With FOB contracts, when the voyage begins, the buyer assumes all liability for the shipped goods.
The costs associated with FOB include transportation of the goods to the port of shipment, loading the goods onto the shipping vessel, freight transport, insurance, and unloading and transporting the goods from the arrival port to the final destination.
Freight costs is determined by the suffix «Origin» or «Destination» after FOB:
- «FOB Origin» indicates that the individual or organization originating the purchase (receiving the goods) is responsible for freight costs/liability
- «FOB Destination» indicates that the person or organization receiving the order (sending the goods) is responsible for freight costs/liability. Specific terms of the agreement can vary widely, in particular which party (buyer or seller) pays for which shipment and loading costs, and/or where responsibility for the goods is transferred.
