According to a recent supply chain report, transportation prices have shifted to expansion for the first time in 19 months, signaling positive growth in the logistics industry. The Logistics Managers’ Index (LMI) increased by 5 percentage points to 55.6 in January, with all eight components of the index indicating growth. This growth is primarily attributed to increased inventory restocking, particularly among retailers, following a busy holiday season.

While transportation capacity continues to grow, the rate has slowed compared to previous months. However, transportation prices have surged into growth territory after 18 months of contraction, despite diesel prices falling by over 15% year-over-year. This inversion between transportation prices and capacity suggests a shift in the market, potentially indicating a changing cycle.

Lower interest rates could further stimulate activity in upstream firms, leading to increased shipments. Respondents predict slight growth in capacity and significant growth in utilization and prices over the next year. Additionally, inventory levels showed expansion for the first time in three months, with downstream companies restocking at a faster pace compared to upstream providers.

Inventory costs have increased due to the growth in merchandise levels, while warehousing metrics remain relatively stable. Prologis, a logistics real estate operator, expects modest occupancy slips in the first half of 2024 before climbing again in the latter half.

Overall, respondents anticipate positive growth in the logistics industry, with the LMI projected to stand at 62.8 one year from now. The LMI serves as a collaborative effort among various universities and supply chain management professionals to provide insights into industry trends.

Inspired by: https://www.freightwaves.com/news/transportation-prices-grow-for-first-time-in-19-months-survey-says