What Is FOB (Free on Board)?
Quick Definition: FOB (Free on Board) means the seller delivers goods to the port of shipment and loads them onto the vessel. Once on board, the buyer assumes all costs and risks.
FOB in China Sourcing
FOB is the most commonly used Incoterm in China manufacturing. When a factory quotes you an "FOB Shenzhen" price, it means:
- The price includes the product cost, inland transport to the port, and loading onto the ship.
- You (the buyer) are responsible for ocean freight, insurance, customs clearance, and delivery from the destination port.
- Risk transfers from seller to buyer when goods cross the ship's rail at the origin port.
FOB vs CIF vs EXW
| Term | Seller Covers | Buyer Covers |
|---|---|---|
| EXW | Product only (at factory gate) | Everything: inland transport, export, freight, import |
| FOB | Product + inland transport + export + loading | Ocean freight, insurance, import customs, delivery |
| CIF | Product + transport + export + freight + insurance | Import customs, duties, delivery |
When to Use FOB
- You have a freight forwarder: If you have an established relationship with a freight company, FOB lets you control shipping costs and routing.
- You want price transparency: FOB separates product cost from shipping cost, making it easier to compare factory quotes.
- Large orders: For FCL (full container) shipments, arranging your own freight is usually cheaper than the factory's CIF quote.
Common FOB Ports in China
FOB Shenzhen (Yantian/Shekou), FOB Guangzhou (Nansha), FOB Shanghai (Yangshan), FOB Ningbo (Beilun), FOB Xiamen.
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