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What is FOB in Inco terms of delilvery?

In this article, I am going to explain about the term of delivery - FOB used in international business.

FOB means Freight On Board or Free On Board. If terms of delivery of a transaction is on FOB means, the cost of movement of goods on board of Airlines or on board of ship is borne by the seller. Rest of all expenses to arrive the goods at buyer's premise has to be met by the buyer.

I will explain FOB terms of delivery with a simple example. You are a Machinary seller situated near Mumbai, India. The buyer is situated in a place near New York. You are the seller of goods and you have contracted with the buyer and agreed to sell the goods on FOB, Mumbai price of USD 5300. Here the selling cost of goods is USD 5300 FOB Mumbai. So the seller meets all the expenses to carry the goods to Mumbai port and meet all expenses including customs clearance in Mumbai to get the goods on board to Airlines or On Board to Ship. As I have explained, all further cost to reach the goods to the buyer's place has to be met by the buyer. The buyer nominates the shipping company or airlines and seller ships goods as per buyer's advice. The buyer pays the cost of freight to the shipping company or airlines. Buyer arrange toinsure the goods and pay the cost of insurance.

Detailed articles about Inco Terms of Delivery under export and import of International business  have been mentioned in  separate category  INCO TERMS  in this web site. You can click here to read. 

I hope, I could explain about  FOB terms of delivery used in international trade.  Do you wish to add more information about FOB price in exports and imports?  Share your experience in handling  your export import goods under FOB terms of delivery.

Comment below your thoughts and share your experience about FOB  terms of elivery in international business.