Cost-based pricing of transportation services in a wholesaler-carrier relationship: an MS Excel spreadsheet decision tool

The purpose of this paper is to describe the development and application of a valuable decision support tool to ensure appropriate pricing of transportation services in the wholesale grocery industry. The impetus for the development of this tool was the recognition that enterprise resource planning systems typically lack data on transportation issues, which means that cost-based pricing is difficult, if not impossible. To address this problem, an MS Excel spreadsheet was developed as a measurement tool over a period of 9 years in close co-operation with providers and buyers of transportation services in Norway. All cost drivers, including loading time, waiting time, speed etc. are included. This paper explains the components of the measurement tool and provides examples of its application. The study concludes that detailed cost analysis and a continuous focus on productivity and risk factors can generate mutually beneficial transportation arrangements between shippers and carriers.