FOB terms of delivery

FOB terms of delivery are part of the international rules of Incoterms, which serve as the basis for foreign economic activity and trade agreements between countries. This article will help you understand what these terms are. The abbreviation FOB is literally translated into Russian as “free on board”. It is used in international maritime shipping. All terms of Incoterms are divided into four categories, one of which is “Free On Board”.

In other words, FOB terms define the liability of the owner of the product: the owner of cargo is responsible for it until the moment it is loaded onto a vessel at the port of departure. Obligations are transferred to the consignee once the cargo is loaded onto the ship. The buyer pays for the goods under the contract, for their shipping, unloading works, delivery to the door of the warehouse; the buyer is also responsible for receiving goods and their safety.

According to Incoterms standards, the seller prepares the cargo for export by obtaining all necessary documents. The recipient pulls permits for the import of goods, performs customs clearance, pays the duties. The exporter bears the risks if the goods get damaged or the terms of loading are not met but only until the moment the cargo is loaded onto the ship. These FOB Terms and Conditions represent a basis that is applicable for inland waterway transport as well. In some cases, FOB terms oblige the buyer to pay for loading of cargo onto the vessel.

FOB price - what does it mean?

The final cost of shipping is determined by a few factors: the FOB delivery terms are taken into account when the goods are transported, from China to Russia, for example. FOB price is the price of a foreign trade contract, which includes the cost of the goods being purchased, the expenses for labelling, packaging, obtaining licenses, certificates or permits, customs clearance, including payment of duties and fees, delivery costs to the port of departure, loading operations, excluding the cost of freight.

Difference between FOB and FCA

The abbreviation FOB applies only to the method of shipping by sea, while FCA includes transportation by land or air. It is the main difference between FOB and FCA. The abbreviation FCA stands for “Free Carrier”, which literally means a “free carrier” in Russian. Another important difference is transfer of risks. In the first case, the responsibility for the goods is transferred from the sender at the time of loading the cargo onto the ship, in the second – from the moment the products are dispatched from the warehouse of the exporting company. FCA conditions are suitable for shipping goods in containers, FOB – for transporting bulk cargo or cargo containers. Oftentimes, goods produced at coal, woodworking and metallurgical factories are exported from Russia under the “free on board” scheme.

The difference between FOB, CFR and CIF

The main difference between FOB and CFR: CFR terms also involve payment of the main freight by the shipper. CFR is translated into Russian as “cost and freight”. The supplier makes a payment just like under FOB terms, and also pays for the transportation of the goods to their destination. The recipient undertakes all transportation risks. CIF in Russian is “cost, insurance and freight” and refers to delivery of goods by sea from the seller to the buyer. CIF is similar to CFR, except it requires insuring the cargo.

An agreement with foreign partners must be understandable to both parties to the transaction. Specialists of MW-Trade with years of experience will suggest what exactly has to be specified in your foreign trade contract. We carry out international sea shipping around the world and throughout Russia on a regular basis, and we know all the subtleties of the terminology and the rules of Incoterms; we have successfully delivered hundreds of tons of goods to our customers by various modes of transport.

You can get competent advice, an accurate calculation of cost of services by MW-Trade, find out the answers to the questions or order international shipping by calling the phone numbers listed on the website. Fill out the form below, we will contact you as soon as possible and offer you the most suitable delivery terms.

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