FOR RELEASE: Tuesday, September 7th, 2021
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
August 2021 Logistics Manager’s Index Report®
LMI® at 73.8
Growth is INCREASING AT A DECREASING RATE for: Inventory Levels, Inventory Costs, and Warehousing Utilization, Warehousing Prices.
Growth is INCREASING AT AN INCREASING RATE for: Transportation Prices and Transportation Utilization.
Warehousing Prices are INCREASING STEADILY.
Warehousing Capacity and Transportation Capacity are CONTRACTING.
LMI® at 73.8
Growth is INCREASING AT A DECREASING RATE for: Inventory Levels, Inventory Costs, and Warehousing Utilization, Warehousing Prices.
Growth is INCREASING AT AN INCREASING RATE for: Transportation Prices and Transportation Utilization.
Warehousing Prices are INCREASING STEADILY.
Warehousing Capacity and Transportation Capacity are CONTRACTING.
(Fort Collins, Colorado) — August 2021’s LMI comes in at 73.8, down slightly (-0.7) from July but still the fifth highest in the history of the index. This is all the more interesting when considering the index hit this mark immediately after the reaching the second- and third-highest readings the two months prior. The LMI is a change index, not a measure of absolute growth. So the fact that the logistics industry still displayed this high rate of growth after expanding so rapidly in the two previous months speaks to the unprecedented stretch of growth we are currently observing. Indeed, in the period from June-August 2021, the LMI averaged a growth rate of 74.4, the highest three-month stretch in the history of the index. This is also more than 10.0 points (and approximately 1.5 standard deviations) above the average growth rate of 64.0. By any measure, this Summer has seen unparalleled rates of expansion in the logistics industry – largely driven by rapid price growth and significant tightening of capacity. higher than the average also marks the highest level of growth across any three-month period, with 74.5, tied for the third-highest in the history of the index. Oftentimes the “peak season” for logistics really heats up in the Autumn as firms prep for Q4 and the holidays. It seems likely that the tightness and high costs we have observed through the Summer will continue into the Fall. In fact, A recently released survey by GlobalTranz shows that executives are expecting Q4 demand in 2021 to exceed the record levels seen in 2020[1]. It will be interesting to observe the strategies firms use to deal with what is sure to be a very busy end of the year.
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 August 2021. As we have seen for most of the last year, this month’s LMI displays continued expansion in the logistics industry. Overall, the LMI is down slightly (-0.7) in from July’s reading of 74.5. The growth in this month’s index is fueled by metrics from across the index. Warehousing Prices come in at an all-time high reading of 88.0 for the second consecutive month while Transportation Prices once again lead the index at 93.7.
The headline of a recent article read “Peak season: Let the chaos commence”[2]. Evidence of firms stocking up on inventory in advance of Q4 is evident throughout globally transportation networks. There are reports of 20 miles of backups for some rail lines moving through Chicago and U.S. ports continue to be packed with goods coming from Asia. There is no sign of relief on the horizon for ports, as maritime bookings were up 40% from last August, giving more evidence that we are seeing the beginning of peak season[3]. This is supported by the Transportation Capacity metric, which while up (+5.6) is still contracting significantly at a rate of 40.5. This marks 15 consecutive months of contraction in available transportation. Fleets are attempting to build capacity up. Orders for Class 8 trucks were up 51% from July and 91% from August 2020. However, due to the shortage of semiconductors many manufacturers are being somewhat measured in terms of their acceptance new orders[4]. Despite continuously high orders, production in July was actually down to 14,920 units – the lowest output since the height of COVID lockdowns in May 2020[5] as manufacturers scramble to find components. The lack of capacity is likely to be felt acutely by both retailers and consumers, as some analysts predict that demand for parcel delivery will exceed available capacity by over 5 million parcels per day during the peak season[6]. Despite the production of over 3.3 million TEU’s in new containers through the first half of 2021, capacity is still not meeting demand[7]. In the first week of September, the price of containers moving from China to the West Coast of the U.S. were up 3% to $19,040 – an all-time high for the lane dwarfed only by the $20,615 shippers can expect to pay to move a 40-foot container from China to America’s East Coast[8]. Transportation Prices are seemingly high everywhere, the metric is up (+2.7) to 93.7. This is the fifth-highest reading in the history of the index and marks the fifth month out of the last six with a reading in the 90’s – the first time that’s happened in the history of the LMI. Transportation Utilization is also up (+XT) to UU. Interestingly, this is largely driven by downstream firms such as retailers, who are reporting a significantly higher rate of utilization (+9.4) than their upstream counterparts.
Tight capacity and high prices are also prevalent among warehousing networks. Warehousing Capacity read in at 39.1, the first time it has dipped back into the 30’s since November 2020. This is also notable in that capacity has now contracted every month for a full year. Part of the issue with capacity is a lack of warehouse labor. While the August job numbers were disappointing with only 235,000 jobs added – falling short of projections. However, 20,000 – or 8.5%, of those jobs were in warehousing (another 11% were in courier/messenger and transportation, suggesting logistics was actually a strong point in August hires)[9]. More warehouse and logistics labor will be needed to deal with peak season. Companies are less optimistic now about a rush of new workers coming in when the enhanced unemployment benefits expire in September[10]; leading some firms to increase wages – exemplified by Walmart’s recently announcement they plan to hire 20,000 workers starting at wage of $20.37 per hour[11]. It will be interesting to observe how firms without the resources of a Walmart or Amazon will do to build up the physical and labor capacity needed to meet consumer expectations through Q4. The lack of capacity has is reflected in Warehousing Utilization which reads in at 66.3. While that is down slightly (-4.3) overall, the metric is bifurcated as downstream firms are utilizing a significantly higher rate (+26.2) than their upstream counterparts. This suggests that retailers are currently utilizing every inch of space available as they attempt to stage goods as close to consumers as possible, while also building up inventories in advance of Q4 to avoid shipping delays. The practice of over-ordering ahead of time to avoid holiday stockouts is epitomized by Best Buy, who recently reported holding $6.4 billion of merchandise on July 31st – up 55% from 2020 and 23% from 2019[12] (O’Neal, 2021). Ironically, when firms order more inventory than normal to avoid shipping delays, they are actually overwhelming carriers and likely causing further shipping delays, creating a negative feedback loop. The lack of labor, physical space, and push to build up inventory levels has led to Warehousing Prices reading in at 88.0 – their all-time index high – for the second month in a row.
The two inventory metrics continued to move their separate ways. Inventory Levels are growing at a rate of 85.9 – the third highest rate on record – dwarfed only by the readings in June and July. Meanwhile, Inventory Levels continue to grow, but at a much lower rate of 63.8 (down 2.6 from July). This is reflective of the velocity with which inventory is moving through the system. Even while the inventory to sales ratio reported by the Federal Reserve has been at or near record lows through the Spring and Summer, actual inventory levels have remained elevated. However, retail sales have remined much more elevated[13]. This all suggests that consumer demand is pushing huge quantities of inventory through supply chains at a rapid pace. This means Inventory Costs are high due to the volume, but Inventory Levels remain moderate due to the velocity. There is evidence that inventory will continue to pour into supply chains in the near future. onto consumers over the next year[14]. Whether this will stem consumer demand remains to be seen. Over 340,000 TEUs are expected to arrive in the Port of Los Angeles in the first half of September – putting the port on pace to shatter previous records[15]. A statistic that explains the record level of ships anchored in the San Pedro Bay (47 on the last Sunday of August)[16].
And so, we have a situation in tight capacity across all aspects of the supply chain combined with firms frantically attempting to build up inventories to avoid shipping-related stockouts during Q4 are driving prices up exponentially. The rapid increase in container prices seems to suggest that supply chains have reached an inflection point in which the strain on capacity is now leading to sharp price increases which will eventually lead to a market correction in the form of significantly increased capacity. The key question firms now face is what to do while we wait for that additional capacity to come online?
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 August 2021. As we have seen for most of the last year, this month’s LMI displays continued expansion in the logistics industry. Overall, the LMI is down slightly (-0.7) in from July’s reading of 74.5. The growth in this month’s index is fueled by metrics from across the index. Warehousing Prices come in at an all-time high reading of 88.0 for the second consecutive month while Transportation Prices once again lead the index at 93.7.
The headline of a recent article read “Peak season: Let the chaos commence”[2]. Evidence of firms stocking up on inventory in advance of Q4 is evident throughout globally transportation networks. There are reports of 20 miles of backups for some rail lines moving through Chicago and U.S. ports continue to be packed with goods coming from Asia. There is no sign of relief on the horizon for ports, as maritime bookings were up 40% from last August, giving more evidence that we are seeing the beginning of peak season[3]. This is supported by the Transportation Capacity metric, which while up (+5.6) is still contracting significantly at a rate of 40.5. This marks 15 consecutive months of contraction in available transportation. Fleets are attempting to build capacity up. Orders for Class 8 trucks were up 51% from July and 91% from August 2020. However, due to the shortage of semiconductors many manufacturers are being somewhat measured in terms of their acceptance new orders[4]. Despite continuously high orders, production in July was actually down to 14,920 units – the lowest output since the height of COVID lockdowns in May 2020[5] as manufacturers scramble to find components. The lack of capacity is likely to be felt acutely by both retailers and consumers, as some analysts predict that demand for parcel delivery will exceed available capacity by over 5 million parcels per day during the peak season[6]. Despite the production of over 3.3 million TEU’s in new containers through the first half of 2021, capacity is still not meeting demand[7]. In the first week of September, the price of containers moving from China to the West Coast of the U.S. were up 3% to $19,040 – an all-time high for the lane dwarfed only by the $20,615 shippers can expect to pay to move a 40-foot container from China to America’s East Coast[8]. Transportation Prices are seemingly high everywhere, the metric is up (+2.7) to 93.7. This is the fifth-highest reading in the history of the index and marks the fifth month out of the last six with a reading in the 90’s – the first time that’s happened in the history of the LMI. Transportation Utilization is also up (+XT) to UU. Interestingly, this is largely driven by downstream firms such as retailers, who are reporting a significantly higher rate of utilization (+9.4) than their upstream counterparts.
Tight capacity and high prices are also prevalent among warehousing networks. Warehousing Capacity read in at 39.1, the first time it has dipped back into the 30’s since November 2020. This is also notable in that capacity has now contracted every month for a full year. Part of the issue with capacity is a lack of warehouse labor. While the August job numbers were disappointing with only 235,000 jobs added – falling short of projections. However, 20,000 – or 8.5%, of those jobs were in warehousing (another 11% were in courier/messenger and transportation, suggesting logistics was actually a strong point in August hires)[9]. More warehouse and logistics labor will be needed to deal with peak season. Companies are less optimistic now about a rush of new workers coming in when the enhanced unemployment benefits expire in September[10]; leading some firms to increase wages – exemplified by Walmart’s recently announcement they plan to hire 20,000 workers starting at wage of $20.37 per hour[11]. It will be interesting to observe how firms without the resources of a Walmart or Amazon will do to build up the physical and labor capacity needed to meet consumer expectations through Q4. The lack of capacity has is reflected in Warehousing Utilization which reads in at 66.3. While that is down slightly (-4.3) overall, the metric is bifurcated as downstream firms are utilizing a significantly higher rate (+26.2) than their upstream counterparts. This suggests that retailers are currently utilizing every inch of space available as they attempt to stage goods as close to consumers as possible, while also building up inventories in advance of Q4 to avoid shipping delays. The practice of over-ordering ahead of time to avoid holiday stockouts is epitomized by Best Buy, who recently reported holding $6.4 billion of merchandise on July 31st – up 55% from 2020 and 23% from 2019[12] (O’Neal, 2021). Ironically, when firms order more inventory than normal to avoid shipping delays, they are actually overwhelming carriers and likely causing further shipping delays, creating a negative feedback loop. The lack of labor, physical space, and push to build up inventory levels has led to Warehousing Prices reading in at 88.0 – their all-time index high – for the second month in a row.
The two inventory metrics continued to move their separate ways. Inventory Levels are growing at a rate of 85.9 – the third highest rate on record – dwarfed only by the readings in June and July. Meanwhile, Inventory Levels continue to grow, but at a much lower rate of 63.8 (down 2.6 from July). This is reflective of the velocity with which inventory is moving through the system. Even while the inventory to sales ratio reported by the Federal Reserve has been at or near record lows through the Spring and Summer, actual inventory levels have remained elevated. However, retail sales have remined much more elevated[13]. This all suggests that consumer demand is pushing huge quantities of inventory through supply chains at a rapid pace. This means Inventory Costs are high due to the volume, but Inventory Levels remain moderate due to the velocity. There is evidence that inventory will continue to pour into supply chains in the near future. onto consumers over the next year[14]. Whether this will stem consumer demand remains to be seen. Over 340,000 TEUs are expected to arrive in the Port of Los Angeles in the first half of September – putting the port on pace to shatter previous records[15]. A statistic that explains the record level of ships anchored in the San Pedro Bay (47 on the last Sunday of August)[16].
And so, we have a situation in tight capacity across all aspects of the supply chain combined with firms frantically attempting to build up inventories to avoid shipping-related stockouts during Q4 are driving prices up exponentially. The rapid increase in container prices seems to suggest that supply chains have reached an inflection point in which the strain on capacity is now leading to sharp price increases which will eventually lead to a market correction in the form of significantly increased capacity. The key question firms now face is what to do while we wait for that additional capacity to come online?
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, albeit at declining rates, while both capacity metrics continue their runs of contraction. The logistics industry remains tight, and based on future predictions and industry experts, seems likely to stay that way through the rest of the year.
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, albeit at declining rates, while both capacity metrics continue their runs of contraction. The logistics industry remains tight, and based on future predictions and industry experts, seems likely to stay that way through the rest of the year.
This month, both upstream (blue bars) and downstream (orange bars) firms reported significant continued growth in utilization of logistics services. We observed some significant differences across Transportation Capacity, Warehouse and Transportation Utilization, and the overall index.
This month, both upstream (blue bars) and downstream (orange bars) firms reported significant continued growth in utilization of logistics services. We observed some significant differences across Transportation Capacity, Warehouse and Transportation Utilization, and the overall index.
T-tests demonstrate that downstream firms are seeing significantly greater levels of growth in their utilization of both Warehouse and Transportation space; the difference in growth rate is particularly pronounced for the former at a 26.2 point difference – the largest delta we have ever tracked between the two groups. In a continuation of July’s numbers, Downstream firms are also having a more difficult time locating available Transportation Capacity, with a rate of contraction 18 points lower than their Upstream counterparts. This aligns with analysis suggesting that inventory is moving through supply chains at high volumes, and that retailers are having difficulties keeping goods in stock. The pressure on utilization and capacity downstream is so great that the overall LMI is actually 6.6 points higher for downstream firms. Interestingly, despite these differences, we see no meaningful difference in price, suggesting that prices continue to climb for everyone.
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. For the next year, respondents predict a growth rate of 73.6 for the overall LMI, up 1.5 points from July’s prediction and 71.7 for the overall LMI and nearly 10 points above the average all-time growth rate of 64.0. This represents a significant rate of predicted growth. This high score is driven by predictions in the upper 80’s for all three price metrics. There is some optimism that Transportation Capacity will come online over the next 12 months, although as noted above that is largely dependent on the future availability of semiconductors and increased processing capacity.
The exact nature of the future predictions vary by supply chain position. Unlike the last two months, we do see divergence between the two groups for future predictions:
T-tests show that Downstream firms (purple bars) are expecting significantly less Transportation Capacity will be available over the next 12 months, predicting contraction while their Upstream counterparts predict expansion. This flips for Warehouse Prices, where Upstream firms are predicting steeper rates of growth. Continuing a dynamic we have observed multiple times in which downstream retailers feel more pressure to transport goods quickly to consumers, and upstream firms feel pressure to hold and move inventory.
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 73.8, down slightly (-0.7) from July’s reading of 74.5. This marks seven consecutive months, and 10 out of the last 12, with a reading above 70.0. As mentioned last month, we have never before observed such an extended streak of growth in the LMI. The average reading over the last three months is 74.4, the highest such average for any three-month period in the history of the LMI. Growth is evident across the board, particularly in the Transportation metrics. It will be interesting to see how much long supply chains can take this type of pressure – especially given that peak season is just beginning.
Respondents are not anticipating any significant relief over the next 12 months, predicting a growth rate of 73.6, up (+1.9) from July’s future prediction of 71.7 and significantly higher than the all-time average of 64.0. This growth rate over the next 12 months would lead to a continued increase in prices as the supply of capacity continues to struggle to keep up with demand.
The overall LMI index is 73.8, down slightly (-0.7) from July’s reading of 74.5. This marks seven consecutive months, and 10 out of the last 12, with a reading above 70.0. As mentioned last month, we have never before observed such an extended streak of growth in the LMI. The average reading over the last three months is 74.4, the highest such average for any three-month period in the history of the LMI. Growth is evident across the board, particularly in the Transportation metrics. It will be interesting to see how much long supply chains can take this type of pressure – especially given that peak season is just beginning.
Respondents are not anticipating any significant relief over the next 12 months, predicting a growth rate of 73.6, up (+1.9) from July’s future prediction of 71.7 and significantly higher than the all-time average of 64.0. This growth rate over the next 12 months would lead to a continued increase in prices as the supply of capacity continues to struggle to keep up with demand.
Inventory Levels
The Inventory Levels value is 63.8, down (-2.6) from July’s reading of 66.4. This differs from virtually every other metric in the LMI in that it is barely off from its all-time average of 61. 2. As explained above, this is not because firms are not ordering large volumes of inventory. Instead, it is a combination of finished goods and components arriving slowly due to shipping delays, as well as the goods that do come in moving through the system at a high velocity. It will be interesting to observe if Inventory Levels do increase in any significant way over the next few months as firms build up for Q4, or if the velocity of demand keeps the growth rate modest.
Future predictions suggest that it may be the former. When asked to predict what conditions will be like 12 months from now, the average value is 78.5, down slightly (-1.0) from July’s future prediction of 79.5. While inventories may not be able to build up significantly before the holidays, respondents do expect inventory values to continue increase significantly over the next year.
The Inventory Levels value is 63.8, down (-2.6) from July’s reading of 66.4. This differs from virtually every other metric in the LMI in that it is barely off from its all-time average of 61. 2. As explained above, this is not because firms are not ordering large volumes of inventory. Instead, it is a combination of finished goods and components arriving slowly due to shipping delays, as well as the goods that do come in moving through the system at a high velocity. It will be interesting to observe if Inventory Levels do increase in any significant way over the next few months as firms build up for Q4, or if the velocity of demand keeps the growth rate modest.
Future predictions suggest that it may be the former. When asked to predict what conditions will be like 12 months from now, the average value is 78.5, down slightly (-1.0) from July’s future prediction of 79.5. While inventories may not be able to build up significantly before the holidays, respondents do expect inventory values to continue increase significantly over the next year.
Inventory Costs
Inventory costs were 85.9 in August, down (-2.9) from July’s reading of 88.8. The three highest readings in this metric have all occurred in the last three months, demonstrating the extreme pressures currently facing supply chains. This is a marked increase from this time last year, up 21.2 points from August 2020’s reading of 64.7. As expected, Inventory Costs increased through the end of 2020 along with typical seasonality, it will be interesting to observe how costs increase through peak season 2021. If we observe the same rate of growth this year a possibility exists that we will see our first Inventory Cost reading in the 90’s – a threshold that has only ever been crossed by Transportation Prices in the past.
Respondent predictions suggest this is a possibility. When asked about what they expect Inventory Costs to be like 12 months from now, the average value is 89.3, up (+1.4) from July’s future prediction of 87.9. If this prediction is accurate it would represent record levels of growth – indicating that firms are not expecting much relief in the way of supply chain costs over the next 12 months.
Inventory costs were 85.9 in August, down (-2.9) from July’s reading of 88.8. The three highest readings in this metric have all occurred in the last three months, demonstrating the extreme pressures currently facing supply chains. This is a marked increase from this time last year, up 21.2 points from August 2020’s reading of 64.7. As expected, Inventory Costs increased through the end of 2020 along with typical seasonality, it will be interesting to observe how costs increase through peak season 2021. If we observe the same rate of growth this year a possibility exists that we will see our first Inventory Cost reading in the 90’s – a threshold that has only ever been crossed by Transportation Prices in the past.
Respondent predictions suggest this is a possibility. When asked about what they expect Inventory Costs to be like 12 months from now, the average value is 89.3, up (+1.4) from July’s future prediction of 87.9. If this prediction is accurate it would represent record levels of growth – indicating that firms are not expecting much relief in the way of supply chain costs over the next 12 months.
Warehousing Capacity
August 2021’s Warehousing Capacity registered in at 39.1 and reflects a rather meek decline from the previous month, and continues the levels being beneath the 50 percent mark, now for the 12th month in a row). Our team previously suspected that readings with a slight uptick in the rate of decline may have been noise in an otherwise very tight warehousing market, and it appears that the continued downward decline is in fact a trend, not noise. Relative to one year ago, this reading reflects an 11.4-point decrease. This is notable given that readings from last summer represented the height of the COVID-19 pandemic and the impact that it continues to have on global supply chains, and a year later the tension is even more pronounced. Now, one year later, the demand for storage appears to be even further in demand. While prognostication may be futile, one thing appears to be clear: capacity in the warehousing space is not going to grow anytime soon.
Looking forward at the next 12 months, the predicted Warehousing Capacity index is predicted to increase at a rate of 48.3, down (-6.7) from July’s future prediction of 55.0 and down (-7.4) from June’s future prediction of 62.4. The prediction for future capacity has dropped off rather drastically over the last two month, perhaps reflecting increasing pessimism.
August 2021’s Warehousing Capacity registered in at 39.1 and reflects a rather meek decline from the previous month, and continues the levels being beneath the 50 percent mark, now for the 12th month in a row). Our team previously suspected that readings with a slight uptick in the rate of decline may have been noise in an otherwise very tight warehousing market, and it appears that the continued downward decline is in fact a trend, not noise. Relative to one year ago, this reading reflects an 11.4-point decrease. This is notable given that readings from last summer represented the height of the COVID-19 pandemic and the impact that it continues to have on global supply chains, and a year later the tension is even more pronounced. Now, one year later, the demand for storage appears to be even further in demand. While prognostication may be futile, one thing appears to be clear: capacity in the warehousing space is not going to grow anytime soon.
Looking forward at the next 12 months, the predicted Warehousing Capacity index is predicted to increase at a rate of 48.3, down (-6.7) from July’s future prediction of 55.0 and down (-7.4) from June’s future prediction of 62.4. The prediction for future capacity has dropped off rather drastically over the last two month, perhaps reflecting increasing pessimism.
Warehousing Utilization
The Warehousing Utilization Index registered in at 66.3 percent in August 2021. This represents a 4.2 percentage point decrease from July’s reading of 70.5. Interestingly, the reading from one year ago is 1.2 points below this month’s. This is also the second consecutive month where utilization in the warehousing market is down. Previously, based on the juxtaposition between slightly increasing capacity (presumably new warehousing entering the market, or a softening demand) and decreased utilization our team thought that it may have been a “signal that more warehousing is coming online (or is planned to come online) in order to assuage the tension in the market”. Unfortunately, this sentiment is in contrast to the further tightening in the capacity. Future readings of these two measurements, as well as the readings for pricing will give our team better insights for future prognostication(s).
Looking forward at the next 12 months, the predicted Warehousing Utilization index is 77.0, up slightly (+1.6) from July’s future prediction of 75.4. Respondents continue to expect to utilize increasingly greater amounts of available warehouse space throughout the year as supply struggles to keep up with demand.
The Warehousing Utilization Index registered in at 66.3 percent in August 2021. This represents a 4.2 percentage point decrease from July’s reading of 70.5. Interestingly, the reading from one year ago is 1.2 points below this month’s. This is also the second consecutive month where utilization in the warehousing market is down. Previously, based on the juxtaposition between slightly increasing capacity (presumably new warehousing entering the market, or a softening demand) and decreased utilization our team thought that it may have been a “signal that more warehousing is coming online (or is planned to come online) in order to assuage the tension in the market”. Unfortunately, this sentiment is in contrast to the further tightening in the capacity. Future readings of these two measurements, as well as the readings for pricing will give our team better insights for future prognostication(s).
Looking forward at the next 12 months, the predicted Warehousing Utilization index is 77.0, up slightly (+1.6) from July’s future prediction of 75.4. Respondents continue to expect to utilize increasingly greater amounts of available warehouse space throughout the year as supply struggles to keep up with demand.
Warehousing Prices
Warehousing Prices Index registered 88.0 percent in August 2021, marking two consecutive months at this all-time high score. This reading continues the trend in the (previously unrelenting) increased growth rate in warehousing prices amid the COVID-19 disruption(s). This reading, is up by nearly 20 percentage points from the reading one year ago. Jointly examining this month’s pricing reading in conjunction with this month’s capacity reading seem to again align, indicating that the decreased capacity is driving prices up. The confounding factor is the decreased utilization. Previously, our team thought that it may have been a fluke, but this month is yet again a data point indicating that the warehousing market remains tight, and pricing seems not to be decreasing any time soon. Last month’s conclusion appears to be again true: the continued tension in the warehousing market is reaching epic proportions, and the pressure is not relenting. In fact, given the decreased capacity, it may be getting worse.
Future predictions suggest that respondents are expecting prices to continue to grow at a rate of 88.0, up (+0.5) from July’s future prediction of 87.5 and matching the current reading. Respondents no longer expect an influx of Warehousing Capacity over the next 12 months – a shortage that seems to be reflected in the predicted growth in cost.
Warehousing Prices Index registered 88.0 percent in August 2021, marking two consecutive months at this all-time high score. This reading continues the trend in the (previously unrelenting) increased growth rate in warehousing prices amid the COVID-19 disruption(s). This reading, is up by nearly 20 percentage points from the reading one year ago. Jointly examining this month’s pricing reading in conjunction with this month’s capacity reading seem to again align, indicating that the decreased capacity is driving prices up. The confounding factor is the decreased utilization. Previously, our team thought that it may have been a fluke, but this month is yet again a data point indicating that the warehousing market remains tight, and pricing seems not to be decreasing any time soon. Last month’s conclusion appears to be again true: the continued tension in the warehousing market is reaching epic proportions, and the pressure is not relenting. In fact, given the decreased capacity, it may be getting worse.
Future predictions suggest that respondents are expecting prices to continue to grow at a rate of 88.0, up (+0.5) from July’s future prediction of 87.5 and matching the current reading. Respondents no longer expect an influx of Warehousing Capacity over the next 12 months – a shortage that seems to be reflected in the predicted growth in cost.
Transportation Capacity
The Transportation Capacity Index registered 40.5 percent in August 2021. This constitutes a jump of 5.6 percentage points from the July reading of 34.9. Despite this increase, the Transportation Capacity Index remains historically low, indicating continued downward pressure on transportation capacity. Further, our data indicates that the downward pressure on transportation capacity remains extremely strong for downstream firms in supply chain (downstream Transportation Capacity Index is only 28.8), indicating that companies are facing significant challenges in ramping up shipments for the approaching holiday season. Relatively speaking, while transportation capacity is shrinking across the board, firms that are upstream in the supply chain do not report as stringent capacity constraints as the firms that are downstream (upstream Transportation Capacity Index is 46.8).
The future Transportation Capacity Index increased slightly from the previous reading, indicating 56.8 for the next year. This denotes an increase of 3.4 points from the previous future expectations, keeping the index above the critical threshold of 50 and indicating expectations of slightly expanding transportation capacity for the next 12 months.
The Transportation Capacity Index registered 40.5 percent in August 2021. This constitutes a jump of 5.6 percentage points from the July reading of 34.9. Despite this increase, the Transportation Capacity Index remains historically low, indicating continued downward pressure on transportation capacity. Further, our data indicates that the downward pressure on transportation capacity remains extremely strong for downstream firms in supply chain (downstream Transportation Capacity Index is only 28.8), indicating that companies are facing significant challenges in ramping up shipments for the approaching holiday season. Relatively speaking, while transportation capacity is shrinking across the board, firms that are upstream in the supply chain do not report as stringent capacity constraints as the firms that are downstream (upstream Transportation Capacity Index is 46.8).
The future Transportation Capacity Index increased slightly from the previous reading, indicating 56.8 for the next year. This denotes an increase of 3.4 points from the previous future expectations, keeping the index above the critical threshold of 50 and indicating expectations of slightly expanding transportation capacity for the next 12 months.
Transportation Utilization
The Transportation Utilization Index registered 72.6 percent in August 2021. This number denotes an increase of 5.1 points from the July reading of 67.5. As such, the Transportation Utilization Index remains at historically high levels, indicating continued expansion in transportation utilization. Downstream Transportation Utilization index is even higher, at 78.8, matching reports regarding consumer facing companies ramping up shipments for the fall.
It should be noted that the future Transportation Utilization Index is also up 2.8 points indicating a 74.2 percent level for the next 12 months. As such, the future transportation utilization index remains substantially above 50, indicating strong expectations of continued strong growth in transportation utilization.
The Transportation Utilization Index registered 72.6 percent in August 2021. This number denotes an increase of 5.1 points from the July reading of 67.5. As such, the Transportation Utilization Index remains at historically high levels, indicating continued expansion in transportation utilization. Downstream Transportation Utilization index is even higher, at 78.8, matching reports regarding consumer facing companies ramping up shipments for the fall.
It should be noted that the future Transportation Utilization Index is also up 2.8 points indicating a 74.2 percent level for the next 12 months. As such, the future transportation utilization index remains substantially above 50, indicating strong expectations of continued strong growth in transportation utilization.
Transportation Prices
The Transportation Prices Index registered 93.7 percent in August 2021. This corresponds to an increase of 2.7 percent from the July transportation prices reading of 91.0. This denotes a new two-year maximum, and indicates that the upward pressure on transportation prices is intensifying further, matching reports of increased transportation costs and capacity shortages.
The future index for transportation prices indicates a value of 87.4, which is also higher than the previous month’s expectations of 80.8. As such, the expectations of continued transportation price increases for the next 12 months remain very strong, with the future index well above the critical level of 50 that indicates expansion.
The Transportation Prices Index registered 93.7 percent in August 2021. This corresponds to an increase of 2.7 percent from the July transportation prices reading of 91.0. This denotes a new two-year maximum, and indicates that the upward pressure on transportation prices is intensifying further, matching reports of increased transportation costs and capacity shortages.
The future index for transportation prices indicates a value of 87.4, which is also higher than the previous month’s expectations of 80.8. As such, the expectations of continued transportation price increases for the next 12 months remain very strong, with the future index well above the critical level of 50 that indicates expansion.
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 = 0.0 * 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 = 0.0 * 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.
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[12] O’Neal, L. (2021, August 24). Best Buy Bolsters Inventories Ahead of the Holidays. Wall Street Journal. https://www.wsj.com/articles/best-buy-bolsters-inventories-ahead-of-the-holidays-11629832294
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[14] Kostov, N. (2021, July 29). Brace for Higher Prices for Ice Cream, Beer and Bottled Water. Wall Street Journal. https://www.wsj.com/articles/brace-for-higher-prices-for-ice-cream-tequila-and-bottled-water-11627558364
[15] Schulte, B., & Ii, C. P. (2021). Container Vessels at Anchor: 19. The Port of Los Angeles Signal, 1.
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