US logistics markets gripped by uncertainty

The annual US Council of Supply Chain Management Professionals (CSCMP) ‘State of The Logistics Nation’ report has described an American logistics sector hit badly by the recession, yet uncertain about the nature of the recovery. The report noted that logistics spend in the US saw a big fall in 2009 accounting for 7.7 per cent of GDP contrasting with the 9.3 per cent seen in 2008. This number has never fallen below nine per cent in the past five years or below eight per cent in the past decade, with the 2009 figure clearly illustrating the depth of the recession.

The report observed that the drop was caused by two main factors - falling inventory levels and lower freight volumes and while inventory levels fell dramatically, they have since bouncedback to pre-recession levels.

Vincent Hartnett, president of Penske Logistics, which sponsored the research and who chaired the conference discussing the report, observed that despite a marked recovery “uncertainty is still the number one consideration”.

The problem, according to the report, lies in the effect of new supply chain structures which have proved to be much more vulnerable to the effects of a volatile economy than previously expected. Manufacturers and retailers have found it difficult to manage inventory and, for example, have had to resort to airfreight in order to counter the sharp drop in stock levels. The report warns that the problem is so severe that stock-outs are expected to become a significant problem over the next six to 12 months. If inventory problems ease, this could mean a steep fall in demand for airfreight.