Top 5 Costs of Logistics

Logistics cost includes expenses associated with moving product From sourcing raw materials to placing customer orders and every step in between. There are significant costs that become part of your supply chain, but there are also hidden costs or costs that you are not aware of. 


Top 5 Logistics Costs

1. Transportation and shipping

This involves getting inventory from the manufacturer to the warehouse and then to the customers. Transportation costs include placing orders through the carrier to customers at residential addresses.


Everyone knows this but what are the costs that you might not be aware of?

  • Fuel surcharges – These are costs associated with the cost of oil, essentially additional costs incurred due to fluctuations in the price of oil
  • The cost of unloading and loading – When your goods arrive or arrive at a destination, someone has to do the loading or unloading. There may be associated costs
  • Gate Fee – Warehousing is a business and such landlord will charge gate charge for parking to enter warehouse facilities and this can be passed on to the customer
  • Warehousing Surcharge – Sometimes you leave your cargo in a warehouse during transit because you are waiting for documentation, may incur additional warehousing charges and are usually at much higher rates than normal warehousing costs .

2. Warehouse rent

This involves signing a lease and buying land, which are often long-term commitments. Costs will vary according to your needs and development plans in terms of square footage, loading docks to receive and ship inventory.
Some potential warehouse costs you might not be aware of:


  • Insurance - Most warehouses do not cover insurance for your goods
  • High Warehousing Costs for Dead Stock - Most warehouses don't want your stock to be there for years and neither will you
  • Processing of Documentation - Any documentation or additional services you may need


3. Inventory storage and allocation

The cost of simply storing inventory is high, especially if you are outsourcing the storage. The more inventory, the more you'll pay.

4. Supplies and equipment in the warehouse

Keeping inventory effectively involves purchasing proper shelving units, pallet racks. You will also need a forklift, conveyor to move the goods. For packaging you need shipping supplies, boxes, envelopes, tape, dunnage, labels. Management of warehouses will also require a warehouse management system, internet, taxes, utilities and other administrative expenses.

5. Staff labor

You will need personnel to move inventory and pack boxes. You will also need teams like customer service that handle logistics functions according to the specific needs of your business.
Now you need more labor but what can the extra charges come for?

  • Overtime - working overtime for labor may require additional hourly pay
  • Holiday pay – if you need to work on weekends or holidays, the hourly wage is higher
  • Insurance - If an injury occurs, is the labor considered your employee or contract with the warehouse?


We've included a few things to be aware of. In general if you have worked with a warehouse you will be notified of these costs. But each operator is different so you need to be aware of what the potential costs could result in your shipment and supply chain.