Friday, June 11, 2010

Supply Chain Annual Logistics Report Examines Shipping Across The US

Costs and Tonnages Down and Recovery May Hold its Own Problems
Shipping News Feature

US - The 21st Annual “State of Logistics Report®”, released by the Council of Supply Chain Management Professionals (CSCMP) and presented by Penske Logistics, reveals that, due to various factors, particularly continuing low interest rates, the cost of logistics to businesses fell by 1.6% to represent 7.7% of Gross Domestic Product during 2009.

 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.

Overall transportation costs were 20.2% lower than 2008 levels, with all modes of transportation being negatively affected by declining traffic levels. Trucking, a large percentage of the transportation component, had a 9% drop in tonnage carried. Rail carload traffic was also down from the previous year. The Ocean sector declined sharply and, principally due to shipping lines reducing rates to stimulate business, some ocean carriers reported 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.

"Logistics providers were among the first to feel the effects of the economic downturn", said Vince Hartnett, president, Penske Logistics. "Today, we are seeing some positive signs of recovery in the supply chain with increasing truck freight volumes and higher truck fleet utilization rates. If this continues, trucking and logistics firms will likely add capacity to take on additional loads and hire drivers to meet increasing demand.

“The economy is beginning to recover, and although time will tell how the logistics sector deals with the recovery, those companies that use the statistics and industry insight contained in this report will be better prepared for the business activity ahead,” said Rick Blasgen, CSCMP president and CEO. “This research presents data for company leaders to be able to capitalize on the recovery as it occurs, such as restructuring their distribution networks to maximize efficiency and minimize miles, investing in technologies to facilitate ‘green’ transportation, and improving real-time data flows to increase visibility and enhance productivity.”

The report goes on to state that there is likely to be a shortage of qualified truck drivers in the coming years. It points out that commercial vehicle drivers are often émigrés from other struggling industries such as construction. As these sectors recover there is a natural migration back toward them and, coupled with the ageing driver population, one sixth of truckers are over 55, plus the shortage of suitably qualified youngsters coming into the industry, and the decline in pay rates there may be a critical shortage of qualified staff if the economy recovers.