FOR RELEASE: Tuesday, October 5th, 2021
Contact:
Zac Rogers, Ph.D.
Logistics Manager’s Index Analyst
Assistant Professor, Supply Chain Management
Department of Management
Colorado State University
Fort Collins, Colorado
(970) 491-0890
E-mail: Zac.Rogers@colostate.edu
http://www.logisticsindex.org
Twitter: @LogisticsIndex
Contact:
Zac Rogers, Ph.D.
Logistics Manager’s Index Analyst
Assistant Professor, Supply Chain Management
Department of Management
Colorado State University
Fort Collins, Colorado
(970) 491-0890
E-mail: Zac.Rogers@colostate.edu
http://www.logisticsindex.org
Twitter: @LogisticsIndex
September 2021 Logistics Manager’s Index Report®
LMI® at 72.2
Growth is INCREASING AT A DECREASING RATE for: Inventory Levels, Transportation Capacity, and Transportation Prices.
Growth is INCREASING AT AN INCREASING RATE for: Inventory Costs, Warehousing Utilization, and Warehousing Prices,
Warehousing Capacity and Transportation Capacity are CONTRACTING.
LMI® at 72.2
Growth is INCREASING AT A DECREASING RATE for: Inventory Levels, Transportation Capacity, and Transportation Prices.
Growth is INCREASING AT AN INCREASING RATE for: Inventory Costs, Warehousing Utilization, and Warehousing Prices,
Warehousing Capacity and Transportation Capacity are CONTRACTING.
(Fort Collins, Colorado) — September’s reading of 72.2 continues the extended run of logistics expansion we have been tracking throughout the year. This month’s number is driven primarily by cost metrics (including an all-time high reading of 89.3 for Warehousing Prices). Interestingly, it is tempered somewhat by a decrease in the rate of growth for Inventory Levels. A decline which is likely due to a combination of inventory moving quickly due to high consumer demand, but also coming in slowly due to logistics delays.
September 2021 marks five years of the LMI. The authors of this report would like to thank readers both for their feedback – which has improved the report significantly, and for their continued interest in the index. The figure below displays the overall index scores over the first five years of the index. The green line represents the overall values, the dashed black line represents the “breakeven” point of 50.0, at which metrics move from expansion to contraction, and the dashed red line is set to a value of 70.0, a level of expansion that represents significant growth at approximately three standard deviations above 50.0 and more than one standard deviation above the median rate of growth. The LMI has never dipped below the black line into a state of contraction., but it has spent quite a bit of time – especially lately – above the red line. The first such peak was from March-October 2018 in the immediate aftermath of the Trump tax cut. Interestingly, after this peak, we observed a steady decline, as overall index ratings dropped down to the 60’s, and then – from April 2019-March 2020 – into the 50’s as upstream firms struggle with trade war related issues and an overall industrial slowdown, and the idling of multiple truck fleets (growth at the time was buoyed by hot consumer spending). Ironically, the onset of COVID-19 led to a marked turnaround as domestic consumers shifted to online shopping and international supply chains raced to catch up with the delays caused by various lockdowns and closures. After a transitionary period through the Spring and Summer of 2020, a new boom period began, one year ago, in September 2020. Since then, all but two readings have come in above 70.0 (only December and January read in the mid-60’s which was partially a function of inventories being sold off during Q4). The overall index has been above 70.0 for eight consecutive readings and 11 out of the last 13.
September 2021 marks five years of the LMI. The authors of this report would like to thank readers both for their feedback – which has improved the report significantly, and for their continued interest in the index. The figure below displays the overall index scores over the first five years of the index. The green line represents the overall values, the dashed black line represents the “breakeven” point of 50.0, at which metrics move from expansion to contraction, and the dashed red line is set to a value of 70.0, a level of expansion that represents significant growth at approximately three standard deviations above 50.0 and more than one standard deviation above the median rate of growth. The LMI has never dipped below the black line into a state of contraction., but it has spent quite a bit of time – especially lately – above the red line. The first such peak was from March-October 2018 in the immediate aftermath of the Trump tax cut. Interestingly, after this peak, we observed a steady decline, as overall index ratings dropped down to the 60’s, and then – from April 2019-March 2020 – into the 50’s as upstream firms struggle with trade war related issues and an overall industrial slowdown, and the idling of multiple truck fleets (growth at the time was buoyed by hot consumer spending). Ironically, the onset of COVID-19 led to a marked turnaround as domestic consumers shifted to online shopping and international supply chains raced to catch up with the delays caused by various lockdowns and closures. After a transitionary period through the Spring and Summer of 2020, a new boom period began, one year ago, in September 2020. Since then, all but two readings have come in above 70.0 (only December and January read in the mid-60’s which was partially a function of inventories being sold off during Q4). The overall index has been above 70.0 for eight consecutive readings and 11 out of the last 13.
The logistics industry has experienced peaks like this before, but never in the history of the LMI for so long a stretch. After the last peak, a subsequent drop-off followed. It will be interesting to observe if the period after this peak follows a similar pattern. There are already some differences as the peak period has lasted considerably longer. Additionally, this peak has come mainly from emerging structural issues that will likely take a considerable amount of time to rectify which may increase the length of time this lasts. Either way it will be interesting to continue tracking when/if some relief comes to the logistics industry, and if the drop-off is quite as steep as what we observed from 2018-2019. If there is a drop-off, it seems unlikely that it will come soon. Over 131 billion packages (approximately 4,000 per second) were delivered in 2020[1], volume is expected to increase in 2021 and be elevated well into 2022. Slowness exists at every level in the supply chain and catching up to demand will be no menial task.
Researchers at Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, and in conjunction with the Council of Supply Chain Management Professionals (CSCMP) issued this report today.
Results Overview
The LMI score is a combination of eight unique components that make up the logistics industry, including: inventory levels and costs, warehousing capacity, utilization, and prices, and transportation capacity, utilization, and prices. The LMI is calculated using a diffusion index, in which any reading above 50 percent indicates that logistics is expanding; a reading below 50 percent is indicative of a shrinking logistics industry. The latest results of the LMI summarize the responses of supply chain professionals collected in September 2021. As we have seen for most of the last year, this month’s LMI displays continued expansion in the logistics industry. Overall, the LMI is down slightly (-1.6) in from August’s reading of 73.8. The growth in this month’s index is fueled by metrics from across the index, primarily those involving capacity and cost. For the fourth consecutive month we observe an all-time high reading for Warehousing Prices, coming in this month at 89.3. Interestingly, this still comes in behind Transportation Prices, which read in at an astronomical rate of 92.7 – it’s sixth out of seven readings to breach 90.0.
The slowness at U.S. ports received a lot of attention in September, and for good reason. There were 73 ships at anchor or drifting in San Pedro Bay in mid-September[2]. This bottleneck has led global schedule reliability to drop to an all-time low of 33.6% in August of 2021, down 30.1% from this time a year ago as ships are now 7.6 days late on average[3], and ships sit in the bay for an average of 10.1 days[4]. The lack of space is confirmed in our Transportation Capacity metric, reading in at 37.2, down (-3.3) from August and marking the 12th out of the last 14 months that this metric has been in the 30’s – a value representing significant contraction. In response to this, retailers like Walmart, Costco, Target and Ikea have chartered their own container ships in an attempt to avoid delays associated with other ships. Coca-Cola has gone in another direction, chartering a bulk vessel that is generally used for raw materials to ship sorely needed manufacturing materials to the U. S[5]. While this will likely be beneficial for the large retailers in question, it will limit available capacity for small importers who are unable to charter full vessels themselves[6]. There has also been a concentrated move towards increasing air cargo capacity to relive this tension, with Boeing expanding capacity in China to convert 767’s to cargo planes to relieve freight issues[7]. United Airlines is also redirecting existing 777’s to cargo-only flights, resuming a lockdown era practice[8].
The congestion at ports has led to significant ripple effects, Drayage fees were up 6% in September, 32% higher than September 2020[9]. Additionally, the congestion in Southern California has led to costly imbalances in trailer positioning for ground carriers. For every three parcels that leave Southern California for another part of the U.S., only one returns. The leads to a high volume of dead head loads in which container are not being fully utilized moving back towards the ports. With over 1,500 FedEx trailers departing Southern California every day, these costs add up quickly[10]. This high cost is reflected in our Transportation Prices metric, reading in at 92.7. While this is down slightly (-1.3) from August, it still represents a highly significant level of growth (and as a change index, represents a significant overall increase from prices in August, just at a slower rate of change). In response to this DHL will hike prices for U.S. customers by an average of 5.9% starting in 2022 to cover increased transportation prices[11]. Finally, reacting to tight capacity and high prices, Transportation Utilization continues to expand at a rate of 69.5.
The crunch extends past transportation and the crowded ports, and into warehousing and storage. It is interesting that the Port of Long Beach’s move to 24-hour shifts has had little impact[12]. This is at least partially because even if cargo clears the dock, it is limited in where it can go. Shippers are holding on to chassis for longer than normal because containers have nowhere else to go due to a lack of warehousing space[13] [14]. Respondents confirm this, with Warehousing Capacity reading in at 47.9, the 13th month in a row this metric has shown contraction with a reading below 50.0. Essentially, even if goods make it past the dock, they are simply moving from one traffic jam to the next. The warehousing crunch is exacerbated by the slowness in transportation as Firms have attempted to stock up ahead of time to stay ahead of potential supply delays. This is exemplified by Walmart who held $47.8 billion of inventory at the end of July, up 16% from 2020[15]. This has led to the previously mentioned record-high reading of 89.3 for Warehousing Prices, and a continued increase in Warehousing Utilization (reading in at 66.4).
Warehousing and Transportation metric show rapid growth across the board, but with our two inventory metrics we see a divergence. Inventory Costs follow the rest of the index, up slightly (+1.6) to a top-3 all-time reading of 86.6. Inventory Levels bucks this trend, down (-5.2) to 58.6 – a level of growth that is actually below the all-time average of 61.2. Essentially, inventory levels are deflated by the twin forces of continually growing consumer demand (retail sales up by 0.7% - more than expected – in August 2021[16]), and limited reliability in logistics services leading to slow replenishment times. This Q4, supply chain issues look likely to impact goods across the spectrum, including Christmas Trees[17], gas in the U.K.[18]., and Nike sneakers[19].
As mentioned above, the low growth in inventory levels may undercut the overall index number, and how busy supply chains are. The stress logistics networks are under is much more clearly represented by the chart below displaying aggregate logistics prices (combing the costs of inventory, warehousing, and transportation). Aggregate costs hit an all-time high in September, reading in at 268.3. This is more than two standard deviations above the all-time average level of 217.0. Aggregate costs have been above 250.0 – a level we classify as significant growth – since March.
Researchers at Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, and in conjunction with the Council of Supply Chain Management Professionals (CSCMP) issued this report today.
Results Overview
The LMI score is a combination of eight unique components that make up the logistics industry, including: inventory levels and costs, warehousing capacity, utilization, and prices, and transportation capacity, utilization, and prices. The LMI is calculated using a diffusion index, in which any reading above 50 percent indicates that logistics is expanding; a reading below 50 percent is indicative of a shrinking logistics industry. The latest results of the LMI summarize the responses of supply chain professionals collected in September 2021. As we have seen for most of the last year, this month’s LMI displays continued expansion in the logistics industry. Overall, the LMI is down slightly (-1.6) in from August’s reading of 73.8. The growth in this month’s index is fueled by metrics from across the index, primarily those involving capacity and cost. For the fourth consecutive month we observe an all-time high reading for Warehousing Prices, coming in this month at 89.3. Interestingly, this still comes in behind Transportation Prices, which read in at an astronomical rate of 92.7 – it’s sixth out of seven readings to breach 90.0.
The slowness at U.S. ports received a lot of attention in September, and for good reason. There were 73 ships at anchor or drifting in San Pedro Bay in mid-September[2]. This bottleneck has led global schedule reliability to drop to an all-time low of 33.6% in August of 2021, down 30.1% from this time a year ago as ships are now 7.6 days late on average[3], and ships sit in the bay for an average of 10.1 days[4]. The lack of space is confirmed in our Transportation Capacity metric, reading in at 37.2, down (-3.3) from August and marking the 12th out of the last 14 months that this metric has been in the 30’s – a value representing significant contraction. In response to this, retailers like Walmart, Costco, Target and Ikea have chartered their own container ships in an attempt to avoid delays associated with other ships. Coca-Cola has gone in another direction, chartering a bulk vessel that is generally used for raw materials to ship sorely needed manufacturing materials to the U. S[5]. While this will likely be beneficial for the large retailers in question, it will limit available capacity for small importers who are unable to charter full vessels themselves[6]. There has also been a concentrated move towards increasing air cargo capacity to relive this tension, with Boeing expanding capacity in China to convert 767’s to cargo planes to relieve freight issues[7]. United Airlines is also redirecting existing 777’s to cargo-only flights, resuming a lockdown era practice[8].
The congestion at ports has led to significant ripple effects, Drayage fees were up 6% in September, 32% higher than September 2020[9]. Additionally, the congestion in Southern California has led to costly imbalances in trailer positioning for ground carriers. For every three parcels that leave Southern California for another part of the U.S., only one returns. The leads to a high volume of dead head loads in which container are not being fully utilized moving back towards the ports. With over 1,500 FedEx trailers departing Southern California every day, these costs add up quickly[10]. This high cost is reflected in our Transportation Prices metric, reading in at 92.7. While this is down slightly (-1.3) from August, it still represents a highly significant level of growth (and as a change index, represents a significant overall increase from prices in August, just at a slower rate of change). In response to this DHL will hike prices for U.S. customers by an average of 5.9% starting in 2022 to cover increased transportation prices[11]. Finally, reacting to tight capacity and high prices, Transportation Utilization continues to expand at a rate of 69.5.
The crunch extends past transportation and the crowded ports, and into warehousing and storage. It is interesting that the Port of Long Beach’s move to 24-hour shifts has had little impact[12]. This is at least partially because even if cargo clears the dock, it is limited in where it can go. Shippers are holding on to chassis for longer than normal because containers have nowhere else to go due to a lack of warehousing space[13] [14]. Respondents confirm this, with Warehousing Capacity reading in at 47.9, the 13th month in a row this metric has shown contraction with a reading below 50.0. Essentially, even if goods make it past the dock, they are simply moving from one traffic jam to the next. The warehousing crunch is exacerbated by the slowness in transportation as Firms have attempted to stock up ahead of time to stay ahead of potential supply delays. This is exemplified by Walmart who held $47.8 billion of inventory at the end of July, up 16% from 2020[15]. This has led to the previously mentioned record-high reading of 89.3 for Warehousing Prices, and a continued increase in Warehousing Utilization (reading in at 66.4).
Warehousing and Transportation metric show rapid growth across the board, but with our two inventory metrics we see a divergence. Inventory Costs follow the rest of the index, up slightly (+1.6) to a top-3 all-time reading of 86.6. Inventory Levels bucks this trend, down (-5.2) to 58.6 – a level of growth that is actually below the all-time average of 61.2. Essentially, inventory levels are deflated by the twin forces of continually growing consumer demand (retail sales up by 0.7% - more than expected – in August 2021[16]), and limited reliability in logistics services leading to slow replenishment times. This Q4, supply chain issues look likely to impact goods across the spectrum, including Christmas Trees[17], gas in the U.K.[18]., and Nike sneakers[19].
As mentioned above, the low growth in inventory levels may undercut the overall index number, and how busy supply chains are. The stress logistics networks are under is much more clearly represented by the chart below displaying aggregate logistics prices (combing the costs of inventory, warehousing, and transportation). Aggregate costs hit an all-time high in September, reading in at 268.3. This is more than two standard deviations above the all-time average level of 217.0. Aggregate costs have been above 250.0 – a level we classify as significant growth – since March.
The continual increase in logistics costs continues to make the efficient, dependable movement of goods difficult for firms. The fourth quarter is generally “crunch time” in the logistics industry. However, the readings from January to September 2021 are the highest costs have ever been over any 9-month period in the history of the index. It will be fascinating to see if this growth will continue to increase in the fourth quarter, or if the numbers will plateau at all as some supply chains are already stretched nearly to the limit.
The index scores for each of the eight components of the Logistics Managers’ Index, as well as the overall index score, are presented in the table below. Six of the eight metrics show signs of growth, while both capacity metrics continue their runs of contraction. The logistics industry remains tight, and based on future predictions and industry experts, seems likely to stay that way through the rest of the year.
The index scores for each of the eight components of the Logistics Managers’ Index, as well as the overall index score, are presented in the table below. Six of the eight metrics show signs of growth, while both capacity metrics continue their runs of contraction. The logistics industry remains tight, and based on future predictions and industry experts, seems likely to stay that way through the rest of the year.
This month, both upstream (blue bars) and downstream (orange bars) firms reported considerable rates of continued growth in utilization of logistics services. We observed significant differences between both available Transportation Capacity, and Transportation Prices.
While logistics networks are stressed everywhere, T-tests demonstrate that transportation has become particularly tough for downstream firms (i.e., retailers and other consumer-facing respondents). All respondents reported a contraction in Transportation Capacity in September, but downstream firms read in 11.5 points lower for a contraction rate of 30.5. Relatedly, downstream firms reported a rate of growth in Transportation Prices of 96.6 – 6.9 points higher than their upstream counterparts. If the 96.6 reading stood alone, it would be the highest reading for any metric in the history of the LMI. Transportation is limited at every level of the supply chain, but downstream customer-facing firms seem to be having particular troubles securing both shipping capacity internationally, as well as last-mile delivery domestically. This is likely to become even more pronounced as we move towards the start of Q4, and the seasonal buildup of inventories head of the holiday season.
Respondents were asked to predict movement in the overall LMI and individual metrics 12 months from now. Their predictions for future ratings are presented below. For the next year, respondents predict a growth rate of 72.6 for the overall LMI down a point from August’s future prediction of 73.6. While this is down, it is still well-above the average all-time growth rate of 64.2. This represents a significant rate of predicted growth. This high score is driven by predictions in the upper 80’s for all three price metrics. Respondents also predict marginal increases in both Warehousing and Transportation Capacity. The projected increase in Warehousing Capacity is a shift from the last two readings. If it comes to bear, increased storage space would provide a welcome break from the all-time high Warehousing Prices supply chains are currently dealing with.
The exact nature of the future predictions varies by supply chain position. But this month we do not see divergence between the two groups for future predictions:
Interestingly, T-tests show no significant difference between the expectations of Upstream or Downstream respondents. Both groups are expecting little to marginal growth in Warehousing and Transportation Capacity – a shift from August when capacity predictions trended negatively. They are also both anticipating continued price growth, ranging from the mid- to high-80’s over the next 12 months. Finally, both groups predict the overall LMI will continue to expand at a rate of 72-73, in line with the growth we are currently observing.
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 72.2, down (-1.6) from August’s reading of 73.8, down slightly (-0.7) from July’s reading of 74.5. Clear trends emerge when looking back over the last two years of readings for the overall index. From September 2019 to May 2020, a period marked by an industrial contraction and the outbreak of COVID-19, the overall index displayed marginal growth, registering scores in the 50’s. A transitionary period occurred in the Summer of 2020, with readings in the 60’s as portions of the global economy began to reopen. Starting one year ago in September 2020, the logistics industry began growing at a torrid pace, with all but two readings since then coming in above 70.0 – which we categorize as a significant rate of growth (only December and January read in the mid-60’s which was partially a function of inventories being sold off during Q4). January-September 2021 is the highest 9-month average overall score in the history of the index at 72.5. The fourth quarter is often the busiest time of the year for logistics networks. It will be fascinating to observe the movements in supply chains for the last three months of 2021, how well they are able to deal with the pressure, and whether we will see any slowdown at all going into 2022 (which respondent future predictions would put into doubt).
Respondents are not anticipating any significant relief over the next 12 months, predicting a growth rate of 72.6, down a point from August’s future prediction of 73.6 and significantly higher than the all-time average of 64.0. This growth rate over the next 12 months would lead to a continued increase in prices as the supply of capacity continues to struggle to keep up with demand.
The overall LMI index is 72.2, down (-1.6) from August’s reading of 73.8, down slightly (-0.7) from July’s reading of 74.5. Clear trends emerge when looking back over the last two years of readings for the overall index. From September 2019 to May 2020, a period marked by an industrial contraction and the outbreak of COVID-19, the overall index displayed marginal growth, registering scores in the 50’s. A transitionary period occurred in the Summer of 2020, with readings in the 60’s as portions of the global economy began to reopen. Starting one year ago in September 2020, the logistics industry began growing at a torrid pace, with all but two readings since then coming in above 70.0 – which we categorize as a significant rate of growth (only December and January read in the mid-60’s which was partially a function of inventories being sold off during Q4). January-September 2021 is the highest 9-month average overall score in the history of the index at 72.5. The fourth quarter is often the busiest time of the year for logistics networks. It will be fascinating to observe the movements in supply chains for the last three months of 2021, how well they are able to deal with the pressure, and whether we will see any slowdown at all going into 2022 (which respondent future predictions would put into doubt).
Respondents are not anticipating any significant relief over the next 12 months, predicting a growth rate of 72.6, down a point from August’s future prediction of 73.6 and significantly higher than the all-time average of 64.0. This growth rate over the next 12 months would lead to a continued increase in prices as the supply of capacity continues to struggle to keep up with demand.
Inventory Levels
The Inventory Level value is 58.6, down (-5.2) from September’s reading of 63.8 and below the all-time average of 61.2. As mentioned above, the decrease in inventory levels is one of the primary drivers behind the slight decrease in this month’s overall index. Ironically, as supply chains get less busy, this metric will likely increase – something that is generally not true of our non-capacity metrics. It will be interesting to observe if Inventory Levels do increase in any significant way as we enter Q4 and firms attempt to build up inventories for the holiday rush. We would normally see inventories increase in September and October, but this year firms may struggle to get the goods in their distribution centers and on shelves.
Future predictions suggest that firms envision a significant increase in inventory growth, predicting Inventory Levels of 79.5, up slightly (+1.0) from September’s future prediction of 78.5. The realization of this prediction hinges on the ability of supply networks to move inventory more quickly than they are currently. Whether or not this 20-point swing indicates that a flood of inventory will arrive post-Q4, leading to a classic bullwhip effect in which firms have too much inventory, remains to be seen.
The Inventory Level value is 58.6, down (-5.2) from September’s reading of 63.8 and below the all-time average of 61.2. As mentioned above, the decrease in inventory levels is one of the primary drivers behind the slight decrease in this month’s overall index. Ironically, as supply chains get less busy, this metric will likely increase – something that is generally not true of our non-capacity metrics. It will be interesting to observe if Inventory Levels do increase in any significant way as we enter Q4 and firms attempt to build up inventories for the holiday rush. We would normally see inventories increase in September and October, but this year firms may struggle to get the goods in their distribution centers and on shelves.
Future predictions suggest that firms envision a significant increase in inventory growth, predicting Inventory Levels of 79.5, up slightly (+1.0) from September’s future prediction of 78.5. The realization of this prediction hinges on the ability of supply networks to move inventory more quickly than they are currently. Whether or not this 20-point swing indicates that a flood of inventory will arrive post-Q4, leading to a classic bullwhip effect in which firms have too much inventory, remains to be seen.
Inventory Costs
The current value of 86.6 is up (+0.7) from August’s reading of 85.9 and is only down 2.8-points from June’s record high of 89.4. This reading is up 20.1-points from September 2020 and 19.1 from September of 2019, clearly the pressures supply chains are currently under have done away with some seasonal norms. Once again, we see that while the growth in overall inventories is slow due to high customer demand and slow delivery, the cost of storing goods continues to climb at a staggering pace – indicating that a high volume of goods is moving through supply chains at a high level of velocity.
Respondents do not expect much relief. When asked about what they expect Inventory Costs to be like 12 months from now, the average value is 87.0, down (-2.3) from August’s future prediction of 89.3 but still incredibly high. If this prediction is accurate, it would represent record levels of growth – indicating that firms are not expecting much relief in the way of supply chain costs over the next 12 months.
The current value of 86.6 is up (+0.7) from August’s reading of 85.9 and is only down 2.8-points from June’s record high of 89.4. This reading is up 20.1-points from September 2020 and 19.1 from September of 2019, clearly the pressures supply chains are currently under have done away with some seasonal norms. Once again, we see that while the growth in overall inventories is slow due to high customer demand and slow delivery, the cost of storing goods continues to climb at a staggering pace – indicating that a high volume of goods is moving through supply chains at a high level of velocity.
Respondents do not expect much relief. When asked about what they expect Inventory Costs to be like 12 months from now, the average value is 87.0, down (-2.3) from August’s future prediction of 89.3 but still incredibly high. If this prediction is accurate, it would represent record levels of growth – indicating that firms are not expecting much relief in the way of supply chain costs over the next 12 months.
Warehousing Capacity
In a rapid departure from August 2021’s warehousing capacity, the value for September 2021’s warehousing capacity registered in at 47.9 and reflects a somewhat sharp increase of 8.8 percentage points from the previous month. It is important to point however that this does not mean more warehouse space came online in September, merely that availability contracted more slowly. Whether or not this represents more warehousing coming online, or simply that warehousing was already incredibly scarce going into the month and it would be hard to decrease further is unclear. In addition, it continues the pattern of readings beneath the 50 percent mark, now for the 13th month in a row). Relative to one year ago, this reading reflects a 4.8-point increase.
Looking forward at the next 12 months, the predicted Warehousing Capacity index is predicted to increase at a rate of 53.9, up (+5.6) from August’s future prediction of 48.3 and signaling a shift from previous predictions of contraction to somewhat sunnier predictions of growth. 53.9 represents a muted growth rate, but in the current market any additional capacity would be better than the alternative.
In a rapid departure from August 2021’s warehousing capacity, the value for September 2021’s warehousing capacity registered in at 47.9 and reflects a somewhat sharp increase of 8.8 percentage points from the previous month. It is important to point however that this does not mean more warehouse space came online in September, merely that availability contracted more slowly. Whether or not this represents more warehousing coming online, or simply that warehousing was already incredibly scarce going into the month and it would be hard to decrease further is unclear. In addition, it continues the pattern of readings beneath the 50 percent mark, now for the 13th month in a row). Relative to one year ago, this reading reflects a 4.8-point increase.
Looking forward at the next 12 months, the predicted Warehousing Capacity index is predicted to increase at a rate of 53.9, up (+5.6) from August’s future prediction of 48.3 and signaling a shift from previous predictions of contraction to somewhat sunnier predictions of growth. 53.9 represents a muted growth rate, but in the current market any additional capacity would be better than the alternative.
Warehousing Utilization
The Warehousing Utilization Index registered in at 66.4 percent in August 2021. This represents a .1 percentage point increase from last month. In contrast to the reading from one year ago, this month’s value reflects a 4.7 point decrease. We should point out that warehousing metrics seem to move in a lagged fashion, which is to say that when we see a movement in the capacity levels, it can take a month or two to reflect in the utilization markers. Previous readings of the levels led our team to believe that more warehousing was coming online. This may be the case given the slowdown in capacity contraction. However, a decrease in demand (given the increased pricing from this, and previous months) could also act as a reason for the increased capacity and flattened utilization. Future months will signal whether or not this is the case.
Looking forward at the next 12 months, the predicted Warehousing Utilization index is 73.9, down (-3.1) from August’s future prediction of 77.0. Respondents continue to expect to utilize increasingly greater amounts of available warehouse space throughout the year as supply struggles to keep up with demand.
The Warehousing Utilization Index registered in at 66.4 percent in August 2021. This represents a .1 percentage point increase from last month. In contrast to the reading from one year ago, this month’s value reflects a 4.7 point decrease. We should point out that warehousing metrics seem to move in a lagged fashion, which is to say that when we see a movement in the capacity levels, it can take a month or two to reflect in the utilization markers. Previous readings of the levels led our team to believe that more warehousing was coming online. This may be the case given the slowdown in capacity contraction. However, a decrease in demand (given the increased pricing from this, and previous months) could also act as a reason for the increased capacity and flattened utilization. Future months will signal whether or not this is the case.
Looking forward at the next 12 months, the predicted Warehousing Utilization index is 73.9, down (-3.1) from August’s future prediction of 77.0. Respondents continue to expect to utilize increasingly greater amounts of available warehouse space throughout the year as supply struggles to keep up with demand.
Warehousing Prices
Warehousing Prices Index registered 89.3 percent in September 2021, up 1.3 points from August and marking the fourth consecutive reading in which a new all-time high reading has been reached. This reading continues the trend in the (largely unrelenting) increased growth rate in warehousing prices amid the COVID-19 disruption(s). This reading is up by 18.8 percentage points from the reading one year ago. Note that, generally speaking, the movements that are seen in the warehousing market tend to be lagged (as noted above). As a result, should more capacity continue to come online and should utilization remain flat/decrease, then we would expect that prices would decrease. Whether or not this will be true in practice remains to be seen. Especially as we are now entering the holiday season where warehousing capacity will be necessary to fulfill the demand for holiday shopping.
Future predictions suggest that respondents are expecting prices to continue to grow at a rate of 87.9, essentially unchanged (-0.1) from August’s future prediction of 88.0. Even with some potential Warehousing Capacity coming online over the next 12 months, respondents expect to be paying higher prices through the rest of the year and well into 2022.
Warehousing Prices Index registered 89.3 percent in September 2021, up 1.3 points from August and marking the fourth consecutive reading in which a new all-time high reading has been reached. This reading continues the trend in the (largely unrelenting) increased growth rate in warehousing prices amid the COVID-19 disruption(s). This reading is up by 18.8 percentage points from the reading one year ago. Note that, generally speaking, the movements that are seen in the warehousing market tend to be lagged (as noted above). As a result, should more capacity continue to come online and should utilization remain flat/decrease, then we would expect that prices would decrease. Whether or not this will be true in practice remains to be seen. Especially as we are now entering the holiday season where warehousing capacity will be necessary to fulfill the demand for holiday shopping.
Future predictions suggest that respondents are expecting prices to continue to grow at a rate of 87.9, essentially unchanged (-0.1) from August’s future prediction of 88.0. Even with some potential Warehousing Capacity coming online over the next 12 months, respondents expect to be paying higher prices through the rest of the year and well into 2022.
Transportation Capacity
The Transportation Capacity Index registered 37.2 percent in September 2021. This constitutes a decrease of 3.3 percentage points from the August reading of 40.5. The Transportation Capacity Index remains historically low, indicating continued downward pressure on transportation capacity. Further, our data indicates that the downward pressure on transportation capacity remains extremely strong for downstream firms in supply chain (downstream Transportation Capacity Index is only 30.2), indicating that companies are facing significant challenges in ramping up shipments for the holiday season. Firms that are upstream in the supply chain do not report as stringent capacity constraints as the firms that are downstream (upstream Transportation Capacity Index is 41.7). While this difference is statistically significant, it is less pronounced than it was in August.
The future Transportation Capacity Index decreased slightly from the previous reading, indicating 52.0 for the next year. While this denotes a decrease of 4.8 points from the previous future expectations, the index remains slightly above the critical threshold of 50, indicating expectations of slightly expanding transportation capacity for the next 12 months.
The Transportation Capacity Index registered 37.2 percent in September 2021. This constitutes a decrease of 3.3 percentage points from the August reading of 40.5. The Transportation Capacity Index remains historically low, indicating continued downward pressure on transportation capacity. Further, our data indicates that the downward pressure on transportation capacity remains extremely strong for downstream firms in supply chain (downstream Transportation Capacity Index is only 30.2), indicating that companies are facing significant challenges in ramping up shipments for the holiday season. Firms that are upstream in the supply chain do not report as stringent capacity constraints as the firms that are downstream (upstream Transportation Capacity Index is 41.7). While this difference is statistically significant, it is less pronounced than it was in August.
The future Transportation Capacity Index decreased slightly from the previous reading, indicating 52.0 for the next year. While this denotes a decrease of 4.8 points from the previous future expectations, the index remains slightly above the critical threshold of 50, indicating expectations of slightly expanding transportation capacity for the next 12 months.
Transportation Utilization
The Transportation Utilization Index registered 69.5 percent in September 2021. This number denotes a decrease of 3.1 points from the August reading of 72.6. The Transportation Utilization Index remains at historically high levels, indicating continued expansion in transportation utilization. Downstream Transportation Utilization index is even higher, at 73.7, while the upstream index is 66.8.
It should be noted that the future Transportation Utilization Index is down 2.9 points indicating a 71.3 percent level for the next 12 months. Despite this small drop, the future transportation utilization index remains substantially above 50, indicating strong expectations of continued strong growth in transportation utilization.
The Transportation Utilization Index registered 69.5 percent in September 2021. This number denotes a decrease of 3.1 points from the August reading of 72.6. The Transportation Utilization Index remains at historically high levels, indicating continued expansion in transportation utilization. Downstream Transportation Utilization index is even higher, at 73.7, while the upstream index is 66.8.
It should be noted that the future Transportation Utilization Index is down 2.9 points indicating a 71.3 percent level for the next 12 months. Despite this small drop, the future transportation utilization index remains substantially above 50, indicating strong expectations of continued strong growth in transportation utilization.
Transportation Prices
The Transportation Prices Index registered 92.4 percent in September 2021. This corresponds to a small decrease of 1.3 percent from the August transportation prices reading of 93.7. While the Transportation Prices index retreated slightly from last month’s record level, it remains extremely elevated, indicating that the upward pressure on transportation prices remains very strong. The price pressure is even higher for downstream firms where the index is registering a 96.6 – the highest reading for any metric in the history of the LMI.
The future index for transportation prices indicates a value of 86.9, which is .5 points lower than the previous month’s expectations of 87.4. The expectations of continued transportation price increases for the next 12 months remain very strong, with the future index well above the critical level of 50 that indicates expansion.
The Transportation Prices Index registered 92.4 percent in September 2021. This corresponds to a small decrease of 1.3 percent from the August transportation prices reading of 93.7. While the Transportation Prices index retreated slightly from last month’s record level, it remains extremely elevated, indicating that the upward pressure on transportation prices remains very strong. The price pressure is even higher for downstream firms where the index is registering a 96.6 – the highest reading for any metric in the history of the LMI.
The future index for transportation prices indicates a value of 86.9, which is .5 points lower than the previous month’s expectations of 87.4. The expectations of continued transportation price increases for the next 12 months remain very strong, with the future index well above the critical level of 50 that indicates expansion.
About This Report
The data presented herein are obtained from a survey of logistics supply executives based on information they have collected within their respective organizations. LMI® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.
Data and Method of Presentation
Data for the Logistics Manager’s Index is collected in a monthly survey of leading logistics professionals. The respondents are CSCMP members working at the director-level or above. Upper-level managers are preferable as they are more likely to have macro-level information on trends in Inventory, Warehousing and Transportation trends within their firm. Data is also collected from subscribers to both DC Velocity and Supply Chain Quarterly as well. Respondents hail from firms working on all six continents, with the majority of them working at firms with annual revenues over a billion dollars. The industries represented in this respondent pool include, but are not limited to: Apparel, Automotive, Consumer Goods, Electronics, Food & Drug, Home Furnishings, Logistics, Shipping & Transportation, and Warehousing.
Respondents are asked to identify the monthly change across each of the eight metrics collected in this survey (Inventory Levels, Inventory Costs, Warehousing Capacity, Warehousing Utilization, Warehousing Prices, Transportation Capacity, Transportation Utilization, and Transportation Prices). In addition, they also forecast future trends for each metric ranging over the next 12 months. The raw data is then analyzed using a diffusion index. Diffusion Indexes measure how widely something is diffused, or spread across a group. The Bureau of Labor Statistics has been using a diffusion index for the Current Employment Statics program since 1974, and the Institute for Supply Management (ISM) has been using a diffusion index to compute the Purchasing Managers Index since 1948. The ISM Index of New Orders is considered a Leading Economic Indicator.
We compute the Diffusion Index as follows:
PD = Percentage of respondents saying the category is Declining,
PU = Percentage of respondents saying the category is Unchanged,
PI = Percentage of respondents saying the category is Increasing,
Diffusion Index = 0.0 * PD + 0.5 * PU + 1.0 * PI
For example, if 25 say the category is declining, 38 say it is unchanged, and 37 say it is increasing, we would calculate an index value of 0*0.25 + 0.5*0.38 + 1.0*0.37 = 0 + 0.19 + 0.37 = 0.56, and the index is increasing overall. For an index value above 0.5 indicates the category is increasing, a value below 0.5 indicates it is decreasing, and a value of 0.5 means the category is unchanged. When a full year’s worth of data has been collected, adjustments will be made for seasonal factors as well.
Logistics Managers Index
Requests for permission to reproduce or distribute Logistics Managers Index Content can be made by contacting in writing at: Dale S. Rogers, WP Carey School of Business, Tempe, Arizona 85287, or by emailing dale.rogers@asu.edu Subject: Content Request.
The authors of the Logistics Managers Index shall not have any liability, duty, or obligation for or relating to the Logistics Managers Index Content or other information contained herein, any errors, inaccuracies, omissions or delays in providing any Logistics Managers Index Content, or for any actions taken in reliance thereon. In no event shall the authors of the Logistics Managers Index be liable for any special, incidental, or consequential damages, arising out of the use of the Logistics Managers Index. Logistics Managers Index, and LMI® are registered trademarks.
About The Logistics Manager’s Index®
The Logistics Manager’s Index (LMI) is a joint project between researchers from Arizona State University, Colorado State University, University of Nevada, Reno, Rochester Institute of Technology and Rutgers University, supported by CSCMP. It is authored by Zac Rogers Ph.D., Steven Carnovale Ph.D., Shen Yeniyurt Ph.D., Ron Lembke Ph.D., and Dale Rogers Ph.D.
The data presented herein are obtained from a survey of logistics supply executives based on information they have collected within their respective organizations. LMI® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.
Data and Method of Presentation
Data for the Logistics Manager’s Index is collected in a monthly survey of leading logistics professionals. The respondents are CSCMP members working at the director-level or above. Upper-level managers are preferable as they are more likely to have macro-level information on trends in Inventory, Warehousing and Transportation trends within their firm. Data is also collected from subscribers to both DC Velocity and Supply Chain Quarterly as well. Respondents hail from firms working on all six continents, with the majority of them working at firms with annual revenues over a billion dollars. The industries represented in this respondent pool include, but are not limited to: Apparel, Automotive, Consumer Goods, Electronics, Food & Drug, Home Furnishings, Logistics, Shipping & Transportation, and Warehousing.
Respondents are asked to identify the monthly change across each of the eight metrics collected in this survey (Inventory Levels, Inventory Costs, Warehousing Capacity, Warehousing Utilization, Warehousing Prices, Transportation Capacity, Transportation Utilization, and Transportation Prices). In addition, they also forecast future trends for each metric ranging over the next 12 months. The raw data is then analyzed using a diffusion index. Diffusion Indexes measure how widely something is diffused, or spread across a group. The Bureau of Labor Statistics has been using a diffusion index for the Current Employment Statics program since 1974, and the Institute for Supply Management (ISM) has been using a diffusion index to compute the Purchasing Managers Index since 1948. The ISM Index of New Orders is considered a Leading Economic Indicator.
We compute the Diffusion Index as follows:
PD = Percentage of respondents saying the category is Declining,
PU = Percentage of respondents saying the category is Unchanged,
PI = Percentage of respondents saying the category is Increasing,
Diffusion Index = 0.0 * PD + 0.5 * PU + 1.0 * PI
For example, if 25 say the category is declining, 38 say it is unchanged, and 37 say it is increasing, we would calculate an index value of 0*0.25 + 0.5*0.38 + 1.0*0.37 = 0 + 0.19 + 0.37 = 0.56, and the index is increasing overall. For an index value above 0.5 indicates the category is increasing, a value below 0.5 indicates it is decreasing, and a value of 0.5 means the category is unchanged. When a full year’s worth of data has been collected, adjustments will be made for seasonal factors as well.
Logistics Managers Index
Requests for permission to reproduce or distribute Logistics Managers Index Content can be made by contacting in writing at: Dale S. Rogers, WP Carey School of Business, Tempe, Arizona 85287, or by emailing dale.rogers@asu.edu Subject: Content Request.
The authors of the Logistics Managers Index shall not have any liability, duty, or obligation for or relating to the Logistics Managers Index Content or other information contained herein, any errors, inaccuracies, omissions or delays in providing any Logistics Managers Index Content, or for any actions taken in reliance thereon. In no event shall the authors of the Logistics Managers Index be liable for any special, incidental, or consequential damages, arising out of the use of the Logistics Managers Index. Logistics Managers Index, and LMI® are registered trademarks.
About The Logistics Manager’s Index®
The Logistics Manager’s Index (LMI) is a joint project between researchers from Arizona State University, Colorado State University, University of Nevada, Reno, Rochester Institute of Technology and Rutgers University, supported by CSCMP. It is authored by Zac Rogers Ph.D., Steven Carnovale Ph.D., Shen Yeniyurt Ph.D., Ron Lembke Ph.D., and Dale Rogers Ph.D.
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[17] Berger, P. (2021a, September 15). Christmas Tree Sellers Hit by Supply-Chain Disruptions. Wall Street Journal. https://www.wsj.com/articles/supply-chain-strains-hit-prices-inventories-of-artificial-christmas-trees-11631698200
[18] Colchester, M. (2021, September 27). Panic Buying in U.K. Creates Shortages at Gas Stations. Wall Street Journal. https://www.wsj.com/articles/panic-buying-in-u-k-creates-shortages-at-gas-stations-11632750035
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