In international trade, freight and insurance are one of the important considerations.   One of the common terms is "FOB".

What is a FOB short for?

FOB is the abbreviation of "Free On Board", which is a shipping term widely used in retail and international trade.   It sets out the process for the transfer of responsibility and ownership of goods upon shipment.

1.   FOB definition:

Under FOB terminology, the seller transfers responsibility and title to the buyer once the goods are loaded onto the ship.

This means that the seller's responsibility ends once the goods are shipped.

2.   Risk transfer:

Under FOB terms, risk passes from the seller to the buyer when the goods are shipped.

Once the goods are shipped at the port of shipment, the buyer assumes all risks during the transportation of the goods.

3.   Cost division:

Under FOB, the seller bears all costs of getting the goods to the shipping port and loading them on the ship.

The buyer is responsible for paying all transportation and insurance costs from the port of shipment to the destination.

Free On Board