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22nd Annual Study of Logistics and Transportation Trends: Masters co-create value

The Masters of Logistics have developed strategic partnerships with carriers that enable them to keep costs low while providing innovative service to their customers—and our data show that this value-added perspective is leading to performance that is significantly better than their competitors.
By Mary C. Holcomb, Ph.D., and Karl Manrodt, Ph.D., Contributing Editors
September 01, 2013

Cost to serve: Transportation’s move to the fast lane
As a derived demand, transportation has reflected inconsistent demand patterns due to changing consumer requirements. The result has been an increase in the cost to serve that is being directly felt in transportation expenditures.

This year’s study results confirm that transportation costs increased at a brisk rate from the previous year. Companies who spent more than 5 percent of sales on domestic transportation grew from 26.8 percent to 30.9 percent from 2012 to 2013. While this shift was noteworthy, the largest swing occurred for those companies that previously had been spending 1 percent to 2 percent of sales on transportation and are now spending 2 percent to 3 percent, representing a 26.3 percent increase in the companies in this spending category—a difference that can translate into millions of dollars.

Where are transportation dollars being spent? The data indicate that TL continues to dominate the modal picture, commanding 32.2 percent of the transportation budget. TL’s portion of the budget has remained essentially unchanged for the past three years suggesting that this mode has reached a sort of equilibrium.

Other data support this conclusion. Some 57.8 percent of companies in this year’s study have now completed the move to multiple modes of transportation to meet delivery schedules. An additional 15.7 percent are in the process of implementing this action to gain greater flexibility. “In the past, 3PLs mainly arranged or provided multi-mode capability,” says Brian Mayer, vice president of global logistics and materials management at Eaton Corporation. “Now, for a carrier to be considered a strategic partner they must bring these resources to the table.”

About the Author

Mary C. Holcomb, Ph.D., and Karl Manrodt, Ph.D.
Contributing Editors

Mary Collins Holcomb, Ph.D., is Associate Professor of Logistics and Transportation at The University of Tennessee.  Dr. Holcomb was also a member of the faculty in Transportation and Logistics at Iowa State University, Ames.  She holds B.S., MBA, and Ph.D. degrees from The University of Tennessee.  Her professional career involved some eighteen years at the Oak Ridge National Laboratory in transportation research and policy issues for the U.S. Departments of Energy, Transportation, and Defense.  Dr. Holcomb’s background also consists of various industry experience with the former Burlington Northern Railroad, General Motors, Milliken & Company, and two years of collaborative research with Procter & Gamble.  She is a principal researcher in one of the longest running annual studies – Logistics and Supply Chain Trends and Issues – that has been conducted for more than 14 years.  Dr. Holcomb is the former editor of the Transportation Energy Data Book, author and co-author of numerous reports and articles in the area of transportation policy and logistics systems design.

Karl Manrodt, Ph.D., serves an Associate Professor in the Department of Management, Marketing and Logistics and Georgia Southern University, located in Statesboro, Georgia.  Prior to joining Georgia Southern, he served as the Executive Director for the Office of Corporate Partnerships and the Supply Chain Strategy Management Forum in the Department of Marketing, Logistics and Transportation at the University of Tennessee.  Degrees include a B.A. in Philosophy and Psychology, Wartburg College, M.S. in Logistics, Wright State University, and his Ph.D. at the University of Tennessee.  He is the recipient of the Chancellor’s Citation for Professional Promise, the Walter Melville Bonham Dissertation Scholarship, both at the University of Tennessee, and the E. Grosvenor Plowman Award awarded by the Council of Logistics Management.


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