FOB - Responsibilities of buyers and sellers

Published: 04 Aug 2009 22:50:26 PST

by Tekle Sebhatu

Question:

Hello, I was wondering, with FOB, when does the responsibility for the shipment pass from seller to buyer? Thank you.

Answer:

FOB - Free on board (named port of shipment) is the most preferred pricing term by exporters. FOB indicates that the price quoted includes the cost of loading the goods into the ship. The responsibility from the seller to the buyer passes once the goods are on board the ship (loaded). Remember, the exporter is responsible to obtain export clearance, including license to export if required. According to Incoterms 2000, FOB is only used when the mode of transportation is sea or inland waterway transportation.