DC Velocity - January 2012

of uncertainty: 27 percent said they were unsure what would happen, about the same as last year’s 26 percent.

When it came to their own companies’ prospects for 2012, opinion was once again almost evenly divided among survey takers. Thirty-four percent said they anticipated strong sales growth, while 35 percent foresaw flat revenues. Another 25 percent thought company sales would be weak. Six percent said they simply didn’t know.

Survey respondents held out even less hope for overall U.S. economic growth. Almost half ( 49 percent) said they believed that growth would be weak, and 38 percent said they thought it would be flat. A paltry 10 percent predicted strong growth, and 4 percent said they had no idea.

As for the respondents themselves, the largest share worked for distributors, at 33 percent, followed by manufacturers, with 31 percent. The remainder worked for logistics service providers ( 18 percent), retailers ( 10 percent), or other types of businesses ( 8 percent).

EXHIBIT 1

Taking the truck route

When asked what types of transportation services they planned to buy in 2012, DCV readers put LTL motor freight at the top of the list.

BUDGET CREEP

Respondents seemed a little more definite when it came to their transportation spending plans. More than half ( 55 percent) said they expected to spend more for transportation services in 2012 than they had in 2011. Another 33 percent predicted their spending on transportation would remain the same, 6 percent anticipated a decrease, and 6 percent said they weren’t sure. Of those who plan to spend more, 52 percent forecast an increase of 3 to 5 percent over what they spent in 2011. One-fourth anticipate spending just 1 to 2 percent more, and 15 percent expect an increase in the neighborhood of 5 to 9 percent. Only 8 percent foresaw an increase of 10 percent or more.

The projected increase in transportation spending is most likely related to respondents’ views on where oil prices are headed. The vast majority— 89 percent—said they were concerned that oil prices would rise in 2012, which would presumably result in higher freight rates.

Even so, only 40 percent of survey takers said their overall spending on logistics and related products and services (including material handling equipment, information technology, and freight transportation) would increase in 2012. Another 44 percent said their overall logistics expenditures would remain the same as in 2011, and 11 percent forecast a decline. The remaining 5 percent were unsure.

Among those respondents who expect to boost their overall logistics spending, the biggest share— 43 percent— said their budget would rise by 3 to 5 percent compared with 2011. About one-fifth ( 21 percent) expected an increase of just 1 to 2 percent. But others forecast a bigger jump: 16 percent said they expect to spend 5 to 9 percent more than last year, and a full 20 percent said their budgets would increase by more than 10 percent.

As was the case in the 2010 and 2011 surveys, less-than-truckload (LTL) services topped the readers’ list of planned transportation purchases. Seventy-six percent of survey

Type of product/service
Less-than-truckload motor freight
Small package
Truckload
Air freight
Express/Expedited/Time-critical
Transportation-based third-party logistics services
Rail/Intermodal
Maritime/Ocean
Private fleet tractors and/or trailers
Barge

of respondents*

76

65

60

46

39

33

32

31

26

6

EXHIBIT 2

War on costs continues

Shipment consolidation and contract renegotiation topped the list of readers’ planned cost-control measures.

Cost-cutting action of respondents*

Consolidate more shipments into truckloads 41

Renegotiate rates with carriers 41

Cut back on express shipments 36

Redesign supply chain network 26

Shift more freight from truck to rail 20

Reduce shipping frequency to customers 19

Use fewer carriers 15

Shift more freight from air to ocean 11

Set up more DCs 10

Outsource more distribution tasks 10

Lay off workers 7

Use fewer DCs 6

*Note: Survey respondents were allowed to select more than one response.

takers said they planned to buy LTL services in 2012. About 65 percent said they would buy small-package shipping services, while 60 percent said they planned to use truckload carriers. (See Exhibit 1 for the full breakdown by mode.)