Also known as: Free On Board
FOB is one of the most common Incoterms in seaborne commodity trade. The seller’s responsibility ends once the goods are loaded on board at the port of loading (POL).
Under FOB the buyer books the ocean freight and insurance, pays destination port charges and handles import clearance. A price quoted "FOB X" means delivered on board at port X.
Its natural counterpart is CIF, where the seller pays freight and insurance through to destination.
CIF
CIF (Cost, Insurance and Freight) is the Incoterm where the seller pays for the goods, the insurance and the freight to the destination port — even though risk passes to the buyer once the goods are loaded.
Incoterms
Incoterms (International Commercial Terms) are the standard rules published by the International Chamber of Commerce that set out who bears each cost and risk in a cross-border sale: transport, insurance, customs and delivery.
POL and POD
POL (Port of Loading) is where the cargo goes on board; POD (Port of Discharge) is where it comes off. Together they define the sea route of the deal.