Thursday, June 16, 2011

US Business Logistics Costs Rise Substantially

Lack of Capacity Could be Problem in Future
Shipping News Feature

USA – In their annual ‘State of Logistics’ paper on the condition of the US freight market the Council of Supply Chain Management Professionals (CSCMP) report that businesses in the U.S. have had to pay substantially more to move their goods in 2010 and probably will again this year. Total logistics cost for American businesses went up over ten percent to $1.2 trillion, a figure that makes it 8.3% of the United States GDP.

The report also warns that the ‘soft’ recovery from recession makes it unlikely that businesses will be able to pass on those extra costs to consumers. In addition, the study points out that the near future might further spur on freight rates due to lack of capacity. America’s road haulage industry carries over seventy percent of the country’s freight, but the industry has lost over 16% of capacity since 2006 due to the recession and a number of bankruptcies and amalgamations that took place as a result.

Rosalyn Wilson, senior analyst at Delcan Corp and author of the paper states that customers to logistics companies could face a ‘perfect storm’ as the economy recovers, not just from rising rates but with trucking firms and forwarders being able to choose their clients due to limited capacity.

She warns that this scenario is likely to occur around the turn of the year due to the poorer than expected recovery.

(pic: One way to deal with under capacity)