FOB is a North American transportation term meaning Freight on Board or Free On Board.  In short, it means that the price for goods includes delivery at the seller’s expense to a specified point and no further.

Note: International shipments (and shipments originating from outside of the U.S.) use a different set of terms known as IncoTerms.  More information on IncoTerms is found at the website of the International Chamber of Commerce (www.iccwbo.org).  You can change the "FOB" label to "IncoTerms" by clicking on "More Options" in the Print dialog box.

The simplest use of FOB would be:  FOB Denver.  That means that you, as the buyer, assume transportation costs starting in Denver.

FOB, however, can include all sorts of modifiers.  AnyPO leaves enough room in the FOB field for you to add modifiers if necessary.  If you're not familiar with the modifiers, the following information may be helpful.  (Note that term "buyer" and "seller" are used below.  If you are ordering the supplies then you are termed the "buyer."  The vendor providing the supplies to you is termed the "seller.")

Introduction

The FOB term is used with an identified physical location to determine

1) The responsibility and basis for payment of freight charges,

2) The point at which title for the shipment passes from seller to buyer.

The FOB location terms, Origin and Destination, may be qualified by modifiers. The modifier determines the payment of the transportation charges. Modifiers denote nothing about the title of the goods or filing of claims. The most three common modifiers are: Collect, Prepaid & Add, and Prepaid & Allow.

Collect The carrier collects the transportation charges from the buyer.

Prepaid & Add The seller prepays the transportation charges, but adds the charges to the invoice for reimbursement from the buyer.

Prepaid & Allow The seller prepays the transportation charges and they are already included in the contract price.

Title & Control Of Goods

FOB ORIGIN

- The buyer assumes title and control of the goods the moment the carrier signs the bill of lading.

- The buyer assumes risk of transportation and is entitled to route the shipment.

- The buyer is responsible for filing claims for loss or damage.

FOB DESTINATION

- The seller retains title and control of goods until they are delivered and the contract of carriage has been completed.

- The seller selects the carrier and is responsible for the risk of transportation.

- The seller is responsible for filing claims for loss or damage.

PAYMENT TERM VARIATIONS

POINT OF ORIGIN

- FOB Origin Unless qualified in the FOB clause, the buyer is responsible for freight charges.

- FOB Origin Freight Collect Buyer pays and bears freight charges.

- FOB Origin, Freight Prepaid Seller pays and bears freight charges.

- FOB Origin, Freight Prepaid & Add Seller pays and invoices buyer for freight charges.

DESTINATION

- FOB Destination Unless qualified in the FOB clause, the seller is responsible for freight charges.

- FOB Destination, Freight Collect Buyer pays and bears the freight charges.

- FOB Destination, Freight Prepaid Seller pays and bears the freight charges.

- FOB Destination, Freight Collect & Allowed Buyer pays freight charges and deducts the amount from seller's invoice.

- FOB Destination, Freight Prepaid & Add Seller pays the freight and adds the freight charges to its invoice to the buyer.

MORE INFORMATION ON THE TERMS OF SALE

FOB Origin Buyer -- Pays freight charges

Buyer -- Bears freight charges

Buyer -- Owns goods in transit

Buyer -- Files claims (if any)

FOB Origin, Freight Collect Buyer -- Pays freight charges

Buyer -- Bears freight charges

Buyer -- Owns goods in transit

Buyer -- Files claims (if any)

FOB Origin, Freight Prepaid Seller -- Pays freight charges

Seller -- Bears freight charges

Buyer -- Owns goods in transit

Buyer -- Files claims (if any)

FOB Origin, Freight Prepaid & Add Seller -- Pays freight charges

Buyer -- Bears freight charges

Buyer -- Owns goods in transit

Buyer -- Files claims (if any)

FOB Destination Seller -- Pays freight charges

Seller -- Bears freight charges

Seller -- Owns goods in transit

Seller -- Files claims (if any)

FOB Destination, Freight Collect Buyer -- Pays freight charges

Buyer -- Bears freight charges

Seller -- Owns goods in transit

Seller -- Files claims (if any)

FOB Destination, Freight Collect & Allow Buyer -- Pays freight charges

Seller -- Bears freight charges

Seller -- Owns goods in transit

Seller -- Files claims (if any)

FOB Destination, Freight Prepaid Seller -- Pays freight charges

Seller -- Bears freight charges

Seller -- Owns goods in transit

Seller -- Files claims, if any