Free On Board (FOB) is an Incoterm used for sea and inland waterway shipments where the seller is responsible for the goods until they are loaded onto the vessel at the named port of shipment. Once the goods cross the ship’s rail and are on board, risk and cost transfer to the buyer, who then handles freight, insurance, and import clearance. In North American domestic trade the term is also used more loosely to mark the point where title and freight responsibility pass, which is a separate meaning from the official Incoterms definition.
How it works
A FOB quote is written as “FOB [named port],” for example “FOB Shanghai.” The seller pays to get the goods to that port, through export clearance, and loaded onto the vessel the buyer nominates. From the moment loading is complete, the buyer owns the risk. If the goods are damaged in transit, that is the buyer’s problem and their insurance claim, not the seller’s.
Why it matters for quoting
FOB decides who pays for what, so it changes the total landed cost a buyer actually sees. A price that looks low FOB can end up higher than a delivered price once the buyer adds ocean freight, insurance, duties, and last-mile delivery. When you quote across borders, state the Incoterm clearly so both sides are pricing the same scope. Vague terms lead to disputes and stalled deals.
Example
A US retailer requests a quote for 500 units from a supplier in Vietnam. The supplier quotes “FOB Haiphong at $12/unit.” The retailer knows they must arrange and pay for shipping from Haiphong onward, plus US import duties. If they wanted a door-to-door price, they would ask for a different Incoterm such as DDP instead.
If you send international quotes through Shopify, put the Incoterm and named port directly on the quote line or notes so buyers can compare apples to apples. See the B2B quoting glossary for related terms.