One of the delivery methods determined by Incoterms is FOB delivery method. In this form of delivery, the seller loads the products on the ship provided by the buyer on the specified date. Any damage that may occur after the goods are placed on the deck of the ship is the responsibility of the buyer. In other words, the seller is not affected by damage or loss. After the seller prepares the documents required for export, the customs clearance of the goods is completed. Thereupon, the delivery of the products is realized. When askedwhat FOB delivery method means, one of the prominent options is shown in this way.

What is FOB Delivery Method?

FOB is a form of shipment that shows the point in the supply chain where the buyer or seller is responsible for the goods to be transported. To give a clear answer to the question ofwhat FOB delivery is, it is seen as Free on Board. In Turkish, it means taking delivery on the ship board. Buyers and sellers specify the conditions required during the transportation of orders. At the same time, thanks to the FOB Delivery method, possible risks and costs in the transportation process can be easily determined.

In answer to the question ofwhat is FOB mode, it is called the type of transportation in which the buyer accepts full ownership of the products at the point of shipment. It is known that the seller assumes all possible risks after sending the product. The buyer is responsible for any damage or loss of the goods during transportation. The seller is responsible until the products are placed on the ship's deck for transportation.

It is important to note that the seller's responsibility is to prepare the goods in accordance with the terms of the contract. All documents required to be used by the buyer in its own country are completed correctly and completely. Customs procedures are then completed. A contract is concluded with the transportation agency. This contract shows that the cost of transportation to the port of destination belongs to the seller. The question ofwho pays the freight in the form of FOB delivery is also explained in this way. The seller is only responsible for the charges until loading on the ship. After the completion of the loading process, he informs the other party about this. It then notifies the buyer of the expected arrival date.

The responsibilities of the buyer include the payment of the cost of the goods. This situation also remains valid within the contract rules. Customs documents are issued within import transactions. Customs procedures are completed. The buyer also pays customs duties. The costs related to the unloading of the goods at the port of destination also belong to the buyer. In addition, it is among the obligations to cover all expenses related to the goods during transportation. It is also possible to access all this information when it is saidwhat FOB delivery means .

How is FOB Delivery Method Applied?

FOB delivery method is one of the prominent options in exports. It is among the international transportation types. It is a form of delivery that stands out for shipment orders and transfers the time, place and payment of the delivery used throughout the contract. It conveys which party will bear the costs. FOB terms are important in the exchange between buyer and seller. Thanks to the FOB status, no ownership is determined between the buyer and the seller. At this stage, it defines the shipment of the buyer and seller parties during the shipment of the goods.

It ensures that each of the parties ensures a smooth transfer of the goods to the seller. It is important to have a definite idea of FOB. Apart from the fact that transfer operations take place both locally and internationally, FOB terms are also influenced by different costs. In other words, insurance cost, transportation and inventory cost are among the prominent options.

In addition to the question of what are the responsibilities of the seller in the form of FOB delivery, the transportation point also stands out. It means that the buyer will receive the products purchased by the buyer when the shipment starts. In the meantime, the seller's responsibility ends after the products are loaded. It is now the buyer's responsibility to deliver the goods to the destination undamaged and on time. In FOB destination, the seller retains ownership of the goods. He is responsible for the goods until they reach their final destination. Lost and damaged goods must be replaced. In international shipments, companies are also expected to comply with contracts. Provisions are created within the contract and details are outlined. There is also more than one set of rules for FOB delivery. Therefore, FOB legal definitions also vary by country. Contracting parties should pay attention to the laws applicable to the shipment.

FOB Pricing

There are many options for the Free on Board delivery method, such as costs, transportation of the goods, loading on the freighter. FOB pricing is also determined depending on these details. The process from the port of arrival of the goods to the final destination port stands out. Insurance cost is also one of the important options in terms of price.

When pricing within the FOB delivery method, the seller collects many details from product cost to profit share. Loading costs, port costs, internal transportation costs are included in these options. When all these details are brought together, FOB pricing is determined.

Who Pays the Freight Fee in FOB Delivery Method?

One of the curious topics within the FOB delivery method is who pays the freight cost. To make a clearer explanation on this issue, if there is a statement “FOB Origin, freight is collected”, then the freight fee belongs to the buyer. In other words, the fee is kept under the responsibility of the buyer. However, if the term is “FOB Origin, freight prepaid”, then the buyer takes responsibility for the products at the point of origin. Transportation costs are paid by the seller. It is necessary to pay attention to the difference between these two terms when it comes to the payment of freight.