What is Free on Board (FOB)?

Maritime Transportation and Export Sector
For those unfamiliar with the maritime transportation and export sector, the terminology can seem complex and difficult to understand. However, becoming familiar with these concepts—on the chance that they may come up in the future—never hurts. On the contrary, at some point in our lives, such knowledge might provide us with great advantages. One of these concepts is FOB. So, what does FOB mean, and what should be known about it?

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What Does FOB Mean?

The term FOB stands for Free on Board. It is also known as “Delivered on Board” or “Delivered at Ship’s Rail.” FOB indicates the responsibility of the supplier (the company or individual providing the goods) up until the goods are placed onto the deck of the vessel arranged for transport.

All expenses incurred by the supplier from the point of origin to the port—including transportation, port charges, and customs fees—fall under the supplier’s responsibility. Once the goods are loaded onto the vessel, all costs and responsibilities are transferred entirely to the buyer.

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What Does FOB Delivery Term Imply?

FOB also literally means delivery on board without additional costs. It is a term used exclusively in maritime transport. Within this sector, there are a total of 11 officially defined delivery terms, and FOB is one of them.

When FOB delivery is applied, it means that the supplier is responsible for all expenses and obligations until the goods are placed on the ship’s deck. In this case, all transportation and loading arrangements are fully managed by the supplier.

In short:

• Before loading onto the ship’s deck → All costs and responsibilities belong to the supplier.

• After loading onto the ship’s deck → All costs and responsibilities belong to the buyer.

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Key Points to Know About FOB Delivery

• In fact, there used to be 13 delivery terms in maritime transportation. However, with a regulation made in 2010, the number was reduced to 11.

• All delivery terms are used together with a place name. For example: FOB Izmir, EXW Denizli, CFR Hamburg.

• When setting a price on behalf of your company or yourself, you must be familiar with all delivery terms and understand how to calculate the related costs.

• After FOB, the most widely used delivery term in exports is CIF (Cost, Insurance, and Freight).

• For smooth operations and quick resolution of issues, both parties must clearly understand their rights and responsibilities.