Logistics Costs Increasing but at Much Slower Pace

Logistics Costs Increasing but at Much Slower Pace

Parcel and express continues to grow, with the main drivers being the explosion of B2C e-commerce and omni-channel retail.

The 27th Annual State of Logistics Report, released on June 21, reveals that U.S. business logistics costs rose to $1.48 trillion in 2015, a 2.6% increase from the previous year, which represents a considerable slowdown from previous years.

"Supply chain transparency continues to grow in importance for shippers and third-party logistics providers," said Marc Althen, Penske Logistics President. "This is driving significant technological change for 3PLs and shippers alike as they collaborate and share more real-time information to enable data-driven business decisions and meet the growing needs of consumers."

Highlights of the study, which was conducted by The Council of Supply Chain Management Professionals in conjunction with A.T. Kearney and supported by Penske Logistics, are as follows:

-Over the next decade, the logistics industry will enter a new era. Disruptive forces, including technology and operational constraints, threaten to fundamentally change the rules of the game.

-Rates and demand for transportation are soft, and continue to fall.

-Despite softening demand and slower rates, competition for drivers remains intense.

-Parcel and express continues to grow, with the main drivers being the explosion of B2C e-commerce and omni-channel retail.

-Containerized shipping is experiencing significant overcapacity, creating a favorable rate environment for U.S. shippers.

-Demand for airfreight services remains sluggish due to economic uncertainty, while overcapacity is being exacerbated by a shift to wide-body aircrafts.

-U.S. oil and gas production has surged over the past decade. U.S. pipeline investment will account for three-quarters of all planned capital investment in transportation modes.

-A steep decline in coal traffic and crude by rail, macroeconomic weakness, and a pause in the growth of intermodal traffic resulted in overall rail volume reduction.

-Technology continues to play a key role in the evolution of the 3PL market.

Note: MH&L will cover the “State of Logistics Report” in greater detail in our next issue. Stay tuned.

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