TAKEAWAYS Shaping the Future of the Global Supply Chain
“The Great Reset” The State of Logistics Report, produced annually for the Council of Supply Chain Management Professionals by global consulting rm Kearney and presented by Penske Logistics, delivers a snapshot of the American economy through the lens of the logistics sector and its role in overall supply chains. Among the major 2023 report ndings: • A key report statistic, U.S. business logistics costs (USBLC), shows an increase. USBLC now stands at a record $2.3 trillion (it was $1.85 trillion last year), representing 9.1% of national GDP—the highest percentage of GDP ever. • While consumers are continuing to return to stores, ecommerce sales are not slowing down. In 2022, the U.S. ecommerce market grew by 8%, to $1.03 trillion (it was $871 billion). It is now 14.5% of the entire U.S. retail market. • Third-party logistics providers are investing more capital into their technology offerings, as opposed to shippers ( see chart ). Respondents indicated that 96% of 3PLs have migrated to the cloud (shippers indicated 86% of them have), while 80% of 3PLs are investing in IoT (77% for shippers). • The reshoring movement continues. For a number of businesses, reshoring has gone from a strategic possibility to a market reality. American imports of Mexican manufactured goods have grown by 26% (dating back to spring 2020), according to the Kearney Reshoring Index.
THE RISKS OF SMB NEARSHORING Small and mid-size businesses (SMBs) are embracing nearshoring to help address supplier challenges such as unreliable delivery time frames and inconsistent product quality. But switching to nearby suppliers is easier said than done. Capterra’s latest research reveals that 74% of U.S. SMBs plan to have most or all of their suppliers in North America. Additional key findings include: • 63% of SMBs expect quicker delivery and fulfillment through nearshoring. • 54% expect better communication from suppliers. • Another 54% expect improved sustainability. However, switching to nearby suppliers isn’t a quick or easy process. • While 85% of SMBs feel most confident in maintaining relationships with existing suppliers, they are least confident in their ability to switch suppliers to make strategic improvements. • On average, SMBs report having 27 supplier relationships but nearshored an average of only four suppliers in the past two years. • 42% rate price volatility as a top challenge in supplier negotiations. SMBs should carefully evaluate new suppliers that not only shorten but also strengthen their supply chain.
3PLs tend to invest more dollars into their technologies versus their shipper counterparts
Comparison of technology investment by 3PLs and shippers (% of total respondents)
3PLs Shippers
Sources: 2022 Third-Party Logistics Study by NTT Data, Penn State and Penske; Kearney analysis
Migrated to the cloud
Percentage of budget
Percentage of supply chain services o ering real- time data
Percentage of supply chain that can be remotely controlled
Investing in Internet-of- Things (IoT)
allocated to 5G implementation in next 5 years
28 Inbound Logistics • July 2023
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