New government regulations and a failure to upgrade computer systems may
lead to increased logistics costs for many shippers this year, Robert V.
Delaney, vice president of Cass Commercial Corp said Monday.
Since 1996, logistics costs have remained static at 10.6 percent, or
$898 billion, of the U.S. Gross Domestic Product of $8.5 trillion,
according to the annual "State of Logistics Report" of Cass, a St.
Louis-based bank holding company.
Inventory management is still a problem for many shippers. "We have not
taken inventory out of the system," Delaney said. "We are merely shifting
where inventory is held within the supply chain."
According to European software firm, Cap Gemini Group, about 38 percent
of U.S. companies are stockpiling inventory as part of their year 2000
contingency plans. Xerox says it will add one month’s supply of all parts
needed to produce printers and printers in safety stock.
Delaney said continued deregulation of transport modes will help to
reduce logistics costs. The Ocean Shipping Reform Act is expected to offer
a logistics improvement of $2 billion during the next five years.
Investments in more efficient cargo transportation equipment, such as
six-axle trucks, will also help to lower logistics costs. The $425 billion
trucking industry currently accounts for 80 percent of the country’s
freight bill.
CASS: SHIPPERS MAY FACE HIGHER LOGISTICS COSTS
CASS: SHIPPERS MAY FACE HIGHER LOGISTICS COSTS
