Is it possible to use FOB incoterms with land and or air shipments?

The aim of the international commercial terms, known as incoterms, is to create a set of international standard rules for the application of the most commonly used trade terms in foreign trade.

Incoterms can only achieve its goal if it could reduce or eliminate the uncertainties of different interpretations of such terms in different countries.

ICC, International Chamber of Commerce, published latest version of international trade terms rules, which is known as Incoterms 2010. 

Incoterms 2010 rules define 11 different trade terms.

FOB, Free on Board, trade term is one of the most frequently used incoterms along with CIF and Ex Works. 

As a result every exporter or importer must understand these trade terms very well.

What does FOB trade terms mean according to Incoterms 2010 rules and what are the key characteristics of FOB incoterms?

FOB means "Free on Board" according to Incoterms 2010 rules. 

“Free on Board” means that the exporter delivers the goods on board the vessel nominated by the buyer at the named port of loading or procures the goods already so delivered.

Alternatively exporter can procure the goods already shipped on board a nominated vessel as per FOB trade terms.

Main Characteristics of FOB Incoterms
  • Transportation must be arranged by the importer and freight amount must be paid by importer as well. 
  • The exporter has no responsibility against to the importer in regards to insurance cover against the importer’s risk of loss of or damage to the goods during the carriage. 
  • The risk of loss of or damage to the goods passes when the goods are on board the vessel at the port of loading, and the buyer bears all costs from that moment onwards.
Is it possible to use FOB incoterms with land and air shipments?

You may have already seen FOB Dubai International Airport, Dubai, UAE Incoterms 2010 or FOB Zurich, Switzerland Incoterms 2010 phrases on one of the shipping documents you have encounter so far.

But both of these expressions are false, because FOB incoterms can only be used only for sea or inland waterway transport. 

As a result you cannot use FOB trade term with air shipments or land shipments, as well as rails shipments.