FOB (Free on Board)
FOB (Free on Board) is the classic Incoterm for sea freight: the seller delivers goods to the origin port and loads them on board the vessel — after that point, title, cost, and risk pass to the buyer. Price quotes like “FOB Shenzhen” name the port where the handoff happens.
What is FOB?
FOB (Free on Board) is the classic Incoterm for sea freight: the seller delivers goods to the origin port and loads them on board the vessel — after that point, title, cost, and risk pass to the buyer. Price quotes like “FOB Shenzhen” name the port where the handoff happens.
It’s the term most supplier quotes actually print — which makes understanding it a buying skill, not a legal footnote. FOB tells you exactly where your obligations start as the importer, which is the foundation of every landed-cost calculation you’ll ever build.
What FOB means in practice (and where it can mislead)
Seller’s side: export packing, inland haulage to port, export clearance, and loading on board. Buyer’s side from there: ocean freight, insurance, destination charges, import clearance, duties, and onward logistics. The practical reading: an FOB price is a price for goods sitting on a ship — everything between that ship and your fulfilment centre is your line on the invoice. Where it can mislead: modern containerised freight often hands over at inland depots rather than the vessel itself (which is why FCA increasingly fits reality better), and buyers who treat “FOB price” as almost-total-cost discover the remainder only when the forwarder’s invoice arrives. FOB is a precise term applied to imprecise journeys unless someone checks.
Using FOB well in negotiations
The disciplines: always compare supplier quotes on the same basis (two factories’ prices are only comparable at a common term — normally FOB, since ex-works prices add unknown haulage), model the full stack before celebrating a “cheaper” FOB number (freight, insurance, duty, brokerage, and drayage can differ more than the product cost), and pair the term with the packaging and loading requirements that make the rest of the journey survivable (an FOB deal on fragile goods with vague packing specs transfers risk at the worst possible time). The mature buyers often negotiate a basket: FOB for comparability, but with the ability to quote FCA or delivered terms when the numbers favour shifting the logistics line to the supplier.
In practice
A brand compares two suppliers quoting $4.10 and $3.95 per unit — both FOB. The cheaper one ships from a port with weaker consolidation options: their forwarder’s all-in cost runs $0.31/unit higher in freight and charges an origin handling fee the other port folds in. At volume, the “cheaper” FOB price costs $4,800 more per container. The negotiable finding: the supplier would quote FCA from their depot at $3.93 with better consolidation access — and the brand takes it.
How Harpy Media helps
Landed-cost architecture — comparing quotes on a common basis and choosing terms deliberately — is table stakes in our sourcing and import work.
FOB FAQ
What is FOB?
Free on Board — the seller delivers goods loaded on board at the origin port; risk and cost pass to the buyer from that point.
FOB or FCA — what’s the difference?
FOB’s handoff is on board the vessel; FCA’s is earlier, at the carrier handover — modern container flows often fit FCA better.
What costs sit after FOB?
Ocean freight, marine insurance, destination port charges, customs brokerage and duty, drayage, and onward logistics to your warehouse or FBA.
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