The 2:00 Minute Warning

Recently, the Council of Supply Chain Management Professionals (CSCMP) released their 33rd Annual State of Logistics Report which is created by AT Kearny. I've viewed this as basically a "Report Card" for shippers and carriers since it offers a comprehensive view of what they both have dealt with in the past year, plus indications for the future.

On a personal note, in reading this year's report, I was reminded of some of those times when I was a bit concerned how my parents would look at the Report Card I was bringing home from from St. Gertrude's!

What did CSCMP's logistics "Report Card" for shippers show about what happened in 2021?

Well, in the "no surprise" category, 2021 brought significant - as in big, big increases in the cost to provide just about any mode of transportation.

For example, the report noted that truckload costs went up by over 10% and LTL costs rose by more than 13%. Interestingly, the highest cost increases were shouldered by private carriers who saw over 39% growth in expenses. There were also significant increases on the parcel and ocean fronts as carriers used whatever resources they could to keep up with demand.

As we’ve learned on a recent webinar called Navigating Your Supply Chain in Survival Mode, the carriers now have much higher costs embedded in their operating structures. While some of the increases in logistics costs can be viewed as transitory, or temporary, at the end of the day, it simply costs a lot more to operate trucks, and other transportation related assets.

The report also noted that 2021 was a record year for mergers and acquisitions in the logistics industry. Limited resources created an environment where acquisition could be necessary to meet expansion needs.

On the shipper side, one of the major issues that the report highlights is that more companies are bringing transportation in-house and reshoring. A recent CCJ Digital article about this report noted: “A March 2021 Kearney survey of U.S. manufacturing executives found that 41% had re-shored at least a portion of their manufacturing operations to the U.S. over the past three years, while another 22% said their company plans to re-shore some manufacturing within the next three years.”

After dealing with countless delays and a trans-Pacific transit time that's just about tripled, it's no wonder that shippers are looking at alternatives that could reduce these issues. Add to that ongoing concerns about Covid related disruptions in China and higher fuel prices that will make long transit times more costly, and there's plenty of motivation to take reshoring seriously.

To hear more about how to evaluate reshoring, listen to our interview with Harry Moser, President of the Reshoring Initiative. And if you're looking for any other resources or help, we encourage you to get in touch.

BY MIKE REGAN, CO-FOUNDER OF TRANZACT
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