If cargo is shipped FOB point of destination, who retains the cost of transportation and insurance during shipping?

When cargo is shipped FOB (Free on Board) point of destination, it means that the seller is responsible for the goods until they reach the specified destination. Under this arrangement, the seller retains ownership and responsibility for it during transit, which includes covering the costs of transportation and insurance.

This setup affects both the logistical and financial aspects of shipping. Specifically, it means that the seller has to arrange for the transportation of the goods and is also obliged to insure them while they are in transit. Once the goods arrive at the destination and are delivered to the buyer, liability transfers to the buyer, who then takes over responsibility for the cargo.

By contrast, if the shipping terms were FOB shipping point, the buyer would take on these responsibilities as soon as the goods left the seller’s premises. In this scenario, it is essential to understand that the free on board terms define the transfer of risk and responsibility between the buyer and seller, clarifying who is liable at different stages of the shipping process.