U.S. business logistics costs rose at a slower rate last year as supply chain transparency continued to grow in importance, according to the the Council of Supply Chain Management Professionals’ Annual State of Logistics Report released June 21.
CSCMP collaborated with global strategic management consulting firm, A.T. Kearney, as the new author and researcher, with Penske Logistics continuing as sponsor.
The report reveals total U.S. business logistics costs rose to $1.48 trillion in 2015, a 2.6 percent increase from the previous year, which represents a considerable slowdown from previous years.
"Supply chain transparency continues to grow in importance for shippers and third-party logistics providers," said Marc Althen, Penske Logistics president. "This is driving significant technological change for 3PLs and shippers alike as they collaborate and share more real-time information to enable data-driven business decisions and meet the growing needs of consumers."
Parcel and express continues to grow, with the main drivers being the explosion of business-to-consumer e-commerce and omni-channel retail. E-commerce is likely to double in size by 2020, notes the report. This presents challenges. For one thing, B2C shipments generate lower revenue and have higher operating costs than the average shipment. Returns are also a challenge. One way parcel and express companies are working to address these challenges is investing in technologies such as robotics and vehicle routing software.
The report finds that technology continues to play a key role in the evolution of the 3PL market and projects that over the next decade, the logistics industry will enter a new era. Disruptive forces, including technology and operational constraints, threaten to fundamentally change the rules of the game, says the report. Automation, "Uberization", optimization tools, 3D printing, alternative fuels, advanced load-matching algorithms and more are expected to affect the logistics industry.
Other report findings include:
- Motor carriers are experiencing rate weakness, as rates and demand for transportation are soft and continue to fall. Despite this, competition for drivers remains intense.
- Containerized shipping by water is experiencing significant overcapacity, creating a favorable rate environment for U.S. shippers.
- A steep decline in coal traffic and crude by rail, macroeconomic weakness, and a pause in the growth of intermodal traffic resulted in overall rail volume reduction.
More information: https://cscmp.org/member-benefits/state-of-logistics