Part 1
Course reading
Transportation is often the largest logistics cost. Freight cost management means choosing the right mode, filling vehicles well, comparing carriers fairly and checking freight invoices.
Modes: road (flexible, door to door), rail (cheaper for heavy long distance), sea (lowest cost per unit, longest time), air (fastest, most expensive). Loads can be FTL (full truck load, one shipper uses the whole vehicle) or LTL (less than truck load, shared vehicle priced by weight or pallet). Sea freight uses FCL (full container) or LCL (shared container).
Key measures: freight cost per unit or per kg, vehicle fill rate, on-time delivery, damage rate and freight cost as a percentage of sales. Example: a truck costs 600 USD per trip and carries 20 pallets of capacity. Shipping 12 pallets costs 600 / 12 = 50 USD per pallet; filling to 20 pallets costs 600 / 20 = 30 USD per pallet. Consolidating orders by route and delivery day can reduce cost per pallet significantly.
Chargeable weight in air freight is the higher of actual weight and volumetric weight (length x width x height in cm divided by 6,000). Always audit freight invoices against the agreed rate card: check distance, weight, accessorial charges such as waiting time, and fuel surcharge. In SAP, shipment documents (VT01N) and shipment cost documents (VI01) record trips and freight charges so they can be settled and analysed by route and carrier.