Free on Board

Definition

Free on Board. (FOB) It is, under this term, the price of the products quoted by a vendor including transport,insurance, and loading costs incurred until the merchandize is loaded on board the vessel.

The vendor fulfills its obligations when the products are boarded at the named port of shipment. The buyer has to bear all costs and risks of loss or damage arising from the point of loading.

The term FOB can only be used for sea or inland waterway transport. When the ship's rail serves no practical purpose, such as in the case of roll-on/roll-off container traffic, the term free carrier is more appropriate.

FOB values also serve as a reference for import and export valuation shipment, all costs of inland transportation and loading being included in the price of the products. The buyer has to bear all costs and risks of loss of or damage to the products from that point.