FOB (Free on Board)

FOB is an Incoterm (ocean/inland-waterway) under which the seller delivers the goods on board the vessel at the origin port and the buyer takes on cost and risk — freight, insurance, and import duty — from that point. Because the FOB price excludes international freight and insurance, it often approximates the transaction value the US uses to assess duty. Example: on an FOB Shanghai purchase, you (the buyer) arrange and pay ocean freight, then owe US duty on arrival. It matters because FOB terms give you control of the freight leg and a clean price basis for estimating duty and landed cost.