Slow growth, high costs
The 24th annual State of Logistics report states that the US logistics market will be confronted by slow growth, higher costs as well as strong freight volume fluctuations in the medium term. The report is published every year by the Council of Supply Chain Management Professionals (CSCMP), a trade organisation for logisticians and supply chain experts.
On the occasion of the presentation of the latest – the 24th – edition of the annual State of Logistics report in Washington DC, author Rosalyn Wilson declared that in 2012, the year under review, the transport and logistics industry in the USA had initially done rather well. Economic developments were dynamic at first, but then lost steam quite significantly in the third quarter, the member of the Council of Supply Chain Management Professionals (CSCMP) continued.
Wilson explained that «we have to put our expectations where they belong» and accept the idea of a new normality. «If we expect slow, sustained growth, then we’ll all be happy.» Wilson’s new normality includes slow economic growth, above all, as well as consistently high unemployment and high costs in almost every segment of the industry.
Realisation replacing reluctance
Marc Althen, the president of the US corporation Penske Logistics, which supports the CSCMP analysis every year and which presented the 24th edition, proved to be rather more optimistic about 2013 than the author of the document herself. Althen said that «in 2012, shippers were still very reluctant to make decisions to shift their supply chain. Now we’re seeing more of them make these changes and taking their business to 3PLs.»
He was speaking during a panel discussion held at the National Press Club in Washington DC, which was also attended by other industry executives, for example from the railfreight operator BNSF, the logistics service provider Pacer International and the office materials manufacturer Office Depot.
Rising logistics costs
Wilson said that the total logistics costs for US businesses rose to USD 1.33 trillion in 2012, a 3.4% increase over the previous year. This figure remains at 8.5% of the USA’s gross domestic product. In addition, she said, pure transportation costs have increased relatively modestly, growing by 3%, largely on account of weak and inconsistent shipment volumes and strong pressures to hold rates.
Warehousing costs were also on the rise, increasing by 7.6% in 2012. Expenditure on national railfreight activities in 2012 rose by 4.9%. In 2011 railfreight operating costs had risen by a rather heftier 16% vis-à-vis 2010.
The CSCMP believes that the railways will manage to gain additional market shares in the USA, at the expense of road haulage and shipping. The shipping industry is the only sector in which costs declined, namely by 0.9%. This was said to be primarily due to the fact that the segment has significant overcapacities, as well as due to ongoing price wars over freight rates.