Cost of Logistics Up 10.4% in 2010

Inventory carrying costs increased 10.3% last year due to higher costs for taxes, obsolescence, depreciation, and insurance, which were offset by a further drop in the inventory carrying rate and warehousing costs.

Business logistics costs rose to $1.2 trillion, an increase of $114 billion from 2009, according to a report released early this month by The Council of Supply Chain Management Professionals (CSCMP).

Inventory carrying costs increased 10.3% last year due to higher costs for taxes, obsolescence, depreciation, and insurance, which were offset by a further 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.

"Over the last 12 months, we've seen a slow and steady improvement in business globally. We've also witnessed the resilience and importance of how well-managed, dynamic supply chains help companies drive down costs, manage inventories, respond to recalls, and adjust to sudden economic shifts and global crises.," said Joe Gallick, senior vice president Sales for Penske Logistics, a sponsor of the report.

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