Meaning
FOB stands for Free On Board. Under the ICC Incoterms® 2020 framework, it is a rule for sea or inland waterway transport. The named port of shipment is essential to the term.
Delivery and risk
At a high level, the seller delivers when the goods are placed on board the vessel nominated by the buyer at the named port of shipment. Risk then transfers according to the rule. The buyer generally arranges the main carriage, while the rule allocates specified obligations and costs between the parties.
When to examine another rule
FOB may be a poor fit where goods are handed to a carrier before they are placed on board, as often occurs with container movements. Parties should assess the actual handover and transport arrangement rather than selecting FOB by habit.
Contract checklist
- State “FOB,” the precise named port of shipment, and the chosen Incoterms edition.
- Align vessel nomination and shipment timing responsibilities.
- Confirm documentary, payment, inspection, and insurance arrangements separately.
- Check that operational teams and logistics providers understand the same delivery point.