FOB: What is FOB Price?
Free On Board, in short FOB, is a term frequently used in shipping terms where the seller quotes a price including the cost of delivering goods to the nearest port. The buyer bears all the shipping expenses and is responsible to get the products from that port to its final destination. In simple terms, FOB price means the buyer has to bear the shipping costs completely. Other frequently used shipping terms include EXW, CFR, CIF, DAP, DDP, etc.
FOB is a price that the buyer pays for the product excluding any of the following costs:
- Loading
- Insurance
- Freight
- Unloading
- Customs
- VAT
- Import Duty
- Transportation (from the port to the final destination)
In most cases, buyers prefer FOB price since it is relatively lower than CFR, CIF, etc. and offers them greater control over shipping and transit time. Most buyers ask for FOB, EXW, and DDU rates from their manufacturers or suppliers and transportation charges from freight companies to make the final decision.