FOB, or Free On Board, is an Incoterms 2020 rule for sea and inland waterway transport. The seller delivers when the goods are on board the vessel nominated by the buyer at the named port of shipment, where risk transfers under the rule.
Review points before the transaction moves
- Confirm the party responsible for the delivery obligation.
- Keep the source data and approval with the transaction.
- Record exceptions instead of silently changing the original instruction.
- Make the downstream owner able to reconstruct what happened without an email search.
The boundary worth keeping clear
The definition matters because nearby terms can describe a different document, event or responsibility. Use FOB only when the record matches the conditions above. A familiar label attached to the wrong stage creates cleaner-looking data and worse decisions. That discipline also makes reports comparable across teams, systems and reporting periods.
Related terms and distinctions
- Incoterms: Incoterms are eleven standardized trade terms published by the International Chamber of Commerce for contracts involving the sale of goods.
- Landed cost: Landed cost is the total cost of obtaining a product and bringing it to the required location.
| Checkpoint | What the record should show |
|---|---|
| Contract | Name the place, rule, scope or service being agreed |
| Movement | Identify the carrier, shipment and operational milestones |
| Cost and risk | State which party handles each relevant obligation |
| Evidence | Keep the document that proves handoff, delivery or exception |
The trade-off
More controls add work at the start. That cost is visible. The cost of weak records arrives later as rework, delayed approval, margin leakage, a payment investigation or a delivery dispute. Set the control depth according to the amount, risk and reversibility of the decision.
Related Quotable resources
Continue with Incoterms, Landed cost and international vendor payments. These pages cover the commercial workflow and the records that connect FOB to the next transaction step.
