How Much Did That Cost? A Call for Improved Transportation Cost Transparency

David Swanson, Yao “Henry” Jin and Bryan Ashenbaum

Transportation Journal, 2022, vol. 61, issue 4, 315-330

Abstract: In 2021 business logistics costs in the United States were 8 percent of the nation’s GDP. However, significant discrepancies exist between aggregated transportation costs and those recorded at the firm level. Under generally accepted accounting principles (GAAP)—a standard for publicly traded companies in the United States must abide—transportation costs are generally recognized as direct expenditure on transportation services, such as when firms pay a carrier for transporting freight. On the other hand, expense items such as fuel, driver wages, leases on transportation equipment are instead broadly grouped under operating expenses despite their specific transportation purposes. In doing so, these expenses that are typically recorded internally as transportation costs are obfuscated to investors, scholars, or other users of financial statements filed along with company quarterly and annual reports. As recent supply chain disruptions due to both natural (e.g., pandemic) and manmade (e.g., foreign conflicts) causes have highlighted, there is an urgent need for various stakeholders to be able to evaluate firm logistics and transportation strategy with better salience. To that end, improved transportation cost visibility is urgently needed. Therefore, our objective is to provide a research agenda for academics to broach the subject of transportation cost transparency.

Date: 2022
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https://doi.org/10.5325/transportationj.61.4.0315

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Persistent link: https://EconPapers.repec.org/RePEc:wly:transj:v:61:y:2022:i:4:p:315-330

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