FOB Price – What is FOB – Fob means Free on board or Freight on board . It is a type of Inco terms of delivery which is used in international Business.Lets find out what is FOB price. In this article we will try to understand this with below mentioned example
“A is a seller in Asia & B is buyer in USA. they came in contract to transfer of goods between them. They decided to do this on FOB Price. The Ex Factory price of Material is $ 100 . So now lets find out the FOB Price
FOB Value = Ex-Factory Price + Other Cost
what are these other cost- these other cost could be Local Transport + Brokerage fee for Export clearance + Storage or warehouse charges +Port handling charges + any other service charges.
Now Seller A which is based in Asia will drop the customs cleared material to nearest port. Once seller dropped the material or container to port his liability will end and from here all risk and cost will be borne by B which is buyer based in USA. Now buyer will pay for shipping cost and Insurance cost for the material. Here is FOB Shipment Shipping carrier is generally decided by Buyer. Seller will drop customs cleared material either on Port or on shipping carrier warehouse .
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How to Print FOB price in commercial Invoice and Bill of lading
We need to mention Inco term on shipping documents so that each party involved in movement of material is aware about the responsibility and cost related to each party. so here for FOB we also need to mention as below
FOB (Origin Port) Freight Collect
FOB (Origin Port ) Freight Prepaid
The term “FOB [name of originating port]” refers to the seller’s (consignor’s) responsibility for the products’ transportation to the port of shipment as well as the cost of loading. Ocean freight, insurance, unloading, and transportation from the arriving port to the final destination are all paid for by the buyer (consignee). When the items are loaded at the origin port, the seller shifts the risk to the buyer.
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