To sat that supply chains were upended by the past three years of the COVID-19 pandemic would be a gross understatement. Supply chains were altered in ways we have never experienced before, and it should not be surprising to see further adjustments on the horizon.
COVID shutdowns forced consumers to take an inward look. With stimulus checks in hand and needing diversions, they bought online goods like kids in a candy store. Home improvements were high on the list, as there was not much else to do but make the best of a bad situation. Even as shutdowns ended, travel and large gatherings were still discouraged, so consumers just continued their buying splurges.
Now that restrictions have eased, consumers have adjusted their spending ways. The buying of goods has been exchanged for the travel and experiences that were lacking during the previous years. Retailers—who erroneously thought the fun would never end—find themselves with huge, built-up inventories and are limiting imports of new products as a result. Sailings are down, trucking is in a recession, and new warehouse projects are being delayed.
As we look at the state of logistics, it is fair to say that we should not have expected supply chains to have maintained the frantic pace of the COVID era. A reset was in order, and that is exactly what we are experiencing today.
This year’s CSCMP’s State of Logistics Report is aptly titled, “The Great Reset.” It examines what took place in 2022 and the early months of the current year in supply chains. This exclusive research study was authored by the global management consulting firm Kearney and is presented by Penske Logistics. The 34th edition of this annual report provides an in-depth view of the logistics industry within the United States and its impact on the world economy. It serves as the jumping off point for Supply Chain Quarterly’s own annual State of Logistics issue.
Logistics activity has always been somewhat of a pendulum, with shippers and carriers alternating who is in control of the industry. With capacity tight during the frenzied pandemic years, carriers were able to set extraordinarily high rates that shippers were forced to accept to get products any way they could. Now that demand has subsided, shippers are able to dictate the market, resulting in rates plummeting and a period of overcapacity.
Despite that shift, logistics costs continued to rise last year due to high inflation and low unemployment. Some interesting numbers: Overall logistics costs rose 19.6%. Logistics as a percentage of gross domestic product increased from 7.5% in 2020 to 9.1% in 2022—a 20% rise. Reshoring to Mexico also increased 26%, as manufacturers looked to shorten their supply chains and reduce any potential risks caused by international politics.
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.
Our hope is that we will look back at the last few years (including this one) as a historic aberration caused by unusual events that affected the world as a whole. By next year, the reset may be complete, and shippers and carriers will adjust to the new normal left in its wake … whatever that may be.Copyright ©2023. All Rights ReservedDesign, CMS, Hosting & Web Development :: ePublishing