Logistics Expenditures Hit Record Lows in ‘09, Report Says

(DC Velocity – Mark B. Solomon)

CSCMP’s 21st annual State of Logistics Report shows steepest year-over-year decline in study’s history

One word could best sum up the state of the U.S. logistics industry last year.

Ugly.

The cost of operating the nation’s business logistics system declined in 2009 to $1.1 trillion, an 18.2% drop from 2008 levels and the steepest year-on-year fall since record keeping began in 1981, according to the annual State of Logistics Report released today in Washington, D.C.

In all, business logistics costs last year declined by $244 billion over 2008, the report said. In the past two years, logistics costs fell by almost $300 billion, with most of 2008’s drop occurring after the financial crisis hit in September and U.S. and world economies went into virtual free-falls.

The 2009 numbers mark a sharp turnabout from the 2003-2008 period, when logistics costs rose in aggregate by 50% as the nation recovered from the relatively brief and modest recession of 2000-01.

Logistics costs measured as a percentage of U.S. gross domestic product (GDP), a closely watched metric of the supply chain’s relevance to the nation’s output of goods and services, dropped last year to 7.7%. That key ratio also hit a level not seen since data has been kept. Read more here.