State of Logistics Report Highlights Tight Supply Chain Capacity and Innovations

United States Business Logistics Costs rose 11.4%

The State of Logistics Report was introduced this morning at the National Press Club in Washington, D.C. The Council of Supply Chain Management Professionals (CSCMP) celebrated a milestone with the issuance of its 30^th annual publication. The logistics study is written by A.T. Kearney and presented by Penske Logistics.

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).

The publication notes 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.

Rick Blasgen, president and chief executive officer of CSCMP: “This highly anticipated report contains the statistics and industry insights that will not only help our members do their jobs better, but also better prepare them for the business demands ahead. Not only do we definitively reveal the cost of logistics in the United States, but we also discuss technology and other forward-thinking applications for leaders to use as they improve their overall supply chain performance.”

“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, a context we summarize in the report’s title, ‘Cresting the Hill.'”

“The State of Logistics Report is a great resource for keeping pace with the modern supply chain,” stated Marc Althen, Penske Logistics president. “It offers a wealth of industry information and we are pleased to once again support it.”

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 sect

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