FREIGHT COST CALCULATION

 

The important question is to how to calculate freight cost ?  The distance from x to y certain transporter want x amount .

For Ex take certain parameters before negotiation

PER TRIP FREIGHT

Kolkata to Guwahati  present mkt rate Rs 60 k

Distance 1010 km

Approx.3.5 mileage

so Diesel 78 / per liter

Diesel costing approx. :- = 1010/3.5 = 288 ;  288 *78 = 22.5 k

Standard time :- 5 days

 So  

Driver Salary 20 k , per trip approx. 5 k

Maintenance monthly 10 k, per trip approx. 2.5 k

EMI :- 20 k monthly, so per trip 5 k

So costing coming around 35 k

Misc 5 k

Approx. 40 k will be grand total

On per trip transporter is charging 20 k profit .

If the homework is done , you are in a position with the parameters to negotiate and deal with a transporter .

Its very much important to negotiate on the right path. 

Also keep in mind payment terms , return load and market demand and supply for the same. For ex if there is no return load transporter will charge return fair, or if the market demand is high probably transporter will not be interested to plot vehicle in your premises.

Lets take another example 

ON KM BASIS

1 207 vehicle running approx. 17/km.

Approx. per day km approx. 130 km

Monthly 25 days ( Excluding Sunday )

So total km is coming 2210 km

Mileage approx. 8 / liter

Diesel rate 78/ liter

So diesel costing = 2210/ 8 =276 . = 276 * 78 = 21.54 k

Driver approx. 12 k, Helper approx. 8 k

EMI approx. 10 k

Maintenance 6 k

Mis 5 k

So in total 62 k

So loss approx. 8 - 10 k.

On the basis is it right to increase freight , answer is no. for a professional you need to consider the multiple trip.

For ex on a month 25 trip, if 50  % of the the 25 day approx. 12 , so in a month if total 37 trip can be organized

= 37* 130 = 4810 km. Diesel costing additional km 47 k, rest are fixed 41 k 

Earning approx. 81770 and loss coming approx. 6 k. so reduce no of vehicle and calculate the same on 25 days 50 trip.

Total costing 1 lac and income of transporter 1.10 , so 10 thousand.

On the above I have taken 3 criteria to make understand the costing parameter. only a proper planning reqd. 

 

Sumit Chatterjee

Senior Supply Chain Manager

Dream Bake Pvt Ltd ( Brand Winkies , Mainly into package Cakes division )

Faculty member for Management Subject under Techno India University .

More than 10 + years’ experience in FMCG Supply Chain

CII Certified Supply Chain Management Professional

MBA Marketing & Finance from Future Business School

Post Graduate Diploma in Logistic & Supply Chain from St Xavier’s

Post Graduate Diploma in Export & Import Management from ICFAI University

Certified Industrial Computerized Accountant