Question: What Is Fob Factory Mean?

The sales term “FOB Factory” is about as American as baseball and apple pie. Just about all product price lists are set up on an FOB (Freight On Board) Factory basis, with the cost of freight from the factory addressed as a suffix such as prepaid, prepaid and charged, collect, etc.

What is FOB factory shipping?

Free on Board (FOB) is a shipment term used to indicate whether the seller or the buyer is liable for goods that are damaged or destroyed during shipping. “FOB shipping point” or “FOB origin” means the buyer is at risk once the seller ships the product.

What does FOB Factory stand for?

FOB stands for “ free on board ” or “freight on board” and is a designation that is used to indicate when liability and ownership of goods is transferred from a seller to a buyer. Free on Board: Free on board indicates whether the seller or the buyer is liable for goods that are damaged or destroyed during shipping.

What is an FOB plant?

FOB stands for “free on board,” a term used in U.S. and international commercial law. After the letters FOB, there is generally a designation of a place where title and control pass to the buyer. For example, FOB plant means that the control and title to the goods pass to the buyer at the seller’s plant origin.

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Who pays for shipping with FOB origin?

FOB Add-on Terms FOB Origin, Freight Prepaid: The seller/shipper pays the cost of shipping while the buyer/receiver of goods assumes the responsibility of goods at the point of origin. FOB Origin, Freight Collect: The buyer pays for freight and shipping costs and assumes full responsibility for the cargo.

What does FOB price include?

Free On Board, in short FOB, is a term frequently used in shipping terms where the seller quotes a price including the cost of delivering goods to the nearest port. FOB is a price that the buyer pays for the product excluding any of the following costs: Loading. Insurance. Freight.

Is freight collect the same as FOB?

“FOB Origin” refers to the legal fact that the buyer assumes title of the goods the moment the freight carrier picks up and signs the bill of lading (BOL) at the origin pick-up location. “Freight Collect” refers to the legal fact that the buyer is responsible for all freight charges.

What does FOB mean in trucking?

An FOB agreement designates whether a seller or a buyer is responsible for items during shipping — and when their responsibility ends. Depending on the context, FOB can either mean free on board or freight on board.

Who owns the goods in transit under FOB shipping point?

FOB Shipping Point ( FOB Origin): Buyer owns goods, in transit. Title passes to the buyer at the moment the goods are transferred to the carrier. Buyer files any damage claims.

What happens when merchandise is delivered FOB shipping point?

When it comes to the FOB shipping point option, the seller assumes the transport costs and fees until the goods reach the port of origin. Once the goods are on the ship, the buyer is financially responsible for all costs associated with transport as well as customs, taxes, and other fees.

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What happens when merchandise is delivered FOB destination?

FOB destination is a contraction of the term “Free on Board Destination.” The term means that the buyer takes delivery of goods being shipped to it by a supplier once the goods arrive at the buyer’s receiving dock. The seller pays and bears the freight charges and owns the goods while they are in transit.

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