U.S. businesses spent $43 billion more on logistics services last year, but the cost of freight transportation and warehousing remained stable considering the 2.5 percent growth in the U.S. economy, according to the annual State of Logistics Report
released Wednesday by the Council of Supply Chain Management Professionals.
Logistics costs as a percentage of Gross Domestic Product, a key metric of logistics system efficiency, remained stable at 8.5 percent. The United States remains one of the lowest cost countries in terms of logistics because of sophisticated logistics planning, information technology, asset utilization, inventory management and excellent transportation infrastructure.
Total logistics costs grew 3.4 percent to $1.33 trillion in 2012, but the increase was less than half that in 2011 ($83 billion) and at the peak in 2007 when logistics expenditures grew $89 billion to $1.39 trillion and logistics productivity worsened to 9.9 percent of GDP.
Inventory carrying costs rose 4 percent to $434 billion, while transportation costs grew 3 percent to $836 billion, the report, authored by transportation analyst Rosalyn Wilson, said.
Inventory costs were held in check by continuing low interest rates. Inventories grew in retail, wholesale and manufacturing categories, with retail inventories jumping 8.3 as store sales began to taper towards the end of the year. That contributed to the inventory-to-sales ratio growing to about 1.29 from 1.26.
The cost of warehousing grew 7.6 percent to $130 billion. Capacity in key markets became scarce, leading to higher lease rates. Commercial real estate developers are building more facilities to meet demand, but occupancy rates are climbing.
Trucking, the largest component of U.S. transportation costs, posted a 2.9 percent increase in revenues. Trucking rates are still depressed, but capacity is very tight in many regions as carriers have been careful not to expand their fleets. Wilson said shippers can expect to pay higher rates in the near future as the economy continues to improve and demand outstrips capacity, especially as new regulations governing driver work schedules kick in and stricter rules on driver qualifications limit the pool of qualified drivers.
Wilson predicted little change in spending and productivity trends for the logistics sector for the next couple years, with sustained, but choppy growth, as the global economy continues to recover from the financial collapse five years ago.
A copy of the full report is available for purchase on the CSCMP Website
. - Eric Kulisch