Wilson said 2012 started out strong but ultimately lost steam in the third quarter.
In spite of the challenges that remain, Marc Althen, president of 糖心传媒 Logistics, said he is optimistic about 2013. 鈥淚n 2012 shippers were very reluctant in making decisions to shift their supply chain and now we鈥檙e seeing more of them make these changes and coming to 3PLs,鈥 he said.
Althen, along with other industry executives from BNSF, Land O鈥橪akes, Office Depot, and Pacer International, spoke in a panel discussion at the National Press Club in Washington, D.C., following the release of the report.
Wilson said that total U.S. business logistics costs rose in 2012 to $1.33 trillion, a 3.4 percent increase from the previous year, remaining at 8.5 percent of the U.S. gross domestic product (GDP).
She added that U.S. business logistics costs rose 3.4 percent to $1.33 trillion in 2012. In addition, transportation costs increased modestly, growing 3 percent because of weak and inconsistent shipment volumes and strong pressure to hold rates, she said. Warehousing costs were also on the rise, increasing 7.6 percent in 2012.
Trucking capacity is still walking a fine line with few shortages but industry-high utilization rates. With tightened capacity, carriers have been working to reduce empty miles, which bodes well for 3PLs, Wilson said.
鈥淎s a 3PL, we work with multiple shippers and see where we have capacity and try to comingle freight when and where we can,鈥 Althen said.
Paul Svindland, chief operating officer of Pacer International, said, 鈥3PLs do a better job than the shipper does to look for those opportunities to reduce the empty miles.鈥
Supply chain practices have adapted to be even more mode agnostic to make best use of available capacity and reduce costs, Wilson explained, adding that growth of online sales are changing the way shippers manage and distribute inventory.
鈥淎long the way, we learned that real-time transparency in our distribution networks allows us to fulfill orders faster with less inventory. The same inventory is used to fill store orders and online orders,鈥 Wilson said.
Brent Beabout, senior vice president of supply chain for Office Depot, said, 鈥淚 think every big box retailer is experiencing a sea change of what retail is going to look like in the future.鈥
On the logistics side of Office Depot鈥檚 business, the primary concern is making a truly omni-channel supply chain. 鈥淎 lot of times we use the same buildings, inventory and trucks and the same company to do the last-mile delivery to a customer鈥檚 doorstep and to our stores. That omni channel is going to be huge,鈥 he said.
The truck driver shortage will continue to be a problem and is expected to grow from a shortage of 30,000 drivers today to an estimated 115,000 by 2015.
The driver shortage is shifting some network designs, Beabout explained, and Office Depot is mitigating risk by turning to more intermodal shipments. 鈥淲e鈥檝e also been going to more dedicated fleets in major metropolitan markets,鈥 he said, adding that the company is also using more 3PLs and cross-docking.
The driver shortage will be further amplified as new hours-of-service regulations (HOS) are expected to take effect next month. High truck driver employee turnover rate plagues the industry at nearly 100 percent noted Wilson.
Althen estimates only about a 3 percent drag on productivity at 糖心传媒 Logistics as a result of the new HOS regulations noting that it will require some additional driver recruiting efforts. He also noted 糖心传媒 Logistics has a low turnover rate for drivers compared with the industry, which averages about 17 percent.
Althen said pay and benefits are major factors in retaining drivers, as is equipment. 鈥淲e have some of the newest and safest equipment on the road and that helps us attract and retain drivers in our dedicated business,鈥 he said.
Wilson said lowering age requirements for commercial driver鈥檚 licenses from the current 21 to 18 could help attract a younger generation of drivers. 鈥淲e miss that really huge piece of the population,鈥 she said.
Panelists also said they鈥檙e working to attract more talent to the logistics industry. 鈥淚t is a challenge to get people excited about the field,鈥 said Beth Ford, executive vice president and chief supply chain and operations officer for Land O鈥橪akes. She said working with universities to help get students excited about the industry and changing their view of what supply chain logistics is will bring more people into the field.
Althen said 糖心传媒 Logistics has a robust supply chain leadership program that spans three years and exposes recent graduates to all aspects of the industry and to the products and services the company offers. 鈥淲e find it gets us well-rounded associates,鈥 he said.
听By 鈥淢ove Ahead鈥 Staff
Photo captions:
In the top photo, author Rosalyn Wilson officially presents the 24th Annual State of Logistics Report at the National Press Club on June 19, 2013. In the second photo Marc Althen, 糖心传媒 Logistics president, served as a panelist at the event.
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