What Two Items Should Be Considered As Part Of Total Logistics Cost In Australia

The transportation and logistics scenario in Australia is experiencing massive growth. The market is expected to grow at a CAGR of 2.73% between 2025 and 2029 and reach US$217.32 billion by 2029¹. 

However, despite the growing scenario, logistics and transportation companies in Australia are facing major challenges in cost management.

Fuel costs, labor shortages, warehouse charges, and compliance costs are directly or indirectly raising operational costs.

However, do you know what two items should be considered part of total logistics cost? Or, which two items impact a company’s total logistics cost?

We have found an answer to this question in this Real Wealth Business Guide. We also have the moving platform FindAMover as the expert partner in this endeavor.

What Two Items Should Be Considered As Part Of Total Logistics Cost?

Total logistics costs involve all the expenses related to logistics. The two major items in logistics costs are warehousing costs and transportation costs. 

Further, administrative costs, inventory carrying costs, and packing materials are part of the total logistics costs. 

Administration processes and other direct expenses included in the logistics cost vary based on the volume of shipment. However, warehousing and transportation costs can change while handling the same volume, even if there is a change of strategy.

Moreover, you can add indirect costs to the total logistics cost. These indirect costs are demurrage, theft prevention, and insurance charges. 

1. Warehousing Costs

Do you own a warehouse, or have you rented one? The cost of owning or renting the warehouse will be included in your total logistics cost. 

Further, you can add the storage charges, utility bills, and fees of the laborers and administrators in inventory management to get the actual warehousing cost. 

2. Transportation Costs

Transportation costs in the logistics landscape refer to the expenses incurred by planes, trucks, railroads, ships, cars, or other modes of transportation. 

Further, transportation costs to move essentials from point A to B include fuel costs, toll taxes, and driver salaries. 

3. Administrative Costs

Transportation and logistics operations need a lot of documentation and management work. Administrative costs include all these expenses along with the fees of the staff. 

4. Inventory Carrying Costs

Do you have your own inventory? Or, do you use the inventory of a third-party manufacturer? 

In both cases, the total logistics cost will shoot up based on how big your inventory is. Purchasing your own inventory is always a better solution, considering the rising rent and demand in the Australian warehouse market. 

5. Packing Material Expenses 

This is, of course, an expense that does not need further explanation. Packaging material expenses can change every month based on the volume of shipment you are handling or the types of essentials you are transporting from point A to point B. 

How To Measure Logistics Cost 

You know what two items should be considered as part of total logistics cost. Now, it’s time to understand how you will measure the logistics cost of your business.

Ideally, you must measure logistics costs once a month. Regular monitoring of logistics costs helps you keep the expenses under control. 

Furthermore, keeping track of the logistics cost is essential while preparing the overall business performance report of your business and financial management. 

Nevertheless, this is the step-by-step guide for measuring the logistics cost of your business. 

1. List what two items should be considered as part of total logistics cost, transport, and warehousing expenses. 
2. Further, list all other direct and indirect expenses. 
3. Make sure that you are listing the exact cost for each expense. 
4. Now, add all the items in each category.
5. Then, add the expenses of all the categories. 

Following this method, you will have a clear idea of the expenses in each category and how they are fluctuating. 

Measuring logistics costs regularly gives you insights into how much you have spent and helps you identify the areas where you can lower the logistics costs.

How To Reduce Logistics Costs Effectively? 

Along with knowing what two items should be considered as part of total logistics cost, you also need to understand how you can reduce the expenses. 

So, check out the best methods that will work for your business.

1. Warehouse And Inventory Auditing 

You must audit your warehouse and inventory management process regularly, which will help you gauge the efficiency of your workflows. 

Further, with regular inventory auditing, you will have a fair idea about how many products or how much stock you have left in the inventory. 

Clarity about the stock is essential to meet fluctuating weekly and seasonal demands. You can even adjust workflows to manage transport and logistics.

2. Optimize Inventory Levels 

Do you have a small inventory with inadequate space to house all essential stocks? Or, do you have an inventory most of which remain vacant? 

In the first case, you are not being able to stock your inventory to meet all your supply demands. This may cause delivery delays. 

Again, in the second scenario, you are paying rent or utility bills for a larger space that you don’t require. 

So, to optimize your inventory levels, you have to calculate average daily sales, and how much time it takes for the shipper to ready a delivery. 

Based on these two factors, you will get the exact figures about how much stock you need to meet daily sales requirements. 

Then, you can shrink or expand your inventory for better stock management.

3. Streamline Last Mile Delivery With Software 

The last-mile delivery or the product’s journey from the warehouse/distribution center to the customers’ houses is crucial for logistics businesses. 

If you leave the responsibility of the last mile delivery to a single dispatcher or manager, late or missed deliveries can happen, impacting the logistics costs. 

You can use logistics management software, which will automate the process and make it error-free. 

Wrapping Up: Be Creative With Warehousing And Transportation Services 

You now know what two items should be considered as part of total logistics cost. To keep the two major factors, warehousing and transportation in check, you have to be creative, 

For example, you cannot rely on a single mode of transportation. Based on the destination, you can choose ships, planes, trucks, or railroads as the mode of transportation. 

Furthermore, for long-distance deliveries, you can use storage closer to the location of your customers.

1. Statista – Statista, a German online platform, is famous for offering market insights across 170 industries in over 150 countries. It offers a good mix of third-party and exclusive data. ↩︎