A logistics contract today involves more than shipping—it bundles leased assets, variable services, and multi-currency transactions spanning global borders. As the industry faces tighter margins and regulatory shifts, the intersection of IFRS 15, 16, and IAS 16 has become the new frontline for financial resilience.
This means that finance teams are often left drowning in manual reconciliations and fragmented data.
To move beyond “data seeking” and start driving strategy, finance teams at logistics businesses must act now: master automated cost allocation and real-time asset tracking to stay ahead. This article breaks down the core financial complexities of modern logistics and shows actionable steps to turn regulatory compliance into a competitive advantage.
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How do IFRS 15 and IFRS 16 impact the way logistics companies account for leased vs. owned assets?
Under IFRS, a single logistics contract often combines several elements:
- The right to use a truck, container, warehouse space, or equipment
- And related services such as driving, handling, or storage
These elements must be separated for accounting purposes into lease and non-lease components.
- IFRS 16 – lease components – For the lease component, IFRS 16 generally requires contracts with a term of more than 12 months to be capitalised. The lessee recognises a right-of-use (ROU) asset and a corresponding lease liability on the balance sheet. Lease payments are then split between depreciation of the ROU asset and interest expense.
- In logistics, where vehicles, depots, containers, and handling equipment are frequently leased, this treatment materially increases reported assets and liabilities and alters indicators such as leverage ratios and EBITDA. A large fleet of leased trucks, for example, now appears as ROU assets and lease liabilities, replacing the former straight-line rental expense with depreciation and interest (1).
- IFRS 15 – service component – The service component of the same contract falls under IFRS 15. Activities such as driving, maintenance, transport over a given distance, or warehouse services must be recognised as revenue over time, based on the degree of completion.
- This requires detailed operational data: kilometres travelled, delivery milestones completed, or hours of service provided. Weak tracking systems can lead to overstated revenue or misallocation of discounts.
- Volume-based rebates, which are common in large shipping and logistics agreements, must be recorded as a reduction of revenue as the customer earns them, not only when the rebate is paid (2)
- IAS 16 – owned asset – When logistics companies own trucks, forklifts, conveyor systems, or warehouse buildings, these fall under IAS 16. The standard sets out how such property, plant, and equipment (PPE) is recognised, depreciated, and tested for impairment. Operators must maintain detailed fixed-asset registers, apply appropriate depreciation methods, and reassess carrying values when assets are under-utilised or when their economic life changes (3).
Taken together, IFRS 16 and IAS 16 create a dual asset base: leased items are accounted for as ROU assets, while owned items are accounted for under PPE. In parallel, IFRS 15 governs the recognition of service revenue over the life of a contract. For logistics providers, the practical challenge is to correctly separate these components, track asset usage and service delivery with sufficient detail, and ensure that the resulting revenue and balance-sheet figures are consistent and auditable.
You might also be interested in:ASEAN Logistics at a Crossroads: Growth, Technology, and the Road Ahead
Why do traditional cost allocation methods fail to calculate the true ‘cost-to-serve’ in logistics?
Logistics activities generate costs across many functions: fuel, tolls, maintenance, labour, warehousing, insurance, customs, and more. These expenditures are spread over numerous routes, customers, and shipments.
Traditional cost allocation methods often provide only an aggregated view and lack the level of detail needed to link specific costs to the shipment, customer, product, or lane that generated them. As a result, finance teams frequently rely on estimates and manual reconciliations, spending considerable time cleaning data rather than analysing it.
Without accurate, near-real-time cost attribution, organisations struggle to calculate the true cost-to-serve, identify loss-making routes or customers, and make evidence-based pricing and contract decisions.
Read more:You’re Losing Money on Manual Invoice Processing! Here’s A Solution
What are the financial risks of managing cross-border logistics without automated multi-currency consolidation?
As logistics companies operate across borders, a single shipment may generate expenses and revenues in multiple currencies, such as fuel in one currency, port charges in another, and customer billing in a third. Exchange rates fluctuate continually, so the local-currency cost of the same activity can vary by route and over time.
Working with multiple currencies introduces operational complexity and financial risk: firms are exposed to exchange rate movements, bank fees, and potential conversion errors.
To prepare financial statements and issue invoices, transactions must be translated into a base currency, often at different rates depending on the transaction date and type. Without automated consolidation tools and robust controls, this process becomes time-consuming, prone to misstatement, and difficult to scale.
How do manual invoicing and approval workflows increase liquidity risk and lengthen DSO?
In many logistics businesses, accounts payable (AP) and accounts receivable (AR) processes are still heavily manual, with paper invoices, email approvals, spreadsheets, and re-keyed data. This fragmented approach slows invoice processing, increases the risk of duplicate or incorrect entries, and can lengthen days sales outstanding (DSO).
Manual AP/AR workflows not only create bottlenecks but also reduce the finance function’s ability to provide timely information for cash-flow planning and risk management (4). For logistics providers operating on thin margins and tight working-capital cycles, billing and collection delays translate directly into higher costs and greater liquidity risk.
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What is the ‘visibility gap’ in 3PL/4PL networks, and how does it hinder financial forecasting?
As supply chains become more complex, shippers increasingly rely on networks of third-party logistics providers (3PLs) and, in some cases, fourth-party logistics providers (4PLs). While this model can improve flexibility, it often fragments data.
Companies that use multiple carriers, warehouse operators, and technology systems often lack a single, unified view of shipments, costs, and performance. Analysts note that firms coordinating dozens of partners often suffer from “limited visibility across the chain” (5).
Individual third-party logistics providers often report only on the specific activities they manage, leaving visibility fragmented and hindering effective end-to-end monitoring across supply chain partners (6).
To address these limitations, visibility platforms and logistics integrators have emerged to consolidate data across multiple 3PLs, but these arrangements require advanced technology integration, partner coordination, and organisational readiness (7).
For finance teams, this limited transparency makes it harder to match costs to specific shipments, verify service levels, detect revenue leakage, or compare performance across providers. Incomplete or delayed information also weakens budgeting, forecasting, and risk management, particularly during disruptions.
More insights and detailed analysis can be found in our recent research paper, “Driving Financial Efficiency in Logistics: Digitalisation, Automation and Compliance for Sustainable Growth”.
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References:
1. https://www.houseofcontrol.com/getting-ifrs-16-leases-right-in-transportation-companie
2. https://www.pwc.com/m1/en/services/cmaas/documents/ifrs15/ifrs-15-transport-and-logistics.pdf
3. https://www.accaglobal.com/gb/en/student/exam-support-resources/fundamentals-exams-study-resources/f7/technical-articles/measure-depreciation1.html
4. https://www.adecsolutions-usa.com/resources/blogs/logistics-finance-outsource-for-efficiency-and-savings/
5. https://techbullion.com/the-rise-of-4pls-in-a-fragmented-supply-chain-world/
6. https://www.mdpi.com/2071-1050/17/7/2998
7. https://eajournals.org/wp-content/uploads/sites/21/2025/05/Supply-Chain-Visibility-Platforms.pdf
