transportation cost

1. Logistics Management
(Part of ORL)
BBA (Semester 4)
Faculty : Ravi Kumar Singh, International School of management Patna
Lecture-7 : Transportation Cost

2. Lecture-7 : Transportation Cost
Topics to be covered :
● Meaning of Transportation Cost
● Components of Transportation Cost
ISM Patna/Logistics_1_Ravi_K_Singh

3. Transportation Cost
Transportation cost is the cost incurred during
transporting the consignment from one place
to another.

4. Components of Transportation Cost
1. Tariff
2. Transit Time Cost
3. Obsolescence & Deterioration Cost
4. Protective Packaging Cost
5. Transit Insurance Cost
6. Miscellaneous Cost

5. Components of Transportation Cost (1. Tariff)
Tariff depends on-
1. Type & Nature of the product
2. Distance to be covered
3. Quantity of the shipment
4. Transit time
5. En-route handling needs
6. Trade relationship

6. 2. Transit Time Cost
1. Working Capital cost
2. Customer service cost
3. Shortage Cost

7. 3. Obsolescence & Deterioration Cost
● This incurs due to changes in the physical
properties of the products resulting in value
reduction.
● Example: perishable items like Milk,
Vegetables, Fruits, Fish, Egg etc.

8. 4. Protective Packaging Cost
Proper packaging is essential for the following reasons
○ To avoid breakage and pilferage
○ To avoid damage due to rain / heat etc
Cost incurs due to packaging material and labour cost

9. 5. Transit Insurance Cost-
-To cover the loss during transit
6. Miscellaneous Cost-
- Toll tax, Local levy etc
Transportation Costs (Cont..)

10. Summary of Lecture-7
1. Tariff
2. Transit Time Cost
3. Obsolescence & Deterioration Cost
4. Protective Packaging Cost
5. Transit Insurance Cost
6. Miscellaneous Cost