FOB (Free on Board)
Definition
An Incoterm where the seller delivers goods onto the ship at the origin port and your responsibility for cost and risk starts once they are loaded.
Want a deeper explanation?
FOB is the most common term for importers because you control the main freight leg and its cost. The FOB price is only the start of your product cost.
Under FOB, you generally own the goods once they are loaded, so inventory in transit belongs on your books. Watch for: comparing supplier quotes on different Incoterms, which is comparing apples to oranges.
Example
Your supplier quotes $8.00 per unit FOB Shanghai. You still pay ocean freight, insurance, duties and delivery from the U.S. port, so your landed cost might be $10.50.