Free on board indicates whether the seller or the buyer is liable for goods that are damaged or destroyed during shipping. Responsibility of buyer and seller under FOB terms of shipping. Its use would be “FOB ” where would be the city or place where the goods would be left. DDP (Delivered Duty Paid) terms mean the seller will deliver the shipment to the location requested by the buyer and pay … FOB stands for "free on board," although it is also sometimes defined as "freight on board." Incoterms, often called trade terms or shipping terms, are an international contract of sale. Should you buy CIF or FOB? I have written detailed articles about Inco Terms of deliveries under Exports and Imports in this web blog. What are the differences? Other ways of expressing the FOB Destination are "FOB Destination Name". For example, FOB Dallas means that the seller would provide the goods at the seller’s expense to Dallas. You send a 30% deposit (by T/T) before production starts. These imply that the net payment is due in either 7, 10, 30, 60, or 90 days after the invoice date. FOB Add-on Terms. EXW and FOB are far and away the two most common incoterms. Incoterms is short for International Commercial Terms. A good rule of thumb when doing business in international trade is that you should buy FOB and sell CIF. The reason is very obvious. It is important to have an understanding of cost and freight (CFR), cost, insurance and freight (CIF) and Free on board (FOB). For example, if the invoice was dated June 10 and you used one of the most used payment terms, Net 30, then the payment would be expected before July 9. Which term that applies depends on where the shipment is going. This term is typically used in sales contract, and designates a location for the delivery of goods. A Guide to Shipping Terms and Incoterms. These add-on terms may include the following: FOB Origin, Freight Prepaid: The seller/shipper pays the cost of shipping while the buyer/receiver of goods assumes the responsibility of goods at the point of origin. What is the most common payment term requested by Chinese suppliers? Abbr Method Comment; CFR: Cost and Freight: seller pays the costs necessary to bring the goods to named port of destination: CIF: Cost, Insurance and Freight: There is much talk in the trade world about incoterms and how something is shipped; these terms have their own nuances. I hope you are enjoying reading all. When used with an identified physical location, the designation determines which party has responsibility for the payment of the freight charges and at what point title for the shipment passes from the seller to the buyer. Cosmo has defined the 2010 Incoterms abbreviations, such as FOB, CFR, and DAP for international trade. When you sell CIF you can make a slightly higher profit and when you buy FOB you can … FOB stands for “free on board”. In this article, let me add the responsibilities of exporter and importer if terms of delivery of shipment is on FOB … On FOB (Free On Board) shipping terms the buyer is responsible for the shipment from the goods being loaded onto the ship in the country of origin. Freight Terms of Sale What exactly does FOB stand for? The most common payment method is a bank wire that works this way: You have the supplier develop sample(s) until you are confident they know exactly what you want. Above all, people have doubts about acronyms like FOB which means free on board or freight on board. Why is this a good rule to follow? This does little to describe how it works in practical terms, however. Some add-on terms may be included on the freight invoice, bill of lading, or other forms of shipping documentation. 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