Get to know the vital terms of Logistics and Supply Chain Management.
FOB Destination, “Free On Board Destination,” is a shipping term indicating the place at which the seller continues to have liability over goods as they move. For such a type of contract, the seller has the risk of the goods and all charges on transportation up to the destination point specified by the buyer.
Transfer of Title: In case the goods are delivered to the buyer’s premises, the title of the goods shifts from the seller to the buyer.
The Seller’s Duty and Risk: The seller bears all freight costs as well as the risk of transportation, such as loss or damage, until the goods reach their destination.
Buyer’s Liability: The buyer does not accept liability for the goods until they reach the place of destination, and are received in good condition.
Lower Exposure to Risk for Buyer: Because the buyer is not responsible for the goods while they are in transit, she/he has less exposure to risk if the goods get damaged, or are lost.
Simplified Logistics for the Buyer: The selling party would ensure and pay for the transportation or shipment to the destination of the buyer’s consignee and leave it up to the buyer to receive the goods.
FOB Destination puts the responsibilities of transportation together with the risks until the goods have reached the buyer’s location. The type of shipping arrangement offers assurance and convenience on the part of the buyer, yet is very demanding on the selling party as far as preparing the shipping process down to final delivery is concerned.
