Bringing you the big picture

Part of our mission at the Council of Supply Chain Management Professionals (CSCMP) is to develop and disseminate research that helps our members understand the factors that influence how they do their jobs. Knowing how logistics and supply chain costs affect and are affected by the larger economy is a key part of this understanding. That's why we believe it's important to sponsor the annual "State of Logistics Report," presented by Penske Logistics.

The report, authored by economist Rosalyn Wilson, provides a look at the big picture of logistics. Since 1989, this research project (originally conducted by the late Robert Delaney) has tracked and measured all costs associated with moving freight through the U.S. supply chain. This year's edition provides an overview of the economy over the past year, the logistics industry's key trends, and the total U.S. logistics costs for 2012. It also suggests that the United States is no longer in recovery mode, and that the failure to achieve sustained, robust growth may represent the "new normal" not just for the U.S. economy but also for the logistics industry.

This latest report discloses that transportation costs were up only 3 percent in 2012 due to weak and inconsistent shipment volumes and pressure to hold the line on rates. Here are some other highlights from the report:

• Total U.S. business logistics costs rose in 2012 to $1.33 trillion, a 3.4-percent increase from 2011. Despite that rise, total costs remained at 8.5 percent of the U.S. gross domestic product (GDP) for the second consecutive year.
• Truck transportation costs rose by 2.9 percent in 2012; however, expected capacity pressures could quickly push up rates.
• Railroad transportation costs rose by 4.9 percent, increasing Class 1 rail revenue per ton-mile by 5.3 percent.
• Intermodal volume was the second highest on record, while carload traffic declined 3.1 percent.
• Warehousing costs increased by 7.6 percent, but in dollar terms that was dwarfed by the cost of a 2.6-percent rise in taxes, obsolescence, depreciation, and insurance, an increase that was directly related to inventory levels.

That's just a fraction of the valuable data included in the "State of Logistics Report." I encourage all of you to get your own copy of this influential research. The report is available free of charge to CSCMP members; nonmembers can purchase it at cscmp.org.

As the U.S. economy continues to adjust to the "new normal," companies that use the insights contained in the "State of Logistics Report" will be better prepared for the business demands that lie ahead. This research not only identifies macro trends and how they influence logistics and supply chain practices, but also details some of the ways supply chain leaders can capitalize on changes in the economy. Having this knowledge will surely help supply chain executives make better, smarter decisions in the future.