Photo credit: Todd Lappin

Last Friday the folks over at Modern Materials Handling wrote about the Council of Supply Chain Professionals’ latest study. The council has been putting out its State of Logistics Report for the last two decades and this year’s news is unsurprising: U.S. spending on logistics fell $49 billion in 2008 to $1.3 trillion — the first drop in six years.

“The annual respected benchmark report revealed the financial damage done to the sector by the ongoing recession. After rising by more than 50% the previous five years, business logistics costs fell to 9.4% of U.S. Gross Domestic Product last year. That is down from 10.1% in 2007. By way of comparison, that figure was 12.3% of GDP in 1985.

Transportation costs rose 2%, but that was not enough to offset the 13.2% decline in inventory carrying costs, primarily due to record-low interest rates last year. Transportation ($872 billion) now accounts for 6.1% of nominal GDP while inventory carrying costs ($420 billion) account for 2.9% of GDP.

Trucking, which accounts for 78% of transport by revenue and half of all business logistics cost, was particularly hard hit, rising just 1.3% compared with 4.4% for the other modes (rail, barge, air cargo, oil pipelines and forwarders).”

For shippers, this has resulted in bargain transport rates, especially in trucking and ocean transport, according to Rosalyn Wilson, the long-time author of the SoL report.

“Abundant capacity, particularly in trucking and ocean shipping, push rates down (last year), often below costs,” Wilson said. “Many companies have not survived the prolonged downturn. Many more will not survive the upcoming months as we continue to ride out the recession.”

Read the full story here.