"𝐈𝐧𝐜𝐨𝐭𝐞𝐫𝐦 𝐅𝐎𝐁: 𝐜𝐨𝐫𝐫𝐞𝐜𝐭 𝐮𝐬𝐞 𝐚𝐧𝐝 𝐫𝐢𝐬𝐤𝐬 𝐨𝐟 𝐢𝐦𝐩𝐫𝐨𝐩𝐞𝐫 𝐚𝐩𝐩𝐥𝐢𝐜𝐚𝐭𝐢𝐨𝐧"

globalmexss2020
Sep 5
2 min read

The Incoterm FOB (Free on Board) is one of the most traditional in international trade and establishes clear responsibilities between buyer and seller, reducing risks and misunderstandings.

The seller is responsible for delivering the goods on board the vessel at the designated port of shipment, covering all expenses up to that point, including inland transportation to the port, export customs clearance, export storage (if applicable), and all fees charged by freight forwarders and shipping companies prior to loading.

From the moment the goods are on board the vessel, the risk and all subsequent costs become the buyer’s responsibility (international freight, insurance, and any other charges that may apply to the operation).

This Incoterm is widely used in the trade of commodities and large export volumes.

Although the rule is clear, it is common to see companies applying FOB to modes of transport other than maritime, such as air freight — which is not in line with ICC guidelines.

In air transport, the correct term is FCA (Free Carrier), not FOB. Using the proper Incoterm prevents contractual disputes, ensures clarity in negotiations, and strengthens credibility between international partners.

👉 Practical example:

❓Question: Suppose that, during the loading of a container or sacks of a commodity onto the vessel, the cargo accidentally slips from the crane during the operation and suffers damage. Who is responsible: the seller or the buyer?

✅ Answer: The seller is still responsible for replacing the goods, as they had not yet been placed on board the vessel as required under the FOB Incoterm.

#Incoterms #FOB #FCA #InternationalTrade #Export #Import #SupplyChain #GlobalTrade #Logistics