Moving goods from one location to another is never free. You will need packing materials, movers (workers), drivers, vehicles (trucks) and possibly storage facilities. The greater the load and the longer the distance, the higher the cost.
But weight and distance are not the only two factors that affect transportation costs. There are several other factors that have a significant impact on the cost of transportation. The following are some of the important factors:
Packaging: Transporting goods begins with packaging because you can`t just load things into a truck haphazardly and drive away. You need proper packing materials that you may need to buy. Packaging ensures the safety and security of your goods, but it also increases volume and weight. Also, the mode of transportation determines the type of packaging. For example, road transport and air transport have different packaging requirements that can make a considerable difference in the costs of transportation.
Mode of Transportation: Selecting the right mode of transportation is of utmost importance when moving goods. You need to consider two things here: transit time (the time it takes to reach the destination) and the costs associated with the chosen mode of transportation. To lower transit time (faster transit), you need to use faster modes of transportation, such as air transport, which has a higher cost. But higher transit time (slower transit) can also increase costs by increasing the inventory carrying costs.
Fuel Prices: Fuel prices are volatile and change constantly. In times of crisis and upheaval, such as the threat of war in the old producing countries, the price of a barrel of crude oil can fluctuate by as much as $5 or more on a single day. This can make a significant impact on your transportation costs regardless of the mode of transportation you have chosen.
Labour costs: Moving goods require labour and labour costs money. You need a team of trained and experienced people to complete the job – to pack the goods, label and categorize packages, load the packages into the truck, unload the packages from the truck, unpack the packages at the destination, drive the trucks and keep inventory. The larger the quantity of goods to be transported, the higher the costs will be.
Inventory Carrying Costs: The goods being transported are the same as goods held in inventory. When transporting goods over long distances, they may have to be stored in a securely-guarded climate-controlled storage facility overnight along the way. Even after being unloaded at the destination, they may have to be held in storage for some time. This can add a significant amount to your cost of transportation.
Security: Arranging adequate security is very important when transporting goods over any distance. The higher the value of the goods, the higher the risk of theft and robbery. You may have to hire professional security guards to protect your goods. This can affect your costs significantly.
Insurance Costs: The risk of damages, loss and theft can never be ruled out no matter how careful the workers are during loading, unloading and transit. Therefore, it is important to insure the goods. Depending on the type and value of the goods you are transporting, insurance costs can make a significant contribution to your transportation costs.