If you've got the nagging feeling that it's costing you a whole lot more to transport and distribute your products these days, you're not alone: Logistics costs in the United States rose over 11% in 2006 to $1.3 trillion, a hefty increase of $130 billion over 2005. According to transportation consultant Rosalyn Wilson, who delivers the annual State of Logistics Report for the Council of Supply Chain Management Professionals (CSCMP), this represents a record high for business logistics costs.
A rise in logistics costs isn't necessarily a bad thing, since it also points to an increase in demand for products of all types. "The volume of freight being moved is meeting and even exceeding estimates," Wilson notes. The amount of cargo containers handled at U.S. ports in 2006 was up by 8%, railroads accommodated a record 9.4 million containers, and air freight ton-miles were up 4.6%, she observes.
|The High Cost of Transportation|
|Warehousing & Inventory Costs (in billions)|
|Taxes, Obsolescence, Depreciation, Insurance||$252|
|Administrative and Shipper-related Costs||$58|
|Total Logistics Costs||$1,305|
|Source: 18th Annual State of Logistics Report|
A key trend is the movement by companies to view the big picture, i.e., "trying to understand their entire supply chain, not just their link," Wilson notes. In particular, more companies are using Web-based resources to research and chart the movement of their shipments.