FOR RELEASE: Tuesday, January 7th, 2025
Contact:
Zac Rogers, Ph.D.
Logistics Manager’s Index Analyst
Associate Professor, Supply Chain Management
Department of Management
Colorado State University
Fort Collins, Colorado
(970) 491-0890
E-mail: [email protected]
http://www.logisticsindex.org
Twitter: @LogisticsIndex
Contact:
Zac Rogers, Ph.D.
Logistics Manager’s Index Analyst
Associate Professor, Supply Chain Management
Department of Management
Colorado State University
Fort Collins, Colorado
(970) 491-0890
E-mail: [email protected]
http://www.logisticsindex.org
Twitter: @LogisticsIndex
December 2024 Logistics Manager’s Index Report®
LMI® at 57.3
Growth is INCREASING AT AN INCREASING RATE for: Warehousing Capacity, Warehousing Utilization, Warehousing Utilization Transportation Capacity, and Transportation Prices.
Growth is INCREASING AT A DECREASING RATE for: Inventory Costs, Warehousing Prices, and Transportation Utilization,
NO MOVEMENT for Inventory Levels
LMI® at 57.3
Growth is INCREASING AT AN INCREASING RATE for: Warehousing Capacity, Warehousing Utilization, Warehousing Utilization Transportation Capacity, and Transportation Prices.
Growth is INCREASING AT A DECREASING RATE for: Inventory Costs, Warehousing Prices, and Transportation Utilization,
NO MOVEMENT for Inventory Levels
(Kona, HI) — The authors of this report may go on vacation, but logistics never sleeps. The December Logistics Manager’s Index reads in at 57.3, down (-1.1) from November’s reading of 58.4. This slowdown in logistics activity is due to the seasonal wind-down in Inventory Levels, which dropped (-6.1) to 50.0 or “no change”. The no change designation does not tell the entire story. Inventory Levels actually increased, reading in at 57.9, for Upstream firms like manufacturers, wholesalers, and 3PLs that are on the receiving end of the surge of imports that have been coming into the U.S. through December. Conversely, Downstream retailers are reporting significant contractions in Inventory Levels at 33.9; which is what should be happening in December during the holiday shopping season. The reduction in Inventory Levels also led to a drop in the rate of growth for Warehousing Capacity (-7.1) to 61.6. Interestingly, Transportation Prices are up (+3.0) to 66.8 which is the fastest rate of expansion for this metric since April of 2022. This also puts Transportation Prices above the all-time average of 65.0 for this metric for the first time in over 2.5 years. This is likely a function of the strong consumer sales we have seen throughout the second half of 2024. There has been higher demand for transportation services to move goods, this was particularly pronounced in December due to the record levels ecommerce requiring expensive last-mile delivery.
The other five metrics, including all three warehousing metrics, were steadier from November to December. Warehousing continues its strong run, with Warehousing Utilization (+2.8) and Warehousing Prices (-0.8) coming reading in at 61.7 and 68.0 respectively, signaling strong rates of expansion.
Researchers at Arizona State University, Colorado State University, Florida Atlantic University, 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 50.0 indicates that logistics is expanding; a reading below 50.0 is indicative of a shrinking logistics industry. The latest results of the LMI summarize the responses of supply chain professionals collected in December 2024.
The LMI read in at 57.3 in December, down (-1.1) from November’s reading of 58.4. As discussed above, this was largely due to seasonal drawdowns in Inventory Levels, and the associated costs of holding them, at the retail level. The difference in the overall index for Downstream retailers and their Upstream counterparts was quite pronounced in December, with Downstream firms registering only very mild contraction at 51.9 compared to the statistically significantly more robust expansion of 60.3 for Upstream firms. This is the reverse of the dynamic we observed in October, when it was Downstream firms reporting more logistics activity in an attempt to get things in place for the holiday season.
Retailers were clearly correct in their bet to stock on goods ahead of the holiday season. Holiday sales from November until Christmas Eve were up 3.8% year-over-year according to Mastercard. This was largely driven by a 6.7% increase in ecommerce sales, although in-person spending was up 2.9% as well. The increase in spending came despite the shorter holiday season due to the late Thanksgiving. The NRF estimates that U.S. shoppers spent just short of a trillion dollars in November and December, making it the busiest holiday season of all time[1]. It was also a happy holiday season for investors. The S&P 500 ended 2024 up 23% on the year. This is the second consecutive year the index has been up over 20% annually. Much of this was due to rate cuts, the winddown of inflation, consumer spending, and enthusiasm around AI[2]. This is a continuation of the trend we have seen all year. The strength of the U.S. economy relative to the rest of the world has led to the dollar being much stronger than other currencies around the world. The dollar may become even stronger given recent comments by the Fed on needing to wait and see ahead of further cuts to the interest rate. This trend significantly benefits U.S. importers, but does make exports slower[3]. Some of these concerns may be reflected in the marginally statistically significant differences in future predictions for respondents. Upstream firms continue to predict slightly more robust rates of growth at 67.8, than their Downstream counterparts who are predicting slightly slower (although still strong growth at 62.0.
Despite all the good news, inflation continues to be tricky. The U.S. personal consumption expenditures (PCE) index was up 2.4% in November, which is slightly above the Fed’s target of 2%. While this is nowhere near the staggering rates of inflation from 2022, the stickiness of price increases is likely a major contributor (along with strong consumer spending) to the Fed’s prediction that they would only consider cutting rates twice in 2025[4]. Those issues pale in comparison to the economic conditions abroad. The U.K. economy has stagnated as inflation jumped back up in late 2024. Germany, France, and Canada’s governments will all be dealing with elections as economic conditions in those countries have made their governing coalitions deeply unpopular[5].
The mid-December import spike is partially explained by firms attempting to avoid incoming tariffs. A survey by GEP and S&P Market Intelligence shows that buying activity by North American Manufacturers hit its highest level in over a year. Due to the uncertainty of when tariffs might happen or how large they may be, many of these manufacturers are focused on critical items, and are taking a “wait and see approach” for everything else[6]. Although overall Inventory Levels are down (-6.1) to “no change” at 50.0, Upstream and Downstream firms reported totally different numbers. Upstream firms saw growth at 57.9, as evidenced by Indian and Chinese manufacturers increasing their orders of raw materials in November in anticipation of an increase in orders from U.S. customers. There is evidence that this strategy has paid off, as orders have increased as U.S. manufacturers began increasing their stockpiles of goods and components in late 2024[7]. Conversely, Downstream firms reported steep contraction in Inventory Levels at 33.9, consistent with reports of strong holiday sales for retailers. Interestingly, both Upstream and Downstream retailers are predicting that Inventory Levels will increase significantly over the next 12 months with future predicted expansion of 71.7 and 69.4 respectively. These numbers both represent significant rates of expansion and would be a major departure for the leaner inventory policies that categorized 2023 and 2024. By bringing inventories forward now, retailers hope to avoid putting any increased costs stemming from potential tariffs on consumers that are already tired from the inflation of 2021-2022[8]. Costs remain an issue as Inventory Costs, while down by 7.1 points, are still increasing at 61.6 which is a solid rate of growth. This is driven more by Upstream (65.7) than Downstream (54.8) firms. It is also notable that Inventory Costs were 9.8 points higher in the second half of the month, bumping up from 56.9 in early December to 66.7 in the second half of the month.
The high levels of activity will not be a major departure for the ports. The Port of Long Beach processed 9.6 million TEUs in 2024, breaking the previous record set in 2021. This was up approximately 20% year-over-year[9], highlighting the difference between consumer behavior and corporate inventory strategies from 2023 to 2024. This fall has seen a similar story at the Port of Oakland where imports were up 13.1%, and exports up 8.5%, in November from the year prior[10]. This looks to continue into 2025. TEUs are up approximately 70% in the first full week of January[11]. This comes after several weeks of imports being up over 50% year-over-year to close out December. The difference seems to be that whereas in 2024 goods were coming in quickly but also being sold quickly in a reflection of JIT-strategies, some of the projected buildup in 2025 seems to be in anticipation of stockpiling goods to be sold later.
Labor disputes could present a challenge for this anticipated inventory buildup. Negotiations between the ILA and East Coast ports are set to resume on January 7th[12]. President-elect Trump has voiced his support for the ILA in these talks, coming out against increasing automation at the docks[13]. The Ports of New York and New Jersey are also engaging in separates negotiation with terminal operators in an attempt to get a larger cut of the revenue generated by the increasing volume of goods passing through East Coast ports. The New York and New Jersey ports processed 6.6 million containers in the first nine months of 2024, representing an increase of 13.8% year-over-year[14]. What volume of ships will be flowing to either coast via the Suez Canal in 2025 remains an open question. The issues in the Red Sea have caused revenues at the Suez Canal to drop by 60% in 2024. Canal authorities are attempting to dredge deeper in an effort to facilitate two-way traffic. Initial testing has been successful. This would allow the canal to have throughput and also make is less susceptible to disruptions like it experienced in 2021[15].
Perhaps reflecting the increased inventories analysts are expecting that available warehousing capacity will tighten up in 2025 relative to 2024 (which some believe was a “low point” of capacity utilization in this cycle) as firms increase inventories through the next 12 months[16]. Warehousing Capacity (+0.2) is at 56.9, which is a mild level of expansion. Growth was much slower for Upstream firms, who reported a score of 53.5 to the Downstream reports of 63.3. Upstream firms are expecting further tightening at 52.1, something that stands in sharp contrast to Downstream firms of Warehousing Capacity expansion at 71.7. This is a continuation of last month’s differences in predicted capacity. It will be interesting to see if this trend holds in January. This is despite estimates by the Industrial Info Resources (IIR) estimates that there is currently $9 billion of warehousing and distribution projects under construction in the U.S. In a move that suggests that e-commerce is continuing to grow, approximately $2 billion of this construction is attributable to Amazon alone[17]. Despite the potential for tariffs between the U.S. and Mexico, logistics service providers (LSPs) such as Prologis and C.H. Robinson are still moving ahead with their significant investments along the U.S.-Mexico border. Mexico has been the U.S.’s largest trade partner since 2019, and LSPs clearly expect that to continue even with potential changes to trade policy[18]. This is consistent with a broader trend of there being more excess logistics capacity than there was during the trade war of 2018-2019. With the extra storage capacity built up during the pandemic, importers have more space to hold goods the high levels of inventory that are currently coming into the U.S. Warehousing Utilization was up (+2.8) to 61.7 (again, driven by more by Upstream firms’ 65.5 than Downstream’s 54.8). We also observe continued growth in Warehousing Prices (-0.8) which read in at 68.0 in December. Price growth was highest in the first half of the month at 72.4, before dropping down to 63.7.
Another challenge to keep an eyer on for warehousing in 2025 is labor. Thousands of Amazon warehouse workers represented by the Teamsters’ Union went on strike during the week before Christmas[19]. While this does not seem to have had a significant impact on package delivery during the holidays, the involvement of Teamsters increases the chances that future strikes and walkouts could occur for at North America’s largest ecommerce retailer. Adding complexity to these talks of unionization is that despite Amazon’s continued push towards automation they are still heavily reliant on human labor. For instance, despite utilizing thousands of robots that perform different tasks, over 2,500 human workers are being brought on at their new Louisiana facility. Despite advances in automation, the human ability to adapt quickly to different types of products in different types of scenarios is still superior to what automation can accomplish, making them a critical piece of the continued growth of e-commerce[20]. Labor is an issue for U.S. manufacturing as well. As more plants have been re- or near-shored manufacturers have faced a shortage of workers, with an average of 100,000 positions for high-skilled manufacturing jobs going unfilled in the last few months[21]. As discussed above, demand for warehousing is expected to increase in 2025, particularly Upstream. It remains to be seen if issues with labor will be a bottleneck on the supply that is available to meet this demand. If so, we may see price growth increase beyond what is being forecasted here.
Transportation Price growth increased (+3.0) to 66.8 in December, which is the fastest rate of growth for this metric since April of 2022. The 13.7-point spread between Transportation Prices and Transportation Capacity is also the highest positive delta in favor of prices since that same month of April 2022. Transportation Capacity is up very slightly (+0.6) to 53.2. Despite the clear growth in freight demand and Transportation Prices, Transportation Capacity still has not dipped into contractionary territory with a reading below 50.0. Available Transportation Capacity has not contracted since July of March of 2022 when the freight recession of 2022-2024 began. This is a testament to the high levels of capacity that were built from 2020-2021. Upstream respondents expect this to change, predicting mild contraction at 48.8 over the next 12 months. Conversely, Downstream respondents expect mild expansion at 53.2. Further evidence of tightening in the freight market can be observed in FreightWaves’ tender rejection index, which briefly went into double digits for the first time in over two years as carriers scrambled to make holiday deliveries in late December[22]. They had been elevated year-over-year even before the holiday rush, so it will be interesting to see how deeply rejection rates sink in January[23]. Transportation Utilization expansion held steady (-0.1) at 60.5. Similar to the dynamic we saw with Warehousing Capacity, Upstream firms predict significantly higher rates of expansion for Transportation Utilization at 72.5 to the more meager Downstream expansion prediction of 56.5.
It will be interesting to see what happens with the costs of transportation going forward. The price of diesel fuel was up very slightly (+$0.027 per gallon) from a week ago, but is still down $0.373 per gallon from this time a year ago, continuing the trend that we observed throughout 2024[24]. It is likely that fuel costs will remain low in 2025 due to the glut in processing capacity brought about by electrification, fracking, and the reemergence of the U.S. as one of the world’s leading energy producers. Crude oil was trading at $73 per barrel at the end of 2024, an affordable number that is artificially inflated by OPEC+ holding back approximately 5 million barrels of production per day in an effort to keep prices high[25]. We also see that the pull forward of inventories has led to an 8% price increase for containers moving from Asia to U.S. West coast in the last week of December[26]. Carriers are expecting trans-Pacific spot rates to increase significantly (with the cost of shipping 40-foot containers estimated to hit $6,000) in January as shippers rush to stay ahead of Chinese New Year[27]. Airfreight is also expected to increase in the same period, particularly for movements from Asia to Europe[28]. It is unclear whether costs will go up or down following the Lunar New Year. Firms are clearly rushing inventories ahead now to get ahead of the holiday and potential tariffs. If tariffs are passed, we might expect to see the market slow down. If tariffs are muted or delayed in their implementation, then inventories may stay leaner and be lower costs, leading to it being moved more frequently which could increase Transportation Prices.
Respondents were asked to predict movement in the overall LMI and individual metrics 12 months from now. Respondents remained optimistic in December, predicting expansion in the overall index at a rate of 65.8, up (+2.2) from November’s future prediction of 63.6. The factors leading to the expansion are notably different in a few places when compared to November’s future predictions. The first of these differences revolve around inventories. Inventory Levels are up (+7.5) to 70.3, which would represent a very significant rate of growth and a sharp turn away from the JIT policies that have characterize the last two years. Relatedly, Warehousing Utilization is expected to increase at a rate of 69.6 (+3.3) and Warehousing Prices are predicted to expand at the robust rate of 75.0 (+1.1) which would be the fastest rate of growth since January 2023 when many firms were still flush with excess inventory. Transportation Prices are expected to increase at a rate of 77.0. This is down (-3.9) from November’s future prediction but would still represent significant rates of expansion. Despite this predicted expansion, Transportation Capacity is expected to hold steady at 50.0, suggesting that there will be enough capacity to soak up demand. It is interesting that firms are now predicting such significant increases in Inventory Levels, it will be critical to keep an eye on these movements in 2025 as inventories are almost always the canary in the coalmine with movements in both the logistics and overall economy.
The other five metrics, including all three warehousing metrics, were steadier from November to December. Warehousing continues its strong run, with Warehousing Utilization (+2.8) and Warehousing Prices (-0.8) coming reading in at 61.7 and 68.0 respectively, signaling strong rates of expansion.
Researchers at Arizona State University, Colorado State University, Florida Atlantic University, 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 50.0 indicates that logistics is expanding; a reading below 50.0 is indicative of a shrinking logistics industry. The latest results of the LMI summarize the responses of supply chain professionals collected in December 2024.
The LMI read in at 57.3 in December, down (-1.1) from November’s reading of 58.4. As discussed above, this was largely due to seasonal drawdowns in Inventory Levels, and the associated costs of holding them, at the retail level. The difference in the overall index for Downstream retailers and their Upstream counterparts was quite pronounced in December, with Downstream firms registering only very mild contraction at 51.9 compared to the statistically significantly more robust expansion of 60.3 for Upstream firms. This is the reverse of the dynamic we observed in October, when it was Downstream firms reporting more logistics activity in an attempt to get things in place for the holiday season.
Retailers were clearly correct in their bet to stock on goods ahead of the holiday season. Holiday sales from November until Christmas Eve were up 3.8% year-over-year according to Mastercard. This was largely driven by a 6.7% increase in ecommerce sales, although in-person spending was up 2.9% as well. The increase in spending came despite the shorter holiday season due to the late Thanksgiving. The NRF estimates that U.S. shoppers spent just short of a trillion dollars in November and December, making it the busiest holiday season of all time[1]. It was also a happy holiday season for investors. The S&P 500 ended 2024 up 23% on the year. This is the second consecutive year the index has been up over 20% annually. Much of this was due to rate cuts, the winddown of inflation, consumer spending, and enthusiasm around AI[2]. This is a continuation of the trend we have seen all year. The strength of the U.S. economy relative to the rest of the world has led to the dollar being much stronger than other currencies around the world. The dollar may become even stronger given recent comments by the Fed on needing to wait and see ahead of further cuts to the interest rate. This trend significantly benefits U.S. importers, but does make exports slower[3]. Some of these concerns may be reflected in the marginally statistically significant differences in future predictions for respondents. Upstream firms continue to predict slightly more robust rates of growth at 67.8, than their Downstream counterparts who are predicting slightly slower (although still strong growth at 62.0.
Despite all the good news, inflation continues to be tricky. The U.S. personal consumption expenditures (PCE) index was up 2.4% in November, which is slightly above the Fed’s target of 2%. While this is nowhere near the staggering rates of inflation from 2022, the stickiness of price increases is likely a major contributor (along with strong consumer spending) to the Fed’s prediction that they would only consider cutting rates twice in 2025[4]. Those issues pale in comparison to the economic conditions abroad. The U.K. economy has stagnated as inflation jumped back up in late 2024. Germany, France, and Canada’s governments will all be dealing with elections as economic conditions in those countries have made their governing coalitions deeply unpopular[5].
The mid-December import spike is partially explained by firms attempting to avoid incoming tariffs. A survey by GEP and S&P Market Intelligence shows that buying activity by North American Manufacturers hit its highest level in over a year. Due to the uncertainty of when tariffs might happen or how large they may be, many of these manufacturers are focused on critical items, and are taking a “wait and see approach” for everything else[6]. Although overall Inventory Levels are down (-6.1) to “no change” at 50.0, Upstream and Downstream firms reported totally different numbers. Upstream firms saw growth at 57.9, as evidenced by Indian and Chinese manufacturers increasing their orders of raw materials in November in anticipation of an increase in orders from U.S. customers. There is evidence that this strategy has paid off, as orders have increased as U.S. manufacturers began increasing their stockpiles of goods and components in late 2024[7]. Conversely, Downstream firms reported steep contraction in Inventory Levels at 33.9, consistent with reports of strong holiday sales for retailers. Interestingly, both Upstream and Downstream retailers are predicting that Inventory Levels will increase significantly over the next 12 months with future predicted expansion of 71.7 and 69.4 respectively. These numbers both represent significant rates of expansion and would be a major departure for the leaner inventory policies that categorized 2023 and 2024. By bringing inventories forward now, retailers hope to avoid putting any increased costs stemming from potential tariffs on consumers that are already tired from the inflation of 2021-2022[8]. Costs remain an issue as Inventory Costs, while down by 7.1 points, are still increasing at 61.6 which is a solid rate of growth. This is driven more by Upstream (65.7) than Downstream (54.8) firms. It is also notable that Inventory Costs were 9.8 points higher in the second half of the month, bumping up from 56.9 in early December to 66.7 in the second half of the month.
The high levels of activity will not be a major departure for the ports. The Port of Long Beach processed 9.6 million TEUs in 2024, breaking the previous record set in 2021. This was up approximately 20% year-over-year[9], highlighting the difference between consumer behavior and corporate inventory strategies from 2023 to 2024. This fall has seen a similar story at the Port of Oakland where imports were up 13.1%, and exports up 8.5%, in November from the year prior[10]. This looks to continue into 2025. TEUs are up approximately 70% in the first full week of January[11]. This comes after several weeks of imports being up over 50% year-over-year to close out December. The difference seems to be that whereas in 2024 goods were coming in quickly but also being sold quickly in a reflection of JIT-strategies, some of the projected buildup in 2025 seems to be in anticipation of stockpiling goods to be sold later.
Labor disputes could present a challenge for this anticipated inventory buildup. Negotiations between the ILA and East Coast ports are set to resume on January 7th[12]. President-elect Trump has voiced his support for the ILA in these talks, coming out against increasing automation at the docks[13]. The Ports of New York and New Jersey are also engaging in separates negotiation with terminal operators in an attempt to get a larger cut of the revenue generated by the increasing volume of goods passing through East Coast ports. The New York and New Jersey ports processed 6.6 million containers in the first nine months of 2024, representing an increase of 13.8% year-over-year[14]. What volume of ships will be flowing to either coast via the Suez Canal in 2025 remains an open question. The issues in the Red Sea have caused revenues at the Suez Canal to drop by 60% in 2024. Canal authorities are attempting to dredge deeper in an effort to facilitate two-way traffic. Initial testing has been successful. This would allow the canal to have throughput and also make is less susceptible to disruptions like it experienced in 2021[15].
Perhaps reflecting the increased inventories analysts are expecting that available warehousing capacity will tighten up in 2025 relative to 2024 (which some believe was a “low point” of capacity utilization in this cycle) as firms increase inventories through the next 12 months[16]. Warehousing Capacity (+0.2) is at 56.9, which is a mild level of expansion. Growth was much slower for Upstream firms, who reported a score of 53.5 to the Downstream reports of 63.3. Upstream firms are expecting further tightening at 52.1, something that stands in sharp contrast to Downstream firms of Warehousing Capacity expansion at 71.7. This is a continuation of last month’s differences in predicted capacity. It will be interesting to see if this trend holds in January. This is despite estimates by the Industrial Info Resources (IIR) estimates that there is currently $9 billion of warehousing and distribution projects under construction in the U.S. In a move that suggests that e-commerce is continuing to grow, approximately $2 billion of this construction is attributable to Amazon alone[17]. Despite the potential for tariffs between the U.S. and Mexico, logistics service providers (LSPs) such as Prologis and C.H. Robinson are still moving ahead with their significant investments along the U.S.-Mexico border. Mexico has been the U.S.’s largest trade partner since 2019, and LSPs clearly expect that to continue even with potential changes to trade policy[18]. This is consistent with a broader trend of there being more excess logistics capacity than there was during the trade war of 2018-2019. With the extra storage capacity built up during the pandemic, importers have more space to hold goods the high levels of inventory that are currently coming into the U.S. Warehousing Utilization was up (+2.8) to 61.7 (again, driven by more by Upstream firms’ 65.5 than Downstream’s 54.8). We also observe continued growth in Warehousing Prices (-0.8) which read in at 68.0 in December. Price growth was highest in the first half of the month at 72.4, before dropping down to 63.7.
Another challenge to keep an eyer on for warehousing in 2025 is labor. Thousands of Amazon warehouse workers represented by the Teamsters’ Union went on strike during the week before Christmas[19]. While this does not seem to have had a significant impact on package delivery during the holidays, the involvement of Teamsters increases the chances that future strikes and walkouts could occur for at North America’s largest ecommerce retailer. Adding complexity to these talks of unionization is that despite Amazon’s continued push towards automation they are still heavily reliant on human labor. For instance, despite utilizing thousands of robots that perform different tasks, over 2,500 human workers are being brought on at their new Louisiana facility. Despite advances in automation, the human ability to adapt quickly to different types of products in different types of scenarios is still superior to what automation can accomplish, making them a critical piece of the continued growth of e-commerce[20]. Labor is an issue for U.S. manufacturing as well. As more plants have been re- or near-shored manufacturers have faced a shortage of workers, with an average of 100,000 positions for high-skilled manufacturing jobs going unfilled in the last few months[21]. As discussed above, demand for warehousing is expected to increase in 2025, particularly Upstream. It remains to be seen if issues with labor will be a bottleneck on the supply that is available to meet this demand. If so, we may see price growth increase beyond what is being forecasted here.
Transportation Price growth increased (+3.0) to 66.8 in December, which is the fastest rate of growth for this metric since April of 2022. The 13.7-point spread between Transportation Prices and Transportation Capacity is also the highest positive delta in favor of prices since that same month of April 2022. Transportation Capacity is up very slightly (+0.6) to 53.2. Despite the clear growth in freight demand and Transportation Prices, Transportation Capacity still has not dipped into contractionary territory with a reading below 50.0. Available Transportation Capacity has not contracted since July of March of 2022 when the freight recession of 2022-2024 began. This is a testament to the high levels of capacity that were built from 2020-2021. Upstream respondents expect this to change, predicting mild contraction at 48.8 over the next 12 months. Conversely, Downstream respondents expect mild expansion at 53.2. Further evidence of tightening in the freight market can be observed in FreightWaves’ tender rejection index, which briefly went into double digits for the first time in over two years as carriers scrambled to make holiday deliveries in late December[22]. They had been elevated year-over-year even before the holiday rush, so it will be interesting to see how deeply rejection rates sink in January[23]. Transportation Utilization expansion held steady (-0.1) at 60.5. Similar to the dynamic we saw with Warehousing Capacity, Upstream firms predict significantly higher rates of expansion for Transportation Utilization at 72.5 to the more meager Downstream expansion prediction of 56.5.
It will be interesting to see what happens with the costs of transportation going forward. The price of diesel fuel was up very slightly (+$0.027 per gallon) from a week ago, but is still down $0.373 per gallon from this time a year ago, continuing the trend that we observed throughout 2024[24]. It is likely that fuel costs will remain low in 2025 due to the glut in processing capacity brought about by electrification, fracking, and the reemergence of the U.S. as one of the world’s leading energy producers. Crude oil was trading at $73 per barrel at the end of 2024, an affordable number that is artificially inflated by OPEC+ holding back approximately 5 million barrels of production per day in an effort to keep prices high[25]. We also see that the pull forward of inventories has led to an 8% price increase for containers moving from Asia to U.S. West coast in the last week of December[26]. Carriers are expecting trans-Pacific spot rates to increase significantly (with the cost of shipping 40-foot containers estimated to hit $6,000) in January as shippers rush to stay ahead of Chinese New Year[27]. Airfreight is also expected to increase in the same period, particularly for movements from Asia to Europe[28]. It is unclear whether costs will go up or down following the Lunar New Year. Firms are clearly rushing inventories ahead now to get ahead of the holiday and potential tariffs. If tariffs are passed, we might expect to see the market slow down. If tariffs are muted or delayed in their implementation, then inventories may stay leaner and be lower costs, leading to it being moved more frequently which could increase Transportation Prices.
Respondents were asked to predict movement in the overall LMI and individual metrics 12 months from now. Respondents remained optimistic in December, predicting expansion in the overall index at a rate of 65.8, up (+2.2) from November’s future prediction of 63.6. The factors leading to the expansion are notably different in a few places when compared to November’s future predictions. The first of these differences revolve around inventories. Inventory Levels are up (+7.5) to 70.3, which would represent a very significant rate of growth and a sharp turn away from the JIT policies that have characterize the last two years. Relatedly, Warehousing Utilization is expected to increase at a rate of 69.6 (+3.3) and Warehousing Prices are predicted to expand at the robust rate of 75.0 (+1.1) which would be the fastest rate of growth since January 2023 when many firms were still flush with excess inventory. Transportation Prices are expected to increase at a rate of 77.0. This is down (-3.9) from November’s future prediction but would still represent significant rates of expansion. Despite this predicted expansion, Transportation Capacity is expected to hold steady at 50.0, suggesting that there will be enough capacity to soak up demand. It is interesting that firms are now predicting such significant increases in Inventory Levels, it will be critical to keep an eye on these movements in 2025 as inventories are almost always the canary in the coalmine with movements in both the logistics and overall economy.
When comparing feedback from Upstream (blue bars) and Downstream (orange bars) respondents we see a sharp difference from the dynamics that were at play in November. This is most pronounced for Inventory Levels. In November, we saw Downstream retailers build up inventories slightly faster than their Upstream counterparts at a rate of 58.1 to 55.1. In December this shifted dramatically, with Downstream Inventory Levels contracting at a rate of 33.9, which is the most significant rate of decline in any part of the supply chain in more than a year. This shift is dramatic, but it suggests that retailers were able to sell down a large quantity of the goods they had been importing all year, supporting other anecdotal and macro-level evidence of a strong holiday season in 2024. This difference extends to the other metrics in expected ways, with Downstream firms reporting significantly lower Inventory costs (54.8 to 65.7), Warehousing Utilization (54.8 to 65.5), and Transportation Utilization (51.7 to 63.8). At the same time, Downstream firms reported marginally significantly higher rates of growth for available Warehousing Capacity (65.5 to 54.8) and Transportation Capacity (63.8 to 51.7). Interestingly, Downstream firms did report slightly higher readings for both price metrics (72.4 to 67.1 for Warehousing and 69.4 to 65.9 for Transportation), which suggests that retailers continued to pay a premium for last mile storage and delivery services. It will be interesting to observe if Downstream respondents snap back towards building inventories again in early 2025, or if this trend continues and they attempt to move back towards leaner policies.
Based on future predictions from both Upstream (green bars) and Downstream respondents (purple bars), it seems likely that inventories will rebuild in 2025. Both Upstream and Downstream firms are predicting significant levels of growth for Inventory Levels. Downstream firms are predicting expansion of 69.4 (up from 60.0 in November) and their Upstream counterparts are predicting expansion of 71.7 (up from 64.2 in November). These would represent significant rates of growth, and for Downstream retailers, would be a noted departure from the lean inventory policies they practiced in 2023 and 2024. In a continuation from November, we also see that Downstream firms are predicting more plentiful capacity in 2025. Downstream firms are predicting significantly higher growth than their Upstream counterparts in Warehousing Capacity (71.7 to 52.1), as well as mild growth in Transportation Capacity (53.2) which stands in contrast to predictions of mild contraction (48.8) Upstream. Unsurprisingly given this dynamic, Upstream firms are also predicting significantly higher rates of Transportation Utilization (72.5 to 56.5). Taken all together, these differences lead to a marginally statistically significantly higher rate of growth in the overall metric for Upstream firms (67.8) than for Downstream firms (62.0). The higher rates of Inventory Levels along with decreased use of warehousing and transportation suggests that Downstream retailers are being cautious when it comes to 2025, building up stores of goods and taking a less JIT approach to operations over the next 12 months, potentially responding to concerns over potential tariff increases. Upstream firms on the other hand seem to be moving full speed ahead in 2025, potentially responding to lower interest rates.
When comparing respondent feedback between early (gold bars) and late (green bars) December, the differences once again come down to inventories. Inventories contracted slightly at 49.0 in early December (12/1-12/15) but began increasing slowly at 51.0 in early December (12/16-12/31). While this difference is small, when taken together with the difference in Upstream and Downstream inventories, as well as the high volume of goods imports in the second half of December, it suggests that as retailers ran inventories down, their Upstream retailers began building them back up. We se evidence of this activity in the marginally higher rates of growth for Inventory Costs (66.7 to 56.9). Interestingly, Warehousing Prices growth slowed (72.4 to 63.7) which may be representative of the more expensive storage facilities used by retailers emptying out over the course of the holiday season. Despite the reports of significant imports in late December, the overall numbers have not moved much, it is only when diving into the differences between Upstream and Downstream firms that the impact of these shifts begins to materialize. It will be important to continue analyzing whether these imports trickle Downstream quickly, or if they remain Upstream in “middle mile” storage facilities.
When comparing respondent feedback between early (gold bars) and late (green bars) December, the differences once again come down to inventories. Inventories contracted slightly at 49.0 in early December (12/1-12/15) but began increasing slowly at 51.0 in early December (12/16-12/31). While this difference is small, when taken together with the difference in Upstream and Downstream inventories, as well as the high volume of goods imports in the second half of December, it suggests that as retailers ran inventories down, their Upstream retailers began building them back up. We se evidence of this activity in the marginally higher rates of growth for Inventory Costs (66.7 to 56.9). Interestingly, Warehousing Prices growth slowed (72.4 to 63.7) which may be representative of the more expensive storage facilities used by retailers emptying out over the course of the holiday season. Despite the reports of significant imports in late December, the overall numbers have not moved much, it is only when diving into the differences between Upstream and Downstream firms that the impact of these shifts begins to materialize. It will be important to continue analyzing whether these imports trickle Downstream quickly, or if they remain Upstream in “middle mile” storage facilities.
Continuing the trend from above, the key difference we see between the responses of larger firms (those with 1,000 employees or more, represented by gold lines) and smaller firms (those with 0-999 employees, represented by maroon lines) revolves around Inventory Levels. In a continuation from November smaller firms are building up Inventory Levels more quickly than their larger counterparts. The key difference from November is that this month while smaller firms are building up Inventory Levels (55.0), Upstream firms are reducing them (45.2). Beyond this we see very few significant differences between the two groups. Directionally speaking it does seem growth is moving faster for smaller firms, but with mild rates of overall index expansion for both small (59.2) and large (55.7) firms it is clear that logistics activity continues to progress at a slow and steady rate across the supply chain.
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. The rate of expansion for the overall index is down (-1.1) to 57.3 from November’s reading of 58.4. This continues the slight slowdown in the rate of growth after the two-year high of 58.9 reached in October. This reading still indicates expansion, but at a slightly slower rate that is consistent with normal seasonality. As would be expected, the slowdown was driven by a decrease in Inventory Levels, which slowed by 6.1-points to a rate 50.0 and “no change”, ending the streak of four consecutive readings of expansion for this metric. Again, this shift reflects normal seasonality as retailers clearly ran inventories down during the holiday season. This led to a significant decrease (-7.1) in the rate of growth for Inventory Costs, which read in at 61.6 – the lowest number for this metric since December of 2023. Other than Inventory Levels all other metrics exhibited expansion in December, with many of them (Warehousing Capacity, Warehousing Prices, Transportation Capacity, and Transportation Utilization) registering growth rates within a point of their November readings, demonstrating the slow, steady growth that has characterized the logistics industry throughout 2024. Continuing another 2024 trend, Transportation Price expansion increased again (+3.0) to 66.8, marking the fastest rate of expansion since April 2022.
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. The rate of expansion for the overall index is down (-1.1) to 57.3 from November’s reading of 58.4. This continues the slight slowdown in the rate of growth after the two-year high of 58.9 reached in October. This reading still indicates expansion, but at a slightly slower rate that is consistent with normal seasonality. As would be expected, the slowdown was driven by a decrease in Inventory Levels, which slowed by 6.1-points to a rate 50.0 and “no change”, ending the streak of four consecutive readings of expansion for this metric. Again, this shift reflects normal seasonality as retailers clearly ran inventories down during the holiday season. This led to a significant decrease (-7.1) in the rate of growth for Inventory Costs, which read in at 61.6 – the lowest number for this metric since December of 2023. Other than Inventory Levels all other metrics exhibited expansion in December, with many of them (Warehousing Capacity, Warehousing Prices, Transportation Capacity, and Transportation Utilization) registering growth rates within a point of their November readings, demonstrating the slow, steady growth that has characterized the logistics industry throughout 2024. Continuing another 2024 trend, Transportation Price expansion increased again (+3.0) to 66.8, marking the fastest rate of expansion since April 2022.
Historic Logistics Managers’ Index Scores
This period’s along with prior readings from the last two years of the LMI are presented table below:
This period’s along with prior readings from the last two years of the LMI are presented table below:
LMI®
The overall index reads in at 57.3 in December, down slightly (-0.9) from November’s reading of 58.4. in November. This is a much stronger reading (+6.7) than we saw a year ago when the December 2023 index registered in at 50.6, capping what had been an anemic peak season. The December 2024 reading is also up (+2.7) from December 2022’s reading of 54.6. The overall index almost always increases in January as supply chains begin replenishing inventories after running them down in December. This certainly seemed to be the case in December of 2024 as Downstream firms ran through significant levels of inventories. This lead to a lower overall reading for Downstream firms, who were close to “no change” for the overall index at 50.9, significantly slower (-8.4) from the more robust expansion of 60.3 reported by Upstream firms.
When asked to predict what conditions will be over the next 12 months respondents foresee a rate of expansion of 65.8, up (+2.2) from November’s future prediction of 63.6, which would put 2025’s logistics expansion comfortably above the all-time average of 61.7. As has been the case for the last several readings, Upstream firms are more bullish on future index expansion than their Downstream counterparts (67.8 to 62.0).
The overall index reads in at 57.3 in December, down slightly (-0.9) from November’s reading of 58.4. in November. This is a much stronger reading (+6.7) than we saw a year ago when the December 2023 index registered in at 50.6, capping what had been an anemic peak season. The December 2024 reading is also up (+2.7) from December 2022’s reading of 54.6. The overall index almost always increases in January as supply chains begin replenishing inventories after running them down in December. This certainly seemed to be the case in December of 2024 as Downstream firms ran through significant levels of inventories. This lead to a lower overall reading for Downstream firms, who were close to “no change” for the overall index at 50.9, significantly slower (-8.4) from the more robust expansion of 60.3 reported by Upstream firms.
When asked to predict what conditions will be over the next 12 months respondents foresee a rate of expansion of 65.8, up (+2.2) from November’s future prediction of 63.6, which would put 2025’s logistics expansion comfortably above the all-time average of 61.7. As has been the case for the last several readings, Upstream firms are more bullish on future index expansion than their Downstream counterparts (67.8 to 62.0).
Inventory Levels
The Inventory Levels index is 50.0, down (-6.1) from November’s reading of 56.1 and nearly 10 points down from 2024’s holiday season high-water mark in September down (-3.3) from October’s reading of 59.4. This is something of a normalization as this reading is 5.7 points higher than a year ago, and 17.3 points lower than two years ago at this time. We saw the decline in inventories over the month that we would expect. Early respondents (from the first half of the month) returned a value of 61.3, and later respondents returned a lower value of 52.0, a decrease of 9.3 points. The decline was especially pronounced for Downstream retailers. Upstream respondents returned a value of 57.9, while Downstream respondents returned a much smaller value of 33.9, a difference of 24.0.
When asked to predict what conditions will be like 12 months from now, the average value is 70.3, up 7.5 points from November’s future prediction of 62.8 and 9.6 points up from October’s pre-election forecast of 60.7. Like last month, Upstream respondents expect a slightly greater rate of expansion (71.7) than their Downstream counterparts (69.4), which for Downstream firms is a departure from the principles of JIT.
The Inventory Levels index is 50.0, down (-6.1) from November’s reading of 56.1 and nearly 10 points down from 2024’s holiday season high-water mark in September down (-3.3) from October’s reading of 59.4. This is something of a normalization as this reading is 5.7 points higher than a year ago, and 17.3 points lower than two years ago at this time. We saw the decline in inventories over the month that we would expect. Early respondents (from the first half of the month) returned a value of 61.3, and later respondents returned a lower value of 52.0, a decrease of 9.3 points. The decline was especially pronounced for Downstream retailers. Upstream respondents returned a value of 57.9, while Downstream respondents returned a much smaller value of 33.9, a difference of 24.0.
When asked to predict what conditions will be like 12 months from now, the average value is 70.3, up 7.5 points from November’s future prediction of 62.8 and 9.6 points up from October’s pre-election forecast of 60.7. Like last month, Upstream respondents expect a slightly greater rate of expansion (71.7) than their Downstream counterparts (69.4), which for Downstream firms is a departure from the principles of JIT.
Inventory Costs
Inventory costs read in at 61.6, down (-7.2) from November’s reading of 68.8. The current value is 5.8 points higher than last year at this time, and 11.2 points lower than two years ago. Despite the fact that Inventory Levels are a significant driver of inventory costs and have had periods of decline recently, the inventory cost index has had no decreasing levels in the last two years. Looking at the individual responses, we had very few respondents saying costs declined, and three times as many respondents saying no change or increase. Above, we saw that Inventory Level responses were quite evenly distributed across the three responses. But for inventory costs, only roughly 15% said no increase. So even though there is not consensus about inventory levels, there is a lot of agreement that inventory costs are not declining. Upstream and Downstream respondents returned differing values at 65.7 and 54.8 respectively. Both large and small firms reported increases in inventory costs. Small firms have the larger increase, at 63.5, while larger firms still had a significant increase, at 59.8.
Predictions for future Inventory Cost growth is 73.7, up (+3.8) from November’s future prediction of 69.9. Upstream future predictions averaged 73.8, which slightly outstripped Downstream expectations of 72.6.
Inventory costs read in at 61.6, down (-7.2) from November’s reading of 68.8. The current value is 5.8 points higher than last year at this time, and 11.2 points lower than two years ago. Despite the fact that Inventory Levels are a significant driver of inventory costs and have had periods of decline recently, the inventory cost index has had no decreasing levels in the last two years. Looking at the individual responses, we had very few respondents saying costs declined, and three times as many respondents saying no change or increase. Above, we saw that Inventory Level responses were quite evenly distributed across the three responses. But for inventory costs, only roughly 15% said no increase. So even though there is not consensus about inventory levels, there is a lot of agreement that inventory costs are not declining. Upstream and Downstream respondents returned differing values at 65.7 and 54.8 respectively. Both large and small firms reported increases in inventory costs. Small firms have the larger increase, at 63.5, while larger firms still had a significant increase, at 59.8.
Predictions for future Inventory Cost growth is 73.7, up (+3.8) from November’s future prediction of 69.9. Upstream future predictions averaged 73.8, which slightly outstripped Downstream expectations of 72.6.
Warehousing Capacity
The Warehousing Capacity index negligibly increased by 0.2 points in the month of December, and remained in expansionary territory (56.9), as has been the case since April of 2024, showing 10 months of expansion in the growth rate of this metric. This reading is down 1.8 points from the reading one year ago, and also up a considerable over 12 points from the reading two years ago. In addition, there was a 9.8-point split between Upstream (53.5) and Downstream (63.3) which was marginally statistically significant (p<.1). Comparing the differences between small (<999 employees) and large (>999 employees) we see that these values are 59.8 and 53.9, respectively. This 5.9-point split was not statistically significant (p >.01).
Finally, exploring the future predictions for this value we see that Warehouse Capacity reads in at 57.4, indicating a continuation of the slight expansion we have seen for much of the year. This is consistent across the supply chain with both the Downstream and Upstream remaining in expansionary territory one year out (though the Upstream value is edging closer to the 50.0-point mark of neutrality). In this case, future Upstream expectations for Upstream are expected to remain in expansionary territory at 52.1 (from 49.3 previously 2 months ago) and being a substantial 19.5 points away from Downstream expectations (71.7). This difference was statistically significant (p<.001).
The Warehousing Capacity index negligibly increased by 0.2 points in the month of December, and remained in expansionary territory (56.9), as has been the case since April of 2024, showing 10 months of expansion in the growth rate of this metric. This reading is down 1.8 points from the reading one year ago, and also up a considerable over 12 points from the reading two years ago. In addition, there was a 9.8-point split between Upstream (53.5) and Downstream (63.3) which was marginally statistically significant (p<.1). Comparing the differences between small (<999 employees) and large (>999 employees) we see that these values are 59.8 and 53.9, respectively. This 5.9-point split was not statistically significant (p >.01).
Finally, exploring the future predictions for this value we see that Warehouse Capacity reads in at 57.4, indicating a continuation of the slight expansion we have seen for much of the year. This is consistent across the supply chain with both the Downstream and Upstream remaining in expansionary territory one year out (though the Upstream value is edging closer to the 50.0-point mark of neutrality). In this case, future Upstream expectations for Upstream are expected to remain in expansionary territory at 52.1 (from 49.3 previously 2 months ago) and being a substantial 19.5 points away from Downstream expectations (71.7). This difference was statistically significant (p<.001).
Warehousing Utilization
The Warehousing Utilization index registered in at 61.7 points for the month of December 2024, reflecting a 2.8-point increase from the month prior. This reading is up, minimally, 1.5 points from the reading one year ago, and, interestingly, down by 2.7 points the reading two years ago. In addition, there was a 10.7 point split between Upstream (65.5) and Downstream (54.8) which was (as was also the case last month) marginally statistically significant (p<.1), and also noteworthy that the Upstream/Downstream breakdown reverse from last month’s reading. Comparing the differences between small (<999 employees) and large (>999 employees) we see that these values are 59.8 and 63.5, respectively. This 3.7-point split was not statistically significant (p >.01).
Finally, exploring the future predictions for this value we see that Warehouse Utilization is expected to continue to move into strong in expansionary territory one year out at 69.6. This is a strong level of expectation and possibly represents the shift in strategies towards higher Inventory Levels. This is consistent across the supply chain with future Upstream expectations (69.7) being predicted to be similarly high to Downstream expectations (71.7), where this 1.9-point difference is not statistically significant (p>.1).
The Warehousing Utilization index registered in at 61.7 points for the month of December 2024, reflecting a 2.8-point increase from the month prior. This reading is up, minimally, 1.5 points from the reading one year ago, and, interestingly, down by 2.7 points the reading two years ago. In addition, there was a 10.7 point split between Upstream (65.5) and Downstream (54.8) which was (as was also the case last month) marginally statistically significant (p<.1), and also noteworthy that the Upstream/Downstream breakdown reverse from last month’s reading. Comparing the differences between small (<999 employees) and large (>999 employees) we see that these values are 59.8 and 63.5, respectively. This 3.7-point split was not statistically significant (p >.01).
Finally, exploring the future predictions for this value we see that Warehouse Utilization is expected to continue to move into strong in expansionary territory one year out at 69.6. This is a strong level of expectation and possibly represents the shift in strategies towards higher Inventory Levels. This is consistent across the supply chain with future Upstream expectations (69.7) being predicted to be similarly high to Downstream expectations (71.7), where this 1.9-point difference is not statistically significant (p>.1).
Warehousing Prices
The Warehousing Price index registered in at 68.0 points for the month of December 2024, which is down less than one point from the month prior, which also demonstrates a 1-2 month “see-saw” effect in the fluctuations of this metric. This reading is up from the reading one year ago (by 2.5 points), yet down 4.1 points from the reading two years ago. In addition, there was a 5.3-point split between Upstream (67.1) and Downstream (72.4) which is not statistically significant (p>.1) and is likely responding to the holiday season push. Comparing the differences between small (<999 employees) and large (>999 employees) we see that these values are both 68.0 reflecting no difference between the two, nor was this statistically significant (p >.1).
Finally, exploring the future predictions for this value we see that Warehouse Prices are expected to expand rapidly at a rate of 75.0. As with utilization, this is consistent across the supply chain with future Upstream expectations (76.1) being predicted to similar to Downstream expectations (75.0). This 1.1-point difference was not statistically significant (p>.1), with this difference continuing to decrease, now two months in a row.
The Warehousing Price index registered in at 68.0 points for the month of December 2024, which is down less than one point from the month prior, which also demonstrates a 1-2 month “see-saw” effect in the fluctuations of this metric. This reading is up from the reading one year ago (by 2.5 points), yet down 4.1 points from the reading two years ago. In addition, there was a 5.3-point split between Upstream (67.1) and Downstream (72.4) which is not statistically significant (p>.1) and is likely responding to the holiday season push. Comparing the differences between small (<999 employees) and large (>999 employees) we see that these values are both 68.0 reflecting no difference between the two, nor was this statistically significant (p >.1).
Finally, exploring the future predictions for this value we see that Warehouse Prices are expected to expand rapidly at a rate of 75.0. As with utilization, this is consistent across the supply chain with future Upstream expectations (76.1) being predicted to similar to Downstream expectations (75.0). This 1.1-point difference was not statistically significant (p>.1), with this difference continuing to decrease, now two months in a row.
Transportation Capacity
The Transportation Capacity Index registered 53.2 in December 2024. This constitutes a small increase of .6 points from last month’s reading. As such, with this third consecutive increase the Transportation Capacity index remains on a slight upward trajectory and above the critical threshold. Despite this increase, the index is at more than 10 points below the level indicated one year ago and more than 16 points below the level indicated two years ago. As such, the Transportation Capacity index, although in expansion territory and on a slight increasing trajectory, remains relatively subdued. There is no significant difference between Upstream and Downstream, with Upstream Transportation Capacity index at 51.9 and the Downstream index at 56.7. As such, the slight expansion trend in Transportation Capacity remains present both Upstream and Downstream, across the supply chains.
The future Transportation Capacity index is slightly down, now at 50.0 indicating expectations of stable Transportation Capacity over the next 12 months. While the Upstream index remains below the threshold indicating contraction at 48.8, the Downstream Transportation Capacity index is slightly higher at 53.2, indicating slight expectations of expansion over the next 12 months. However, this difference is not statistically significant.
The Transportation Capacity Index registered 53.2 in December 2024. This constitutes a small increase of .6 points from last month’s reading. As such, with this third consecutive increase the Transportation Capacity index remains on a slight upward trajectory and above the critical threshold. Despite this increase, the index is at more than 10 points below the level indicated one year ago and more than 16 points below the level indicated two years ago. As such, the Transportation Capacity index, although in expansion territory and on a slight increasing trajectory, remains relatively subdued. There is no significant difference between Upstream and Downstream, with Upstream Transportation Capacity index at 51.9 and the Downstream index at 56.7. As such, the slight expansion trend in Transportation Capacity remains present both Upstream and Downstream, across the supply chains.
The future Transportation Capacity index is slightly down, now at 50.0 indicating expectations of stable Transportation Capacity over the next 12 months. While the Upstream index remains below the threshold indicating contraction at 48.8, the Downstream Transportation Capacity index is slightly higher at 53.2, indicating slight expectations of expansion over the next 12 months. However, this difference is not statistically significant.
Transportation Utilization
The Transportation Utilization Index remains unchanged from last month, indicating 60.5 in December 2024. As such, the Transportation Utilization index remains very close to the two-year maximum registered in October 2023. The expansion is felt across the supply chain, with the Downstream Transportation Utilization Index reading 51.7, while the Upstream index is indicating 63.8. This difference is marginally statistically significant, indicating that the activity increase is more intense Upstream than Downstream.
The future Transportation Utilization Index remains unchanged from the last reading and continues to indicate strong expansion at 68.0 for the next 12 months. The future Upstream Transportation Utilization index is at 72.5 while the Downstream index is at 56.5. The difference is statistically significant so the growth expectations for Transportation Utilization are stronger Upstream than Downstream.
The Transportation Utilization Index remains unchanged from last month, indicating 60.5 in December 2024. As such, the Transportation Utilization index remains very close to the two-year maximum registered in October 2023. The expansion is felt across the supply chain, with the Downstream Transportation Utilization Index reading 51.7, while the Upstream index is indicating 63.8. This difference is marginally statistically significant, indicating that the activity increase is more intense Upstream than Downstream.
The future Transportation Utilization Index remains unchanged from the last reading and continues to indicate strong expansion at 68.0 for the next 12 months. The future Upstream Transportation Utilization index is at 72.5 while the Downstream index is at 56.5. The difference is statistically significant so the growth expectations for Transportation Utilization are stronger Upstream than Downstream.
Transportation Prices
The Transportation Prices Index indicates 66.8 in December 2024, which corresponds to an increase of 3 points from the previous month, establishing a new two-year maximum. As such, the upwards pressure on the Transportation Price Index resumes. While the Upstream Transportation Prices Index is at 65.9, the Downstream index is at 69.4, yet the difference is not statistically significant, indicating that the inflationary price pressure persists across the supply chains.
The future index for Transportation Prices retreats 3.9 points and is now at 77.0. Despite this retreat, the index continues to indicate very strong expectations of higher Transportation Prices in the next 12 months. The Downstream Transportation Prices index is at 74.2 while the Upstream Transportation Prices index is at 78.0, but the difference is not statistically significant.
The Transportation Prices Index indicates 66.8 in December 2024, which corresponds to an increase of 3 points from the previous month, establishing a new two-year maximum. As such, the upwards pressure on the Transportation Price Index resumes. While the Upstream Transportation Prices Index is at 65.9, the Downstream index is at 69.4, yet the difference is not statistically significant, indicating that the inflationary price pressure persists across the supply chains.
The future index for Transportation Prices retreats 3.9 points and is now at 77.0. Despite this retreat, the index continues to indicate very strong expectations of higher Transportation Prices in the next 12 months. The Downstream Transportation Prices index is at 74.2 while the Upstream Transportation Prices index is at 78.0, but the difference is not statistically significant.
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
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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, Florida Atlantic University, 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 [email protected] 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, Florida Atlantic University, 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.