CSCMP Logistics Report Shows First Drop in Six Years

CSCMP’s 20th Annual “State of Logistics Report® provides insight into US supply chain and logistics trends, declining freight volumes, and a “big-picture” view of supply chain performance. This premier benchmarking tool for the supply chain profession is a CSCMP Member benefit. It is also available to the public for purchase.

An annual benchmark released today shows the impact of the recession on the US logistics industry. The 20th Annual “State of Logistics Report ®” released by the Council of Supply Chain Management Professionals (CSCMP) reveals that, after rising over 50% during the previous five years, business logistics costs fell to 9.4% of US Gross Domestic Product (GDP) in 2008. This number is down from 10.1% in 2007. For consumers, the new numbers indicate that the final, delivered cost of goods in the US may have declined slightly.

Total US logistics costs dropped to $1.3 trillion last year, a decrease of $49 billion from
2007. Interest rates plummeted to over 50% lower in 2008 than they were the prior year.
Since 1988, the report has tracked and measured all costs associated with moving
goods through the US supply chain. The report benchmarks key metrics in US logistics such
as transportation and inventory-carrying costs, freight volumes, and revenues, giving practitioners
a big-picture view of the performance of the US supply chain process.
Other key findings
In 2008, inventory-carrying costs plunged 13%, and were the driving force behind the
year’s decline in logistics costs. The decrease in carrying costs was due to both a 2.2% drop in
inventories and an 11.2% decrease in the inventory-carrying rate. Warehousing costs, however,
rose 9.5% with warehouse managers reporting that inventory turns were down substantially from
earlier years as stock spends more time in warehouses.
Transportation costs were only up 2% over 2007 levels, which was not enough to offset
the steep decline in inventory-carrying costs. Trucking, which comprises 78% of the transportation
component, increased 1.3% compared to 4.4% for rail, air, and ocean modes. Truckload
industry capacity dropped at unprecedented rates, with freight volumes declining faster than
capacity, offering little incentive to keep fleets.
“The economy will eventually recover, and when it does, those companies that use the
statistics and industry insight contained in this report will be better prepared for the business
boom ahead,” said Rick Blasgen, CSCMP president and CEO. “This research details ways that company leaders can capitalize on the recovery when it occurs, such as restructuring their
distribution networks to maximize efficiency and minimize miles, investing in technologies to
facilitate ‘green’ transportation, and improving real-time data flows to increase visibility and
enhance productivity.”
The report was released at the National Press Club in Washington, DC. A panel of senior
supply chain executives from BNSF Railway, Dell, Kraft Foods, Limited Logistics Services, Saddle
Creek Corporation, Sustainable Supply Chain Consulting, and YRC discussed the implications
of the report’s findings on their companies and on the industry, as well as the changes
they will be implementing because of them.
Founded in 1963, the Council of Supply Chain Management Professionals is the leading
worldwide professional association dedicated to education, research, and the advancement of the
supply chain management profession. With over 9,000 members globally, representing business,
government, and academia from 63 countries, CSCMP members are the leading practitioners
and authorities in the fields of logistics and supply chain management.
For more information, please contact:
Madeleine Miller-Holodnicki, ABC
Manager of Communications
Council of Supply Chain Management Professionals (CSCMP)
333 East Butterfield Road, Suite 140
Lombard, Illinois 60148-5617 USA

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