In June, CSCMP released its 33rd Annual State of Logistics Report®, which gives a snapshot of the macro economy through the logistics and transportation sectors. Supply chain complexity and pressures from all modes of transportation made 2021 and early 2022 challenging for logistics managers. CSCMP, a global professional association, partnered with consulting partner Kearney to develop the report. Here are three key findings:
Inflationary effects on overall supply chain costs
In 2021, strong demand led to higher contract and spot rates and was further inflamed by rising fuel prices. U.S. business logistics costs increased by 22.4 percent, representing 8 percent of U.S. GDP. CSCMP estimates that this is the highest level it’s measured since 2008.
Capacity remains very tight
Freight volumes rose in 2021 to historically high levels, putting pressure on trucking capacity. Carriers that made investments in building capacity were in a much better position than others who cut investments in areas such as drivers and equipment. Disruptions in logistics networks ate into any new capacity as ships waited at the ports and warehouses became full. CSCMP noted that relative stability may or may not return, so the industry must invest now into capacity.
Inventory levels reach historic lows, but carrying costs kept pressure on budgets
While many business inventories remained at historic lows, the costs to handle inventory (storage and financing) rose 25.9 percent. Coupled with material shortages worldwide, inventory levels remained low; as of Q1 2022, inventory levels remained their lowest in five years. Shippers are continuing to replenish their stock, which could add 0.5 percentage points of GDP growth in 2022. CSCMP notes many manufacturers are reconsidering moving the locations of many of its facilities closer to the U.S. and anticipates a shift of nearshoring or reshoring.