APICS Certified in Logistics, Transportation and Distribution (CLTD) — Question 122

A company is sending a shipment to its customer in Italy. It elects to pay the freight and be responsible for any liability and damage claims. Which of the following free on board (FOB) terms is the company using?

Answer options

• A. FOB destination, freight collect
• B. FOB destination, freight prepaid
• C. FOB origin, freight prepaid
• D. FOB origin, freight collect

Correct answer: B

Explanation

The correct answer is B, FOB destination, freight prepaid, because the company is paying for the freight, which indicates they are responsible until the goods reach the destination. Options A and D indicate that the freight costs are not covered by the seller, while option C suggests the liability shifts at the origin, which does not fit the scenario.