Transportation News

State of Logistics Report: New Order, New Opportunities for Logistics Managers

2012 was not a great year from an economic perspective - While the freight sector continues to improve, prospects for high growth are limited - Slow growth will be with us for many years.

TranzAct Technologies Resources

Companies

  • The Council of Supply Chain Management Professionals (CSCMP) provides you and your organization with the education, research, connections, and professional growth opportunities needed in today’s global marketplace.

  • Delcan is a multidisciplinary engineering, planning, management and technology firm that provides a broad range of integrated systems and infrastructure solutions. As an award-winning company, Delcan has gained international recognition by virtue of our innovation, quality and commitment to clients.…

  • 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 major industrial and consumer companies throughout the world. Penske Logistics delivers…

  • TranzAct helps shippers like you reduce their transportation spend while providing the tools necessary to make better business decisions on an ongoing basis. Our solutions provide shippers of all modes with freight audit and payment, reporting and TMS applications, rate negotiation and savings, contract…

  • Company Quicklook

WASHINGTON, D.C. - According to the Council of Supply Chain Management Professionals’ 24th annual State of Logistics Report (sponsored by Penske Logistics) released today, logistics and supply chain managers are continuing to drive inefficiencies out of the business transportation system.

Last year, business logistics costs were once again 8.5 percent of Gross Domestic Product (GDP), the same level they thy hit in 2011, the new report says. That means freight logistics was growing at about the same rate as the GDP.

Cost of the U.S. business logistics system rose 3.4 percent in 2012, according to the report—less than half the increase from 2011 and still short of the peak 2007 level. Business logistics costs were $1.33 trillion, up $43 billion from 2011.

Inventory carrying costs and transportation costs rose “quite modestly” in 2012, said the report’s author Rosalyn Wilson in her remarks. Inventory carrying costs rose 4 percent while transportation costs were up only 3 percent, thanks to weak and inconsistent shipping volumes and strong blowback by shippers for carriers to hold rates.

“Logistics costs as a percentage of GDP in the U.S. compares quite favorably to that of our trading partners,” Wilson said. “Slow economic growth has kept the percentage low, but the supply chain sector has made great strides in productivity, asset utilization, and inventory management in the past three years.”

These supply chain management improvements will continue even as higher volumes return to the market place, Wilson predicted.

In releasing the report at the National Press Club, Wilson noted that slow growth and lackluster job creation has caused the global economy to wallow in mixed levels of recovery.

“This month will mark the fourth year of recovery after the Great Recession, and you’re probably thinking that here has not been much to celebrate,” said Wilson. “Is it time to ask, ‘Is this the new normal?’”

Wilson said that she believes we’re experiencing a “new order” that is translating into a new economic paradigm that is strongly affecting the logistics and supply chain sectors.

This “new normal” is characterized by slow growth (GDP growth of between 2.5 and 4 percent), higher unemployment levels (7.5 percent in U.S.), higher reliance on part-time workers, and slower job creation.

For logisticians, this means less predictable and less reliable freight services as volumes rise but capacity does not. In areas such as ocean transport, Wilson said, this can mean slower transit times “I do believe the economy and logistics sector will slowly regain sustainable momentum, but that we’ll still experience unevenness in growth rates,” Wilson predicted.

For cutting-edge logistics managers, however, the current environment also means great opportunities to secure increasingly tight capacity in an era of shrewd rate bargaining. This is partly because the trucking industry, in particular, is facing a lid on capacity because of higher qualifications for drivers while top carriers are becoming increasingly selective in their choice of customers.

“Truck capacity is still walking a fine line—few shortages, but industry-high utilization rates,” Wilson explained. “Qualified truck drivers have become a valuable commodity in very short supply.”

Wilson predicts that this shortage will exacerbate as the economy improves even further. She’s predicting the current driver shortage of 30,000 will hit 115,000 by 2016. In the ocean and air freight sectors, meanwhile, overcapacity is the issue. Railroads, meanwhile, have more than 20 percent of their freight cars in storage, she said.

The following summarizes the performance of individual freight modes last year:

  • Trucking rose 2.9 percent. The sector is “just on the breach” of experiencing capacity problems due to higher regulations and lack of fleet growth.
  • Rail costs rose 4.9 percent, well below its 16 percent increase in 2011. Class 1 revenue per ton-mile rose 5.3 percent even as ton-miles actually decreased 1 percent in 2012.
  • Maritime costs fell 0.9 percent in another disappointing year for ocean carriers. Capacity is expected to rise 10 percent this year but these new vessels “will be difficult to deploy” without further damaging the industry’s dynamic, the report said.
  • Air freight revenue gained 3.1 percent—domestic air cargo ton-miles rose 2 percent, but international fell 3.9 percent. The all-cargo air industry is facing “chronic over-capacity and deteriorating yield,” the report said.
  • Oil pipeline ton-miles were virtually flat last year. But that was “more than offset” by rate increases as pipeline revenue rose 8.3 percent in this heavily economically regulated sector.

In summary, 2012 was “certainly not a great year from an economic perspective,” Wilson said. While the freight sector continues to improve, prospects for high growth are limited. “Slow growth will be with us for many years,” Wilson concluded.


Article Topics
News   Research   Transportation   Transportation Management   Business   Associations   Other   State of Logistics Report   All topics


Comments
Be the first to post a comment.
You must be logged in to post a comment. Login.

About the Author
John D. Schulz
John D. Schulz has been a transportation journalist for more than 20 years, specializing in the trucking industry. John is on a first-name basis with scores of top-level trucking executives who are able to give shippers their latest insights on the industry on a regular basis.
 
Latest Transportation News
Transportation Predictions That Will Shake-Up the Supply Chain Industry In 2018
Dan Clark, Founder and President of Kuebix, gives his annual vision of what he sees happening in the transportation and supply chain industry including; tax reforms, decreased capacity, higher rates, and…

Home Depot Considers Buying $9 Billion XPO Logistics So Amazon Doesn’t
If Home Depot were to make an offer, one main impetus would be to keep XPO out of the hands of Amazon, which the home improvement retailer believes has also considered buying the logistics company, according…

CSX Provides Surface Transportation Board with Update on Precision Scheduled Railroading Progress
In a letter to leadership at the United States Surface Transportation Board, CSX CEO James Foote outlined the progress the Jacksonville, Fla.-based Class I freight railroad carrier has made in its ongoing…

The Five Ways 3PLs Can Retain Their Employees
Creating a positive work environment can help your 3PL improve its operational performance.


 

24|7 Pro Team

The 24|7 Team is your direct pipeline to solutions for your business challenges. It's your opportunity to have supply chain and logistics experts look at your specific challenges and needs, and give you free, no-obligation advice, solutions, and information.

The 24|7 Team will simplify the task of creating a database of likely partners, building your knowledge base, and preparing your Request for Proposal list.

1
  Choose a topic for your RFP

Transportation RFP/RFI

The Transportation RFP is your direct pipeline to solutions for your transportation challenges. It's your opportunity to have logistics experts look at your specific transportation challenges and needs, and give you free, no-obligation advice, solutions, and information specific to your request.

Choosing the perfect software or system can be an indomitable challenge. Using this transportation/TMS RFP will simplify the task of creating a database of likely partners, building your knowledge base, and preparing your Request for Proposal list.

Warehouse/DC Management RFP/RFI

The Warehouse Management Systems (WMS) RFP is your direct pipeline to solutions for your WMS challenges. It's your opportunity to have logistics experts look at your specific WMS challenges and needs, and give you free, no-obligation advice, solutions, and information specific to your request.

Choosing the perfect WMS solution can be an indomitable challenge. Using this WMS RFP will simplify the task of creating a database of likely partners, building your knowledge base, and preparing your WMS Request for Proposal list.

Supply Chain RFP/RFI

The Supply Chain RFP is your opportunity to have logistics experts look at your specific challenges and needs, and receive free, no-obligation advice, solutions, and information. It simplifies finding a pool of likely partners, building your knowledge base, and preparing your Request for Proposal list. The companies in the Logistics Planner have agreed to respond to your request for in-depth information and follow-up, and your request is totally confidential.

Software/Technology RFP/RFI

The Software/Technology is your direct pipeline to solutions for your logistics information technology challenges. It's your opportunity to have logistics experts look at your specific technology challenges and needs, and give you free, no-obligation advice, solutions, and information specific to your request. Whether it's WMS, TMS, Mobile or Cloud, our pros can help.

The companies listed below have agreed to respond to your request for in-depth information and follow-up. Your request is totally confidential.

Executive Education RFI

The Logistics and Supply Chain Education RFI can help you identify the schools, coursework, continuing education, distance learning and certification opportunities available from leading logistics educational institutions.

Upgrade and improve your logistics and supply chain skillsets. Whatever route you choose—advanced degree, executive education, certification or distance learning—the time and money you invest in your education today can pay off in continued career success tomorrow. Contact leading universities and professional institutions for the information you need to prepare for the future.

Third Party Logistics RFP/RFI

This 3PL Request for Proposal (RFP)/Request for Information (RFI) can help you find the 3PL and 4PL providers that can meet your specific 3PL service challenges and needs. The 3PL companies below will provide free, no-obligation third-party logistics advice, solutions, and information.

Ask your 3PL questions, you'll get answers. Simply complete the information, and detail your 3PL challenges. Then, check off the third-party logistics companies that you want to review your request.

1. Choose an RFI topic.
2. Enter your contact information and challenge.
3. Select companies and optional categories.
4. Submit.


2

Your Information



Your Challenge, Problem or Request *

3

Select Transportation Companies

  • Select All

  • 3Gtms
  • BluJay Solutions
  • CSX Trans. Intermodal
  • Kuebix
  • Landstar
  • Legacy Supply Chain Svs.
  • One Network
  • Pitt Ohio
  • Purolator
  • Quintiq
  • SEKO Logistics
  • SMC3


Select Relevent Categories

  • Air Freight
  • Intermodal
  • Motor Freight
  • Ocean Freight
  • Rail Freight
  • TMS

Select Warehouse/DC Management Companies

  • Select All

  • 3PL Central
  • Apex Supply Chain Tech.
  • Honeywell Intelligrated
  • Kuebix
  • Legacy Supply Chain Svs.
  • Swisslog
  • Westfalia Technologies
  • Zebra Technologies


Select Relevent Categories

  • Auto ID & Data Capture
  • Automation
  • Conveyors & Sortation
  • Lift Trucks
  • Packaging & Labeling
  • Pallets & Containers
  • Shelving & Racking
  • WMS

Select Supply Chain Companies

  • Select All

  • 3Gtms
  • 3PL Central
  • Amber Road
  • Apex Supply Chain Tech.
  • APICS
  • BluJay Solutions
  • CSX Trans. Intermodal
  • Frontier Business
  • Kuebix
  • Legacy Supply Chain Svs.
  • Logility
  • One Network
  • Purolator
  • Quintiq
  • SMC3
  • Synchrono
  • TAKE Supply Chain
  • Westfalia Technologies
  • Zebra Technologies


Select Relevent Categories

  • Global Trade
  • Inventory Management
  • Risk Management
  • Sustainability

Select Software/Technology Companies

  • Select All

  • 3GTMS
  • 3PL Central
  • Apex Supply Chain Tech.
  • BluJay Solutions
  • Honeywell Intelligrated
  • Frontier Business
  • Kuebix
  • Logility
  • One Network
  • Quintiq
  • SMC3
  • Swisslog Logistics
  • Synchrono
  • TAKE Supply Chain
  • Zebra Technologies


Select Relevent Categories

  • ERP
  • Sales & Operations
  • Sourcing/Procurement
  • Optimization
  • Transportation Mgmt
  • Warehouse Mgmt

Select Executive Education Choices

  • Select All

  • Graduate Courses
  • Online/Distance
  • Executive Education
  • Certifications
  • Undergraduate
  • Seminars
  • Associations
  • Conferences
  • Tradeshows


Select Third Party Logistics Companies

  • Select All

  • 3PL Central
  • Landstar
  • Legacy Supply Chain Svs.
  • Purolator
  • SEKO Logistics
  • Westfalia Technologies


4
 

24|7 Company Profiles