Free on board - FOB
Table of contents
01 Overview of FOB
Comparison among
02 FOB, FAS and FCA
01
Overview of FOB
1.1. Definition
Free on Board (FOB) is a shipment
term that defines the point in the
supply chain when a buyer or seller
becomes liable for the goods being
transported.
1.2. In case of use:
Fulfill the delivery Have to do the export
responsibility formalities for the
shipment
Not require to contract for carriage and
purchase insurance for export
shipments
1.3. Obligation,
Adv/Disadv of
Seller, Buyer:
Obligation
Obigation Seller Buyer
• Voyage chartering: the
seller loads their goods Takes responsibility for
Delivery on the quay the cargo when it is
loaded on the ship
• Liner Chartering: The
seller delivers containers
to C/Y
Obigation Seller Buyer
At the board (on boat)
Transfer of At the board (on boat)
risk
Obigation Seller Buyer
• Booking
Carriage No obigation • Sends the information of
booking to the seller right
when it is confirmed
Obigation Seller Buyer
Insurance No obigation No obigation
Obigation Seller Buyer
Transfer all documents
Transport to the buyer when the Collect related documents to
document goods have been loaded receive the cargo
on board
Obigation Seller Buyer
Export/Import Export clearance at POL
Import clearance at POD
clearance
Obigation Seller Buyer
Must pay any kind of fee
Must pay freight and any
before the board, such as:
Fees Loading fee, trucking,
kind of fee after the board,
such as: Lifting cargo fees,
packaging, etc
demurrage in POD, etc
Obigation Seller Buyer
Provide the notice to the
Notice/others buyer when the cargo has
Pay for the shipment when
the cargo is laid on the boat
been laid on board
Advantage - Disadvantage
of Seller, Buyer
Advantages Disadvantages
• Not be responsible for • Not be able to
arranging the sea recover any loss
transportation and marine once the goods
insurance. have been on-
The Seller • Recover the merchandise boarded.
before the merchandise is • Need to make
hauled on the vessel. certain
• Not held responsible for any arrangements for
in-transit loss once the getting export
goods are on board. permissions.
Advantages Disadvantages
• Get more control over the • Not be suitable
logistics and shipping for new buyers
costs.
• FOB includes customs
clearance.
The
• Cost-effective
Buyer • Be able to choose the
freight forwarder
1.4. The difference between FOB 2010 and
FOB 2020
In INCOTERMS 2010 In INCOTERMS 2020
Not used for goods transported by container
Be revised by the ICC to become applicable to goods
transported by containers
02
Comparison among
FOB, FAS and FCA
Similarity
The buyer must bear the cost of the
rental of the means of transport, the
insurance of the goods and other costs
incurred during the carriage as well as
the associated risks.
Difference
FOB
• The seller delivers the goods to the
buyer on board the vessel, designated
by the buyer, at the port of shipment in
the country of export.
• The risk of loss of or damage to the
goods is in transit when the goods are
on board and the buyer bears all costs
from that point forward.
FAS
• The goods are placed alongside
the vessel, designated by the
buyer, at the port of shipment
designated by the exporting
country.
• The risk of loss of or damage to
the goods is when the goods are
placed alongside the vessel and
the buyer bears all costs from that
point on
FCA
The seller delivers on the
inland transport
nominated by the buyer at
the seller's premises and
clears for export.
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