You can pass freight costs on to your customers by using special condition types that relate to shipping and freight charges. The standard SD application component includes predefined condition types that are based on Incoterms.

Incoterms are the internationally recognized shipping terms that establish the respective liabilities of both the shipping party and the recipient. For example, a common shipping term is FOB (Free on board). The term can be further qualified by adding the loading port, for example, FOB Boston.

You can create condition records either:

• Based solely on the first part of the Incoterm (for example, FOB)
• Based on the combination of parts 1 and 2 (for example, FOB and Boston)

The standard R/3 System includes two predefined freight conditions:

• Freight condition type KF00 applies to each item in a sales document. During automatic pricing, the system searches for valid condition records that apply to this freight condition.
• Freight condition type HD00 can only be applied to an entire document. You enter this freight manually during sales order processing.