FOR RELEASE: Tuesday, June 2nd, 2020
Contact:
Zac Rogers, Ph.D.
Logistics Manager’s Index Analyst
Assistant Professor, Supply Chain Management
Department of Management
Colorado State University
Fort Collins, Colorado
(970) 491-0890
E-mail: Zac.Rogers@colostate.edu
http://www.logisticsindex.org
Twitter: @LogisticsIndex
Contact:
Zac Rogers, Ph.D.
Logistics Manager’s Index Analyst
Assistant Professor, Supply Chain Management
Department of Management
Colorado State University
Fort Collins, Colorado
(970) 491-0890
E-mail: Zac.Rogers@colostate.edu
http://www.logisticsindex.org
Twitter: @LogisticsIndex
May 2020 Logistics Manager’s Index Report®
LMI® at 54.5%
Growth is INCREASING AT AN INCREASING RATE for: Inventory Levels, Inventory Costs, Warehousing Prices, and Transportation Utilization
Growth is INCREASING AT A DECREASING RATE for: Warehousing Utilization and Transportation Capacity
Warehousing Capacity and Transportation Prices are CONTRACTING.
LMI® at 54.5%
Growth is INCREASING AT AN INCREASING RATE for: Inventory Levels, Inventory Costs, Warehousing Prices, and Transportation Utilization
Growth is INCREASING AT A DECREASING RATE for: Warehousing Utilization and Transportation Capacity
Warehousing Capacity and Transportation Prices are CONTRACTING.
(Fort Collins, Colorado) — In a shift from April’s all-time low overall score of 51.3, May’s Logistics Managers’ Index (LMI) is up to 54.5, a score much more in line with the previous six months of logistics activity (we recorded overall scores between 54.0-54.4 from October 2019 to January 2020). Similar to April’s report, we observe a somewhat bifurcated logistics industry, as Warehousing and Inventory metrics come in high, and Transportation metrics continue to struggle. This is likely because firms, particularly those upstream from the consumer, are saddled with high levels of unsellable inventory, driving up their storage costs. Transportation remains slow, although it seems it has stabilized since last month.
Researchers at Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, and in conjunction with the Council of Supply Chain Management Professionals (CSCMP) issued this report today.
Results Overview
The LMI score is a combination 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 percent indicates that logistics is expanding; a reading below 50 percent is indicative of a shrinking logistics industry. The latest results of the LMI summarize the responses of supply chain professionals collected in May 2019. As mentioned above, this month’s LMI represents a tension between the growth in our Warehousing and Inventory metrics, and continued (albeit slowing) contraction in Transportation. This is interesting as this is only the second time that Transportation Prices and Warehouse Capacity have both been in a state of contraction (the first time was in April). Previously, these measures have been negatively correlated When demand for logistics services is high Warehouse Capacity decreases, and Transportation Prices increase. That they are moving in the same direction suggests that while demand is down for Transportation, inventories remain quite high and the demand for Warehousing is up.
The LMI is up (+3.2) from April’s reading of 51.3. However, it should be pointed out that this is still somewhat anemic growth. Yes, the index is up from April’s all-time low, but it is still the sixth lowest reading in the 44-month history of the index. The “dip” may be ending, but our readings seem to indicate that the recovery will not come in the quick, “V-Shape” that some were predicting.
The recovery will be slowed partially because of the large volumes of unsold inventory currently held in the supply chain. Although consumer demand remains depressed, both Inventory Costs (+2.9) and Inventory Levels (+0.5) display continued growth. This is particularly true in the upstream supply chain. Downstream (consumer-facing) firms reported inventory growth of 50.0, indicating no change in inventory levels. Upstream firms reported Inventory Levels growing at 59.9. This mismatch is likely because retailers can more easily cancel orders, and maintain lower, more affordable inventory levels. Upstream firms such as manufacturers, carriers, and 3PL’s, may not have that luxury as their vendors are more likely to be international and they may have issues cancelling pre-existing and in-transit orders. Dispositioning this excess, and expensive, inventory will be a crucial step for firms to take coming out of the lockdown. This will likely lead to opportunity for firms such as value retailers or salvage dealers, and may put additional stress on landfills and manufacturers with liberal returns policies.
The heavy inventory burden is reflected in the growth in Warehousing metrics. Warehousing Prices are up (+1.1) to 60.1, which is second only to Inventory Costs (and likely the primary driver behind them) in growth rate in May’s reading. There is a corresponding contraction in Warehouse Capacity. Although the rate of change has increased from 46.8 to 47.7, we are still reading contraction as less warehouse space is available – likely due to the buildup of inventory.
Finally, the Transportation industry continues to struggle. Transportation Capacity is growing at a rate of 57.9 as trucks continue to go unused. Transportation Utilization is up (+7.7) to a steady-state of 50.5. Finally, Transportation Prices continue to ride the rollercoaster. They were up 16.5, from February to March, down 27.8 in April, and are now up again by 11.4 to 49.1. Although the rate of contraction has decreased significantly, Transportation Prices are still decreasing. While we read continuing softness in the Transportation industry, these results do suggest that the free-fall has stopped, and prices are at least beginning to stabilize. The recovery may be long, but it is possible that the bleeding has subsided.
The index scores for each of the eight components of the Logistics Managers’ Index, as well as the overall index score, are presented in the table above. six of the eight metrics show signs of growth. The overall LMI® index score is up from last month’s all-time low, but still growing at a fairly depressed rate.
Researchers at Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, and in conjunction with the Council of Supply Chain Management Professionals (CSCMP) issued this report today.
Results Overview
The LMI score is a combination 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 percent indicates that logistics is expanding; a reading below 50 percent is indicative of a shrinking logistics industry. The latest results of the LMI summarize the responses of supply chain professionals collected in May 2019. As mentioned above, this month’s LMI represents a tension between the growth in our Warehousing and Inventory metrics, and continued (albeit slowing) contraction in Transportation. This is interesting as this is only the second time that Transportation Prices and Warehouse Capacity have both been in a state of contraction (the first time was in April). Previously, these measures have been negatively correlated When demand for logistics services is high Warehouse Capacity decreases, and Transportation Prices increase. That they are moving in the same direction suggests that while demand is down for Transportation, inventories remain quite high and the demand for Warehousing is up.
The LMI is up (+3.2) from April’s reading of 51.3. However, it should be pointed out that this is still somewhat anemic growth. Yes, the index is up from April’s all-time low, but it is still the sixth lowest reading in the 44-month history of the index. The “dip” may be ending, but our readings seem to indicate that the recovery will not come in the quick, “V-Shape” that some were predicting.
The recovery will be slowed partially because of the large volumes of unsold inventory currently held in the supply chain. Although consumer demand remains depressed, both Inventory Costs (+2.9) and Inventory Levels (+0.5) display continued growth. This is particularly true in the upstream supply chain. Downstream (consumer-facing) firms reported inventory growth of 50.0, indicating no change in inventory levels. Upstream firms reported Inventory Levels growing at 59.9. This mismatch is likely because retailers can more easily cancel orders, and maintain lower, more affordable inventory levels. Upstream firms such as manufacturers, carriers, and 3PL’s, may not have that luxury as their vendors are more likely to be international and they may have issues cancelling pre-existing and in-transit orders. Dispositioning this excess, and expensive, inventory will be a crucial step for firms to take coming out of the lockdown. This will likely lead to opportunity for firms such as value retailers or salvage dealers, and may put additional stress on landfills and manufacturers with liberal returns policies.
The heavy inventory burden is reflected in the growth in Warehousing metrics. Warehousing Prices are up (+1.1) to 60.1, which is second only to Inventory Costs (and likely the primary driver behind them) in growth rate in May’s reading. There is a corresponding contraction in Warehouse Capacity. Although the rate of change has increased from 46.8 to 47.7, we are still reading contraction as less warehouse space is available – likely due to the buildup of inventory.
Finally, the Transportation industry continues to struggle. Transportation Capacity is growing at a rate of 57.9 as trucks continue to go unused. Transportation Utilization is up (+7.7) to a steady-state of 50.5. Finally, Transportation Prices continue to ride the rollercoaster. They were up 16.5, from February to March, down 27.8 in April, and are now up again by 11.4 to 49.1. Although the rate of contraction has decreased significantly, Transportation Prices are still decreasing. While we read continuing softness in the Transportation industry, these results do suggest that the free-fall has stopped, and prices are at least beginning to stabilize. The recovery may be long, but it is possible that the bleeding has subsided.
The index scores for each of the eight components of the Logistics Managers’ Index, as well as the overall index score, are presented in the table above. six of the eight metrics show signs of growth. The overall LMI® index score is up from last month’s all-time low, but still growing at a fairly depressed rate.
However, as we see in the comparison of upstream and downstream respondents, the effects of COVID-19 do not appear to be consistent in all stages of the supply chain. Respondents classified as upstream are those that do not interact directly with consumers. These tend to be warehousing firms, carriers, and manufacturers. Downstream respondents are firms that do interact with consumers, such as retailers.
However, as we see in the comparison of upstream and downstream respondents, the effects of COVID-19 do not appear to be consistent in all stages of the supply chain. Respondents classified as upstream are those that do not interact directly with consumers. These tend to be warehousing firms, carriers, and manufacturers. Downstream respondents are firms that do interact with consumers, such as retailers.
Respondents were asked to predict movement in the overall LMI and individual metrics 12 months from now. Their predictions for future ratings are presented below and, as has become a pattern, seem to be somewhat more optimistic than our current readings. Respondents seem to be predicting better times ahead as far as the logistics industry is concerned. The logistics industry getting back to these levels in the next year is largely a function of how soon the economy comes back online, and whether or not we see a secondary wave of COVID-19 infections in the Fall and Winter.
Historic Logistics Managers’ Index Scores
This period’s along with prior readings from the last two years of the LMI are presented table below. The values have been updated to reflect the method for calculating the overall LMI:
This period’s along with prior readings from the last two years of the LMI are presented table below. The values have been updated to reflect the method for calculating the overall LMI:
LMI®
The overall LMI index is up (+3.2) to 54.5 from April’s all-time low of 51.3. While up, this is the sixth-lowest reading in the history of the LMI and is down from both one (-3.4) and from two (-18.2) years ago. It remains to be seen whether this trend towards recovery will continue, or whether there will be a secondary dip, potentially linked to a secondary outbreak. But for the moment, it appears as though the logistics industry may have bottomed out, and is on the road to recovery.
Respondents predict that over the next year, the LMI will be at 57.5, down (-3.5) from April’s future prediction of 61.0. While respondents are still looking for growth, they expect it at a seemingly decreased rate.
The overall LMI index is up (+3.2) to 54.5 from April’s all-time low of 51.3. While up, this is the sixth-lowest reading in the history of the LMI and is down from both one (-3.4) and from two (-18.2) years ago. It remains to be seen whether this trend towards recovery will continue, or whether there will be a secondary dip, potentially linked to a secondary outbreak. But for the moment, it appears as though the logistics industry may have bottomed out, and is on the road to recovery.
Respondents predict that over the next year, the LMI will be at 57.5, down (-3.5) from April’s future prediction of 61.0. While respondents are still looking for growth, they expect it at a seemingly decreased rate.
Inventory Levels
The Inventory Level value is 56.67, up slightly (+0.47) from last month’s score of 56.2, and 8.27 points above the value three months ago. The long-term trendline reflects the recent fluctuations. As we noted in previous months, the sharp decline four months ago could have represented the beginning of an extended decline for the index, or, given past volatility, could have reflected fluctuations in the index. There is now more evidence for the latter. Looking at the general trend of the index values, inventory levels are consistently increasing, although the growth rate has stabilized in the last half year at a low level. As a composite reading, this likely hides significant difference between the experiences of different parties in different parts of the supply chain, or in different industries. As the economy continues to re-open, it will be interesting to see how inventory levels fare in coming months.
When asked to predict what will conditions will be like 12 months from now, the average value is 56.7, indicating inventory levels are expected to grow slightly. This value is an decrease from last month’s year-ahead prediction of 66.1. This indicates that respondents expect inventory values to continue increase modestly over the next year.
The Inventory Level value is 56.67, up slightly (+0.47) from last month’s score of 56.2, and 8.27 points above the value three months ago. The long-term trendline reflects the recent fluctuations. As we noted in previous months, the sharp decline four months ago could have represented the beginning of an extended decline for the index, or, given past volatility, could have reflected fluctuations in the index. There is now more evidence for the latter. Looking at the general trend of the index values, inventory levels are consistently increasing, although the growth rate has stabilized in the last half year at a low level. As a composite reading, this likely hides significant difference between the experiences of different parties in different parts of the supply chain, or in different industries. As the economy continues to re-open, it will be interesting to see how inventory levels fare in coming months.
When asked to predict what will conditions will be like 12 months from now, the average value is 56.7, indicating inventory levels are expected to grow slightly. This value is an decrease from last month’s year-ahead prediction of 66.1. This indicates that respondents expect inventory values to continue increase modestly over the next year.
Inventory Costs
As inventory levels continue their modest growth, it is not surprising that inventory costs have continued to increase, although the rate has slowed. The current value is 66.02, which is 2.92 points below the previous reading of 63.1, but 0.48 below the month before that. The trend line has shown a very stable rate of decline in the inventory cost index over the past two years, but values seem to have stabilized recently. Seven of the last eight values have been within 2 units of 65. Taking this graph and the previous graph of inventory values together, inventory levels are growing, but only modestly, and inventory costs continue to grow, but at a slightly higher rate. Given the relatively small decrease in inventory levels seen above, and consistent increases in warehousing costs, it seems quite likely that inventory costs will continue to rise.
Responses from participants seem consistent with this hypothesis. When asked about what they expect inventory costs to be like 12 months from now, the index value is 64.1, a relatively unchanged from last month’s value of 65.2. This value reflects expected continued inventory cost growth. Respondents clearly expect inventory costs to continue to be high for the next 12 months.
As inventory levels continue their modest growth, it is not surprising that inventory costs have continued to increase, although the rate has slowed. The current value is 66.02, which is 2.92 points below the previous reading of 63.1, but 0.48 below the month before that. The trend line has shown a very stable rate of decline in the inventory cost index over the past two years, but values seem to have stabilized recently. Seven of the last eight values have been within 2 units of 65. Taking this graph and the previous graph of inventory values together, inventory levels are growing, but only modestly, and inventory costs continue to grow, but at a slightly higher rate. Given the relatively small decrease in inventory levels seen above, and consistent increases in warehousing costs, it seems quite likely that inventory costs will continue to rise.
Responses from participants seem consistent with this hypothesis. When asked about what they expect inventory costs to be like 12 months from now, the index value is 64.1, a relatively unchanged from last month’s value of 65.2. This value reflects expected continued inventory cost growth. Respondents clearly expect inventory costs to continue to be high for the next 12 months.
Warehousing Capacity
The Warehousing Capacity Index registered 47.69 percent in May 2020. This represents a minor increase of less than 1 percentage point from the April 2020 reading of 46.8, though it is on par with, though slightly lower than, the May 2019 value of 48.1. The continued contraction in capacity of warehousing (from previous highs) is likely directly related to the supply chain disruption that the SARS-COV-2 (COVID-19) virus had (and continues to have) on domestic and global supply chains. The reading indicates that the capacity for warehousing, though slightly less than April 2020, continues to contract, with a three month decrease in the rate of contraction. The reading suggests that the demand for goods at the consumer level has caused retailers/wholesalers/manufacturers to need significantly more warehousing to maintain service levels; hence the rapid drop in this measure.
Looking forward at the next 12 months, the predicted Warehousing Capacity index is 60.4, up significantly (+11.4) from April’s future prediction of 49.0.
The Warehousing Capacity Index registered 47.69 percent in May 2020. This represents a minor increase of less than 1 percentage point from the April 2020 reading of 46.8, though it is on par with, though slightly lower than, the May 2019 value of 48.1. The continued contraction in capacity of warehousing (from previous highs) is likely directly related to the supply chain disruption that the SARS-COV-2 (COVID-19) virus had (and continues to have) on domestic and global supply chains. The reading indicates that the capacity for warehousing, though slightly less than April 2020, continues to contract, with a three month decrease in the rate of contraction. The reading suggests that the demand for goods at the consumer level has caused retailers/wholesalers/manufacturers to need significantly more warehousing to maintain service levels; hence the rapid drop in this measure.
Looking forward at the next 12 months, the predicted Warehousing Capacity index is 60.4, up significantly (+11.4) from April’s future prediction of 49.0.
Warehousing Utilization
The Warehousing Utilization Index registered 58.96 percent in May 2020. This represents a slight increase of nearly 2 percentage points from last month, and is negligibly up .3 points from the May 2019 reading of 58.6. This reading is likely a continued carryover effect from the massive supply chain disruption caused as a result of the COVID-19 outbreak. As noted above, the capacity is still contracting and as such the rate at which warehousing is being utilized continues to increase.
Looking forward at the next 12 months, the predicted Warehousing Utilization index is 60.0, down slightly (-0.7) from April’s future prediction of 60.7.
The Warehousing Utilization Index registered 58.96 percent in May 2020. This represents a slight increase of nearly 2 percentage points from last month, and is negligibly up .3 points from the May 2019 reading of 58.6. This reading is likely a continued carryover effect from the massive supply chain disruption caused as a result of the COVID-19 outbreak. As noted above, the capacity is still contracting and as such the rate at which warehousing is being utilized continues to increase.
Looking forward at the next 12 months, the predicted Warehousing Utilization index is 60.0, down slightly (-0.7) from April’s future prediction of 60.7.
Warehousing Prices
Warehousing Prices Index registered 60.10 percent in May 2020. This reading shows a 1.1 point increase in the rate of increase from last month, though the data indicate that the prices for warehousing are continuing to increase at an increasing rate amid the COVID-19 disruption. This reading is also down rather sharply by 10.5 points from one year ago. This reading breaks the trend of the decreased rate of growth in pricing, reflecting that prices are increasing at an increasing rate. Taken together with the increasing utilization and contracting capacity, this reading could suggest that the market is reflecting the price sensitivity in demand and adjusting as necessary; particularly in response to COVID-19’s impact on domestic supply chains.
Looking forward at the next 12 months, the predicted Warehousing Prices index is 62.1, down (-1.8) from April’s future prediction of 63.9.
Warehousing Prices Index registered 60.10 percent in May 2020. This reading shows a 1.1 point increase in the rate of increase from last month, though the data indicate that the prices for warehousing are continuing to increase at an increasing rate amid the COVID-19 disruption. This reading is also down rather sharply by 10.5 points from one year ago. This reading breaks the trend of the decreased rate of growth in pricing, reflecting that prices are increasing at an increasing rate. Taken together with the increasing utilization and contracting capacity, this reading could suggest that the market is reflecting the price sensitivity in demand and adjusting as necessary; particularly in response to COVID-19’s impact on domestic supply chains.
Looking forward at the next 12 months, the predicted Warehousing Prices index is 62.1, down (-1.8) from April’s future prediction of 63.9.
Transportation Capacity
The Transportation Capacity Index registered 57.9 percent in May 2020. This constitutes a decrease of 4.3 percentage points from the April reading of 62.2. The Transportation Capacity Index remains over 50, indicating expanding capacity, but the expansion is at a lower rate than in April. This excess capacity is a clear indicator that the demand for product movement is down.
It should be noted the data indicates a score of 53.8 percent for the next year, projecting expectations of slightly increasing transportation capacity in the next 12 months
The Transportation Capacity Index registered 57.9 percent in May 2020. This constitutes a decrease of 4.3 percentage points from the April reading of 62.2. The Transportation Capacity Index remains over 50, indicating expanding capacity, but the expansion is at a lower rate than in April. This excess capacity is a clear indicator that the demand for product movement is down.
It should be noted the data indicates a score of 53.8 percent for the next year, projecting expectations of slightly increasing transportation capacity in the next 12 months
Transportation Utilization
The Transportation Utilization Index registered 50.5 percent in May 2020. This constitutes an increase of 7.7 percentage points from the record low April reading of 42.8, which was the lowest reading we had recorded in the history of this metric. This month’s reading is almost exactly at 50.0, indicating that the utilization rate has not changed materially since April.
It should be noted that the future Transportation Utilization Index indicates a 64.6 percent level for the next 12 months, indicating expectations of strong growth in the future.
The Transportation Utilization Index registered 50.5 percent in May 2020. This constitutes an increase of 7.7 percentage points from the record low April reading of 42.8, which was the lowest reading we had recorded in the history of this metric. This month’s reading is almost exactly at 50.0, indicating that the utilization rate has not changed materially since April.
It should be noted that the future Transportation Utilization Index indicates a 64.6 percent level for the next 12 months, indicating expectations of strong growth in the future.
Transportation Prices
The Transportation Prices Index registered 49.1 percent in May 2020. This constitutes an increase of 11.4 percent from the April transportation prices reading of 37.7. While the Transportation Prices Index remains under 50 and indicates a decrease in prices, the index has rebounded significantly from the record low registered in April. As mentioned above, Transportation Prices have fluctuated wildly. They were up 16.5, from February to March, down 27.8 in April, and are now up again by 11.4 to 49.1. Transportation Prices have been the most dynamic, as well as the most predictive, metric in the LMI. This reading may represent that the economy is coming out of free-fall, and moving towards to long road to recovery.
The future index for transportation prices remains elevated, with a future Transportation Prices Index value of 66.4 indicating expectations of price increases over the next 12 months.
The Transportation Prices Index registered 49.1 percent in May 2020. This constitutes an increase of 11.4 percent from the April transportation prices reading of 37.7. While the Transportation Prices Index remains under 50 and indicates a decrease in prices, the index has rebounded significantly from the record low registered in April. As mentioned above, Transportation Prices have fluctuated wildly. They were up 16.5, from February to March, down 27.8 in April, and are now up again by 11.4 to 49.1. Transportation Prices have been the most dynamic, as well as the most predictive, metric in the LMI. This reading may represent that the economy is coming out of free-fall, and moving towards to long road to recovery.
The future index for transportation prices remains elevated, with a future Transportation Prices Index value of 66.4 indicating expectations of price increases over the next 12 months.
About This Report
The data presented herein are obtained from a survey of logistics supply executives based on information they have collected within their respective organizations. LMI® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.
Data and Method of Presentation
Data for the Logistics Manager’s Index is collected in a monthly survey of leading logistics professionals. The respondents are CSCMP members working at the director-level or above. Upper-level managers are preferable as they are more likely to have macro-level information on trends in Inventory, Warehousing and Transportation trends within their firm. Data is also collected from subscribers to both DC Velocity and Supply Chain Quarterly as well. Respondents hail from firms working on all six continents, with the majority of them working at firms with annual revenues over a billion dollars. The industries represented in this respondent pool include, but are not limited to: Apparel, Automotive, Consumer Goods, Electronics, Food & Drug, Home Furnishings, Logistics, Shipping & Transportation, and Warehousing.
Respondents are asked to identify the monthly change across each of the eight metrics collected in this survey (Inventory Levels, Inventory Costs, Warehousing Capacity, Warehousing Utilization, Warehousing Prices, Transportation Capacity, Transportation Utilization, and Transportation Prices). In addition, they also forecast future trends for each metric ranging over the next 12 months. The raw data is then analyzed using a diffusion index. Diffusion Indexes measure how widely something is diffused, or spread across a group. The Bureau of Labor Statistics has been using a diffusion index for the Current Employment Statics program since 1974, and the Institute for Supply Management (ISM) has been using a diffusion index to compute the Purchasing Managers Index since 1948. The ISM Index of New Orders is considered a Leading Economic Indicator.
We compute the Diffusion Index as follows:
PD = Percentage of respondents saying the category is Declining,
PU = Percentage of respondents saying the category is Unchanged,
PI = Percentage of respondents saying the category is Increasing,
Diffusion Index = 0.5 * PD + 0.5 * PU + 1.0 * PI
For example, if 25% say the category is declining, 38% say it is unchanged, and 37% say it is increasing, we would calculate an index value of 0*0.25 + 0.5*0.38 + 1.0*0.37 = 0 + 0.19 + 0.37 = 0.56, and the index is increasing overall. For an index value above 0.5 indicates the category is increasing, a value below 0.5 indicates it is decreasing, and a value of 0.5 means the category is unchanged. When a full year’s worth of data has been collected, adjustments will be made for seasonal factors as well.
Logistics Managers Index
Requests for permission to reproduce or distribute Logistics Managers Index Content can be made by contacting in writing at: Dale S. Rogers, WP Carey School of Business, Tempe, Arizona 85287, or by emailing dale.rogers@asu.edu Subject: Content Request.
The authors of the Logistics Managers Index shall not have any liability, duty, or obligation for or relating to the Logistics Managers Index Content or other information contained herein, any errors, inaccuracies, omissions or delays in providing any Logistics Managers Index Content, or for any actions taken in reliance thereon. In no event shall the authors of the Logistics Managers Index be liable for any special, incidental, or consequential damages, arising out of the use of the Logistics Managers Index. Logistics Managers Index, and LMI® are registered trademarks.
About The Logistics Manager’s Index®
The Logistics Manager’s Index (LMI) is a joint project between researchers from Arizona State University, Colorado State University, University of Nevada, Reno, Rochester Institute of Technology and Rutgers University, supported by CSCMP. It is authored by Zac Rogers Ph.D., Steven Carnovale Ph.D., Shen Yeniyurt Ph.D., Ron Lembke Ph.D., and Dale Rogers Ph.D.
The data presented herein are obtained from a survey of logistics supply executives based on information they have collected within their respective organizations. LMI® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.
Data and Method of Presentation
Data for the Logistics Manager’s Index is collected in a monthly survey of leading logistics professionals. The respondents are CSCMP members working at the director-level or above. Upper-level managers are preferable as they are more likely to have macro-level information on trends in Inventory, Warehousing and Transportation trends within their firm. Data is also collected from subscribers to both DC Velocity and Supply Chain Quarterly as well. Respondents hail from firms working on all six continents, with the majority of them working at firms with annual revenues over a billion dollars. The industries represented in this respondent pool include, but are not limited to: Apparel, Automotive, Consumer Goods, Electronics, Food & Drug, Home Furnishings, Logistics, Shipping & Transportation, and Warehousing.
Respondents are asked to identify the monthly change across each of the eight metrics collected in this survey (Inventory Levels, Inventory Costs, Warehousing Capacity, Warehousing Utilization, Warehousing Prices, Transportation Capacity, Transportation Utilization, and Transportation Prices). In addition, they also forecast future trends for each metric ranging over the next 12 months. The raw data is then analyzed using a diffusion index. Diffusion Indexes measure how widely something is diffused, or spread across a group. The Bureau of Labor Statistics has been using a diffusion index for the Current Employment Statics program since 1974, and the Institute for Supply Management (ISM) has been using a diffusion index to compute the Purchasing Managers Index since 1948. The ISM Index of New Orders is considered a Leading Economic Indicator.
We compute the Diffusion Index as follows:
PD = Percentage of respondents saying the category is Declining,
PU = Percentage of respondents saying the category is Unchanged,
PI = Percentage of respondents saying the category is Increasing,
Diffusion Index = 0.5 * PD + 0.5 * PU + 1.0 * PI
For example, if 25% say the category is declining, 38% say it is unchanged, and 37% say it is increasing, we would calculate an index value of 0*0.25 + 0.5*0.38 + 1.0*0.37 = 0 + 0.19 + 0.37 = 0.56, and the index is increasing overall. For an index value above 0.5 indicates the category is increasing, a value below 0.5 indicates it is decreasing, and a value of 0.5 means the category is unchanged. When a full year’s worth of data has been collected, adjustments will be made for seasonal factors as well.
Logistics Managers Index
Requests for permission to reproduce or distribute Logistics Managers Index Content can be made by contacting in writing at: Dale S. Rogers, WP Carey School of Business, Tempe, Arizona 85287, or by emailing dale.rogers@asu.edu Subject: Content Request.
The authors of the Logistics Managers Index shall not have any liability, duty, or obligation for or relating to the Logistics Managers Index Content or other information contained herein, any errors, inaccuracies, omissions or delays in providing any Logistics Managers Index Content, or for any actions taken in reliance thereon. In no event shall the authors of the Logistics Managers Index be liable for any special, incidental, or consequential damages, arising out of the use of the Logistics Managers Index. Logistics Managers Index, and LMI® are registered trademarks.
About The Logistics Manager’s Index®
The Logistics Manager’s Index (LMI) is a joint project between researchers from Arizona State University, Colorado State University, University of Nevada, Reno, Rochester Institute of Technology and Rutgers University, supported by CSCMP. It is authored by Zac Rogers Ph.D., Steven Carnovale Ph.D., Shen Yeniyurt Ph.D., Ron Lembke Ph.D., and Dale Rogers Ph.D.
