Logistics costs rise

by Array

LOMBARD, ILLINOIS: Business logistics costs rose to US$1.2 trillion—or 8.3 percent of US gross domestic product (GDP)—in 2010, as compared to 7.7 percent the year before. That year was roughly on par with 2005, well below the pre-recession years.

That’s according to the 22nd-annual State of Logistics Report, released by The Council of Supply Chain Management Professionals (CSCMP) and presented by Penske Logistics recently in Washington, DC.

Written by transportation consultant Rosalyn Wilson of Delcan Inc, the report has tracked and measured all costs associated with moving goods through the US supply chain since 1988. This year’s report presents an overview of the 2010 economy, the industry’s key trends, and the total US logistics costs for 2010 and their percentage of the GDP in that country.

The report also examines which sectors of the industry recovered, those that didn’t, and which areas can be targeted for increased profit and growth. The research concludes with industry indicators for the future.

According to the report, the cost of the US business logistics system jumped 10.4 percent in 2010, making up for more than half of last year’s decline. Those costs rose to US$1.2 trillion, the report said, an increase of US$114 billion from 2009.

Inventory carrying costs increased 10.3 percent last year due to higher costs for taxes, obsolescence, depreciation, and insurance, which were offset by a further drop in the inventory carrying rate and warehousing costs.

Transportation costs were up 10.3 percent from 2009, with trucking lagging behind other modes, rising 9.3 percent compared to an average of 15.4 percent for the other modes combined.

Manufacturing and business spending were the bright spots during much of 2010, while consumer goods production was almost flat. Industrial production was up 5.3 percent in 2010, after declining 11.2 percent the year before.

“This research is a key source of information that not only identifies macro trends and how the logistics discipline is impacted, but also details ways that company leaders can capitalize on the recovery as it occurs,” said Rick Blasgen, CSCMP president and CEO. “Penske’s continued sponsorship of the report underscores the significant contribution that quality research makes in driving thought leadership and innovation in the logistics and supply chain industries.”