Right before the July 4 holiday here in the US, I offered my review and comment on the 2024 State of Logistics Report from CSCMP and partner Kearney, based on mostly 2023 data with some early 2024 numbers added in
This is actually the 35th edition of the report, launched in 1988 by the late Bob Delaney and sponsored by his company, Cass Information Systems. Somewhere along the way, CSCMP took over the sponsorship.
As always, the headline news: what the report several years back started calling US Business Logistics Costs (USBLC) actually fell on an absolute basis in 2023 to $2.37 trillion, down from $2.6 trillion in 2022, for a drop of 11.2%. That was after an increase of a huge 25.3% in 2022. (See State of the Logistics Union 2024.)
Gilmore Says.... |
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There has been a surge in network redesign efforts over the past year, the report says, for several reasons.
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The report in general keeps getting better, with almost too much data. My only real complaint: for the second year the metric of US logistics costs as a percent of GDP is nowhere to be found. Until the past two years that was the headline metric, shown for the current year and the past decade for comparisons and trends.
I am mystified by this.
In my part 1 review I focused on making sense of the data, picking out some key numbers amid sea of information.
As usual, the report goes beyond the data with a number of “special topics” sections, some highlights of which I will provide below.
In one on the 3PL market, the report says there are some important changes going on. Specifically, “The capabilities of select 3PL providers are beginning to reflect those of asset-based providers, while several large shippers are also beginning to flex their asset base and hinting towards externalizing their network capabilities.”
As an example of the market changes occurring, the report notes that a number of freight brokers are investing in trailer fleets to develop drop-and-hook services that will expand their available markets.
The report says overall, 3PLs will have to invest more in building expertise, especially in areas that have not been historic strengths.
In comments on 3PL technology that brought to mind Dr. John Langley’s annual 3PL study, this report notes that 3PLs need to more, noting that “The logistics sector has yet to fully capitalize on the potential of tech to strengthen transport and supply networks.” It adds that with AI and more tech, 3PLs will have to balance their technologies with the “human touch.”
I agree with this last point.
On the shipper side of the equation, the report says that with many facing overcapacity in their own networks, some shippers are selling that capacity to other shippers, becoming in effect 3PLs.
There is once again in this year’s report a special topics section on sustainability, very appropriate as this seems where much of the logistics focus is right now.
The report says many companies have set so-called net-zero emissions targets, with a strategy it would seem to get then there - but yet insufficient progress is made
Why? The report says many companies are not well considering upstream and downstream emissions when setting those targets.
The report sites data from S&P Global finding, for example, that 79% of firms have not set a strategy for level 3 emissions – those from a company’s supply chain.
That’s in large part because level 3 emissions are much harder to track, for a variety of mostly obvious reasons, including false reporting. As a result, many companies kind of give up on scope 3, the report says. They need to redouble their efforts here for net-zero success.
Finally, there is a section on supply chain network trends.
There has been a surge in network redesign efforts over the past year, the report says, for several reasons. Those include: rising cost consciousness within the C-suite; the pressure to get ecommerce deliveries to consumers ever faster; and the search for growth through greater capacity, agility, and flexibility.
The report makes a rather bold statement: that is that in the US, companies overall have not much invested in core distribution networks, resulting in “legacy costs” with increased network complexity. It adds that overall companies focus more on tactical investments and constant “brushfires” rather than the more valuable strategic dimension.
Obviously, the report authors take a very different view. It’s time to “re-wire” those networks, it says, adding that this is essential if a company is pursuing a larger business transformation.
“The equation is simple,” the report concludes, “the one that rewire quickly and accurately wins.”
So there you have it. This last section on network trends runs right into the report’s appendices on page 52.
Any reaction to our summary of this year's State of Logistics? How could the report be improved? Let us know your thought at the Feedback section below.
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