Final answer:
In-transit carrying cost % is a factor of the total movement and storage costs of goods, influenced by transportation efficiency, while inventory carrying cost % includes expenses for storing goods in a warehouse. Improved transportation methods like containerization can reduce both in-transit and inventory carrying costs by shortening transit times and enhancing loading/unloading efficiency.
Step-by-step explanation:
The in-transit carrying cost percentage typically relates to the inventory carrying cost percentage as a component of the overall cost to move and store products. In-transit carrying costs include factors like financing, insurance, and potential spoilage or damage while the goods are being transported. These costs can vary significantly depending on the efficiency of the transit routes and the type of transportation used. For instance, container ships that can transfer ballast water internally may spend less on in-transit carrying costs due to the reduced need for ballast water exchange, which is an important cost consideration in maritime shipping.
Inventory carrying costs, on the other hand, encompass costs associated with the storage of goods in a warehouse, such as rental fees, utilities, insurance, taxes, depreciation, and opportunity costs of the capital tied up in inventory. If the transit time is reduced, or the efficiency of loading and unloading is improved through measures like containerization, there can be a direct impact on warehouse storage times and costs. Shorter transit times may reduce the need for extensive warehousing, thus potentially lowering the inventory carrying costs.