What is FOB?

What is FOB?

 Free On Board (FOB) is an Incoterm (international commerce term) -- also commonly but incorrectly referred to as "Freight on Board". It means that the seller pays for transportation of the goods to the port of shipment, plus loading costs. The buyer pays freight, insurance, unloading costs and transportation from the port of destination to the factory. The passing of risks occurs when the goods pass the ship's rail at the port of shipment. Internationally the term specifies the port of loading.

e.g. "FOB New York" or "FOB Tokyo".

This FOB Tokyo for example, means the port of departure.  All the costs it took to get the boat on the freight ship.  Further costs incurred like the cost to ship the boat to your port are not included in the "FOB" cost.  This price is usually refered to as CIF.  Please see: "What is CIF?".