FOB Shipping : The Most Popular Incoterms ( 2024 )
As the first shipping terms, fob shipping is what we are going to talk about today.
If you’re doing international trading business and shipping, you might don’t know the Incoterms well.
But I bet you heard of the word FOB before, right ?
Among all of them that are currently used in international freight, FOB is the most frequently used.
This guide to fob terms will cover everything you need to know.
What does fob in shipping terms mean ?
What is FOB ? FOB, stands for ” Free on board “.
It’s one of the shipping terms restricted to goods transported by sea or inland waterway.
In terms of FOB shipping, it means that the supplier retains ownership and responsibility for the goods until they are loaded ‘on board’ a shipping vessel.
Once on the ship, all liability transfers to the buyer.
Specifically,
Seller delivers goods, clear export Customs, loaded on board the vessel at the named port.
Once the goods have been loaded on board, risk transfers to the buyer, who bears all costs thereafter.
In plain English, fob shipping meaning is more like Port to Port or Port to Door service.
FOB shipping points VS FOB destination
The designation determines where the buyer assumes title of the goods and the risk of damage from the seller.
The port can be port of loading ( Origin ) and port of discharge ( Destination ).
More exactly, a port or a city name is designated when using FOB shipping.
You can’t just say FOB China, but also need to know the loading port in China.
ie FOB Qingdao, FOB Shanghai, FOB Shenzhen, FOB Xiamen etc
Here is a fob shipping point example,
when you have a sea shipment from Guangzhou to California U.S under FOB shipping term, it could be FOB Guangzhou or FOB Los Angeles.
With FOB shipping point ( FOB Guangzhou ) ,
The ownership of goods is transferred to you once they leave your supplier’s shipping point ( Guangzhou ) .
The title for the goods transfers from your supplier to you immediately from Guangzhou ( Port ) .
And if anything happens to the goods at any leg of the journey to you from Guangzhou,
You will assume all responsibilities and costs.
With FOB destination ( FOB Los Angeles ),
The ownership of goods is transferred to you at your loading dock ( Los Angeles ) .
Upon delivery of the goods to the destination ( Los Angeles ) , the title for the goods transfers from your supplier to you.
And if anything happens to the goods on any leg of the journey to you from Guangzhou,
Your supplier will assume all responsibilities and costs.
Bottom Line # 1
You can found that FOB destination is pretty the same as CIF Incoterms.
So compared with FOB destination, FOB shipping points are more used in international shipping.
You can seldom find FOB destination but FOB shipping points in the shipping documents like commercial invoice.
Bottom Line # 2
You need to confirm the POL ( Shipping point ).
For example,
When you found FOB Foshan on your Foshan furniture supplier’s proforma invoice, means supplier will deliver goods to Foshan port for shipping.
However, there are more carrier options with more good price from Guangzhou or Shenzhen.
Or if you have other goods from Guangzhou to Shenzhen,
Then you need to check with supplier whether they agree to do FOB Guangzhou or FOB Shenzhen.
Specifically, confirm whether supplier is willing to pay the additional inland delivery fee.
Surely it can be more far and costly from Foshan to Guangzhou or Shenzhen compared Foshan factory directly send goods to Foshan loading port.
Why FOB shipping is most frequently used ?
As captioned, FOB is the most popular Incoterms in interntional shipping.
No matter you are a novice or veteran in importing, FOB is the Incoterm you deserve to choose.
1.Compared with EXW, you can save the costs of origin export charges which will be paid by your supplier when you use fob incoterms.
2.Compared with CIF shipping, you have a designated freight forwarder who stand for your interest, so you can get shipment in control.
3.Compared with FCA, FOB can save a lots of trouble and costs for unloading or terminal operation, especially for consolidated shipments.
So that’s why we normally quote FOB shipping price if you don’t give specific requirements.
What’s the FOB shipping price ?
So now you have understand what FOB shipping point means and learn when to consider FOB.
It is time to get a FOB shipping port to port sea shipping price.
You can use our cost calculator to get the estimate fcl shipping cost and lcl shipping price.
The shipping price of China to Global seaports is in your hands.
CONCLUSION
Looking for port to port shipping service ? FOB shipping is what you need.
Designate a POL with your suppliers and learn the shipping quotes accordingly.
If you plan to ship from China, now or in the future, please contact me, and I will provide you with a solution subsequently.
