FOB — Free on Board

Mode of transport

Sea and inland waterway only

Definition

The seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment, cleared for export. Risk passes once the goods are on board.

Delivery point

On board the vessel at the named port of shipment.

Risk transfer

When the goods are on board the vessel.

Seller costs

• Inland carriage to the port and terminal handling at origin
• Export clearance and duties
• Loading on board

Buyer costs

• Ocean freight and any surcharges
• Insurance
• Destination handling, import clearance and delivery

Insurance

No obligation on either party; the buyer normally insures from the ship's rail onwards.

Export formalities

Seller's responsibility.

Import formalities

Buyer's responsibility.

Documents

• Commercial invoice, packing list
• On-board bill of lading
• Export declaration, certificate of origin, inspection certificate

Best use cases

Bulk cargo and traditional break-bulk sea shipments; still widely used in commodity trade and letters of credit.

Common mistakes

• Using FOB for containerised cargo delivered at a terminal days before loading — use FCA
• Not agreeing who bears terminal handling charges (THC)
• Nominating the vessel late and triggering storage costs

Practical example

FOB Bandar Abbas, Incoterms® 2020.