Where delivery happens
When the goods are on board the vessel at the named port of shipment.
The seller
- Export clearance
- Origin charges and loading on board
The buyer
- Ocean freight, insurance, import clearance, duty and GST/VAT
- Risk once on board
When risk passes
Passes once the goods are on board the vessel.
When to use FOB
Bulk or conventional sea cargo loaded directly onto the ship.
Watch out
Widely used for containers, but containers are handed over at the terminal days before loading, so FCA fits better. Australian customs value is generally based on the FOB price, so FOB values often appear on import paperwork even when another Incoterm was sold.
Example
FOB Shanghai: the Chinese supplier pays to get the goods onto the vessel; the Australian importer pays ocean freight onwards.
How it appears on the invoice
Write the three-letter code, the named place and the rules version, for example FOB Shanghai (Incoterms® 2020). The full name is not needed on the document. In Vendara Trade Documents you pick FOB – Free On Board from the list and the invoice prints just FOB with your named place.
Frequently asked questions
What does FOB mean?
FOB stands for Free On Board (Incoterms® 2020). The seller loads the goods onto the buyer's nominated ship at the named port of shipment, cleared for export.
Where does risk pass under FOB?
Passes once the goods are on board the vessel.
Who pays import duty and GST under FOB?
The buyer pays import clearance, duty and import GST or VAT.
When should I use FOB?
Bulk or conventional sea cargo loaded directly onto the ship.
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