12.1 Landed Cost Architecture: Voyages, Shipping Containers, Folios, and Journey Templates

12.1 Landed Cost Architecture: Voyages, Shipping Containers, Folios, and Journey Templates

Quick Answer: The Landed Cost module in Microsoft Dynamics 365 Supply Chain Management (D365 SCM) provides end-to-end operational visibility and financial capitalization for complex inbound supply chains. Its core architecture relies on a strict four-level hierarchy: Voyages (top-level transportation entity representing a vessel, aircraft, or convoy), Shipping Containers (physical freight units such as 20ft or 40ft ocean containers), Folios (customs declarations or commercial invoice groupings), and Purchase Order / Transfer Order lines (the transacted inventory items). Multi-modal routes are defined using Journey Templates composed of sequenced Legs between ports with estimated lead times.

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1. Landed Cost Module Overview in D365 SCM

Modern international procurement involves long transit times, multiple freight handlers, customs brokers, ocean carriers, and significant ancillary expenses (ocean freight, customs duty, harbor fees, insurance). Standard Accounts Payable miscellaneous charges and basic Purchase Order receiving lack the capability to track goods while at sea or capitalize multi-leg freight costs accurately into item inventory valuation.

The Landed Cost module bridges this gap by delivering:

• Complete Inbound Supply Chain Visibility: Real-time tracking of goods across multi-modal legs from the overseas factory gate to the domestic warehouse dock.
• Goods in Transit (GIT) Financial Control: Recording legal transfer of inventory ownership at the port of departure (e.g., FOB Shipping Point) prior to physical warehouse receipt.
• Accurate Cost Capitalization: Apportioning estimated landed costs (duties, freight, insurance) into item cost valuation (complying with IAS 2 / US GAAP inventory capitalization rules) and reconciling actual vendor invoices with automated variance posting.
• Milestone and Exception Management: Monitoring carrier departures, port arrivals, customs clearances, and transit delays to proactively update warehouse receiving schedules and master planning delivery dates.

Landed Cost vs. Transportation Management (TMS)

A common MB-330 exam consideration is understanding when to deploy Landed Cost versus Transportation Management (TMS):

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2. The Core Landed Cost Hierarchy

The architectural structure of the Landed Cost module is organized into a four-tier parent-child hierarchy. Understanding the boundaries and responsibilities of each level is critical for configuring inbound logistics workflows.

+-------------------------------------------------------------------------+
|                            VOYAGE (VOY-001)                             |
|  Vessel: Pacific Star | Journey: SHANGHAI-LA | Booking Ref: BKG-98442   |
+------------------------------------+------------------------------------+
                                     |
         +---------------------------+---------------------------+
         |                                                       |
+--------v--------------------------------+   +------------------v------------------+
|   SHIPPING CONTAINER 1 (CONT-40HC-01)   |   | SHIPPING CONTAINER 2 (CONT-20ST-02) |
|   Type: 40ft High Cube | Max Wt: 28,000kg|   | Type: 20ft Standard | Max Wt: 21,000| 
+--------+--------------------------------+   +------------------+------------------+
         |                                                       |
   +-----+-----+                                                 | 
   |           |                                                 | 
+--v-----+  +--v-----+                                     +-----v----+
| FOLIO 1|  | FOLIO 2|                                     | FOLIO 3  |
| (Cust. |  | (Cust. |                                     | (Cust.   |
| Duty)  |  | Tariff)|                                     | Exempt)  |
+--+-----+  +--+-----+                                     +-----+----+
   |           |                                                 |
+--v-----+  +--v-----------------------+                   +-----v----+
|PO Lines|  | PO Lines (Vendor B)      |                   |PO Lines  |
|(Vend A)|  | Transfer Order Lines     |                   |(Vendor C)|
+--------+  +--------------------------+                   +----------+

1. Voyage

The Voyage is the highest organizational entity in the hierarchy. It represents a discrete transportation journey, such as a chartered cargo vessel, an ocean carrier voyage, an air charter, or a rail convoy moving between an origin and destination.

• Navigation: Landed cost > Voyages > All voyages
• Key Attributes: Voyage ID, Description, Journey template, Vessel name, Voyage status, Estimated Departure Date (ETD), Actual Departure Date (ATD), Estimated Arrival Date (ETA), Actual Arrival Date (ATA).
• Cost Allocation: Voyage-level costs (e.g., vessel charter fees, port clearance flat fees) apply to all items transported on the voyage.

2. Shipping Container

A Shipping Container represents the physical cargo unit housed within the voyage. Multiple shipping containers can reside inside a single voyage.

• Container Types: Defined under Landed cost > Setup > Container setup > Shipping container types. Each container type establishes maximum gross weight, volumetric capacity, length, width, and height.
• Tracking: Tracks physical container identifiers (e.g., BIC container numbers such as MSKU7829104), refrigeration requirements, and container seal numbers.
• Cost Allocation: Container-level costs (e.g., ocean freight per container, container drayage) apportion down to the contents of that specific container.

3. Folio

A Folio is an administrative, logical grouping of purchase order lines or transfer order lines within a shipping container. In many international trade jurisdictions, a folio represents a single Customs declaration, a Bill of Lading (BOL), or a Commercial Invoice.

• Regulatory Purpose: Customs brokers and port authorities frequently require items to be declared under specific Harmonized Tariff Schedule (HTS) codes or country-of-origin groupings. Folios allow organizations to separate lines in the same physical container according to distinct customs rules.
• Mandatory Link: Purchase order lines cannot be attached directly to a container; they must belong to a folio that resides in the container.

4. Purchase Order and Transfer Order Lines

The lowest tier of the hierarchy consists of the actual inventory lines being transported. Landed Cost supports:

• Inbound Purchase Order Lines across standard and batch/serial-tracked items.
• Inbound Transfer Order Lines representing intercompany or inter-site shipments.
• Splitting individual purchase order lines across multiple containers or voyages when partial shipment occurs.

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3. Journey Templates, Legs, and Delivery Information

A Journey Template models the standardized, multi-modal transportation path that goods follow from their point of departure to their final destination.

• Navigation: Landed cost > Setup > Delivery information > Journey templates

Configuring Sequenced Legs

A journey template is composed of sequenced Legs (Landed cost > Setup > Delivery information > Legs). Each leg models a discrete geographic and operational segment:

[Vendor Plant: Shanghai] 
       │ (Leg 1: Inland Road Drayage - 2 Days)
       ▼
[Shipping Port: Port of Shanghai]
       │ (Leg 2: Ocean Transit - 18 Days)
       ▼
[Shipping Port: Port of Long Beach]
       │ (Leg 3: Customs Clearance / Port Dwell - 4 Days)
       ▼
[Intermodal Rail Ramp: Los Angeles]
       │ (Leg 4: Inland Rail Transport - 5 Days)
       ▼
[Destination Warehouse: DC-24 Dallas]

For each leg within the journey template, the functional consultant configures:

• Sequence: The ordinal execution order (10, 20, 30, 40).
• From port / To port: Configured under Landed cost > Setup > Delivery information > Shipping ports. Ports represent ocean ports, airports, rail terminals, or vendor pickup hubs.
• Shipping method: Transportation mode, such as Sea, Air, Rail, or Road.
• Leg type: Classifies the segment, such as Ocean, Inland, or Customs.
• Estimated lead time: The baseline transit duration in calendar days. D365 SCM uses this lead time to calculate scheduled milestone dates.

Supporting Master Data Entities

• Shipping Ports: Establishes geographic nodes with country/region codes and local port authorities.
• Customs Brokers: Master records for third-party brokerage agencies associated with customs clearance folios.
• Activities: Operational tasks assigned to legs, such as fumigation, phytosanitary inspection, or cargo offloading.

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4. Voyage Creation and Multi-Vendor Line Consolidation

A major operational advantage of Landed Cost is the ability to consolidate purchase order lines from multiple vendors into a single voyage and shared containers.

Step-by-Step Voyage Creation Procedure

1. Create Voyage Header:

   • Navigate to Landed cost > Voyages > All voyages.
   • Click New in the Action Pane.
   • Enter a Voyage identifier (or leverage the automated number sequence).
   • Select the applicable Journey template (e.g., ASIA-USWC-DC24).
   • Select the Vessel and enter the carrier's Booking reference.
   • Click OK.

2. Open Voyage Line Manager:

   • In the Voyage form, click Voyage editor or Add lines.
   • The Voyage line manager provides search filters: Vendor account, Purchase order number, Delivery date range, Item number, Warehouse, and Delivery terms.

3. Consolidate Multi-Vendor Purchase Orders:

   • In standard procurement, purchase orders from Vendor A (Ningbo), Vendor B (Shanghai), and Vendor C (Shenzhen) remain isolated.
   • In the Voyage line manager, the logistics coordinator filters for all confirmed purchase order lines originating in the regional hub.
   • Select lines from Vendor A, Vendor B, and Vendor C simultaneously.

4. Containerization and Folio Generation:

   • Click Create shipping container and select the container type (e.g., 40HC).
   • Click Create folio under the container and specify the customs broker and commercial terms.
   • Move selected purchase order lines into the respective folios and containers.
   • The system validates that total weight and volume do not exceed the container type's maximum thresholds.

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5. Voyage Status Updates and Milestone Tracking

As the shipment progresses across the globe, the voyage moves through operational lifecycle statuses:

• Created: Initial planning state; purchase order lines are allocated to containers.
• In transit: Vessel has departed the port of origin; vendor invoice is posted and Goods in Transit orders are generated.
• At port: Vessel has arrived at the destination port; containers are awaiting unloading.
• Customs cleared: Customs duties have been assessed and folios are released by authorities.
• Received: Containers have physically arrived at the destination warehouse; Goods in Transit receiving is executed.
• Invoiced: All merchandise and landed cost ancillary invoices are posted and matched.
• Closed: Financial adjustments and variances are settled; the voyage is archived.

Milestone Tracking

Each leg records four key date attributes:

• Estimated Departure Date (ETD): Calculated by adding cumulative upstream lead times.
• Actual Departure Date (ATD): Populated when carrier confirms departure.
• Estimated Arrival Date (ETA): Calculated by adding the leg's lead time to the departure date.
• Actual Arrival Date (ATA): Recorded upon physical arrival at the leg's destination port.

[!NOTE] Entering an Actual Departure Date or Actual Arrival Date on a leg prompts the system to automatically recalculate estimated dates on all subsequent legs, updating the confirmed delivery dates on linked purchase orders and feeding revised supply dates into Master Planning.

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6. Implementation Scenarios and Common Exam Traps

[!IMPORTANT] Exam Tip — The Indispensable Folio: On the MB-330 exam, candidates are often asked whether a purchase order line can be placed directly into a shipping container. In D365 SCM Landed Cost, lines cannot be assigned directly to a container without a folio. The folio is mandatory because it serves as the financial and customs anchor for tariff calculations and duty reporting.

[!WARNING] Exam Trap — Line Splitting Across Containers: If a vendor delivers 1,000 units on a single purchase order line, but physical container capacity only allows 600 units in Container 1 and 400 units in Container 2, you do not need to create multiple purchase order lines. The Voyage line manager allows splitting a single purchase order line across multiple containers and folios directly.

[!TIP] Exam Tip — Transfer Orders in Voyages: Landed Cost is not restricted to external purchase orders. When an enterprise operates manufacturing subsidiaries in Asia and distribution hubs in Europe, Transfer orders between legal entities or internal warehouses can be added to voyages, containers, and folios to track intercompany transit and allocate logistics expenses.