FOB shipping is one of the international trade terms, the full name is Free On Board .FOB is also known as price without freight.
Therefore, FOB goods are usually designated goods, usually foreign customers designated consignor, consignee, notifier, designated shipping company, designated shipping price, cost of goods sold, and sometimes designated freight forwarding company and so on.
Meet the conditions:FOB terminology is limited to the scope of sea freight, domestic trade transportation.
Xiongda is a forwarder agent in China, and provide FCL and LCL freight from China to USA.
FOB shipping Influencing factors
At the buyer’s request and at the buyer’s risk and expense, the seller may give assistance to obtain a bill of lading or other transportation documents.
FOB shipping Features
T / T (prepayment) and FOB trade terms are a common set of combinations that can effectively control the potential risks under this trade term. Europe and the United States choose FOB trade terms more.
FOB shipping Common Misconceptions
The FOB shipping terminology applies when the seller is responsible for delivering the goods to the vessel at the port of shipment. However, FOB may not be the best option for some buyers, especially if they have limited experience with transportation and customs clearance procedures.
The FOB shipping price includes only the price at which the goods are sold on board the vessel at the port of shipment terminal and does not include freight and insurance costs. Some buyers may incorrectly assume that the FOB price includes all costs, leading to subsequent problems with payments and fees.
If you don’t want to just read these text interpretations, you can click on the video below to help you understand more quickly about FOB shipping：
Similarities and Differences of FOB/CIF/CFR
Their common points are:
- They are only applicable to sea and inland waterway transportation, not applicable to other modes of transportation.
- The place of delivery are in the port of shipment, that is, the seller is in the port of shipment to complete delivery. Especially pay attention to the CIF term, is in the port of shipment delivery, not in the port of destination.
- The boundaries of risk transfer are the same, are at the port of shipment of goods across the ship’s rail risk from the exporter to the importer.
Differences:
- The two sides in the transportation and insurance on the division of labor is different. FOB terminology is the importer is responsible for transportation and insurance, CIF is the exporter is responsible for transportation and insurance, CFR is the exporter is responsible for transportation, the importer is responsible for insurance.
- The price of goods is composed of different, FOB is only cost grid, CIF is “cost of goods + insurance + freight” price, CFR is “cost of goods + freight” price.
This article introduces more about CIF, please click to view:
CIF Clearance Tax Exemption And Credit | Most Complete Formula
The similarities and differences between FAS and FOB shipping
Different nature
- FAS: buyer and seller of a sale agreement.
- FOB: when the goods in the designated port of shipment over the side of the ship, the seller is completed delivery.
Different contents
- FAS: the seller is responsible for delivering the goods to the side of the buyer’s designated ship at the port terminal, the ship can not be docked at the terminal need to cross the barge, to the barge, the seller’s risk, liability and costs are bounded by this, and all risks and costs are borne by the buyer later.
- FOB: The buyer must bear all the risks of loss or damage of the goods from that point. In addition the seller must handle the formalities related to the export of goods.
Different characteristics
- FAS: in foreign trade, when the seller is not willing to assume responsibility for the actual export of goods, or goods in the loading of special difficulties, often take ship-side delivery conditions, in order to exempt themselves from certain obligations.
- FOB: terminology applies only to maritime or inland waterway transportation.
