FOB, or "free on board," is a term that appears on purchase orders and shipping documents. For many people, it's just another acronym to add to the long list of business jargon. But in reality, FOB has a specific and important meaning that can impact the cost and liability of an LTL shipment.
FOB refers to who is responsible for the goods being shipped and when the ownership of those goods changes hands. Specifically, FOB indicates when the seller's responsibility for the goods ends and the buyer's responsibility begins.
There are two common types of FOB terms: FOB shipping point (which is also referred to as FOB origin) and FOB destination. FOB shipping point means that the seller is responsible for the goods until they are loaded onto the carrier’s vehicle. Once the goods are with the carrier, the buyer takes over responsibility. FOB destination means that the seller is responsible for the goods until they reach the buyer's specified destination. In this case, the buyer's responsibility starts once the goods arrive at their designated location.
This is important because FOB terms can impact who is liable if something goes wrong during shipping. For example, if the goods are damaged or lost while in transit, who is responsible for filing any freight or insurance claims? If the FOB terms are FOB shipping point, the buyer would be responsible for addressing any damages or losses that occur during shipping. But if the FOB terms are FOB destination, the seller would have to deal with it.
In some cases, the FOB terms may also impact when revenue is recognized. Revenue recognition refers to the process of accounting for revenue on financial statements. If the FOB terms are FOB shipping point, revenue would be recognized once the goods are loaded onto the carrier. But if the FOB terms are FOB destination, revenue would not be recognized until the goods are delivered to the buyer's specified destination. This can impact a company's financial statements and may need to be considered when making business decisions.[Text Wrapping Break]
The terms FOB origin and FOB destination are paired with the terms freight collect and freight prepaid to express not only the ownership of the goods, but who will pay the cost of shipping them. Here’s what they mean when put together:
If you have questions about which FOB terms would work best for you, contact the team of LTL shipping experts at Koho.
FOB, or "free on board," is a term that appears on purchase orders and shipping documents. For many people, it's just another acronym to add to the long list of business jargon. But in reality, FOB has a specific and important meaning that can impact the cost and liability of an LTL shipment.
FOB refers to who is responsible for the goods being shipped and when the ownership of those goods changes hands. Specifically, FOB indicates when the seller's responsibility for the goods ends and the buyer's responsibility begins.
There are two common types of FOB terms: FOB shipping point (which is also referred to as FOB origin) and FOB destination. FOB shipping point means that the seller is responsible for the goods until they are loaded onto the carrier’s vehicle. Once the goods are with the carrier, the buyer takes over responsibility. FOB destination means that the seller is responsible for the goods until they reach the buyer's specified destination. In this case, the buyer's responsibility starts once the goods arrive at their designated location.
This is important because FOB terms can impact who is liable if something goes wrong during shipping. For example, if the goods are damaged or lost while in transit, who is responsible for filing any freight or insurance claims? If the FOB terms are FOB shipping point, the buyer would be responsible for addressing any damages or losses that occur during shipping. But if the FOB terms are FOB destination, the seller would have to deal with it.
In some cases, the FOB terms may also impact when revenue is recognized. Revenue recognition refers to the process of accounting for revenue on financial statements. If the FOB terms are FOB shipping point, revenue would be recognized once the goods are loaded onto the carrier. But if the FOB terms are FOB destination, revenue would not be recognized until the goods are delivered to the buyer's specified destination. This can impact a company's financial statements and may need to be considered when making business decisions.[Text Wrapping Break]
The terms FOB origin and FOB destination are paired with the terms freight collect and freight prepaid to express not only the ownership of the goods, but who will pay the cost of shipping them. Here’s what they mean when put together:
If you have questions about which FOB terms would work best for you, contact the team of LTL shipping experts at Koho.
Liftgate Maximums
Average Limits Across Carriers
Maximum Length
66.5"
Maximum Width
65.5"
Maximum Height
79"
Maximum Weight
2,750 lb
