Will the Cost of Logistics Increase This Year?

By July 17, 2015 Logistics News

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As the economy continues to improve and the logistics industry continues to grow in the United States and around the world, it may not be any surprise that the cost of doing business in the logistics industry continues to go up. What may be surprising, however, is that logistics costs have been at historically low levels until now.

In fact, according to The Wall Street Journal, the cost of nearly everything related to logistics, from hiring truck drivers, to warehousing, and even gasoline for the past several months, has been relatively low. Now due to inflation, labor shortages, and increased regional and global demand, all of those costs are about to make a jump.

First, demand for warehouse space, shipping, and other logistics services is only increasing. As the global economy expands and more people are buying more goods, the need for more places to store and move those goods increases along with it. Since we’re working with the same infrastructure and there is already a relative shortage of personnel such as truck drivers, the cost of using these resources have nowhere to go but up.

Second, the Federal Reserve is expected to raise interest rates later this year, the first time since 2006. Since the Recession, the benchmark rate has been near zero percent. Now experts anticipate median interest rates to increase by over a full percentage point by the end of 2016.

But most logistics companies and those seeking their services shouldn’t be concerned. Most 3PLs, warehousers, and shippers have enough capacity to deal with current demand. Plus, this is a future-focused industry that is quick to adopt new technologies and adjust to customer demands and needs.

In fact, we’re expanding here at TAGG to meet the demands of the logistics industry in the future. Now with distribution centers on both coasts and the Midwest, we can ship anywhere in the US in just 1-3 days! Contact us today to learn more.