FOR RELEASE: Tuesday, December 1st, 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
November 2020 Logistics Manager’s Index Report®
LMI® at 70.8%
Growth is INCREASING AT AN INCREASING RATE for: Transportation Prices
Growth is INCREASING AT A DECREASING RATE for: Inventory Levels, Inventory Costs, Warehousing Utilization, Warehousing Prices, and Transportation Utilization
Warehousing Capacity and Transportation Capacity are CONTRACTING AT AN INCREASING RATE.
LMI® at 70.8%
Growth is INCREASING AT AN INCREASING RATE for: Transportation Prices
Growth is INCREASING AT A DECREASING RATE for: Inventory Levels, Inventory Costs, Warehousing Utilization, Warehousing Prices, and Transportation Utilization
Warehousing Capacity and Transportation Capacity are CONTRACTING AT AN INCREASING RATE.
(Fort Collins, Colorado) — The November 2020 reading of the LMI suggests that the logistics industry continues to grow at a rapid pace. The LMI is at 70.8, while this is down very slightly (-0.8) from October, it still represents a significant rate of growth, and is up nearly 20 points from its all-time low of 51.3 in April 2020. The high rates of growth reported in November stem from high prices and a record contraction in available capacity, As we have previously reported, much of this growth stems from the increased demand for logistics services and infrastructure due to the new ways in which people are shopping due to the ongoing pandemic. Online sales may be up by as much as 33% over Q4, coming close to $200 billion in sales in the U.S. alone[1]. An early indicator of this shift in consumer shopping behaviors can be seen in the 50% reduction in foot-traffic, combined with the 22% increase in online sales that were reported on Black Friday[2]. Ecommerce tends to be more logistics-intensive, requiring firms to carry more inventory and utilize more trucks and warehouses. Because ecommerce is growing much more quickly than predicted, it has been difficult for firms to procure the infrastructure necessary to fulfill consumer demand. This reflected in the plummeting rates of available Warehousing Capacity, which this month read in at their lowest-ever level in the history of the LMI®. Transportation Capacity is dropping even more rapidly and this month we observe continuing rates of growth in the cost of each.
Demand for logistics services is likely to continue even after the Q4 rush subsides. Retailers are expecting that record-setting online sales will lead to record-setting returns. Large items such as office chairs or exercise bikes will pose a significant challenge as they are difficult to ship and process efficiently[3]. Adding to this stress will be the need to ship out billions of doses of COVID-19 vaccines around the globe. DHL predicts that at least 200,000 pallets of vaccine will need to be shipped by air alone to properly distribute the rollout, something that will be made more difficult by the reduction in flights[4]. The vaccine rollout might come sooner than expected, with firms looking to begin shipping remedies as soon as they are approved by the FDA; event which could occur as early as the second week of December[5].
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 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 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 November 2020. As we have seen for most of the last seven months, November’s LMI displays rapid growth in price and utilization metrics and a drop-off in available capacity. Due to these factors, the cost of holding inventory remains high.
Overall, the LMI is down very slightly (-0.8) from October’s reading of 71.6. It is important to remember that this is a rate of growth, and not overall growth, so the logistics industry still expanded significantly in November, albeit at a slightly slower pace. However, this still represents a significant rate of growth and is tied for the fifth-highest rate in the history of the index. The rate of growth we observe for logistics services is similar to what we might see with a booming economy. As discussed above, this is largely due to the increase in demand for logistics services driven by the pandemic.
High demand has put a strain on capacity for all logistics services, particularly for Warehousing Capacity, which is down (-2.2) to 38.0, which is its lowest level in the history of this index. This marks the second consecutive period in which this metric has hit a nadir, after October’s reading of 40.2. The lack of availability is a major factor behind the high (though slightly diminished) rates of growth for both Warehousing Utilization (down 0.8 to 71.1) and Warehousing Prices (down 0.3) to 78.4). Firms are struggling to find warehousing space that is close to the consumer and will allow them to make same-or next-day deliveries. This has put additional pressure on firms to find existing urban warehouses or warehouses that have recently been infilled to replace abandoned malls or big box stores. However, it is not just the downstream warehousing market that is suffering, upstream respondents actually reported steeper rates of growth for both Warehousing Prices and Utilization for than their downstream counterparts. The scramble for both upstream and downstream warehousing is epitomized by Walmart converting brick and mortar stores to fulfillment centers[6] while also adding 42 pop-up fulfillment centers inside of existing DC’s[7].
Similar to the trends we observe in with warehousing, Transportation Capacity continues to contract while price and utilization increase. The rate of contraction is down (-2.9) from October’s reading of 38.0, and at 35.1, is lower than the rate of contraction for Warehousing Capacity. In the reverse of warehousing, it is the downstream respondents who report a more tightness across the transportation metrics. Transportation Utilization continues to grow quickly at a rate of 71.1. As is often the case during growth periods for the logistics industry, Transportation Prices is the fastest-growing metric in the LMI, up (+0.3) to 85.8 in November.
It should be pointed out that limited capacity is not the only driver behind the observed price increases. The uncertainty associated with whether or not the ecommerce boom will continue, and when to expect an end to the lockdowns seems to have scared some firms away from making big capital investments and/or taking up long-term contracts. In a recent conversation with the authors of this report, Dean Croke from DAT stated that, while total dry van volume is down 3% y-o-y, but spot market rates for the same services are up 106% y-o-y. At the same time, the rates being paid for spot market transportation are up between 25%-46% depending on the service being utilized and can be double the rates paid through long-term contracts.. The combination of both uncertainty and a lack of capacity has had a sharp impact on prices. The change in both Warehousing and Transportation Prices and Capacity can be observed in the figure below.
Demand for logistics services is likely to continue even after the Q4 rush subsides. Retailers are expecting that record-setting online sales will lead to record-setting returns. Large items such as office chairs or exercise bikes will pose a significant challenge as they are difficult to ship and process efficiently[3]. Adding to this stress will be the need to ship out billions of doses of COVID-19 vaccines around the globe. DHL predicts that at least 200,000 pallets of vaccine will need to be shipped by air alone to properly distribute the rollout, something that will be made more difficult by the reduction in flights[4]. The vaccine rollout might come sooner than expected, with firms looking to begin shipping remedies as soon as they are approved by the FDA; event which could occur as early as the second week of December[5].
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 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 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 November 2020. As we have seen for most of the last seven months, November’s LMI displays rapid growth in price and utilization metrics and a drop-off in available capacity. Due to these factors, the cost of holding inventory remains high.
Overall, the LMI is down very slightly (-0.8) from October’s reading of 71.6. It is important to remember that this is a rate of growth, and not overall growth, so the logistics industry still expanded significantly in November, albeit at a slightly slower pace. However, this still represents a significant rate of growth and is tied for the fifth-highest rate in the history of the index. The rate of growth we observe for logistics services is similar to what we might see with a booming economy. As discussed above, this is largely due to the increase in demand for logistics services driven by the pandemic.
High demand has put a strain on capacity for all logistics services, particularly for Warehousing Capacity, which is down (-2.2) to 38.0, which is its lowest level in the history of this index. This marks the second consecutive period in which this metric has hit a nadir, after October’s reading of 40.2. The lack of availability is a major factor behind the high (though slightly diminished) rates of growth for both Warehousing Utilization (down 0.8 to 71.1) and Warehousing Prices (down 0.3) to 78.4). Firms are struggling to find warehousing space that is close to the consumer and will allow them to make same-or next-day deliveries. This has put additional pressure on firms to find existing urban warehouses or warehouses that have recently been infilled to replace abandoned malls or big box stores. However, it is not just the downstream warehousing market that is suffering, upstream respondents actually reported steeper rates of growth for both Warehousing Prices and Utilization for than their downstream counterparts. The scramble for both upstream and downstream warehousing is epitomized by Walmart converting brick and mortar stores to fulfillment centers[6] while also adding 42 pop-up fulfillment centers inside of existing DC’s[7].
Similar to the trends we observe in with warehousing, Transportation Capacity continues to contract while price and utilization increase. The rate of contraction is down (-2.9) from October’s reading of 38.0, and at 35.1, is lower than the rate of contraction for Warehousing Capacity. In the reverse of warehousing, it is the downstream respondents who report a more tightness across the transportation metrics. Transportation Utilization continues to grow quickly at a rate of 71.1. As is often the case during growth periods for the logistics industry, Transportation Prices is the fastest-growing metric in the LMI, up (+0.3) to 85.8 in November.
It should be pointed out that limited capacity is not the only driver behind the observed price increases. The uncertainty associated with whether or not the ecommerce boom will continue, and when to expect an end to the lockdowns seems to have scared some firms away from making big capital investments and/or taking up long-term contracts. In a recent conversation with the authors of this report, Dean Croke from DAT stated that, while total dry van volume is down 3% y-o-y, but spot market rates for the same services are up 106% y-o-y. At the same time, the rates being paid for spot market transportation are up between 25%-46% depending on the service being utilized and can be double the rates paid through long-term contracts.. The combination of both uncertainty and a lack of capacity has had a sharp impact on prices. The change in both Warehousing and Transportation Prices and Capacity can be observed in the figure below.
anything above indicates growth. Transportation Prices are up 35.8 points since the beginning of the year and Warehousing Prices are up 8.5 points (it should be noted that, due to contract lengths, warehousing metrices often move more slowly than transportation metrics. This is partially explained by the drops in capacity, with Warehousing capacity down 16.7 points, and Transportation Capacity down 22.0 points. Transportation Capacity was 7.1 points higher than Transportation Prices in January, and are now 50.7 points lower. Clearly, COVID-19 and all of the obstacles firms have faced in 2020 have had a disproportionate effect on the logistics industry.
Finally, we observe Inventory Levels and Inventory Costs increasing, but at decreasing rates to 62.0 and 73.1 respectively. It is interesting that the rate of growth for Inventory Levels is down 7.6 points, and unusual drop for November, but perhaps a sign that the increased demand for online goods has been more spread out over time, and less concentrated on traditional retail holidays such as Black Friday. Holiday ecommerce spending could end up as high as $200 billion, which would be an increase of 30-40%, much higher than the 22% jump observed on Black Friday[8].
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 below. Six of the eight metrics show signs of growth, with both capacity metrics actively contracting at increasing rates.
Finally, we observe Inventory Levels and Inventory Costs increasing, but at decreasing rates to 62.0 and 73.1 respectively. It is interesting that the rate of growth for Inventory Levels is down 7.6 points, and unusual drop for November, but perhaps a sign that the increased demand for online goods has been more spread out over time, and less concentrated on traditional retail holidays such as Black Friday. Holiday ecommerce spending could end up as high as $200 billion, which would be an increase of 30-40%, much higher than the 22% jump observed on Black Friday[8].
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 below. Six of the eight metrics show signs of growth, with both capacity metrics actively contracting at increasing rates.
This month, both upstream and downstream firms reported significant continued growth in utilization of logistics services, albeit in somewhat different ways. Downstream firms such as retailers (represented by the orange bars) reported a slightly tighter transportation market, while upstream firms reported a tighter warehousing market, with a marginally significantly higher rate of warehouse utilization growth. This potentially suggests that while downstream firms struggle to deliver inventory to consumers on time, upstream supply chains are straining to hold the inventory necessary to keep up with growing demand. It is also possible that this represents firms pulling inventory forward for Q1 in the case that demand goes up on the release of vaccines.
As mentioned above, T-tests demonstrated a moderately statistically significant difference existed between the two for Warehousing Utilization:
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. Respondents predict that prices will continue to grow, but at decreased rates from what we presently observe. This does not necessarily suggest that relief is around the corner however, as they also predict a strong level of continued growth in both inventory levels and prices, along with an inability to bring sufficient warehousing capacity online to meet burgeoning demand. The picture respondents paint seems to suggest that businesses and consumers will not forget the lessons of the pandemic, even when it ends; indicating that a higher percentage of commerce will continue to exist online, utilizing a higher level of logistics services going forward.
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 (+1.1) to 71.6 from September’s reading of 70.5. This marks six consecutive months of increasing readings following April’s all-time low of 51.3. This is highest reading for the overall index since June of 2018. The long-term U-shape of this metric demonstrates how, after an extended period of slow expansion, growth rates roared back in through the Summer and Fall of 2020. As noted above, this growth seems to be primarily driven by increasing inventory levels which have resulted in limited capacity and high prices for both warehousing and transportation. The logistics industry is continuing to grow quickly, a trend that is likely to increase through the end of the year as holiday shopping continues to pick up.
Respondents predict that over the next year, the LMI will be at 71.5, up (+5.1) from August’s future prediction of 66.0. This suggests that respondents are anticipating increasing rates of growth in the logistics industry over the next 12 months.
The overall LMI index is up (+1.1) to 71.6 from September’s reading of 70.5. This marks six consecutive months of increasing readings following April’s all-time low of 51.3. This is highest reading for the overall index since June of 2018. The long-term U-shape of this metric demonstrates how, after an extended period of slow expansion, growth rates roared back in through the Summer and Fall of 2020. As noted above, this growth seems to be primarily driven by increasing inventory levels which have resulted in limited capacity and high prices for both warehousing and transportation. The logistics industry is continuing to grow quickly, a trend that is likely to increase through the end of the year as holiday shopping continues to pick up.
Respondents predict that over the next year, the LMI will be at 71.5, up (+5.1) from August’s future prediction of 66.0. This suggests that respondents are anticipating increasing rates of growth in the logistics industry over the next 12 months.
Inventory Levels
Inventory Level growth is 62.0, down (-7.6) from October’s growth rate of 69.6. While this is down, this reading is significantly higher (7.8 points) than the same time last year, this means that seasonally speaking, inventories are increasing faster than a year ago. Inventory decisions must be considered in the context of the supply chain and retail challenges caused by the COVID-19 Corona virus. Against the backdrop of the pandemic, the current value being so much higher than last year at this point might be a reflection of the increased reliance on online retail. This is corroborated as we observe upstream respondents reporting a value of 59.6, compared to 65.7 for downstream respondents.
When asked to predict what conditions will be like 12 months from now, the average value is 73.2, up (11.2) from October’s future prediction of 62.0. Respondents expect inventory values to continue increase significantly over the next year, potentially indicating a sentiment that the increase in inventory-intensive practices that were adopted due to the pandemic will continue, even after vaccines are distributed.
Inventory Level growth is 62.0, down (-7.6) from October’s growth rate of 69.6. While this is down, this reading is significantly higher (7.8 points) than the same time last year, this means that seasonally speaking, inventories are increasing faster than a year ago. Inventory decisions must be considered in the context of the supply chain and retail challenges caused by the COVID-19 Corona virus. Against the backdrop of the pandemic, the current value being so much higher than last year at this point might be a reflection of the increased reliance on online retail. This is corroborated as we observe upstream respondents reporting a value of 59.6, compared to 65.7 for downstream respondents.
When asked to predict what conditions will be like 12 months from now, the average value is 73.2, up (11.2) from October’s future prediction of 62.0. Respondents expect inventory values to continue increase significantly over the next year, potentially indicating a sentiment that the increase in inventory-intensive practices that were adopted due to the pandemic will continue, even after vaccines are distributed.
Inventory Costs
Given the continued increases in inventory levels, it is not surprising that inventory costs have continued to grow as well. The current value is 73.1, down slightly (-0.5) from October’s growth rate of 73.6. Still these levels are significantly elevated from the same time last year (+7.7), when Inventory Costs grew at a rate of 65.4. Taking this graph and the previous graph of inventory values together, inventory levels and costs are growing, at higher rates. This continued growth in costs could be related to the fact that warehousing prices and utilization are still increasing. Given the significant increase 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 to predict what conditions will be like 12 months from now, the average value is 76.9, down slightly (-1.9) from October’s future prediction of 78.8, but still demonstrating a significant rate of growth. Respondents expect the cost of holding inventory to continue to grow over the next year.
Given the continued increases in inventory levels, it is not surprising that inventory costs have continued to grow as well. The current value is 73.1, down slightly (-0.5) from October’s growth rate of 73.6. Still these levels are significantly elevated from the same time last year (+7.7), when Inventory Costs grew at a rate of 65.4. Taking this graph and the previous graph of inventory values together, inventory levels and costs are growing, at higher rates. This continued growth in costs could be related to the fact that warehousing prices and utilization are still increasing. Given the significant increase 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 to predict what conditions will be like 12 months from now, the average value is 76.9, down slightly (-1.9) from October’s future prediction of 78.8, but still demonstrating a significant rate of growth. Respondents expect the cost of holding inventory to continue to grow over the next year.
Warehousing Capacity
The Warehousing Capacity Index registered 38.0 percent in November 2020, which indicates that warehouse capacity is decreasing for a third month in a row. This is the first time this metric has registered in the 30’s and is the lowest Warehousing Capacity reading in the history of the LMI. This reading is down nearly over 14 percentage points from the reading one year ago (November 2019 registered in at 52.1). Previous predictions from the LMI reports have suggested that an inevitable tightening would increase, particularly as forecasts about the 2020 holiday season continue to grow and as the reverberations of the COVID-19 disruption continue to manifest. These forces, coupled with consumers’ behavioral shift to more e-commerce, will likely manifest in increasingly tight warehouse capacity.
Looking forward at the next 12 months, the predicted Warehousing Capacity index is predicted to contract slightly with a score of 49.4, down (-4.9) from October’s future prediction of 54.3. Respondents as hesitant to predict any significant relief in the current warehousing crunch over the next year.
The Warehousing Capacity Index registered 38.0 percent in November 2020, which indicates that warehouse capacity is decreasing for a third month in a row. This is the first time this metric has registered in the 30’s and is the lowest Warehousing Capacity reading in the history of the LMI. This reading is down nearly over 14 percentage points from the reading one year ago (November 2019 registered in at 52.1). Previous predictions from the LMI reports have suggested that an inevitable tightening would increase, particularly as forecasts about the 2020 holiday season continue to grow and as the reverberations of the COVID-19 disruption continue to manifest. These forces, coupled with consumers’ behavioral shift to more e-commerce, will likely manifest in increasingly tight warehouse capacity.
Looking forward at the next 12 months, the predicted Warehousing Capacity index is predicted to contract slightly with a score of 49.4, down (-4.9) from October’s future prediction of 54.3. Respondents as hesitant to predict any significant relief in the current warehousing crunch over the next year.
Warehousing Utilization
The Warehousing Utilization Index registered 71.1 percent in November 2020. This represents a minor .8 percentage point decrease from last month, and is up by over 10 percentage points from the November 2019 reading of 60.5. As was the case last month, this continued increase in the rate at which utilization is growing is congruent with the decrease in capacity noted previously. Previously in this report, we predicted a continued overall increase in the utilization, due to the challenges noted above. It appears that this prediction is accurate. The slight dip in the rate from last month (i.e. the .8 percentage point decrease) is in contrast with the continued tightening of warehouse capacity, but might represent or portend a shift for the post-holiday season. Further analysis is required, and the coming months will indicate whether this is a blip or a harbinger of things to come.
Looking forward at the next 12 months, the predicted Warehousing Utilization index is 78.0, up very slightly (+0.6) from October’s future prediction of 77.4. This seems to support the notion that respondents do not expect significant amounts of warehousing to come online in the next year, and therefore anticipate the need to utilize more of the currently available space.
The Warehousing Utilization Index registered 71.1 percent in November 2020. This represents a minor .8 percentage point decrease from last month, and is up by over 10 percentage points from the November 2019 reading of 60.5. As was the case last month, this continued increase in the rate at which utilization is growing is congruent with the decrease in capacity noted previously. Previously in this report, we predicted a continued overall increase in the utilization, due to the challenges noted above. It appears that this prediction is accurate. The slight dip in the rate from last month (i.e. the .8 percentage point decrease) is in contrast with the continued tightening of warehouse capacity, but might represent or portend a shift for the post-holiday season. Further analysis is required, and the coming months will indicate whether this is a blip or a harbinger of things to come.
Looking forward at the next 12 months, the predicted Warehousing Utilization index is 78.0, up very slightly (+0.6) from October’s future prediction of 77.4. This seems to support the notion that respondents do not expect significant amounts of warehousing to come online in the next year, and therefore anticipate the need to utilize more of the currently available space.
Warehousing Prices
Warehousing Prices Index registered 78.4 percent in November 2020. This reading represents a rather negligible decrease of .3 percentage points from last month, which (though marginally) breaks the trend of seven straight months of an increased growth rate in warehousing prices amid the COVID-19 disruption(s), and holiday season preparations. This reading is also dramatically up by over 10 percentage points from the reading one year ago. This continued increase in the rate at which prices are increasing is, as predicted previously “likely directly proportional to the tightening in warehousing capacity and utilization, creating a heightened demand and an increasingly difficult pricing structure for those seeking warehouse space”. Indeed, the data are indicating that pricing will not relent anytime soon, unless a rapid shift in the market occurs. Such a shift might come as a result of new warehouse capacity coming online, thereby potentially placing a downward pressure on pricing. As yet, there are no indications of this.
Future predictions suggest that respondents are expecting prices to continue to grow at a rate of 82.9, up slightly (+0.4) from October’s future prediction of 82.5. Clearly respondents are anticipating a significant increase in costs (and a continuation of current trends) over the next 12 months.
Warehousing Prices Index registered 78.4 percent in November 2020. This reading represents a rather negligible decrease of .3 percentage points from last month, which (though marginally) breaks the trend of seven straight months of an increased growth rate in warehousing prices amid the COVID-19 disruption(s), and holiday season preparations. This reading is also dramatically up by over 10 percentage points from the reading one year ago. This continued increase in the rate at which prices are increasing is, as predicted previously “likely directly proportional to the tightening in warehousing capacity and utilization, creating a heightened demand and an increasingly difficult pricing structure for those seeking warehouse space”. Indeed, the data are indicating that pricing will not relent anytime soon, unless a rapid shift in the market occurs. Such a shift might come as a result of new warehouse capacity coming online, thereby potentially placing a downward pressure on pricing. As yet, there are no indications of this.
Future predictions suggest that respondents are expecting prices to continue to grow at a rate of 82.9, up slightly (+0.4) from October’s future prediction of 82.5. Clearly respondents are anticipating a significant increase in costs (and a continuation of current trends) over the next 12 months.
Transportation Capacity
The Transportation Capacity Index registered 35.1 percent in November 2020. This constitutes a decrease of 2.9 percentage points from the October reading of 38.0 and one of the steepest rates of decline measured in the history of the index. This is the sixth consecutive month that the Transportation Capacity Index has read in as contracting. This is consistent with recent news reports indicating that firms are struggling to find the trucks and boats necessary to meet consumer demand. Finding sufficient transportation continues to be an issue for many firms (particularly customer-facing firms), the four lowest scores for the last two years in the Transportation Capacity index have come in the last four months.
Future predictions suggest that respondents are expecting capacity to increase over the next year at a rate of 59.7 percent up (+0.2) from October’s future prediction of 59.5. Whether or not sufficient capacity will come online over the next year, to make this prediction a reality, remains to be seen.
The Transportation Capacity Index registered 35.1 percent in November 2020. This constitutes a decrease of 2.9 percentage points from the October reading of 38.0 and one of the steepest rates of decline measured in the history of the index. This is the sixth consecutive month that the Transportation Capacity Index has read in as contracting. This is consistent with recent news reports indicating that firms are struggling to find the trucks and boats necessary to meet consumer demand. Finding sufficient transportation continues to be an issue for many firms (particularly customer-facing firms), the four lowest scores for the last two years in the Transportation Capacity index have come in the last four months.
Future predictions suggest that respondents are expecting capacity to increase over the next year at a rate of 59.7 percent up (+0.2) from October’s future prediction of 59.5. Whether or not sufficient capacity will come online over the next year, to make this prediction a reality, remains to be seen.
Transportation Utilization
The Transportation Utilization Index registered 69.4 percent in November 2020. This number denotes a 2.2 points decrease from the October reading of 71.6. This drop continues the slight downward trend in Transportation Utilization Index, while it remains above 50, indicating expansion in transportation utilization.
It should be noted that the future Transportation Utilization Index shows a value of 78.8 percent level for the next 12 months, indicating continuing expectations of growth in the future.
The Transportation Utilization Index registered 69.4 percent in November 2020. This number denotes a 2.2 points decrease from the October reading of 71.6. This drop continues the slight downward trend in Transportation Utilization Index, while it remains above 50, indicating expansion in transportation utilization.
It should be noted that the future Transportation Utilization Index shows a value of 78.8 percent level for the next 12 months, indicating continuing expectations of growth in the future.
Transportation Prices
The Transportation Prices Index registered 85.8 percent in November 2020. This constitutes a small increase of .3 percent from the October transportation prices reading of 85.5. This is up 48.1 points from April continuing to indicate increasing transportation prices. Observing the last two years of Transportation Prices shows a “u-shaped” trend, with November’s rate of growth representing a return to the heady days of mid-to-late 2018.
Transportation Prices will likely remain elevated at least through the remainder of Q4, and potentially further. The future index for transportation prices indicates a value of 77.9 indicating continuing expectations of price increases over the next 12 months, albeit these expectations are slightly lower than they were in October.
The Transportation Prices Index registered 85.8 percent in November 2020. This constitutes a small increase of .3 percent from the October transportation prices reading of 85.5. This is up 48.1 points from April continuing to indicate increasing transportation prices. Observing the last two years of Transportation Prices shows a “u-shaped” trend, with November’s rate of growth representing a return to the heady days of mid-to-late 2018.
Transportation Prices will likely remain elevated at least through the remainder of Q4, and potentially further. The future index for transportation prices indicates a value of 77.9 indicating continuing expectations of price increases over the next 12 months, albeit these expectations are slightly lower than they were in October.
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.
[1] Adobe Digital Insights. (2020). Unboxing 2020’s Holiday Shopping Forecast (pp. 1–38). Adobe. https://www.adobe.com/content/dam/www/us/en/adi/2020/pdfs/Adobe_Holiday_Predictions_2020.pdf
[2] Nassauer, S., & Kapner, S. (2020, November 29). Black Friday Was a Bust for Many Stores, Better for Online. Wall Street Journal. https://www.wsj.com/articles/black-friday-was-a-bust-for-many-
[3] Smith, J. (2020b, November 17). Retailers Brace for Hefty Holiday Returns of Oversize Goods. Wall Street Journal. https://www.wsj.com/articles/retailers-brace-for-hefty-holiday-returns-of-oversize-goods-11605644126
[4] Millar, A. (2020, November 30). Special delivery: The logistics of curing Covid-19. Pharmaceutical Technology. https://www.pharmaceutical-technology.com/features/special-delivery-the-logistics-of-curing-covid-19/
[5] Tabak, N. (2020, November 23). COVID-19 vaccine distribution could start in mid-December, official says. FreightWaves. https://www.freightwaves.com/news/covid-19-vaccine-distribution-could-start-in-mid-december-official-says
[6] Repko, M. (2020, October 29). Walmart turns four stores into e-commerce laboratories as online sales surge. CNBC. https://www.cnbc.com/2020/10/29/walmart-turns-four-stores-into-e-commerce-laboratories-.html
[7] Smith, J. (2020a, November 12). Walmart Adding ‘Pop-Up’ Centers for Online Holiday Sales. Wall Street Journal. https://www.wsj.com/articles/walmart-adding-pop-up-centers-for-online-holiday-sales-11605216505
[8] Adobe Digital Insights. (2020). Unboxing 2020’s Holiday Shopping Forecast (pp. 1–38). Adobe. https://www.adobe.com/content/dam/www/us/en/adi/2020/pdfs/Adobe_Holiday_Predictions_2020.pdf
