Why are transportation costs going up?

Dec. 8, 2005
Logistics professionals no matter what industry they work in, no matter where in the country they're located all have to endure the same edict from their

Logistics professionals — no matter what industry they work in, no matter where in the country they're located — all have to endure the same edict from their bosses: Keep transportation costs down.

At the recent Council of Supply Chain Management Professionals conference in San Diego, John Hulton, director of inbound transportation at retailer Staples Inc. (www. staples.com), and Mike Kilgore, CEO and president of consulting firm Chainalytics (www.chainalytics.com) , offered several reasons to explain the high cost of logistics. Use them one at a time or all at once, depending on the severity of your boss' latest tirade.

Regulatory

• Hours of Service rules/revisions

• Cleaner burning engines (2007/2010)

• Ultra-low sulfur diesel

• Higher tolls/more tollroads

• Homeland security measures

Market forces

• Global sourcing/offshoring

• Driver wages and shortages

• Fuel price volatility

• Highway/port congestion

Customer requirements

• Smaller shipment sizes

• Increased service reliability

• Event-specific/timed delivery

• Customer-specific packaging.

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