December Logistics Managers' Index: Freight Prices, Utilization Fall

For the second straight month, the December Logistics Managers' Index found Transportation Prices at an all-time (as in, six-year) low with both prices and Transportation Utilization contracting. Transportation Prices measured at 36.9, down .5 from November, while Transportation Utilization dropped 1.9 to 48.1 - moving from growth to contraction for the first time since the early days of the pandemic in April 2020. In spite of the weakness of the transportation metrics - there was also continued high Transportation Capacity - the LMI actually ticked up in December as the holiday shopping season impacted inventory and warehousing particularly. After dropping seven of the last eight months, the index went up one point to 54.6, a fact the report attributes to a stronger than expected holiday shopping season and keeping it above the overall moderate growth threshold of 50. According to Mastercard, holiday spending was - perhaps somewhat surprisingly - up 7.6% year over year, while e-commerce rose even more, at 10.6%. This led to Inventory Levels continuing to moderate from where they were earlier in the year (though they increased from 54.8 in November to 57.3) and Warehousing Utilization to jump 7.3 to 64.1. Warehousing Prices are still high, with an index figure of 72.1, though that marked a decline of 2.3 from November. Inventory Costs also remain elevated but did drop a bit month to month, from 73.4 to 72.8. The Inventory and Warehousing machinations according to the report are largely due to downstream vs upstream, as downstream respondents (i.e. retailers) held higher inventory levels with more limited warehousing to sell their merchandise. Warehousing Capacity continues to contract - for 28 straight months now - while carriers look to create more, and the aforementioned Transportation Capacity metric likely suffered because inventory was already staged with little need for further movement.

By the Numbers

See the summary of the December 2022 Logistics Managers' Index, by the numbers:

About the Logistics Managers' Index (LMI)

Researchers at Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno - in conjunction with the Council of Supply Chain Management Professionals (CSCMP) - issue the report. The LMI score is a combination of eight unique components that make up the logistics industry, including: inventory levels and costs, warehousing capacity, utilization, and prices, and transportation capacity, utilization, and prices. The LMI is calculated using a diffusion index, in which any reading above 50.0 indicates that logistics is expanding; a reading below 50.0 is indicative of a shrinking logistics industry. The latest results of the LMI summarize the responses of supply chain professionals collected in December 2022.

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