What is FOB (Shipping) ?

When we received a quotation from oversea suppliers, “FOB” is often shown on the price term column.  But what is FOB term?

Followed is expiation from WIKIPEDIA:
“FOB, "Free On Board", is a term in international commercial law specifying at what point respective obligations, costs, and risk involved in the delivery of goods shift from the seller to the buyer under the Incoterms 2010 standard published by the International Chamber of Commerce. FOB is only used in non-containerized sea freight or inland waterway transport. FOB terms do not define transfer of ownership of the goods.

The term FOB is also used in modern domestic shipping within the USA to describe the point at which a seller is no longer responsible for shipping cost.

Ownership of a cargo is independent from Incoterms. In international trade, ownership of the cargo is defined by the bill of lading or waybill.”--(SEE MORE HERE)

To understand it in a very simple way, FOB means the quoted price cover to seller’s loading port. All other expense/risks happened afterward is buyer’s responsibility.  Please see followed picture from WIKIPEDIA:

 
There are 4 transporting points: Seller, Loading port, Destination port and the Buyer.  The 4 transporting points defines 4 major price term: EXWORK, FOB, CIF, DDU.  If two suppliers quote the same price but supplier A quote based on FOB and B supplier quote based on CIF, then you might want to choose B as its price covers sea freight.

HSIEH Metal was founded in 1985 and has been specialized in Metal Stamping Manufacturing and Tooling.

In many cases price terms are negotiable. Understand them throughout would defiantly give you a lot of flexibility during business negotiation.

For more about "What is CIF?"

www.hsiehmetal.com
HSIEH Metal was founded in 1985 and has been specialized in Metal Products Manufacturing and Tooling.
Metal stamping parts | Casting parts | Forging parts.
Our factory is located in New Taipei City and China. 

Comments

  1. Very informative article, Which you have shared here about the FOB shipping. After reading your article I got very much information about the FOB shipping and it is very useful for us. Pak Cargo offers the best shipping services at an affordable price.

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