The chapter devoted to the maritime container in the book Fifty Things That Made the Modern Economy explains in a pleasant way how the cost of transporting a tonne of merchandise went from $420 to $50 between 1954 and 2017.

Today, the challenge is another: to understand what each logistics decision really costs. Choosing a route, a supplier or a mode of transport has consequences that are not always seen at first sight:

• Delays that break the deadlines
• Long periods in which money is immobilized while the product travels and has not yet been charged
• Regulations and tariffs that make shipments expensive or leave them blocked for days

Cost analysis must go beyond logistics. With a cost-to-serve view, a route is no longer evaluated only by the price of transport. With this mindset, a decision can no longer be made from a single department. Logistic managers explain what happens in the operation when a decision generates problems. Financial management translates these effects into margin and liquidity tensions. And the tax area evaluates, from the beginning, if the option chosen compensates from a tax point of view.

Many companies discover that the problem is how the costs were distributed. For years we have worked with averages: the same cost is assigned to customers, products or very different routes. This perspective can be used to make an aggregate reading of the business, but not to decide well.

When analysing how much it really costs to serve a specific customer, with a certain product and specific conditions, surprises appear. Routes that seemed efficient stop being so. Large customers are no longer profitable. And decisions that worked on the aggregate start to fail when it goes down to detail: are the orders small and frequent, with last minute changes and regular returns? Or are shipments larger, more predictable and with fewer exceptions?

It is not a theoretical approach. Amazon, for example, has explained how the redesign of its logistics network in the United States —bringing stock closer to the final customer— allowed it to reduce its cost to serve by more than 45 cents per order in a single year, according to eMarketer. It was not limited to reducing transport: it reduced distances, incidents and the extra work they generate.

To understand these differences, many companies have begun to measure how much it really costs to serve each client. It is a question of avoiding decisions that seem reasonable on paper and end up eroding margins in practice.