The Impact of Increased Transportation Costs on Global Supply Chains: Five Key Trends

The intensive outsourcing and off-shoring of U.S. manufacturing operations to other countries has caused growing import flows.

This practice has also reinforced the trend of the United States as a consumer nation that is heavily reliant on freight transportation systems.

There is increasing pressure on both U.S. gateways and inland transportation to meet growing freight transportation needs. However, U.S. transportation infrastructure is fast approaching its capacity,
and capability to invest in this critical sector is limited. Added to the infrastructure capacity constraints are escalated fuel prices and growing concern about climate change.

Together, these factors have resulted in rising costs of transportation. The transportation and freight industries alike are undertaking fundamental changes in their operational strategies.

This paper highlights five key trends in global supply chains driven by today’s transportation environment.

• Emerging Trend 1: From low-labor-cost country sourcing to near-consumer sourcing strategies
• Emerging Trend 2: From West to East: port diversion strategies
• Emerging Trend 3: From near-port import warehouses to large, inland warehouses
• Emerging Trend 4: From national mega-distribution centers to regionalized distribution networks
• Emerging Trend 5: From lean inventory to efficient transportation using consolidation and mode evaluations