The seller must provide the goods at the port of shipment aboard the vessel chosen by the buyer, and make, if necessary, customs clearance for export. In a contract of FOB type, the seller fulfills when the goods are on board on the vessel at the named port of shipment.
In this type of contract, the buyer chooses the vessel, pays the ocean freight and insurance and takes care of the formalities when the goods arrive. Assumes all costs and risks of loss or damage that may occur to the goods from the time it was delivered.
The “set FOB” is the terminology used by freight forwarders to point out that the above-shipment operations were performed, including, if necessary, payment of export tariffs. All these operations represent a cost to be paid by the seller, sometimes called “start-up costs FOB”. The “FOB stowed” and / or “FOB stowed and trimmed” is a variant. The seller bears all costs of the goods at the port of shipment. It must be stated in the contract where is the transfer of risk.
The seller must, if necessary, provide the buyer (or even help you obtain) any document or security-related necessary for export and / or import of their goods and / or for transport to their final destination information. Documents submitted and / or the assistance provided are buyer’s responsibility.
FOB in the US
In America the FOB terms are different. In the United States, Incoterm FOB (Free on Board) does not indicate a shipment by boat or a port: indicates a destination in the United States’ border. For the US, there are four types of FOB:
- FOB / Starting point: Buyer pays all.
- FOB / Border: The manufacturer pays until the border, does not assumes the costs of tariffs on goods.
- FOB / Point of sale: The goods are sent to a particular destination. That is why the supplier pays tariffs of goods. We must always point the franc chosen point, usually the city.
- FOB / Destination with tariffs canceled: In this case, the manufacturer takes care of everything, without the aid of the buyer. DDP / Delivered also the duties are paid. Most US sales are made under this premise.