FOB Free On Board
The seller loads the goods on board the vessel; from that point the buyer pays and carries the risk.
Sea and inland waterway onlyFOB is the best-known rule of the eleven and the most misapplied. The seller packs, clears for export and loads the goods on board the vessel the buyer nominated at the named port of shipment. Once they are on board, cost and risk both pass to the buyer, who has already contracted the freight.
Track a container- Risk passes at
- On board the vessel
- Export clearance
- Seller
- Import duty & taxes
- Buyer
- Cargo insurance
- Not required
The journey, stage by stage
Every stage of the shipment in order, and who pays for it.
- 1 Packing the goods for export Seller pays
- 2 Loading onto the collecting vehicle Seller pays
- 3 Inland carriage to the port or terminal Seller pays
- 4 Export customs formalities Seller pays
- 5 Terminal handling at origin Seller pays
- 6 Loading onto the main carrier Seller pays
- Risk passes to the buyer The moment the goods are on board the vessel at the named port of shipment.
- 7 The international freight Buyer pays
- 8 Terminal handling at destination Buyer pays
- 9 Import customs, duty and taxes Buyer pays
- 10 Inland carriage to the final destination Buyer pays
- 11 Unloading at the final destination Buyer pays
What the seller does
- Pack the goods, clear them for export and deliver them on board the nominated vessel.
- Pay terminal handling at origin and the cost of loading.
- Provide the usual proof of delivery — in practice the on-board bill of lading.
What the buyer does
- Contract the sea carriage and nominate the vessel and the loading date.
- Pay the freight and everything from the port of destination onward.
- Carry the risk from the moment the goods are on board.
- Clear the goods for import and pay duty and taxes.
Use it when
- Bulk and breakbulk loaded directly on board.
- Charter shipments where the buyer controls the vessel.
- Sales where the buyer has a freight rate of its own and wants the seller responsible right up to loading.
Watch out for
- Containers are handed in at a terminal, often several days before the vessel loads, and the seller keeps the risk through that whole wait for no reason. FCA is the correct rule — the ICC has said so in every edition since 2010.
- “FOB” in a domestic US contract usually means something else entirely under the Uniform Commercial Code. Always write “Incoterms® 2020” after the term.
If the cargo goes in a container, on a plane or on a truck, FOB is the wrong rule no matter how familiar it looks.
Compare with
Sources for this page
Every payer cell on these pages was checked against several published references, and the two cells those references disagree on are drawn as “per contract” rather than resolved by picking a side. This is a summary for orientation, not legal advice — the contract and the ICC text govern.
-
Incoterms® 2020
International Chamber of Commerce
The rules themselves. The authoritative text is ICC publication no. 723E, which is not free — this page is a summary of it, not a copy.
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Incoterms
Wikipedia
Risk transfer point, export and import clearance and the insurance clauses for each of the eleven rules; the 2010 to 2020 changes; what the rules do not cover.
Selling or buying on FOB terms? Follow the shipment from handover to arrival — whoever holds the number can track it.
Track a containerFOB FAQ
FOB is the best-known rule of the eleven and the most misapplied. The seller packs, clears for export and loads the goods on board the vessel the buyer nominated at the named port of shipment. Once they are on board, cost and risk both pass to the buyer, who has already contracted the freight.
Risk passes to the buyer the moment the goods are on board the vessel at the named port of shipment.
The seller pays everything up to and including loading on board; the freight is on the buyer’s own contract. Export clearance is the seller’s and import duty and taxes are the buyer’s. Neither side is obliged to insure the cargo.
Whoever contracted the carriage holds the transport document, and its number is what a lookup needs. Enter a bill of lading, booking or container number in the container tracking app, an air waybill in the air cargo tracker, or make the same lookup one REST call with the API reference.