FOB (Free on Board)

FOB (Free on Board) is an Incoterms rule under which the seller delivers goods on board a vessel at the named port of shipment, cleared for export — and from that moment, cost and risk pass to the buyer, who pays the ocean freight, insurance, and everything at the destination. In practice, an "FOB price" from a supplier means: product, transport to the port, and export clearance included; the international journey is yours.

FOB is one of the rules published by the International Chamber of Commerce in Incoterms 2020, and it is the most common quoting basis in e-commerce sourcing — the price most Asian manufacturers give by default.

How does FOB split responsibilities?

Responsibility	Seller (under FOB)	Buyer (under FOB)
Transport to the port of shipment	Pays and arranges	Nothing
Export customs clearance	Handles and pays	Nothing
Loading on board the vessel	Pays — risk transfers once goods are on board	Takes over risk from that point
Ocean freight & insurance	Not included	Books and pays (insurance optional but wise)
Import clearance, duties & delivery	Nothing	Handles and pays — including customs brokerage and acting as importer

FOB shipping point vs. FOB destination (the US meaning)

In North American domestic shipping, "FOB" carries a second, older meaning that causes endless confusion. FOB shipping point (or FOB origin) means ownership and risk pass to the buyer when the carrier picks up — the buyer pays freight. FOB destination means the seller owns the goods and the risk until delivery — the seller pays freight. These are domestic contract terms, not Incoterms; when trading internationally, always state the Incoterms rule and edition explicitly (for example "FOB Shanghai, Incoterms 2020") so both meanings can't collide in one contract.

FOB vs. EXW vs. CIF vs. DDP

Term	What the seller's price includes	Where the buyer takes over
EXW	The goods at the factory gate — nothing more	At the factory: buyer arranges everything, even export clearance
FOB	Delivery on board the vessel, export-cleared	On board at the origin port: buyer books freight onward
CIF	Freight and insurance paid to the destination port	Risk still transfers at loading — only the costs are prepaid
DDP	Everything to the buyer's door, duties and taxes paid	At final delivery — see our DDP entry

What do brands get wrong with FOB?

• Comparing supplier quotes across different Incoterms. An EXW price will always look cheaper than an FOB price from a rival factory — until you add inland transport and export clearance. Normalize every quote to the same term, then into full landed cost, before choosing a supplier.
• Leaving the ocean leg uninsured. Under FOB the goods are the buyer's risk from the moment they're on board — and nobody is obliged to insure them. Cargo insurance is cheap; a lost container is not.
• Using FOB for containerized freight without thinking. Strictly, FOB is a sea-freight rule with risk transferring on board — for containers handed over at a terminal days earlier, the ICC recommends FCA instead. Most e-commerce trade still says "FOB" loosely; just know your risk may effectively start at the terminal gate.
• Forgetting what starts after the port. The FOB price is where cross-border cost begins, not ends: freight, import duties, and the destination-side setup — an importer of record, registrations, clearance — are all on the buyer's side of an FOB deal.

FAQ

Who pays for shipping under FOB?
The seller pays up to and including loading the goods on board at the origin port; the buyer pays the ocean freight and everything after — insurance, import clearance, duties, and delivery to the final destination.

What does an FOB price from a supplier include?
The product, transport to the named port, export customs clearance, and loading on board. It excludes ocean freight, insurance, import duties and taxes, and destination-side costs — which typically add materially to the per-unit cost by the time goods land.

Is FOB only for sea freight?
As an Incoterms rule, yes — FOB applies to sea and inland-waterway transport, with FCA as the ICC's recommended equivalent for containers and other modes. In everyday commercial usage, "FOB" is often used loosely for any origin-based handover, which is exactly why contracts should name the rule and edition explicitly.

An FOB quote hands you the whole international journey: freight, insurance, customs, and the importer role at destination. eBrands takes that journey over — imports, registrations, and compliance included — as your operating partner and Merchant of Record — see how it works for physical-goods brands.