FOB is an Incoterms 2020 rule for sea transport under which the seller delivers goods on board the buyer’s nominated vessel at the named port of shipment and clears them for export, with risk and costs transferring to the buyer from that moment.
In trade practice
FOB is widely used for bulk grain and oilseed shipments from Ukrainian Black Sea ports, where sellers are experienced in handling export documentation and port logistics. Buyers must nominate the vessel and notify the seller of the vessel name, berth and loading date in time for the seller to deliver the goods. A common dispute arises when goods are damaged during loading operations; under FOB the risk passes once the goods cross the ship’s rail, so the party responsible for the stevedore determines liability. For containerised frozen food, FCA is generally more appropriate than FOB because it avoids ambiguity about when risk passes in a container terminal.
In a specification
Contracts should state ‘FOB [named port of shipment] Incoterms 2020’ and specify the laycan window, nomination procedure and any demurrage terms applicable at the load port.