Inbound Logistics | July 2024

TAKEAWAYS

SPOTLIGHT: TRANSPORT INVESTS IN IT With supply chain disruptions, changing consumer spending habits, and persistent inflation top of mind, transportation leaders are focused on improving visibility and order management and are investing more in technology. That’s the overall consensus from Descartes’ eighth annual Global Transportation Management Benchmark Survey , which is based on responses from more than 630 companies regarding their top transportation management strategies and technologies, as well as financial results and success. Fuel costs and environmental regulations are foremost concerns in the market. Top performers continue to take aggressive actions to become more competitive and spur growth, while poorer performers are more focused on cutting costs, the report finds.

According to the survey data: • Real-time visibility held the top spot for greatest transportation IT investment for the 7th consecutive year, followed by order management. Fleet routing climbed to the 3rd spot vs. 8th in 2023. • 40% of shippers and logistics service providers plan to invest in transportation tech to prepare for industry and regulatory changes. • When asked why they are investing in transport tech, cost reduction was the top reason (40%), with customer service (39%) and growth (38%) close behind. (Customer service and growth were the top choices for the past seven years.) • 25% of respondents view transportation management systems as a “competitive weapon,” down 5% from 2023 numbers; those that view it as “not important” rose from 6% to 10%. • The percentage of respondents who expect more than 15% growth over the next few years fell from 28% in 2023 to 12% in 2024, although overall growth expectations remain high. • Respondents say the top three industry and regulatory changes that will have the greatest market impact over the next five years are: fuel costs (52%), environmental regulations (34%), and carrier charges (34%).

Survey respondents identify the capabilities their organizations need to manage transportation eectively.

60%

2020

2021

2022

2023

2024

50%

42%

40%

38%

36%

36%

32%

30%

31%

30%

20%

10%

0%

Visibility (tracking/proof of delivery)

Order management

Fleet routing & execution

Performance management/ BI dashboards

Parcel shipping/ label generation

Carrier sourcing

Source: Descartes Survey Procurement/ contract management

WAREHOUSE TAX STICKER SHOCK Rising taxes are the latest economic factor worrying warehouse operators and industrial developers, as tax bills for industrial buildings are experiencing significant jumps. What’s behind the sticker shock? The increases are due to reassessments as taxing jurisdictions catch up to rising sale prices , which have surged an average of 70.4% over the past five years across 11 major U.S. and Canadian markets, notes a new whitepaper from global real estate services firm Savills. Since property taxes are a crucial part of most municipal budgets, taxing bodies will continue aligning assessments with market values, raising the yearly levy on industrial assets. With the industrial property sector outperforming all other major asset types, more of the local property tax burden will continue to shift to warehouse occupiers.

Some key data trends highlighted in this paper include: • Across 11 markets surveyed in the United States and Canada, property taxes have already gone up by as much as 57%. • Over the past five years, property taxes on industrial buildings in the study markets have grown by 21.3%, primarily due to a 29.6% increase in assessments. • Additional increases in property taxes are expected as assessments catch up to sale prices, which have grown by 70.4% compared to 4.3% for other commercial real estate sectors. For example, annual property taxes on a typical 500,000-square-foot warehouse in Northern New Jersey’s high tax market already average more than $1.1 million; this could soon increase above $1.5 million based on the analysis of recent assessments and appreciation in market value. • The degree of under-assessment varies by market. Toronto is at the highest risk for future tax hikes, while Dallas-Fort Worth and Houston have the lowest exposure.

July 2024 • Inbound Logistics 29

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