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Free on Board (FOB) is an Incoterm where the seller is responsible for delivering goods to a specified port or shipping point, and the buyer assumes all risks and costs once the goods are loaded onto the vessel.
FOB is an agreement that determines the point at which responsibility for goods transfers from the seller to the buyer. The seller is responsible for all costs, risks, and delivery until the goods are on board the ship. After the goods are loaded, the buyer assumes responsibility for the shipment, including shipping and insurance costs.
FOB simplifies logistics by defining when responsibility for the goods shifts from the seller to the buyer. As a buyer, you only bear the risks and costs once the goods are loaded onto the shipping vessel, which helps you control shipping expenses.
By using FOB, you can better estimate costs and ensure that both parties are aware of their responsibilities, avoiding potential conflicts and delays.
Buske Logistics is a Top 40 3PL with over 35 warehouses across North America, specializing in warehousing, transportation, and value-added services. We provide tailored logistics solutions serving major Fortune 500 companies.
FOB is crucial for businesses as it clearly defines the division of responsibilities and risks between the seller and buyer. It ensures that both parties understand when the responsibility for transportation and goods shifts, reducing misunderstandings during international shipping.
For example, if a company is selling goods under FOB shipping point, they are responsible for the goods until they are loaded onto the shipping vessel. Once loaded, the buyer assumes all risk and cost, which helps streamline logistics and determine costs for both parties.
