A report on the annual state of the national logistics industry shows third-party logistics providers are growing faster than the gross domestic product, a trend that also can be seen in the Greater Lehigh Valley.
The Council of Supply Chain Management Professionals, an organization based in Illinois, released its 27th annual state of logistics report Tuesday which offered an overview of supply chain industry trends and statistics. The report is created by global firm A.T. Kearney and presented by Penske Logistics of Cumru Township.
“Shippers are turning more to third-party logistics providers,” said Marc Althen, president of Penske Logistics, a third-party logistics company. “The report shows the third-party logistics provider is growing faster than GDP, so that’s good for businesses like ours.”
The report also showed that about 11 percent of the nation’s logistics spending in 2015 was outsourced to third-party logistics providers who move, store or manage shippers’ products without taking ownership.
In the Greater Lehigh Valley, Penske Logistics provides third-party logistics services to regional and national customers, including a BMW North American LLC parts distribution center in Lower Nazareth Township, a Knoll Inc. office furniture distribution center in East Greenville and dedicated product delivery services to Wawa stores and Wegmans markets throughout the region, Althen said. At the Knoll and BMW sites, Penske conducts the logistics operations for those companies.
“There’s more capacity in the market than there is demand,” Althen said.
He estimated that it would probably not be until the first half of 2017 before that demand sees more equilibrium with supply. Althen said there are too many big tractor-trailers in the marketplace that are not being fully used, and some of these older units are going to get retired. Some of those smaller carriers will then go out of business, which will tighten up demand and allow demand and supply to reach an equilibrium, he said.
According to the report, the nation’s total logistics costs rose to $1.48 trillion in 2015, a 2.6 percent increase from the previous year.
Highlights of the report focused on the continuation of the truck driver shortage and how competition for drivers remains intense despite a softening demand and slower rates. Also, it showed motor carriers are experiencing rate weakness, as rates and demand for transportation are soft and continue to fall. Rail volume also continues to show reductions, chiefly because of a steep decline in coal traffic and crude by rail.
Parcel and express delivery continues to accelerate, chiefly because of the rise of business-to-consumer e-commerce, the report said.