This years State of Logistics Report reveals an increase in costs spent & technology investments within U.S business logistics companies.
Yesterday, the 34th Annual State of Logistics Report was presented at the Indianapolis Motor Speedway, revealing the transformation of U.S. supply chains in response to recent global volatility. The report, produced annually for the Council of Supply Chain Management Professionals (CSCMP) by Kearney, a global consulting firm, offers insights into the logistics sector’s role in overall supply chains and provides a comprehensive view of the American economy.
The report compiles valuable logistics intelligence from around the world and examines industry trends and evolving supply chains across various sectors. While the previous year’s report emphasized the need to realign, the 2023 edition focuses on the development of long-term resilience in logistics operations to better serve customers through diverse distribution channels.
Here are four key takeaways from the report:
- U.S. business logistics costs have increased, proving that the industries healing has been costly. U.S. Business Logistics Costs (USBLC) reaching a record $2.3 trillion, accounting for 9.1% of the national GDP—the highest percentage ever recorded.
- As our world is becoming more and more digitalized, e-commerce sales continue to grow. The U.S. e-commerce market expanded by 8% in 2022, reaching $1.03 trillion, and now represents 14.5% of the entire U.S. retail market.
- Third-party logistics providers (3PLs) are investing more in technology compared to shippers. The Logistics industry is fragmented, meaning that competition is high. 3PLs must continue to adapt in using the newest software available to offer their customers competitive services, and that’s exactly what they’ve done. The report reveals that 96% of 3PLs have transitioned to the cloud, while 80% of them are investing in the Internet of Things (IoT). In contrast, 86% of shippers have adopted cloud technology, and 77% are investing in IoT.
- The reshoring movement continues, with an increasing number of businesses shifting their manufacturing operations back to the United States. The Kearney Reshoring Index shows a 26% growth in American imports of Mexican manufactured goods since spring 2020.
Balika Sonthalia, Senior Partner at Kearney and co-author of the 2023 State of Logistics Report, highlighted the need for strategic capacity building as the logistics sector moves forward from previous challenges and bottlenecks. Sonthalia emphasized the importance for all industry participants to proactively plan for geopolitical tensions, cybersecurity threats, climate change and related natural disasters, slowing e-commerce growth, and global recessionary factors, despite the current market favoring shippers over carriers.