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Logistics costs dropped in 2008 for first time in five years Five straight years of logistics costs rising over 50 percent ended with those costs falling to 9.4 percent of U.S. Gross Domestic Product (GDP), down from 10.1 percent in 2007, according to the annual “State of Logistics Report” released by the Council of Supply Chain Management Professionals (CSCMP). Total U.S. logistics costs dropped to $1.3 trillion last year, a decrease of $49 billion from 2007, the report said. Interest rates plunged 50 percent lower in 2008 over the prior year, the report said. Since 1988, the CSCMP says its logistics report has tracked and measured all costs associated with moving goods through the U.S. supply chain. The report benchmarks metrics in U.S. logistics such as transportation and inventory-carrying costs, freight volumes, and revenues. In 2008, the report said inventory-carrying costs dropped 13 percent, and were the driving force behind the year’s decline in logistics costs. The decrease in carrying costs was due to both a 2.2 percent drop in inventories and an 11.2 percent decrease in the inventory-carrying rate. Warehousing costs, however, rose 9.5 percent with warehouse managers reporting that inventory turns were down substantially from earlier years as stock spends more time in warehouses, the report said. Transportation costs were only up 2 percent over 2007 levels, which were not enough to offset the steep decline in inventory-carrying costs, according to the report. Trucking, which accounts for 78 percent of transportation, increased 1.3 percent compared to 4.4 percent for rail, air, and ocean modes. Truckload industry capacity dropped at unprecedented rates, with freight volumes declining faster than capacity, offering little incentive to keep the fleet. The report was released at the National Press Club in Washington, DC. A panel of senior supply chain executives from BNSF Railway, Dell, Kraft Foods, Limited Logistics Services, Saddle Creek Corporation, Sustainable Supply Chain Consulting, and YRC discussed the implications of the report’s findings on their companies and on the industry, as well as the changes they will be implementing because of them, the CSCMP said.	In This Issue Up Front News, Trends & Analysis New Items The Growth Paradox Supply Chain Industries to watch Trade compliance in the workplace Logistics costs dropped in 2008 Overseas trade experts have some tips for you Five things you should know about U.S. trade policy Supply Chain product review Inventory container management Features Gateway at a glance U.S. Northeast Bulk Up Ports & infrastructure Port of Seattle nets new container business Clean trucks at your ports: How to pay for them? Port Product Review Project cargo equipment Commentary Are we thinking inside or outside the box? On the horizon: Wave Energy - A future power source for your port Casualties
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Logistics costs dropped in 2008 for first time in five years