On June 16, the Council of Supply Chain Management Professionals (CSCMP) released the “29th Annual State of Logistics Report”. This year’s report was entitled Steep Grade Ahead .The SOL report was launched in 1988, by the late Bob Delaney, one of the leading supply chain experts of that time; and after his death carried on by Rosalyn Wilson until 2015. Since that time, A.T. Kearney has performed the research and published the results. The complete report can be found at www.cscmp.org, and is free to members of the organization. Since non-members are charged $295, this week, I wanted to publish a brief summary of the report for those who might not see it otherwise
2017 business logistics costs totaled $1.5 trillion, or 7.7% of Gross Distribution Product. Expenditures were up 6.2% y/y, and the percentage of GDP was slightly higher than last year’s 7.6%. At the same time, GDP grew about 2.9%. Expenses for every category were up, ranging from 1.1% for water to 10.7% for rail intermodal.

ATK chose the title of this year’s report considering the fact that carriers continue to control the marketplace and are expected to do so throughout 2018. Demand is exceeding supply in every sector.
E – Commerce continued to grow by double digit percentages, and growth should continue at the same rate. Not surprisingly, the report indicated that Amazon is continuing to “raise the bar” as far as customer service expectations are concerned. It further suggested however, that on-line sales growth may be slowed somewhat by the lack of infrastructure capacity necessary to accommodate the tighter delivery requirements.
Although relationships between shippers and providers are becoming more common and more important, in the warehousing sector customers still are focusing on short term cost cutting rather than long term strategic partnerships. This was disappointing; and I believe as capacity becomes tighter, this could be detrimental to those firms concerned only about cost.
Looking ahead, ATK expects five trends to shape the logistics future,

1. Strong macroeconomic growth, fueled by strong labor and tax cuts.
2. Costs will rise as interest and fuel costs increase.
3. Changing demand patterns and new competitors will “challenge old business models”.
4. A fully digital and flexible supply chain, optimized for E – Commerce and tight delivery demands will be essential.
5. Technology

For the past year, most reports on the subject of logistics have made some mention of blockchain, and this one was no exception. Kearney believes blockchain has application in three supply chain areas:
“simplifying payments and cross-border transactions; tracking goods as they move through the supply chain, and establishing the provenance and integrity of goods.” In spite of the hype about blockchain however, adoption will be slow. There are several reasons for this, but the major hindrance will be the lack of common standards. In this regard, it will not be unlike the standardization that was necessary to facilitate Electronic Data Interchange (EDI) several years ago.
For those who have access to the full report, a review of the document would be very informative..