Fast Facts on the Global Supply Chain

A huge industry

• The cost of logistics in the US was $1.4 trillion in 2007; 10.1% of gross domestic product (GDP), according to CSCMP’s 19th Annual “State of Logistics Report®”. US expenditures on logistics are larger than the national GDP of all but ten countries. (For example, US logistics expenditures are larger than the GDP of Russia.)
• US expenditures on truck transportation alone ($635 billion) are larger than the GDPs’ of all but 16 countries.
• Transportation-related workforce numbers add up to 11.3 million people (8.6% of the total US labor force), according to United States Department of Labor statistics

The global trading village according to World Trade Organization statistics through 2005

• World merchandise exports have risen from $157 billion in 1963 to $10.159 trillion in 2005.
• The nations of the European Union lead the world in merchandise exports, accounting for $4.0 trillion in 2004 and representing 39% of all global merchandise exports. The US accounted for $904 billion, representing 8.7% of all global exports; China accounted for $762 billion, representing 7.3%; Japan accounted for $595 billion, representing 5.7% of all global exports.

US trade with China according to US-China Business Council Forecast, published June 2007

• In 1981, US trade with China was $5.7 billion. In 2005, US/China trade was estimated at $343 billion, 60 times greater than in 1981.
• The US is China’s largest trading partner and China is now the second largest supplier of US imports, trailing only Canada. 
• The US trade deficit with China, $232 billion in 2006, will continue to grow because of long-term economic benefits to the US.

China on trade according to statistics from the Ministry of Commerce of the People’s Republic of China

• In 2006, China imported $791 billion from its world neighbors, an increase of 19.9% over 2005, and exported $969 billion, an increase of 27.2% over 2005.
• Other Asian nations account for 66% of China’s imports and 48% of China’s exports.
• Significant investments are needed in China’s infrastructure and in its logistics industry. According to Professor Ju Songdong of Beijing Jiatong University, logistics services will have to grow 2.8% for every 1% increase in China’s GDP.

• In 1980, logistics represented 17.9% of US GDP. Today, it is 10.1%.
• By comparison, estimated logistics costs represent 22.3% of China’s GDP and 17% of India’s.
• 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 2005 or latest available US Government Bureau of Transportation Statistics

Highways 3.99 million miles	Interstate motor carriers 674,000
Rail (Class 1) 95,800 miles	Pipeline operators 2,166
Navigable channels 26,000 miles	Marine vessel companies 767
Pipelines 161,000 miles	Air carriers (major) 17
	Railroads (Class I) 7



• Over $1.5 billion in containerized shipments pass through US ports each day.
• Container shipments through US ports increased 94% from 1995 to 2005.
• China accounts for 43% of US import container shipments. 
• 36% of all inbound US container shipments pass through the ports of Los Angeles or Long Beach.

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, a company’s stock price can drop as much as 8% on the day a supply chain glitch is announced.
• 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.
• Every organization is impacted by the supply chain. Every organization has one.

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