newsworthy
20th annual State of Logistics
Report highlights weakness in
’08, shaky outlook for ’09
THE 20TH ANNUAL “STATE OF LOGISTICS REPORT” RELEASED
June 17 by the Council of Supply Chain Management Professionals
painted a picture of a shaky U.S. economy and a logistics industry that
will require an economic rebound in the United States to regain its
strength.
The eagerly awaited report found that total U.S. logistics costs in
2008 slid to $1.34 trillion from $1.4 trillion in 2007, the first decline
since 2003. Logistics costs as a percentage of U.S. gross domestic product dropped to 9. 4 percent from 10. 1 percent in 2007. The 2008 results
were attributable to a 13.0-percent plunge in inventory carrying costs
as interest rates declined precipitously, the report found.
The drop in the cost of capital may have been the only bright spot
in the 2008 report. The average investment in all business inventories
fell by $45 billion in 2008 as the value of existing inventory declined
and as companies struggling with weak demand in the year’s second
half liquidated stock on hand rather than replenish inventories.
The combined impact of falling inventories and declining interest
rates led to a 54-percent drop in the interest component of the report’s
calculation of inventory carrying costs.
Warehousing costs rose 9. 5 percent year over year, while warehouse-men reported a significant decline in inventory turns as goods spent
more time in warehouses, the report said. By the end of 2008, warehousing rates were declining for the first time in three years, while
vacancy rates were rising due to slowing demand, the report said.
No bottom in sight
In an interview with DC VELOCITY prior to the report’s release, Rosalyn
Wilson, the report’s author, said she doesn’t believe the U.S. economy
“has hit bottom yet.” She added that supply chain activity won’t return
to its historic norms until employment and the housing market stabilize and consumers feel more confident about their financial situations.
Wilson said that “we are seeing a permanent change in … spending
and consumption patterns” as Americans become more frugal in their
buying habits. This will result in a painfully slow economic rebound
and have a profound impact on the supply chain for years to come, she
said.
Demand for trucking, which moves nearly 80 percent of the nation’s
freight, remains very weak and may not pick up appreciably until well
into 2010, Wilson said. Freight rates will initially remain stable as volumes improve, she said. However, the significant reductions in trucking capacity during the past two to three years will lead to an upward
spike in rates once the recovery takes hold, she said. ;
—Mark Solomon
green machine
Toyota Industries Corp. (TICO) will
begin selling an internal-combustion hybrid lift truck in Japan in
December. This is believed to be the
first commercially available hybrid of
its kind. There’s no word yet on
when Toyota’s U.S. material handling subsidiary, Toyota Material
Handling, U.S.A., Inc. (TMHU), will
make the vehicle available to the
North American market.
The new lift truck, to be known
as the Geneo-Hybrid, will be an
8,000-pound counterbalanced
vehicle combining a 2.5-liter diesel
engine with an electric motor and
nickel-metal hydride battery. The
new hybrid reportedly delivers the
same operational performance as a
conventional diesel-powered lift
truck while producing half the CO2
emissions and consuming half as
much fuel.
The Geneo-Hybrid combines a
Series Hybrid System for driving with
a Parallel Hybrid System for load
handling. With the Series Hybrid
System, the lift truck’s drive motor
runs on electric energy from the
engine-powered generator and battery. Load handling functions are
powered by a Parallel Hybrid System
with a hydraulic pump that receives
mechanical energy from the diesel
engine and generator, and electric
energy from the battery. The nickel
hydride battery is recharged by the
engine’s operation and does not
require plug-in recharging. ;
