Logistics Costs: Transportation, Handling, and Warehousing

Logistics Costs

Logistics costs refer to the expenses incurred in the planning, coordination, and execution of the movement and storage of goods from one place to another.

Transportation Costs

• Accounts for the largest proportion of logistics costs (40-50%)
• Includes:
  • Fuel costs
  • Vehicle maintenance costs
  • Driver salaries and benefits
  • Tolls and taxes
  • Insurance premiums
  • Freight charges (e.g. air, land, sea)
• Factors affecting transportation costs:
  • Distance and mode of transportation
  • Fuel prices and efficiency
  • Vehicle capacity and utilization
  • Traffic and congestion

Handling Costs

• Includes the costs of:
  • Receiving and inspecting goods
  • Storing and retrieving goods
  • Packaging and labeling goods
  • Loading and unloading goods
  • Inventory management and tracking
• Factors affecting handling costs:
  • Efficiency of warehouse operations
  • Labor costs and productivity
  • Equipment and technology used
  • Inventory turnover and storage capacity

Warehousing Costs

• Includes the costs of:
  • Renting or owning warehouse space
  • Utilities and maintenance
  • Equipment and supplies (e.g. shelving, forklifts)
  • Labor costs for warehouse staff
  • Inventory holding costs (e.g. depreciation, obsolescence)
• Factors affecting warehousing costs:
  • Warehouse size and location
  • Inventory levels and turnover
  • Storage and retrieval systems
  • Automation and technology used

Learn about the different components of logistics costs, including transportation, handling, and warehousing. Understand the factors that affect these costs and how to optimize them.