fob shipping point

An “FOB San Francisco” shipment means you’re responsible for shipping them from San Francisco to Dallas and own the goods when the shipping company picks them up. Depending on the agreement with your supplier, your goods may be considered delivered at any point between the port of destination and your final delivery address. With FOB destination, ownership of goods is transferred to the buyer at the buyer’s loading dock. DDP means “delivered duty paid.” Under this Incoterm rule, the seller agrees to deliver goods to the buyer, paying for all shipping, export, and import duties and taxes. FAS stands for “free alongside ship” and is often used for bulk cargo transactions. It says that sellers must deliver goods to a vessel for loading, with the buyer taking responsibility for bringing them onboard.

Additionally, FOB Shipping Point may not be feasible if the buyer is located far from the seller, as transportation costs can quickly add up. When accounting for shipping costs, accountants assume follow the shipping terms to determine who is responsible for this expense. If the sale occurred at the shipping point (FOB Shipping Point), then the buyer is expected to pay the cost of transporting the goods to their location and will therefore record this cost as Freight-In.

Are Rules Different When Operating Under FOB Destination?

Keep reading to learn more about this crucial shipping term so that you don’t get stuck footing the bill on your own. FOB means that the seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment or procures the goods already so delivered. If you’re a buyer or seller interested in using the FOB address, you may wonder how to manage the process effectively.

fob shipping point

If the buyer is responsible for the cost of transportation, they may prefer fob shipping point, as they can choose their own carrier and potentially negotiate better rates. However, if the seller is responsible for transportation costs, they may prefer FOB Destination, as they can ensure the goods are transported safely and efficiently. FOB shipping point means you choose your delivery method, which can lower costs, or you can avoid liability, even though you’ll likely pay more, with FOB destination. The point at which the goods’ ownership transfers and related shipping costs also affect your cost of goods sold (COGS).