Supply Chains Out of Sync

Supply Chains Out of Sync

There are some harsh words for the logistics and supply chain sector in the 33rd Annual State of Logistics Report, revealed recently at the National Press Club in Washington, D.C. U.S.-based supply chains are “out of sync,” caused by struggles to adjust to short-term changes, the report claims.

The good news, though: the industry is discovering long-term solutions to those challenges.

The report, produced for the Council of Supply Chain Management Professionals (CSCMP) by global consulting firm Kearney and presented by Penske Logistics, is intended to look at the overall U.S. economy as seen through the lens of the logistics and supply chain sector.

One of the more telling statistics from the report involves U.S. business logistics costs, or USBLC. In 2021, USBLC rose 22.4% to $1.85 trillion, which accounts for 8% of 2021’s $23 trillion GDP.

Other key findings:

  • Business inventories dropped to near historic lows, but the costs associated to store, handle, and finance those items jumped by 25.9% in 2021, while transportation costs increased 21.7%. This has led to “uneven supply chains and inconsistent product availability for consumers (both in-person and online),” says CSCMP.
  • Multi-shoring efforts are expected to increase. Companies are looking to move their operations closer to the United States so they can respond to changing market demands more swiftly.
  • The pandemic continues to pose challenges to the supply chain, as disruptions further damage capacity.
  • Last-mile delivery volume is trending up. E-commerce sales grew 10% in 2021 (to $871 billion), accounting for 14% of U.S. retail sales.
  • Trucking freight is a bright spot, with more volume and opportunities. Road freight expanded by 23.4%, to a robust $831 billion spend, and accounted for the largest segment of the U.S. supply chain spend.