Amid a booming economy, United States Business Logistics Costs (USBLC) rose 11.4% to reach $1.64 trillion, or 8% of 2018’s $20.5 trillion gross domestic product (GDP).
This and other key insights were revealed in The State of Logistics Report, introduced at the National Press Club in Washington, D.C. The Council of Supply Chain Management Professionals (CSCMP).
It was discovered that supply chain capacity is tight enough that a number of major companies have reported in their Securities and Exchange Commission (SEC) filings that they exceeded their 2018 supply chain budget spending.
Why are supply chain costs rising?
- The retooling of supply chains to account for more e-commerce sales; online purchasing increased by 14.2% last year. The need for smaller, more costly warehouses has spiked.
- Extremely high utilization of existing truck fleets limits available freight capacity and drives up rates.
- Increasing government regulations on driver hours-of-service causing smaller trucking firms to cease operations, consolidate or be acquired by larger transportation companies.
- Tight U.S. labor market and higher wages for truck drivers and warehouse workers; attracting and retaining labor in general remains challenging for transportation and logistics companies.
How are innovations driving today’s state-of-the-art supply chains?
- Silicon Valley has devoted time, energy and resources to automation and robotics with inventions like automated trucks and automated warehouses.
- Vehicle electrification will lead the way to a more sustainable transportation network.
- The upgrade to a 5G communications network is on the horizon, which will improve logistics operation execution; planning and management; and high-security encryption.
“The logistics industry is at a new crossroads,” explained Michael Zimmerman, partner with A.T. Kearney and co-author of the 2019 report. “It has overcome a tough and exhausting year. Now, demand has softened, and growth is in doubt—but not to the point where a steep decline is visible.”
Across three decades, the report has offered a snapshot of the U.S. economy through the lens of the supply chain. It is a rigorous compilation of leading logistics intelligence around the world; shines a spotlight on industry trends; and offers key points of view on the supply chain sector.
About the Council and A.T. Kearney
Since 1963, the Council of Supply Chain Management Professionals (CSCMP) has been the preeminent worldwide professional association dedicated to the advancement and dissemination of research and knowledge on supply chain management.
A.T. Kearney is a leading global management consulting firm with offices in more than 40 countries. Since 1926, we have been trusted advisors to the world’s foremost organizations. A.T. Kearney is a partner-owned firm, committed to helping clients achieve immediate impact and growing advantage on their most mission-critical issues. For more information, visit atkearney.com.
Penske Logistics is a wholly owned subsidiary of Penske Truck Leasing. With operations in North America, South America, Europe and Asia, Penske Logistics provides supply chain management and logistics services to leading companies around the world. Penske Logistics delivers value through its design, planning and execution in transportation, warehousing and freight management. To learn more visit www.PenskeLogistics.com.
The logistics study was written by A.T. Kearney and presented by Penske Logistics.