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Faster Recovery Has Fizzled, Says Logistics Study’s Author

By Greg Johnson, Staff Reporter

This story appears in the June 18 print edition of Transport Topics. Click here to subscribe today.

WASHINGTON — The fast-paced recovery most had hoped for hasn’t materialized and economists believe the country will suffer slow growth for three years, according to a report on logistics from the Council of Supply Chain Management Professionals.

Manufacturing and business spending have carried the economy throughout the recession and recovery, but they were not strong in 2011, said Rosalyn Wilson, an economist and author of the 23rd Annual State of Logistics Report. “The longer the recovery takes without solid sustainable economic growth, the more reticent businesses become about hiring and investment,” she said June 13.

Wilson’s report said business logistics costs rose 6.6% in 2011 to $1.28 trillion, up $800 million from 2010. But the increase failed to match the $1.39 trillion spending level of 2007 from which the industry dropped during the recession. “In truth, we may not get back there for quite some time,” she said.

Wilson also highlighted that spending on third-party logistics providers rose 10.9% in 2011, while shipper-related costs rose 9% and spending on logistics management went up 4.9%.

3PLs generally act as a buffer during tough economic times, and activity in the sector actually has gone up, Joseph Gallick, senior vice president of sales at Penske Logistics, said in a panel discussion at the press briefing here unveiling the report. Shippers with product distribution centers are increasingly calling upon 3PLs to improve internal warehouse operations and design new operating procedures, he said.

This emphasis on 3PLs will help this sector lead the way to a full recovery in transportation, Ronald Marotta, vice president of origin cargo management at Yusen Logistics (Americas) Inc., a unit of NYK Group, said during the panel session.

The logistics report also stated that during 2011, railroads, trucking companies and 3PLs all were able to increase their rates and revenue. During 2011, trucking, which comprises 77% of the transportation component, posted a 6.2% increase, while the third-party and forwarding sector rose 9% and railroads surged 15%, Wilson said.

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