Last year's Logistics Management Salary Survey painted a pretty bright picture for logistics professionals. Average salaries were up 6.6 percent from 2003 to 2004, to $83,790, and industry recruiters were pointing to an uptick in the job market.

But last year's good news was tempered somewhat by the results of this year's annual survey—our 22nd—which are less encouraging.

For starters, the average annual compensation reported by respondents dropped 4.5 percent below last year's average, from $83,790 to $80,000 (see Figure 1).

While that nosedive in compensation may look pretty rough on paper, things may not be as bad as they appear to be: Recruiting specialists suspect that annual compensation for logistics professionals may be in the early stages of a "leveling off" phase.

Data for this year's survey is based on feedback from 1,621 respondents. Approximately 28 percent of those respondents also participated in last year's survey.

Although the sampling pool changes substantially from year to year, the profile of a typical survey participant has remained remarkably consistent. This year's average respondent is a 46-year-old, college-educated male. (The majority—85 percent—of respondents were men, and 94 percent have attended college.) The typical respondent has spent 7.28 years with his current employer, down from 9 last year, and has been in his current position for 4 years, down from 5 last year. The average length of work experience rose modestly, from 15.4 to 16 years.

Considering the decline in such metrics as years of experience, years with current employer, and years in current position, it's not too surprising that the average salary has decreased, too. What did come as a surprise, given the strength of the economy, was that the average raise for survey respondents was 3.39 percent, down from 5 percent last year.

In fact, 11 percent of survey respondents did not receive a raise at all last year. For those who did, the pickings were pretty slim: Another 11 percent received raises of less than 2 percent, and nearly half—47 percent—found an extra 2 percent to 4 percent in their paychecks. On the higher end of the scale, 15 percent of respondents received raises of 5 to 7 percent, 6 percent earned 8-to-10 percent increases, and a hardworking (or perhaps upwardly mobile) 3 percent of respondents earned raises exceeding 20 percent.

Those findings appear to be right in line with recruiters' experiences. "Based on what we are seeing, the two-to-four percent range [for raises] is dead-on with what is happening in the marketplace," confirms Jim Rohan, senior partner at JP Canon Associates, a supply chain executive search firm in Manhattan. Moreover, recent data from the U.S Labor Department, which found that the average increase in compensation for 2005 was 3.1 percent, show that LM's findings accurately reflect compensation trends across all types of industries.

The trend in past years' surveys—that the bigger the title is, the heavier the paycheck will be—still holds true. Leading the way were vice presidents and general managers, who comprised 10 percent of all respondents, with an average salary of $140,000. That topped last year's average by 4.5 percent. Next were corporate and division managers, who comprised 8 percent of the pool, at $110,000. This group's compensation fell short of last year's $112,718 by 2.4 percent. Logistics managers, who comprised the largest group in the survey, took home $80,000, off 1.3 percent from last year's $81,048 (see Figure 2 for more details). Possible reasons for those declines include differences in the pool of respondents, and respondents who had been downsized taking lower-paying jobs.

Along with title, specific job functions figured prominently in average earnings. Respondents who said their main job function was supply chain management, which encompasses a wide range of business areas, made $100,000 on average. That was down 4.6 percent from last year's $104,657 but still came out on top, as has often been the case. Respondents who mainly are involved in distribution and logistics were next at $89,300. Average salaries for more narrowly defined, operations-oriented functions, such as materials handling, fleet operations, and inventory control, ranged from $65,000 to $78,000 (see Figure 3).

Other significant factors that affect compensation are education and experience. As previous surveys have disclosed, the more education and experience, the higher the salary. Respondents who have a high school diploma only reported an average salary of $55,000 last year. Survey respondents with some college experience earned an average of $68,000, while those with a bachelor's degree averaged $85,000, putting them about on par with last year's $85,393. MBAs, meanwhile, brought home the biggest bucks: They averaged $105,000, eclipsing the $102,888 they reported the previous year (see Figure 4).

As one would expect, more experience translates into more money. Respondents who have between 1 and 10 years of experience earned $66,575 on average, while those with 11 to 15 years in the field brought home $84,000. Salary differences scaled back somewhat after that point; participants who reported between 16 and 20 years on the job averaged $85,000. Those with 21 to 25 years of experience made $83,500, but that may not be indicative of actual job market conditions, as the sample size for that group was very small. Finally, the most experienced logistics and supply chain pros, with 26 to 30 years under their belt, averaged $95,000.

Partly because the overwhelming majority of survey respondents were men, it's not a huge surprise that they came out ahead of women in terms of annual compensation. Male respondents averaged $84,000, compared to $62,000 for women. The $22,000 gap was slightly lower than last year's $24,122 difference, which was the largest in more than 10 years. Male respondents on average had slightly more experience than women (16 years versus 13) and more direct reports (5.96 versus 3.87). Men also out-earned women in every title category, too, although there is no clear-cut explanation for that difference.

As always, location has a measurable effect on the bottom line. New Englanders had another strong year, reporting an average salary of $87,000, which was just below last year's $87,895. The Pacific region, which last year reported an average salary of $73,932, bumped up its average by 13.8 percent to $85,810. The South Atlantic states placed third with $85,000, while the Mid-Atlantic states followed close behind with $84,000. West South Central and East South Central were neck-and-neck. Rounding out the pack was a three-way tie among East North Central, West North Central, and Mountain states at $75,000 (see Figure 8). The state with the highest average salary was Connecticut, with $105,000. Idaho, at $51,600, had the lowest average salary.

With the average age of logistics professionals rising—only 12 percent of survey respondents were between 26 and 34 years of age— and a flattening trend for annual compensation potentially underway, this year's survey results portend a few notable takeways, says Robert McInturff, president of McInturff & Associates, a Natick, Mass.-based executive placement firm for supply chain and logistics.

"The most significant thing, and it is backed up by the [Salary Survey] data, is that the logistics marketplace has an aging population," he says. "Over the recession of the last five years, there has not been sufficient hiring of recent college graduates, and it is also reflected in the age breakdown [of survey respondents]. There are not enough new people coming into the field."

One way to reverse that trend is to get younger people into the field earlier, says Alex Metz, principal of Metz Associates, an executive search firm in Boynton Beach, Fla. "Companies are starting to think about hiring recent college graduates or getting them involved in intern programs while still in school," he says. "If they have an understanding of the business and how things work, it will help them hit the ground running."

Although logistics salaries appear to be headed downhill, last year's tallies may prove to be nothing more than a bump in the road. With the economy holding steady and the current generation of logistics professionals getting ready to retire, demand for logistics talent will only increase. And that means compensation should get back on track in 2006.