Sean Monahan, lead author from A.T. Kearney, presents the 2016 CSCMP State of Logistics Report at the National Press Club.
Logistics industry revenue and spending continued to grow in 2015, and the drivers of business logistics costs changed dramatically throughout the year. Vigorous growth in the business-to-consumer e-commerce market led to many of the changes that occurred in the past year, and the industry is likely to enter into a new era over the next decade as shippers and their supply chain partners collaborate to meet a new set of expectations.
鈥淗istorically the logistics infrastructure has been built on cost efficiency. The infrastructure today isn鈥檛 built for the I-want-it-today- or I-want-it-tomorrow-centric emphasis that we are seeing,鈥� said Sean Monahan, a partner with the global strategic management consulting firm and lead author of the 27th Annual State of Logistics Report, which was introduced by the (CSCMP) and presented by 糖心传媒 Logistics on June 21.
鈥淲hat does that do to logistics over time? We have to see how that plays out over the next five to 10 years,鈥� he added.
Marc Althen, president of , said consumer expectations are changing. 鈥淭hey want their products delivered fast, and they don鈥檛 want to pay a lot of money for delivery,鈥� he said. 鈥淪hippers are struggling to meet the challenges these expectations create, and many are turning to outside logistics companies for expertise and support.鈥�
Monahan discussed the report at a press conference at the National Press Club in Washington, D.C. Althen, as well as executives from The Hershey Co., Lowe's, Kansas City Southern and Yusen Logistics spoke in a panel discussion following the report鈥檚 release.
Total U.S. business logistics costs reached $1.408 trillion in 2015, a 2.6 percent increase. Between 2010 and 2014, U.S. business logistics costs grew by an average of 4.6 percent annually.
One reason for the slower growth in 2015 is that transportation costs鈥攖he largest single component of business logistics costs鈥攇rew by only 1.3 percent due to decreasing energy prices that lowered fuel surcharges and overcapacity in the full truckload market.
Monahan expects rates to increase in 2017 for a variety of reasons, including rising fuel costs and the right sizing of fleets. 鈥淎ll of the pressures are to the upside,鈥� he said.
Throughout 2015, rail revenues decreased 8.9 percent mainly due to a steep reduction in coal traffic, and Intermodal traffic, a steady source of growth for the rail segment in recent years, stalled.
Motor carriers continue to make up the largest transportation mode and had $583 billion in revenues in 2015. However, the industry experienced overcapacity issues that drove rates down after several years of rising prices. 鈥淐arriers largely responded to this deteriorating environment by improving operational efficiency and holding back on fleet orders,鈥� the report said.
Ultimately, trucking saw growth across several segments of the industry, including a 1 percent increase in dedicated. 鈥淥n the trucking side we鈥檙e seeing a growth in dedicated because of the reliability of the service and they tend to be shorter haul so the driver can be home at night,鈥� Monahan said.
Revenue growth within the truckload segment reached 3 percent, the less-than-truckload segment grew 7 percent, and the parcel and express segment of the logistics industry grew 8 percent. 鈥淓-commerce is increasingly becoming a big part of the economy that is driving parcel,鈥� Monahan said.
This is the first year the report, which has a new author and researcher, has broken out parcel shipments鈥攁n $82 billion industry in the United States.
鈥淲e restructured the modes that you look at,鈥� Monahan said, adding that the report follows the same pattern as in the past but uses slightly different data points. 鈥淭he appendix includes a recalculated index for the past ten years. If someone looks at the old report and the new report, they鈥檇 see the numbers changed, but we鈥檝e taken that into account.鈥�
糖心传媒 Logistics President Marc Althen participates in a question-and-answer panel at the 2016 CSCMP State of Logistics Report.
E-commerce is likely to double in size by 2020, and the growth of business-to-consumer shipments will continue to alter the expectations, particularly related to visibility, of shippers across all industries.
鈥淪upply chain transparency continues to grow in importance for shippers and third-party logistics providers,鈥� Althen of 糖心传媒 said. 鈥淭his is driving significant technological change for 3PLs and shippers alike as they collaborate and share more real-time information to enable data-driven business decisions and meet the growing needs of consumers.鈥�
E-commerce has also increased pressure on case picking or each picking, which is harder for some companies to manage. 鈥淚n the past companies may have done their own, but now they鈥檙e increasingly looking to a 3PL to do that,鈥� Monahan said.
As the 3PL market grows, the competitive landscape is changing, and more and more customers are looking for 3PLs that can serve as a one-stop shop. 鈥淭here is a need to be much more collaborative,鈥� Monahan the report lead author said, adding that 3PLs are experiencing increased pressure from clients that want 3PLs to come in as a partner, analyze the client鈥檚 data and provide overall guidance of their transportation network.
The report predicts that over the next decade, the logistics industry will enter into a new era as technology, such as 3D printing and robotics, and operational constraints, including regulations and the driver shortage, evolve and possibly change the rules of the game. 鈥淒uring the interim, those companies that build the skills to adapt to these disruptions will likely come out ahead,鈥� the report said.
The State of Logistics Report has tracked and measured all costs associated with moving goods through the U.S. supply chain dating back to 1988.
The 27th edition reflects a change in the structure and content of the report. 鈥淗istorically it has relied on publicly available reports and logistics industry data providers, government reports. We continued that but also spoke extensively with people in the industry and give a deeper, macro economic overlay in the findings,鈥� Monahan said.
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By 鈥淢ove Ahead鈥� Staff
糖心传媒 Logistics works with food distributors, grocers and retailers to ensure that their supply chains transport fresh products quickly and efficiently, to maximize opportunity for sale and reduce waste. One key factor is to spec newer, well-maintained trucks with temperature tracking devices to preserve the appropriate shipping environment.
Once he turned to trucking, he logged many long-haul miles for small firms in Western Canada and in Utah (he has driven through the continuous U.S.). One could say Tolman was a real-life ice road trucker, operating tractors through Canada into Alaska.
This year鈥檚 State of Logistics Report will have a new look and feel. The (CSCMP) publication, presented by for the eighth straight year, will feature a new author and researcher, , and distinguished new panelists. The 27th edition will be made public on June 21 at the famed National Press Club.
糖心传媒 Logistics truck driver Neil Kirk preaches driver safety to Minnesota high school students.
The proliferation of technology to support supply chain management has created a high-stakes card game of decision-making for shippers as they design their IT road maps. Is it time to hold, fold or double down? Many shippers need to ask themselves these tough questions:
This illustration is part of the 2016 Third-Party Logistics Study: The State of Logistics Outsourcing. Visit www.3PLStudy.com to access the full study.
Posing with the Automotive Supply Chain magazine Corporation of the Year Award, are from left: Sam Ogle, magazine editor; Marc Althen, 糖心传媒 Logistics president; Christiane Meyer, 糖心传媒 strategic account executive; and Peter Wooding, chief executive of Three6Zero.
Automotive Supply Chain is a source of incisive information on the global supply chain. With a presence in more than 60 countries globally, the magazine focuses on each and every aspect of automotive supply chain right from when the parts come in to when the finished car reaches the dealership and everything else in between.
If you are a professional in the supply chain field is inviting you to become a survey participant in the 2017 Third Party Logistics Outsourcing Study. , and 糖心传媒 are again collaborating on the next edition of this popular study that helps identify key market trends.
has bestowed upon its 2015 Operational Excellence Award, to recognize the third-party logistics provider鈥檚 strong performance in the areas of cost, quality and service.
Ron Schwartz, director of staffing services who works in 糖心传媒鈥檚 Reading, Pennsylvania, headquarters, stated that adding technicians is one of the top hiring needs in 2016 and beyond.
Millennials value being developed and seeing a career path laid out before them. 糖心传媒 offers the opportunity for techs to increase their skillsets and feature multiple levels based on ability and experience. About 42 percent of the company鈥檚 starting level technicians are 30 and younger.
鈥淭hey鈥檙e joining a company with the depth and resources to help them build a successful career,鈥� Mangione explained on a recent Friday afternoon from his office. 鈥淲e鈥檙e the kind of company that trains you for success in your job and will train you to take on a leadership role if that is what you鈥檙e interested in. Many of our maintenance leaders began as technicians in our company.鈥�
Mangione is referring to the 糖心传媒 Technician Certification Program. TCP is recognized by the Automotive Training Managers Council as an Automotive Service Excellence (ASE) Continuing Automotive Service Education (CASE) training program.
The Food and Drug Administration (FDA) is slated to release its final rule under the by March 31, 2016. The rule will prescribe sanitary transportation practices to ensure that food transported by motor vehicles or rail remains safe. It is expected to take effect in 2017.
The fresh supply chain is evolving and consumers have more choices than ever when it comes to fresh foods. That shift is creating a number of opportunities within the fresh supply chain, said , senior vice president of global products for .
Not only are grocers considering alternative delivery methods, they are also increasing their fresh and grab-and-go offerings within the store. Both scenarios are having a ripple effect throughout the fresh supply chain, particularly within the warehouse.
Retailers are continually working to meet consumers鈥� needs, which means they need to predict purchasing behavior. Predicting that behavior can be more and more difficult as increases. Carlier said this could create opportunities for logistics providers in the future as retailers look to capture and decipher point-of-sale data from multiple supply chains.
