State of Logistics Report 2011

The cost of the U.S. business logistics system jumped up 10.4 percent in 2010, making up more than half of last year’s decline. Business logistics costs rose to $1.2 trillion, an increase of $114 billion from 2009. This puts 2010 about on par with 2005, and still well below the pre-recession years. In 2010, logistics costs as a percent of the nominal Gross Domestic Product (GDP) climbed back up to 8.3 percent.

Both major components of the logistics cost model increased by slightly over 10 percent in 2010. Inventory carrying costs increased 10.3 percent in 2010. The increase in carrying costs was due to higher costs for taxes, obsolescence, depreciation, and insurance, which were offset by a further drop in the inventory carrying rate and warehousing costs. Transportation costs were up 10.3 percent from 2009 levels. Trucking, which comprises 78 percent of the transportation component, continued to lag behind the performance of other modes, rising only 9.3 percent compared to an average of 15.4 percent for the other modes combined.

2010 was certainly a better year than 2009, but did not turn out to be all we had hoped it would be. The recovery from the Great Recession has proven to be more elusive and prolonged than any other in our history. The slow growth presented another year of challenges for the logistics industry. Volumes firmed up early in the year, but dropped off in the second half. Demand for capacity began to equalize with available capacity in many sectors, but rates continued to be constrained. Inventories began to climb again and retailers pulled back on their ordering, because spending did not expand as expected. The economy began to falter in the second half of the year as the contribution from the various stimulus packages put in place to jumpstart and fuel the first year of the recovery faded. Or to put it another way, “The recovery remains distinctly subpar,” according to New York Federal Reserve Bank President William

The Council of Supply Chain Management Professionals (CSCMP) released the 22nd Annual “State of Logistics Report” presented by Penske Logistics on June 15, 2011 at the National Press Club in Washington, DC.

The report was delivered by author Rosalyn Wilson, with additional commentary provided by a panel of industry leaders representing various areas within the supply chain. The “State of Logistics Report” is widely used by supply chain management and logistics professionals and organizations as the premier benchmark for US logistics activity.