Unlocking FOB: What is FOB? What is the FOB price? The distinction between CIF and FOB prices.

FOB, a specialized term, widely used in international trade, especially in maritime transport. If FOB is still unclear, explore it with Mytour. Dive into understanding FOB, FOB prices, and the differences between CIF and FOB prices in this article.

Here, Mytour shares insights into FOB concepts, FOB prices, and the differences between CIF and FOB prices. Follow along to gain a deeper understanding.

Decoding FOB: What is FOB? What is the FOB price?

Demystifying FOB:

What is FOB? FOB, an abbreviation for Free On Board or Freight on Board, signifies the delivery condition where the seller's responsibility ends upon loading the goods onto the ship. FOB is an international trade term extensively used in both international and domestic maritime transport, specified in Incoterms (International Commercial Terms - globally recognized and widely used international trade terms). If the goods haven't boarded the ship, all responsibilities rest with the seller; once on board, all risks and responsibilities shift to the buyer.

In contracts, the port (loading location) must be explicitly stated. Using the FOB + Loading Location structure determines the risk transfer point. Identifying the loading port's name establishes the transfer of rights and obligations for both parties, for example, FOB New York or FOB Hai Phong.

FOB price is the cost at the exporting border (excluding insurance and transportation costs to the importing port).

Distinguishing between CIF and FOB prices.

CIF and FOB share a similarity in terms of risk transfer from the seller to the buyer immediately after the goods cross the ship's rail and differ in cost responsibilities.

Distinguishing CIF and FOB Prices:

- CIF = Cost, Insurance, Freight

When the price is stated as CIF, it means the seller's price includes the product cost, shipping freight, and insurance fees. In other words, CIF is the price at the importing border (including insurance costs and transportation of goods to the importing border).

Usually, CIF is expressed alongside the destination port, for example, CIF New York (New York being the port of arrival).

- FOB = Free on board = Delivery onto the ship

When the price is stated as FOB, it means costs such as transportation and insurance belong to the buyer's responsibility. The FOB price is at the exporting border (it does not include insurance and transportation costs to the importing port).

FOB will be expressed alongside the departure port, for example, FOB Hai Phong (Hai Phong being the loading port).

So, you've delved into FOB and CIF terms in sea freight transportation with Mytour. Through this article, it's hoped that you've gained a clearer understanding of FOB and the differences between CIF and FOB prices.