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Free On Board (…named port of shipment) (FOB)

obsolete-Incoterms 2000

An international trade term of sale in which, for the quoted price, the seller/exporter/manufacturer clears the goods for export and is responsible for the costs and risks of delivering the goods past the ship’s rail at the named port of shipment.

The Free On Board term is commonly used in the sale of bulk commodity cargo such as oil, grains, and ore where passing the ship’s rail is important. However, it is also commonly used in shipping container loads of other goods. The key document in FOB transactions is the “On Board Bill of Lading.”

Sellers and buyers often confuse the Free On Board term with Free Carrier. Free On Board (FOB) does not mean loading the goods onto a truck at the seller’s place of business. Free On Board is used only in reference to delivering the goods past a ship’s rail in ocean or inland waterway transport. Free Carrier, on the other hand, is applicable to all modes of transport.

See Free On Board, Incoterms© 2010 below.

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