Final answer:
The buyer pays the shipping costs if the goods are shipped under FOB shipping point terms and the seller pays if the goods are shipped under FOB destination terms. These terms determine the point at which ownership and shipping costs liability shift from the seller to the buyer.
Step-by-step explanation:
When it comes to the terms FOB shipping point and FOB destination, they determine when the ownership of goods passes from the seller to the buyer and, consequently, who is responsible for paying the shipping costs. FOB shipping point means that the buyer takes ownership of the goods as soon as they leave the seller's shipping dock, and therefore, the buyer pays for the shipping costs. In contrast, FOB destination indicates that the ownership of goods transfers to the buyer when they arrive at the buyer's receiving dock, which means the seller is responsible for the shipping costs until that point.
The choice between FOB shipping point and FOB destination impacts how businesses manage their shipping routes and BW delivery patterns. Given that shipping finished goods over congested street networks can increase costs, the transfer of ownership and associated expenses is a crucial consideration for both parties in a transaction.