Article written by John Schulz on July 12, 2019 | Posted on LogisticsManagement.com
Tight capacity, high rates, rapid e-commerce growth and a booming economy fueled an 11.45% rise in U.S. logistics costs over the course of 2018. However, new freight management innovations abound, and now nimbleness and efficiency are keys to good service as we roll through 2019.
Riding a booming economy, U.S. business logistics costs (USBLC) rose 11.45% to reach $1.64 trillion—or 8% of 2018’s $20.5 trillion gross domestic product (GDP). That’s according to the “30th Annual State of Logistics Report” recently released at the National Press Club in Washington, D.C. The report, authored by A.T. Kearney, was sponsored by the Council of Supply Chain Management Professionals (CSCMP) and presented by Penske Logistics.
That 8% cost of logistics as a segment of GDP was the most since 2014. However, to put that figure in historical perspective, logistics as a share of GDP was about 18% in 1979, the last year prior to trucking deregulation.
As to be expected, freight transportation costs ate up the biggest share of USBLC, hitting $1.037 trillion last year. “There is no other way to put it: 2018 was among the most challenging of years for shippers,” say the authors of the report. “Tight capacity led to significant, and, in some cases, multiple rate increases in order to continue to secure capacity. Shippers struggled to control spend.”
In addition, the report says, logistics professionals were “forced to adjust their business models to maintain capacity” and control costs. They did this in two ways: implementing dedicated fleets to assure service and adjusting internal operations to become “shippers of choice” in this new era...
Read the full article here.