Out of sync and in the spotlight

It used to be that when someone asked what industry our media organization covered and I responded “supply chain,” I would get an uncomprehending blank stare in return. Most folks had never heard of supply chain and just assumed the products that they buy every day somehow magically appear in their favorite stores.

In some ways, that should be a compliment, similar to a baseball umpire being unnoticed in a game because they have done a good job of making calls accurately. Supply chains were humming along prior to the pandemic. No one took notice.

However, if someone asks me that same question today, everyone understands what I mean by supply chain, and their affirmative nod is often followed up with a question about why this or that product is now in short supply.

Our supply chains are out of sync, which is the appropriate title of this year’s “State of Logistics Report,” authored by global management consulting firm Kearney for the Council of Supply Chain Management Professionals (CSCMP) and presented by logistics service provider Penske Logistics. The report provides an in-depth view of the logistics industry within the United States and its impact on the world economy.

The 33rd edition of this annual report reflects on the state of the industry during the past year and serves as the jumping off point for CSCMP’s Supply Chain Quarterly’s own annual State of Logistics issue.

Saying our supply chains are currently “out of sync” may actually be putting it mildly. Costs are rising, services often take longer, and capacity is still hard to find for many lanes. Overall, U.S. business logistics costs rose a little more than 22% during the past year. That amounts to $1.85 trillion or 8% of 2021’s U.S. gross domestic product (GDP). This reverses a trend before the pandemic where logistics operations were becoming so efficient that those cost percentages had been moving downward.

The biggest increases were for trucking, as high fuel prices gouged wallets in ways we have not seen for decades. Demand was still high, as companies sought to bring in more inventories to assure they had adequate stock in attempts to reduce well-publicized product shortages. Many shippers found capacity harder to find and when obtained, that capacity was more costly.

Since COVID is not entirely in the rearview mirror yet, it continued to play a significant role during the past year, primarily from long shutdowns at Chinese ports and manufacturing centers. Russia’s invasion of Ukraine has also contributed to supply problems and higher fuel costs.

Beyond the synopsis of the CSCMP report, this special issue of Supply Chain Quarterly also offers expanded coverage from industry experts, who provide their insights into specific supply chain verticals. We deliver this analysis in easily digestible slices of trucking, rail, ocean, air freight, parcel inventory management, warehousing, third-party logistics, and technology.

When we wrote last year’s issue, we had looked forward to a return to a bit of normalcy. Sadly, we are far from it. Hopefully, the insights in this issue will help us get a little closer to being more in sync next year.