The leap month of February continued a guardedly positive trend for the Logistics Managers' Index (LMI), as all eight sub-metrics remained in expansion territory for the second straight month. The overall index rose 0.9 to 56.5 last month, so the growth was less pronounced than the five point margin from December to January. But still, growth is growth.
Transportation Prices stayed in the black, up 1.8 to 57.6 - marking that metric's fastest growth rate in nearly two years. Transportation Utilization was basically in lockstep, up 1.5 to 56.5. However, Transportation Capacity bounced back up after dropping nearly nine points last month, gaining 6.4 to read at 60.9.
That increase in available supply certainly puts a damper on the idea of a full recovery being underway - even with greater demand reflected on the price side. In fact, authors say a key indicator of an end to the freight recession would be consecutive readings of Transportation Prices exceeding Transportation Capacity - something that hasn't yet happened.
Warehousing, which had been growing quickly in recent years, has slowed, with Warehousing Prices staying steady at 64.2 month to month and Warehousing Capacity dropping 1.3 to 52.8. Just like transportation though, one metric bucked the trend, with Warehousing Utilization jumping 7.6 - the largest increase of the month - to 66.3.
The remaining area is inventory, which saw Inventory Levels jumping 5.8 to 58.5 - that metric's fastest growth rate in a year and a suggestion that restocking is taking place. On the flipside, Inventory Costs saw the largest drop of the month, falling 3.9 to a still robust 62.9. Still, authors say inventory is flowing - with import volume up, particularly through West Coast ports which are up 90% from this time last year. That represents a definitively positive sign for the industry overall.
Speaking of positive, survey respondents are still showing optimism about the coming year, though slightly less than last month. The 12 months from now LMI projection registered at 61.8, down one point from last month, but still up from where it stands now and near the long-term average of 62.4. Authors say that suggests a prediction of a return to "normal" within the next year. Baked into those projections are especially optimistic views of Transportation Utilization and Transportation Prices, which respondents have at 77.1 and 68.3. The price expansion would resemble the astronomical growth last seen during the peak period of a couple years ago.
By the Numbers
See the summary of the February 2024 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 February 2024.
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