In ocean freight, the FOB Incoterm, or “Free on Board”, is an Incoterm exclusive to shipping. It states that the seller must load the goods onto the ship chosen by the buyer. The seller is also responsible for all costs and risks up until all goods are loaded onboard the vessel, at which point the risks are transferred to the buyer.
The FOB Incoterm is similar to the FCA Incoterm, the only difference being the risk transfer point upon complete loading of goods is not specifically mentioned in the FCA Incoterm.
Delivery of goods and documents required
Packaging and wrapping
Inland transportation in the country of origin
Customs at origin
Cost of the goods
Customs upon arrival
Inland transportation in the destination country
Payment of fees
The two most-commonly used Incoterms when importing from China are the FOB and CIF (Cost, Insurance and Freight) Incoterms.
Under FOB, as an importer, you are responsible for the booking, payment, and management of the ocean freight shipment. On the other hand, under CIF, the exporter, or seller, will be responsible for them.
This may seem to be an advantage for the importer, but if you still have yet to establish a trusting relationship with your provider, it could become a big risk. We recommend you to give our article on why you should choose FOB and not CIF when importing from China a read.
If you still have doubts, you may read our article on how to choose a safe and competitive Incoterm. Alternatively, feel free to contact us. Our imports and exports agents will be glad to to help you out.
"Don't underestimate the value of Incoterms and their impact on international trade."
Aliona Yurlova, Business Development Manager at iContainersDOWNLOAD THE FREE GUIDE