Fob is short for ‘Free on Board’, or a type of contract that specifies where the risks and responsibilities of shipping goods lies between the seller and the buyer. It’s often used when trading internationally, or for large-scale transportation operations.
Essentially, when goods are marked FOB, it means the seller is responsible for delivering the goods to a specified port and loading them onto a vessel nominated by the buyer. As soon as this happens, the risk passes to the buyer and they’re obligated to cover all taxes, duties, customs fees and freight costs after that point.
In other words, FOB gives businesses peace of mind in knowing who should take responsibility if something goes wrong during transit – allowing them to safeguard their investments and alleviate the potential threat of financial losses.