Viewpoint: State of Logistics is complicated
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As we have for two decades, we’ve devoted a large portion of our July issue to putting the Annual State of Logistics Report into context for logistics professionals. The report, which encapsulates the cost of the U.S. business logistics system during the previous year, represents the clearest snapshot available of how economic conditions will mold the logistics and transportation landscape.
The release of the report—which took place on June 17th at the National Press Club in Washington, D.C.—sparks our annual investigation into the details of the findings and sends our entire editorial staff on a quest to summarize where each transportation mode currently stands in terms of service, capacity, and rates.
This year marks the 25th year of the report and the 11th year that it’s been authored by Rosalyn Wilson, a 32-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.
Beginning on page 28, Contributing Editor John Schulz—who was in attendance at the Press Club last month—kicks off our comprehensive coverage with his analysis of the report.
So, what is the state of logistics coming out of 2013? “It’s complicated,” says Schulz. “After a slow start to 2013, mid-year shipments were strong before a very deep dive at the end of the year—with not much movement in rates across the modes.”
He adds that those rollercoaster demand levels and uneven volumes wreaked havoc on the U.S. freight network last year,causing a whiplash effect on both shippers and carriers as they tried to balance their capacity with uneven surges in demand.
As we rolled into 2014, we were still feeling that whiplash, but it was compounded as freight shipments for the first five months of the year were up 13.1 percent year-over-year, marking the strongest freight performance period since the end of the recession.
Certainly, growing shipment levels are a bright sign for the nation’s economy, however shippers are beginning to see rates rise, and capacity—most notably on the nation’s highways—move from tight to what can now be called the industry’s most pressing anxiety.
“The single biggest concern coming out the report is trucking’s ability to recruit and retain drivers,” says Schulz. “That’s what’s keeping trucking executives up at night—and should be causing shippers to stir in their sleep.”
Add rising fuel costs, soaring equipment costs, grueling compliance, and tough federal regulations, and you have one of the most challenging operating environments trucking has ever seen. As a result, trucking bankruptcies increased in seven straight quarters and are currently at a three-year high. According to the report, 21,775 trucks were idled in 2013 due to company shutdowns, which is larger than 2010 and 2011 combined.
“The bottom line,” says Schulz, “is that demand is going to increase and capacity is going to decrease, adding even more complexity than ever. Shippers are going to need every ounce of savvy and experience in 2014 to solve this complicated puzzle.”
About the AuthorMichael Levans, Group Editorial Director Michael Levans is Group Editorial Director of Peerless Media’s Supply Chain Group of publications and websites including Logistics Management, Supply Chain Management Review, Modern Materials Handling, and Material Handling Product News. He’s a 23-year publishing veteran who started out at the Pittsburgh Press as a business reporter and has spent the last 17 years in the business-to-business press. He’s been covering the logistics and supply chain markets for the past seven years. You can reach him at [email protected]
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