An uncertain state of logistics

So I attended the unveiling of the 23rdannual State of Logistics report this week; a tome published by the Council of Supply Chain Management Professionals (CSCMP) and sponsored by Penske Logistics. And while it contained many heartening pieces of information – hey, trucking industry revenues increase 6.2% in 2011! – the report’s portents for the future were anything celebratory.

Sean Kilcarr 1

June 14, 2012

3 min read

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So I attended the unveiling of the 23^rdannual State of Logistics report this week; a tome published by the Council of Supply Chain Management Professionals (CSCMP) and sponsored by Penske Logistics. And while it contained many heartening pieces of information – hey, trucking industry revenues increase 6.2% in 2011! – the report’s portents for the future were anything celebratory.

Roslyn Wilson (seen speaking at right) – senior business analyst with Declan Inc. and president of her own supply chain consulting firm R. Wilson Inc. – has undertaken the heavy lifting entailed in crafting such detailed examination of the logistics industry for the past nine years (and does a mighty good job of it, too!) yet while she stressed the many positive factors fueling the freight business these days, Wilson didn’t skip over the ugly challenges facing it, either.

Biggest among them is the slowdown in the overall U.S. economy, as gross domestic product (GDP) growth downshifted to 1.7% last year from 2.8% in 2010. And though trucking rates took a healthy bounce in 2011, rising anywhere from 5% to 15%, a spate of rising costs faced the industry as well – including everything from the long-overdue need to raise driver pay to higher new equipment stickler prices, rising fuel costs, rising insurance premiums, and higher safety compliance expenses (just to name a few).

Indeed, Wilson outlined some of the big macroeconomic concerns facing all transportation and logistics providers – not just truckers – during the unveiling of the23rd annual State of Logistics report at a special conference held in Washington D.C. at the National Press club:

The big issue where trucking is concerned, though, is shrinking capacity. As you can read in our top news story today, Wilson noted that by almost every measurement, the trucking industry is compressing – getting smaller and smaller, comprised of ever fewer trucks, drivers and carriers.

It’s no surprise this compression is occurring, by the way. Indeed, Wilson pointed out that the increasing shortage of drivers is forcing many fleets to park more and more trucks today.

Looking forward, though, Wilson believes things are overall on the upswing – with the U.S. economy projected to improve slowly, though, in her words, not at “elevator” speed but at “stair walking” speed.

Yet, at the end of the day, does that mean we’ll see a continuing exodus of capacity for the trucking market? Well, maybe – especially if carriers can get a good return on their assets, something that seems to be occurring as the demand for used equipment keeps rising.