FOB TERM indicates whether the supplier or the customer will pay shipping expenses. It shows which party takes legal responsibility for the goods being shipped, and at what point during transport that responsibility is transferred.
FOB is important for a number of reasons, but most importantly, shippers and carriers need to understand FOB designations in damage situations.
Some receiving docks will refuse delivery of obviously damaged goods, rather than accept with a damage notation for a future claim against the carrier. However, a shipment designated FOB Origin technically belongs to the buyer/consignee at the time that it is shipped.
So, the consignee would be refusing delivery of goods it legally owns and bears the risk for. The seller has no legal reason to accept those goods back and the return shipment could possibly result in additional damages.
FOB DESTINATION – This type to be used is typically designated in a customer’s purchase order, and is also stated on the supplier’s invoice to the customer.
This term indicates that the liability and the responsibility of good, is in the hands of the seller until the importer receives it at his port, While the buyer should record the purchase, the account payable, and the increase in its inventory.
FOB SHIPPING POINT – It is a contraction of the term Free on Board Shipping Point. It means that the customer takes delivery of goods being shipped to it by a supplier once the goods leave the supplier’s shipping dock.
Since the customer takes ownership at the point of departure from the supplier’s shipping dock, the supplier should record a sale at that point.
If you’re a manufacturer of shirts and sells it to a random company, if you shipped $100,000 in shirts to any company using the term FOB shipping point, so Buyer would be liable for any loss while the goods are in transit and would purchase insurance to protect the shipment.
FOB is an international freight term that is under the (2010 Incoterms rules) published by the International Chamber of Commerce (ICC), designating a FOB point is an extremely important part of any shipping contract.
Because it can help prevent destination and service errors that can translate into delays and added cost to the shippers.
The use of “FOB” originated in the days of sailing ships. When the ICC first wrote their guidelines for the use of the term in 1936, the ship’s rail was still relevant, as goods were often passed over the rail by hand.
Some sources claim that FOB stands for “Freight On Board”. This is not the case. The term “Freight On Board” is not mentioned in any version of Incoterms, and is not defined by the Uniform Commercial Code in the USA.
Furthermore, it has been found in the US court system that “Freight On Board” is not a recognized industry term. The use of the term “Freight On Board” in contracts is therefore very likely to cause confusion.
CIF and FOB mainly differ in who assumes responsibility for the goods during transit. In CIF agreements, insurance and other costs are assumed by the seller, with liability and costs associated with successful transit paid by the seller up until the goods are received by the buyer.
The responsibilities of the seller include transporting the goods to the nearest port, loading them on a vessel and paying for the insurance and freight.
In our report, we also have included some of the columns in it in which shows you about the FOB charges on any particular shipment. With thousands of numbers, we provide buyers and suppliers import export directory which helps you to make vital contacts and establish B2B connections.
So If you are new in this market and or want to make an impact on your business, we are willing to help every businessman and entrepreneur to achieve their goal and make their organization on top.
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