"Weak Growth" Is the Best the Logistics Industry Can Hope for in 2011

U.S. business logistics costs – the costs to transport and warehouse goods – rose to 8.3% of U.S. Gross Domestic Product (GDP) in 2010, as compared to 7.7% the previous year, according to the 22nd State of Logistics Report, an annual report from Council of Supply Chain Management Professionals (CSCMP), a trade association. According to the report, logistics costs in 2010 were roughly on par with 2005, and still well below the pre-recession years.

This year’s report, written as in years past by transportation consultant Rosalyn Wilson of >>Delcan<<, reveals that the cost of the U.S. business logistics system jumped up 10.4% in 2010 to $1.2 trillion, an increase of $114 billion from 2009. Inventory carrying costs increased 10.3% last year due to higher costs for taxes, obsolescence, depreciation and insurance, which were offset by a drop in the inventory carrying rate and warehousing costs.

Transportation costs were up 10.3% from 2009 levels, with trucking lagging behind the performance of other modes, rising only 9.3% compared to an average of 15.4% for the other modes combined. Manufacturing and business spending were the bright spots during much of 2010, while consumer goods production was almost flat. Industrial production was up 5.3% in 2010, after declining 11.2% the year before.

As Wilson points out, the recovery from the recession has been elusive and more prolonged than any other in U.S. history, with the “weak growth” presenting another year of challenges for the logistics industry.