COST OF TRANSPORTATION

            In order to increase the efficiency and effectively of logistics operation, transportation cost is most expenditure that need to control and minimize as possible. If the half of transportation cost can be cut, it will save the whole of operation because since the transportation cost is a single larger cost in logistics operation. Factors that influence the transportation cost such as distance, volume, density, stowability, handling, liability, and market.

          The most factor that influence transportation cost is a distance. The longer the distance of shipment, the higher the transportation cost. This is because the costs is directly contributes to variables cost. Such as labor, fuel and maintenance. The second factor is a load volume. The principle of economies scale of transportation of shipment increase. The most efficient way is consolidate the small load into a large load to maximize the economies of scale.

          Density is for another factor that can influence the cost of transportation. Density is the combination of weight and volume of product. By increase the product density, the more product units can be load. For example, a bottle drink packaging can be replace with can drink in order to increase density. So, we can fully utilize the cubic capacity. Next is stowability factor. Stowability refers to product dimension that fit into transport equipment. The size and shape of packaging should be fit in transportation space.

          Another factor is a handling. Handling equipment is depends on type of commodity or cargo that use. It is easier to handle the containerized cargo. It more complicated to move the live animals cargo because it need special handling equipment. The cost will be higher if the special requirement is needed. Besides, another consideration that influences cost of transportation is a liability. A product characteristic is main things that need to consider, that can be damage or broken. Carrier needs to have insurance to protect against responsibility for damage. Shippers can reduce the risk of damage by improved protective packaging.

          Lastly, is a market factors. For example, balance the lane volume. A lane refers to movement between origin and destination points. Transportation vehicles must return to their origin, either return with back haul load or deadheaded empty. The best solution is both directions so that can minimize the joint cost.

Classification of transportation cost:

1.     Variable cost

2.     Fixed cost

3.     Joint cost

4
     
     Variable cost is a cost that change quickly and it no fixed.For example,labor cost,fuel and maintenance.This cost are measured as a cost per mile or of per unit of weight.Fixed cost is cost that do not change and need to pay even the company is not operate such as during holiday.For example,cost of terminal and vehicles rent.Besides,joint cost are cost that cannot avoid due to decision to provide a particular service.This cost can give can give impact on tranportation charges because carrier need to consider the back haul cost and forward haul cost.For example,carrier need to consider the cost since transportation vehicles is going to destination point and must return to their origin.