History of FOB (Freight on Board)

The history of “Freight On Board” (FOB) as a concept in international trade can be traced back many centuries, and it has evolved to become a widely accepted and standardised term.

1. Early Maritime Trade: The origins of FOB can be traced back to the early days of maritime trade, which predates written records. Merchants and traders have been shipping goods across seas and oceans for thousands of years. In these early days, trade was often conducted through simple agreements between buyers and sellers.

2. Development of Trade Practices (Medieval Period): As international trade expanded during the medieval period, so did the need for standardised trade practices. Merchants and traders developed common customs and traditions to facilitate commerce. These practices were often passed down orally and through experience.

3. Emergence of Formal Contracts: In the 17^th and 18^th centuries, as global trade continued to grow, formal written contracts became more common. These contracts began to outline the responsibilities of both buyers and sellers in greater detail, including the conditions under which goods would change hands.

4. Legal and Commercial Developments (19^th Century): The 19^th century saw significant advancements in trade law and international commerce. Nations started to develop legal systems that recognised the rights and obligations of traders. International trade agreements and treaties began to address issues related to shipping and trade.

5. Formalisation of FOB in Shipping Contracts (Late 19^th and Early 20^th Centuries): The term FOB was formalised in the late 19^th and early 20^th centuries. It was developed to specify at what point in the shipping process the seller’s responsibility for the goods ended and the buyer’s responsibility began. FOB terms provided clarity in international trade contracts, especially in maritime trade, where the transfer of goods from land to ship was a crucial moment.

6. Standardisation and Global Acceptance (20^th Century): In the 20^th century, FOB terms became widely accepted and standardised in international trade contracts. This standardisation was essential for the smooth operation of global commerce, as it eliminated ambiguity and ensured that both parties clearly understood their roles and responsibilities in the shipping process.

7. Continued Relevance (21^st Century): FOB terms remain a cornerstone of international trade to this day. While modern trade involves more complex logistics and transportation methods, the fundamental concept of FOB, indicating when ownership and responsibility for goods transfer, remains crucial in trade agreements.