The cost of goods in transit refers to merchandise and other inventory items that have been shipped by the seller but have not yet been received by the buyer. Let’s take the shipping journey from Guanta to Los Angeles. It takes approximately 30 days. To calculate the costs of in-transit inventory, logisticians should know the annual inventory costs of their companies. It changes approximately 20-25 % of the inventory at hand. In this case, let’s take it at 25 %. Also, also let’s take the value of cargo in a 20’ container as of $50,000.

Do the math;

average shipment value of $50,000 x annual inventory carrying cost of 25% = $12,500 per year/365 = $34.24 per day).

From Guanto to Los Angeles, it takes approximately 30 days.

So the cost of goods in transit is equal to $1,027 per container.

If you have 50 containers shipment per month; your monthly cost of goods of transit is equal to $1,027 x 50 = $51,350

As a logistician tour task is to reduce the transit time and, needless to say, decrease the in-transit inventory costs. ShipsGo service finder can offer to assist and offer you Long Beach (6 km away from Los Angeles) instead of Los Angeles as POD (Port of Discharge) for the sake of reducing transit times for 4-5 days.

About ShipsGo

ShipsGo’s vision is to make people happy with the information. Since the beginning of our journey in the container transportation business, we have been trying to organize the shipping industry’s information and make it accessible universally. We have developed our two well-known products in the digital container transportation market; container tracking and route finder. These two products were developed for “visibility” in container transport. We provide information on the current position of containers and carriers’ route performances (transit time and reliability). We have reached 5,000 daily searches on our website from 70+ countries and plan to reach 30,000 daily searches worldwide.

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The value of the cargo in a container is the most critical variable for logisticians to understand and manage the logistics costs and sea freight charges of the company. If you deliver your good as FOB (Free on Board), you do not need to focus on the issues we will discuss. If you use CIF (Cost Insurance Freight), read what we offer to you. For a better explanation, we refer to the “container shipping costs and cargo value” table given in “The Geography of Transportation Systems”.

Suppose that, $500,000 worth of cargo is loaded in a 40’ container from Port of Loading (POL) Hamburg to Port of Discharge (POD) Los Angeles. The cost of container transportation freight is $5,000. The share of the container transport freight is calculated as follows;

$5,000 freight / 500,000 value of the cargo  x 100 = 1 %

What does this rate tell us?

First of all, we need to know the “type of product” to comment on. Let’s assume the type of product as clothing (mid-range). Then refer to the table given in here It can be observed that this rate is higher than the high value (0.86 %) provided in the table.

After realizing this fact, the task of the logistician is to reduce the cost of freight. How can you do that?

1)    Make negotiation

Negotiation mainly depends on your cargo volume.  If you do not have enough cargo volume for the talks, what would you do? As ShipsGo, we offer you to increase your knowledge & information on this route. Just click the service finder for the details of Hamburg – Los Angeles

Learn also the possibility of shipments from/to the alternative ports. This information could help you to understand the weaknesses and strengths of the liner transport companies on this route. You can reinforce yourself before negotiating.

2)    Look for the better freight

Sometimes, freight forwarders can give better freights than liner transport companies. ShipsGo Forwarder Partnership program accepts very well-known freight forwarders all around the world. These forwarders are listed in the routes regarding their expertise. You have a chance to communicate with them to get a freight quote.

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