Listen to a Business English Dialogue about Free on board
Craig: Hey Paisley, have you ever heard of the term “free on board”?
Paisley: No, Craig, I haven’t. What does it mean?
Craig: “Free on board” or FOB is a shipping term indicating who pays for transportation and when the ownership of goods transfers from the seller to the buyer.
Paisley: Ah, I see. So, does it mean the seller pays for transportation until the goods reach a certain point?
Craig: Exactly. When goods are sold FOB, the seller is responsible for shipping the goods to a specified destination, and the ownership transfers to the buyer once the goods are loaded onto the transportation vehicle.
Paisley: That makes sense. Are there different types of FOB terms?
Craig: Yes, there are. For example, FOB destination means the seller is responsible for goods until they reach the buyer’s specified destination, while FOB origin means the buyer assumes responsibility once the goods are loaded at the seller’s location.
Paisley: I see. So, depending on the FOB terms, either the seller or the buyer takes on the responsibility and cost of shipping?
Craig: Exactly. It’s important for both parties to clearly understand the FOB terms specified in the sales agreement to avoid any misunderstandings regarding shipping costs and responsibilities.
Paisley: Got it. Thanks for explaining, Craig. FOB sounds like an important concept for businesses involved in shipping and logistics.
Craig: You’re welcome, Paisley. Understanding FOB terms can help businesses manage their supply chain effectively and ensure smooth transactions.
Paisley: Definitely. I’ll keep that in mind. Thanks again, Craig.
Craig: No problem, Paisley. Feel free to reach out if you have any more questions about business terms like FOB.
Paisley: Will do. Thanks, Craig.