What are the costs involved in logistics?

What are the costs involved in logistics?

Logistics Costs: The 5 Main Cost Drivers During Operations

• Warehousing Costs: Incoming goods.
• Warehousing Costs: Storage.
• Fulfillment Costs: Pick & Pack.
• Shipping Costs: Delivery.
• Other Costs: Returns.

How is logistics cost calculated?

Divide the total transportation costs by the total sales on the transported products to determine the percentage costs for transportation. Include all transportations costs in this equation, such as payroll for transportation staff, fuel use, insurance costs and maintenance costs.

How much should a company spend on logistics?

So, between 10 and 12 percent of sales was the approximate average US companies spent on logistics in 2015.

What percentage of sales should you spend on logistics?

With the data from above and the fact that in 2019, the average logistics costs accounted for 11 percent of sales,[4] companies can begin to benchmark and quantify their actual logistics costs based on the above data.

What are the 4 basic costs of transportation?

In freight, the basic costs you’ll get billed for include these four items:

• Line haul.
• Pickup and delivery.
• Terminal handling.
• Billing and collecting.

What are cost drivers in logistics?

Cost drivers are any factors which cause a change in the costs of work performed in an organisation or in a process. Cost driver analysis is the examination, quantification and explanation of the cause-effect relationship between the cost drivers and the indirect costs of an operation [10].

How much should distribution costs be?

Typically, distribution and transportation costs for consumer packaged goods companies range from 6% to 8% of revenues (see Figure 1). In our experience, companies with inefficient networks can lower their distribution network costs by 10% to 25% by upgrading their systems (see Figure 2).

What is product distribution cost?

Distribution cost is the sum total of all those expenses which are incurred by the producer of a product in order to make possible the delivery of the product from its location to the location of the end customer.

How much is it to distribute a product?

The margin for a distributor may range from 3% to 30% of the sales price, the margin for the retailer may range from very little to 60%.

What percentage of logistics cost is transportation?

Chart 1 description: Chart 1 presents the shares of the three main components of the logistics costs such as inventory-carrying costs (33%), transportation costs (63%), and logistics administration costs (4%).

What does transportation cost include?

Transportation expenses are a subset of travel expenses, which include all of the costs associated with business travel such as taxi fare, fuel, parking fees, lodging, meals, tips, cleaning, shipping, and telephone charges that employees may incur and claim for reimbursement from their employers.

What are the types of transportation costs?

Alongside this common breakout, transport costs are broken down into three types: standing, running, and overhead (the first two classified as direct costs, the latter one borne by the whole fleet of vehicles) ( Table 2).

What factors affect the cost of logistics?

What are the Factors Affecting the Cost of Logistics?

• Deregulation (Reduction in Economic Regulation) Relaxed government control of carriers? …
• Changes in Consumer Behaviour. Changes in consumer behavior have important logistical implications. …
• Technological Advances. …
• The Growing Power of Retailers. …
• Globalization of Trade.