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“Free on Board” specifies when the title for shipped merchandise transfers to the buyer. “F.O.B.” is often followed by text that specifies which party is responsible for freight charges and damages or losses while in transit. See Table below- Carrier Shipping Methods for more information.

F.O.B. Destination Under these terms, the risk of loss of goods does not pass to your agency until the goods are delivered and your agency has accepted the shipment. If the shipment is refused or never reaches its destination, the vendor is responsible for re-shipping new goods at its expense. SPD recommends that all orders be placed as "F.O.B. Destination."

F.O.B. Origin Under these terms, the risk of loss passes to your agency when the carrier picks up the shipment from the vendor. The ordering entity is responsible for the merchandise at that point. If the merchandise is damaged or lost in shipment, the ordering entity owes the vendor full payment regardless. If there are damages or shortages, the ordering entity is responsible for filing any needed freight claims to attempt to recover the damages. If goods must be replaced, a new order must be placed with the vendor. SPD does not normally recommend using "F.O.B. Origin."

Shipping Method Carrier Paid By Freight on PO Title Held in Transit By Claims Filed By
F.O.B Origin Freight Allowed Vendor No Agency Department
F.O.B Origin Freight Prepaid & Added TEES Yes Agency Department
F.O.B Destination Freight Prepaid & Allowed Vendor No Vendor Vendor
F.O.B Destination Freight Prepaid & Added TEES No* Vendor Vendor

*A freight estimate should be added as a line item