Fast Facts on the Global Supply Chain

(Note: All monetary values are in US dollars.)

A huge industry

The cost of logistics in the US was $1.1 trillion in 2009; 7.7% of gross domestic product (GDP), according to CSCMP’s 21st Annual “State of Logistics Report®”. US expenditures on logistics are larger than the national GDP of all but 12 countries. (For example, US logistics expenditures are larger than the GDP of Mexico.)
US expenditures on transportation alone ($688 billion) are larger than the GDPs’ of all but 16 countries (World Bank GDP data).
The transportation-related workforce in December 2010 totaled 4.24 million people, including those in warehousing, according to United States Bureau of Labor Statistics (BLS Employment Data Series, December 2010 – www.bls.gov/iag/tgs/iag493.htm). This represents 3.2% of the total US workforce.

An efficient industry

In 1980, logistics represented 17.9% of US GDP. Today, it is 7.7%.
By comparison, estimated logistics costs represent 15 to16% of China’s GDP and 11 to 13% of India’s GDP.
Logistics costs in Europe are significantly lower due to a combination of less geography and long-established transportation infrastructure, including rail, rivers, and highways. On average, logistics costs represent 7.15% of European GDP.
It is estimated that the total logistics costs associated with delivering a $3.60 box of cereal from the field to the consumer’s table is about $.37 in the US. The net retail profit is about $.05.

US Logistics Infrastructure (according to 2008 US Government Bureau of Transportation Statistics, RITA)

Highways

47,000 miles of interstate highways
117,000 miles of other National Highway System roads
3.9 million miles of other roads

Rail

94,313 miles by Class I freight railroads in the United States
16,930 miles by regional freight railroads
28,891 miles by local freight railroads
21,708 miles by Amtrak (passenger)

Navigable Channels

25,320 miles

Pipelines

Oil pipelines—169,322 miles
Gas pipe transmission—298,993 miles
Gas pipe distribution—1,205,991 miles

Interstate Motor Carriers—715,000 carriers
Pipeline Carriers—2,242 carriers
Marine Vessel Companies—652 companies
Air Carriers (major)—22 companies
Railroads (Class I)—7 companies

Container Volumes (US Bureau of Transportation Statistics, 2008)

28.2 million TEUs* of containers moved through US ports. *(TEUs = twenty-foot equivalent units. One 20-foot container equals one TEU, and one 40-foot container equals two TEUs.)
One container in every ten that is engaged in global trade is either bound for or originates in the United States, accounting for 10% of worldwide container traffic.
On a typical day in 2008, US container ports handled an average of 77,000 TEUs, up from 37,000 TEUs per day in 1995.
Between 1995 and 2008, world container traffic more than tripled in volume from 137 million TEUs to 387 million TEUs, growing at an average annual rate of about 8%.
On a typical day in 2008, container throughput for the New York/New Jersey port, the nation's third largest container port, was 5,265,053 TEUs.
In 2008, three US ports—Los Angeles, Long Beach, and New York/New Jersey— ranked among the world’s top 20 container ports when measured by TEUs, placing
16th, 17th, and 20th, respectively.
Singapore was the largest container port in 2008, handling almost 30 million TEUs. Shanghai and Hong Kong were second and third in terms of TEU volume. Los Angeles, being the largest US container port, handled only 7.85 million TEUs in 2008.
China was the leading containerized merchandise trading partner of the US in 2008.

World Export Volumes (CIA World Fact Book, 2010)

The leading exporter in 2010 was China with $1.51 trillion in exports. China was followed by Germany with $1.34 trillion, the US with $1.27 trillion, and Japan with $736 billion.
China accounts for roughly 10% of all global exports, while the US accounts for 8.7%, and Japan accounts for nearly 5%. (World Trade Organization statistics through 2009).
Total world exports exceeded $12.5 trillion in 2010.

US trade with China (according to US-China Business Council Forecast, published June 2009)

In 2009, US exports to China totaled $69.6 billion, compared to $16.2 billion in 2000. Alternatively, US imports from China totaled $296 billion, for a net trading deficit of $227 billion with China. The US is China’s top export destination, followed by Hong Kong, Japan, and South Korea
China’s top import suppliers are Japan, $131 billion; South Korean, $103 billion; Taiwan, $86 billion; and the US is fourth
The US is China’s largest trading partner, with $366 billion in total trade.
Although China exports $1.21 trillion of goods and services, it also imported $1.01 trillion worth of goods in 2009.

US Trade with the World (US Census Bureau, Foreign Trade Statistics, 2009)

In terms of total trade (imports and exports), Canada is the largest trading partner with the US, with total trade of $430 billion in 2009. The second largest is trading partner is China, with total trade of $366 billion, followed by Mexico with total trade of $306 billion.
China is the third largest US export market with about $70 billion in imports from the US. Canada is the leading export market for the US, with $205 billion in imports from the US; Mexico is second with $129 billion in imports from the US.
China is now the second largest supplier of US imports, trailing only Canada.

Supply chain’s impact on company valuation

Statistical evidence continues to mount suggesting companies with well-run supply chains continue to outperform other companies. According to Boston-based AMR Research, the average total return of companies in AMR’s “Supply Chain Top 25” in 2007 was 17.89%, compared with returns of 6.43% for the Dow Jones Industrial Average and 3.53% for companies in Standard & Poor’s 500 Index.
According to a Georgia Tech study, supply chain glitches torpedo shareholder value. After adjusting for industry and market movements, the total shareholder value loss associated with a glitch can be as high as 25%. These results are based on estimating the loss in shareholder value from 838 supply chain glitches that were made known publicly by the news media from 1989 through 2001. These news stories appeared in The Wall Street Journal or the Dow Jones News Service and were about publicly-traded companies that experienced production or shipping delays.
A study by Dr. Thomas Speh of Miami University of Ohio showed that when a company adopts a new distribution or logistics innovation, the company’s stock price increases.
A study by Bain & Company showed that companies employing sophisticated supply chain methods enjoyed 12 times greater profit than companies with unsophisticated methods.
A real correlation has been drawn between companies’ financial success and the depth and sophistication of their supply chains. This fact is illustrated by a number of companies. According to Dell, the supply chain is “the biggest leverage point we have.” At Spanish clothing manufacturer/retailer Zara, “the supply chain is the business model.” And international trading company Li & Fung opines that “customer value lies in our ability to architect and operate supply chains.” (“A Global Study of Supply Chain Leadership and Its Impact on Business Performance,” Accenture study, 2008)
Every organization is impacted by the supply chain because every organization has one.