Free on Board (FOB)

Free on Board (FOB) is a shipping term used in international trade to specify when the ownership and responsibility of goods transfer from the seller to the buyer. Under FOB terms, the seller is responsible for delivering the goods to a specified port and loading them onto the transportation vessel. Once the goods cross the ship’s rail at the port, the buyer assumes responsibility for shipping costs, risks, and insurance. Essentially, FOB clarifies who pays and who bears the risk at each stage of the delivery process, helping both parties understand their responsibilities in the transaction.