GlossaryEN1 min readUpdated: Jun 24, 2026
Free on Board (FOB)
Unlike multimodal terms such as FCA or CPT, FOB (Free on Board) applies exclusively to sea and inland waterway transport – a restriction that is regularly overlooked in practice.
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Source: https://iccwbo.org/business-solutions/incoterms-rules/
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Incoterms 2020 Simulator: Who bears costs & risk?
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Definition & Explanation
Unlike multimodal terms such as FCA or CPT, FOB (Free on Board) applies exclusively to sea and inland waterway transport – a restriction that is regularly overlooked in practice. The seller bears all costs and risk until the goods are on board the named vessel at the port of shipment; from that point, both pass to the buyer. FOB remains the most widely used Incoterm in maritime trade and the standard pricing benchmark in commodities and agricultural goods. For containerised cargo, however, the ICC recommends FCA instead: in modern container terminals, goods typically pass out of the seller's control at the terminal gate, well before the vessel arrives, rendering the risk transfer at the ship's rail operationally meaningless. Applying FOB to a container shipment creates a coverage gap that can leave both parties inadvertently exposed.
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⚖️ ICC Incoterms 2020
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