Which term that applies depends on where the shipment is going. For example, if the invoice was dated June 10 and you used one of the most used payment terms, Net 30, then the payment would be expected before July 9. FOB stands for "free on board," although it is also sometimes defined as "freight on board." What is the most common payment term requested by Chinese suppliers? Less often, a buyer will use the shipping term FOB Origin or FOB Shipping point. A good rule of thumb when doing business in international trade is that you should buy FOB and sell CIF. Should you buy CIF or FOB? Probably one of the more common terms that people have questions about in the freight industry in terms of sale. For example, FOB Dallas means that the seller would provide the goods at the seller’s expense to Dallas. On FOB (Free On Board) shipping terms the buyer is responsible for the shipment from the goods being loaded onto the ship in the country of origin. The seller is the owner of goods while in transit and is responsible for any loss or damage up to the time of delivery. Some add-on terms may be included on the freight invoice, bill of lading, or other forms of shipping documentation. Freight Terms of Sale What exactly does FOB stand for? Above all, people have doubts about acronyms like FOB which means free on board or freight on board. It is important to have an understanding of cost and freight (CFR), cost, insurance and freight (CIF) and Free on board (FOB). I have written detailed articles about Inco Terms of deliveries under Exports and Imports in this web blog. Free on board indicates whether the seller or the buyer is liable for goods that are damaged or destroyed during shipping. Cosmo has defined the 2010 Incoterms abbreviations, such as FOB, CFR, and DAP for international trade. There is much talk in the trade world about incoterms and how something is shipped; these terms have their own nuances. These add-on terms may include the following: FOB Origin, Freight Prepaid: The seller/shipper pays the cost of shipping while the buyer/receiver of goods assumes the responsibility of goods at the point of origin. Other ways of expressing the FOB Destination are "FOB Destination Name". EXW and FOB are far and away the two most common incoterms. The most common payment method is a bank wire that works this way: You have the supplier develop sample(s) until you are confident they know exactly what you want. FOB Destination is the standard and most common FOB term used by buyers. DDP (Delivered Duty Paid) terms mean the seller will deliver the shipment to the location requested by the buyer and pay … When you sell CIF you can make a slightly higher profit and when you buy FOB you can … Sponsored Links . Incoterms is short for International Commercial Terms. When used with an identified physical location, the designation determines which party has responsibility for the payment of the freight charges and at what point title for the shipment passes from the seller to the buyer. This term is typically used in sales contract, and designates a location for the delivery of goods. This does little to describe how it works in practical terms, however. A Guide to Shipping Terms and Incoterms. FOB and CIF are the two most popular price terms of the Inco terms. FOB Add-on Terms. Why is this a good rule to follow? FOB stands for “free on board”. These imply that the net payment is due in either 7, 10, 30, 60, or 90 days after the invoice date. I hope you are enjoying reading all. You send a 30% deposit (by T/T) before production starts. 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