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FOB (Free On Board) is one of the most widely used Incoterms® in international trade.
It defines who is responsible for goods and transport costs during delivery — and like all Incoterms®, understanding the division of responsibilities clearly is essential to avoiding misunderstandings.
FOB kan være en god løsning for både sælger og køber, men det er vigtigt at forstå ansvarsfordelingen klart for at undgå misforståelser.
What does FOB mean?
FOB (Free On Board) means the seller is responsible for delivering the goods to the agreed port of shipment and loading them onto the vessel. Once the goods are on board, risk, insurance and costs transfer to the buyer.
NOTE: FOB applies exclusively to sea freight. It cannot be used for road, air or rail transport.
Responsibilities under FOB
Under FOB, all responsibility transfers from seller to buyer the moment the goods are loaded onto the vessel at the port of shipment. This also marks the point at which the seller's liability for damage or loss ends.
The seller is responsible for:
- Packing and labelling the goods correctly
- Arranging transport to the port of shipment
- Handling export customs clearance in the country of origin
- Loading the goods safely onto the vessel
NOTE: The seller's responsibility ends the moment the goods are on board. From that point, all risk passes to the buyer — including any damage or loss during the voyage.
The buyer is responsible for:
- Arranging and paying for sea freight and insurance
- Handling import customs clearance in the destination country
- Bearing all risk of damage or loss once the goods are on board
To learn how FOB compares to other Incoterms® such as DAP, DDP and EXW, check out our full overview of Incoterms® 2020.
Pros and cons of FOB for the seller
Pros:
- Responsibility ends the moment the goods are loaded — no involvement in onward transport or insurance
- No need to arrange transport and insurance after shipment.
Cons:
- If the buyer's chosen vessel is delayed, it can affect the seller's warehouse and storage planning
Pros and cons of FOB for the buyer
Pros:
- Full control over carrier selection — the buyer can choose the shipping line and negotiate rates directly
- Greater visibility over freight and insurance costs from the port of shipment onwards
Cons:
- The buyer bears full responsibility for risk the moment the goods are on board — including any damage or loss during the voyage
- The buyer must arrange sea freight and insurance themselves, which requires experience and reliable logistics partners
To sum up
FOB er et godt valg til søfragt for både købere og sælgere.
FOB is a well-suited Incoterm® for sea freight when the buyer wants control over shipping and insurance from the port of shipment onwards, and the seller wants a clean handover once the goods are loaded.
For it to work smoothly, both parties need a clear understanding of where responsibility lies — and that clarity is exactly what FOB provides.
Get a full overview of responsibilities under all Incoterms® 2020..
Frequently asked questions about Incoterms®
What does FOB mean?
FOB stands for Free On Board — an Incoterm® where the seller is responsible for delivering the goods to the agreed port of shipment and loading them onto the vessel.
Once the goods are on board, risk, insurance and costs transfer to the buyer.
FOB Incoterms® 2025
No — there is no Incoterms® 2025 edition. The current version is Incoterms® 2020, which followed Incoterms® 2010.
Under FOB Incoterm® 2020, the seller delivers the goods to the port of shipment and loads them onto the vessel. Once on board, risk, insurance and costs pass to the buyer.
What does EXW Incoterms® mean?
EXW stands for Ex Works — the seller's responsibility ends once the goods are made available at the seller's premises or another agreed location.
FCA (Free Carrier) means the seller delivers the goods to a carrier nominated by the buyer at an agreed location. Once handed over, responsibility and risk transfer to the buyer. FCA applies to all modes of transport.
What does FCA Incoterm® mean in practice?
FCA stands for "Free Carrier" and means that the seller delivers the goods to a carrier chosen by the buyer at an agreed location. Once the goods have been handed over to the carrier, responsibility and risk are transferred to the buyer.
What are Incoterms® 2020?
Incoterms® 2020 is the current edition of the ICC's standardised trade terms, which came into effect on 1 January 2020.
Compared to the 2010 edition, Incoterms® 2020 includes a number of updates and clarifications — covering delivery locations, modes of transport and the division of responsibility between buyer and seller.
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