Spending on freight transportation and logistics services grew more slowly last year compared to 2012, reflecting weaker shipment volumes and flat rates associated with a sluggish economy, rather than any gains in business efficiency, according to an annual report on logistics trends.
Logistics costs as a percent of Gross Domestic Product, a key measure of logistics performance relative to overall productivity, fell to 8.2 percent from 8.3 percent, the lowest it's been since the recession in 2009, when it finished the year at 7.8 percent.
U.S. business costs for logistics increased 2.3 percent, or $31 billion, to $1.39 trillion in 2013. During the prior year, logistics costs grew 3.4 percent to $1.35 trillion, according to the "State of Logistics" report authored by Rosalyn Wilson for the Council of Supply Chain Management Professionals.
CSCMP's Annual State of Logistics Report.
Transportation costs only increased 2 percent, while inventory-carrying costs rose 2.8 percent. Retail inventories grew the most, 6.2 percent, due to weaker-than-expected sales. Wholesale inventory growth was less than half that amount, and manufacturing inventories posted a 2.1-percent gain.
Trucking, the largest component of transportation costs, posted a 1.6-percent rise in 2013, one of the weakest revenue years in recent history. But Wilson predicted that the shortage of drivers due to demographics, bankruptcies and new safety regulations, combined with a quickening economy, could push truck rates up 5 percent to 8 percent this year, and a couple of logistics industry executives concurred during a press event in Washington to promote the report that they are having to pay more to secure long-haul trucks.
Wilson cited work by Donald Broughton of Avondale Partners showing that motor carrier bankruptcies were at a three-year high in 2013, as small firms found it increasingly difficult to pay more to attract drivers, while also experiencing significant inflation in equipment, insurance and other costs. Trucking industry officials say new safety regulations reduce productivity, and, therefore, the earning potential of drivers, and winnow out the pool of available drivers that don't meet new standards.