FOB (Free On Board)

FOB places delivery at the vessel. The seller’s obligations run to getting the goods through export clearance and on board the ship the buyer has nominated at the named port; the buyer’s begin with having a ship there to receive them and continue through the sea leg and beyond.

Cost

The seller bears costs to delivery on board and export clearance. The buyer bears the freight, the discharge, and everything at destination.

Risk

Passes at delivery on board the vessel. Loss or damage on the sea leg falls on the buyer, whether or not the buyer has insured it.

Carriage

The buyer contracts the ocean carriage and nominates the vessel. This makes vessel nomination an obligation with real consequences: the seller cannot deliver without a ship to deliver into.

Insurance

Neither party is obliged to insure for the benefit of the other. A buyer bearing sea risk from loading arranges its own cover if it wants any.

Export and import formalities

Export clearance is the seller’s obligation; import clearance and everything at destination are the buyer’s.

A port-based term assumes that the moment the seller relinquishes the goods and the moment they are loaded into the international carrier are close enough to be treated as one. For a bulk cargo loaded directly from a terminal into a ship’s hold, that assumption holds well: the elevator, the spout, and the hatch are all part of a single operation.

For containerised cargo it often does not hold. A container is typically handed to the carrier or terminal well before it is loaded, and the seller has no control over it in the interval. A term that fixes delivery on board therefore leaves the seller bearing risk over a period in which the goods are already out of its hands. The ICC materials discuss this distinction directly, which is why the any-mode family exists alongside the port-based one.

FOB is deeply embedded in the language of bulk commodity trade, to the point that prices for grains and oilseeds are routinely quoted on an FOB basis at a named port. A quotation of that kind describes the value of the cargo delivered on board at that port, and it is the reference from which freight and destination costs are added to reach a landed comparison.

Loading a bulk agricultural cargo is also where several measurement and quality questions crystallise. Quantity is established at the load port by an agreed method, and sampling for quality is customarily taken during loading. What method applies, who appoints the surveyor, and whether the load-port result binds the parties are contractual questions, settled by the sale contract and the trade rules it incorporates rather than by the delivery term.

• Bulk cargoes load directly into a nominated vessel, which is the geometry the term is built around
• Quantity and quality are conventionally established at the load port, around the moment the term fixes as delivery
• Vessel nomination, laytime, and demurrage are handled by the sale and charter contracts, not by the delivery term
• The term does not address whether the cargo will be admissible at destination