What Does FOB Mean

To understand the meaning of FOB, one should first understand what does FOB stand for. The abbreviation FOB stands for the term Free On Board or Freight on Board. In simple words, FOB is the term used to indicate location at which merchandise ownership is transferred from the seller to buyer. The term FOB provides specifications as to who (buyer or seller) is going to pay for the costs related to shipment of goods. The definition of FOB changes from region to region. The Incoterm standards defined by the International Chamber of Commerce are used in most of the countries.

The meaning of FOB varies from region to region and it should be understood in various contexts. The information about what does FOB mean in different regions/contexts is provided below.

Incoterm Standards
As per the Incoterm standards, the term 'Free On Board' is used to refer to port of loading. The seller has to pay for the transportation of goods to the port. The seller also bears the loading costs. Buyers on the other hand are charged for marine freight transport and other services offered at the arrival port. These services include unloading, insurance and transportation. It means that the responsibility of seller is limited, up to the point where goods are loaded into ships. Thereafter, it is the buyer who has to bear the charges as well as the risk.

North American Standards
In the US and Canada, the term 'Freight On Board' is commonly used. The 'Foreign Trade Definitions' formulated in the year 1941 is the source/origin of this term. It is necessary to understand the meaning of two terms, 'FOB Shipping Point' and 'FOB destination' in order to understand the standards of North America. FOB Shipping Point means that the buyer takes charge of goods from seller's premises itself. He also bears the transportation costs. The term 'FOB origin' can be used as a substitute to FOB Shipping Point. The meaning of FOB destination is opposite to that of the FOB origin, in a sense that seller pays for transportation as well as takes responsibility of goods till it reaches the buyer.

The term FOB, along with ports, can also be used in reference to a town. In case of ports, the buyers assume responsibility as soon as the goods are loaded in the ship. FOB in context of towns means that buyers take charge of the goods as soon as the sellers turn them loose.

Other FOB Terms
The abbreviation, FOB is also used for many other terms such as 'Federal Office Building', 'Forward Operating Base', 'Fresh off the Boat', etc. The Federal Office Buildings are present in various cities of the US. The FOB of New York is listed as one of the historic places in America. The term Forward Operating Base is a term used in military operations. FOB in this case is a secured and forward position, useful in supporting tactical operations. The term 'Fresh off the Boat' is used in reference to recently arrived immigrants, who are yet to jell properly with the local culture.

The information pertaining to the meaning of FOB and its usage in different contexts is explained in the article above. Thus, it helps in getting the relevant information about FOB.