Logistics Costs

Direct logistics costs can be directly attributed to a specific order, product, customer, or shipping transaction. These include, for example, freight-related shipping costs, packaging materials, or order-related order fulfillment. Indirect logistics costs also arise in logistics but cannot be readily attributed to a single cost object. Typical examples include warehouse management, IT systems, facility costs, fleet overhead costs, or the salaries of logistics management. In practice, direct costs are usually recorded directly, while indirect costs are allocated via cost centers and allocation keys. This distinction is important for making cost calculations more precise and better identifying cost drivers in logistics processes.

Administrative and system costs in logistics include all indirect expenses related to planning, control, monitoring, and IT support for logistics processes. These include, for example, personnel and material costs for scheduling, route planning, shipping processing, customs and freight documents, inventory planning, controlling, complaint handling, and supplier coordination. On the systems side, costs include those for ERP, WMS, TMS, or shipping software, interfaces, licenses, maintenance, support, data entry, scanners, servers, and cloud services. This also includes training, process documentation, and administrative quality assurance. It does not include direct physical services such as transportation, warehousing, or handling, but rather their organizational and digital management.

Handling and transshipment costs arise wherever goods are physically moved, received, sorted, transshipped, or made available. These include, for example, costs for loading and unloading, order picking, packing, repacking, labeling, scanning, goods receipt and goods issue, internal transport, palletizing, and temporary storage at loading docks or transshipment areas. Also relevant are labor costs, industrial trucks, conveyor systems, energy, wear and tear, auxiliary equipment, and space-related costs associated with these process steps. In practice, these costs often increase with the number of manual handling operations, stock transfers, shipment items, and interfaces. They thus represent a major cost component in all transportation, transshipment, and warehousing processes.

Transportation costs are the portion of logistics costs that arise directly from the movement of goods from one location to another. These typically include freight, freight space procurement, tolls, fuel surcharges, transportation insurance, freight forwarding fees, and transportation-related packaging and shipping costs. These costs must be distinguished from warehousing costs, inventory and capital tie-up costs, handling costs, and administrative logistics costs. In practice, the distinction is made by asking: Does the expense arise because goods are being transported, or because they are being stored, picked, managed, or held in inventory? Pre- and post-carriage, express surcharges, and return shipments are generally included in transportation costs, whereas purely internal warehouse movements are usually not.

Logistics costs typically include all costs associated with the planning, management, and execution of logistics processes. These primarily include transportation costs for shipping, freight, and routes; warehouse costs for space, personnel, and equipment; inventory and capital tie-up costs for stored goods, and handling and transshipment costs—such as those for order picking, loading and unloading, and internal transport. In addition, there are administrative and system costs, such as those for scheduling, logistics planning, IT systems, software, and process control. Depending on the company, costs for packaging, returns, quality assurance, or external logistics service providers may also be included in logistics costs.

In a B2B context, logistics costs refer to the expenses recorded in business accounting that arise from organizing the supply and delivery of goods to companies. This includes costs associated with typical business processes such as goods receipt, warehousing, internal provisioning, order picking, shipping, and distribution-related information processing. This definition is particularly relevant for controlling and cost accounting because it enables the consistent allocation of logistics expenses to functions, processes, or areas of responsibility. In contrast to a narrow view focused solely on freight costs, the term in the B2B context encompasses the entire operational effort required to deliver goods reliably, on time, and cost-effectively.

Logistics costs are all costs incurred through the planning, management, execution, and monitoring of logistics processes within a company. These include all expenses that facilitate the flow of materials, goods, and information between procurement, warehousing, internal movement, and delivery. In a B2B context, the term thus encompasses not only visible transportation expenses but, in principle, all process-related logistics costs. Logistics costs are therefore the financial expression of a company’s logistics performance. Depending on how they are defined within the company, they may refer to individual departments, processes, locations, or the entire supply chain.

Companies reduce logistics costs by optimizing material flow, warehousing, order picking, and shipping as an end-to-end process: this minimizes unnecessary movement, wait times, duplicate entries, and manual verification steps. Automation speeds up data capture, labeling, shipping approvals, and inventory reconciliation, which reduces costs associated with errors, labor, and rework. Precise volume and weight capture is particularly effective, as incorrect master data leads to excessively high freight rates, retroactive charges, and poor space utilization. PackageHERO® supports this process with standardized, rapid capture of relevant shipping data. This enables better selection of packaging materials, more accurate freight calculations, more efficient planning of warehouse capacity, and a sustainable reduction in costs per shipment.

In Germany, benchmarks for logistics costs vary significantly depending on the industry, vertical integration, product range, and service level. As a rough guideline, logistics costs in the B2B sector are often in the mid-single-digit to low-double-digit percentage range of revenue. Retail companies often have higher costs than lean industrial processes, and e-commerce typically exceeds even those levels. Key metrics for comparison include transportation costs per shipment, warehousing costs per storage space or order, inventory turnover, turnover rate, and costs per order line. Market data from the crisis years of 2021 through 2024 shows increased pressure, particularly from rising energy, labor, rent, and transportation costs. To establish reliable benchmarks, companies should therefore always use current, industry-specific, and size-class-based comparative figures.

Replenishment management affects logistics costs because it determines when, in what quantities, and at what intervals materials or goods are replenished. As a result, it directly influences the alignment between demand, availability, and operational execution. When replenishment decisions are made in line with consumption, processes remain more stable, and unnecessary disruptions in the warehousing and shipping processes are avoided. The key factor affecting cost levels is whether replenishment parameters are reliably aligned with actual demand. Effective management thus reduces the need for ad hoc measures and supports a more even utilization of logistics resources. This makes logistics as a whole more predictable and cost-effective.

Volume weight is important because shipping costs are calculated not only based on actual weight but often based on the amount of cargo space required. Light but bulky shipments place a greater strain on vehicles, containers, or warehouse capacity than compact goods. That’s why many carriers use the higher value between actual weight and volumetric weight. For businesses, this means that large packaging, air cushions, and inefficient box sizes can increase shipping costs, even though the product itself weighs very little. Accurate measurement of dimensions and weight therefore helps prevent rate discrepancies, ensures shipments are calculated correctly, and enables targeted optimization of packaging and packing density.

The supply chain determines how products travel from the company to the customer—and thus also where logistics costs are incurred. The key factors are, above all, the number of transfer points, the distribution of inventory across the network, and the allocation of tasks between the company’s own locations and external partners. Direct delivery results in different cost structures than a multi-stage supply chain involving warehouses and hubs. For companies, therefore, it is not just the individual shipment that matters, but the entire distribution model. The role of the distribution chain is to align service requirements, the delivery area, and network structure in such a way that the supply chain remains economically and organizationally manageable.

Logistics costs are closely linked to TUL processes because these three areas constitute the basic operational functions of physical logistics. Transportation refers to the movement of goods between locations; transshipment refers to the handling and transfer of goods at interfaces; and warehousing refers to the storage of goods over time. For cost analysis, it is important to consider these process types separately because they have different cost drivers: for transport, for example, distance and shipment structure; for transshipment, the number of movements; and for storage, primarily duration and space requirements. TUL processes thus serve as a framework for clearly assigning cost sources and implementing optimization measures in a targeted manner at the right points.

Key metrics that make costs transparent, comparable, and manageable are particularly important. The logistics cost as a percentage of revenue is central. In addition, costs per shipment, per order, per pallet, per kilometer, or per metric ton to evaluate processes based on their actual causes. For warehousing and inventory, storage costs per storage location, inventory range, inventory turnover, and capital tied up per item or product group are relevant. Added to these are on-time delivery, delivery rate, damage rate, and return rate, because service issues often increase hidden logistics costs. In B2B, the combination of cost metrics, inventory metrics, and performance metrics is particularly meaningful, rather than a single isolated figure.

Logistics Costs as a Percentage of Revenue (%) = (Logistics Costs / Revenue) × 100 This metric shows what percentage of revenue is spent on logistics services. It is important that the numerator and denominator correspond to the same time period and the same reporting period, such as monthly or annually. Example: If logistics costs amount to €250,000 and revenue is €5,000,000, the calculation is: (250,000 / 5,000,000) × 100 = 5% In B2B controlling, this formula is frequently used as a percentage metric to compare locations, product groups, or time periods. If necessary, the relevant portion of revenue for a division or customer segment can be used instead of total revenue.