Logistics costs as a percentage of GDP rose to 9.9 percent last year from

9.4 percent in 2005 but the increase is no cause for alarm, according to the annual State of Logistics report from the Council of Supply Chain Management Professionals.

Companies appear to be doing "a very commendable job" in managing their supply chains, said consultant Rosalyn Wilson, the author of the report, which was issued Wednesday.

In the early 1980s, the ratio of logistics costs to GDP topped 16 percent.

Until last year it had been below 10 percent. Wilson said, though, that the increase was not necessarily a sign of problems, but "reflects that we are doing things differently or, put another way, [that] managing logistics in today's complex global environment costs more."

Wilson said logistics costs increased in 2006 because of a 9.4-percent increase in transportation costs, primarily due to fuel surcharges, and a 13.5-percent jump in inventory carrying costs.

The increase in inventory costs resulted largely from higher interest rates, but Wilson said part of the increase was due to changes in how companies manage inventories to increase sales and reduce overall business costs.

"Inventory carrying costs have risen dramatically because more inventory is in the system to ensure that customer demand can be met," she said.

More companies are finding it beneficial to take advantage of low-cost international sourcing, and are willing to pay a little extra to gain those economies. Logistics managers' objective used to be to always minimize inventory but, "with a global economy, we can't operate that way any more."

Retailers and manufacturers are requiring suppliers to maintain more inventory and to store it in places where goods are available for quick, frequent replenishment, Wilson said. This change is reflected in distribution centers and warehouses, where some of the fastest growth is in small regional facilities.

The changing attitude toward logistics is being influenced by recognition by top executives of supply-chain management's role in their organizations, Wilson said. "One of the most important trends that has emerged in the last couple of years is more companies viewing the big picture and trying to understand their entire supply chain, not just their link," she said.