Meaning Of FOB Price In Exports And Imports

If you want to know what is the meaning of FOB price and what is the importance of FOB price in import-export.

You are on the right page!

This article will help you to understand what is the meaning of FOB price and why you need to understand the incoterms of delivery.

Hello, friends welcome to another fresh article on “Indiancustoms.info”, Here in this article I explained the meaning of FOB price and who will bear pre-export charges.

If you are working in the import-export industry you need to understand the FOB price.

Because it is the most used incoterm for import or export shipments.

I promise you if you carefully read the complete article, all your queries related to FOB price will be solved.

Now let’s look what is the meaning of FOB price.

Also Read:- How Is CBM Calculated [Complete Guide With Example]

What Is The Meaning Of FOB Price?

The term FOB stands for “Free On Board” or “Freight On Board” If the shipment delivery transaction term is FOB.

Then the cost of export customs clerance and pre-export charges till on board the airline or board of ship is borne by the exporter or seller.

The rest of all expenses to arrive at the buyer’s premises has to be paid by the importer or buyer.

Let’s understand the FOB Delivery term with an example:-

You are a Readymade Garment manufacturer exporter situated near Delhi/NCR, India. A buyer situated in the United Kingdom wants to buy readymade garments from you and contact you for the price.

And you agree to sell garments at FOB Delhi’s price of USD 7130. Here the selling cost of garments is USD 7130 FOB Delhi.

It means you have to pay all the transportation charges for goods from your warehouse to Delhi airport and customs clearance charges in Delhi.

You have to bear all charges till the goods are on board to Airline.

All the other charges like freight, Airline DO, import customs clearance, Import duty, etc… are bear by the buyer.

If you want to know about other incoterms you read our article Incoterms® 2020 [In Export-Import Business] In this article we covered all other incoterms used for international trade.

I hope now you understand what is the meaning of FOB price and how to calculate FOB value in shipping bill. If anyone has any suggestions or queries please comment in the comment box.