What does FOB - freight on board mean? What's the diff with that and just the regular shipping rate? thanks

Question

Shipping rate from port to port seems clear enough to me, but what does it mean when people say FOB?

Answer 1

Term indicating delivery will be made on board or into a carrier by the shipper without charge. The abbreviation FOB is followed by a shipping point or destination. The invoice price includes delivery at seller's expense and seller's risk to the specified location. For example, "FOB our warehouse in Duluth, Minnesota," means to a buyer requesting New York City delivery that the seller who might have its headquarters and billing office in Chicago, will pay shipping costs from Duluth to New York. Title usually passes from seller to buyer at the FOB point.


A commercial term that signifies a contractual agreement between a buyer and a seller to have the subject of a sale delivered to a designated place, usually either the "place of shipment" or the "place of destination," without expense to the buyer. Thus a shipment "f.o.b. Shipping point" requires the seller to bear the expense and the risk of putting the subject of the sale into the possession of the carrier, but the duty to pay the transportation charges from the f.o.b. Point is on the buyer. 334 P. 2d 808, 814. Where the shipment is "f.o.b. Destination point," the seller is required to bear the transportation charges and the risk of transport until the buyer point of destination. U.C.C. §2-319. The term is not merely a pricing agreement as to who shall bear the cost of transportation but is also a "delivery term" designating where title and risk of loss shall pass. An f.o.b. Contract that does not designate any point of delivery is commonly held to be an f.o.b. Shipping point agreement. When in addition to designating a delivery point, the agreement specifies a vessel, car or other vehicle, the seller must also load the goods aboard said vessel, car, or other vehicle at his own expense.

Answer 2

Freight On Board

Answer 3

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What does FOB - freight on board mean? What's the diff with that and just the regular shipping rate? thanks
Shipping rate from port to port seems clear enough to me, but what does it mean when people say FOB?

Answer 4

This is an Incoterm. That is, accepted by ICC (international chamber of commerce), the banks, traders, and all other concerned parties all over the world.

It means, the goods will be delivered and mounted on board a carrier on the shippers' cost. The term will be followed by a port's name. For example, $100 FOB warehouse, Brooklyn, NY, means that goods price + loading charge at the supplier’s warehouse is $100. The buyer will have to send a transport to seller’s warehouse. The seller will load the goods on the transport with his resources. No charge for the loading.

$100 FOB JFK, NY means that the goods price + transportation cost upto JFK from supplier’s warehouse + JFK’s warehouse charge (if any) + airline’s loading charge (if any) are included on this price. The shipper will be responsible for all the labor and other charges until the goods are on board a flight leaving JFK. However, the airfreight is not covered.

This is between ex-warehouse and C&F. Ex-warehouse term means that, the shipper is not responsible for any of the labor or other charges. The buyer will be responsible for picking up the product from seller's warehouse. He will be charged for the labor and transportation charges. The supplier will only allow you or your authorized agent to pick up the goods. Nothing else. You get a price term $100 ex-warehouse Brooklyn, NY. You will send your company truck to their warehouse or hire one on your cost. May be they need a forklift to load it. They have arranged one and get the job done. However, you’ll have to pay the charge for using that forklift. As well, the forklift driver’s charge too.

The C&F is means Cost and Freight. C&F JFK, NY means that goods will be loaded on an aircraft bound to JFK from supplier’s airport and freight cost is paid by the supplier. The buyer will be charged for any expense once the goods arrive JFK warehouse. $100 C&F JFK, NY means the cost of goods + any transportation cost upto JFK in covered. However, there is an exception to this. That is, freight insurance. The buyer has to insure the goods from his/her end.

CIF is one more step ahead. It includes the freight insurance. CIF JFK, NY, means, the price includes the cost of goods + freight cost upto JFK warehouse + the freight insurance. However, warehouse charges and other dues on JFK is not paid by the seller. Buyer has to pay for it.

Hope this will satisfy your need. If you need to know more, email me on [e-mail]

Answer 5

FOB = Free On Board

Answer 6

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Free On Board (FOB) is an Incoterm. It means that the seller pays for transportation of the goods to the port of shipment, plus loading costs. The buyer pays freight, insurance, unloading costs and transportation from the port of destination to his factory. The passing of risks occurs when the goods pass the ship's rail at the port of shipment. Internationally the term specifies the port of origin, e.g. "FOB New York" or "FOB Vancouver". Domestically within the United States and Canada, the term is used in two common phrases, "FOB shipping point" and "FOB destination," to distinguish when the title of goods passes from the seller to the buyer. Under the terms of "FOB shipping point," the title of the goods passes to the buyer at the shipping point. Similarly, under the terms of "FOB destination", the title of the goods passes to the buyer when the goods arrive at their destination. The distinction is important because it determines who pays for the shipping costs of the merchandise: whoever holds the title to the merchandise at the time of its shipping pays for its transportation costs unless otherwise noted (e.g., freight prepaid or freight collect). Also, it is important that if the shipment is damaged while traveling the owner must file the freight claim. Note that this usage is inconsistent with the official Incoterm definitions, and should not be used for international shipping. North American FOB definitions correspond to Incoterm approximately as follows: * FOB shipping point or FOB shipping point, freight collect: FCA shipping point * FOB shipping point, freight prepaid: CPT destination * FOB destination or FOB destination, freight prepaid: DDU destination * FOB destination, freight collect: not commonly used, no Incoterm equivalent With the advent of e-commerce, most commercial electronic transactions occur under the terms of "FOB shipping point" or "FCA shipping point". Most analysts see this as a disadvantage of online shopping compared to traditional in-person purchasing, where "FOB destination" is more prevalent. When counting inventory, merchandise in transit plays a crucial role depending on whether it is added to the company's balance sheet. Items under "FOB shipping point/destination" are checked to see if the purchaser has title of the goods. If it does, then they are added to the inventory count, but not the balance sheet. If not, they are treated as would items under consignment, meaning they still belong to the supplier (consignor).

Answer 7

It has something to do with when possession of the item is transferred from producer to buyer.

Answer 8

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Answer 9

cif