What is FOB price in Exports and Imports and how it works
Thursday, October 27, 2016     Category : Inco Terms

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FOB

What is FOB in Inco terms of delilvery?

 

In this article, I am going to explain about the term of delivery - FOB used in international business.

 

FOB means Freight On Board or Free On Board. If terms of delivery of a transaction is on FOB means, the cost of movement of goods on board of Airlines or on board of ship is borne by the seller. Rest of all expenses to arrive the goods at buyer's premise has to be met by the buyer.

 

I will explain FOB terms of delivery with a simple example. You are a Machinary seller situated near Mumbai, India. The buyer is situated in a place near New York. You are the seller of goods and you have contracted with the buyer and agreed to sell the goods on FOB, Mumbai price of USD 5300. Here the selling cost of goods is USD 5300 FOB Mumbai. So the seller meets all the expenses to carry the goods to Mumbai port and meet all expenses including customs clearance in Mumbai to get the goods on board to Airlines or On Board to Ship. As I have explained, all further cost to reach the goods to the buyer's place has to be met by the buyer. The buyer nominates the shipping company or airlines and seller ships goods as per buyer's advice. The buyer pays the cost of freight to the shipping company or airlines. Buyer arrange to insure the goods and pay the cost of insurance.

 

Detailed articles about Inco Terms of Delivery under export and import of International business  have been mentioned in  separate category – INCO TERMS – in this web site.  You can click here to read. 

 

I hope, I could explain about  FOB terms of delivery used in international trade.  Do you wish to add more information about FOB price in exports and imports?  Share your experience in handling  your export import goods under FOB terms of delivery.

 

Comment below your thoughts and share your experience about FOB  terms of elivery in international business.

 

How to export goods from India?

Export benefit schemes in India

Export procedures and documentation

How to get Export Order?

Know HTS code (HS code) of your product

How to import goods to India?

Find ITC code of your product

Indian Budget 2016-17, Duty changes in Excise, Customs and ST

Export benefit schemes from Export Promotion Councils

 

 

 

 

 

The above information is a part of Online Export Import course 


Other information about Export import tutorial

 

Easy tips while deciding terms of delivery in export business:
What is CIF terms of delivery in Exports and Imports?
Who decides shipping carrier on FOB shipments
What is Nominated cargo or Routing order shipment
Explain DDU terms in export import trade. What is DDU delivery
How C&F terms of delivery works in Export Import business
What is C& I terms of delivery in export import business?
What is DDP terms in an export Import Business? 
Excise and Customs - Click here to read complete notification under Budget 2014
How to get Export Orders?
How to settle dispute in Exports and Imports?
Click here to know India Trade Classification(ITC)
Pre shipment bank finance to suppliers for exports through other agencies
Types of export containers
Measurement of export containers
Export Import Policy of India 2015-2020
MEIS, Merchandise Exports from India Scheme
SEIS, Service Exports from India Scheme
Merge your Commercial Invoice and Packing List for all your future exports
Export procedures and documentation 

 

Types of Insurance Documents.

How to obtain GSP - Certificate of Origin?

How to obtain Phyto sanitary certificate. What is phytosanitary certification

 How to obtain waiver on detention/ demurrage on imported goods/container from Shipping company/CFS

How does a Running bond work?

 How does Bill of Lading work in DP payment terms?

How does Bill of Lading work in Sight LC

How does CENVAT Credit work?

Why need Certificate of Origin

 Why prefer exports?

 How many types of imports in India. Types of bills of Entry in India

How many types of shipping bills in export

 How to add Line number in Import General Manifest in Custom in India

 Import General Manifest (IGM)

Transferability of Bill of Lading

Transhipment - A redefinition

Travelers to India under import duty exemption, Frequently Asked Questions Part 2

Triangular export

 Triangular shipment

Types of Insurance Documents.

Importance of Bill of Lading

Introduction to this web site.

 Is Airway bill a documents of title?

 Is Customs House Agents (CHA ) required to be appointed mandatory?

 Is DP terms of payment safe in export business?

Is Letter of Credit LC safe for an Importer?

 Is ON BOARD CERTIFICATE required for LC negotiation

Why to insure export goods?

Why, best attention while preparing Export Invoice?



 

Comments

 
Dilip Kumar Mallick Says :
Monday, August 05, 2013
Is it mandatory for Supplier to buy a Insurance Policy for a FOB Origin Shipment ? Question arises as becoz in case of FOB shipments, normally Supplier bears all the cost & expenses until it is on Ships rail or On board. After that it is the Buyer's risk & responsiblity. Now if any incident happens during transit from supplier's warehouse to Forwarders warehouse or any incident such as burn/pilferage etc happens at Forwarder/Co-loader's warehouse, then how supplier will get reimbursement for their export goods since they didn't buy the Insurance policy due to FOB shipment. Please advice.
fred Says :
Friday, October 04, 2013
Thanks for explaination.now i understant:)
munjal Says :
Sunday, April 13, 2014
Dear sir, My customer ask me about FOB price.. My Ex-Factory price is 100 Rupee per kg.In Ahmedabad we pay transportation charge.But there were Some other charge in Port like Terminal Handling,Cerificate origin Etc.. Charges..This charge is pay by me or I include this charge in buyers Invoice ?
Surendran Kollerath Says :
Friday, April 18, 2014
Hi Munjal, Read my detailed articles in this website
Dipneesh Says :
Friday, June 27, 2014
What is depreciated FOB? Kindly explain.
Arun Tiwari Says :
Wednesday, July 30, 2014
Need Some Information About All Related imported or export bussness.........relation
Kaamil Khan Says :
Wednesday, July 30, 2014
I wanna know about this mail what is asked by my client, I'm mentioning below sample mail what sent to me by my client. "Please send me a Proforma Invoice with FOB Prices. Airfreight to Sydney Australia Order - 20 Pcs. of XYZ Products 10 Pcs. of XYZ Products 10 Pcs. of XYZ Products 10 Pcs. of XYZ Products also a Price - XYZ Product My Address is 421, elkinsley, sydney, NSW, Australia." So please help me how I should manage in this situation and what kind of invoice i should make for my client, if possible then send me sample invoice.
Admin Says :
Thursday, July 31, 2014
Hi Kaamil Khan, You can read about Proforma Invoice and other related posts in this article to know more
Tejas Says :
Tuesday, August 05, 2014
In FOB terms Except transportation and loading and unloading all chgs has to pay buyer like freight,THC ,BOE,Clearance and Insurance?
John Says :
Wednesday, August 20, 2014
Thanks so much for the wonderful explanation and for giving a concrete example.
Kanna Says :
Tuesday, December 02, 2014
In FOB terms what are all the documents exporters should submit to buyer?
Hiren B. Javiya Says :
Thursday, February 12, 2015
Greetings from Ingenious Business Services! It was an indeed pleasure to see your profile in your website (howtoexportimport.com). However, we are need your expert advice on below query. Kindly note that we are an independent consultancy service provider company in India. We would like to supply / export herbal seeds (which are used for research purpose to make vaccine and other medicines) form India to UK. In detail process, we purchased from farmer and will supply to bio-pharma company in UK. Kindly suggest us, 1. What % of tax applicable in total amount? 2. What are documents required for FOB at Delhi from our side? 3. Would you please tell us where we have to be vigilant during entire process? Look forward for your affirmative respond! Best Regards, Hiren
Admin Says :
Thursday, February 12, 2015
Hiren B. Javiya, You may please read our other articles in this website.
muhammad Says :
Monday, February 16, 2015
Goodday sir nice article ,my question is not relate to this issue of fob ,I want to purchase some heavy machine from china to nigeria but d sell. Don't allow credit card for. D payment but letter of credit which my bank in nigeria seems not ready to give to most of there customer so pls Doc of Bus help me out
Tarun Gagwani Says :
Tuesday, February 17, 2015
I wish to start Import of cookware and need your help with costing. Say I am importing cookware from Newyork on EXW terms, then how do I calculate the cost of bringing the goods to my warehouse in Mumbai?What percentage should I assign to the following costs? For example Cost: 100 Freight from sellers place to port: Insurance: Export custom charges: Sea freight: Import customs charges: CHA charges: Loading/Unloading charges: Port to my warehouse freight charges: Loading/unloading charges:
din Says :
Friday, April 17, 2015
Dear sir, it is my first chance. i want work with ali baba. i search whole seller at ali baba. send query. and daily recrive mail. i m very excited tjeur price. i want purchase naterial. but i have no idea how receive material. and do payment. please dear sir suggest me.
dinesh Says :
Friday, April 17, 2015
Dear sir, i want work with alibaba. when i search whollseller. manny whollseller there. send query. mow i receive many mail of quation. i want purchase material. but don't know how receive matetail . please tell me how do payment. how will safe method of payment. and how received my material. thanks
amanullah khan achakzai Says :
Monday, April 20, 2015
Asssala mu Alai kum I want to buy the sun flower oil from the two countries turkey and malaysia . but i don not know which one the most profitable for me to buy kindly gide me about the prices of Market about both markets amanshahzada11@hotmail.com
jean Says :
Wednesday, April 29, 2015
What are the payment terms under FOB? The buyer has to pay 100% to the seller before the goods leave sellers warehouse/factory to the shipping agents warehouse or port? Or The buyer has to make 100% payment after the seller receives original BL from shipping agent , and emails a scan copy of BL, And upon receiving 100% payment, The seller couriers / mails the original BL to buyer.
ali Says :
Tuesday, May 12, 2015
please explain some cases that there were in courts(at least 10 cases)
maria Says :
Sunday, May 24, 2015
why FOB and CIF are highly recommended in international procurement
Harry Grey Says :
Sunday, May 31, 2015
Liston Trade Finance Ltd provides different financial vehicles for international clients - import letter of credit - commercial documentary credit - letter of guarantee - stand-by letter of credit - performnce bond - advance payment guarantee All facilities are issued in your favour by a list of European, Asian and US banks. Face value begining from $100,000 and up to $250 mln. We also provide free due dilligence expertise for overseas vendor as a bonus to our services. For more details or online application please feel free to contact us at info@listontradefinance.com
Kunal Shah Says :
Thursday, July 02, 2015
Can you highlight more details on Merchandise Trade Transaction? …In my case I am buying goods from EX Works Shanghai + Freight and Delivering to Party in Hong Kong. I am sitting in Mumbai and executing this transaction. I am doing US$ remittance for import and selling this Goods to HK and getting US$ inward remittance in India. I do not know the documentation procedures and which authorities in India are to be involved in this? RBI, Customs, Sales Tax ?
prasad Says :
Thursday, July 02, 2015
i want to import cashews of 1 ton what is difference between FOB and CIF
Sonali Yadav Says :
Saturday, July 04, 2015
How would I export herbal medicines to other countries from India to USA? Do we have a precise plan of action for that? I would really appreciate your guidance and help.
Aditya Dara Says :
Saturday, July 04, 2015
I reside at Nabarangpur which is located in Odisha state but Iam planning to export through Vishakhapatnam port which is in Andhra Pradesh, as it is the nearest port from my place. My doubt is that, can i use Odisha's address as office & transact through Visakhapatnam or not??
Nissar Says :
Wednesday, July 08, 2015
I am beginner of the export business and I would like to get some information about below. I have some order of potato for UAE Market and I would like to know where I can get the products and shipping rate for JEBEL ALI FZ from Ex work or MUMBAI TO J ALI c&f. Where I have to get the all above information and what license I have to keep it.
Kaushik De Says :
Wednesday, July 08, 2015
I want to import Brand New Mobile Phones of Apple my supplier will ship me through fedex from UK & it will be delivered in my country India city-Kolkata so can you tell me what will be the FOB price I have ordered only 5 pieces of iPhones amounting to 960$ since its my first time will the shipping company directly give me doorstep delivery & will took a certain amount from me as FOB price or I have to go to the customs to make the payment.
satish kumar Says :
Tuesday, July 21, 2015
dear sir. i want to know my buyer situated in australia the current shipment based on fob based i have told my buyer this is fob based delhi but buyer demand the shipment fob mumbai please give me advice me if i will do fob mumbai then i will bear the freight cost from delhi to mumbai or in other case i will ship the goods delhi on dryport then i will not liable to pay the freight from delhi to mumbai kindly advise me regd satish kumar
RANJAN Says :
Friday, August 07, 2015
Dear Sir, We have purchase some material from singapore on FOB basis.I read your above article in that you said that on FOB basis seller only pay Transportation, THC,& custom clearance. Who will bear charge of BL,COO, & other relates documents.Please clarify.
giani Says :
Monday, August 24, 2015
can anybody explain what is fob price,another words FOB $1-22 WHAT THIS IS MEAN
maulik Says :
Thursday, September 10, 2015
i want a more knowledge about import and export. but i don't know how to trade in china. so,i hope you replay immediately..
Rahul Says :
Friday, September 11, 2015
Dear Team, Nowadays my office guys have started giving price as FOB Delhi. When I told them that FOB can only be used when we are delivering goods till port how can it be FOB Delhi because there is not port in Delhi. It should be FCA Delhi. But they are not agreeing. Their explanation is that till dry port we are delivering the goods hence FOB Delhi can be used for quoting the price. Kindly shed some light on it. Thanks
Refa Says :
Thursday, October 01, 2015
Does the FOB price includes freight. (I'm the Importer/Buyer)
satheesh jothimani Says :
Tuesday, October 13, 2015
I am MCA graduate. I saw that your website its worth and useful, before that I have a theory knowledge about export while I implement I have so doubt so may you help me and what is your consulting fees
Yashesh Parekh Says :
Tuesday, October 13, 2015
If a physical broker is to assist in valuing product, what key information will they need in order to give you an indicative FOB number?
Chetan Gavaniya Says :
Thursday, October 15, 2015
I was visiting your web, your web is very useful to us. and wanted some information, so thought to mail you. I wanted information regarding followings (1) in case of import, does import duty calculated on FOB price or CIF price & my firm is interested in importing cinnamon split/broken cassia from VIETNAM HS Code : 09061910 I want to know that... (2) what is import duty for split / broken cassia of vietnam (3) Which documents will be required from exporter to import in india? (4) i have IEC in my firm name, is any other registration or licence equired in case of import of spices or agri products?
Vaibhav Says :
Thursday, November 26, 2015
does FOB include designs and development charges?
Blaise Says :
Sunday, November 29, 2015
Hi, I find your website very interesting and will like to received advice from you on how to handle a transaction base on FOB. I have a cocoa firm in Africa and my buyer is in Germany but he wants me to deliver the products on FOB. please share with me the necessary docx i need to provide to the buyer and vise versa. Thanks
Shreya Vaidya Says :
Friday, January 01, 2016
Hello, This artical is very helpful and infact explained in very simple term. And I just want to know that not only machinary but for all will it remain same??
Rashmi Says :
Tuesday, January 05, 2016
Will design and development charges be included in fob price if incurred by the seller?
Bharat Bhatia Says :
Friday, January 15, 2016
If a physical broker is to assist in valuing product, what key information will they need in order to give you an indicative FOB number?
Mohammed Saquib Qureshi Says :
Monday, February 15, 2016
Hello sir, Very nice article you wrote, can you please explain me that if i want to purchase products from china mainland of 10$ via fob what will be the charges levied reaching to my destination in madhya pradesh.
surya Says :
Tuesday, February 16, 2016
i need to purchase products from china with ali baba company.
tunde ajao Says :
Monday, March 14, 2016
Plz I want to buy Galvanized pipe from China in a good price list from any good company there in China
Rajendra Padhi GM Says :
Monday, April 18, 2016
I have one South American buyer who wants to import Polyester yarn and Textile machinery spare parts on F.O.B inco terms. I have 2 different companies who want to export this client. One company is selling The Yarns and Another company is selling the Textile machinery spares. The goods are to be handed over to the Shipping agency appointed by the Buyer and these would be sent in the same 20' container to optimize the space and freight costs. I want to know if this happens then, Does the shipping company make one 0r two B/Ls ?
Raashid Khan Says :
Monday, April 18, 2016
I have firm named indian exports through which i exported semi husked coconut in 1st week of march.actually i have sent it to an agent who would be selling it for me on 5% commission basis.But the problem is about the prices.whatever he says i have to accept it.though he is honest but i need to cross verify .So how to do it.please suggest me
Asheesh Says :
Monday, April 18, 2016
What the use fob i don't know me how it is use where and fob pay customer ya seller?
M. A. RAHEEM Says :
Tuesday, May 03, 2016
Thanks for explaining the term FOB. I had a query, Leaving FOB what are the other taxes duties for the buyer to pay from the India port till it reaches buyers godown in Hyderabad India. For example if we buy PS Plates from shanghai China. They give FOB and what are the other taxes and duties in India that we have to bear. M. A. Raheem OZMARS Technologies Pvt Ltd Pre Press solutions Hyderabad India
Vicky Liu Says :
Monday, May 16, 2016
As per my 6 years sales experience in custom plastic injection molding industry, the liability depends on the trade terms. If FOB or CIF, once the cargo pass the edge of the harbor of loading port, the supplier is no longer liable, but they should be responsible for the basic quality. Not liable should be they can not guarantee if the cargo can arrive safely, or they will be stolen? or disappear for something wrong? or some disasters happen that no one can control or expect... CIF vs. FOB, the only difference is the Insurance and Freight should be bough by the seller for the cargo, and then the cargo is insured. The insurance is not very high. You can ask the seller to quote based on CIF if you want the cargo be safer. Almost 99% of the cargos are safe, but... so it is up to you. For the freigt of CIF, it is only the ocean freight, not including other charges like doc/ISF, Customs clearance fee, etc. If EW/Ex-factory, the buyer arrrange everything and liable for everything, or the forwarder should be responsible for it as they are paid.
sushil yadav Says :
Friday, July 01, 2016
Dear Sir, IS FOB LC in INR is legal. Please provide any documentary deviance.
Avijit Goel Says :
Wednesday, August 10, 2016
I am hugely indebted to you for your websit, as I have taken a majority of my learning in the import export business from there. Thanks a lot for your knowledge Sharing-You truly are a treasure house of knowledge on Import and export. Sir, I would need a reference for a CA in Mumbai as I plan to set up a small import export business in Mumbai. Please help me with the same.
Aditya Chatrath Says :
Friday, August 12, 2016
Im 19 and i want to startup a business which involves selling online. Im purchasing mobile covers from an international ecommerce site which delivers in india. Will it be treated as in import? and how do i set the mrp of the product which i will sell.
Thiruppathi M Says :
Tuesday, August 16, 2016
My Name Thiruppathi M from Chennai (Tamil Nadu). I have done my MBA from T. John business school @ Bangalore only. Now, I am working in Chennai MNC company. I am very interest to do the export and import business (it is my dream to become exporter from India), I have attained 1 or 2 class as well in Chennai. But your experience which you shared in Import Export .com is really very much valuable and useful to become exporter sir, even I am not get this much information in the export class also that much valuable information you have shared with us. Past one year I am gathering the information about export and import business, Now the time come to me to start up the business with your valuable guide lines Import Export .com. Sir, I am going to register my company name and website another few week, before that I want to thank to you given such kind of boost.
ajay Says :
Thursday, September 01, 2016
sir import ka laya vat number compasery ha.
K. Durai Says :
Tuesday, October 04, 2016
This is Durai from Chennai, i have a doubt about the Incoterms, If the import invoice doesn't have the incoterms, shall we proceed the BOE with FOB terms. Is there any circulars or rule in customs.
Cesar Says :
Thursday, February 09, 2017
Hi All, i am looking for some advice. I have just started out importing coffee in from Colombia to the UK and have been given a bill of nearly twice as much as the quote and want to understand why. Basically i have been quoted for 15 sacks @ 523KG FOB Cartagena, cleared and delivered to my door. This excluded import duty, VAT and Deferment. However my invoice is now twice as much (some of this is Deferment) but the majority is for "Ex-Works charges". I was under the assumption that my contract was for FOB not EX-works. I have been back to the frieght company and they are not able to shed any light on this, only saying they are charges from origin. The company i use for import has suggested that this is relating to local charges in Colombia and i was liable, however my original quote was inclusive of all charges, with the exemptions already stated. Does anyone have any idea why i am charged this extra? Thanks Cesar
Ramesh Waghela Says :
Monday, February 27, 2017
please give us all details of export and import in hindi and English.
BHARAT PATEL Says :
Wednesday, March 08, 2017
Will the container charges be included in FOB?
 

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