Transportation costs have always been a key element in logistics that joints the separated activities. According to the statistics, transportation costs occupies one-third of the amount in the logistics costs and largely influences the performance of logistics system. Transporting is inevitable to logistics as it required in the whole production procedures, from manufacturing to delivery to the final consumers and even returns. In today's economy, it is virtually impossible for a logistics firm to function without the help of transportation. In fact, the backbone of the entire supply chain in logistics is the transportation management that makes it possible to achieve the right product in the right quantity and the right condition, at the right place, at the right time, for the right customer at the right cost.
When all the components
of the logistics sector like production, storage, transportation, wholesaling,
and retail sale are dependent on effective transportation, you might now fairly
access what major influence does the transportation costs have on the logistics
sector. It requires efficient planning of all these functions and sub-functions
into a system of goods movement in order to minimize the costs and to maximize
services to the customers. Production or manufacturing plants required the
assembly of various materials, components which cannot be done without
transportation. Warehousing or storage services between production plants and
marketing outlets involve separate transport. Finally, the chain completes with
merchandising the finished product or say the final delivery to the consumers
which again cannot be brought into action without the help of transportation.
So, all these developments majorly
depend on better, effective and
affordable transport services which ultimately reflects on the logistics costs
Talking about transportation costs, today it is the major concern of the logistics sector as well as the other companies as it constitutes to about 40-50 percent of the total logistics costs and 4 to 10 percent of the selling price of the final products. With this, it is pretty much clear that the transportation decisions directly affect the total logistics costs, and cost in other functional areas of the firm. Now, that we know about the major impact of transportation on logistics we should now think about effective ways to resolve the ever-increasing prices.