Meaning
Maritime sales contracts allocate cargo handling costs, freight liabilities and maritime risks using codified trade definitions established by the International Chamber of Commerce. Under FOB, designated as free on board, the seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment. The rule governs ocean and inland waterway transport exclusively, including export packaging, origin terminal handling and customs clearance at origin.
It stops applying to intermodal container shipping where handoff occurs at an inland container terminal prior to vessel loading.
Loading Responsibility
Physical liability transfers across the vessel rail once the cargo rests securely inside the ship’s hold or on the vessel deck. The seller pays all port entry fees, export documentation costs, crane operations and stevedoring charges necessary to place cargo aboard the vessel. If packaging fails during crane loading and goods fall onto the wharf or into the water, the financial loss remains with the seller.
Buyers assume all freight charges, marine insurance premiums and import customs duties from that exact geographic handoff point forward. Proof of delivery consists of the official marine bill of lading marked clean on board by the shipmaster.
Vessel Nomination
Coordinating shipping space and selecting ocean carriers remains the exclusive administrative obligation of the purchasing organization. A buyer must provide the supplier with clear vessel details, port terminal locations and scheduled loading dates well before the cargo arrives at the dock. When maritime carriers delay arrival or cancel designated port calls, storage charges accumulated at the maritime terminal accrue to the buyer.
Packaging Standard
Protecting export freight against maritime humidity, saltwater corrosion and transit shock requires industrial-grade packaging verified before port dispatch. Suppliers delivering under FOB must prepare crating, desiccants and pallet bracing suitable for maritime crane handling. Port inspectors reject damaged crates before loading, halting the handoff process.
