Risk transfer: The risk transfers from seller to buyer when the goods have been loaded on board of the ship at the specified port.
Costs: The seller is responsible for all costs up until the goods have been loaded on board the ship.
Responsibility: The seller takes care of the export clearance.
There were no new changes in the FOB Incoterms 2020 compared to the 2010 edition.
The Incoterm FOB is an acronym for “Free On Board”. Some claim the Incoterm acronym also stands for “Freight On Board”. The term “Freight On Board'' is however not an officially approved term and is never mentioned in any of the versions of the Incoterms according to ICC (the International Chamber of Commerce). We therefore suggest excluding it completely to avoid confusion and misunderstandings.
There are many ways to divide their transport chain; port-to-door, port-to-port or door-to-port. Free on board (FOB) is one of the most important Incoterm to know if you are importing from abroad. FOB is a port-to-door transport where the supplier in the exporting country is responsible for all local costs. FOB is the term of delivery that is most often used for transport buyers for imports from Asia. A disadvantage when buying FOB transport may be that you do not have full insight and control over the transportation chain. It's difficult to get full control over the costs that are imposed on the product price in order to cover the costs of transport to the port and the customs clearance, etc.
The FOB Incoterms is part of the Incoterm Group 2 and is thus only used for sea freight. The buyer when using FOB shipping needs to provide the seller with all required information and documentation to make it possible to load the goods as well as process it for export clearance.
It is easy to book transport on Adnavem, as soon as you have a date when your goods are ready to be loaded, you can make choices along with your term of delivery.
At FOB you exclude the local charges on origin from the booking. The only thing that cannot be set as optional is the costs related to the sea freight such as Origin THC, which follow the choice of the carrier.
Every supplier goes through a rigorous vetting process before being added to the marketplace. This control is kept alive and judged on the companies' financial status and performance.
FOB is a commonly used Incoterm, especially when importing from China. However, ICC advises against using FOB transport when you need to ship any type of container due to the fact that the risk transfer occurs when the goods are loaded on board the freight vessel. Containers are often delivered to the container terminal days before getting loaded on board a ship. In case of an accident where the goods are damaged, this makes it difficult to determine the exact moment when the accident occurred and to identify who’s the responsible party since the containers under normal circumstances are kept closed all the way until arrival and pick up.
When transporting goods in a container, FCA would be the preferred Incoterm over FOB.
How much would it cost to import with FOB (Free On Board) from for example China?
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Read more about the latest updates for Incoterms 2020.
You get full transparency.
You choose the suppliers that suit you in your transport chain.
You know who manages your goods and when. You can easily see what you pay and to whom.
You get full control.
You can easily see when your containers leave or come to port.
You can optimize your transport chain over time with the help of the data and knowledge you collect.
You pay less as you do not need any intermediaries, you do not pay for someone else to administer your transport. You simply pay directly to the parties who actually handle your goods.
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