The cost transition point is referred to in commercial enterprises as the physical point at which transportation costs pass from the seller to the buyer.
Brief description
The cost transition point determines the point before which costs are borne by the shipper and after which costs are borne by the consignee. Thus, for example, if the FOB formula is used, the costs of transportation from the factory to the ship are borne by the seller. The actual transportation costs as well as charges for further transportation to the destination point are assumed by the buyer. Cost pass-through is determined automatically using the agreed Incoterms trade formula.
