The freight market is showing signs of life in January's Logistics Managers' Index, with Transportation Utilization back in the black and Transportation Prices rebounding from last month's all-time lows. Those increases helped the overall index gain ground for the second straight month, rising three points to 57.6. December and January marked the first back-to-back increases since February and March of last year. In fact, every sub-index - both good and bad - went up in January. The Transportation Utilization component saw the most dramatic gains, increasing 8.9 points and crossing the threshold from contraction to growth at 57.0 - its highest figure since September. Transportation Prices rose solidly as well - 5.1 points - but the indicator remains stuck in a contracting direction at 42.0. Transportation Capacity did tick up again as well, but at just 0.7 points, the other transportation indicators may be catching up to absorb at least some of it. Warehousing Capacity is still in a contracting mode, but it gained 1.7 points last month, moving closer to a growth stance. Warehousing Utilization and Costs remain high with the lack of capacity, both increasing about three points. On the inventory side, Inventory Levels were up significantly - 5.2 points - while Inventory Costs rose at a lower rate - 1.4. The monthly index report expresses optimism that last month's signals suggest rather than simply shifting inventory around, the market is actually replenishing inventory as supply chains are "coming back to life." This jibes with logistics pros' look ahead to the future of the index, in which they predict increases across the board, indicating a potential return to slow, steady freight market growth.
By the Numbers
See the summary of the January 2023 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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