FOB, or Free on Board, is one of the Incoterms (short for International Commercial Terms), which are standardized rules for global shipping. These terms define who is responsible for costs and risks at each stage of the shipping process—because shipping isn’t free! 😊

Check out the infographic below to see how different terms like EXW, FCA, and FAS work. Does it make sense?

Incoterms

fob-incoterms-for-vietnam-manufacturing

Three common incoterms in the Vietnam apparel industry are FOB, CMT or LDP. When you negotiate a price with a Vietnamese sewing factory you will choose one of these three terms 99% percent of the time. I will explain CMT and LDP later.

When a garment factory quotes an FOB price, it means that the factory is only responsible up to the point that the goods are free on board. Remember to ask the question about which FOB port the factory will deliver to. For example, Thai Son S.P Sewing factory always quotes FOB-Ho Chi Minh City. It means that their price gets your goods to the HCMC port. After this port, you have to pay all the cost of transportation goods to your warehouse. Does that help explain, what does FOB mean?

An FOB price can also be thought of including everything from A to Z except shipping. A free on board garment price includes sourcing fabrics, trims, accessories, packaging and the cut and make component. The price is up to HCMC port- typically the nearest port to the factory. After that, your freight forwarding company will take over the shipping and you will pay the freight forwarder to get your goods from the Vietnam port to your warehouse. Do you know how to answer, what does FOB mean?

Location

Thai Son S.P Building (Ground Floor)
153 Ung Van Khiem, Ward 25, Binh Thanh District, Ho Chi Minh City, Vietnam
Zip Code: 700000
Tel. +84 903926973
Email: kiki@lhc.vn
Attn: Ms. Sim