In addition to sales, expenses play an important role for every company. These include expenses for production, but also transport costs. The latter are influenced by various aspects. Here you get an overview of which factors are relevant.

Why is an overview of transportation costs important?

First of all, the question should be answered why an exact overview of your transport costs is important. After all, as an entrepreneur you certainly don't have much time and only want to deal with factors that play a central role and possibly even drive your business forward.

The calculation

First of all, the costs have an important meaning in your calculation. The question is whether you want to bear the delivery costs yourself or add them to the purchase price of your products - i.e. list them separately. If you decide on the first option, you must of course make sure that the transport costs are already included in the respective product prices.

You need to pay attention to details: It is essential that you know all the factors that can influence the transport costs. This is the only way to avoid unpleasant surprises due to errors in the calculation.

Adjustments and the cheapest way

Added to this is the significance of potential changes in transportation costs. Various external influences can play a role here (more on this in a moment). You need to keep an eye on these changes to be able to adjust your prices accordingly - or to decide whether an adjustment is necessary. Otherwise, you may lose potential revenue.

On the other hand, you can benefit extensively from a detailed knowledge of transport costs. Based on your knowledge, you have the possibility to choose the most favorable option for your individual requirements.

In the best case, this will keep your delivery and product costs low, which is certainly in the interest of your customers and can ensure more sales. This is especially true when you gain a price advantage over the competition.

 

What points basically have an impact on your transportation costs?

To get an overview of the factors that are important for transportation costs, you should first know which items basically play a role in this. Among other things, these include:

• Acquisition costs for means of transport and their maintenance
• Fuel costs
• Personnel expenses
• Tolls and insurances

Relevant factors in pricing

The acquisition costs for means of transport are often a high investment. Accordingly, transport companies must calculate in such a way that they can recoup these expenses within a certain period of time.

In addition, there are the costs for fuel and personnel expenses. The longer the distance your products have to travel, the more significant these items are. This is especially true for fuel. You also have to factor in the cost of tolls.

Special case insurance

The costs of insurance are also relevant for you as an entrepreneur. For example, the legal situation is not always clear when it comes to the question of who is responsible for damage that occurs during transport.

There are differences between deliveries to B2B or B2C customers, among others. In the best case, you should consult an expert to assess how relevant the topic is for you and whether transport insurance can be worthwhile for you.

It is also relevant what kind of products you sell. In the case of particularly expensive and sensitive goods, transport insurance is certainly more sensible in many cases than for inexpensive and less vulnerable items, for which a claim is hardly to be expected.

Commission transport or transport it yourself?

With a look at the transport costs, it also matters whether you have a third-party provider deliver your goods or implement it yourself with your own fleet of vehicles.

Delivery by a third-party provider is certainly the more common option, but the use of a company's own fleet of vehicles is quite conceivable, particularly for larger companies - especially if transport can take place exclusively by road.

If you choose your own transport, you must bear in mind that you will initially have high investment costs for the means of transport and thus take a financial risk. You should recoup this risk as quickly as possible. The personnel costs are also entirely your responsibility - regardless of whether you sell a lot or a little at any given time.

The variant of own transport can permanently reduce the costs, because you do not want to achieve profit margins like a transport company. However, the basic investment and the risk are significantly higher.

External circumstances

Another important factor that can influence transportation costs is external circumstances of various kinds. Therefore, it is important that you keep such aspects in mind in order to be able to react accordingly or to adjust your sales regions or delivery routes if necessary.

These points, some of which are mutually dependent, include:

• Economic crises
• Pandemics
• Inflation
• political developments
• Energy prices

Economic crises and pandemics

There have been one or more examples of each of these factors in recent years and decades, which once again illustrate their relevance. In the economic crisis of 2009, demand in the transport industry dropped significantly - at the time, this led to a price war, i.e. lower costs.

The Corona pandemic, in turn, caused transport prices to rise. This was partly due to the fact that, depending on the transport route, more circuitous delivery routes had to be taken because of various restrictions.

Due to the restrictions, demand could not always be met in full or only with great delays, resulting in supply bottlenecks. At the same time, companies wanted to deliver their products to their destination as quickly as possible - this combination also drove prices up.

Inflation, political developments and energy prices

Another factor that can have a major impact on transportation costs is inflation. Since 2022, the significant devaluation of money has been felt in many industries, which is influenced, among other things, by the war in Ukraine. As a result, it is only logical that transportation costs will also increase in this context.

The war in Ukraine has already brought up the next issue that can influence transport prices: Political developments. In addition to wars, other conflicts between countries can also play a role, leading, for example, to a significant increase in tariffs as a country's economy tries to seal itself off from the outside world.

Another factor that can have a major impact on transport costs is energy prices. Especially when fuel becomes more expensive, this drives up logistics expenses significantly, as the transporter has to bear higher costs on a day-to-day basis.

Since the year 2022, corresponding developments in the sense of increases with regard to the prices for energy can be observed in a clear form.

 

Packing material

In addition to the basic costs and the external circumstances, you must of course also take into account the packaging materials. This includes, among other things, sturdy boxes, labels that protect the products.

In addition, the cost of the labels that help you and the suppliers keep track of them also plays a role. Of course, these are not costs that arise directly from transportation. However, they are directly related to the delivery, as they affect the transport safety and integrity of the goods.

Transport costs for truck and rail

After a basic look at factors influencing transport costs, it is worth taking a look at the details and the items that will be billed later. For example, there are some differences between the various types of mobility in terms of the items that are relevant for the final price. Among other things, for the transport depending on the specific route come into question:

• TRUCK
• Railroad
• Air traffic
• Seafaring

TRUCK

When you order transport by truck from a freight forwarder, you must first include the freight rates in your calculation. Then, among other things, the collection, the handling and the main run, i.e. the main section of the transport, have to be added.

In addition, you have to take into account the delivery costs and the costs for customs - especially the latter can vary depending on the country to which you export your goods. In most cases, however, as a customer of a freight forwarder you will only be aware of this breakdown when you look at the invoice, which lists the individual items.

Transport costs for rail transport

A similar picture emerges when looking at the cost breakdown for transport via rail. Only the names of the terminology differ. In this context, the freight rate is called the rail freight rate.

Among other things, regional or seasonal surcharges are also included here. In addition, you have to calculate expenses for the rail terminal and delivery. Depending on the destination, payments to customs may also be added.

Transport costs for air and sea freight

A similar picture emerges when looking at the costs for air freight. The basis for the calculation here is the volume weight. The first item for this in the calculation is the so-called air freight rate.

Added to this are the costs for the airport. The loading and unloading as well as the organization play a role here. Finally, you have to reckon with expenses for delivery and customs.

Sea freight costs are also calculated analogously to this model. The basis here is provided by the sea freight rate. This price is determined in connection with the container size. In addition, there are the port costs, the price for delivery and also the costs for customs.

Conclusion

Transportation costs are a key factor in your calculations. They can vary due to different circumstances. Therefore, you should get a good overview of these aspects and always keep yourself informed about developments. The way in which your goods are transported also plays a role in the final expenses. Depending on the region to which your products are delivered, you can gain (cost) advantages with the right decision.

FAQ

1. What basic items affect transportation costs?
   Basic items that affect transportation costs include insurance, the cost of fuel, and personnel expenses. 

2. What external circumstances, which are hardly predictable, have an influence?
   The external circumstances that influence the transport costs can be, for example, occurring pandemics, general inflation, economic crises and the development of energy prices.