The Logistics Association of Australia’s breakfast meeting yesterday was a great opportunity to meet and talk with several colleagues in the supply chain sector. I appreciated the introduction and kind words of George Balis (VP Sales and Services, CHEP) and Brad Harrison (LAA President) and I thoroughly enjoyed the Questions and Answers session after my talk.
The outlook for the US logistics industry is not pretty: over the course of 2007, total logistics costs were up 7% from the 2006 baseline. All this, against a backdrop of the slowest growth in the US economy since 2002. Inventory carrying costs rose faster than transportation costs, with a growth of 9% with respect to 2006 costs. Nearly 47 hundred trucking firms left the market in 2007 and in the first three quarters of 2008. The demise of 6.5% of the US trucking capacity existent in 2006 raises concerns over the levels of response of US road transport providers when the financial downturn is over.
We discussed how some US trends could affect the Australian logistics sector. One key message was that strategic decisions made today on the basis of current financial challenges also need to account for the need to maintain levels of service when the good times come back (because they will!).
We also discussed the prominent role of 3rd party logistics and the global trends described in the 13th Annual 3PL Report. Key issues addressed were the users views about how 3PL adds value to their companies, the use of integrated logistics (as opposed to individual outsourcing), the role of 3PLs in achieving green supply chains and the issues of concern in supply chain security.
The entire presentation can be found here.