What Is FOB Shipping Point and FOB Destination?
March 19, 2021
Free on Board (FOB) is to make it easier for shippers and carriers to understand who is responsible in the event that goods are damaged during transit.
The sales/purchase invoice should indicate when ownership of the goods transfers from the seller to the buyer. The company that owns the goods while they are being transported to the buyer`s place of business pays the transportation charges and is responsible for any damage to the merchandise during transit. In North America, the point where ownership is transferred is called the FOB point and may be expressed as either “FOB destination” or “FOB shipping point.” The letters FOB mean “free on board.”
FOB shipping point means:
Ownership changes from the seller to the purchaser when the goods are placed on the carrier by the seller – the “shipping point.”
The purchased pays the freight costs and is responsible for damages.
FOB destination means:
Ownership changes from the seller to the buyer when the goods are delivered by the carrier to the purchaser’s place of business – the destination.”
The seller pays the freight and is responsible for damages.