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U.S. logistics costs just topped 10% of the country’s gross domestic product (GDP) in 2007. The recently released 19th Annual State of Logistics Report revealed that logistics costs for 2007 were just under $1.4 trillion. The report is sponsored by the Council of Supply Chain Management Professionals.

GDP figures for 2007 were up from 9.9% in 2006 and matched 1998 figures. In the intervening years, only 2000 resulted in a GDP figure above 10%. With the exception of 10.3% in 2000, total spending as a percentage of GDP declined steadily from 1998 to a low of 8.6% in 2003 before beginning a slow rise. Financial experts predict a drop in GDP spending figures for 2008 citing the slow economy, high fuel costs, the mortgage crisis and the resulting credit crisis.

The report indicated significant increases in total business inventories. In 2007 inventories rose 8.7% and an additional 3.7% in the first quarter of 2008. At 5%, commercial interest rates were at 5-year highs. Commercial paper rates were just 1% in 2003 and 2004.

Not surprisingly, motor carriage led logistics spending at $671 billion or 79% of transport costs and 48% of total costs. Motor carriage costs rose 6.1% in 2007. With diesel prices edging past $5 per gallon, 2008 carriage costs are expected to be significantly higher. Logistics companies and shipping firms are feeling the pinch of rising fuel prices. With no relief in sight, shipping companies are hurting and many smaller firms are going under.

Increased fuel prices are expected to have a deleterious effect on 2008 GDP figures. Logistics industry gains realized in 2007 may well be lost. How desperately the overall economic picture will be affected remains to be seen, but experts don’t think it’s looking good. Losses are expected across the board.

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