Transportation logistic costs spiral in 2005

Transportation logistics costs jumped 14.1 percent in 2005, compared to the year before -- driven mainly by the increased demand in trucking and tight capacity, according to a report sponsored by the Council of Supply Chain Management Professionals (CSCMP).

The statistics are part of the study that reported overall logistics costs in 2005 rose $156 billion from the year before. The increase is nearly double last year’s rise and the largest year-to-year change in over 30 years. The costs discussed include those generated by transportation, and other shipper- and distribution administration-related costs.

“2005 US business logistics costs rose from 8.8 percent to 9.5 percent of gross domestic product,” said Rick Blasgen, CSCMP president and chief executive officer.

The situation was impacted by rising energy costs, interest rates, and security-related issues. The report said more frequent incidents of terrorism, political upheaval, natural disasters, accidents, and other large-scale disruptive events played a role in the cost hikes. As a result, companies may be rethinking their lean inventory strategies. “Some customers are seriously considering increasing their safety stock in the event of disruption or delays in distribution,” said Richard Murphy, Murphy Warehouse Co president and chief executive officer.

The 17th Annual State of Logistics Report contains the complete portrait of industry statistics, their impact, recommendations, and a future perspective on the logistics and supply chain professions. It also includes recommendations for aging infrastructure needs.

For more information, click here for the CSCMP Web site at cscmp.com.

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