FOB (shipping) - North America

North America

Within the United States, the term FOB is commonly used when shipping goods to indicate who pays loading and transportation costs, and/or the point at which the responsibility of the goods transfers from shipper to buyer.

"FOB shipping point" or "FOB origin" indicates the buyer pays shipping cost and takes responsibility for the goods when the goods leave the seller's premises. "FOB destination" designates the seller will pay shipping costs and remain responsible for the goods until the buyer takes possession.

Previously, under the Uniform Commercial Code, both "FOB origin" and "FOB destination" left the seller responsible for paying costs of loading goods on board the carrier; hence "Free On Board". When the buyer was responsible for loading costs as well, the UCC term was "FAS", "Free Alongside". Currently, the UCC has removed FOB and FAS leaving the definition of these terms up to the interpretation of the parties or the applicable state's law. Many states have wholly or in part adopted the UCC terms without realizing that the UCC has abandoned the definitions.

A related but separate term "CAP" ("customer arranged pickup") is used to denote that the buyer will arrange a carrier of their choice to pick the goods up at the seller's premises, and the liability for any damage or loss belongs to the buyer.