What is Free on Board?
Free on Board (FOB) is an Incoterms 2020 rule under which the seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment, or procures goods already so delivered. It applies only to sea and inland waterway transport. Risk passes when the goods are on board, the seller clears them for export, and the buyer arranges and pays for the main carriage, insurance and import clearance. The seller bears the cost of bringing the goods to the port and loading them on the vessel. The term is written as FOB plus the named port, for example FOB Ningbo, and in US domestic commerce 'FOB' has a different meaning under the Uniform Commercial Code that should not be confused with the Incoterms rule.
Why it matters for forwarders
FOB remains one of the most widely quoted terms in Asian export trade, often used for containerised goods even though ICC advises FCA in that situation. In practice the container is gated into the terminal days before loading, so damage or loss in the terminal falls into a grey zone between seller and buyer. Forwarders nominated by the buyer handle the booking, while the origin agent must collect export documents and VGM from the seller and meet the carrier's cut-offs. Origin charges such as terminal handling, documentation and seal fees are a common source of dispute, so 'FOB' quotes should list which origin charges are included. When a client buys FOB with a letter of credit, the on-board bill of lading date matters, so watch for rolled bookings.