US logistics shows signs of recovery

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The US logistics industry is showing signs of recovery after a tough couple of years, according to The 21st annual State of Logistics Report, released by the Council of Supply Chain Management Professionals and presented by Penske Logistics.

Overall, indicators showed improvements in the fourth quarter with a focus on future direction, said the report, which  benchmarks key metrics in US logistics such as transport and inventory-carrying costs, freight volumes, and revenues.

Rick Blasgen, council president and chief executive, said:  “The economy is beginning to recover, and although time will tell how the logistics sector deals with the recovery, those companies that use the statistics and industry insight contained in this report will be better prepared for the business activity ahead.”

For 2009 as a whole, the report found that:

Business logistics cost fell to 7.7 per cent of US gross domestic product, compared to 9.3 per cent the previous year.

Inventory-carrying costs continued to fall due to a 4.6 per cent decline in inventory and further plunge in interest rates.

Pressure on rates and an inability to move goods resulted in warehousing costs falling two per cent below those of 2008.

Although early 2009 saw warehouses full of inventory, by mid-year goods had been drawn down or relocated leaving facilities with empty space.

Transport costs were 20.2 per cent lower than 2008 levels, with all modes of transport being negatively affected.

Road haulage, which comprises a large percentage of the transport component, had a nine per cent drop in tonnage carried. Rail freight traffic was also down from the previous year.

The Ocean sector reported sharp declines, lowering rates to stimulate business, with some ocean carriers reporting losses for the first time in their company’s histories. After heavy losses early in the year, air cargo had a much stronger showing by the latter part of 2009, the report said.

Penske president Vince Hartnett said:  “This research presents data for company leaders to be able capitalise on the recovery as it occurs, such as restructuring their distribution networks to maximise efficiency and minimise miles, investing in technologies to facilitate ‘green’ transport, and improving real-time data flows to increase visibility and enhance productivity.

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