Joseph Bonney | Jun 15, 2011 10:56AM EDT
U.S. logistics costs rose to 8.3 percent of GDP last year from a record low of 7.8 percent in 2009 and are expected to continue to grow faster than the economy, according to an annual supply chain benchmark.
The State of Logistics Report, issued by the Council of Supply Chain Management Professionals, said rising transportation and inventory costs pushed logistics spending up 10.4 percent last year to $1.2 trillion, a $114 billion increase from 2009.
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The two main components of the State of Logistics index, transportation and inventory expenses, each rose an estimated 10.3 percent last year. Trucking costs, which comprise 78 percent of the survey's transportation component, rose 9.3 percent while costs for other modes rose 15.4 percent.
Rosalyn Wilson, senior business analyst at Delcan Corp. and author of the benchmark report, said most of the increased rates have been from fuel costs but that tightening transportation capacity is poised to increase base rates, especially for truckload service. "Volumes have only recovered about half the recession losses, yet industry capacity, particularly in truck and air, is close to being fully engaged," she said.
Railroads have the capacity to easily handle a 10 to 15 percent increase in volume and intermodal is likely to gain market share as truckload carriers deal with new hours-of-service rules and safety regulations that cull drivers with poor safety records, she said.
Wilson said inventory carrying costs rose last year despite low interest rates. Restocking boosted inventory levels and combined with rising costs for insurance, depreciation, taxes and obsolescence to more than offset a 6 percent drop in warehousing costs, the report said.
Inventory carrying costs as a percentage of GDP have declined 45 percent since the 1980s. Wilson said that although companies are keeping inventories tight, they remain higher than in 2009, when companies reduced stockpiles in response to flagging sales.
Wilson said uncertain economic trends make for uncertain forecasts of logistics costs in 2011. "Two thousand and ten was certainly a better year than 2009 but did not turn out to be all we had hoped it would be," she said. "The recovery from the Great Recession has proven to be more elusive and prolonged than any other in our history."
-- Contact Joseph Bonney at jbonney@joc.com. Follow him on Twitter @josephbonney.
