FOR RELEASE: Tuesday, August 4th, 2020
Contact:
Zac Rogers, Ph.D.
Logistics Manager’s Index Analyst
Assistant Professor, Supply Chain Management
Department of Management
Colorado State University
Fort Collins, Colorado
(970) 491-0890
E-mail: Zac.Rogers@colostate.edu
http://www.logisticsindex.org
Twitter: @LogisticsIndex
Contact:
Zac Rogers, Ph.D.
Logistics Manager’s Index Analyst
Assistant Professor, Supply Chain Management
Department of Management
Colorado State University
Fort Collins, Colorado
(970) 491-0890
E-mail: Zac.Rogers@colostate.edu
http://www.logisticsindex.org
Twitter: @LogisticsIndex
July 2020 Logistics Manager’s Index Report®
LMI® at 63.0%
Growth is INCREASING AT AN INCREASING RATE for: Inventory Costs, Warehousing Prices, and Transportation Prices
Growth is INCREASING AT AN STEADY RATE for: Transportation Utilization
Growth is INCREASING AT A DECREASING RATE for: Inventory Levels, Warehousing Utilization, and Transportation Capacity
Warehousing Capacity is CONSTANT
Transportation Capacity is CONTRACTING.
LMI® at 63.0%
Growth is INCREASING AT AN INCREASING RATE for: Inventory Costs, Warehousing Prices, and Transportation Prices
Growth is INCREASING AT AN STEADY RATE for: Transportation Utilization
Growth is INCREASING AT A DECREASING RATE for: Inventory Levels, Warehousing Utilization, and Transportation Capacity
Warehousing Capacity is CONSTANT
Transportation Capacity is CONTRACTING.
Fort Collins, Colorado) — The logistics industry continues to recover from April’s all-time low overall score of 51.3, following up May’s reading of 54.5, and June’s reading of 61.7 with an overall index of 63.0, the highest reading since January 2019. Interestingly, upstream respondents report a higher level of activity then their downstream counterparts. Whether or not this reflects the closings of downstream retailers due to COVID-19 outbreaks remains to be seen. On the whole, Inventory Levels and Costs continue to increase, while Warehouse Capacity remains stagnant. Transportation Capacity has fallen to a 22-month low, while Transportation Utilization and Prices spike to 19-month highs. With the new round of COVID-19 outbreaks and the potential to re-shutter portions of the economy, whether or not this upswing will continue is anyone’s guess. For the moment however, the LMI is reporting growth levels not seen since late 2018.
Researchers at Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, and in conjunction with the Council of Supply Chain Management Professionals (CSCMP) issued this report today.
Results Overview
The LMI score is a combination eight unique components that make up the logistics industry, including: inventory levels and costs, warehousing capacity, utilization, and prices, and transportation capacity, utilization, and prices. The LMI is calculated using a diffusion index, in which any reading above 50 percent indicates that logistics is expanding; a reading below 50 percent is indicative of a shrinking logistics industry. The latest results of the LMI summarize the responses of supply chain professionals collected in July 2019. As mentioned above, this month’s LMI displays rapid growth in Transportation Prices and a drop-off in available Transportation Capacity. The crunch on available warehousing spurred by high inventory levels remains a going concern – particularly for upstream firms.
Overall, the LMI is up (+1.3) from June’s reading of 61.7. This is the second consecutive reading in the 60’s and the highest overall score in the 18 months since January 2019. This does not necessarily mean that the logistics industry is as robust as it was in early 2019, merely that it is growing at a similar rate (the overall level may not be the same). Still, this is encouraging news for logistics professionals after the massive drop-off experienced this Spring.
The continued growth in the LMI is largely driven by the recovery of our Transportation metrics. Transportation Capacity has tightened considerably (-6.8) at a rate of 42.8. The lack of capacity has driven Transportation Prices up (+8.2) to 72.6. This continues the rebound Transportation Prices have been on since reaching their nadir of 37.7 in April – since which they’re up a staggering 34.5 points. Interestingly, the increase in freight rates is not enjoyed across all modes of transportation. Both sea[1] and rail[2] have reported much slower recoveries and have yet to recover to the levels observed before the crisis. This is interesting as sea and rail freight often precede automotive shipments as they tend to move both raw materials domestically and finished goods that will eventually be moved to retailers from international suppliers.
Inventory Levels are still increasing at 57.2, but at a significantly slower rate (-7.1) than June. Despite the slowdown in overall levels, Inventory Costs are up (+5.7) to 69.1. This high costs is more likely a product of limited warehousing capacity than rising inventory levels. Continuing the pattern of the Upstream/Downstream divide, it should be noted that upstream firms are reporting higher Inventory Levels (59.3 to 53.2) and Inventory Costs (71.6 to 64.6).
The persistent (if slowing) growth in inventory continues to weight on the warehousing sector. Warehousing Capacity is holding steady at 50.0, up (+8.3) from June’s all-time index low of 41.3. It should be pointed out that this does not mean there is more space, merely that the space available ceased contracting in July. There is still significant evidence that warehouse space is tight, with firms fighting to lock down prime storage space in anticipation of an ecommerce-heavy Q4[3]. It was postulated in last month’s report that the contracting capacity combined with the increasing rates of Warehouse Utilization would lead to an increase in costs. That is borne out this month with Warehouse Prices increasing (+6.9) to 67.5 – indicating a rapid rate of growth. Interestingly, warehouse capacity is lower, and prices higher, for upstream firms. This suggests that industries a step or two removed from the customer are having more difficulty locating affordable facilities to store their goods. Whether or not this is indicative of increased demand (manifested in quicker inventory turns) or decreased demand (manifested in cancelled orders to suppliers) downstream remains to be seen.
Researchers at Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, and in conjunction with the Council of Supply Chain Management Professionals (CSCMP) issued this report today.
Results Overview
The LMI score is a combination eight unique components that make up the logistics industry, including: inventory levels and costs, warehousing capacity, utilization, and prices, and transportation capacity, utilization, and prices. The LMI is calculated using a diffusion index, in which any reading above 50 percent indicates that logistics is expanding; a reading below 50 percent is indicative of a shrinking logistics industry. The latest results of the LMI summarize the responses of supply chain professionals collected in July 2019. As mentioned above, this month’s LMI displays rapid growth in Transportation Prices and a drop-off in available Transportation Capacity. The crunch on available warehousing spurred by high inventory levels remains a going concern – particularly for upstream firms.
Overall, the LMI is up (+1.3) from June’s reading of 61.7. This is the second consecutive reading in the 60’s and the highest overall score in the 18 months since January 2019. This does not necessarily mean that the logistics industry is as robust as it was in early 2019, merely that it is growing at a similar rate (the overall level may not be the same). Still, this is encouraging news for logistics professionals after the massive drop-off experienced this Spring.
The continued growth in the LMI is largely driven by the recovery of our Transportation metrics. Transportation Capacity has tightened considerably (-6.8) at a rate of 42.8. The lack of capacity has driven Transportation Prices up (+8.2) to 72.6. This continues the rebound Transportation Prices have been on since reaching their nadir of 37.7 in April – since which they’re up a staggering 34.5 points. Interestingly, the increase in freight rates is not enjoyed across all modes of transportation. Both sea[1] and rail[2] have reported much slower recoveries and have yet to recover to the levels observed before the crisis. This is interesting as sea and rail freight often precede automotive shipments as they tend to move both raw materials domestically and finished goods that will eventually be moved to retailers from international suppliers.
Inventory Levels are still increasing at 57.2, but at a significantly slower rate (-7.1) than June. Despite the slowdown in overall levels, Inventory Costs are up (+5.7) to 69.1. This high costs is more likely a product of limited warehousing capacity than rising inventory levels. Continuing the pattern of the Upstream/Downstream divide, it should be noted that upstream firms are reporting higher Inventory Levels (59.3 to 53.2) and Inventory Costs (71.6 to 64.6).
The persistent (if slowing) growth in inventory continues to weight on the warehousing sector. Warehousing Capacity is holding steady at 50.0, up (+8.3) from June’s all-time index low of 41.3. It should be pointed out that this does not mean there is more space, merely that the space available ceased contracting in July. There is still significant evidence that warehouse space is tight, with firms fighting to lock down prime storage space in anticipation of an ecommerce-heavy Q4[3]. It was postulated in last month’s report that the contracting capacity combined with the increasing rates of Warehouse Utilization would lead to an increase in costs. That is borne out this month with Warehouse Prices increasing (+6.9) to 67.5 – indicating a rapid rate of growth. Interestingly, warehouse capacity is lower, and prices higher, for upstream firms. This suggests that industries a step or two removed from the customer are having more difficulty locating affordable facilities to store their goods. Whether or not this is indicative of increased demand (manifested in quicker inventory turns) or decreased demand (manifested in cancelled orders to suppliers) downstream remains to be seen.
The index scores for each of the eight components of the Logistics Managers’ Index, as well as the overall index score, are presented in the table above. Six of the eight metrics show signs of growth. The overall LMI® index score is at its highest level in 18 months.
Upstream firms report more logistics activity than they’re downstream counterparts. The show lower rates of capacity and higher prices. More activity upstream, away from consumers could reflect a number of factors. It may be that upstream firms are simply slower to recover from the high levels of crisis-related inventory than their downstream counterparts who are able to sell goods off more quickly. However, it is also reminiscent of earlier this Spring, when inventory started to stick upstream as retail sales began to fall due to lockdowns. It is also possible that this disparity is some combination of those two factors. It will be interesting to monitor this disparity over the next few months, to determine whether or not the increased activity upstream will trickle down or vice-versa (in which slowness for consumer-facing firms leads to slowness upstream).
Upstream firms report more logistics activity than they’re downstream counterparts. The show lower rates of capacity and higher prices. More activity upstream, away from consumers could reflect a number of factors. It may be that upstream firms are simply slower to recover from the high levels of crisis-related inventory than their downstream counterparts who are able to sell goods off more quickly. However, it is also reminiscent of earlier this Spring, when inventory started to stick upstream as retail sales began to fall due to lockdowns. It is also possible that this disparity is some combination of those two factors. It will be interesting to monitor this disparity over the next few months, to determine whether or not the increased activity upstream will trickle down or vice-versa (in which slowness for consumer-facing firms leads to slowness upstream).
Respondents were asked to predict movement in the overall LMI and individual metrics 12 months from now. Their predictions for future ratings are presented below. Respondents predict continued tightness in both transportation and warehousing, with Transportation Prices and Inventory Costs expected to increase rapidly, with growth rates in the low-80’s. If these trends hold as predicted, we will see rapid growth across the logistics industry. Whether or not this is possible is primarily a function of whether or not the economy remains open, and avoids further economic lockdowns.
Historic Logistics Managers’ Index Scores
This period’s along with prior readings from the last two years of the LMI are presented table below. The values have been updated to reflect the method for calculating the overall LMI:
This period’s along with prior readings from the last two years of the LMI are presented table below. The values have been updated to reflect the method for calculating the overall LMI:
LMI®
The overall LMI index is up (+1.3) to 63.0 from June’s reading of 61.7. This is the third consecutive increase after hitting April’s all-time low of 51.3. This is the highest overall score in 18 months since January 2019, indicating that, at least through July, the logistics industry seemed to be coming back strong. As noted above, this growth seems to be primarily driven by upstream respondents, perhaps indicating a shift back towards the dynamics we observed this Spring, when inventories accumulated upstream as retailers and other downstream firms experienced partial closures (as is now happening in some areas) and cancelled orders. It remains to be seen whether this trend towards recovery will continue, or whether there will be a subsequent dip linked to the ongoing secondary outbreak. For the moment however, it appears that the logistics industry has begun to regain its footing.
Respondents predict that over the next year, the LMI will be at 69.1, up (4.5) June’s future prediction of 65.6). This suggests that respondents are anticipating growth in the supply chain industry, and potentially in the economy as a whole, over the next 12 months.
The overall LMI index is up (+1.3) to 63.0 from June’s reading of 61.7. This is the third consecutive increase after hitting April’s all-time low of 51.3. This is the highest overall score in 18 months since January 2019, indicating that, at least through July, the logistics industry seemed to be coming back strong. As noted above, this growth seems to be primarily driven by upstream respondents, perhaps indicating a shift back towards the dynamics we observed this Spring, when inventories accumulated upstream as retailers and other downstream firms experienced partial closures (as is now happening in some areas) and cancelled orders. It remains to be seen whether this trend towards recovery will continue, or whether there will be a subsequent dip linked to the ongoing secondary outbreak. For the moment however, it appears that the logistics industry has begun to regain its footing.
Respondents predict that over the next year, the LMI will be at 69.1, up (4.5) June’s future prediction of 65.6). This suggests that respondents are anticipating growth in the supply chain industry, and potentially in the economy as a whole, over the next 12 months.
Inventory Levels
The Inventory Level value is 57.2 down (-7.1) from June’s value of 64.3. The current value is 10.0 points lower that July 2019, and 10.1 points down from July 2018 indicating that seasonally speaking, inventories are increasing much less quickly than they were one or two years ago at this time. As mentioned earlier, the slow down in inventory growth in July seems to be driven primarily by downstream firms. This could represent production ramping up from pandemic supply chain challenges, or retailers being more strategic about rebuilding inventories as things open up again. Alternatively, it could indicate that retailers in some parts of the country are seeing reduced business due to new restrictions.
Looking forward at the next 12 months the predicted Inventory Levels index is 69.2 up (+8.9) from June’s future prediction of 60.3. This indicates that respondents expect inventory values to continue increase significantly over the next year.
The Inventory Level value is 57.2 down (-7.1) from June’s value of 64.3. The current value is 10.0 points lower that July 2019, and 10.1 points down from July 2018 indicating that seasonally speaking, inventories are increasing much less quickly than they were one or two years ago at this time. As mentioned earlier, the slow down in inventory growth in July seems to be driven primarily by downstream firms. This could represent production ramping up from pandemic supply chain challenges, or retailers being more strategic about rebuilding inventories as things open up again. Alternatively, it could indicate that retailers in some parts of the country are seeing reduced business due to new restrictions.
Looking forward at the next 12 months the predicted Inventory Levels index is 69.2 up (+8.9) from June’s future prediction of 60.3. This indicates that respondents expect inventory values to continue increase significantly over the next year.
Inventory Costs
Given the continued increases in inventory levels, it is not surprising that inventory costs have continued to grow. The current value is 69.1 up (+5.6) from June’s reading of 63.5. This is the highest reading for this metric since August 2019. Like Inventory Levels, the upstream and downstream respondents report differing costs: 64.6 for downstream and 71.6 for upstream. Upstream respondents show inventory costs increasing more quickly, which is consistent with their greater increase in inventory levels, in the previous section. This continued growth in costs could be related to the fact that warehousing prices and utilization are still increasing. Given the significant increase in inventory levels seen above, and consistent increases in warehousing costs, it seems quite likely that inventory costs will continue to rise (as long as the U.S. is able to avoid a secondary round of lockdowns).
Looking forward at the next 12 months, the predicted Inventory Costs index is 82.4, up substantially (+11.0) from June’s future prediction of 71.4. Firms in many different industries are dealing with high levels of inventory and constraints on places to hold it. Based on this prediction, it appears many expect these issues to continue over the next 12 months.
Given the continued increases in inventory levels, it is not surprising that inventory costs have continued to grow. The current value is 69.1 up (+5.6) from June’s reading of 63.5. This is the highest reading for this metric since August 2019. Like Inventory Levels, the upstream and downstream respondents report differing costs: 64.6 for downstream and 71.6 for upstream. Upstream respondents show inventory costs increasing more quickly, which is consistent with their greater increase in inventory levels, in the previous section. This continued growth in costs could be related to the fact that warehousing prices and utilization are still increasing. Given the significant increase in inventory levels seen above, and consistent increases in warehousing costs, it seems quite likely that inventory costs will continue to rise (as long as the U.S. is able to avoid a secondary round of lockdowns).
Looking forward at the next 12 months, the predicted Inventory Costs index is 82.4, up substantially (+11.0) from June’s future prediction of 71.4. Firms in many different industries are dealing with high levels of inventory and constraints on places to hold it. Based on this prediction, it appears many expect these issues to continue over the next 12 months.
Warehousing Capacity
In a rather dramatic shift, the Warehousing Capacity Index registered 50.00 percent in June 2020, which indicates that the overall warehousing capacity is neither increasing nor decreasing. This represents an 8.3 percentage point increase from the June 2020 reading of 41.7. This number is similar to the reading one year ago of 51.5. This measurement for warehousing capacity in conjunction with other components of the LMI suggests an across the board increase, perhaps signaling that the impact of COVID-19 has now been accounted for in the logistics system. This reading breaks the trend of contraction we saw over the past four months, and shifts into neutral territory. Note that this does not mean that more warehouse capacity is coming online, merely that what is available has stopped contracting. Likely, fall planning around inventory levels and consumer demand led to an increase in the capacity for warehousing. Decisions that are made in the next month or so will likely determine how logistics network attempt to cope with the post-COVID new normal of fluctuating demand and supply of good, and of services.
Looking forward at the next 12 months, the predicted Warehousing Capacity index is 56.7, down (-0.7) from June’s future prediction of 57.4, and down 3.7 from May’s future prediction of 60.4. Respondents appear to be growing more pessimistic that large quantities of additional Warehousing Capacity will come online over the next 12 months.
In a rather dramatic shift, the Warehousing Capacity Index registered 50.00 percent in June 2020, which indicates that the overall warehousing capacity is neither increasing nor decreasing. This represents an 8.3 percentage point increase from the June 2020 reading of 41.7. This number is similar to the reading one year ago of 51.5. This measurement for warehousing capacity in conjunction with other components of the LMI suggests an across the board increase, perhaps signaling that the impact of COVID-19 has now been accounted for in the logistics system. This reading breaks the trend of contraction we saw over the past four months, and shifts into neutral territory. Note that this does not mean that more warehouse capacity is coming online, merely that what is available has stopped contracting. Likely, fall planning around inventory levels and consumer demand led to an increase in the capacity for warehousing. Decisions that are made in the next month or so will likely determine how logistics network attempt to cope with the post-COVID new normal of fluctuating demand and supply of good, and of services.
Looking forward at the next 12 months, the predicted Warehousing Capacity index is 56.7, down (-0.7) from June’s future prediction of 57.4, and down 3.7 from May’s future prediction of 60.4. Respondents appear to be growing more pessimistic that large quantities of additional Warehousing Capacity will come online over the next 12 months.
Warehousing Utilization
The Warehousing Utilization Index registered 63.9 percent in July 2020. This represents a slight 1.6 percentage point decrease from last month, and is down by 1 point from the July 2019 reading of 64.9. The continued increase in the rate of growth of warehousing utilization, though slightly down from the month prior, is likely attributable to the increase in consumer demand as various portions of the economy emerge from lock-down and stay at home orders as a result of the COVID-19 pandemic. Particularly this is also likely the case as schools plan their re-opening strategies, and the corresponding supply chains meant to support their successful operations gear up in order to maintain service levels.
Looking forward at the next 12 months, the predicted Warehousing Utilization index is 73.6, up dramatically from June’s future prediction of 60.0. This seems to support the notion that respondents do not expect significant amounts of warehousing to come online in the next year, and therefore anticipate the need to utilize more of the currently available space.
The Warehousing Utilization Index registered 63.9 percent in July 2020. This represents a slight 1.6 percentage point decrease from last month, and is down by 1 point from the July 2019 reading of 64.9. The continued increase in the rate of growth of warehousing utilization, though slightly down from the month prior, is likely attributable to the increase in consumer demand as various portions of the economy emerge from lock-down and stay at home orders as a result of the COVID-19 pandemic. Particularly this is also likely the case as schools plan their re-opening strategies, and the corresponding supply chains meant to support their successful operations gear up in order to maintain service levels.
Looking forward at the next 12 months, the predicted Warehousing Utilization index is 73.6, up dramatically from June’s future prediction of 60.0. This seems to support the notion that respondents do not expect significant amounts of warehousing to come online in the next year, and therefore anticipate the need to utilize more of the currently available space.
Warehousing Prices
Warehousing Prices Index registered 67.50 percent in July 2020. This reading represents a rather sizeable 7-point increase from last month, which represents the fourth straight month of an increased growth rate in warehousing prices amid the COVID-19 disruption. This reading is approximately equal to the reading from one year ago, much like the warehousing capacity number noted above. In the previous month’s report, the fluctuations in capacity and utilization led our analysts to speculate that prices may increase. Indeed, in the previous month’s report we noted “Interestingly, while capacity is decreasing and utilization is rising at rather expeditious rates, pricing has yet to follow as sharply. The reading next month will confirm whether there is a lagged effect in pricing.” As such, it appears that there is a slight lagged effect in the price dynamics of warehousing. Taken in combination with the increasing utilization and neutral capacity, this reading could suggest that the market is adjusting prices as necessary, in order to ‘rebalance’ and reflect the cost of operating under the exogenous constraints placed on logistics systems as a result of COVID, which continues to create ripples.
Future predictions suggest that respondents are expecting prices to continue to grow at a rate of 73.1, down slightly (-1.9) from June’s predicted future price of 75,0, but still indicating an expectation of a significant increase in costs as capacity continues to be stretched.
Warehousing Prices Index registered 67.50 percent in July 2020. This reading represents a rather sizeable 7-point increase from last month, which represents the fourth straight month of an increased growth rate in warehousing prices amid the COVID-19 disruption. This reading is approximately equal to the reading from one year ago, much like the warehousing capacity number noted above. In the previous month’s report, the fluctuations in capacity and utilization led our analysts to speculate that prices may increase. Indeed, in the previous month’s report we noted “Interestingly, while capacity is decreasing and utilization is rising at rather expeditious rates, pricing has yet to follow as sharply. The reading next month will confirm whether there is a lagged effect in pricing.” As such, it appears that there is a slight lagged effect in the price dynamics of warehousing. Taken in combination with the increasing utilization and neutral capacity, this reading could suggest that the market is adjusting prices as necessary, in order to ‘rebalance’ and reflect the cost of operating under the exogenous constraints placed on logistics systems as a result of COVID, which continues to create ripples.
Future predictions suggest that respondents are expecting prices to continue to grow at a rate of 73.1, down slightly (-1.9) from June’s predicted future price of 75,0, but still indicating an expectation of a significant increase in costs as capacity continues to be stretched.
Transportation Capacity
The Transportation Capacity Index registered 42.8 percent in July 2020. This constitutes a decrease of 6.8 percentage points from the June reading of 49.6. The Transportation Capacity Index continued to drop further under 50, indicating contracting capacity. The high demand for transportation is echoed in extant metrics such as FreightWaves’ tender rejection index. As noted earlier, trucking is an aberration among freight modes, as rail and sea freight have been slipping. Whether or not this will impact our measure of transportation remains to be seen.
Future predictions suggest that respondents are expecting capacity to continue to contract at a rate of 42.7, down (-7.2) from June’s predicted future price of 49.5, indicating that consumers have shifted from expecting little change, to fairly significant contraction.
The Transportation Capacity Index registered 42.8 percent in July 2020. This constitutes a decrease of 6.8 percentage points from the June reading of 49.6. The Transportation Capacity Index continued to drop further under 50, indicating contracting capacity. The high demand for transportation is echoed in extant metrics such as FreightWaves’ tender rejection index. As noted earlier, trucking is an aberration among freight modes, as rail and sea freight have been slipping. Whether or not this will impact our measure of transportation remains to be seen.
Future predictions suggest that respondents are expecting capacity to continue to contract at a rate of 42.7, down (-7.2) from June’s predicted future price of 49.5, indicating that consumers have shifted from expecting little change, to fairly significant contraction.
Transportation Utilization
The Transportation Utilization Index registered 66.7 percent in July 2020. This number is unchanged from the May reading of 66.7. The readings over the last two months are the highest for this metric since November 2018. This indicates that as capacity shrinks and prices increase, the utilization of available capacity continues to grow.
Future predictions suggest that respondents are expecting utilization to continue increasing at a rate of 70.1, up (+1.2) from June’s predicted future rate of 71.9. Respondents clearly expect a tight transportation market, and the need to more fully utilize available capacity in the months ahead.
The Transportation Utilization Index registered 66.7 percent in July 2020. This number is unchanged from the May reading of 66.7. The readings over the last two months are the highest for this metric since November 2018. This indicates that as capacity shrinks and prices increase, the utilization of available capacity continues to grow.
Future predictions suggest that respondents are expecting utilization to continue increasing at a rate of 70.1, up (+1.2) from June’s predicted future rate of 71.9. Respondents clearly expect a tight transportation market, and the need to more fully utilize available capacity in the months ahead.
Transportation Prices
The Transportation Prices Index registered 72.6 percent in July 2020. This constitutes an increase of 8.1 percent from the June transportation prices reading of 64.5. This indicates that transportation prices are continuing their increasing trend. When taken together with contracting capacity and increasing utilization, it is clear that the transportation market continues to recover rapidly, indicating that at least parts of the economy are moving back towards their pre-crisis velocity.
Future predictions suggest that respondents are expecting prices to continue to grow at a meteoric rate of 83.2, up (+7.8) from June’s predicted future price of 75.4. Respondents anticipate freight’s recent hot streak to continue over the next 12 months.
The Transportation Prices Index registered 72.6 percent in July 2020. This constitutes an increase of 8.1 percent from the June transportation prices reading of 64.5. This indicates that transportation prices are continuing their increasing trend. When taken together with contracting capacity and increasing utilization, it is clear that the transportation market continues to recover rapidly, indicating that at least parts of the economy are moving back towards their pre-crisis velocity.
Future predictions suggest that respondents are expecting prices to continue to grow at a meteoric rate of 83.2, up (+7.8) from June’s predicted future price of 75.4. Respondents anticipate freight’s recent hot streak to continue over the next 12 months.
About This Report
The data presented herein are obtained from a survey of logistics supply executives based on information they have collected within their respective organizations. LMI® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.
Data and Method of Presentation
Data for the Logistics Manager’s Index is collected in a monthly survey of leading logistics professionals. The respondents are CSCMP members working at the director-level or above. Upper-level managers are preferable as they are more likely to have macro-level information on trends in Inventory, Warehousing and Transportation trends within their firm. Data is also collected from subscribers to both DC Velocity and Supply Chain Quarterly as well. Respondents hail from firms working on all six continents, with the majority of them working at firms with annual revenues over a billion dollars. The industries represented in this respondent pool include, but are not limited to: Apparel, Automotive, Consumer Goods, Electronics, Food & Drug, Home Furnishings, Logistics, Shipping & Transportation, and Warehousing.
Respondents are asked to identify the monthly change across each of the eight metrics collected in this survey (Inventory Levels, Inventory Costs, Warehousing Capacity, Warehousing Utilization, Warehousing Prices, Transportation Capacity, Transportation Utilization, and Transportation Prices). In addition, they also forecast future trends for each metric ranging over the next 12 months. The raw data is then analyzed using a diffusion index. Diffusion Indexes measure how widely something is diffused, or spread across a group. The Bureau of Labor Statistics has been using a diffusion index for the Current Employment Statics program since 1974, and the Institute for Supply Management (ISM) has been using a diffusion index to compute the Purchasing Managers Index since 1948. The ISM Index of New Orders is considered a Leading Economic Indicator.
We compute the Diffusion Index as follows:
PD = Percentage of respondents saying the category is Declining,
PU = Percentage of respondents saying the category is Unchanged,
PI = Percentage of respondents saying the category is Increasing,
Diffusion Index = 0.5 * PD + 0.5 * PU + 1.0 * PI
For example, if 25% say the category is declining, 38% say it is unchanged, and 37% say it is increasing, we would calculate an index value of 0*0.25 + 0.5*0.38 + 1.0*0.37 = 0 + 0.19 + 0.37 = 0.56, and the index is increasing overall. For an index value above 0.5 indicates the category is increasing, a value below 0.5 indicates it is decreasing, and a value of 0.5 means the category is unchanged. When a full year’s worth of data has been collected, adjustments will be made for seasonal factors as well.
Logistics Managers Index
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The authors of the Logistics Managers Index shall not have any liability, duty, or obligation for or relating to the Logistics Managers Index Content or other information contained herein, any errors, inaccuracies, omissions or delays in providing any Logistics Managers Index Content, or for any actions taken in reliance thereon. In no event shall the authors of the Logistics Managers Index be liable for any special, incidental, or consequential damages, arising out of the use of the Logistics Managers Index. Logistics Managers Index, and LMI® are registered trademarks.
About The Logistics Manager’s Index®
The Logistics Manager’s Index (LMI) is a joint project between researchers from Arizona State University, Colorado State University, University of Nevada, Reno, Rochester Institute of Technology and Rutgers University, supported by CSCMP. It is authored by Zac Rogers Ph.D., Steven Carnovale Ph.D., Shen Yeniyurt Ph.D., Ron Lembke Ph.D., and Dale Rogers Ph.D.
The data presented herein are obtained from a survey of logistics supply executives based on information they have collected within their respective organizations. LMI® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.
Data and Method of Presentation
Data for the Logistics Manager’s Index is collected in a monthly survey of leading logistics professionals. The respondents are CSCMP members working at the director-level or above. Upper-level managers are preferable as they are more likely to have macro-level information on trends in Inventory, Warehousing and Transportation trends within their firm. Data is also collected from subscribers to both DC Velocity and Supply Chain Quarterly as well. Respondents hail from firms working on all six continents, with the majority of them working at firms with annual revenues over a billion dollars. The industries represented in this respondent pool include, but are not limited to: Apparel, Automotive, Consumer Goods, Electronics, Food & Drug, Home Furnishings, Logistics, Shipping & Transportation, and Warehousing.
Respondents are asked to identify the monthly change across each of the eight metrics collected in this survey (Inventory Levels, Inventory Costs, Warehousing Capacity, Warehousing Utilization, Warehousing Prices, Transportation Capacity, Transportation Utilization, and Transportation Prices). In addition, they also forecast future trends for each metric ranging over the next 12 months. The raw data is then analyzed using a diffusion index. Diffusion Indexes measure how widely something is diffused, or spread across a group. The Bureau of Labor Statistics has been using a diffusion index for the Current Employment Statics program since 1974, and the Institute for Supply Management (ISM) has been using a diffusion index to compute the Purchasing Managers Index since 1948. The ISM Index of New Orders is considered a Leading Economic Indicator.
We compute the Diffusion Index as follows:
PD = Percentage of respondents saying the category is Declining,
PU = Percentage of respondents saying the category is Unchanged,
PI = Percentage of respondents saying the category is Increasing,
Diffusion Index = 0.5 * PD + 0.5 * PU + 1.0 * PI
For example, if 25% say the category is declining, 38% say it is unchanged, and 37% say it is increasing, we would calculate an index value of 0*0.25 + 0.5*0.38 + 1.0*0.37 = 0 + 0.19 + 0.37 = 0.56, and the index is increasing overall. For an index value above 0.5 indicates the category is increasing, a value below 0.5 indicates it is decreasing, and a value of 0.5 means the category is unchanged. When a full year’s worth of data has been collected, adjustments will be made for seasonal factors as well.
Logistics Managers Index
Requests for permission to reproduce or distribute Logistics Managers Index Content can be made by contacting in writing at: Dale S. Rogers, WP Carey School of Business, Tempe, Arizona 85287, or by emailing dale.rogers@asu.edu Subject: Content Request.
The authors of the Logistics Managers Index shall not have any liability, duty, or obligation for or relating to the Logistics Managers Index Content or other information contained herein, any errors, inaccuracies, omissions or delays in providing any Logistics Managers Index Content, or for any actions taken in reliance thereon. In no event shall the authors of the Logistics Managers Index be liable for any special, incidental, or consequential damages, arising out of the use of the Logistics Managers Index. Logistics Managers Index, and LMI® are registered trademarks.
About The Logistics Manager’s Index®
The Logistics Manager’s Index (LMI) is a joint project between researchers from Arizona State University, Colorado State University, University of Nevada, Reno, Rochester Institute of Technology and Rutgers University, supported by CSCMP. It is authored by Zac Rogers Ph.D., Steven Carnovale Ph.D., Shen Yeniyurt Ph.D., Ron Lembke Ph.D., and Dale Rogers Ph.D.
[1] Paris, C. (2020, July 24). Shipyards’ Rebound Hopes Are Coming Up Empty. Wall Street Journal. https://www.wsj.com/articles/shipyards-rebound-hopes-are-coming-up-empty-11595538751
[2] Stiffel. (2020). Economy Now Shuffling Sideways—At Least Over the Rails (pp. 1–15). Stiffel. https://stifel2.bluematrix.com/sellside/EmailDocViewer?encrypt=2c6baa76-47c2-46ce-a9f4-a50f17824588&mime=pdf&co=Stifel&id=null&source=mai
[3] Smith, J. (2020, July 30). The Rush Is On to Secure Holiday-Season Warehouse Space. Wall Street Journal. https://www.wsj.com/articles/the-rush-is-on-to-secure-holiday-season-warehouse-space-11596136191
[2] Stiffel. (2020). Economy Now Shuffling Sideways—At Least Over the Rails (pp. 1–15). Stiffel. https://stifel2.bluematrix.com/sellside/EmailDocViewer?encrypt=2c6baa76-47c2-46ce-a9f4-a50f17824588&mime=pdf&co=Stifel&id=null&source=mai
[3] Smith, J. (2020, July 30). The Rush Is On to Secure Holiday-Season Warehouse Space. Wall Street Journal. https://www.wsj.com/articles/the-rush-is-on-to-secure-holiday-season-warehouse-space-11596136191
