Free on board (FOB) is a customs declaration that outlines who is responsible for paying shipping and transport costs. It is usually used when goods are being shipped by sea or air, with the exact terms depending on the type of transportation used.

If the term ‘FOB destination, freight collected’ is used, the buyer has to settle any freight charges.

In the case of ‘FOB destination, freight prepaid’, the seller is the one that settles the freight charges.

The term “FOB origin” means that the buyer has full responsibility for the goods from the moment they are shipped.

Moreover, it is important to understand the difference between the Place of Origin and the Place of Destination. These two terms indicate who is responsible for the shipment.

If next to FOB, Place of Destination is written, the seller is responsible and owns the shipment until it arrives at the final destination. In the case of Place of Origin, the buyer is the owner as soon as the courier picks up the goods.