29th Annual State of Logistics: Logistics steps into the light
As we have for the past 29 years, the Logistics Management editorial team has devoted a large portion of our July issue to putting context around the “Annual State of Logistics Report (SoL)”—and we continue to do so for good reason.
The report, authored by global management consulting firm A.T. Kearney in partnership with CSCMP and Penske Logistics, is by far the most comprehensive report of its kind, encapsulating the cost of the U.S. business logistics system during the previous year and offering a crystalline snapshot of how economic conditions are shaping the current logistics landscape. The official release of the report—which took place on June 19th at the National Press Club in Washington, D.C.—kicks off our annual examination of where each transportation mode currently stands in terms of service, capacity and rates.
Our intrepid contributing editor John D. Schulz was once again in attendance this year, and says that while the vast majority of the findings shouldn’t catch anyone off guard, there was one underlying finding that should certainly heightened the interest of shippers—especially those eager to step into the spotlight.
“The obvious takeaway this year revolved around the fact this it’s now a seller’s market and shippers need to rely on all their expertise, relationships and savvy to avoid being slapped with excessively high rate increases,” says Schulz. “Carriers can be extra choosy about with whom they do business, and the many factors causing this capacity crunch are likely to remain for several years—or longer.”
The less obvious takeaway centers on the visibility that shippers have had to build into their operations, be it through new technology or improved communication between the logistics operation and related departments. In fact, the improvements being applied to meet today’s overwhelming freight management challenges could prove to be a springboard for any shipper ready for advancement.
“You can say that this capacity crunch may be the best thing to happen to many ambitious shippers,” says Schulz. “In call after call, CFOs and CEOs, those responsible for keeping an eye on millions of dollars in transport spend, are suddenly citing transportation efficiencies—or inefficiencies—in discussing profitability levels with analysts and the press. Logistics managers have been accustomed to working quietly in the background, but that’s no longer going to be the case.”
Indeed, a quick glance at the numbers proves that logistics is no longer the corporate “backwater” it used to be. This year’s report finds that U.S. business logistics costs, after declining in 2016 for the first time since 2009, were on the rise again in 2017. Business logistics costs rose 6.2% to $1.494 trillion last year. According to the SoL, that spending surged in the fourth quarter of 2017, foreshadowing more of the same for this year.
Logistics Management has long pushed for logistics professionals to step into the C-suite and take their rightful place at the table. And according to Schulz, that moment has arrived.
“By all indications, logistics operations are officially on the front lines of efficiency, and success or failure in the management of freight movement can mean the difference between added profit or additional red ink,” adds Schulz. “This is a significant development for logistics professionals who have learned how to manage their operations with savviness and efficiency.”
