A Quick Look at Worldwide Logistics Growth

logistics growth

The United States of America is a global leader in multiple industries. The strength of our workforce, diversity of business types, and protection from the world’s best military gives the US a strong foundation to succeed in the global economy. These attributes also contribute to the impact that the US has on worldwide logistics growth. 

In 2018, more than $1.5 trillion was spent by manufacturers, retailers, and consumers on shipping. It’s an industry that is expanding, due to improved economics, more disposable income, and the ease of purchasing due to the rapid growth of e-commerce shopping. 

With all that said, the future of logistics and supply chain movement looks bright and promising. So, let’s take some time to highlight some of the statistics of the global supply chain, and a few areas that continue to drive this industry. 


Taking a Close Look at Global Logistics Growth

Heading into the fiscal year 2018, growth was certainly predicted. However, nobody expected the rapid expansion that actually occurred. The amount of money spent on the movement of freight and commodities rose a whopping 11 percent. In total, the US logistics costs nearly eclipsed $1.65 trillion, which represented 8 percent of our gross domestic product. 

There are multiple reasons why supply chain costs have increased over the last year. Online purchasing and sales grew by an impressive 14.2 percent. The increase in spending is mainly due to the fact that costs for shipping individual products are much more expensive than a complete pallet or cargo container. Additionally, costs for operating e-Commerce fulfillment centers are also on the rise, which contributes to the total revenue. 

The trucking industry also has a significant impact on the global supply chain financing. With a significant driver shortage impacting the availability, supply and demand economics have exponentially increased shipping rates. However, consumers are willing to pay the increased shipping charges to receive their products quickly. 

Additionally, a global trade war and threatening of rising tariffs, starting with cross-border shipping between the US, Canada, and Mexico likewise helped to increase spending on shipping. The uncertainty of tariff increases stimulated many retailers, manufacturers, and distributors to increase inventory levels, in case future tariffs are increased.


Areas of Strength in Global Logistics

There are several specific areas within the supply chain that are experiencing growth.

In 2018 specifically, the introduction of precision railroad scheduling helped to improve the profitability in this shipping mode. Likewise, the growth of e-commerce also helps to contribute to the health of the global supply chain. 

The expansion of oil and gas exploration and production, along with the lifting of several regulations in the United States have also shown to be areas of strength. It’s also a fact that a renewed focus on sustainability efforts in freight movement has introduced new opportunities for environmentally conscious businesses. 


Trends in Technology 

Technology also has a strong impact on the global supply chain.

In fact, one of the biggest is the infusion of blockchain technology. This technology is typically used in the cryptocurrency market but is now powering transportation management solutions.

However, it’s also an area of opportunity, for other supply chain partners to work together. Participation between logistics stakeholders to develop blockchain solutions continue to benefit the supply chain.

The introduction of 5G mobile networks is another area that helps supply chain partners connect faster than ever before. Over the next three years, the growth of 5G networks will decrease shipping delays. More than that, they will increase communication speeds, and reduce lapse in coverage areas. 

The global supply chain is indeed strong. It’s an industry that will continue to grow as consumers have more disposable income, pricing remains fluent, and trade tariffs become balanced. The creation of the US, Canada, and Mexico trade agreement has yet to be officially ratified. However, once it does, cross-border shipping will grow as well. 


Final Thoughts

At the heart of supply chain movements are expert 3PLs like Redwood Logistics. Logistics professionals are the main contributing factor to all of this growth. Maybe not directly... but they are responsible for the efficiency of freight movement on a rather large scale.

Companies involved in supply chain movement depend on the expertise of well-rounded 3PLs to help them improve their operations.

If you operate a business within the global supply chain and would like to improve the efficiency of your network, contact Redwood Logistics today.