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LSP Scenario in embedded Transportation Management of S/4HANA 1809 Release

SAP Standalone Transportation management ( TM) provides functionalities for both Shipper (like Ericsson , Nestle) and LSP – Logistic service provider (like DHL , Panalpina) . TM was embedded in S/4HANA core in 1709 release and it used to support only Shipper scenario as stated in one of my previous blogs  Note that LE-TRA of ECC does not support LSP scenario

Embedded TM of S/4HANA 1809 release now supports LSP scenario and this feature of LSP scenario in embedded TM can be also considered as one of the advantages of embedded TM w.r.t LE-TRA of ECC. There are some Shipper companies who have a group company to take care of all transportation activities of the main Shipper company, so this LSP scenario can also be used by the Transportation unit of the Shipper company.

Typical scenarios for Shipper and LSP in embedded TM of S/4HANA 1809 release have been depicted in below image.

LSP scenario generally starts with a Forwarding order. Freight units can be created automatically from Forwarding order based on the transportation requirement .LSP also can subcontract the transportation to another company and can create Freight order (or Freight booking) similar to Shipper scenario. LSP scenario can have two separate charge calculations

  • Charge calculation on Forwarding order: Freight charges are calculated based on the Forwarding agreement (FWA) of LSP with their customer (a Shipper company like Ericsson, Nestle).
  • Charge calculation on Freight order or freight booking: Freight charges are calculated on the freight order (or freight booking) based on the Freight agreement (FA) of the LSP with their subcontractors (or carriers).

Similarly, LSP scenario can have two separate settlements

  • Forwarding settlement document (FWSD): It is created with freight charges calculated based on the Forwarding agreement (FWA) and is used to create the Billing document to the Customer of LSP.

If the LSP unit belongs to a Shipper organisation , then this settlement will create a                              Intracompany settlement document if the Shipper & LSP unit belong to the same company                  code and can be posted to specific Cost element or cost center or internal order. If the                        Shipper  and LSP unit belong to different company codes , then this settlement will create                  Inter company billing document.

  • Freight settlement document (FSD) : It is created with freight charges calculated based on the Freight agreement (FA) with subcontractor and is used to create Purchase order & Service entry sheet

Document for a typical Forwarding order is in below image

Note that there is no Agency business document (ABD) or Supplier billing document in LSP scenario as there is no need to allocate the freight cost to originating logistic document like Sales order or delivery or Material valuation. However, Profitability can be calculated in LSP scenario, if required.

Forwarding order is also used in Shipper scenario like in case of ‘Transit warehousing’ as described in one of my blogs in link

Also like to highlight that the use of LSP scenario in embedded TM of S/4HANA requires additional license i.e LSP scenario is not covered under ‘Basic TM’ of S/4HANA.

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  • In case of 'complex' shipper scenario's where the FWO functionality is required how do you recommend the FWO is created? By entering the Sales order data on the FWO again? We are considering to automate this bij using XI webservices.  Dou you recommend this or are there other solutions?

    With kind regards,


    Benno Mateman




      • Hi Mrinal,

        There could be a case where we have different legs of transport, say for e.g. Road>Rail>Road. If the government has announced a subsidy for freight movement by rail transport, can we map this?

        Thanks for your answer.


  • Hi Mrinal Kanti Roy ,

    Just before the second image,  "Freight settlement document (FSD): It is created with freight charges calculated based on the Freight agreement (FA) with subcontractor and is used to create Purchase order & Service entry sheet"

    Here, For an LSP who is subcontracting the transportation to a carrier, Purchase Order is created in the TM of S/4HANA 1809 or do we need MM for that?

  • Hi Mrinal

    We have embedded SAP S/4 1709 TM system, In that posting of forwarding settlement to create Invoice is not present through standard process so SAP has recommended for Upgrade but client doesn't want to go with this solution, they want some modification to be done in this system.

    Is there a way we can achieve this through customization.

  • Hi Mrinal,

    Currently we have LSP scenario with S/4 HANA 2020  TM embedded system, for our company we have our own Transportation company serves for our company transportation requirement. we have 2 sales organizations one takes care of sales and distribution and the other takes care of transportation requirements (LSP) assigned to a single company code. Our LSP has its own trucks and he do service internally  with in our company as well as serves for external customers also. This blog is exactly matching with our business process.

    Here i would like to understand as our LSP is our own carrier, do we still need to create purchase organization in TM? or it is enough we create the FWO and do the FWSD and Billing and close?