What are the costs of transporting goods?

The pandemic has shown that logistics moves the world, that it is a key muscle in international trade. For this reason, from Economipedia, we are going to analyze what are the main costs that must be faced in the transport of goods.

Good management of logistics and its costs can be a competitive advantage for companies. Hence the importance of understanding and being aware of what the main transport costs are.

Knowing where logistics costs are located, companies will be able to implement strategies to reduce them or choose more efficient and economic means of transport.

transport costs

They include everything related to vehicles, distribution, fuel, collection and delivery. Now, if a company chooses to carry out its own transport instead of hiring third parties, it must add the maintenance costs of its own fleet of vehicles.

Among the most outstanding costs we find the purchase of vehicles, tolls, insurance, customs, gasoline and the salaries of carriers.

It should be noted that, when carrying out transport, it is common for companies to resort to freight transport insurance. These insurances protect the merchandise from possible eventualities such as deterioration and theft.

Regarding insurance, it is worth mentioning that shipping companies have the obligation to hire them for the transport of goods. To do this, it will be necessary to select the most appropriate type of insurance for the type of shipment that is intended to be made.

However, multimodal transport is also another element to analyze in logistics costs. All this means resorting to various means of freight transport. In this sense, punctuality in deliveries and collections will be essential when changing means of transport.

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In the changes of means of transport we can find additional costs. These costs are charged for the collection and shipment of the container to the recipient. In fact, costs may be charged for additional services such as time, place of loading and machinery used in loading and unloading operations.

Likewise, good inventory management is essential to coordinate the different means of transport. In cases of delay, it is possible to resort to faster means of transport, although generally more expensive, in order to meet the agreed deadlines. A clear example would be exchanging a ground shipment for an air shipment.

Inventory management

This type of cost refers to the management of the warehouse, the way in which demand is met and the number of units stored.

Thus, an excessive accumulation of stock can harm the company, since the products take up space in the warehouse without generating income. Conversely, insufficient stock levels can lead to the dreaded stock-outs and leave customers short of supplies.

The causes that can increase storage costs are very varied. These include mispredictions of consumer demand, poor merchandise tracking, poor stock turnover, production bottlenecks, delivery delays, and damaged or defective merchandise.

If errors occur in stock management, they can cause serious problems in logistics chains. For this reason, it is important to review historical data and establish an adequate stock classification system.

Staff costs

Carriers are not the only human element related to the transport of goods. Keep in mind that many specialists are involved in supply chains.

For this reason, we find directors of logistics departments, warehouse administrators, forklift drivers and stevedores, among many others. Thus, the costs associated with personnel are usually those related to salaries, commissions, incentives, education and training.

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Due to the fact that maritime transport is the great pillar of international trade, port stevedores are especially relevant. In fact, it has been shown that labor disputes with port stevedores can cause serious delays and, therefore, have negative consequences on economic and business activity.

Merchandise packaging

Thanks to the packaging it is possible to protect the products and guarantee a safe delivery to the recipient.

However, it is not just about preventing goods from being damaged. Logistics managers, carriers and warehouse technicians must be aware of container dimensions. This is the case of pallets.

For example, the universal pallet, with dimensions of 1,200 millimeters by 1,000 millimeters. Another widely used pallet is the Euro pallet, measuring 1,200 millimeters by 800 millimetres, widely used for the transport and storage of goods on the European continent.

Therefore, it will be necessary to find a balance between the reduction of packaging costs, the number of units transported and the resistance of the packaging.

Taxes and tariffs

Depending on the value of the merchandise transported, a series of tariffs and taxes must be paid. Generally, they are paid at the customs of the destination countries.

The usual thing is that it is the importer who pays the tariffs. It should be noted that tariffs can far exceed the cost of transportation. Therefore, when making international shipments of goods, it is necessary to assess the possible costs that tariffs may entail.

The amount of duties will be set to the HS code, which is a tariff code.

Since shipping covers 90% of world trade, let’s take an example of how tariffs are calculated for shipping. Thus, a percentage will be paid on the value of the merchandise, the cost of freight and insurance.

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However, in the event that the country of destination has implemented measures against unfair trade or against excessively low prices, it is possible that they will have to face tariffs of around 50%.

A tax to take into account in Europe is VAT. And it is that imports from non-member countries of the European Union must pay VAT. In this way, VAT is obtained by applying the corresponding percentage to the value of imported products, the cost of insurance and the cost of freight.

Other expenses that must be faced in the international transport of goods are customs clearance. These expenses are paid for the processing of the goods and the verification of the shipment. However, if we compare them with other taxes and duties, they are much less high.

delays

In the demanding world of international trade, delays mean economic penalties, that is, added costs. Among the causes that cause a delay can be congested ports, traffic jams, inspections by authorities or bottlenecks in logistics centers.

In maritime transport, shipping companies offer a few days off in their warehouses that cover a certain margin of delay. However, once those days have expired, the excess days must be paid.

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