Total Logistics Freight Forwarding

Logistics Costs Plummet over 18% – Brad Hollister

CHICAGO-manufacturer and distributors spent a record on logistics last year. Annual cost of logstics spent a record level of nearly 5% of GDP in 2009, compared to just over 9% in 2008. According to the annual report published last week.

The Council of Supply Chain Management Professionals (CSCMP) and Penske Logistics at the National Press Club reported spending Logistics manufacturers and distributors fell to 7.65% from a record high of 16.2% in 1981. The report presents the impacts the recession has taken 24 + months on freight and industry.

From 2008 Shippers and carriers have felt the pinch of excess capacity, higher fuel costs and increased external threats introduced into the industry regarding stricter regulations on a multitude of platitudes.

On the road carriers, professional logistics, truckload carriers, drivers and LTL carriers have taken steps to reduce capacity, but Rosalyn Wilson (Powers report CSCMP) warns against shippers, manufacturers, distributors and that the current business climate and increasing restrictions on consumer credit may cause difficulties in rapid expansion capacity in the foreseeable future. "It is likely that we will have capacity problems in some areas, year-end," Wilson reported.

The freight, trucking, intermodal and air freight industries have been under considerable pressure since the beginning the recession more than two years. Transport costs fell by 20 per cent more in 2009 after jumping more than 50 per cent over a period five years preceding the recession that began in fall 2008.

After rising more than 50 percent in the five years preceding the recession, total logistics costs have fallen the past two years. Transportation costs fell more than 20 percent last year. All modes of transport have been made, trucking (truckload and LTL both combined) fell more than 20 per cent. Intermodal and rail prices closely mirror cuts trucking rates with substantial declines in average just under 20 percent.

Industry Cargo CHANGE

Shippers can not too familiar with these cheap shipping and freight rates cheap. Capacity constraints, Bankruptcy carrier and owner-operator financial difficulties have affected the transport industry which will have significant Capacity reductions Wilson warned. Wilson then advise caution that freight rates have already increased in some modes and higher rates continue to be presented to the market before the end of 2010.

The section of the truck (transport by truck, unless the carriers truck, and specialized carriers) have felt the economic struggles. Experts expect about 2,000 trucking companies will close their additional doors because the financial markets pressures on them will be too much to survive.

Third Party logistics companies have also played an important role in the transportation industry is constantly evolving. Many shippers have abandoned their longstanding logistics (freight forwarders, 3PL, third logistics companies) and have chosen to use the spot market. This change greatly pressure cargo companies to further reduce their prices to win business.

The remainder of 2010 continue to be difficult for all carriers. Some experts say there is excess capacity simply 'parked' which can be used with little notice. Other transportation experts believe that There will be a shortage of trucking equipment and drivers at a time. Wilson believes that the transportation industry has stabilized at levels adequate the market capacity, but expressed concern at how the industry to facilitate economic growth in future demand increases and returns of freight rates.

Owner-operators and trucking companies that survive the industry will probably optimistic future. By experts, will strengthen the capacity and freight rates cheap disappear as rates rise. Manufacturers and distributors must maintain relationships of dry freight in order to position themselves as freight rates began to rise with economic recovery.

Other scholars argued that the modest rate increases will be implemented in 2010, but has largely freight rates remain uneven move forward. There are several factors that are yet to be determined and the stakes for our economy and our transportation industry. One thing is certain: if you ask around enough sense of the industry, optimism is certainly a long-awaited economic recovery for the proprietors, truckload carriers, LTL carriers, shippers, The manufacturers and distributors.

By Brad Hollister

Director of Business Development

http://www.freightaccess.com

About the Author

Brad Hollister is the Director of Business Development, for Freight Access, Inc.  Visit Brad at:  http://www.freightaccess.com, http://www.bradhollister.com, http://www.bradleyhollister.com