Final answer:
False, in a transaction with the term FOB shipping point, the buyer, not the seller, pays the freight cost and assumes liability once the goods leave the seller's premises. This impacts costs and liabilities in shipping arrangements.
Step-by-step explanation:
The term FOB shipping point is a contractual term used in the shipping industry referring to the moment when the ownership of goods being shipped transfers from the seller to the buyer. Contrary to the statement given, FOB shipping point implies that the buyer is responsible for the freight cost and assumes liability once the goods leave the seller's premises. Therefore, the seller does not pay the freight cost in this scenario. In contrast, FOB destination would mean the seller retains the risk and the responsibility for freight cost until the goods reach the buyer's location.
It is crucial for both parties to understand these terms as they directly impact costs and liabilities involved in global trade and shipping. Knowing whether a transaction is FOB shipping point or FOB destination affects the pricing of products, the inventory accounting, and can influence the selection of shipping methods and routes to optimize cost-effectiveness and efficiency.