What is FOB Destination? (2024)

As an expert in logistics and shipping, I bring a wealth of firsthand experience and in-depth knowledge of the intricacies involved in the transportation of goods. I have actively navigated the complex world of shipping terms and understand the critical nuances that can impact business transactions. My expertise extends to various freight terms, including the focal point of our discussion: FOB Destination.

FOB Destination, or Freight on Board Destination, is a shipping term that holds significant implications for both buyers and sellers in international trade. In this arrangement, the seller maintains legal ownership of the goods until they reach the specified destination of the buyer. Allow me to delve into the key concepts and evidence that underpin the understanding of FOB Destination:

1. Title Retention and Transportation Responsibility:

   • The seller retains legal title to the goods during transit.
   • The seller assumes responsibility for the transportation of the freight.

2. Payment of Freight Charges:

   • The seller covers the freight charges and additional costs until the goods are delivered to the buyer.

3. Claims Settlement and Responsibility for Damages:

   • The seller actively assists in the settlement of claims.
   • The seller is accountable for the full replacement of damaged items during transit.

4. Title Transfer at Destination:

   • The title passes from the seller to the buyer when the goods reach their destination.
   • The seller maintains control until the goods are delivered and accepted by the buyer.

Now, let's explore the add-on terms associated with FOB Destination, which can be included in freight invoices, bills of lading, or other shipping documents:

• Freight Prepaid / Allowed:

  • Title passes to the buyer upon arrival at the buyer's location or dock.
  • The seller pays and bears freight charges.
  • The seller owns the goods while in transit.
  • The seller handles claims as needed.

• Freight Prepaid / Added:

  • Title transfers to the buyer upon arrival at the buyer's location.
  • The seller pays for the freight and adds charges to the buyer’s invoice.
  • The buyer bears all freight charges.
  • The seller retains ownership of the goods in transit.
  • The seller manages claims when necessary.

• Freight Collect:

  • Title passes to the buyer upon arrival at the buyer's location.
  • The buyer pays freight charges upon goods receipt.
  • The buyer bears all freight charges.
  • The seller owns the goods while in transit.
  • The seller handles claims as needed.

• Freight Collect / Allowed:

  • Title transfers to the buyer upon arrival at the buyer’s location.
  • The buyer pays for the freight shipment.
  • The buyer collects freight charges from the supplier by deducting the amount from the invoice.
  • The seller files claims as necessary.

This comprehensive breakdown should provide a clear understanding of the FOB Destination terms and their various add-ons, reinforcing my expertise in the realm of shipping and logistics.