What does FOB mean?

There are many reasons why FOB is a very important term to our customers, whether they are buyers or sellers, this concept makes more sense on the B2B logistics side. That said, commercial shippers should pay close attention to the meaning of this term. Not understanding its meaning can be very costly.  Spelled out, the acronym FOB is defined as Free on Board. Free on Board refers to a couple of different things, but mainly the risk of loss in the shipping process when the buyer of the shipped content is no longer responsible or liable for any charges. It also stipulates the amount of money owed by the buyer for the shipment.

There are four main points to determining your FOB specifics:

1. The seller pays all shipping charges (our services fall under here), while the buyer insures the product; known as CF Pay Freight to Destination.

2. FOB Destination: The seller is responsible for; cost to ship and risk of loss (Insurance).

3. FOB Shipping Point: the buyer is responsible for charges and possible damage.

4. Pay Insurance and Freight to Destination, the seller is responsible for all, including insurance during transport.

Every shipper should inquire about their FOB options, especially buyers of imported goods. The terms and conditions should be determined beforehand. 


Informed buyers that understand FOB will manage their shipping needs much better. 


Interested in our shipment insurance coverage? Falvey Insurance is our provider. If your freight qualifies as "new" and not used and falls under qualifying freight classes, a check box will appear during the booking process. Check this box to add freight insurance coverage. Remember, most carriers only cover $0.10 to every pound, which does not always cover the cost to replace damaged or lost goods.