Transportation capacity up again in December, prices fall faster

Transportation metrics slid again in December with capacity increasing at a faster pace and prices declining at a higher rate, according to a monthly survey of supply chain executives. However, there was some optimism that the cycle may turn in the new year.

The Logistics Managers’ Index (LMI) registered a 63.3 reading for transportation capacity during the month, which was 1.5 percentage points higher than in November. The LMI is a diffusion index where a reading above 50 indicates expansion while one below 50 signals contraction. The growth rate of transportation capacity was 10 points higher in the second half of the month than it was in the first half.

Transportation utilization (54.6) was 4.6 points higher in the month. The metric was up 8 points in the back half of the month, which the Tuesday report attributed to last-minute holiday-related shipments.

Transportation prices (43.1) declined again, down 1.1 points from November. The pricing index appears to have bottomed in May at 27.9, with the rates of contraction more subdued over the past five months. Lower fuel prices, which result in lower fuel surcharges, were cited as a reason for the decline.

“Fuel prices were one of the major drivers of supply-based inflation over the last two years, a decrease in costs would continue to push inflation down and help to revive the freight sector in 2024,” the report said.

Respondents were asked to predict conditions one year out. The forward-looking expectation for transportation capacity was 51 with prices coming in at 70.3.

Source: freightwaves.com