Definition
FOB (Free On Board) under Incoterms 2020 is for sea or inland waterway only. The seller delivers when goods are on board the vessel nominated by the buyer at the named port of shipment, and clears export. Risk passes when goods are on board. Buyer pays main freight and import.
Worked example
FOB Shanghai US$2.10/unit: factory gets goods over the ship’s rail/on board; you pay ocean freight, destination charges, duty and trucking to the 3PL.
Why it matters for replenishment
FOB is a common factory quote. Always add freight, duty and last mile before comparing to a DAP/DDP number.
Guides & calculators
Educational overview of common shipping terms including Incoterms® 2020 concepts. Not legal, customs or tax advice. Incoterms® is a trademark of the International Chamber of Commerce (ICC). Confirm the exact rule and named place in your contract, and speak to your freight forwarder or adviser for live shipments.