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U.S. Logistics Industry Poised for Rebound

Tuesday June 22, 2010

An annual benchmark released today shows the continued impact of the economic slowdown on the US logistics industry. The 21st Annual “State of Logistics Report®”, released by the Council of Supply Chain Management Professionals (CSCMP) and presented by Penske Logistics, reveals that, continuing the decline reported in 2008, business logistics cost fell to 7.7 percent of US Gross Domestic Product (GDP) in 2009, as compared to 9.3 percent the previous year. Total US logistics costs dropped again last year showing a significant decrease from 2008. Interest rates remained historically low, dropping below those set in 2008.

Since 1988, the report has tracked and measured all costs associated with moving goods through the US supply chain. The report benchmarks key metrics in US logistics such as transportation and inventory-carrying costs, freight volumes, and revenues, giving practitioners a big picture view of the performance of the US supply chain process.

Other key findings
In 2009, inventory-carrying costs continued to fall due to a 4.6 percent decline in inventory and further plunge in interest rates. Pressure on rates and an inability to move goods resulted in warehousing costs falling 2 percent below those of 2008. Although early 2009 saw warehouses full of inventory, by mid-year goods had been drawn down or relocated leaving facilities with empty space. Transportation costs were 20.2 percent lower than 2008 levels, with all modes of transportation being negatively affected. Trucking, which comprises a large percentage of the transportation component, had a 9 percent drop in tonnage carried. Rail carload traffic was also down from the previous year. The Ocean sector reported sharp declines, lowering rates to stimulate business, with some ocean carriers reporting losses for the first time in their company’s histories. After heavy losses early in the year, air cargo had a much stronger showing by the latter part of 2009.

Due to abundant capacity and decreased freight to move, the industry has experienced significant pressure to reduce costs. Although shippers have responded with reductions, customers have not necessarily noticed a decline in rates.


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