March 23, 2006

Logistics Study Finds Significant Differences in the Ways Companies Measure Logistics Costs, Strong Upward Cost Pressure in 2005

New report on Logistics Costs based on survey of 247 companies across multiple vertical industries show strong differences

Dayton, OH -- Supply Chain Digest, the leading on-line newsletter and web site for busy supply chain and logistics professionals to get news and insight and to find solutions, has released its report on Logistics Costs 2006, based on survey results from 247 companies across many vertical industries. The full report, available at, found important differences in the way companies measure logistics costs, and which cost elements are included in that definition.


For example, 40 percent of respondents to the Supply Chain Digest Logistics Cost study reported that their primary measure of logistics costs was as a percent of company sales. 27 percent used cost per weight measure or unit as the primary measure, while 25 percent used absolute logistics costs.

“While many companies use multiple logistics cost measures, the primary metric chosen can have a significant impact on how logistics cost performance is viewed,” said Dan Gilmore, editor of Supply Chain Digest. “For example, those companies using logistics costs as a percent of sales as their primary measure and who operate in industries such as chemicals and other commodities saw that cost ratio fall in 2005 due to strong upward pricing power that impacted the top line, even though logistics costs also rose. Other industries had rising logistics costs with flat or declining prices for their products, driving up logistics costs as a percent of sales.”

In general, 25-30% of respondents across different approaches to measurement said they were able to reduce logistics costs in 2005, despite an unfavorable environment that included rising transportation and fuel costs.

The study also found significant differences in what cost elements are included in total logistics costs. For example, only 32% of respondents included inventory carrying costs in their logistics costs calculation.

More details, including responses by industry sector, can be found on Supply Chain Digest’s web site (

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