Inside Logistics

U.S. logistics costs drop four percent in 2020

State of Logistics Report finds supply chains continuing to reset from the pandemic


June 28, 2021
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In 2020, U.S. business logistics costs (USBLC) dropped 4% to US$1.56 trillion, or 7.4% of 2020’s $20.94 trillion gross domestic product (GDP). The pandemic forced many global supply chains to screech to a halt and then start back up. Again and again.

The 32nd Annual State of Logistics Report finds supply chains continuing to reset from the pandemic with logisticians adapting, planning and shifting to meet current and future demands.

Want more details on the Annual State of Logistics Report? Watch for the August print issue of Inside Logistics.

This year’s State of Logistics Report is called “Change of Plans”, and it provides a snapshot of the American economy through the lens of the logistics sector in the overall supply chain. The report is a compilation of logistics intelligence from around the world and shines a spotlight on industry trends, and key insights on ever-evolving industry supply chains.

The State of Logistics Report is produced annually for the Council of Supply Chain Management Professionals (CSCMP) by global consulting firm Kearney and presented by Penske Logistics.

Safety stocks are back

As a result of a still ongoing pandemic and other disruptions, supply chains will be forced to continuously adapt. Change is inevitable in supply chains and adjustments are ongoing as manufacturers shift their sources and consumers shift their spending habits. Change will also come from the trend of multi-shoring and emphasis on options at the expense of lean and optimal. Safety stock is back, so more inventory will need to be carried.

“Resiliency, innovation, technology, and close collaboration with shippers have all been essential to weathering the rapidly changing market demands up and down the supply chain,” said Andy Moses, senior vice-president of sales and solutions, Penske Logistics.

“We see this continuing as supply chains reset and adjust to a new normal as consumer preferences and expectations have reshaped the future of the supply chain during the pandemic.”

The K-shaped recovery of 2021 reflects changed consumer habits, the report finds. Hospitality, restaurants and airlines struggled. Grocery retail, home improvement and e-commerce prospered.

E-commerce purchases (some of which was picked up in-store) grew by 33% to $792 billion, representing 14% of all retail sales.

The control tower concept is taking on an added importance. Resilience is most effective when paired with visibility. Companies need knowledge to make quick decisions, and the control tower serves as an information hub to enable better planning and reacting.

“Logisticians came off the ropes of a bruising 2020 with a new appreciation that while resilience from the capabilities they had built got them through the main disruptive rounds of the pandemic, 2021 is confirming that the ability to change plans and execute under adversity has risen to be the top priority,” said Michael Zimmerman, partner at Kearney.

Sustainability

Sustainability efforts by the transportation sector are increasing. Consumers are considering environmental impacts in their purchasing decisions while governments across the globe are instituting more stringent regulations.

Moving forward, supply chains must continue to provide goods and services to the American public while dealing with tight capacity and volatile rising rates; H1 2021 has the highest rates the market has ever seen.

The U.S. economy is now expected to grow 7.7% this year with advancements related to increased vaccinations and a return to normal.