Sunday, March 18, 2018

Business logistics cost up 3.1% in 2014, report shows

Wednesday, June 24, 2015
Rosalyn Wilson of Parsons addresses the media Tuesday to discuss the implications found in the annual “State of Logistics Report.” (Courtesy: CSCMP)
Rosalyn Wilson of Parsons addresses the media Tuesday to discuss the implications found in the annual “State of Logistics Report.” (Courtesy: CSCMP)

WASHINGTON — The Council of Supply Chain Management Professionals (CSCMP) released its 26th Annual “State of Logistics Report,” presented by Penske Logistics, at a news conference Tuesday at the National Press Club in Washington.

The event also included a panel discussion of industry executives from Penske Logistics, Boeing, BNSF Railway, Domino’s, Yusen Logistics and Sustainable Supply Chain Consulting.

“This highly anticipated report contains the statistics and industry insights that will not only help our members do their jobs better, but also better prepare them for the business demands ahead,” said Rick Blasgen, president and chief executive officer of CSCMP. “Knowing how logistics and supply chain costs affect and are affected by the larger economy is a key part of this understanding. We are grateful for the support from Penske Logistics in issuing this critical industry intelligence.”

The report reveals total U.S. business logistics costs rose to $1.45 trillion in 2014, a 3.1 percent increase from the previous year. However, the growth rate for logistics costs was lower than the U.S. gross domestic product, resulting in a slight decline in logistics as a percent of GDP from 8.4 percent to 8.3 percent.

The report, authored and presented by transportation consultant Rosalyn Wilson of Parsons, has tracked and measured all costs associated with moving freight through the U.S. supply chain since 1988. This year’s report presents an overview of the economy during the past year, the logistics industry’s key trends and the total U.S. logistics costs for 2014.

In 2014, the supply chain industry experienced its best year since the Great Recession. The research examines the economic vitality and associated challenges facing each segment of the logistics industry and concludes with a brief overview of industry indicators for the first half of 2015 and thoughts about performance for the remainder of the year.

This year’s State of Logistics Report reveals the transportation sector grew by 3.6 percent in 2014 because of stronger shipment volumes rather than higher rates. The U.S. economy was on solid ground. New job creation was consistent, real net income and household net worth inched up, inflation was low-to-moderate and gas prices tumbled, providing consumers with additional buying power.

As consumer spending increased, freight levels climbed as retailers replenished inventories, the report said.

Consumers had been the missing component in the recovery from the Great Recession, but in 2014 they began returning to the marketplace. 

The truck driver shortage remains a key concern for the logistics sector with the American Trucking Associations estimating the current shortage ranges from 35,000 to 40,000 drivers. A key indicator of this was the driver turnover rate, which was more than 95 percent on an annualized basis.

The report also noted that the impact of new federal truck safety regulations, specifically the Hours of Service rules implemented July 1, 2013, had been felt by 390 trucking companies that went bankrupt. The companies averaged operating 27 vehicles.

“Smaller trucking companies are also being forced out of the business because of cost-related pressures stemming from new federal safety regulations. Although these companies represent a small part of the industry compared to the nation’s largest carriers, they are often an important source of competition,” the report said.  

“Today’s market-leading companies use their supply chains to drive innovation and competitive advantage,” stated Marc Althen, president of Penske Logistics. “This in-turn drives demand for logistics providers. While demand for logistics is increasing, the industry faces a talent shortage and needs more logistics engineers, technology professionals, warehouse workers, and truck drivers to meet the needs of current and evolving freight fulfillment models businesses and consumers rely on for their goods and services.”

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