Logistics Spend

Part
01
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Part
01

Logistics Spend Healthcare

Estimates suggest that the logistics cost of healthcare institutions in the United States is roughly $1.26 trillion.

Logistics Spend Healthcare

  • The logistics cost of healthcare institutions in the US is roughly $1.26 trillion.
  • This cost is estimated to have grown in the last three years at CAGR 2.94% from about $1.155 trillion in 2016 to $1.26 trillion in 2018.
  • The cost of logistics activities in healthcare institutions represents about 30% to 40% of healthcare spending.
  • Healthcare institutions spending amounted to $3.6 trillion in the United States in 2018.
  • In 2016, healthcare spending in the country amounted to $3.3 trillion.

RESEARCH STRATEGY

To determine the logistics cost of healthcare institutions, the research team searched through government and market research databases, including SelectUSA.gov, Statista, and NCBI. Although most of these databases provide information on the logistic sector in the US, they leave out statistics regarding the cost incurred by healthcare firms. However, based on the most recent data available, an analysis at NCBI presented us with the cost of logistics activities as a percentage of healthcare spending. Additionally, a study at CMS.gov revealed the U.S. health care spending in 2018. Using these two metrics, we were able to triangulate the amount spent on logistics by the healthcare industry.

The next step entailed determining the growth of the cost in the last 2-3 years. To accomplish this, we sought for reasonable metrics, from industry-related sources, such as the American Medical Association, that the team could use in triangulating the result.

Determining The Logistic Cost of Healthcare Institutions

On average, healthcare companies in the US spend 35% {(30+40)/2} of healthcare spending on logistics.
In 2018, healthcare spending in the US was about $3.6 trillion
Therefore, the cost of logistics was roughly $1.26 trillion in 2018.

Determining growth in logistics costs in the last 2-3

Assuming that the growth of logistics costs changed with the cost of healthcare spending, then:

In 2016, healthcare spending in the US was about $3.3 trillion
Average healthcare spending on logistics — 35%
Therefore, the cost of logistics was roughly $1.155 trillion in 2016.

Using the CAGR calculator, where the initial value (i) is $1.155 trillion, final value (f) is $1.26 trillion, and period (n) is 3 years, the CAGR (growth rate) is 2.94%.
Part
02
of two
Part
02

Logistics Spend Food Stores

The food truck industry in the United States has generated a revenue of $1 billion in the year 2019 and the number of businesses involved is 23,872. The annual growth of the industry from the year 2014 to 2019 is 6.8%. We could not find any information on the logistics cost of food stores and how it has changed in the last 2-3 years.

Helpful Findings

  • It's estimated that it costs $0.37 to deliver a box of cereal to the breakfast table in the United States. At the end of 2018, around 28.3 million pounds of apples were cold-stored in warehouses while dairy products were over 1.5 billion pounds. At the end of February 2019, Birds Eye Steamfresh was the second-ranked frozen mixed vegetable brand.
  • Consumers, government entities, and businesses spent $1.71 trillion on food and beverages in grocery stores and other retailers and on away-from-home meals and snacks in 2018. In the United States, retail food prices partially reflect farm-level commodity prices, cost of packaging, transportation, processing, and other marketing costs.
  • In 2018, businesses spent $1.64 trillion on transportation and logistics services in the United States, a jump of 11.4% from the prior year. The rise was mainly due to the growth in tight freight hauling capacity driving up shipping rates.
  • Logistics costs rose across the board in 2018. Inventory carrying costs led the way with a 14.8% jump to $493.7 billion. Transportation costs rose 10.4% to $1.04 trillion while inter-modal shipping increased by 28.7%. The percentage increase in the cost of rail transport was 12.9% water and ports were 12.8% while the pipeline was 12.7%.
  • Motor carrier costs rose 10.1% to $668.8 billion in 2018 compared to the previous year. Spending on full truckload transportation rose by 7.6% to $296.1 billion and less-than-truckload transportation increases by 8.3% to $71.8 billion.
  • The overall spending on business logistics reached 8% of the total United States Gross Domestic Product of $20.5 trillion in 2018 which was the highest level in 10 years and a significant bump up from 7.5% of GDP in 2017 and 2016 according to CSCMP.
  • For each "dollar spent in 2017 by consumers in the United States on domestically produced food, including both grocery store and dining out purchases, 36.7 cents went to pay for services provided by food service establishments, 15.0 cents to food processors, and 12.6 cents to food retailers. At 3.8 cents, energy costs per food dollar were below the 4.5-cent."
  • In Q2 2019, the Consumer Price Index for the food-at-home increased 1.0% over Q2 2018. "The food-at-home CPI is weighted by average consumer expenditure shares." Fresh vegetable prices rose by 5.2% while egg prices decreased by 14.9% over the same period.

Research Strategy

The research team searched for information about the logistics cost of food stores and how the cost has changed in the last 2-3 years. We searched various business journals and magazines such as Forbes, The Wall Street Journal, and logistics management journals for information on the logistics cost of food stores in the United States. The team only found information on the logistics industry as a whole and not the logistics cost of food stores specifically. The information found on food could not conclusively give the logistics cost of food stores.

We also searched for various websites such as IBISWorld and MarketWatch for information about the logistics cost of food stores in the United States. We only found information on the cost, the revenue, and growth of the logistics industry as a whole and no data were found on the logistics cost of the food industry individually. We then searched for statistical data and reports such as Statista, CSCMP, and United States National Transportation Statistics on the logistics industry. The team only found information on the entire logistics industry in the United States but not the logistics cost of the food store as an independent unit.

Next, we attempted to conduct a triangulation to find the answer. First, we searched for the total logistics cost for all businesses in the United States, and then search for food stores' share of this figure. We could have used this figure to estimate the total spend on logistics for food stores in the nation. For this, we explored sites such as Statista, Allied Market Research, and Grandview Research, among others. Though we found the amount spent on logistics in 2018 ($1.64 trillion), we were unable to find food stores' share.

Finally, we searched for historical data on the logistics cost of food stores in the United States. We were hoping to find earlier figures for multiple years to calculate the annual growth rate through the years until 2019. The annual growth rates then could have been used to estimate logistics costs for food stores for several years. For this information, we visited sites such as GlobeNewsWire, Businesswire, etc. However, none of the figures were available for the food store space specifically. Most of the reports we came across provided global or U.S. figures for the overall logistics market.

Sources
Sources