What Is "Freight on Board"?

I have Googled and found two definitions of “Freight on Board” (FOB). It is either free shipping, OR it means the cost of shipping is strictly delivery and DOES NOT include offloading of materials.

Are both correct?

I’ve heard FOB defined as “Free on Board” and thought it had something to do with exactly when ownership was transferred and liability. E.g. in some cases, the product legally becomes yours and is treated as delivered when the seller ships it and if the vehicle carrying it gets picked up by a tornado and thrown in the depths of the ocean and your product is never found, sucks to be you. On the other hand, in some cases the product remains the seller’s property and responsibility until you physically pick it up or it arrives at your location, meaning that if they lose it during shipment they have to replace it in order to actually make delivery, as it’s their loss, not yours.

When we ship things out at work by freight, we can do the F.O.B. by our location or by the customer’s location. Usually we like it set to ours, because that means the customer will pay freight from our dock to theirs. If it’s set to the customer’s location (which some customers insist on), then we pay the freight.

ETA: I don’t do the shipping part of the business though so that’s as far as I can explain it. Hope that helps a little.

It is not “freight on board” but “free on board Port X” and is a deprecated INCOTERM

This makes no sense. FOB means the customer pays the shipping. See the incoterms.

Combination of this and what Fluffy said. The sender sees the freight “free” (of inspection, customs, fees, etc.) into the shipping process, and payment and delivery is at the receiver’s cost from there.

What are you having shipped and from where, in general?

It makes no sense but it’s a common use in business nonetheless. People use it as if it means “responsibility for the merchandise passes to the customer starting…” followed by a description of when or where that happens. Essentially reducing all incoterms to “FOB” and including a qualifier.

It’s particularly annoying when you negotiate an actual agreement with a customer or vendor and then their purchasing rep or shipping clerk insists on putting some gibberish on the shipment that makes literally no sense.

I have been purchasing for decades and have never seen it. Maybe I am used to dealing with larger, competent firms.

Anyone who uses FOB in a contract to mean something else is a fool and clearly incompetent. It is a recipe for disaster. No lawyer would even consider it. Incoterms are very precisely and clearly defined for a purpose and businesses use them to make things clear.

A sales contract with contradictory terms is a recipe for disaster and a sign of clearly incompetent people. I can only imagine this happening in a tiny outfit with someone trying to sound “proffesional” but out of their depth. I have never seen it in any decent place and I can’t imagine it. “Yes, your honor, when we signed a contract saying I would pay for shipping we really meant he would pay for shipping”.

FOB does mean that the Buyer pays for shipping. But it also means that the responsibility for the merchandise passes from the seller to the common freight carrier once the carrier inspects and signs for it.

This used to be common with bad eBay sellers. They’d just toss “FOB” somewhere in their ToS and if it was “lost in the mail” they’d shrug their shoulders and go “Tough shit”. However, eBay no longer puts up with that shit, and of course the scum seller wouldn’t actually ship via freight, just USPS UPS, etc.

Oh, if we are talking about eBay then FOB means “a tiny outfit with someone trying to sound “proffesional” but out of their depth and not having a clue”.

True.:cool: