Transport and Logistics Costs and Return on Investment of Selected Manufacturing Companies in Nigeria

This study examined the effect of transport and logistics cost components on return on investment among selected manufacturing companies in Nigeria. An ex post facto longitudinal design was adopted, and secondary data were extracted from the published annual reports of twelve manufacturing companies for 2015-2024. The balanced panel comprised 120 firm-year observations. Return on investment was measured as profit after tax divided by total assets, while transport cost, inventory-holding cost, warehousing cost and order-processing cost were expressed as proportions of sales. Descriptive statistics, correlation analysis, panel-model specification tests and fixed-effects regression with firm-clustered robust standard errors were employed. The results showed that transport cost, inventory-holding cost and warehousing cost had significant negative effects on return on investment. Order-processing cost also recorded a negative coefficient, but its effect was weaker and was significant only at the 10% level. Transport cost produced the largest adverse coefficient among the logistics variables. The study concludes that poorly controlled logistics expenditure reduces profitability and asset productivity. It recommends integrated logistics-cost management, improved route planning, stronger inventory visibility, closer monitoring of warehouse productivity and greater digital integration of order-processing activities.

Transport cost; logistics cost; return on investment; manufacturing companies; panel data; Nigeria.

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