White Paper: Creativity And Flexibility Are Keys To Managing Rising Logistics Costs.

By Purolator USA

Logistic costs — the amount of money associated with the purchase, transport, storage and distribution of goods — are an unavoidable part of the supply chain process. In recent years, logistics costs have increased at an alarming rate. Businesses have been forced to stymie expansions into new markets because transportation costs associated with the market are prohibitively high, increasing the timeline for profit. Other businesses have experienced the need to cost-cut service or alternatively, pass along increased logistics costs to customers.

How much have logistics costs increased
A study released in July 2008 by the Council on Supply Chain Management Professionals found that logistics costs in the U.S. rose by nearly $100B during 2007, which is an increase of seven percent over 2006 levels. The study reported that logistics costs accounted for more than 10 percent of the nation's gross domestic product.

A variety of factors have contributed to the continued change in logistics costs, with fuel cost increases and the turbulent U.S. economy at the obvious forefront. Other factors that impact cost include: higher interest rates, deflation of the dollar, increased security requirements, customs fees and higher warehousing costs. Virtually every component of the supply chain has been affected by increasing costs.