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FOB Free on Board (…named port of shipment)
“Free on Board” means that the seller delivers when the goods pass the ship's rail at the named port of shipment. This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that point. The FOB term requires the seller to clear the goods for export. This term can be used only for sea or inland waterway transport. If the parties do not intend to deliver the goods across the ship's rail, the FCA term should be used.
Seller's Primary Duties
- Deliver goods at the port and on board the vessel named by the buyer
- Provide seller evidence of delivery
- Package and mark goods for export
- Prepare Documents
- Commercial invoice
- Export Declaration
- Export License
- Pay loading costs according to the custom of the port to the extent that the costs are not included in the freight
Buyer's Primary Duties
- Nominate carrier
- Coordinate contract of carriage from point of ship's rail
- Pay loading costs if included in the freight costs (i.e. containerized cargo)
- Arrange import clearance
- Obtain import license (when applicable)
- Pay cost for any required pre-shipment inspection
- Coordinate and pay unloading costs at destination
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