{"id":9289,"date":"2019-10-15T12:40:33","date_gmt":"2019-10-15T04:40:33","guid":{"rendered":"https:\/\/www.zhenhub.com\/?p=9289"},"modified":"2022-10-07T18:24:41","modified_gmt":"2022-10-07T10:24:41","slug":"costs-of-logistics","status":"publish","type":"post","link":"https:\/\/zhenhub.com\/blog\/costs-of-logistics\/","title":{"rendered":"Top 5 Costs of Logistics in 2022"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Regardless of the scale, managing a retail company involves operating on a tight budget. From product development, marketing, and branding to staffing and human resources, all arms of the operation should be cost-efficient to ensure that profit margins remain healthy. Unfortunately, especially for eCommerce operators, the costs of logistics can be challenging to manage, and they <\/span><a href=\"https:\/\/www.wsj.com\/articles\/shipping-and-logistics-costs-are-expected-to-keep-rising-in-2022-11639918804\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">could keep rising well beyond 2022.<\/span><\/a><span style=\"font-weight: 400;\"> The supply chain is constantly in flux and can quickly balloon depending on a spectrum of factors.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Keeping the cost of logistics manageable entails more than shopping around for the most affordable carrier. Dollar savings should not come at the expense of the customer experience. The best way to reduce supply chain costs starts with knowing what makes up this considerable expense.\u00a0<\/span><\/p>\n<h2><b>What are Logistics Costs?<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">At its core, logistics costs refer to the amount an eCommerce operation spends to move a product along the supply chain. It includes all expenses from <\/span><a href=\"https:\/\/zhenhub.com\/blog\/amazon-fba-product-sourcing\/\"><span style=\"font-weight: 400;\">product sourcing<\/span><\/a><span style=\"font-weight: 400;\"> to <\/span><a href=\"https:\/\/zhenhub.com\/blog\/reverse-logistics-in-ecommerce\/\"><span style=\"font-weight: 400;\">reverse logistics<\/span><\/a><span style=\"font-weight: 400;\">. It is arguably the most significant operational expenditure of eCommerce retailers &#8211; at 5 &#8211; 15% of the total overhead costs. In contrast, brick-and-mortar retail stores spend an average of less than 5% on shipping and logistics.\u00a0<\/span><\/p>\n<h2><b>Top 5 Costs of Logistics<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">One of the best ways to improve profit margins is to reduce supply chain expenses. Retailers can do this by taking stock of the top expenditures in this sector:<\/span><span style=\"font-weight: 400;\"><br \/><\/span><\/p>\n<h3><b>1. Transportation &amp; Shipping<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Transportation expenses make up a large chunk of logistics costs. It encompasses all shipping costs from product sourcing to delivery of the package to the customers. More than the shipping rate, there are a few other fees that fall under this bucket:<\/span><\/p>\n<ul>\n<li><b>Fuel Surcharge<br \/><\/b>Fuel surcharges refer to the fees transportation companies place on their customers when there are fluctuations in fuel cost. Retailers can calculate it on a base rate and leverage it to negotiate fuel surcharges.<\/li>\n<li><b>Handling Fees<br \/><\/b>The coverage of handling fees differs from carrier to carrier. However, this expense often includes loading and unloading fees, entrance charges, and even parking fees. Like the fuel surcharge, retailers have a little bit of wiggle room regarding handling fees.<\/li>\n<li><b>Duties &amp; Customs<br \/><\/b><a style=\"font-size: inherit; background-color: initial; font-family: -apple-system, system-ui, BlinkMacSystemFont, &#039;Segoe UI&#039;, Helvetica, Arial, sans-serif, &#039;Apple Color Emoji&#039;, &#039;Segoe UI Emoji&#039;, &#039;Segoe UI Symbol&#039;;\" href=\"https:\/\/zhenhub.com\/blog\/customs-duty-de-minimis-values-by-country-2020\/\">Customs duties<\/a><span style=\"font-weight: 400;\"><span style=\"font-weight: 400;\"> should always be accounted for when transporting goods to international destinations. When computing the total delivery price, retailers must consider the different area-to-area costs.<\/span><\/span>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<\/li>\n<li><b>Shipping Insurance<br \/><\/b><a style=\"font-size: inherit; background-color: initial; font-family: -apple-system, system-ui, BlinkMacSystemFont, &#039;Segoe UI&#039;, Helvetica, Arial, sans-serif, &#039;Apple Color Emoji&#039;, &#039;Segoe UI Emoji&#039;, &#039;Segoe UI Symbol&#039;;\" href=\"https:\/\/zhenhub.com\/blog\/do-you-need-shipping-insurance\/\">Shipping insurance<\/a><span style=\"font-weight: 400;\"> isn\u2019t always a requirement when transporting items to the customer. This extra cost is especially beneficial for retailers that sell high-value, one-of-a-kind safety. It offers a level of security to the customers.\u00a0<\/span><\/li>\n<\/ul>\n<h3><b>2. Storage &amp; Warehousing<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Many small eCommerce businesses quickly outgrow their home operations. Most of these sellers need a secondary location to store and manage inventory to scale. Unfortunately, in 2022, renting a storage space can be expensive.. Aside from the deposit and the monthly surcharges, most warehouses are empty and still need outfitting. It is a hefty investment that requires long-term lease commitments.\u00a0<\/span><\/p>\n<h3><b>3. Inventory Management<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Managing inventory entails more than just renting a storage space. <\/span><a href=\"https:\/\/zhenhub.com\/services\/inventory-management\/\"><span style=\"font-weight: 400;\">Inventory management<\/span><\/a><span style=\"font-weight: 400;\"> requires taking stock of all items and gathering data on the profitability of each. The more things a retailer offers, the more expensive it is to manage the inventory supplies.\u00a0<\/span><\/p>\n<h3><b>4. Supplies &amp; Equipment<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Supplies and equipment play a role in optimizing a retailer\u2019s warehouse use. This expense includes organization tools like shelves, pallets, and racks. It also comprises heavy machinery like forklifts and conveyor belts. For sellers that package their items, the expense also falls under this category.\u00a0<\/span><\/p>\n<h3><b>5. Labor<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">The retailer&#8217;s workforce is the most important asset. After all, without them, there wouldn\u2019t be a \u201chandling\u201d in \u201cshipping &amp; handling.\u201d This logistics cost includes basic pay, bonuses, and benefits. Payroll management is also part of labor expenses.\u00a0<\/span><\/p>\n<h2><b>Ways to Reduce Logistics Expenses<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">It isn\u2019t easy to cut logistics expenses. A retailer shouldn\u2019t sacrifice the customer experience to save a buck on sourcing or packaging at the end of the day. For sellers that need to reduce supply chain expenditures, below are the best ways to do so.\u00a0<\/span><\/p>\n<ul>\n<li aria-level=\"1\"><b>Choose a Local Supplier<br \/><\/b>Most retailers assume that the cheapest procurement route is to source items from China. While the products are almost always more affordable, plenty of hidden costs come with sourcing from overseas. The shipping and transportation expense alone can significantly cut a retailer\u2019s profit margins. In some circumstances, working with a local supplier is the most cost-efficient sourcing solution.<\/li>\n<\/ul>\n<ul>\n<li aria-level=\"1\"><b>Take Stock of the Inventory<br \/><\/b>As mentioned earlier, a robust product selection isn\u2019t always good. The more products a retailer has, the more expensive it is to manage them. In <a style=\"font-size: inherit; background-color: initial; font-family: -apple-system, system-ui, BlinkMacSystemFont, &#039;Segoe UI&#039;, Helvetica, Arial, sans-serif, &#039;Apple Color Emoji&#039;, &#039;Segoe UI Emoji&#039;, &#039;Segoe UI Symbol&#039;;\" href=\"https:\/\/zhenhub.com\/blog\/how-to-reduce-shipping-costs\/\">reducing logistics costs<\/a><span style=\"font-weight: 400;\">, assessing all available items in the catalog is essential. Identifying fast-moving and slow-moving inventory can help a retailer determine which product deserves warehouse space.<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-level=\"1\"><b>Compare Carriers<br \/><\/b>Carriers change their prices regularly. It is up to the retailer to remain updated with the changes to ensure that they are getting the best pricing.<\/li>\n<\/ul>\n<ul>\n<li aria-level=\"1\"><b>Purchase Packaging in Bulk<br \/><\/b>Branding through packaging is an important marketing too, and it&#8217;s wise for retailers to take advantage of this. Nevertheless, the packaging isn\u2019t cheap. Buying bulk is the best solution to save on packing cost materials. Manufacturers often provide volume discounts for companies that purchase considerable amounts.<\/li>\n<\/ul>\n<ul>\n<li aria-level=\"1\"><b>Work with Third-Party Logistics Provider<br \/><\/b>Contrary to popular belief, working with a <a style=\"font-size: inherit; background-color: initial; font-family: -apple-system, system-ui, BlinkMacSystemFont, &#039;Segoe UI&#039;, Helvetica, Arial, sans-serif, &#039;Apple Color Emoji&#039;, &#039;Segoe UI Emoji&#039;, &#039;Segoe UI Symbol&#039;;\" href=\"https:\/\/zhenhub.com\/blog\/signs-you-need-a-3pl-partner\/\">third-party logistics partner<\/a><span style=\"font-weight: 400;\"> is a cost-effective supply chain solution. Most 3PLs offer steep shipping discounts, access to warehousing and workforce, and an inventory management tool with remote access.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Logistics is the backbone of eCommerce. A seamless supply chain, after all, has a profound effect on customer satisfaction and loyalty. Understanding what the process entails is the best way to improve services and reduce costs.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The best way to optimize logistics for most companies is by working with experts. <\/span><a href=\"https:\/\/zhenhub.com\/\"><span style=\"font-weight: 400;\">ZhenHub<\/span><\/a><span style=\"font-weight: 400;\"> is one of the best 3PL partners your company can work with, as it has a network of supply chain hubs across the globe. Our <\/span><a href=\"https:\/\/zhenhub.com\/services\/\"><span style=\"font-weight: 400;\">logistics solutions<\/span><\/a><span style=\"font-weight: 400;\"> are grounded on our expertise in supply chain and technology. Let us help your company reach the next level. Reach out to us today to request a free quote to know what we can offer.\u00a0<\/span><\/p>\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Regardless of the scale, managing a retail company involves operating on a tight budget. From product development, marketing, and branding to staffing and human resources, all arms of the operation should be cost-efficient to ensure that profit margins remain healthy. Unfortunately, especially for eCommerce operators, the costs of logistics can &#8230; <a title=\"Top 5 Costs of Logistics in 2022\" class=\"read-more\" href=\"https:\/\/zhenhub.com\/blog\/costs-of-logistics\/\" aria-label=\"Read more about Top 5 Costs of Logistics in 2022\">Read more<\/a><\/p>\n","protected":false},"author":5,"featured_media":12866,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_eb_attr":"","inline_featured_image":false,"_uag_custom_page_level_css":"","advgb_blocks_editor_width":"","advgb_blocks_columns_visual_guide":"","footnotes":""},"categories":[13],"tags":[],"class_list":["post-9289","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general-logistics"],"author_meta":{"display_name":"crystal","author_link":"https:\/\/zhenhub.com\/blog\/author\/crystal\/"},"featured_img":"https:\/\/zhenhub.com\/wp-content\/uploads\/2021\/04\/22-02-03-Top-5-Costs-of-Logistics-in-2022-1-300x159.jpg","featured_image_src":"https:\/\/zhenhub.com\/wp-content\/uploads\/2021\/04\/22-02-03-Top-5-Costs-of-Logistics-in-2022-1-600x400.jpg","featured_image_src_square":"https:\/\/zhenhub.com\/wp-content\/uploads\/2021\/04\/22-02-03-Top-5-Costs-of-Logistics-in-2022-1-600x600.jpg","author_info":{"display_name":"crystal","author_link":"https:\/\/zhenhub.com\/blog\/author\/crystal\/"},"uagb_featured_image_src":{"full":["https:\/\/zhenhub.com\/wp-content\/uploads\/2021\/04\/22-02-03-Top-5-Costs-of-Logistics-in-2022-1.jpg",1446,765,false],"thumbnail":["https:\/\/zhenhub.com\/wp-content\/uploads\/2021\/04\/22-02-03-Top-5-Costs-of-Logistics-in-2022-1-150x150.jpg",150,150,true],"medium":["https:\/\/zhenhub.com\/wp-content\/uploads\/2021\/04\/22-02-03-Top-5-Costs-of-Logistics-in-2022-1-300x159.jpg",300,159,true],"medium_large":["https:\/\/zhenhub.com\/wp-content\/uploads\/2021\/04\/22-02-03-Top-5-Costs-of-Logistics-in-2022-1-768x406.jpg",768,406,true],"large":["https:\/\/zhenhub.com\/wp-content\/uploads\/2021\/04\/22-02-03-Top-5-Costs-of-Logistics-in-2022-1-1024x542.jpg",1024,542,true],"1536x1536":["https:\/\/zhenhub.com\/wp-content\/uploads\/2021\/04\/22-02-03-Top-5-Costs-of-Logistics-in-2022-1.jpg",1446,765,false],"2048x2048":["https:\/\/zhenhub.com\/wp-content\/uploads\/2021\/04\/22-02-03-Top-5-Costs-of-Logistics-in-2022-1.jpg",1446,765,false],"gb-block-post-grid-landscape":["https:\/\/zhenhub.com\/wp-content\/uploads\/2021\/04\/22-02-03-Top-5-Costs-of-Logistics-in-2022-1-600x400.jpg",600,400,true],"gb-block-post-grid-square":["https:\/\/zhenhub.com\/wp-content\/uploads\/2021\/04\/22-02-03-Top-5-Costs-of-Logistics-in-2022-1-600x600.jpg",600,600,true],"crp_thumbnail":["https:\/\/zhenhub.com\/wp-content\/uploads\/2021\/04\/22-02-03-Top-5-Costs-of-Logistics-in-2022-1-150x150.jpg",150,150,true]},"uagb_author_info":{"display_name":"crystal","author_link":"https:\/\/zhenhub.com\/blog\/author\/crystal\/"},"uagb_comment_info":0,"uagb_excerpt":"Regardless of the scale, managing a retail company involves operating on a tight budget. From product development, marketing, and branding to staffing and human resources, all arms of the operation should be cost-efficient to ensure that profit margins remain healthy. Unfortunately, especially for eCommerce operators, the costs of logistics can ... Read more","coauthors":[],"tax_additional":{"categories":{"linked":["<a href=\"https:\/\/zhenhub.com\/category\/general-logistics\/\" class=\"advgb-post-tax-term\">General Logistics<\/a>"],"unlinked":["<span class=\"advgb-post-tax-term\">General Logistics<\/span>"]}},"comment_count":"0","relative_dates":{"created":"Posted 6 years ago","modified":"Updated 3 years ago"},"absolute_dates":{"created":"Posted on October 15, 2019","modified":"Updated on October 7, 2022"},"absolute_dates_time":{"created":"Posted on October 15, 2019 12:40 pm","modified":"Updated on October 7, 2022 6:24 pm"},"featured_img_caption":"","series_order":"","_links":{"self":[{"href":"https:\/\/zhenhub.com\/wp-json\/wp\/v2\/posts\/9289","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zhenhub.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zhenhub.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zhenhub.com\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/zhenhub.com\/wp-json\/wp\/v2\/comments?post=9289"}],"version-history":[{"count":1,"href":"https:\/\/zhenhub.com\/wp-json\/wp\/v2\/posts\/9289\/revisions"}],"predecessor-version":[{"id":13516,"href":"https:\/\/zhenhub.com\/wp-json\/wp\/v2\/posts\/9289\/revisions\/13516"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zhenhub.com\/wp-json\/wp\/v2\/media\/12866"}],"wp:attachment":[{"href":"https:\/\/zhenhub.com\/wp-json\/wp\/v2\/media?parent=9289"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zhenhub.com\/wp-json\/wp\/v2\/categories?post=9289"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zhenhub.com\/wp-json\/wp\/v2\/tags?post=9289"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}