Skip to content
Search AI Powered

Latest Stories

Logistics economy grew in March

Strong demand for warehousing and transportation continues, but inflation and rising fuel costs may cause market shift in the coming months, researchers say.

march-2022-lmi.png

The logistics economy expanded in March, continuing the industry’s strong growth run, but rising fuel prices and near-record level inflation may signal a shift in the coming months, according to the monthly Logistics Manager’s Index (LMI) report, released today.

The March LMI was up one percentage point compared to February, reaching an all-time high of 76.2 and maintaining a nearly two-year streak of above-average growth. An LMI reading above 50 indicates growth in the industry, and a reading below 50 indicates contraction. The LMI has remained above the 60-point mark since June of 2020 and has been above 70 since February 2021.


High costs and tight capacity in warehousing and transportation are fueling the strong pace of growth. Warehousing prices hit a record high during the month and capacity hit a record low, reflecting continued red-hot demand for warehouse space. Inventory costs also continued to climb, surpassing February’s record levels.

“Continued inventory congestion has driven inventory costs, warehousing prices, and overall aggregate logistics costs to all-time high levels,” the LMI researchers wrote. “This is putting even more pressure on already-constrained capacity.”

Transportation prices were up slightly compared to February, and transportation capacity continued to contract overall, indicating an ongoing imbalance in freight markets—but the LMI researchers said there were signs conditions may be easing in some markets. Upstream firms–including carriers, third-party logistics services (3PL) providers, and wholesalers–reported an increase in capacity during the second half of the month, potentially indicating a coming shift in the market, according to LMI researcher Zac Rogers, assistant professor of supply chain management at Colorado State University.

“It’s interesting to see how capacity loosened up in the second half of the month,” Rogers said, pointing to a transportation capacity reading of 55 for upstream firms during the last two weeks of March. “Certainly, we’re seeing some kind of shift.”

Rising fuel prices are largely the reason. A gallon of diesel fuel reached a record high average of $5.25 in mid-March, and the price of a gallon of regular gasoline surpassed $4 for the first time since 2008. Combined with near-record high U.S. inflation rates and a changing consumer economy, those factors may alter the logistics landscape later this year.

“The high costs of fuel may end up being the thing that finally slows down the runaway transportation market,” according to the LMI report. “The dramatic increase in fuel prices … seem to have put a relative damper on the previously insatiable freight demand. Consumers had been willing to absorb some increase in costs through 2021. However, the rate of inflation through the first quarter of 2022 is at such a rapid pace, the stimulus money that buoyed spending last year is largely gone, and consumer spending has shifted increasingly away from goods and towards services.”

The U.S. inflation rate reached 7.9% in February, the highest rate since January 1982 (8.4%).

The changing landscape may lead to a rebalancing of the freight market as the year unfolds, Rogers said.

“We may see some moderation in trucking,” he explained. “Prices are still going to be up, capacity will be tight, but not impossibly so [as we’ve seen recently].”

Other industry watchers agree that the pain of high costs is here for the long term. Brett Wetzel, a senior director at transportation management solutions firm Breakthrough , says it’s increasingly difficult for shippers and carriers to manage the current fuel market volatility in particular–a factor that drives up costs throughout the channel. Fuel is the second-largest operating cost for trucking companies–after driver costs—and when those costs rise considerably, they get passed along to shippers when goods are moved, he said.

“Rapid volatility adds cost to both [parties], and it creates a big challenge,” Wetzel said. “We expect continued pressure through 2022. We may see some relief in 2023, but we still won’t be back to 2021 [levels].”

Respondents to the March LMI report predicted that transportation prices, warehousing prices, and inventory costs will all continue to rise over the next 12 months.

The LMI tracks logistics industry growth overall and across eight areas: inventory levels and costs; warehousing capacity, utilization, and prices; and transportation capacity, utilization, and prices. The report is released monthly by researchers from 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).

Visit the LMI website to participate in the monthly survey.


This story was updated with additional information on April 7.

The Latest

More Stories

Warehouse automation project orders fell 3% in 2024

Warehouse automation project orders fell 3% in 2024

Warehouse automation orders declined by 3% in 2024, according to a February report from market research firm Interact Analysis. The company said the decline was due to economic, political, and market-specific challenges, including persistently high interest rates in many regions and the residual effects of an oversupply of warehouses built during the Covid-19 pandemic.

The research also found that increasing competition from Chinese vendors is expected to drive down prices and slow revenue growth over the report’s forecast period to 2030.

Keep ReadingShow less

Featured

screenshot of kodiak hub software

Swedish supply chain tech firm Kodiak Hub expands to U.S.

The Swedish supply chain software company Kodiak Hub is expanding into the U.S. market, backed by a $6 million venture capital boost for its supplier relationship management (SRM) platform.

The Stockholm-based company says its move could help U.S. companies build resilient, sustainable supply chains amid growing pressure from regulatory changes, emerging tariffs, and increasing demands for supply chain transparency.

Keep ReadingShow less

Logistics gives back: February 2025

Here's our monthly roundup of some of the charitable works and donations by companies in the material handling and logistics space.

  • For the sixth consecutive year, dedicated contract carriage and freight management services provider Transervice Logistics Inc. collected books, CDs, DVDs, and magazines for Book Fairies, a nonprofit book donation organization in the New York Tri-State area. Transervice employees broke their own in-house record last year by donating 13 boxes of print and video assets to children in under-resourced communities on Long Island and the five boroughs of New York City.
  • Logistics real estate investment and development firm Dermody Properties has recognized eight community organizations in markets where it operates with its 2024 Annual Thanksgiving Capstone awards. The organizations, which included food banks and disaster relief agencies, received a combined $85,000 in awards ranging from $5,000 to $25,000.
  • Prime Inc. truck driver Dee Sova has donated $5,000 to Harmony House, an organization that provides shelter and support services to domestic violence survivors in Springfield, Missouri. The donation follows Sova's selection as the 2024 recipient of the Trucking Cares Foundation's John Lex Premier Achievement Award, which was accompanied by a $5,000 check to be given in her name to a charity of her choice.
  • Employees of dedicated contract carrier Lily Transportation donated dog food and supplies to a local animal shelter at a holiday event held at the company's Fort Worth, Texas, location. The event, which benefited City of Saginaw (Texas) Animal Services, was coordinated by "Lily Paws," a dedicated committee within Lily Transportation that focuses on improving the lives of shelter dogs nationwide.
  • Freight transportation conglomerate Averitt has continued its support of military service members by participating in the "10,000 for the Troops" card collection program organized by radio station New Country 96.3 KSCS in Dallas/Fort Worth. In 2024, Averitt associates collected and shipped more than 18,000 holiday cards to troops overseas. Contributions included cards from 17 different Averitt facilities, primarily in Texas, along with 4,000 cards from the company's corporate office in Cookeville, Tennessee.

Catch a thief, stop a vandal

Electric vehicle (EV) sales have seen slow and steady growth, as the vehicles continue to gain converts among consumers and delivery fleet operators alike. But a consistent frustration for drivers has been pulling up to a charging station only to find that the charger has been intentionally broken or disabled.

To address that threat, the EV charging solution provider ChargePoint has launched two products to combat charger vandalism.

Keep ReadingShow less
ATRI releases annual list of nation’s top truck bottlenecks

ATRI releases annual list of nation’s top truck bottlenecks

New Jersey is home to the most congested freight bottleneck in the country for the seventh straight year, according to research from the American Transportation Research Institute (ATRI), released today.

ATRI’s annual list of the Top 100 Truck Bottlenecks aims to highlight the nation’s most congested highways and help local, state, and federal governments target funding to areas most in need of relief. The data show ways to reduce chokepoints, lower emissions, and drive economic growth, according to the researchers.

Keep ReadingShow less