What Is FOB Shipping (Free On Board)? | Lojistic [ ](https://www.lojistic.com)- Why Lojistic - [ All Inclusive. Zero Cost. Every Lojistic solution. No limits. No fees. ](https://www.lojistic.com/pricing) - [ All Modes. All Carriers. All Currencies. 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Under FOB Origin, the buyer assumes responsibility, and cost, once goods are loaded at the seller's facility. Under FOB Destination, the seller retains responsibility until goods arrive at the buyer's location. Why FOB Matters --------------- FOB terms decide who manages the carrier relationship, who files claims if goods are damaged, and how freight costs are allocated between trading partners. Getting them wrong can leave a company paying for freight it doesn't control or absorbing losses it can't recover. Worth Knowing ------------- FOB Origin and FOB Destination are U.S. domestic terms under the Uniform Commercial Code. Internationally, FOB is an Incoterm used only for sea and inland waterway freight, where risk passes once goods are loaded on the vessel. What FOB Terms Determine ------------------------ ### Ownership When title passes from seller to buyer. ### Risk of Loss Who bears the cost if goods are lost or damaged in transit. ### Freight Payment Who pays the carrier, and when. ### Carrier Control Who selects and manages the carrier. ### Claims Who files with the carrier if something goes wrong. Types of FOB Terms ------------------ 1### FOB Origin (FOB Shipping Point) Ownership and risk pass to the buyer once goods are loaded at the seller's facility. The buyer typically pays freight and files any claims. 2### FOB Destination The seller keeps ownership and risk until goods arrive at the buyer's location. The seller typically pays freight and files any claims. 3### Freight payment variations Terms like "Freight Prepaid" (the seller pays the carrier) or "Freight Collect" (the buyer pays the carrier) can be added to either option. They shift who pays the carrier without changing who owns the goods. Best Practices for FOB Shipping ------------------------------- ### Spell out terms State the FOB point and freight payment terms on every purchase order and bill of lading. ### Code freight correctly Allocate inbound and outbound freight to the right accounts with [GL coding](/gl-coding-erp-sync). ### Audit freight bills Confirm you're only paying for shipments your terms make you responsible for. [Freight audit](/freight-audit-and-payment) catches charges that belong to a trading partner. How It Works ------------ FOB terms follow a shipment from order to delivery: 1. Agree: Buyer and seller set the FOB point and freight payment terms on the purchase order. 2. Document: The bill of lading records the same terms. 3. Transfer: Ownership and risk pass at the named point: the seller's dock or the buyer's door. 4. Settle: The responsible party pays the carrier and files any claims. Clear terms mean fewer disputes over who pays and who's liable. Common Issues with FOB Terms ---------------------------- ### Unclear terms Purchase orders and bills of lading that don't match create disputes. ### Claims confusion The wrong party files, or no one does, and the claim window closes. ### Misallocated freight costs Freight gets charged to the wrong party or cost center. ### Incoterm mix-ups Using domestic FOB terms on international contracts, or the reverse. FOB Shipping Synonyms --------------------- Free On Board, FOB Terms, FOB Point, FOB Shipping Point, FOB Origin On This Page ------------ - [Overview](#overview) - [Why FOB Matters](#why-it-matters) - [What FOB Terms Determine](#what-includes) - [Types of FOB Terms](#types) - [Best Practices for FOB Shipping](#best-practices) - [How It Works](#how-it-works) - [Common Issues with FOB Terms](#common-issues) - [FOB Shipping Synonyms](#synonyms) - [Related Resources](#related-resources) - [Related Terms](#related-terms) - [FAQs about FOB Shipping](#faqs) Tags ---- - [Shipping Terms](https://www.lojistic.com/glossary/tags/shipping-terms) - [Incoterms](https://www.lojistic.com/glossary/tags/incoterms) - [Freight Costs](https://www.lojistic.com/glossary/tags/freight-costs) - [Freight Claims](https://www.lojistic.com/glossary/tags/freight-claims) - [Procurement](https://www.lojistic.com/glossary/tags/procurement) - [Logistics](https://www.lojistic.com/glossary/tags/logistics) - [International Shipping](https://www.lojistic.com/glossary/tags/international-shipping) - [Carriers](https://www.lojistic.com/glossary/tags/carriers) Related Resources ----------------- [GL Coding & ERP Sync](/gl-coding-erp-sync)Automate GL coding across all modes and carriers, and sync seamlessly with your accounting software to save on shipping costs with Lojistic. [Continue Reading](/gl-coding-erp-sync) [All Modes. All Carriers. All Currencies.](/carrier-connectors)Simplify multi-carrier shipping with our technology and connect seamlessly with carriers for easy, cost-saving global logistics tracking and solutions from... [Continue Reading](/carrier-connectors) [Shipping FAQs](/shipping-faqs)Answers to common shipping questions by Lojistic freight auditors. You are guaranteed to reduce freight costs. [Continue Reading](/shipping-faqs) Related Terms ------------- [Freight Audit and Payment (FAP)](/glossary/term/freight-audit-and-payment-fap)Freight audit and payment (FAP) checks carrier invoices against contracts before you pay. Learn what it covers, common errors, and how it works. [Continue Reading](/glossary/term/freight-audit-and-payment-fap) [Freight Broker](/glossary/term/freight-broker)A freight broker connects shippers with carriers for domestic truckload and LTL freight. Learn what brokers do, how they're paid, and how to work with one. [Continue Reading](/glossary/term/freight-broker) [Parcel Audit and Payment](/glossary/term/parcel-audit-and-payment)Parcel audit and payment reviews UPS, FedEx, and DHL invoices for errors, recovers refunds, and manages payment. Learn what it covers and how it works. [Continue Reading](/glossary/term/parcel-audit-and-payment) [Freight Forwarder](/glossary/term/freight-forwarder)A freight forwarder arranges international shipments for shippers, coordinating carriers, documentation, and compliance. Learn what they do and how they wo... [Continue Reading](/glossary/term/freight-forwarder) ### FAQs about FOB Shipping Who pays freight under FOB Origin? Usually the buyer. But if the terms say "FOB Origin, Freight Prepaid," the seller pays the carrier while the buyer still owns the goods in transit. Who files a claim if goods are damaged? The party that owns the goods when the damage happens files the claim. Under FOB Origin, that's typically the buyer. Under FOB Destination, it's the seller. Is FOB the same as an Incoterm? Not exactly. FOB Origin and FOB Destination are U.S. domestic terms. The Incoterm FOB is used in international sea freight, with risk passing once goods are loaded on the vessel. Still need help? Check out our full list of [FAQs](/shipping-faqs) or [Contact Us](/contact) – we’re here and always happy to assist! ![Lojistic Llama CSR](https://www.lojistic.com/images/svg/pricing-page/llama-csr.svg "Lojistic Llama CSR") Loading... 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