Logistics Costs As A Percentage Of GDP Hit Highest Level In 13 Years

The 33rd annual State of Logistics Report, the year-over-year report card of the U.S. business logistics system, confirmed empirically what everyone already knew: 2021 was nirvana or a nightmare depending on what one does for a living.

Total logistics costs, which measure how much was spent on transportation, warehousing and ancillary services such as support and administrative, soared 22.4% last year to nearly $1.85 trillion, according to the report. That was equal to 8% of the U.S. GDP, a level not seen since 2008, said the report, which was released by the trade group Council of Supply Management Professionals (CSCMP) Tuesday morning.

Demand spiked across every mode and service. Businesses desperate for reliable motor carrier capacity powered a 39.3% jump in spending on private fleets or dedicated contract carriage to $415.2 billion. Inventory carrying costs jumped 25% to $502 billion as surging warehouse demand and supply chain congestion filled facilities to overflowing. The capital costs of carrying mountains of inventory jumped 33.4%.

Spending on waterborne services surged 23.6% as ocean carriers leveraged massive rate increases on international sea routes to make more money in 2021 than in the prior 20 years combined, the report said.

Spending on parcel-delivery services jumped 15.6% and produced a five-year compounded annual growth rate of 11.4%, the highest of all the report’s cost components.

All of this led to a fattening of carrier profits at a time when shippers felt the double whammy of shrinking margins and declining service levels, according to the report. Shippers of all types “longed for the days” when service levels that are now considered acceptable were viewed as major failures, the report said.

READ MORE HERE