Talk:FOB (shipping)/Archives/2013

Unsorted talk

Under the accounting section, there is an error. The original author states that if title is transferred to the buyer then it is included in inventory, but not the balance sheet. This is incorrect. If something is added to inventory, then it is added to the balance sheet. You cannot do something to one and not the other. Inventory is an account on the balance sheet, and one either has the inventory or does not. I do not know how the FOB affects the specific accounting of it, but what is out there now cannot be the case.

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I have always been under the impression (and have done the research)that free on board or freight on board is used to define where ownership of goods changes hands thus who is responsible for lost or damaged freight. And has basically nothing to do with who pays cost of freight movement. fob without destination or shipping point does really mean much at all. freight charges could be collect, prepaid or prepaid and add. —Preceding unsigned comment added by Larryphillips (talk • contribs)

• I agree. When I use this term, I don't use it to mean who will be paying for the shipping. I realize that may be the intent of the term, but I believe it is more widely used to signify at what point the sale is transferred to the buyer. In other words, F.O.B. tells one, if something were to happen to the product, whether he or she is responsible for it. Stiles 02:45, 24 April 2006 (UTC)

FOB Origin or FOB Destination can be followed by Freight terms: "Freight Prepaid" or "Freight Collect". "Prepaid" means the vendor pays freight and "Collect" means the buyer pays freight.

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Be careful: You should use the INCOTERM CFR: Cost of Freight (Named Port), CIF - Cost of Insurance and Freight and CIP: Carriage, Insurance Paid (Named Port). FOB in International Trade is always buyers pays. Any cost to seller after delivery at port should cause the "C" class of Incoterms to be applied - not amendments - "while in muddy waters". [[[User:Khflottorp|Khflottorp]] 22:06, 24 May 2006 (UTC)]

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Transfer of ownership may happen at sea, but can only happen if buyer has purchase EXW, FCA, FAS or FOB: F-class. That should clarify "ownership". Note that payment terms can differ from delivery terms and should then appear as a liability/asset in the balance sheet of seller/buyer - just as any other "Goods received but not paid for". [[[User:Khflottorp|Khflottorp]] 22:06, 24 May 2006 (UTC)]

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I would suggest that the final part of the introduction , "North American FOB usage corresponds to Incoterms approximately as follows:" and is followed by a table, is innapropriate here and should be moved to the section headed North America. I pref er to offer the suggestion rathjer than make the change so as to leave it to those with a keener interest in this subject. 123.87.98.143 (talk) 03:52, 22 October 2009 (UTC) Apault

FOB USD$10/unit

Ok. If I see an advertisement that states "FOB USD$10/unit" does that mean the seller is paying the shipping or the buyer? If it doesn't refer to shipping then what does it refer to? Responsibility for damage? In either case, who is paying for the shipping and/or taking responsibility for damage during shipping? The buyer or seller? If it is unstated, then why bother with the "FOB" part at all and not simply say "Price USD$10/unit"? I think examples of how/when the FOB usage occurs would be of help. 192.122.237.11 (talk)

While usage of "FOB" varies, "FOB USD$10/unit" doesn't really make sense. The seller is being unclear. We can't fix that in the article. —DragonHawk (talk|hist) 01:27, 23 September 2011 (UTC)

FOB

is: Free On Board (Named Port of Shipment)

FOB is an INCOTERM meaning that the seller delivers when the goods pass the ship's rail at the named port of shipment. This means that the buyer has to bear all costs and risk of loss of or damage to the goods from that point. The FOB term requires the seller to clear the goods for export. The term can be used only for sea and inland waterway transport. If the parties do not intend to deliver the goods across the ship's rail the FCA term should be used. (c)Incoterm [[[User:Khflottorp|Khflottorp]] 22:06, 24 May 2006 (UTC)]

The sentence: "The term can be used only for sea and inland waterway transport." is not true...FOB can (and is constantly) used with regard to any shipment, cartage, or freight, regardless of whether it is transported by water, and regardless of whether it crosses a border during transport.

It is true that the seller bears the responsibility of clearing the product for import, but FOB can refer to products that are not being imported as well (and is often used when referring to construction materials).

article in flux (some fragments in ecommerce section)

the last section has some incomplete thoughts. whoever knows about this stuff, please fix!

i was looking at:

"When counting inventory, merchandise in transit plays a cruc." [just when it was getting interesting...]

Michaeljwsiegel 16:25, 23 February 2007 (UTC)

"cruc" isn't a word, according to merriam-webster and dict.org. I think the word that goes here is "crux". That doesn't explain why merchandise in transit is important, but at least the sentence becomes intelligible.

Regarding the eCommerce Section, someone who knows more than me should clarify that while sellers' terms may state a product ships FOB, consumer law and UCC provisions may give additional protections to consumers, buying "consumer goods", the sellers' terms notwithstanding. —Preceding unsigned comment added by 65.196.113.42 (talk) 21:51, 7 January 2008 (UTC)

Doesn't FOB as used in North America, when not referencing Incoterms, mean Freight on Board rather than Free on Board? —Preceding unsigned comment added by 199.207.253.101 (talk) 01:17, 29 January 2008 (UTC)

External links or References?

I removed these two:

International Chamber of Commerce

Intercom Term Wall Chart

--Links to the ICCWBO.org website are no longer valid. I guess the references could still be good, but the PDF is not available anymore and the other web pages do not exist anymore. It appears the information is now in a paying publication. Tycobee (talk) 12:47, 24 October 2012 (UTC)tycobee 2012-10-24

Article move

I've just moved this article to FOB (shipping). The old title was Free On Board. I did this to try and clear up confusion over what we're talking about. We've had various bad things happen. In the past, the article has been blanked and redirected to Incoterm. FOB is quite often not used per Incoterms, so that's wrong. We've had a duplicate article at Freight on Board. We've had all the capitalization variants redirecting to different things.

One solution I considered would be separate articles for Free vs Freight, but individually, there isn't enough material to warrant separate articles. Plus, the terms do deal with similar subject matter, so we can use the same introductory material for both. Most of all, precisely because these terms are apparently so often confused, I think it's best to compare and contrast them, providing the reader with disambiguating explanation.

As always, discussion welcomed. —DragonHawk (talk|hist) 00:09, 27 March 2009 (UTC)

rrr —Preceding unsigned comment added by 219.120.53.234 (talk) 06:11, 15 July 2009 (UTC)

Uniform Commercial Code

The explanation in the main article seems inconsistent with the UCC (Uniform Commercial Code). Article 2-319 defines FOB as "free on board." Furthermore, 2-319 explains the consequences of risk of shipping (ie when does risk pass) the same way as the Wiki article claims Incoterm explains passage of risk. Finally, the UCC has been adopted, at least in some part, in all 50 states which makes me believe that FOB in North America, particularly the US, would be Free on Board and carry similar consequences. However, this is only an educated guess, which is why I did not modify the article. MECAVTP (talk) 11:32, 20 April 2010 (UTC)

I'm not familiar with the UCC. I think it would be great if you could add treatment of how the UCC sees things to the article (properly cited, of course). Perhaps the "North American usage" section should be clarified to identify that it's more a traditional usage (perhaps even colloquial at this point), at odds with current nominal regulations. • I can say that I still see the "FOB Shipper" and "FOB Destination" usage frequently on US invoices, waybills, and the like. It's hardly a scientific sample, though. I'm not aware of anything like a reliable study on contemporary real-world usage of the terminology in the US. That would be ideal to have. —DragonHawk (talk|hist) 12:56, 22 April 2010 (UTC)

To add to the confusion, UCC removed FOB and FAS 2-319 from its text in 2004 due to the conflict between the shipping and title transfer. UCC's definition used to cover the cost of the shipping (Free On Board - Seller pays freight to the ship's rail) AND transfer of title and liability (Seller transfers title and risk at the ship's rail). Incoterms only applies to freight costs and liability leaving title to be defined in the acceptance portion of the contract. — Preceding unsigned comment added by Eiluff (talk • contribs) 16:40, 25 August 2011 (UTC)

North American usage vs. Incoterms

I'm no international trade expert, but back in the day when I was in law school, I read a number of cases in my sales & lease class, most of which were litigated long before the UCC was enacted anywhere (FYI, the sales & lease sections were never enacted in Louisiana, which is where I went to school), and long before Incoterms came into existence.

And what do I remember from these cases? Not once did "fob" stand for "Freight on board." Not one single time. It was always referred to by the courts as "free on board." In fact, other than sites like Answers.com, I can't find anything suggesting its use as "freight on board." Can anybody find any reliable references from the North American section where a court or governmental body refers to f.o.b. as "freight on board"?? --Mr. Brown (talk) 20:38, 6 November 2010 (UTC)

As long as we're talking completely unverifiable anecdotal experience, I see the NA use of FOB all the time at $WORK for domestic shipments, usually as "FOB ORIGIN" and "FOB DESTINATION" (which would be incorrect under Incoterms). What FOB stands for has never been explicitly given on any of this paperwork, but "Free On Board" wouldn't make any sense in that usage, while "Freight On Board" would. Now, that could be just one of many things in the world that don't make any sense, but I've seen reference to US "Foreign Trade" rules in more than one place. I haven't been able to find a copy online, which is why I tagged that statement as verification-needed in the article. But unless you have a better source that specifically denies the US defined it that way in 1941, it seems like a reasonable citation. As for sources to back up the "Freight On Board" expansion at all, I did find it all over the place with Google, and cited a few of them in the accounting section. —DragonHawk (talk|hist) 21:59, 6 January 2011 (UTC)

Okay, I just double-checked the references in the accounting section, and they don't say what my memory said they did. So now I'm less sure.  :-( I did find UCC 2-319 which at least provides a reliable source for the North American, non-Incoterm usage. —DragonHawk (talk|hist) 22:17, 6 January 2011 (UTC)

Error in text

I read this paragraph several times and I think there is an error in the last sentence:

For example, "FOB Vancouver" indicates that the seller will pay for transportation of the goods to the port of Vancouver, and the cost of loading the goods on to the cargo ship (this includes inland haulage, Customs clearance, origin documentation charges, demurrage if any, origin Port handling charges, in this case Vancouver). The buyer pays for all costs beyond that point (including unloading). Responsibility for the goods is with the seller until the goods pass the ship's rail. Once the cargo is off of the ship, the buyer assumes risk.

The last sentence should read: Once the cargo is on the ship, the buyer assumes risk. — Preceding unsigned comment added by Toomas Altosaar (talk • contribs) 03:57, 26 June 2012 (UTC)

Poorly Written

This page is hard to understand. It doesn't outwardly explain what the term means, it refers to another page and you says its similar and then says why its different... it should just define what it is outright.

Definition moved to lead sentence

I found the lead of this entry unusable as written. Since several others commented here on the same problem, I re-wrote it. Now the first sentence tells users that FOB means the seller pays for shipping. I also condensed the first two paragraphs, which were repetitive and confusing, into one concise one. In so doing, I didn't eliminate any links. Laodah (talk) 19:00, 5 August 2013 (UTC)

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I also agree that this page is difficult to understand, from a layman's perspective. Mostly, I want someone to clarify how to use the term properly. For example, when the article says "FOB destination", does that mean you use the word "destination", or do you replace "destination" with the city you are shipping to? If the terms "destination" and "shipping point" are indeed meant to be replaced by the user, which is common practice from what I see, then it should be mentioned that these terms are basically variables. 72.34.77.234 (talk) 22:03, 8 September 2011 (UTC)JMK

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The definition section states that the seller pays costs and assumes risks up to and including loading onto the vessel but then states that the buyer assumes costs and risk when the cargo is "off of the ship." Shouldn't this read "on the ship?" I'm confused to what is actually being said; other sources seem to indicate that transfer of possession occurs once loaded onto the ship at the port of origin, as do parts of the definition as written. It's that one phrase which seems inconsistent with the rest. Edit: to be clear, the Incoterm definition. Forgot the labeling when I posted the first time.