FOB (Free On Board)
Customs valuation method based on goods value only, excluding freight.
Definition
FOB (Free On Board) is an Incoterm and a customs valuation method. As an Incoterm, FOB means the seller delivers goods onto the ship at the origin port, after which risk transfers to the buyer. As a valuation method, FOB customs value includes only the goods price at the point of export—excluding international freight and insurance. The US uses FOB-based valuation, meaning duty is calculated only on the goods value, not shipping costs.
Why It Matters
FOB valuation results in lower duty compared to CIF, since freight and insurance aren't taxed. For high-shipping-cost items (heavy goods, express services), the difference can be substantial. Knowing your destination's valuation method helps you accurately predict landed costs.
Example
US import: Product $5,000, shipping $1,500, insurance $100. Since the US uses FOB, customs value is $5,000 only. At 6% duty, you pay $300. Under CIF valuation, duty would be $396.
Landed Cost Calculator
Estimate total import costs including duty, tax, and shipping fees.
Related Terms
Frequently Asked Questions
Does FOB mean I pay less duty?
In FOB-valuation countries (like the US), yes—duty is only on the goods value, not shipping. But most countries use CIF, so this benefit is limited to specific destinations.
What about insurance in FOB?
Under FOB terms, the buyer is responsible for freight and insurance from the origin port. For customs valuation in FOB countries, neither freight nor insurance is included in the duty calculation.
Related Resources
What is Landed Cost?
Complete guide to import duty and tax
ToolLanded Cost Calculator
Estimate import duty, tax, and total cost
DefinitionCIF (Cost, Insurance, Freight)
Customs valuation method including goods, shipping, and insurance.
DefinitionCustoms Value
The value used by customs to calculate import duties.
DefinitionImport Duty
Tax charged by customs on imported goods.