U.S. business logistics costs rose 6.6 percent last year as companies spent more on transportation and inventory in a gradually recovering economy, according to the 23rd annual State of Logistics report.
The report, sponsored by the Council of Supply Chain Management Professionals and Penske Logistics, said logistics costs totaled $1.28 trillion last year. That was up $79 billion from 2010 but still below the peak of $1.39 trillion in 2007.
Logistics spending as a percentage of GDP rose to 8.5 percent from 8.3 percent in 2010 and 7.9 percent in 2009, when the recession slowed shipments.
“Transportation costs were up 6.2 percent in 2011 because of higher rates, not increased volume,” said the report’s author, Rosalyn Wilson, senior business analyst at Delcan Corp.
She said railroads’ revenue jumped 15.3 percent, and trucking, which comprises three-fourths of transportation spending, posted a 6.2 percent rise in revenue. Forwarders and other third parties had a 9 percent increase.
Inventory carrying costs increased 7.6 percent despite low interest rates that made it cheaper for companies to hold inventory. If interest rates had been the same level they had been in 2005, overall logistics costs as a percentage of GDP would have been 8.9 percent instead of 8.5 percent, Wilson said.
Wilson said the outlook for this year depends on an uncertain economy. She said interest rates are expected to remain low but that transportation costs may rise if capacity doesn’t keep pace with economic recovery.
She said railroads are positioned to gain market share from motor carriers. “The railroad industry has invested throughout the recession and recovery to ensure that it will have the capacity to pick up the slack as the recovery regains momentum,” she said.