Cost of logistics skyrockets

July 21, 2006
According to a new study by the Chicago-based Council of Supply Chain Management Professionals (CSCMP), logistics expenses in the U.S.—comprised of carrying, transportation, and other shipper- and distribution administration-related costs—surged 15.2% last year over 2004

According to a new study by the Chicago-based Council of Supply Chain Management Professionals (CSCMP), logistics expenses in the U.S.—comprised of carrying, transportation, and other shipper- and distribution administration-related costs—surged 15.2% last year over 2004.

That equates to a jump of over $156 billion, the highest increase in three decades, CSCMP said.

“In 2005, U.S. business logistics costs rose from 8.8% to 9.5% of gross domestic product (GDP),” said Rick Blasgen, the group’s president & CEO. “Transportation costs, driven mainly by the increased demand in trucking and coupled with tight capacity, jumped 14.1% over 2004.”

CSCMP member Richard Murphy, president and CEO of the Murphy Warehouse Company in Minneapolis, added that the impact of more frequent terrorism, political upheaval, natural disasters, accidents and other large-scale disruptive events is also causing some companies to rethink their lean inventory strategies.

“Some customers are seriously considering increasing their safety stock in the event of disruption or delays in distribution,” he said.

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