Free On Board (named place of delivery)
Incoterms FOB is the oldest Incoterm and together with CIF the most widely used with sea transport. The seller delivers the goods by placing them on board the ship named by the buyer in the port of shipment. The terminal costs and export clearance are borne by the seller.
This Incoterm should be used preferably with bulk, heavy loads and general cargo. Also, in the case of complex goods (e.g. machinery) whose loading on board the ship may involve some risk so it is better that the seller assumes this risk till the loading has been completed and the goods delivered.
When the goods are transported in containers and the place of delivery is the port of shipment, Incoterms 2010 rules advised to use FCA instead of FOB, because the containers are delivered regularly in the port's container terminal and not loaded on board the ship.
Although FOB has traditionally been one of the most commonly used Incoterms the evolution of sea transport and the importance of logistics as a sales strategy have diminished the use of this Incoterm that is being gradually replaced by other terms like CFR or CIF.