FOB – Free On Board
Incoterms® 2020 rule: transfer of risk, cost sharing and customs responsibilities.
The FOB rule in brief
FOB (Free On Board) is a rule in Incoterms® 2020 that can be used only for sea and inland waterway transport: "Free on board". It sets, in the sales contract, how delivery of the goods and costs and risks are shared between seller and buyer.
When does risk transfer?
When the goods are loaded on board the vessel
Export clearance
The seller
Import clearance
The buyer
Seller's obligations
Delivers the goods on board the vessel and clears them for export; risk passes to the buyer once the goods are loaded on board.
Buyer's obligations
Pays freight and insurance and handles import clearance.
When is it used?
Common in sea freight where the buyer wants to manage freight under its own agreements.
This page is for general information; for the full scope of rights and obligations, see the ICC's official Incoterms® 2020 text and your contract terms.
Frequently asked questions
What is FOB?
FOB (Free On Board) is a rule in Incoterms® 2020 that can be used only for sea and inland waterway transport: "Free on board". It sets, in the sales contract, how delivery of the goods and costs and risks are shared between seller and buyer.
What is the difference between FOB and CIF?
FOB: Delivers the goods on board the vessel and clears them for export; risk passes to the buyer once the goods are loaded on board. CIF: In addition to CFR obligations, takes out minimum cargo insurance under ICC (C).