CSCMP's Supply Chain Quarterly
January 20, 2020
Direct Connection
Direct Connection

A new crossroads

After 2018's surge in economic growth, demand has softened. Will growth will follow suit?

Every June, the Council of Supply Chain Management Professionals (CSCMP), along with Penske Logistics, presents its Annual "State of Logistics Report" in Washington, D.C. This year's report, titled "Cresting the Hill," was authored by management consulting company A.T. Kearney and provides an optimistic outlook for the industry after years of rate and capacity challenges.

Amid the booming economy of 2018, U.S. business logistics costs (USBLC) rose 11.4% to reach $1.64 trillion, or 8.0% of 2018's $20.5 trillion U.S. gross domestic product (GDP). The report indicated that growing demand led to a stronger job market with rising wages, which carriers and warehouses passed on to shippers as higher prices. Shipping activity was especially intense in the fourth quarter, as companies prepared for heightened U.S.-China trade tensions and U.S. business inventory reached an all-time high of $2.75 trillion, driving increased inventory carrying costs to eclipse increases in transportation costs.

At the same time, the rise of e-commerce has radically changed customers' expectations for how and when they receive products and services. The report, for example, touches on the growing importance and increasing competition in last-mile delivery. We also highlight regulatory impacts like the turmoil coming from the International Maritime Organization (IMO) 2020 sulfur regulations.

Now more than ever, technology will play a key role in improving fulfillment and driving efficiency in modern supply chains. This year's report focuses on warehousing automation, artificial intelligence, blockchain, and 5G cellular network technology.

Finally, the report summarizes trends in the marketplace and predicts how these trends are going to affect the industry and the cost of logistics going forward. This year's report identifies that the industry is at a new crossroads, rebounding from the recent capacity and pricing crunch. As demand has softened though, growth becomes questionable.

How can CSCMP help you meet these challenges? There is a lot of information out there, and it is hard for supply chain professionals to know what to consume, what is meaningful, and what to pay attention to. We, as your professional association, feel strongly about what we create and disseminate. We want you to be armed with not just information, but important, meaningful, and relevant information that matters. For example, this year's report discusses growth, capacity in all modes, geopolitical forces, as well as regulation. These key forces play an important within the ever-changing business environment. In our world, surprises always seem imminent. Having strong relationships can help you navigate the vast amount of information and decipher what's really important. We can make those connections with and for you.

The State of Logistics Report is complimentary for all CSCMP members as an exclusive member benefit and is available for purchase by nonmembers.

Rick Blasgen is President and Chief Executive Officer of the Council of Supply Chain Management Professionals (CSCMP).

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