A Look at Carriage Costs

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In shipping terms, carriage cost (commonly known as the freight cost) is the expense incurred for the moving of goods from one location to another. In most cases, carriage cost is discussed in context of an order transaction between a buyer and a seller. Before a carriage cost can be determined, unit costs and trade prices have to be set in order to appropriately define the costs associated with the transporting of the goods.

Typically, carriage costs are incurred by the buyer as a separate shipping charge or included in the unit cost.

Unit costs are calculated by the given unit of a product and the cost that a company incurs to produce, store or sell a product. Unit costs include all costs associated with production. From production, the goods move to the final destination (a distribution center or a retail store that will then sell the product). Carriage costs will be associated with the transporting of the units.

Prior to the shipment, trade prices will be determined between the manufacturer or producer and the retail or wholesale location. A trade price is defined as the price a product is sold as to the stores by the companies that produce it.