Economic activity in the logistics industry expanded in December but remained well below the high levels of activity recorded throughout 2021 and 2022, according to the latest Logistics Managers’ Index (LMI) report, released today.
The LMI registered 54.6 in December, up one percentage point from November but well below last year’s high of 76.2, recorded in March. The LMI measures business activity across warehousing and transportation markets via a monthly survey of logistics managers. An LMI reading above 50 indicates expansion across the industry, and an LMI below 50 indicates contraction.
The LMI had been showing exceptionally strong demand for logistics services nationwide from mid 2020 through the spring of 2022, when conditions began to moderate. The December report revealed a continued weakening of transportation metrics and slowing growth in inventory levels—especially at upstream companies, which include distributors and wholesalers—contributing to the more moderate overall demand.
“Transportation metrics were weak across all levels of the supply chain,” the LMI researchers wrote. “Transportation Utilization was down to 48.1, marking the first time it has dipped into contraction territory since April of 2020. Transportation Prices contracted at a rate of 36.9, which is the sharpest rate of contraction we have measured for this metric in the over six years of the Logistics Managers’ Index.”
December’s future conditions index predicts a “return to normal” for logistics in 2023.
“Taking out Warehousing Prices (70.1) which tend to lag the other metrics and change more slowly due to contract length, the predictions for metrics range from mild contraction (47.7 for Transportation Prices) to moderately high growth (68.1 for Transportation Capacity),” according to the researchers. “We classify readings in the 40s, 50s, or 60s as ‘normal’ rates of change. This suggests that after the wild swings seen from 2020-2022, the logistics industry may be moving back toward a bit more predictability—a change that would be welcome by firms at almost every level of the supply chain.”
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 web page for information on participating in the monthly survey.