Authored by global management consulting firm A.T. Kearney in partnership with CSCMP and Penske Logistics, the “Annual State of Logistics Report (SoL)” has become known over the past 30 years as the most comprehensive
report of its kind—encapsulating the cost of the U.S. business logistics system during the previous year and offering a snapshot of how economic conditions are shaping the current logistics landscape.
View the feature article on the State of Logistics 2019
The official release of the report—which took place on June 18th at the National Press Club in Washington, D.C.—sets our editorial staff on a quest to put context around the report and what it’s findings mean to freight transportation management in terms of service, capacity and rates.
Our contributing transportation editor John Schulz was again in attendance in Washington this year, and says that while last year was one of the most challenging on record for logistics managers, all the hard work shippers have been doing to keep their heads above water continues to elevate their importance in the eyes of the C-suite.
“Over the decades, logistics managers felt as if they were toiling in anonymity,” says Schulz. “The last couple years have changed all of that, as they’ve been thrust into the spotlight to manage rising freight rates, tight capacity and driver shortages amidst rising customer service demands. All of a sudden, CEOs are aware of not just what they spend, but what they actually do to keep costs as low as they do—and that’s a huge win for the profession.”
As this year’s SoL report reveals, 2018 gave logistics professionals plenty of opportunity to illustrate how a well managed operation could make a difference to the bottom line. According to the report, U.S. business logistics costs rose 11.45% to reach $1.64 trillion, or 8% of 2018’s $20.5 trillion gross domestic product (GDP)—the highest cost as a segment of GDP since 2014.
And as freight transportation costs ate up the biggest share of that number—hitting $1.037 trillion last year—that forced even the most reluctant of shippers to adjust their strategies, especially in the ground game.
“In many cases, they needed to move toward private fleet and intermodal and made an effort to open up their operations to become a ‘shipper of choice’ and create more mutually beneficial relationships to win much needed capacity,” says Schulz. “We’ve preached about the advantages of carrier collaboration in the pages of LM over the years, and now it appears to be paying off.”
Following Schulz’ deep dive into the overall findings of this year’s SoL, the Logistics Management editorial staff then offers mode-by-mode snapshots in an effort to help shippers adjust their planning for the rest of 2019—a year that’s still hanging in balance in terms of volume projections.
“Halfway through 2019 there has been plenty of talk of a slowdown, and the volume numbers have reflected that,” adds Schulz. “But we need to understand that we’re coming out of one of the hottest freight markets in a generation, so volumes were bound to dip. The good news is that this environment has pushed shippers and carriers in the direction of more constructive engagement, and that bodes well for whatever market we face next.”