In 2021, U.S. business inventories dropped to near historic lows, and the costs associated with storing, transporting and financing goods rose considerably. But the logistics sector has begun to enable changes which should benefit manufacturers, retailers and consumers alike, said Balika Sonthalia, partner at Kearney and lead author of the annual 2022 State of Logistics Report, released by The Council of Supply Chain Management Professionals (CSCMP), June 21.

“Competing in today’s global marketplace is not just about the high-quality products supply chains plan, procure, make and deliver,” said Mark Baxa, CSCMP president and CEO. “It’s also about impacting the global community and doing vital work like making and delivering life-saving vaccines.”

The report found that U.S. business logistics costs, or USBLC, rose 22.4% in 2021 to $1.85 trillion, representing 8% of 2021’s $23 trillion gross domestic product. Inventory-carrying costs rose by 25.9% in 2021, and transportation costs jumped 21.7% — in ocean by 26.3%, for road by 23.4% and for parcel carrier services by 15.2%. The effects of the pandemic, including rollercoaster consumer demand and high inflation has left U.S.-based supply chains out of sync, the report concluded, while observing that some are adjusting to short-term changes and perhaps uncovering long-term solutions.

Some of these involve efforts to increase multi-shoring, which are expected to accelerate. Companies are seeking to have operations move closer to the U.S., to respond quicker to fluctuating market demands. Meanwhile, last-mile delivery volume is trending upward, partly driven by e-commerce sales, which grew 10% last year (to $871 billion), accounting for 14% of U.S. retail sales.

Trucking freight continues to see more volume and opportunities, the report’s authors said. With road freight accounting for the largest segment of the U.S. supply chain spend, it expanded by 23.4%, to an $831 billion spend. “We have seen an incredible amount of resiliency among private truck fleets and dedicated contract carriage truck fleets,” said Andy Moses, senior vice president of sales and solutions, Penske Logistics. “Demand has been up sharply year-over-year and these fleets continue to manage the complexities they face in the trucking supply chain including headwinds caused by shortages of parts, equipment, drivers, and most recently rising fuel costs.”

“We’re especially heartened by the progress the sector has made in rebuilding supply chain resilience via multi-shoring, automation and optionality in last-mile distribution,” said Sonthalia. “This will also improve customer service and bring efficiencies for all parties.”

Sonthalia went on to note that “this is not the first time we’ve seen logistics go through a cycle,” where inventory levels drop low and logistics assets are scarce, sending costs high, then the industry ramps up and gains capacity and efficiencies, pushing costs down again.

The 2022 State of Logistics Report is the 33rd annual publication, produced by CSCMP in partnership with Kearney, IHS Market and Penske Logistics.