On June 21st, 2022, Kearny Consulting Firm revealed their annual State of Logistics report to members of the Council of Supply Chain Management Professionals (CSCMP). The document provides an overview of the US economy through the eyes of the logistics sector.
This year’s findings state that “US based supply chains are out of sync while adjusting to short-term changes and perhaps uncovering long-term solutions.” A key statistic generated by the report stated that the United States business logistics costs were elevated by 22.4% to $1.85 Trillion USD, which represents 8% of 2021’s $23 Trillion GDP. As the demand for trucking freight increased due to business inventory levels reaching a near historic low, the carrier capacity could not keep up due to cuts in staffing, and a lack of equipment produced during the pandemic. This resulted in a 24% rise in spot and contracted rates from March 2021 to March 2022. The increasingly high cost of fuel in 2022 is also aiding the inflationary effect as shippers now pass along increased transportation costs to their consumers to make up for decreases in profits in 2021. The report proposes that reshoring/nearshoring of manufacturing companies, companies acquiring their own private fleets, and investing in drivers will all provide long term relief from the current pains in the logistic sector.
As shipper’s needs grow less lenient, a shift could be seen towards creating private fleets or large buildups of already established fleets to better control their own freight if for-hire carriers fail to increase their service levels. The President of The National Private Truck Council, Gary Petty, told FleetOwner back in April of this year, “The shipper community has a collective sense that control has been slipping away. The old notion that you can buy the capacity as we need it—and turn the tap on or off—is a thing of the past.” CSCMP found that the cost of creating and maintaining a private fleet “has shrunk substantially, while the advantage of controlling capacity and assuring services became increasingly compelling for many shippers.” The logistics report saw more shippers’ turning to private fleets. “The private fleet is still peaking,” Petty said. “It’s never had more attention, visibility, and importance in the shipper community than today. That is driven by so much uncertainty going on—if the capacity is not under control and managed internally, there’s risk that it won’t be there.”
The final long-term solution for the logistics sector is a stronger investment in drivers. “Given the recent rise in both freight volumes and shipping rates, motor carriers should invest more proactively in recruiting, training, and compensating drivers,” the report authors wrote. The American Trucking Association reports that 80,000 drivers are needed to ease the pressures currently being felt and the number of needed drivers is expecting to double to 160,000 by 2030.
Sources
Out-of-sync supply chains are changing trucking | FleetOwner
State of Logistics Report (cscmp.org)
Inflation-proofing the supply chain: is your business meeting the moment? – Kearney
Truck Driver Shortage Looms Over 2022 | Transport Topics (ttnews.com)
