FOB INCOTERMS - Free on board

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    " >FREE    ON BOARD [... named port of shipment ]
  • FREE ON BOARD [... name of the port of shipment ]
This term should be used only for sea or inland waterway transport.
FOB-Incoterms-2010-VINCULUM-Customs clearance Vladivostok-GC-IMPORT40 Factory or warehouse of the manufacturer or seller Delivery from the factory or warehouse to the departure terminal Placement of goods at the cargo terminal Placement of goods on board the vessel State border Sea transportation to the port of discharge Placement in a temporary storage warehouse at the port of arrival (unloading) Delivery of goods ready for unloading from the vehicle Cargo recipient's warehouse The area of expenses and responsibility of the buyer whenFOB The seller's area of expenses and responsibility at FOB The moment of transfer of risks at FOB !

"Free on Board" ("Free on board") means that the seller deliversproducton board the vessel nominated by the buyer at the named port of shipment, or ensures the provision of the goods delivered in this way. Riskthe loss or damage of the goods passes when the goods are on board the ship, and from that moment the buyer bears all costs .

The seller is obliged either to deliver the goods on board the vessel, or to ensure that the goods delivered in this way are provided for shipment. The indication of the obligation to "provide" takes into account the numerous sales along the chain, which are often used in commodity trading.

It is advisable to use these conditions in the following cases:

  • the seller can transport the goods and load them onto the ship with minimal costs and risk;
  • the buyer plans to sendcargointermodal transportation using a single line;
  • the buyer rents the whole vessel or orders a charter flight;

For example, in the south of Russia, large agricultural enterprises export grain, cereals in bags or in bulk on FOB terms. In advertisements for the sale of goods, such enterprises often indicate the ports of Novorossiysk and Astrakhan as the place of loading on board the ship. Coal is regularly exported from Russia abroad on FOB terms,wood, scrap metal and other products.

FOB may not be appropriate when the goods are transferred to the carrier before they are placed on board the ship, for example, goods in containers, which is typical for delivery to" >terminal. In such situations, it is advisable to use the termFCA.

FOB requires the seller to perform customs formalities for export, if any. However, the seller is not obliged to perform customs formalities for importation, pay import duties or perform other customs formalities upon importation. 

Find out what needs to be done when choosing FOB Close the list of actions at FOB
  • to clarify in detail the parameters and characteristics of cargo packages (including labeling), this is necessary for subsequent customs clearance of goods;
  • find out the seller's loading capabilities;
  • to coordinate with the seller the type of vehicle, the volume of goods ready for loading (especially ifthe contractthe supply is long-term, and deliveries are made in batches under one contract);
  • take into account the specifics of cargo transportation (in cases of transportation of dangerous goods);
  • clearly coordinate with the seller the place of transfer of the goods;
  • notify the seller where and when it is necessary to deliver the goods;
  • to agree with the insurance company on the terms of insurance, if necessary (Insurance with FOB is the buyer's area of responsibility);
  • ensure timely acceptance and placement of cargo on board the vessel;
  • in advance to transfer to the Seller full data about a specific carrier, vehicle (for customs and transport documents);
  • obtain permits if necessary;
  • pay customs fees for the import of goods;
  • to carry out customs clearance of goods;

Of course, this list is not complete and depends on the specific case, but, under these conditions of delivery, the logistics of the buyer can most significantly prove themselves and bring additional profit using an intermodal delivery.

 

 

1.General obligations of the seller and the buyer under FOB conditions

A.1.The seller is obliged, in accordance with the contract of sale, to provide the buyer with the goods, a commercial invoice-invoice, as well as any other proof of compliance of the goods with the terms of the contract of sale, which may be required under the terms of the contract.
Any document referred to in paragraphs A1-A10 may be replaced by an equivalent electronic record or procedure, if this is agreed by the parties or is customary.
V.1.The buyer is obliged to pay the price of the goods, as stipulated in the contract of sale.
Any document referred to in paragraphs B1-B10 may be in the form of an equivalent electronic record or other procedure, if this is agreed by the parties or is customary.

2. Licenses, permits, security controls and other formalities under FOB conditions

A.2.If necessary, the seller is obliged, at his own expense and at his own risk, to obtain an export license or other official permit and to perform all customs formalities necessary for the export of goods.
B.2.If necessary, the buyer is obliged to obtain, at his own expense and at his own risk, an import license or other official permit and perform all customs formalities necessary for the import of goods and their transportation through any country.

3.Contracts of carriage and insurance under FOB conditions

A.3.a) Contract of carriage
The seller has no obligation to the buyer to conclude a contract of carriage. However, at the request of the buyer or if it is a commercial practice and the buyer does not give instructions to the contrary in a timely manner, the seller may, at the expense and risk of the buyer, conclude a contract of carriage on normal terms. In any case, the seller may refuse to conclude a contract of carriage by notifying the buyer without delay.
b) Insurance contract
The seller has no obligation to the buyer to conclude an insurance contract. However, the seller is obliged to provide the buyer, at his request, at his risk and at his expense (if there are expenses), with the information necessary for the buyer to obtain insurance.
B.3.a) Contract of carriage
The buyer is obliged, at his own expense, to conclude a contract for the carriage of goods from the named port of shipment, except in cases when the contract of carriage is concluded by the seller, as specified in paragraph A3 (a);
b) Insurance contract
The buyer has no obligation to the seller to conclude an insurance contract.

4.Delivery and acceptance of goods under FOB conditions

A.4.The seller is obliged to deliver the goods either by placing on board the vessel nominated by the buyer at the point of loading, if any, indicated by the buyer in the named port of shipment, or by ensuring the provision of the goods delivered in this way. In either case, the seller is obliged to deliver the goods on the agreed date or in the agreed period in accordance with the customs of the port.
If a specific point of loading is not specified by the buyer, the seller can choose the point in the named port of shipment that is most suitable for his purposes.
V.4.The buyer is obliged to accept delivery of the goods as soon as they are delivered in accordance with paragraph A4.

5.Transfer of risks under FOB conditions

A.5.The seller bears all risks of loss or damage to the goods until the moment of its delivery in accordance with paragraph A4, except for the risks of loss or damage in the circumstances specified in paragraph B5.
V.5.The buyer bears all risks of loss or damage to the goods that may arise from the moment of its delivery in accordance with paragraph A4.
If:
a) the buyer does not provide the name of the vessel in accordance with paragraph B7, or
b) the vessel nominated by the buyer did not arrive on time so that the seller could act in accordance with paragraph A4, was unable to accept the goods or stopped accepting the cargo earlier than the time reported in accordance with paragraph B7;
the buyer bears all risks of loss or damage to the goods: 
i) from the agreed date, and in the absence of an agreed date, 
ii) from the date of the notification made by the seller in accordance with paragraph A7 within the agreed period, and if such period has not been notified, 
iii) from the expiration date within the agreed delivery period, 
provided that the goods have been explicitly individualized as the goods that are the subject of the contract.

6.Cost allocation under FOB conditions

A.6.The seller is obliged to pay:
  • all expenses related to the goods up to the time of its delivery in accordance with paragraph A4, except for expenses paid by the buyer, as provided for in paragraph B6;
  • if necessary, the costs of customs formalities to be paid for the export of goods, as well as any duties,taxesand other expenses paid during export.
V.6.The buyer is obliged to pay:
  • all expenses related to the goods from the moment of their delivery, as provided for in paragraph A4, except, if necessary, the costs of customs formalities for the export of the goods, as well as all taxes, duties and charges payable on the export of the goods, as provided for in paragraph A6 (b);
  • all additional costs incurred as a result of the buyer's failure to send proper notice in accordance with paragraph B7, or the fact that the vessel nominated by the buyer did not arrive on time, or was unable to accept the goods, or stopped accepting the cargo before the time specified in paragraph B7, provided that the goods were explicitly individualized as goods that are the subject of agreements;
  • if necessary, all expenses for the payment of taxes, duties and other official fees, as well as for the implementation of customs formalities to be paid for the import of goods, and the costs of its transportation through any country.

7.Notification to the buyer and seller under FOB conditions

A.7.The seller is obliged, at the expense and risk of the buyer, to give him sufficient notice either that the goods were delivered in accordance with paragraph A4, or that the ship did not accept the goods within the agreed period.
V.7.The buyer is obliged to give the seller proper notice of the name of the vessel, the place of loading and, if necessary, the chosen time of delivery within the agreed period.

8.Documentary proof of delivery under FOB conditions

A.8.The seller is obliged, at his own expense, to provide the buyer with the usual proof that the goods have been delivered in accordance with paragraph A4.
If such proof is not a transport document, the seller is obliged, at the request of the buyer, at his expense and at his risk, to assist him in obtaining a transport document.
V.8.The buyer is obliged to accept the proof of delivery provided as provided in paragraph A8.

9.Inspection, packaging, labeling and inspection of goods under FOB conditions

A.9.The seller is obliged to bear all the costs associated with the inspection of the goods (quality control, measurement, weighing, counting) necessary for the delivery of the goods in accordance with paragraph A4, as well as the costs of inspecting the goods before shipment, which is prescribed by the authorities of the country of export.
The seller is obliged to ensure the packaging of the goods at his own expense, except in cases when it is usually customary in this branch of trade to ship the goods specified in the contract without packaging. The seller may pack the goods in such a way as is necessary for their transportation, unless the buyer notifies the seller of the specific packaging requirements prior to the conclusion of the contract.Markingthe packaged goods must be carried out properly.
V.9.The buyer is obliged to bear the costs of mandatory inspection of the goods before shipment, except in cases when such inspection is carried out by the order of the authorities of the country of export.

10.Assistance in obtaining information and related expenses under FOB conditions

A.10.If necessary, the seller is obliged to provide the buyer in a timely manner or assist him in obtaining, at the buyer's request, at his risk and at his expense, documents and information, including security information, which the buyer may need to import the goods and/ or transport them to the final destination.
The seller is obliged to reimburse the buyer for all costs and fees incurred by the buyer when receiving or assisting in obtaining documents and information, as provided in paragraph B10.
Q.10.The buyer is obliged to inform the seller in a timely manner about the requirements for security information so that the seller can act in accordance with paragraph A10.
The buyer is obliged to reimburse the seller for the costs and fees incurred by him for providing or assisting in obtaining documents and information, as provided for in paragraph A10.
If necessary, the buyer is obliged to provide the seller in a timely manner or assist the seller in obtaining, at the seller's request, at his risk and at his expense, documents and information, including security information, which the seller may need for transportation, export of goods and for its transportation through any country.
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