State of Logistics: Professionalism, resilience win the day

While many things have been turned upside down over the past few months, I’m happy to report that we’re able to stick to tradition in a few areas. For example, we’re able to devote a large portion of the July issue to the findings of the Annual State of Logistics Report (SoL), marking the 31st year that Logistics Management has offered a deep dive into this valuable report.

Authored by global management consulting firm Kearney in partnership with CSCMP and Penske Logistics, the SoL has become known over the past three decades as the most comprehensive report of its kind, encapsulating the cost of the U.S. business logistics system during the previous year and offering a snapshot of how economic conditions are shaping the current logistics landscape.

The official release of the report—which took place in an online event on June 22—once again sets our editorial staff on a quest to put context around the report and what its findings mean to freight transportation management in terms of service, capacity and rates (pages 16-25).

Our contributing transportation editor John Schulz took part in the online panel discussion, and says that much of this year’s report reads like the tale of two eras: pre-pandemic and post-pandemic.

“Considering what the markets have gone through over the first two quarters of the year,” says Schulz, “the timing of the writing and release of the report are quite helpful. The authors are able to offer a clear snapshot of 2019 and share a fairly good view of the impact of the pandemic and where we’re heading in recovery—and it’s not as discouraging as one may think.”

In fact, as the authors rolled up the data and concluded their interviews with shippers, carriers and service providers, the results showed that shippers deserve high praise for their overall response to the disturbances caused by the worldwide pandemic.

“While many logistics networks were initially traumatized,” says Schulz, “it appears that most shippers handled the worst supply chain interruptions with professionalism and grace as they worked to improve communication with carriers, remained flexible in their needs and ultimately proved to be quite resilient in the face of crisis.”

Indeed, this shock to the system may have very quickly shifted logistics and supply chain thinking back toward more of a strategic, long-term play. According to the report, the pandemic is forcing their hand to become more proactive in investing in automation as well as setting up modular networks to build in more options—all positive outcomes.

“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,” says Michael Zimmerman, the report’s author and Kearney partner. “The pandemic starkly brought this to life.”

In terms of recovery, the report says that the U.S. economy is bouncing back somewhat strongly, as e-commerce “continues to boom”—a huge benefit to the large parcel giants and some nimble trucking companies.

“And while the pandemic was a shot in the arm to e-commerce, the authors and the SoL panelists believe that the size, shape and timing of the recovery is still up in the air,” says Schulz. “Whether it’s a fast V-shaped, slower U-shaped, or an even slower ‘Nike swoosh’ is open to debate. However, most economists surveyed in the report expect a U, so we’ll just keep our eyes on freight volumes and consumer confidence over the next few months.