Keeping Logistics Costs in Check

(Jorina Fontelera — Thomas Net)

Logistics costs have skyrocketed over the last few years as fuel prices increased and the United States economy spiraled downward. A study by the Council of Supply Chain Professionals (CSCMP) found that logistics costs in the U.S. alone rose by $91 billion in 2007, an increase of 7 percent over the previous year. According to the CSCMP’s 19th annual State of Logistics Report, logistics costs accounted for more than 10 percent of the country’s gross domestic product.

Higher interest rates, the deflating dollar and increased customs and warehousing costs in addition to fuel prices have contributed to the high costs of logistics. In 2007, U.S. businesses spent more than $1.4 trillion on transportation, storage and distribution of goods, according to CSCMP estimates.

“Clearly, there is a cause for concern,” says a new white paper from LTL trucking company Purolator USA Inc. “[B]usinesses cannot exist without logistics, but at the current rate, businesses can’t really afford to exist with them either.”

To combat the rising costs of logistics, companies should reassess each aspect of their transportation and logistics strategy. Here are six factors to consider.