Understanding the Transportation Costs

November 10, 2021

Transportation costs make up all of the expenses associated with the movement of raw materials, finished goods, or retail products to customers, businesses, or third-party sellers. They include direct costs such as fuel, salaries, etc., and indirect costs such as maintenance of vehicles, support structures, distribution networks, and other overheads.

Transportation costs account for the majority of all operating expenses. They are capable of impacting the key areas of business like the price of products or the competitiveness in the market. That’s why companies continuously strive to reduce transportation costs by optimizing the transportation process.

Transportation cost depends on several factors. These include the industry, size, structure, complexity of the business operations, and the location of the business. Important KPIs to consider for transportation cost analysis are:

  1. Transportation Expense Ratio
  2. Cost of Transportation
  3. Operating Cost per Kilometre
  4. Fixed Expenses
  5. Variable Expenses
  6. Cost per delivery

Try out the free demo for Transportation Cost Analysis using Microsoft Power BI here.

How to reduce Transportation Costs? Click here to know more.

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