Transportation Spend as % of Revenue

Transportation spend as a percentage of revenue is the metric that puts freight costs in business context. A company spending $5 million annually on freight sounds expensive until you learn their revenue is $100 million – that's 5%, which is within range for many industries. The same $5 million on $30 million in revenue is 16.7%, which signals a structural cost problem. The ratio normalizes transportation spend against business size, making it comparable across time periods, divisions, and peer companies.

Industry benchmarks vary significantly. Consumer packaged goods companies typically run 6–10% of revenue on transportation. Food and beverage, especially with cold chain requirements, often runs higher – 8–15%. Industrial manufacturers might be lower at 3–6%. The right benchmark depends on product density, shipping distance, temperature requirements, and order profiles. A company shipping lightweight, high-value electronics will always have a lower ratio than one shipping heavy, low-margin beverages.

This metric matters most as a trend line. If transportation spend as a percentage of revenue is rising year over year, it means freight costs are growing faster than the business – eroding margins. A declining ratio means the logistics team is finding efficiencies that outpace business growth. Executives and boards watch this number because it directly affects profitability and competitive positioning. A company whose freight ratio is 3 points higher than their competitors is operating at a structural disadvantage.

The challenge is that many mid-market companies can't calculate this metric cleanly because freight spend data isn't consolidated. When transportation costs are scattered across carrier invoices, broker statements, and intercompany charges – some in the TMS, some in the ERP, some in someone's email – getting to a reliable total requires manual effort that often doesn't happen until annual planning.