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FOB (Free On Board)
Definition
A shipping term that indicates which party (buyer or seller) is responsible for goods and shipping costs at different points in transit. With Free On Board, ownership and liability transfer once goods are loaded onto the transport
How It's Calculated
Not formula-based; determined by contract terms (e.g., FOB Origin means buyer takes responsibility once goods leave the seller; FOB Destination means seller retains responsibility until delivery).
Example
A beverage company ships cases of soda FOB Origin, meaning the retailer assumes responsibility for freight costs and risk once the products are loaded at the manufacturer’s dock.
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