Full definition
Free On Board — an Incoterms rule (ICC Incoterms 2020) specifying that the seller delivers the goods aboard the vessel at the named port of origin, at which point risk transfers from seller to buyer. The seller is responsible for: goods, packaging, inland transport to port, export customs clearance, and loading aboard vessel. The buyer is responsible for: ocean freight, marine insurance, destination port charges, import customs clearance, duties and taxes, and inland delivery. FOB is the most commonly used Incoterm for ocean imports of industrial rubber and belts from Asia (China, India, Thailand, Japan) to Mexico and LATAM. FOB pricing allows the buyer to control freight costs (choose carrier, negotiate rates, consolidate shipments) and insurance coverage. The FOB price is the basis for customs valuation in most countries — import duties and taxes are calculated on FOB value plus freight and insurance (CIF value). Common port designations: FOB Shanghai, FOB Qingdao, FOB Mumbai, FOB Bangkok for Asian rubber exports. Per ICC Incoterms 2020 — FOB applies only to sea and inland waterway transport (for all modes, use FCA instead). Always specify the port name after FOB to avoid ambiguity.