FOB mill and FOB delivered are two of the most important pricing terms in the lumber industry, but they are often misunderstood. They look similar on a quote sheet, yet they change how cost, responsibility, and risk are actually handled once material leaves the mill.
What FOB Mill Actually Means
FOB mill means the buyer takes responsibility for freight as soon as the lumber is loaded at the mill. The seller’s responsibility ends there. From that point on, the buyer handles trucking, timing, and any issues that happen during transit. The price usually looks lower because freight is not included, but the real cost depends on how far the material has to move and what freight conditions look like at the time.
What FOB Delivered Means
FOB delivered means the seller is responsible for moving the lumber all the way to the buyer’s destination. Freight is included in the price, so what you see is the total delivered cost. This makes it easier to understand what the material actually costs to receive, since transportation is already built into the number.
Why These Two Prices Cannot Be Compared Directly
The biggest mistake buyers make is comparing FOB mill and FOB delivered prices side by side. They are not structured the same way. One includes freight and the other does not. A lower FOB mill price can easily end up more expensive once trucking is added. Because of this, the only meaningful comparison is total landed cost to the final destination.
How Risk Changes Between the Two
FOB mill shifts risk to the buyer once the load leaves the mill. That includes delays, freight cost changes, and any damage that happens in transit. FOB delivered keeps that risk with the seller until the material is delivered. This difference affects not just cost, but also how predictable and controlled the shipment is for the buyer.
How Buyers Actually Use Them
In practice, most experienced buyers convert both options into a single landed cost before making a decision. Buyers with strong freight networks often prefer FOB mill because it gives them control over trucking. Buyers who want simplicity often prefer FOB delivered because it removes logistics decisions from the process. The choice usually comes down to control versus convenience.
Final Thoughts
FOB mill and FOB delivered are not just pricing labels. They are two different ways of structuring how lumber moves, how costs are calculated, and how risk is assigned. Once the difference is clear, it becomes much easier to evaluate quotes correctly and focus on the only number that truly matters, which is the final delivered cost.
