FOB Terms Analysis: Key Delivery Terms in International Trade

What is FOB?

FOB stands for Free On Board, meaning 'delivered on board at the port of shipment'. This is a term commonly used in international trade, especially in sea freight.

Simply put:

The seller is responsible for delivering the goods to the designated port and loading them onto the ship, after which the transportation risks and costs are borne by the buyer. For example, if you agree on 'FOB Ningbo Port' with the factory: the factory is responsible for delivering the goods to Ningbo Port and loading them onto the ship; from the moment the goods are loaded onto the ship, sea freight, customs clearance, insurance, etc., are your responsibility.

FOB means the factory will help you deliver the goods to the port and load them onto the ship, which is relatively more convenient.

Precautions for FOB

The FOB port must be clearly stated: 'FOB China' is too vague, it must be specific to 'FOB Ningbo' or 'FOB Shenzhen'.

Loading responsibilities must be clear:

The factory is only responsible for loading the goods onto the ship. If you do not arrange the shipping schedule properly, it may lead to increased costs or delays in goods delivery.

There may be additional fees:

Although it's FOB, some factories may still add some port miscellaneous charges. Remember to ask clearly what is included in the quotation.

As a procurement novice, should I choose FOB?

If it's your first time purchasing, FOB is a relatively friendly and common choice: the factory will help you deliver the goods to the port; you only need to find a freight forwarder to take care of the transportation from the port.

What can Factory Explorer do for you?

Confirm whether the factory's quotation includes reasonable FOB fees, assist you in understanding the terms and connecting with reliable freight forwarders, avoiding the pitfall of 'superficial FOB but actually charging randomly'.