Total Cost of Logistics

Total cost of logistics captures everything it actually costs to get a product from point A to point B, and it's almost always higher than the freight rate alone suggests. Shippers who focus only on line-haul rates miss the accessorial charges, detention fees, re-delivery costs, warehouse handling, claims, invoice disputes, and internal labor hours that quietly inflate the true cost of every shipment.

The components break down across several categories. Transportation costs include base rates, fuel surcharges, accessorials (liftgate, inside delivery, residential), detention and demurrage, and re-class or re-weigh fees. Warehouse and handling costs include storage, pick-and-pack, dock labor, and appointment coordination. Administrative costs include the time spent building loads, shopping rates, tracking shipments, auditing invoices, and managing exceptions. And hidden costs – claims from damaged freight, chargebacks from late deliveries, and the revenue impact of poor customer experience – rarely show up on a freight invoice but are very real.

Understanding total cost matters because optimizing one component in isolation can inflate another. Choosing the cheapest carrier saves on the rate line but may increase claims, late deliveries, and customer service calls. Skipping dock scheduling saves coordination time but creates congestion that drives up detention charges. A total-cost view forces better trade-off decisions.

Most shippers struggle to calculate total cost of logistics accurately because the data lives in different systems – ERP, TMS, carrier invoices, warehouse management, and the email inboxes of everyone on the logistics team. Pulling it together requires either significant manual effort or a platform that centralizes freight data across the shipment lifecycle.