When does risk pass under FOB?

When the goods are on board the vessel at the named port of shipment. Until then, loss or damage is the seller's; after it, the buyer's.

Can FOB be used for container shipments?

It can, but ICC recommends FCA instead, because containers are usually handed to the carrier at a terminal days before loading and FOB leaves the seller carrying the risk for that time.

Is US "FOB origin" the same as Incoterms FOB?

No. US domestic usage comes from the Uniform Commercial Code and federal purchasing rules, and works for any mode and any shipping point. ICC notes its meaning differs from Incoterms FOB, so contracts should name the rule set.

Term

FOB (Free On Board)

FOB, or Free On Board, is an Incoterms rule under which the seller delivers goods loaded on board the vessel the buyer has nominated, at the named port of shipment. Risk passes to the buyer once the goods are on board, and the buyer pays the ocean freight from there. It is meant for sea and inland waterway transport only.

Also called Free On Board, FOB Incoterm, FOB shipping point, FOB originUpdated 12 October 2026

What FOB means

The seller clears the goods for export and delivers them loaded on board the buyer's nominated vessel at the port of shipment.
Risk of loss or damage passes when the goods are on board, as HMRC's guidance puts it.
The buyer books and pays for the main carriage and insures the voyage if it wants cover.
FOB is for sea and inland waterway only; FCA does the same job for any mode.

FOB and containers

A container is usually handed over at the terminal, not loaded by the seller onto the ship — and, as ICC guidance notes, it may stay there several days before loading. Under FOB the seller still carries the risk for those days, though the box is out of its hands. ICC recommends FCA when goods are containerised.

Worked example: who owns the risk at the terminal

A seller delivers a container to the port terminal on 3 June; the vessel loads it on 8 June. On 6 June a crane drops it.

Under FOB: risk passes on loading (8 June) → the damage on 6 June is the seller's · Under FCA at the terminal: risk passed on 3 June → it is the buyer's

The same five days, two different losers. Pick the rule that matches where the goods actually change hands.

"FOB" in US domestic freight

In the US the letters have an older, different meaning. The Uniform Commercial Code's section 2-319 — still the official text, since the 2003 amendments to Article 2 were withdrawn in 2011 — uses "F.O.B. the place of shipment" and "F.O.B. the place of destination", and federal purchasing rules use "FOB origin" and "FOB destination". ICC's own analysis says the domestic meaning differs from FOB in the Incoterms rules, so a contract should say which it means.

The mistake people make

Using FOB out of habit for every export, including containers and air freight. It fits bulk and break-bulk cargo loaded directly onto a ship; for a box handed to a terminal or a forwarder, FCA puts the risk where the control is.

FAQ

FOB (Free On Board): common questions

When does risk pass under FOB?: When the goods are on board the vessel at the named port of shipment. Until then, loss or damage is the seller's; after it, the buyer's.
Can FOB be used for container shipments?: It can, but ICC recommends FCA instead, because containers are usually handed to the carrier at a terminal days before loading and FOB leaves the seller carrying the risk for that time.
Is US "FOB origin" the same as Incoterms FOB?: No. US domestic usage comes from the Uniform Commercial Code and federal purchasing rules, and works for any mode and any shipping point. ICC notes its meaning differs from Incoterms FOB, so contracts should name the rule set.