FedEx serves as supply chain barometer


fedex shippingIndustry watchers wondering how well supply chain processes are likely to perform in the months ahead can look to FedEx, according to Supply Chain Digest. The source stated that FedEx's place in a majority of logistics sectors means that its performance contains larger lessons for the marketplace. According to the source, insiders at FedEx see slow growth ahead rather than a rapid boost for the supply chain field.

Lessons from a shipping company

Supply Chain Digest stated that FedEx makes its own projections of the economy's future direction. These elaborate and well-supported prediction processes, according to the source, expect the U.S. gross domestic product to increase by 2.2 percent in 2012 and industry to spike by 4.3 percent. The company guessed at a similar growth rate for 2013, with a 2.4 percent GDP boost.

According to the source, FedEx executives see a shift taking place in supply chain management when economic growth is slow. Instead of a constant focus on speeding up shipping, firms will take stock of their transportation options and see if there is a more affordable method available. This runs somewhat counter to expectations in an e-commerce driven market, where customers have come to expect fast shipping times.

"Any time you see softness in the economy, you see some mode shift where customers re-evaluate their supply chains and look to see if they could rely on a slower mode of transportation in some cases or the lack of a time-definite service," said FedEx CEO Fred Smith, according to the source.

Logistics status

A recent report by the Council of Supply Chain Management Professionals offered a snapshot view of United States' logistics procedures. The results were decidedly mixed, with companies changing their inventory management strategies and different shipping methods growing at disparate rates. While trucking and rail rates rose, air cargo fell. Logistics cost for the year, in general, were up.

According to the survey, some transit methods thrived in 2011. Others could not gain, despite rising interest from international buyers and sellers. The source found air exports at a high but air revenue down by 3 percent domestically and 1 percent internationally. Shippers moving products by ship found themselves burdened by too much capacity, high expenses and general declines in service. Moving products over land was a stronger option, with truck rates up despite a decline in volume.