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Responsibility for the goods is with the seller until the goods are loaded on board the ship. In international shipping, for example, “FOB ” means that the seller is responsible for transportation of the goods to the port of shipment and the cost of loading. The buyer pays the costs of ocean freight, insurance, unloading, and transportation from the arrival port to the final destination.

Is free on board FOB better than CIF?

The key differences between CIF and FOB

The main difference between CIF and FOB is the party that is responsible for the goods while they are in transit. With a CIF agreement, the seller is liable for the goods during transit, and with a FOB, the buyer is liable for the goods during transit.

In this case, the seller tends to be responsible for freight charges of the goods to the buyer. More to that, the seller is also liable for any damages of the goods when they are in transit to the buyer. However, the seller may charge the buyer for these transportation costs. When you think about legal liability, you need to know your FOB terms with vendors.

Safe Ways to Ship Precious Metals

You can learn more about the standards we follow in producing accurate, unbiased content in oureditorial https://quick-bookkeeping.net/. «FOB Destination» means the seller retains the risk of loss until the goods reach the buyer. «FOB Destination» means the seller retains the title of the goods and all responsibility during transit until the items reach the buyer.


In practice it should be used for situations where the seller has direct access to the vessel for loading, e.g. bulk cargos or non-containerised goods. Well, when an order is labeled as FOB Origin it simply means that any transfer of responsibility or ownership happens only when the goods leave the hands of the seller. One of the most commonly confused terms is the ‘Free on Board’ which seems like quite an ironical name to me. This is because the service is not free at all and the failure to understand that could possibly lead to problems when shipping products from foreign countries. With that in mind, you need to know that in the course of any international trades. There must be compliance with the existent cultural differences as well as any international laws that govern trade.

What is FOB in shipping and why does it matter?

In this case, the receiver bears the freight costs, owns the product and assumes all liability at the point of origin. If the FOB terms of sale indicate that it is «FOB delivered,» then this implies that the shipper will be responsible for all of the carrier’s costs. On the other hand, FOB Destination means that the receiver/ buyer takes responsibility and ownership of the goods until they are delivered to the doorstep of the buyer.

– someWhat Does Fob Free On Board Mean In Shipping?s forwarders will want to know if they will be handling the end-to-end aspect of the service, or if a local trucking company might take over. In most instances, it is best to have your freight forwarder handle everything, so you have less moving pieces to cause worry. International Chamber of Commerce ,in 1936, Freight on Board has grown to become one of the most common commercial terms used in contracts for the cell and shipment of goods around the globe.

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