Logistics Costs

Introduction. Logistics costs. Managing logistics costs. Transportation costs. Warehousing costs. Carrying costs. Administrative costs. Reducing logistics costs. Analysis of results. Conclusion. Bibliography.

Logistics are one of most important processes nowadays in our world, because of this we can have everything we need in our daily life. Shops and more are full of products because of process called logistics. However to work properly like any other processes it’s important to invest money to it and logistics are no difference it costs a lot for being effective. Logistics costs takes a significant part of business costs, often exceeding even 10 per cent of company turnover. Total logistics costs are taken to consist of many individual components. In this work I will mention few of these components: transportations costs, warehousing costs carrying costs and administrative costs. Objective of this work is analyze these components to know from there costs come and why. Main thing of this work is to understand about every component of costs in logistics. Also to think about ways how to reduce logistics costs.

Organizations need to deal with their coordination with a harmony among expense and execution, since the most reduced cost transportation way isn't really the quickest. Coordination costs identify with the charges for different transportation strategies, including train travel, trucks, air travel and sea transport. Extra coordination costs incorporate fuel, warehousing space, bundling, security, materials dealing with, levies and obligations.

This diagram shows some of the most common logistics costs. As it is shown transportation takes a huge part of these costs. After that goes warehousing and it takes almost 30 percent less than transportation. So we can see that transportation is most important thing in logistics. When we have labors costs, customer service and much less part taking costs in logistics. So going further we will understand what is these costs.

Firstly, transportation costs are described like expenses which come for moving different supplies, products and more from one point to another. Reason why they are transported is simple, because to reach consumers, which will buy these products and supplies. Some companies have their own transport which are used to transport products which are made by that company, however not every company has their own transport. That’s where comes up logistics companies which offers their services of transportation. Of course in any case it will cost money for company to transport their supplies. Transportations costs depends from many different reasons. Starting with that every cargo which are being shipped have their own specifics and that makes costs of transportation for every cargo different. Also there are many different salaries you have to pay then transporting goods, for example pay for the roads, fuel costs, truck maintenance. Also truck insurance, payments to the drivers and more. All of these things are included in transportation costs, but it’s just a few. Among the most significant conditions which affect transportation costs are.