FOB stands for "Free on Board," a shipping term used in international trade. It indicates that the seller is responsible for the goods until they are loaded onto a shipping vessel. Once the goods are on board, the responsibility shifts to the buyer, who then assumes all risks and costs associated with transportation. This term is crucial for determining who pays for shipping and insurance during transit. It helps clarify the responsibilities of both the seller and the buyer in a transaction, ensuring that both parties understand their obligations. Understanding FOB terms can prevent disputes and facilitate smoother trade operations.