MODEX 2012: Looking up

by Carolyn Gruske

ATLANTA, GEORGIA: Everything went up.

That’s the trend in the supply chain sector, according to Rick Blasgen, CEO of the Council of Supply Chain Management Professionals. Blasgen opened this year’s MODEX Expo and Conference 2012 with his keynote speech, The State of Logistics and Supply Chain Management.

According to his figures, logistics costs in the US were $1.211 trillion in 2010. That’s up 10.4 percent from 2009.

Also up was logistics as a percentage of GDP (8.3 percent in 2010, up 6.4 percent from 2009), transportation costs, which totaled $768 billion in 2010, up 10.5 percent from the previous year, and inventory carrying costs, which came to $396 billion in 2010, 10.3 percent higher than 2009.

´╗┐These increases aren’t just one-time events. Since 1990 logistics costs have risen 184 percent, with an annual average increase of $28 billion.

There was one figure that went against the upward trend: during that same 1990 to 2010 time period, as a percentage of GDP, logistics went from 11.4 percent to 8.3 percent.

In comparison, Blasgen’s figures for other countries and regions indicated logistics made up a higher percentage of their national GDPs. He listed Asia spending between 13 to 20 percent, China 15 percent, Europe 12-14 percent, India 13 percent, Japan 11 percent and Mexico 14 percent.

He also presented some other figures of note, including:

  • Total US domestic inventories were valued at $2 trillion.
  • US logistics spending is larger than the GDP of of all but 12 countries

He also noted the revolutionary influence of Wal-Mart on the supply chain, noting “the effects of the company’s supply chain innovations on the retail industry led to a 3.1 percent decline in overall prices between 1985 and 2004,” and “In 2004, consumers spent $263 billion less than they would have if Wal-Mart were not around. That translates to $895 per person or $2,329 per household.”

He also pointed out the immediate need for an American national transportation policy, given that by 2020 freight volume will be 25 billion tonnes, worth more than $30 trillion and that trucks will account for 75 percent of the cargo carried. Rail volume will also be up, increasing 44 percent from 2012 levels to 888 million tonnes. He also predicted that demand will exceed capacity at many US ports by over 200 percent.