FOB (Free On Board) is one of the International Commercial Terms (Incoterms).
Under this term, the seller is responsible for costs and risks until the goods are loaded onto the vessel at the port of origin. After that, responsibility transfers to the buyer.
In simple terms, the Chinese factory is responsible until the goods are on board, while the buyer takes over from the moment the ship leaves the Chinese port until it reaches its final destination.
Under this term, the seller is responsible for costs and risks until the goods are loaded onto the vessel at the port of origin. After that, responsibility transfers to the buyer.
In simple terms, the Chinese factory is responsible until the goods are on board, while the buyer takes over from the moment the ship leaves the Chinese port until it reaches its final destination.
Pros of FOB
- The seller arranges inland transportation within China.
- The buyer does not need to contact domestic pick-up trucks in China.
- Reduces export documentation hassles.
- Commonly used when importing goods from China.
- Cost calculation is easier compared to EXW.
Cons of FOB
- Product prices may be higher than EXW.
- The buyer is still responsible for international freight charges.
- Requires choosing a reliable freight forwarding/shipping company.
What is the Difference Between FOB and EXW?
| Item | EXW (Ex Works) | FOB (Free On Board) |
|---|---|---|
| Delivery Point | Factory | On board the vessel at the Chinese port |
| Transport Cost in China | Buyer | Seller |
| Export Customs Clearance | Buyer | Seller |
| Loading Goods onto Vessel | Buyer | Seller |
| Seller's Responsibility | Less | More |
