What is meant by FOB shipping?
Free on Board (FOB) is a shipment term used to indicate whether the seller or the buyer is liable for goods that are damaged or destroyed during shipping. “FOB shipping point” or “FOB origin” means the buyer is at risk once the seller ships the product.
How do you handle FOB shipping?
FOB destination, freight collect: The buyer pays for shipping, but the seller owns goods in transit. FOB destination, freight collect and allowed: The seller adds shipping to the invoice, and the buyer pays that cost, but the seller assumes the responsibility for goods until delivery.
What is difference between FOB and FCA?
FCA considers goods delivered once seller places goods on transport arranged by buyer. FOB considers goods delivered once seller places goods on board specified vessel.
What does FOB mean when buying from China?
In the language of international logistics, however, “FOB” stands for “free on board,” a term that doesn’t really resonate without some background. First, you need to understand the costs that a product incurs on its intercontinental journey from a Chinese factory to its final destination in the United States.
What is the advantage of FOB shipping?
When shipping FOB, you have total control over your freight costs. You have the benefit of hiring your own forwarder at an agreed freight rate, among other charges. You will also be able to get exact and timely information from your forwarder, hence solving any service issues or hassles during transit.
Why is FOB good for importers?
FOB shipping is one of the more favourable shipping terms (or international commerce terms) for the importer. FOB is a more cost effective way of shipping goods, as the importer has more control over their shipment. Some of the more common shipping terms when importing from other markets are: EXW – Ex Works.
What is difference between for and FOB?
FOB – free on board: The seller’s obligations are fulfilled when the goods have passed over the ship’s rail at the port of shipment. For contracts FOT (free on truck) and FOR (free on rail) this occurs when the goods have passed over the truck’s tailgate or the railcar’s loading gate.
Does FOB apply to air freight?
FOB only applies to ocean or inland waterway transport. As such, the named place is always a port. It does not apply if the main carriage is via air, ground or rail. This term is commonly used for bulk cargo (such as oil or grain) or freight from Asia.
Who is responsible for the freight cost when the terms are FOB?
Traditionally with FOB shipping point, the seller pays the transportation cost and fees until the cargo is delivered to the port of origin. Once on the ship, the buyer is responsible financially for transportation costs, customs clearance, fees, and taxes.
What does FOB cost include?
The costs associated with FOB include transportation of goods to the port, loading of goods, marine freight, insurance, unloading of goods at the destination port and transportation cost up to the final destination.
Can FCA be used for sea freight?
FCA can be used for any form of transport, such as air freight, sea freight, road freight, and rail freight. This Incoterm provides the buyer with flexibility, as they can arrange carriage, frequently at a better price than what their seller might quote.