FOB - Free on board

What does FOB mean?

FOB means "free on board" and it is one of the standardised Incoterms. With free on board (FOB) the liability is on the seller until the cargo is on board the ship; i.e. the seller is responsible for everything including loading on the ship. Once the freight is loaded, the buyer is responsible.

Are there alternative meanings for FOB?

In North America, FOB can have different meanings for domestic shipments. As Panalpina primarily deals with intercontinental freight, we mean FOB as per the international Incoterms described here. For information on the North American meaning, please consult § 2-319 of the Uniform Commercial Code.

FOB does not mean "freight on board", although this is a common misconception. As neither any version of the Incoterms nor the Uniform Commercial Code describe FOB in this way, we recommend you stick to "free on board" to avoid confusion.

Where do I select free on board (FOB) as an Incoterm?

When you're quoting a shipment with Panalpina, the free on board Incoterm will be available if you've selected to use a "Panalpina Warehouse (CFS)"; i.e. you will bring the goods to Panalpina's container freight station. .

FOB - Free on board

If you have chosen "Pick-up address", i.e. an address to which Panalpina will send someone to collect your goods, then you will not be able to choose free on board (FOB) as the Incoterm for that shipment. In this case, you will be able to choose "free carrier" (FCA), as liability can latest change from the seller to the buyer upon handing over the goods to Panalpina, which will occur before the goods arrive at the ship.

Which transport modes can free on board (FOB) be used with?

Free on board (FOB) can only be used with water-borne transport, as the waypoint where risk changes from the seller to the buyer is dependent on ocean freight infrastructure. This is in contrast to terms "ex works" (EXW), where the mode of transport is not relevant as risk already changes from the seller to the buyer at the beginning of the journey.

For containerised freight, the Incoterms recommend you use "free carrier" (FCA) rather than free on board (FOB), as once the cargo is in the container, it is difficult to know if damage occurred prior, during or after loading.

Where can I find out about the different Incoterms?

You can visit our Incoterms explorer, where you can experiment with the different Incoterms and see how the different terms affect the split of liability and which Incoterms are compatible with which transport modes.