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