FOB Terms

The payment of ocean freight shipping services is a vital discussion to have between two parties before commencing the shipment. There are many different payment terms that can be decided by the buyer or the seller. One popular shipping paying term is called Free On Board. Perhaps you have heard of this term by its acronym known as FOB, but it is also known as Free On Board. In the original FOB terms, the buyer will be the one paying for the transportation of the containers overseas. Sometimes, the seller will contribute to the cost of transportation.
Let us examine the FOB by examining the responsibilities of both the seller and the buyer. In FOB terms, the seller must make sure that the ocean cargo is packaged for shipping and the invoices must be prepared to begin the process. In addition, the seller must assume all risk by paying for transportation of the cargo to the port via truck or rail, because the seller must guarantee that the shipment gets to port on time. The buyer’s responsibilities are all on the import side, including customs clearance, delivery and insurance. Under the Incoterms, which were developed by the International Chamber of Commerce, the seller pays for the getting the goods to port and the buyer covers the cost for everything else. Under the FOB Origin terms, the buyer pays for everything. Under FOB Destination terms the seller pays until the delivery. It is important to understand all of the different types of FOB terms in shipping.