Development of the Logistics Sector in the United States: Past, Present and Future

Development of the Logistics
Sector in the United States:
Past, Present and Future
James R. Stock
Frank Harvey Distinguished Professor of Marketing
University of South Florida

MALAYSIA LOGISTICS ROADMAP:
THE WAY FORWARD
4 August 2010

MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)

Overview of Presentation
Selected Historical Periods of
Logistics Development
State of Logistics in the United
States
Future Issues Facing the Freight
Transportation Sector
Responding to the Challenges


Physical Distribution Era (1970’s-
1980’s)
Introduction of the personal computer
and electronic information systems
Emergence of a world economy where
goods & services are outsourced to
organizations & third-parties are located
around the globe
Emergence of logistics and SCM
professional organizations


Logistics Era (1980’s-1990’s)
Merging of materials management and
physical distribution into logistics
Expanding publication and presentation
outlets for logistics-related research
Awareness by business of the
importance of logistics in customer
satisfaction & corporate strategy


Logistics Era (1980’s-1990’s)
Development of a number of significant
management philosophies &
orientations such as total quality
management, six sigma, efficient
consumer response, reengineering, &
supply chain management
Emergence of the Internet and E-
commerce


Supply Chain Era (1990’s-present)
Emergence of low-cost country
sourcing
Sustainability becomes a key issue
Models of the supply chain process
appear (e.g., SCOR)
Risk mitigation (e.g., supply
interruption, terrorism, supplier
uncertainty, worldwide recession)


State of Logistics in the United States
CSCMP State of Logistics Report (June 2010)

Business logistics costs fell to US $1.1
trillion in 2009, down US $244 from 2008
Logistics costs as a percent of GDP fell to
a historic low at 7.7 percent
Transportation costs fell 20.2 percent from
2008 (trucking is 78% of transportation)



Excess capacity in the transport sector
was reduced
Transportation costs down 20 percent in
2009 due to low volumes and extreme rate
pressures
Majority of firms cut costs and increased
productivity



Delivery times lengthening due to
inventory shortages throughout the supply
chain
Truck tonnage down 8.7 percent in 2009
Volatile fuel prices, although lower than
previously
About 2,000 trucking companies went out
of business



Cost for rail transport down 20.6 percent in
2009
Intermodal traffic declined 14.1 percent
More than 500,000 rail cars and several
thousand locomotives placed in storage
Traffic through US ports declined in 2009



Seven Asian ocean carriers disposed of
16 percent of their fleet due to excess
capacity
12 percent of air cargo capacity was lost in
2009 resulting in significant shortages of
capacity
Government regulation of US business is
increasing


Future Issues Facing the
Freight Transportation Sector
Truck driver shortages (since 2007, more
than 140,000 drivers have stopped driving)
Large number of truck drivers are retiring
(UPS will lose 25,000 drivers in next five
years)
Rail capacity will be able to respond more
quickly than other transport modes (rail
cars can be returned to service more
quickly)

Shipping lines are sailing slower, saving
fuel and reducing emissions, but making
on-time deliveries difficult (only 53 percent
of ships tracked in final quarter of 2009
arrived by the scheduled arrival day)
Transportation infrastructure is aging and
insufficient monies are available to
improve it, which will result in a number of
future problems

By 2015, the widening of the Panama
Canal will shift significant volumes of
freight from West Coast ports to Gulf ports
Current capacity of US roads, rails and
seaports will not keep pace with demand


Trucking sector will bring on-line, 1.8
million trucks by 2020
New equipment that is more fuel efficient
and larger to carry more freight
Expansion of the Interstate Highway
System (increasing number of lanes and
new highways)
Increased usage of multi-fuel vehicles


Pressuring government to expedite the
dredging and expansion of existing
seaports
Development of additional intermodal
connectors to allow rail, water and trucks
to move more containers
Moderate expansion of funding to repair
and/or improve transportation
infrastructure


Questions and
Discussion

Contact:
James Stock
jstock@usf.edu

Development of the Logistics Sector in the United States: Past, Present and Future

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