Logistics Cost Calculator

Calculate your total logistics cost, logistics cost as a percentage of revenue, and each component's share of the total. Compare against industry benchmarks to identify cost-reduction opportunities.

Annual Revenue ($)

Annual Transportation Cost ($)

Annual Warehousing Cost ($)

Average Inventory Value ($)

Inventory Carrying Cost (% of inventory value)

Industry avg: 20–30% of inventory value

Order Processing Cost ($)

Other Logistics Costs ($)

Logistics Cost Components Explained

Transportation

Inbound freight from suppliers, outbound delivery to customers, inter-facility transfers, carrier fees, and fuel surcharges. Typically the largest component at 40–60% of total logistics cost.

Warehousing

Rent/lease, utilities, equipment depreciation, warehouse labor (receiving, picking, packing, shipping), and facility management costs.

Inventory Carrying Cost

Capital cost of tied-up inventory, storage space, insurance, taxes, obsolescence, shrinkage, and handling. Typically 20–30% of average inventory value annually.

Order Processing

Customer service, order entry systems, IT, documentation, and administrative costs associated with processing customer orders from receipt to shipment.

Frequently Asked Questions

What percentage of revenue should logistics cost?

Logistics costs as a percentage of revenue vary by industry: Manufacturers: 8–12%, Retailers: 6–10%, E-commerce: 10–15%, High-tech/electronics: 4–8%, Consumer goods (FMCG): 5–9%, Automotive: 3–5%, Pharmaceuticals: 5–7%. If your logistics cost exceeds these benchmarks, it signals an opportunity for optimization in transportation, warehousing, or inventory management.

What is inventory carrying cost?

Inventory carrying cost (or holding cost) is the total cost of keeping inventory in stock. It includes: capital cost (opportunity cost of cash tied up in stock, typically 10–15%), storage cost (rent, utilities, equipment), service cost (insurance, taxes), and risk cost (obsolescence, damage, shrinkage). The industry average is 20–30% of average inventory value per year. High carrying costs incentivize lean inventory and just-in-time practices.

How can I reduce logistics costs?

Key strategies: Transportation — negotiate carrier rates, consolidate shipments, optimize routes, switch modes (rail vs truck). Warehousing — reduce SKU count, improve space utilization, implement slotting optimization, consider 3PL outsourcing. Inventory — reduce safety stock through better demand forecasting, increase inventory turns. Order processing — automate with WMS/OMS, reduce order errors. Network — optimize warehouse locations relative to customers.

What is the total logistics cost concept?

Total logistics cost (TLC) is the sum of all costs incurred in the flow of goods from origin to destination. It was popularized by logistics academic Donald Bowersox and is used for network design and make/buy decisions. TLC includes transportation, warehousing, inventory carrying costs, order processing, and customer service costs. Optimizing one component often increases another — TLC analysis helps find the optimal trade-off.

What is the difference between 3PL and in-house logistics?

3PL (Third-Party Logistics) outsources warehousing, fulfillment, and/or transportation to a specialist provider. Benefits: variable costs (scale up/down), access to carrier networks and technology, and freeing capital. In-house logistics offers more control and potentially lower per-unit costs at sufficient scale. Most businesses compare the all-in cost of 3PL vs. owning/leasing facilities, hiring staff, and managing carriers.