“FOB” stands for “free on board” or “freight on board,” a crucial term in the realm of shipping and logistics. This designation serves as a clear indicator of the moment when the responsibility and ownership of goods shift from a seller to a buyer. When you see “Free on Board,” it’s essentially stating who bears the liability for goods in case they are damaged or lost during transit.
In practical terms, FOB is used to determine at what point in the shipping process the seller fulfills their obligation, and the buyer takes over. If goods are labeled “FOB origin,” it means the buyer assumes responsibility once the goods leave the seller’s possession. Conversely, “FOB destination” indicates that the seller remains responsible for the goods until they reach the buyer’s designated location.
Understanding FOB is crucial for both sellers and buyers in international trade, as it clarifies financial and logistical responsibilities. For businesses navigating the complex world of shipping, knowing whether they are dealing with FOB origin or destination can significantly impact their risk management and financial planning.
(Response: FOB stands for “free on board” or “freight on board,” indicating the transfer of liability and ownership of goods from a seller to a buyer.)