5 states get an 'F' for logistics health

AUTHOR

Nicole Ault

PUBLISHED

June 19, 2018

Dive Brief:

• Five states — Hawaii, Maine, New Hampshire, New Mexico and Rhode Island — received a failing grade for logistics industry health in Conexus Indiana's annual Manufacturing and Logistics Report Card for the United States, released this month. 
• For those states and others that received low scores, policies that invest in infrastructure and human capital will help, said Srikant Devaraj, research economist and assistant professor at Ball State University's Center for Business and Economic Research (CBER), in a phone interview with Supply Chain Dive.
• Logistics health affects other sectors, too, Devaraj said. The report graded each state in eight categories other than logistics industry health, including manufacturing industry health, human capital and productivity and innovation.

Dive Insight:

The report card signals no dramatic changes from year to year, but for states that performed poorly, it's a sign that policy changes are in order, said Devaraj.

The report "tells states doing poorly to maybe make policy changes at the grassroots level," Devaraj said. Small changes go a long way: "Once you make policy changes in one category, it affects other categories."

CBER considers 11 factors in logistics health. Relevant factors include government expenditure on highways, information from a census on commodity flows by road and rail and the industry's share of personal income and of employment in each state.

Many of these factors point to bigger trends, Devaraj said. For example, commodity flows — which includes the value and tonnage of shipped goods —correlate with business development. Investment in infrastructure tends to help manufacturing.

"Logistics and manufacturing go hand in hand," he said, noting that a good logistics system is important when there's a rise in demand for manufacturing. In general, enhanced capacity and technology are improving logistics in the U.S., and automation is key to that improvement.

Indeed, Penske's 2017 State of Logistics Report emphasized a growth of new technologies in logistics, as shippers, carriers, warehouse operators and others along the supply chain adapt automated systems to meet consumers' demands for speedier deliveries.

"Beyond 2017, logistics is moving toward a fully digital, connected, and flexible supply chain optimized for e-commerce and last-mile, last-minute delivery," the report said."The next-generation supply chain will enhance fulfillment opportunities and drive efficiencies through technologies ranging from big data and predictive analytics to artificial intelligence and robotics."

Even with technological growth, though, policy changes to improve logistics should focus on investing in infrastructure and human capital, Devaraj said.

"Those technologies are there, but still you need people who can work with them," he said. "Education is a key component, no matter which industry."