What is FOB? When to Use FOB to Control Shipping Costs

16/04/2026

What is FOB?

FOB (Free On Board) is a shipping term under Incoterms 2020 where the seller is responsible for goods until they are loaded onto the vessel at the port of origin. From that point, the buyer assumes all costs and risks.

 

 

How does FOB work?

• Seller:
  • Prepares goods
  • Handles export clearance
• Buyer:
  • Books freight
  • Pays shipping cost
  • Arranges insurance

Key point: Risk transfers at the port of loading

 

FOB vs CIF: Key differences

Tiêu chí	FOB	CIF
Freight	Buyer	Seller
Insurance	Buyer	Seller
Control	Higher	Lower

 

>> See also: What is CIF I Incoterms 2020

 

When should you use FOB?

Use FOB if you:

• Have a reliable freight forwarder
• Want cost control
• Have import experience

 

Common risks

• Unexpected port charges
• Schedule delays
• Limited control without a forwarder

 

FAQ

1. Does FOB include shipping cost?
   No. FOB only covers costs until goods are loaded.
2. Who should use FOB?
   Businesses with logistics experience.

 

Need help choosing between FOB and CIF? Contact Vantage Logistics for tailored advice.

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VANTAGE LOGISTICS

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One-Stop Shop For Integrated Logistics Services

 

CONTACT US

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Website: https://vantage-logistics.com