Logisticians adapting to ‘permanent volatility’ in supply chains, SoL report concludes

The influential 35^th annual State of Logistics Report released today shows how logisticians are adapting to what the report calls “permanent volatility” in their supply chains while they ride out the wave of uncertainty.

But supply chains are navigating that wave adroitly. Logisticians are investing in technologies to accelerate resilience, agility and flexibility to better navigate current and future disruptions that include persistent inflation, climate change and geopolitical conflicts.

The 2024 State of Logistics Report was unveiled at the National Press Club in Washington. It is produced annually for the Council of Supply Chain Management Professionals (CSCMP) by global consulting firm Kearney and presented by leading third-party supply chain provider Penske Logistics.

The influential annual report offers a snapshot of the American economy via the lens of the logistics sector and its role in overall supply chains. The report concluded that uncertainty is now a near constant in the global economy, and that the smartest way to respond to unsteady times is to rekindle strategic projects and gather resources to improve resilience.

The global economy is expected to experience sluggish 2.5% growth this year, the report predicts. That would represent the slowest half-decade of output in 30 years.

Demand has not yet fully recovered from the Covid-induced worldwide recession in 2020-21. With myriad forces at play, new growth engines will need traction before the tide turns.

Highlights from the 2024 SoL report include:

• U.S. business logistics costs were $2.3 trillion year, which translates to 8.7% of the national GDP;

• There are multiple reasons why demand has not yet fully recovered, chief among them are simultaneous geopolitical conflicts around the world, climate change (which has affected shipping lanes), high inflation, high interest rates and apart from the U.S., sluggish demand;

• As a result of the economic headwinds and geopolitical instability, the continued fragmentation of global trade is complicating supply chain transactions. There were over 1,000 U.S. freight brokers that shuttered their doors since last year’s report was released;

• Some of the largest manufacturers and retailers are seeking to monetize their own logistics capabilities while viewing their supply chain successes as a service to market and profit from;

• Carriers have been plagued by high operating costs, while lackluster demand and the capacity glut have made it hard for them to charge the kinds of rates that would allow them to sustain rates and protect their margins;

• Third-party logistics providers continue to work through significant challenges right now, which include high operating and insurance costs, low freight rates and excess capacity. Will this lead to further industry consolidation?;

• Investments in emerging technologies such as artificial intelligence, end-to-end visibility and advanced automation are expected to drive competitive advantage and greater resilience to future disruption in the logistics sector; and

• Major global corporations have adopted rigorous environmental goals. Further government funding programs have been launched to encourage decarbonization initiatives, which indicate progress in both the public and private sector toward higher levels of sustainability

“I believe CSCMP creates the very finest and most comprehensive unbiased research with ready access to solutions supply chain leaders seek,” CSCMP President and CEO Mark Baxa said in a statement. “I encourage you to ask, ‘What’s different?’”

Baxa said whether you are the senior leader or an entry-level analyst, you have decisions to make that will make a difference in your supply chain’s performance. The CSCMP State of Logistics Report presents powerful and timely insights that bring to life critical data and insights that will help readers develop solutions to their logistics challenges.

Josh Brogan, Kearney partner and lead author for the State of Logistics Report, added: “Continued volatility drives our clients to rethink and rewire the logistics capabilities that drive their supply chains. Both shippers and carriers find that the people, processes and tools that move goods and information in global supply chains are often inadequate for their needs and require accelerated investment.

The State of Logistics Report shows “what is happening, where and why,” Brogan added.

“Our customers, as well as the industry, continue to face significant challenges in maintaining both a consistent and cost-effective supply chain,” Andy Moses, senior vice president of sales and solutions for Penske Logistics, added. “Investing in technologies to help improve agility and resilience will better position organizations and the industry as a whole to seamlessly navigate future disruptions.”