What is free-on-board (FOB)?

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Free-on-board (FOB) is a shipping term used in international trade to define the point at which ownership and responsibility for goods transfer from the seller to the buyer. It helps clarify who is responsible for transportation costs, insurance, and liability during shipping. There are two common types of FOB terms: FOB shipping point and FOB destination. The chosen term plays a crucial role in contract agreements and supply chain operations by setting clear expectations for both parties involved in the transaction.

What is free-on-board origin?

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Free-on-board origin, also known as FOB shipping point, means the buyer assumes ownership and liability for the goods as soon as they leave the seller’s facility or point of shipment. The seller is responsible for loading the goods onto the transport vehicle but is not responsible for damage or loss that occurs during transit. In this case, the buyer typically pays for transportation and manages any risks from that point forward. This term is often used when buyers want control over shipping arrangements and are willing to take on the associated risks earlier in the delivery process.

What is free-on-board destination?
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Free-on-board destination indicates that the seller retains ownership and responsibility for the goods until they arrive at the buyer’s specified delivery location. The seller is responsible for covering transportation costs, handling logistics, and assuming the risk of loss or damage during transit. Ownership transfers to the buyer only after the goods are safely delivered. This arrangement provides added assurance for buyers, especially in cases involving long-distance shipping or sensitive cargo, as the seller maintains accountability throughout the delivery process.

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