SCDigest editorial staff

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Establish Inc./Herbert W. Davis and Company recently released its annual report on the costs of logistics, the results of feedback from several hundred companies on their logistics performance.

The full report can be found at the link above (quick registration required) but some of the highlights include the following:

• Logistics cost as a percent of sales is down 9.6%
• Cost per hundredweight is down 5.2%
• Over 70% of companies were able to reduce their costs this year—significantly better performance than in recent years.
• Logistics costs have been declining since 2001 for most companies and are now at a 25-year low in percent of sales and cost per hundredweight.
• Inventory as a percent of sales is at the lowest level in 25 years

Below is a chart providing – for the survey population – cost elements of logistics as a percent of company sales and cost per hundred weight in 2005:

Source: Establish Inc.

At one level, this data is consistent with other reports, such as the Annual State of Logistics study, that find overall logistics costs as a percent of GDP continue to decline. On the other hand, strong increases in transportation rates and fuel surcharges in the past year would seem to have caused upward pressure on total logistics costs as a percent of sales fro many/most companies, contrary to the report. The average respondent in the database reported a .4% decrease in transportation cost as a percent of sales, though there was a slight increase in the cost per hundredweight.

Also, other studies have shown inventory levels are actually increasing, driven in part by offshoring and longer supply chains.

Regardless, it’s always good to look at this data each year as another input into thinking about your own company’s operations.

Do you believe logistics costs for most companies decreased in the past year – or are they rising? What about inventory levels? Let us know your thoughts.