What does FOB stand for when referring to the transportation charges a retailer pays?

The term FOB stands for "Free On Board," which refers to a shipping arrangement where the seller pays for transportation of the goods to a specified point, and the buyer assumes ownership and responsibility for the goods once they reach that point. In this context, "Free" indicates that the seller covers the shipping costs up to the designated location, while "On Board" signifies that the responsibility for the goods transfers to the buyer as they are loaded onto the shipping vessel or carrier.

Understanding this term is crucial for retailers as it impacts the overall cost structure involved in procurement, as well as the point at which they take ownership of the goods. This can influence inventory management, logistics planning, and pricing strategies for the retailer. The other options do not reflect accurate industry terminology associated with transportation charges, which makes "Free On Board" the correct choice in this scenario.