2-1. Ratio of land and costs to logistics costs
When planning to open a new logistics base or review (reorganize) a distribution center, the most important and careful discussion is the evaluation of the appropriateness of land and facility costs (storage costs).
The proportion of costs related to land, buildings, and storage facilities (storage and facility costs) in the total logistics costs borne by companies (ratio of logistics costs to sales) isApproximately 15%~20%is considered the standard level.still accounts for the largest proportion of logistics costs.Transportation costs (over 50%)However, in recent years, the impact of site selection and facility design on company-wide financial performance has been increasing year by year due to the driver shortage represented by the ``2024 problem,'' soaring labor costs, and rising land prices and construction materials mainly in urban areas.
This paper systematically explains the standard composition ratio of logistics costs by function, the breakdown structure of land and facility costs, the mechanism of variation by business type and location, and the practical steps to achieve an optimal cost structure, based on the latest survey data from the Japan Society of Logistics Systems (JILS).
1. Composition ratio of logistics costs by general function
A company's total logistics costs are broadly classified into four categories: transportation costs, cargo handling costs, storage/facility costs, and logistics management costs.The following is a general composition ratio by function based on the "Logistics Cost Survey" by Japan Logistics Systems Association (JILS).
| cost item | Composition ratio (estimate) | Main causes and details |
|---|---|---|
| Transportation costs (main transportation/delivery) | 50% ~ 55% | Primary transportation costs between factories and bases, and secondary delivery costs to customers and stores.Strongly dependent on fuel costs and labor costs (drivers). |
| Cargo handling costs (work costs) | 20% ~ 25% | Direct and indirect labor costs and material handling equipment operating costs associated with receiving, inspecting, shelving, picking, packing, and shipping operations. |
| Storage/facility costs (land/facilities) | 15% ~ 20% | Base rent, depreciation, fixed asset taxes, facility management costs, utility costs, storage equipment costs, etc. |
| Logistics management costs | Approximately 5% | Information system costs such as WMS (warehouse management system), personnel costs and administrative costs for the head office logistics management department, etc. |
At first glance, storage and facility costs do not account for the majority of the total cost, accounting for 15 to 20%, but the facility planning itself, such as ``where to locate the base and what kind of structure it will have'', accounts for the rest.Determinants that directly determine the amount of transportation costs (distance/route) and cargo handling costs (work flow lines/mechanization)Please note that.
2. Subdivision and components of land/facility costs (storage costs)
"Storage and facility costs" make up 15-20% of the total cost, but the cost structure differs greatly depending on whether you acquire and own the land and buildings yourself or enter into a rental contract (rent) for properties such as advanced logistics facilities.
This is the cost structure when leasing large multi-tenant logistics facilities, which have become mainstream in recent years.
- Basic rent (approximately 70-80% of the total):Unit price per tsubo x area used (tsubo).This depends on factors such as location, age of building, ceiling height, floor load, and presence or absence of a rampway.
- Common service fee/management fee (approximately 10-15%):Lighting and cleaning costs for common areas, security maintenance costs, disaster prevention equipment maintenance costs, etc.
- Utility expenses/water cooling expenses (approximately 5-10%):Lighting, air conditioning (air conditioning equipment), power reception and substation equipment usage fees, etc. within the facility.
- Other initial/current costs:Loss of interest on security deposits/security deposits, allowance for restoration costs, brokerage fees, etc.
This is the cost structure when operating and owning a BTS (Build To Suit) type base dedicated to your company as a long-term company asset.
- Depreciation of buildings and equipment:Depreciation cost based on construction cost (building itself + electricity/air conditioning/fire protection equipment) and the service life of material handling equipment.
- Taxes and public dues for land and buildings:Taxes that occur every year, such as fixed asset tax and city planning tax.
- Maintenance and repair costs/insurance fees:Large-scale repair reserve fund, exterior wall/roof waterproofing repair costs, fire/earthquake insurance premiums.
- Funding costs:Interest expense associated with construction financing (in the case of interest-bearing debt) or expected hurdle rate (in the case of equity capital).
3. Structural differences in cost ratios depending on business format and products handled
The composition ratio of logistics costs is not the same for all companies.Significant distortions occur depending on customer attributes (BtoB or BtoC), product characteristics (volume, weight, expiration date management), and the degree of small-lot orders.
① Comparison by business format (BtoB vs BtoC/EC)
・BtoB (manufacturing industry, wholesale industry, inter-company logistics)
Cost trend: High transportation cost ratio (55%-65%) / Low storage cost ratio (10-15%)
Since we mainly deliver bulk deliveries in large pallets or cases, we have a high space filling rate and excellent storage and work efficiency in warehouses.As a result, the proportion of storage and facility costs will decrease relatively, and the weight of transportation costs associated with long-distance transportation will increase.
・BtoC (EC/online shopping/consumer logistics)
Cost trend: Storage cost/cargo handling cost ratio is high (40% to 50%) / Storage cost ratio is rising (20 to 25%)
It is necessary to carry a wide variety of small-lot SKUs, which increases the required frontage and aisle space, which increases the required total floor area (number of tsubos).In addition, as bulk picking, inspection, gift wrapping, and distribution processing occur, workers (cargo handling costs) and high-spec facility functions (air conditioning equipment, etc.) are required, and the ratio of land and facility costs increases significantly.
② Differences due to characteristics of products handled
- Apparel and daily necessities (various types, large seasonal fluctuations):Due to the large number of catalog items and seasonal changes, high-density racks and storage shelves are required, which tends to increase storage costs.
- Frozen food/Fresh food (three temperate zones/frozen/refrigerated):The costs of refrigeration and heat insulation work, countermeasures against fluorocarbon gas, and maintenance of 24-hour air conditioning and cold storage equipment are enormous, and the cost per tsubo and facility maintenance costs have soared to 1.5 to 2 times more than dry (normal temperature) warehouses.
- Heavy objects/mechanical parts:While flat storage and floors that can handle heavy loads (floor load of 2.0t/m2 or more, etc.) are required, it is difficult to assemble high-rise racks and it is difficult to take advantage of the floor space ratio, which reduces storage efficiency per tsubo and increases land costs.
4. Verification of trade-offs in location selection (urban vs. suburban)
The most sophisticated decision-making process in facility planning is the selection of location.There is an inversely proportional relationship (trade-off) between land/rent costs and transportation costs.
| Evaluation items | Urban areas/bay areas (high land prices) | Inland areas/suburbs (low land prices) |
|---|---|---|
| Land cost/rent unit price | expensive(The price per tsubo is high) | cheap(Cost can be significantly reduced) |
| Transportation cost (delivery cost) | low(Close to consumption areas and ports, reducing distance) | expensive(Increased distance to major consumption areas) |
| Shipping lead time | short(Advantageous for same-day delivery and overnight delivery) | long(Long distance operation occurs) |
| Securing labor force (part-time/employees) | easy(High surrounding population density/near the nearest station) | somewhat difficult(Assuming commuting by car/increase in recruitment costs) |
| Comprehensive business format | EC last mile, store delivery, same-day delivery base | National trunk mother hub, long-term storage depot, heavy goods base |
Concept of total logistics cost (TLC) minimization
If you move to the suburbs simply because the rent (land cost) is low, you may be able to move to the suburbs because the distance to deliver to your main customers has increased.A failure example where the increased transportation cost exceeds the difference in rent that could be reducedThere is no end to it.
In logistics facility planning, it is expressed by the following formula:Total Logistics Cost (TLC)It is essential to calculate the point that minimizes the
Total logistics cost (TLC) = Facility cost (rent/depreciation cost) + Transportation cost + Cargo handling cost + Inventory interest/management cost
5. Practical steps to avoid mistakes when planning logistics facilities
To achieve the optimal land/facility cost ratio and operational efficiency, we recommend proceeding with planning in the following order:
- Step 1: Quantitative visualization of current cost/load flow data (ABC analysis/majority analysis)
We accurately break down and analyze the currently occurring logistics costs into "by function," "by location," "by SKU," and "by delivery route," and calculate the current storage cost ratio and transportation cost ratio. - Step 2: Calculating the optimal location area by calculating the center of gravity
From the location information of the demand data of the shipping destination (customer/store) and the shipping weight/frequency, we calculate the geographical "center of gravity" where the transportation cost is theoretically minimum. - Step 3: Base consolidation/distribution simulation
We perform a sensitivity analysis of whether to concentrate the number of locations at one location (effect of reducing storage costs and inventory by consolidating inventory) or to spread it over multiple locations (effect of reducing transportation costs by shortening delivery distance). - Step 4: Reducing the number of square meters required by optimizing material handling and layout
We will consider approaches that reduce the required building area (square meter) by utilizing vertical space (introducing high-rise racks and automated storage systems/ASRS) and optimizing flow line design, thereby reducing the total cost even if the location fee is high.
Summary: For strategic location planning
Land and facility costs (storage costs) are not just fixed costs (expenses) that should be reduced.Investing in the right location and optimized facility structure is the source of competitiveness for your overall logistics strategy, including reducing transportation costs, reducing truck driver downtime, shortening lead times, and securing workers.
Determine the characteristics of your company's products and customer needs, and promote facility planning that aims to minimize "total logistics costs" rather than storage costs alone.