What does F.O.B. Mean in International Trade?

F.O.B. stands for "Free On Board." It is a term used in international trade to indicate that the seller is responsible for delivering the goods to the ship or vessel at the port of departure, and the buyer is responsible for all costs and risks after the goods are loaded onto the ship.

In other words, F.O.B. means that the seller's obligation ends when the goods are placed on board the ship, and the buyer's obligation begins at that point. This term is commonly used in sales contracts and shipping agreements to clarify the responsibilities of both parties involved in the transaction.

For example, if a company in the United States is purchasing goods from a supplier in China, the sale may be listed as F.O.B. Shanghai, which means that the supplier is responsible for delivering the goods to the ship at the port of Shanghai, and the buyer is responsible for all costs and risks after the goods are loaded onto the ship.