Lombard, IL – Logistics costs for US-based businesses climbed by 2.3 percent last year to $1.39 trillion, according to the latest State of Logistics Report (SOL), released by the Council of Supply Chain Management Professionals (CSCMP) and Penske Logistics.
According to the SOL, the first five months of 2014 “have had the strongest freight performance since the end of the Great Recession, with freight shipments up 13.1 percent.”
Yet, the report said, logistics as a percent of US gross domestic product (GDP) declined for the second year in a row, “indicating that the logistics sector is not keeping pace with the growth in the overall economy.”
Based on the SOL, Penske Logistics sees moderately improving US economic conditions, in the form of better dedicated contract carriage growth; a solid near- and long-term automotive sector outlook; and an improving manufacturing sector, also evidenced in the May reading published by the Institute for Supply Management that showed the fastest pace of manufacturing growth this year.
The nation’s supply chain sector, the report said, “faces distinct challenges, including a significant employment gap in the form of a serious shortage of truck drivers to handle the immense amount of inventory that needs to be moved around the country.”
To address this problem, the SOL said, “the industry is raising driver wages, but it remains the most pressing issue hampering sector growth. In fact, by the end of last year, despite strong inventory growth at warehouses, SOL recorded a record low rate of shipments, with inventory not moving swiftly enough, and the cost to store inventory rising. “
This employment gap/driver shortage “could continue to take its toll on the industry, and is an interesting phenomenon to juxtaposed against the labor force participation rate, which sits at historic lows.”
The SOL found that trucking costs topped the list of transportation costs in 2013 at $657 billion; railroad costs came in at $74 billion; water (ocean and inland waterways), $37 billion; air, $33 billion; and freight forwarder costs, $38 billion.