Also known as Freight on Board Destination. It is a shipping term that means the seller retains ownership of the goods until they arrive at the buyer’s specified delivery location. The seller covers all transportation costs and assumes responsibility for any additional freight charges until delivery is completed.
How FOB Destination Works
While the goods are in transit, the seller remains the owner and is responsible for shipping costs. If any items are lost or damaged, the seller must handle claims and provide a full replacement if necessary. Ownership officially transfers to the buyer only when the goods arrive at their destination and are accepted.
FOB Destination vs. FOB Shipping Point
The main difference between FOB Destination and FOB Shipping Point lies in when ownership of goods is transferred from the seller to the buyer and who is responsible for shipping costs and risks.
| FOB Destination | FOB Shipping Point |
| Ownership transfers when goods arrive at the buyer’s location and are accepted. | Ownership transfers when goods are shipped from the seller’s location. |
| The seller covers transportation costs until delivery. | The buyer pays for freight costs from the shipping point onward. |
| The seller owns the goods while they are in transit. | The buyer owns the goods once they leave the seller’s location. |
| The seller is responsible if goods are lost or damaged in transit. | The buyer is responsible once the goods are shipped. |
| The seller files claims if needed. | The buyer files claims if needed. |