FOB stands for “Free On Board.” It’s an international trade term that specifies an agreement where the seller is responsible for delivering the goods on board a vessel nominated by the buyer at a named port of shipment.
With FOB terms, the buyer takes ownership and bears the risk for the goods as they embark on their journey. The buyer is then responsible for arranging transportation, insurance, customs clearance, and any other necessary steps to transport the goods from the port of shipment to their final destination.
Once the goods are on board the vessel at the specified port under FOB terms, the risk and responsibility are transferred from the seller to the buyer.
Overall, the FOB arrangement simplifies the transaction process, as the seller doesn’t need to worry about transportation beyond loading the goods onto the designated vessel.
