Logistics in 2020: ‘Adapt, Improvise, Overcome!’
Up until a few months ago, you might have thought you’d seen it all during your logistics career. And who could blame you?
Plus, the U.S. economy finished 2019 strongly, with GDP growing to $21.43 trillion. The U.S. logistics industry was firing on most cylinders, too, with $1.63 trillion in expenditures.
But as it turned out, “at the close of 2019, the state of the U.S. logistics industry was an unrecognized last hurrah of the ‘old normal,'” observes the 31st annual State of Logistics Report, released today.
“Logistics leaders are normally unflappable, being accustomed to fluctuations, volatility and even crises,” the report noted. “But as the pandemic violently wrenched supply chains across the world, these leaders were tested by new extremes.”
The 3 organizations behind the report — the Council of Supply Chain Management Professionals (CSCMP), consulting firm Kearney and Penske Logistics — remained bullish but warned that the logistics industry needs to adjust to the new realities.
“In our view, the experience will lead to a new emphasis on supply chain resilience, which is to say that logistics will build in more options and suppleness,” the report stated. “The pendulum that once swung toward ultra-efficient, single-source, just-in-time and heavily cost-focused supply chains will swing back in favor of flexibility and reserve capacity to cope with uncertainty and risk. The pandemic starkly brought risks to life.”
Among the findings:
- “Road freight, the biggest segment of U.S. logistics spend, was already slowing down in 2019 after a torrid 2018 as years of scarce capacity and increasing rates reversed in favor of shippers;
- “COVID-19 has been more economically damaging than a standard recession or an escalation of trade tensions. The current pandemic-driven recession ended 126 months of growth, the longest economic expansion in U.S. history;
- “The pandemic and public response has accelerated an already fast growth in e-commerce, which has different logistics needs than traditional retailing; and
- “When the economic recovery begins to occur, it will likely be uneven and staggered.”
“To say that everything changed [in 2020] is an understatement,” commented Rick Blasgen, CSCMP president and CEO. “Supply chain management professionals deal with change daily, and many in our industry have led efforts in adapting, innovating and managing through unprecedented disruption while simultaneously creating new operating models. This report provides both a historical snapshot, and also a portal into what you need be ready for in the future: Adapt, improvise, overcome!”
Among the report’s observations: Shippers and 3PLs are struggling to meet the boom in e-commerce and customer demands. Other takeaways can be found here.
“With the reopening of American businesses, many supply chains have become off-balance,” stated Marc Althen, Penske Logistics president. “This is an important time to reevaluate your supply chain, from distribution points to modes of transportation, and the State of Logistics Report provides the level of insight necessary to make these types of critical decisions.”