Think Outside the Box

CSCMP ANNUAL STATE OF LOGISTICS REPORT

The Council of Supply Chain Management Professionals (CSCMP) recently published their 22^nd Annual State of Logistics Report last month.  Although a little lengthy, it does contain some very interesting data and forecasts as well as some sobering news. This post is intended to serve as a “Cliff Notes” version of their report.

When given the opportunity to receive bad news or good news first, I almost always choose the bad.  Personally I like to end on a good note.

So here it is, “bad” news first.  2010 was an improvement from 2009, but when you’re close to rock bottom, there’s only one way to go, up. According to the report, at the beginning of 2010 volumes were up, but slowly trickled off during the second half of the year.  Demand and available capacity began to equalize, but rates were still tight. Although the recovery started strong, it began to run out of steam by the time the second half of 2010 rolled around.

Trucking, the largest component of the transportation sector, was the hardest hit mode. Constant increases in fuel costs were the largest contributing factor (which we have previously discussed). Additionally, trucking took a 13.4% cut in workforce over the past four years.  The CSCMP reported that over 3,000 trucking firms have declared bankruptcy over the last three years.

Forward looking to 2011, the report indicates that the US economy appears to be plateauing. With capacity issues becoming more prevalent, it sets carriers up for the ‘perfect storm’.  Retaining drivers is becoming a more daunting task, operating costs are continuing to rise, new regulations are in the process of being implemented, as well as the truck order backlog is growing.  Add all these factors into the mix with rising freight volumes and it puts the trucking sector in a tough bind, ultimately leaving it unable to meet the market’s demand.

Now for the “good” news.  Rosalyn Wilson, who initially presented this report in June, stated, “my money is on the innovators in the logistics industry who are navigating through the recovery.”  I could not agree more.  When times get tough, it’s time to start expanding the boundaries, getting creative, and “thinking outside the box.”

Contact us to learn of ways we can help your company “think outside the box.”