According to the “30th Annual State of Logistics Report” recently released at the National Press Club in Washington, D.C., and covered by Logistics Management (LM) magazine, U.S. logistics costs rose 11.45% over the course of 2018. That puts U.S. business logistics costs for 2018 at $1.64 trillion—or 8% of gross domestic product (GDP) for the year. The 8% cost of logistics as a segment of GDP was the most since 2014.
According to the report, as reported by LM, overall supply chain costs are rising due to several factors:
- retooling of supply chains to account for more e-commerce sales, as online purchasing increased by 14.2% last year to reach 9.9% of all retail sales. The need for smaller, more costly warehouses has spiked;
- “extremely high” utilization of existing truck fleets limits available freight capacity, driving up rates;
- increasing government regulations on driver hours-of-service (HOS) causing smaller trucking firms to cease operations, consolidate or be acquired by larger transport companies; and
- a tight U.S. labor market and higher wages for truck drivers and warehouse workers, as attracting and retaining labor in general remains challenging for transportation and logistics companies.
The table shown to the right provides a detailed breakout of where logistics costs increased in 2018. You can read the full LM article and report recap online here: www.logisticsmgmt.com/article/state_of_logistics_in_2019_whats_next
As always, if you are struggling to cope with logistics costs and challenges, drop us a line and let us help.
