Viewpoint: New order, new opportunities

Looking for a great way to kick off your summer reading? Well, look no further than page 28. Once again, we’ve devoted a sizable portion of our July issue to putting the Annual State of Logistics Report into context for shippers.

As many are aware, the Annual State of Logistics Report represents the clearest snapshot available of the economy over the previous year and offers shippers a summary of the key trends that will be driving the transportation and logistics industry.

The release of the report—which took place on June 19th at the National Press Club in Washington, D.C.—sparks our annual investigation into the details of the findings and sends our beat reporters in search of where each transportation mode currently stands in terms of service, capacity, and rates. In short, this issue pulls together just about all of our staff in the creation of a definitive market snapshot.

This marks the 24th year the report has been released, and the 10th year that it’s been authored by Rosalyn Wilson, a 30-year industry veteran who’s now a senior business analyst with Delcan Consulting where she focuses on the progress of the overall supply chain industry. Wilson has been working on the report since 1994 and assumed full responsibility in 2004 following the passing of the report’s creator, Robert Delaney.

Upon a first glance at this year’s report, which neatly summarizes total business logistics costs over the course of 2012, you may feel that Wilson’s work has no new tale to tell. In fact, many of the same trends dominating the environment in 2012 are the same trends the market has been managing through since 2010—lack of sustained economic growth; high unemployment with fairly weak job growth; and inconsistent freight volumes, capacity, and rates that have forced shippers to become mode agnostic.

However, it’s this lack of any true market differentiation over that period of time that’s at the heart of a rather upbeat story, one that many savvy logistics managers should be proud to hear. It’s come to the point, says Wilson, where these reoccurring themes have become so engrained that they’ve become our “new normal” and have ushered in “a new way of life for our economy and the logistics and supply chain sectors.”

This “new order,” as Wilson refers to it, is characterized by the fact that logistics professionals have seized new opportunities to drive costs out of the overall system. She says they’re doing an excellent job of getting the most out of extremely lean full-time staffs; they’ve excelled at managing less predictable freight service as volumes rose but capacity stayed flat; and they’re doing extremely well at planning around longer shipping times when moving freight by sea and rail.

The new order has amplified the challenges facing logistics practitioners, and according to our John Schulz, the author of this month’s cover story “New order, new opportunities,” the numbers clearly prove that they’ve been up to the task.

“In 2012, business logistics costs stayed steady at 8.5 percent of GDP, the same level as they were in 2011,” says Schulz. “But more importantly, the cost of U.S. business logistics system in 2012 only rose 3.4 percent, less than half the increase from 2011. So, any way you slice it, today’s savviest logistics practitioners continue to drive costs out the transportation system and value to their company’s bottom lines—and they’re being treated with the respect they deserve.”