More than half of respondents to a recent industry survey say they will add automation to meet growing last-mile delivery volumes, with many pointing to outdated technology as a roadblock to delivering on last-mile promises.
Technology vendor Bringg surveyed 200 logistics professionals at companies with 200 to 50,000 employees for its State of Last Mile Logistics report, released this week. The survey polled workers in North America and Western Europe and found that the growth of e-commerce, customer expectations, and rising last-mile delivery volumes have created a capacity problem that logistics providers are struggling to fill.
More than 60% of respondents said they have seen increased demand for last-mile delivery, but noted that a lack of visibility, automation, and innovative technology is “holding them back” from meeting those demands, according to the survey. More than 40% said their biggest challenge to scaling last-mile operations is outdated business processes and manual operations, followed by legacy technology (36%).
“This past year has forced retailers and service providers to assess their supply chain agility and resilience,” Guy Bloch, Bringg CEO, said in a statement. “While they want to take advantage of growing opportunities in the world of ecommerce, they are challenged by legacy systems, limited visibility and high operational costs.”
Key findings indicate a greater emphasis on tech tools for the last-mile:
53% of respondents said their shippers use or have requested real-time visibility tools for end customers, but just 18% of providers have it—and more than half said they have no plans to purchase those tools.
54% of logistics providers said they are focused on adding automation to improve customer service; 41% said they have already done so.
20% of respondents said they’ve abandoned automated scheduling and self-scheduling because it was too expensive, but 61% said this was the top wish-list item from shippers.
64% said they are planning to offer new premium services and service plans to increase business through last-mile operations this year, while 43% said intelligent and easy integrations that enable multiple delivery models is the technology that will most help them win business.
The full report is available for download on the Bringg website.
Amid unprecedented challenges, the 2024 State of Logistics Report arrives at a crucial time for the global logistics industry. Now in its 35th edition, it remains a cornerstone for professionals, offering invaluable insights into a landscape marked by economic uncertainty, geopolitical instability, and the escalating impacts of climate change. For decades, this report has guided shippers, carriers, and industry leaders with clarity and strategic foresight in navigating an ever-evolving global economy.
According to the report, the balance between shippers and carriers may shift again in the coming months. Potential rate increases loom, driven by external factors like geopolitical developments and environmental concerns. In such uncertain times, comprehensive, data-driven insights are invaluable.
The report provides a detailed understanding of current market dynamics, grounded in data, expert analyses from CSCMP and Penske Logistics, and insights from leading global companies. This rich compilation helps logistics professionals plan strategies to not only weather the storm but also achieve long-term success.
A key takeaway is the contrast between carriers' challenges and shippers' opportunities. Carriers face high operating costs, weak demand, and excess capacity, increasing financial pressure. Conversely, shippers are capitalizing on lower rates and diversifying carrier relationships to enhance resilience. Some are even monetizing their logistical capabilities, turning challenges into advantages.
The report's importance is underscored by over 60 press outlets globally, garnering significant media attention from the likes of Supply Chain Xchange, DC Velocity, and The Wall Street Journal. Many noted that professionals are adapting to “permanent volatility” by leveraging technology to manage disruptions. Meanwhile, Paul Page of The Wall Street Journal notes that U.S. business logistics costs accounted for 8.7% of GDP in 2023, highlighting the industry's integral role in the economy.
At CSCMP, we take pride in releasing the State of Logistics Report, providing professionals with essential information to make informed decisions in a complex world. Our partnership with Penske Logistics and others ensures the report is comprehensive and forward-looking, offering actionable insights to drive the industry forward.
Looking ahead, challenges persist, but with the right tools, data, and strategies, the logistics industry is well-positioned to navigate this turbulent economy. The 2024 State of Logistics Report serves as both a guide and a call to action, encouraging professionals to think creatively, plan strategically, and act decisively amid uncertainty.
CSCMP remains committed to supporting our members and the broader logistics community. Through collaboration, innovation, and knowledge-sharing, we believe the industry can overcome today's challenges and seize opportunities. The future of logistics is complex, but with the right insights and leadership, it is also filled with promise.
2024 was expected to be a bounce-back year for the logistics industry. We had the pandemic in the rearview mirror, and the economy was proving to be more resilient than expected, defying those prognosticators who believed a recession was imminent.
While most of the economy managed to stabilize in 2024, the logistics industry continued to see disruption and changes in international trade. World events conspired to drive much of the narrative surrounding the flow of goods worldwide. Additionally, a diminished reliance on China as a source for goods reduced some of the international trade flow from that manufacturing hub. Some of this trade diverted to other Asian nations, while nearshoring efforts brought some production back to North America, particularly Mexico.
Meanwhile trucking in the United States continued its 2-year recession, highlighted by weaker demand and excess capacity. Both contributed to a slow year, especially for truckload carriers that comprise about 90% of over-the-road shipments.
Labor issues were also front and center in 2024, as ports and rail companies dealt with threats of strikes, which resulted in new contracts and increased costs. Labor—and often a lack of it—continues to be an ongoing concern in the logistics industry.
In this annual issue, we bring a year-end perspective to these topics and more. Our issue is designed to complement CSCMP’s 35th Annual State of Logistics Report, which was released in June, and includes updates that were presented at the CSCMP EDGE conference held in October. In addition to this overview of the market, we have engaged top industry experts to dig into the status of key logistics sectors.
Hopefully as we move into 2025, logistics markets will build on an improving economy and strong consumer demand, while stabilizing those parts of the industry that could use some adrenaline, such as trucking. By this time next year, we hope to see a full recovery as the market fulfills its promise to deliver the needs of our very connected world.
If you feel like your supply chain has been continuously buffeted by external forces over the last few years and that you are constantly having to adjust your operations to tact through the winds of change, you are not alone.
The Council of Supply Chain Management Professionals’ (CSCMP’s) “35th Annual State of Logistics Report” and the subsequent follow-up presentation at the CSCMP EDGE Annual Conference depict a logistics industry facing intense external stresses, such as geopolitical conflict, severe weather events and climate change, labor action, and inflation. The past 18 months have seen all these factors have an impact on demand for transportation and logistics services as well as capacity, freight rates, and overall costs.
The “State of Logistics Report” is an annual study compiled and authored by a team of analysts from Kearney for CSCMP and supported and sponsored by logistics service provider Penske Logistics. The purpose of the report is to provide a snapshot of the logistics industry by assessing macroeconomic conditions and providing a detailed look at its major subsectors.
One of the key metrics the report has tracked every year since its inception in 1988 is U.S. business logistics costs (USBLC). This year’s report found that U.S. business logistics costs went down in 2023 for the first time since the start of the pandemic. As Figure 1 shows, U.S. business logistics costs for 2023 dropped 11.2% year-over-year to $2.4 trillion, or 8.7% of last year’s $27.4 trillion gross domestic product (GDP).
“This was not unexpected,” said Josh Brogan, Kearney partner and lead author of the report, during a press conference in June announcing the results. “After the initial impacts of COVID were felt in 2020, we saw a steady rise of logistics costs, even in terms of total GDP. What we are seeing now is a reversion more toward the mean.”
This breakdown of U.S. Business Logistics Costs for 2023 shows an across-the-board decline in all transportation costs.
CSCMP's 35th Annual "State of Logistics Report"
As a result, Figure 1 shows an across-the-board decline in transportation costs (except for some administrative costs) for the 2023 calendar year. “What such a chart cannot fully capture about this period is the intensification of certain external stressors on the global economy and its logistical networks,” says the report. “These include a growing geopolitical instability that further complicates investment and policy decisions for business leaders and government officials.”Both the report and the follow-up session at the CSCMP EDGE Conference in October provided a vivid picture of the global instability that logistics providers and shippers are facing. These conditions include (but are not limited to):
An intensification of military conflict, with the Red Sea Crisis being particularly top of mind for companies shipping from Asia to Europe or to the eastern part of North America;
Continued fragmentation of global trade, as evidenced by the deepening rift between China and the United States;
Climate change and severe weather events, such as the drought in Panama, which lowered water levels in the Panama Canal, and the two massive hurricanes that ripped through the Southeastern United States;
Labor disputes, such as the three-day port strike which stopped operations at ports along the East and Gulf Coasts of the United States in October; and
Persistent inflation (despite some recent improvement in the United States) and muted global economic growth.
At the same time that the logistics market was dealing with these external factors, it was also facing sluggish freight demand and an ongoing excess of capacity. These twin dynamics have contributed to continued low cargo rates through 2024.
“For 2024, I foresee a generally flat USBLC as a percentage of GDP,” says Brogan. “We did see increases in air and ocean costs in preparation for the East Coast port strike but overall, road freight is down. I think this will balance out with the relatively low level of inflation seen in the general economy.”
Breakdown by mode
The following is a quick review of how the forces outlined above are affecting the primary logistics sectors, as described by the “State of Logistics Report” and the updated presentation given at the CSCMP EDGE Conference in early October.
Trucking: A downturn in consumer demand plus a lingering surplus in capacity led to a plunge in rates in 2023 compared to 2022. Throughout 2024, however, rates have remained relatively stable. Speaking in October, report author Brogan said he expects that trend to continue for the near future. On the capacity side, despite thousands of companies having departed the market since 2022, the number of departures has not been as high as would normally be expected during a down market. Brogan accounts this to investors expecting to see some turbulence in the marketplace and being willing to stick around longer than has traditionally been the case.
Parcel and last mile: Parcel volumes in 2023 were down by 0.5% compared to 2022. Simultaneously, there has been a move away from UPS and FedEx, both of which saw their year-over-year parcel volumes decline in 2023. Nontraditional competitors have taken larger portions of the parcel volume, including Amazon, which passed UPS for the largest parcel carrier in the U.S. in 2023. Additionally, there has been an increasing use of regional providers, as large shippers continue to shift away from “single sourcing” their carrier base. Parcel volumes have increased in 2024, mostly driven by e-commerce. Brogan expects regional providers to claim “the lion’s share” of this volume.
Rail: In 2023, Class I railroads experienced a challenging financial environment, characterized by a 4% increase in operating ratios, a 2% decline in revenue, and an 11% decrease in operating income compared to 2022. These financial troubles were primarily driven by intermodal volume decreases, service challenges, inflationary pressures, escalated fuel and labor expenses, and a surge in employee headcount. The outlook for 2024 is slightly more promising, according to Kearney. Intermodal, often regarded a primary growth driver, has seen increased volumes and market share. Class I railroads are also seeing some positive operational developments with train speeds increasing by 2.3% and terminal dwell times decreasing by 1.8%. Finally, opportunities are opening up for an expansion in cross-border rail traffic within North America.
Air: The air freight market saw a steep decline in costs year over year from 2022 to 2023. Rates in 2024 began flat before starting to pick up in the summer, and report authors expect to see demand increase by 4.5%. Part of the demand pickup is due to disruptions in key sea lanes, such as the Suez Canal, causing shippers to convert from ocean to air. Meanwhile, the capacity picture has been mixed with some lanes having a lot of capacity while others have none. Much of this dynamic is due to Chinese e-commerce retailers Temu and Shein, which depend heavily on airfreight to execute their business models. In order to serve this booming business, some airfreight providers have pulled capacity out of more niche markets, such as flights into Latin America or Africa, and are now using those planes to serve the Asia-to-U.S. or Asia-to-Europe lanes.
Water/ports: The recent “State of Logistics Report” indicated that waterborne freight experienced a very steep decline of 64.2% in expenditures in 2023 relative to 2022. This was mostly due to muted demand, overcapacity, and a normalization from the inflated ocean rates seen during the pandemic years. After the trough of 2023, the market has been seeing significant “micro-spikes” in rates on some lanes due to constraints caused by geopolitical issues, such as the Red Sea conflict and the U.S. East and Gulf Coast ports strike. Kearney foresees a continuation of these rate hikes for the next few months. However, over the long term, the market will have to deal with the overcapacity that was built up during the height of the pandemic, which will cause rates to soften. Ultimately, however, Brogan said he did not expect to see a return to 2023 rate levels.
Third-party logistics (3PLs): The third-party logistics (3PL) sector is facing some significant challenges in 2024. Low freight rates and excess capacity could force some 3PLs to consolidate, especially if they are smaller players and rely on venture capital funding. Meanwhile, Kearney reports that there is some redefining of traditional roles going on within the 3PL-shipper ecosystem. For example, some historically asset-light 3PLs are expanding into asset-heavy services, and some shippers are trying to monetize their own logistics capabilities by marketing them externally.
Freight forwarding: Major forwarders had a shaky final quarter of 2023, seeing a decline in financial performance. To regain form, Kearney asserts that forwarders will need to increase their focus on technology, value-added services, and tiered servicing. Overall, the forwarding sector is expected to grow at slow rate in coming years, with a projected annual growth rate of 5.5% for the period of 2023–2032.
Warehousing: According to Brogan an interesting phenomenon is occurring in the warehousing market with the average asking rents continuing to rise even though vacancy rates have also increased. There are several reasons for this mixed message, according to the “State of Logistics” report, including: longer contract durations, enhanced facility features, and steady demand growth. A record-breaking level of new construction and new facilities, however, have helped to stabilize rent prices and increase vacancy rates, according to the report authors.
Path forward
What is the way forward given these uncertain times? For many shippers and carriers, a fresh look at their networks and overall supply chains may be in order. Many companies are currently reassessing their distribution networks and operations to make sure that they are optimized. In these cost-sensitive times, that may involve consolidating facilities, eliminating redundant capacity, or rebalancing inventory.
It’s important to realize, however, that network optimization should not just focus on eliminating unnecessary costs. It should also ensure that the network has the right amount of capacity to response with agility and flexibility to any future disruptions. Companies must look at their supply chain networks as a whole and think about how they can be utilized to unlock strategic advantage.
The notice of proposed rulemaking suggests a new standard that would require that:
certain pipeline, freight railroad, passenger railroad, and rail transit owner/operators with higher cybersecurity risk profiles establish and maintain a comprehensive cyber risk management program;
these owner/operators, and higher-risk bus-only public transportation and over-the-road bus owner/operators, currently required to report significant physical security concerns to TSA to also report cybersecurity incidents to CISA; and
higher-risk pipeline owner/operators adopt TSA's current requirements for rail and higher-risk bus operations to designate a physical security coordinator and report significant physical security concerns to TSA.
The publication of a “notice of proposed rulemaking” in the Federal Register typically begins a 60-day period for public comment from any interested party, and an additional 30 days for reply comments.
"TSA has collaborated closely with its industry partners to increase the cybersecurity resilience of the nation's critical transportation infrastructure," TSA Administrator David Pekoske said in a release. "The requirements in the proposed rule seek to build on this collaborative effort and further strengthen the cybersecurity posture of surface transportation stakeholders. We look forward to industry and public input on this proposed regulation."
The notice came a week after a White House representative warned the trucking freight industry that the People’s Republic of China (PRC) has remained the most active and persistent cyber threat to the U.S. government, private sector, and critical infrastructure networks. The briefing came from a member of the administration’s Office of the National Cyber Director, in an address to attendees at the National Motor Freight Traffic Association (NMFTA)’s Cybersecurity Conference.
“In January, the National Cyber Director testified in front of Congress along with colleagues from CISA, NSA, and the FBI about this threat from the PRC, dubbed Volt Typhoon,” speaker Stephen Viña said in his remarks. “Volt Typhoon conducted cyber operations focused not on financial gain, espionage, or state secrets but on developing deep access to our critical infrastructure. This includes the energy sector transportation systems, among many others. A prolonged interruption to these critical services could disrupt our ability to mobilize in the event of a national emergency or conflict and can create panic among our citizens. Ultimately, if trucking stops, America stops.”
Online merchants should consider seven key factors about American consumers in order to optimize their sales and operations this holiday season, according to a report from DHL eCommerce.
First, many of the most powerful sales platforms are marketplaces. With nearly universal appeal, 99% of U.S. shoppers buy from marketplaces, ranked in popularity from Amazon (92%) to Walmart (68%), eBay (47%), Temu (32%), Etsy (28%), and Shein (21%).
Second, they use them often, with 61% of American shoppers buying online at least once a week. Among the most popular items are online clothing and footwear (63%), followed by consumer electronics (33%) and health supplements (30%).
Third, delivery is a crucial aspect of making the sale. Fully 94% of U.S. shoppers say delivery options influence where they shop online, and 45% of consumers abandon their baskets if their preferred delivery option is not offered.
That finding meshes with another report released this week, as a white paper from FedEx Corp. and Morning Consult said that 75% of consumers prioritize free shipping over fast shipping. Over half of those surveyed (57%) prioritize free shipping when making an online purchase, even more than finding the best prices (54%). In fact, 81% of shoppers are willing to increase their spending to meet a retailer’s free shipping threshold, FedEx said.
In additional findings from DHL, the Weston, Florida-based company found:
43% of Americans have an online shopping subscription, with pet food subscriptions being particularly popular (44% compared to 25% globally). Social Media Influence:
61% of shoppers use social media for shopping inspiration, and 26% have made a purchase directly on a social platform.
37% of Americans buy from online retailers in other countries, with 70% doing so at least once a month. Of the 49% of Americans who buy from abroad, most shop from China (64%), followed by the U.K. (29%), France (23%), Canada (15%), and Germany (13%).
While 58% of shoppers say sustainability is important, they are not necessarily willing to pay more for sustainable delivery options.