FOB, or Free On Board, is an international trade term defined by the International Chamber of Commerce (ICC) in the Incoterms rules. FOB is commonly used in international shipping, particularly for maritime transport. It defines the responsibilities, costs, and risks between the seller and the buyer.

Delivery Point

In an FOB transaction, the seller is responsible for delivering the goods on board the vessel named by the buyer at the specified port of shipment. The seller is responsible for loading the goods onto the vessel.

Seller's Responsibilities

Under FOB, the seller is responsible for:

• Packaging and preparing the goods for export.
• Transporting the goods to the named port of shipment.
• Loading the goods onto the vessel nominated by the buyer.
• Providing the buyer with any necessary documents, like invoices, export licenses, or other documentation.

Buyer's Responsibilities

• Nominating the vessel and booking space on the vessel.
• Paying for the cost of transportation from the port of shipment to the final destination.
• Handling import customs formalities, duties, taxes, and clearances.
• Bearing any costs or risks incurred after the goods are on board the vessel.

Transfer of Risk

Risk is transferred from the seller to the buyer when the goods are on board the vessel at the specified port of shipment. Once the goods are on board, the buyer assumes responsibility for any damage, loss, or risk associated with the goods.

FOB is a widely used Incoterm for maritime shipments, and it's commonly used when the buyer has more control over the shipping process, such as choosing the vessel and managing the transportation from the port of shipment. It's important to specify the named port of shipment and to have a clear agreement between the parties to ensure a smooth international trade transaction under FOB terms.