Why Is Accounting Important In Transportation And Logistics Business?

The accounting process is integral to any transportation and logistics business, from monthly accounts to income and cash flow statements. With such high transaction volumes, transportation companies must stay on top of their finances and manage variable costs efficiently. This article will explore the different aspects of accounting services for truck drivers and logistics firms. In addition, you may want to read more about freight accounting and environmental concerns in logistics. 

Freight accounting

As a part of the supply chain, the freight and transportation businesses face various challenges in accounting and finance. These challenges include managing cash flow and liquidity, dealing with operational cost uncertainties, and the impact of fluctuations in oil and shipping rates. However, a logistics company can overcome these challenges using appropriate freight accounting and financial management techniques. 

The buyer of goods pays freight costs. For accounting purposes, these fees are regarded as purchases. Once the cargo is loaded onto a vehicle, it becomes the buyer’s property. The buyer also assumes the risks of transporting the freight. Freight expenses are accounted for as business expenses and subtracted from the gross profit to determine the business’s net profit. However, freight accounting and finance are essential to any transportation and logistics business.

Resource distribution

Resource distribution is important in the transportation and logistics industry. Despite having higher outgoing transit costs, decentralized distribution methods have lower inventory costs. Centralized methods, in contrast, typically have higher inventory expenses. This trade-off can be complicated by factors such as changes in interest rates or unit transport costs. 

Increasingly, the energy cost will become the fastest-growing factor in a company’s operations. Therefore, energy conservation and allocation will become increasingly important means to gain a competitive cost advantage. More than ever, this advantage can be used to improve earnings quality. Therefore, strategic facility location is critical. This decision will determine the quality of the earnings that can be generated by implementing cost-saving strategies. Moreover, strategic facility locations must be selected strategically, considering environmental and economic constraints.

Environmental concerns

The transportation and logistics industry has several facets involving environmental issues, some of which are not entirely understood. Depending on the circumstances, the environmental policy may need to change, while others may not. The transportation sector is a prime example of a sector subsidized mainly through road infrastructure construction and maintenance. Furthermore, road infrastructure is generally free to access. In addition, environmental concerns and regulations often run counter to public stakes in the industry.

Companies that want to reduce their environmental impact must consider the impacts of their operations. In particular, they should focus on fleet management, buying cleaner vehicles, implementing smart routing systems, and prioritizing cargo consolidation. Additionally, they should consider using intermodal transportation, which utilizes more than one form of transportation to reduce emissions and maximize efficiency. Renewable energy systems are another option for reducing the carbon footprint of logistics operations. Moreover, unifying shipments can reduce the number of trips required. Similarly, consolidating dozens of parcels in a warehouse or booth can help to reduce environmental concerns. Lastly, environmental concerns can also be addressed in product specifications, manufacturing processes, and the location of suppliers.


The profitability of the transportation and logistics business is a critical consideration. Unfortunately, the sector’s through-cycle capital market performance has been poor, with average returns to shareholders (ROI) of only 7.2 percent. Companies in this sector generated revenue growth that was above average but less than the industry’s average of 3.6 percent. Transportation and logistics companies generated lower returns on invested capital than other sectors.

One way to profit in the transportation and logistics industry is to become a freight broker. These businesses typically charge a customer a flat fee, then pass the difference on to the carrier. Freight brokerages typically have margins of 10 to 20% and pass the majority of their revenue along to their carriers. In addition, they often have no inventory and no intermodal boxes. Thus, the margins on this business are lower than those of other types of businesses.


Transportation and logistics-related costs can run up to 14% of sales. Expenses include warehousing, dedicated personnel, and transportation costs. The energy cost, for example, will likely increase over the next decade. However, the benefits of these services can far outweigh the costs. 

Transportation and logistics costs are often affected by customer service. To cut back on these costs, companies should evaluate customer service. If possible, increase storage density by optimizing vertical space. Improved storage density reduces damage and wears to shipping containers. This process also reduces inventory movement, which further decreases costs. Lastly, consider implementing robotic process automation to automate maintaining cost catalogs. Implementing this technology may save a company time and money while reducing the risk of errors.