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Incoterms & Delivery Terms

FOB

Also known as: Free On Board

Free On Board is a maritime-only term under which the seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment and clears them for export. Risk transfers once the goods are placed on board, after which the buyer bears all costs and risks, including ocean freight and marine insurance. FOB is one of the most widely used and most widely misused terms in global trade: it is intended for bulk and break-bulk cargo loaded directly onto ships, not for containerized freight handed to a carrier at a terminal, where FCA is the technically correct choice.

The JFS takeLicensed customs broker · Filer 82G

FOB is for goods lifted onto a vessel; almost nothing moves that way any more. When you hand a container to a carrier at an inland depot and call it FOB, the risk transfer point in your contract does not match where the goods actually changed hands — which only matters on the day something is damaged, and then it matters a great deal. FCA is the correct term for containerized cargo.

Where it matters for compliance

  • FOB value is the usual basis for the entered value on a U.S. import, with international freight and insurance excluded.
  • Check what the invoice actually includes. An "FOB" price that quietly contains inland freight to the port is still dutiable in full — international carriage from the country of exportation is excluded when separately identified (19 U.S.C. § 1401a(b)(4)(A)), foreign inland freight to the port often is not (19 CFR § 152.103(a)(5)).

Related terms

CIFUnder Cost, Insurance and Freight the seller pays the cost of the goods, contracts and pays for ocean freight to the named destination port, and procures a minimum level of marine cargo insurance for the buyer's benefit.CFRCost and Freight obliges the seller to pay for the goods and the ocean freight to bring them to the named destination port, but not to arrange insurance.FCAFree Carrier is a flexible, all-modes term under which the seller delivers the goods, cleared for export, to a carrier or another party nominated by the buyer at a named place — which may be the seller's premises or a forwarder's terminal.

Reviewed by a licensed customs broker. Definitions are general information, not legal or customs advice for a particular shipment. Duty rates, tariff programs and agency requirements change frequently.