Taking stock

By Peter Bradley, Editor in Chief -- Logistics Management, 7/1/2000

Logistics costs in the United States dropped below 10 percent of the Gross Domestic Product for the first time last year, according to the latest State of Logistics Report produced by Robert Delaney for Cass Information Systems and ProLogis.

In part, this achievement is a reflection of revamped statistics, yes. But even more, it is a result of hard-won gains in logistics and inventory efficiency, application of sophisticated management techniques, and a revolution in technology. And no doubt, it came as a result of capitalism working at its best and its most ruthless. Carriers today are routinely held to performance standards that few could have met 20 years ago. Competition among carriers has impelled innovation while keeping costs under control. The development of third-party logistics has offered an array of outsourcing options. Warehouses have evolved from storage depots to businesses that can add value to customers' products while helping to move them through the distribution system. The potential of the Internet to connect all parties in a supply chain promises even more efficiency to come.

Despite that success, logistics managers still face myriad challenges both in the daily demands of moving goods and materials efficiently and reliably and in the strategic difficulties created by globalization of supply, production, markets, and competition. The laws of physics still apply to the movement of goods, and the realities of weather, traffic congestion, business and economic factors, and plain old human frailty can still send the best-laid plans awry. Examples abound. Motor carriers are struggling with high fuel costs and the perennial shortage of drivers. Railroad service remains well below where it should be despite the best efforts of some very intelligent people. The future shape of competition in that industry is in question. Plenty of legal and regulatory issues still affect transportation efficiency.

The pace of business today doesn't often allow much time for anyone to take stock, to borrow a logistics phrase. As we usually do in our July issue, we have devoted the bulk of the pages in this issue to helping our readers do just that. We begin with our report on the annual Delaney study, which opens the section on Page 43. The economic outlook and modal reports that follow give some insight, we hope, into some of the crucial issues facing transportation and logistics professionals. We hope you agree that the result of all this is a useful and worthwhile perspective on the state of logistics in the year 2000.