What is carriage outwards?

Definition of Carriage Outwards

Carriage outwards refers to the transportation costs that a seller must pay when it sells merchandise with the terms FOB Destination. Carriage outwards is also referred to as freight-out, transportation-out, or delivery expense.

The cost of carriage outwards should be reported on the income statement as an operating expense in the same period as the revenue from the sale of the goods. (Carriage outwards is not part of the cost of goods sold.)

Example of Carriage Outwards

Assume that a supplier sells $700 of merchandise with the terms FOB Destination. The supplier ships the goods via United Parcel Service at a cost of $50. The supplier's income statement will report sales of $700. In addition, it will report the operating expense carriage outwards (or delivery expense) of $50.

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