Free on Board

FOB (Free on Board) is an incoterm that requires the seller to clear the goods for export, deliver the goods to the ocean vessel, and place the goods on board. Cost and risk transfer from the seller to the buyer once the goods cross the ship’s rail. FOB should only be used for ocean shipments that will be delivered directly from the seller’s premises to the vessel. FCA is a more suitable incoterm for LCL and other containerized shipments that will be delivered to a carrier at a CFS (Container Freight Station) or Container Yard. It is ultimately up to the buyer and the seller to agree on each party's responsibility of cost and risk before the shipment begins.