November/December Report

 

 jan-17-logo

FOR RELEASE: January 17, 2017

Contact: Dale Rogers, Ph.D.
Logistics Manager’s Index Analyst
Professor, Logistics & Supply Chain ManagementDepartment of Supply Chain Management
Arizona State University

Tempe, Arizona
(480) 965-1456
E-mail: Dale.Rogers@asu.edu

http://www.logisticsindex.org

Twitter: @LogisticsIndex

November/December 2016 Logistics Manager’s Index Report®

LMI® at 62.9%
Inventory Levels, Costs, Warehousing Capacity, Utilization and Prices increasing. Transportation Utilization and Prices Increasing, Transportation Capacity Decreasing.

(Tempe, Arizona) — According to a sample of North American logistics executives, economic activity across the logistics sector expanded in November and December.

The report was issued today by researchers at Arizona State University, Rutgers University, Portland State University, University of Nevada, Reno, and Colorado State University in conjunction with the Council of Supply Chain Management Professionals (CSCMP).


 

Results Overview

The November/December LMI® registered 62.9 percent, an increase of 8 percentage points from the October reading of 54.9 percent. The LMI score is a combination of all of the other components that make up the index 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 Inventory Levels Index registered 58.6 percent, an increase of 12.7 percentage points from the October reading of 45.9 percent. The Inventory Cost Index registered 65.5 percent, up 6 percentage points from the October reading of 59.5 percent. The Warehousing Capacity Index registered 55.2 percent, an increase of 11 percentage points from the October reading of 44.2 percent. The Warehousing Utilization Index registered 67 percent, an increase of 4.5 percentage points from the October reading of 62.5 percent. The Transportation Capacity Index registered 49.1 percent in November/December, an increase of 15 percentage points from the October reading of 34.1 percent. The Transportation Utilization index registered 68.5 percent, an increase of 9.2 percentage points from the October reading of 59.3 percent. Finally, the Transportation Prices Index registered at 67.2 percent, an increase of 2.1 percentage points from the October reading of 65.1 percent. The Transportation Utilization and Transportation Prices Indices registered new highs for the LMI Index.

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LOGISTICS AT A GLANCE
Index November Index October Index MoM Change Projected Direction Rate of Change
LMI® 62.9 54.9 8.0% Growing From Contracting
Inventory Levels 58.6 45.9 12.7% Growing From Contracting
Inventory Costs 65.5 59.5 6.0% Growing From Contracting
Warehousing Capacity 55.2 44.2 11.0% Growing From Contracting
Warehousing Utilization 67.0 62.5 4.5% Growing From Contracting
Warehousing Prices 71.8 68.9 2.9% Growing From Contracting
Transportation Capacity 49.1 34.1 15.0% Decreasing Slightly Increasing
Transportation Utilization 68.5 59.3 9.2% Growing Increasing
Transportation prices 67.2 65.1 2.1% Growing From Contracting

DECEMBER 2016 LOGISTICS INDEX SUMMARIES

LMI®

The LMI expanded to 62.9 in the November/December reading. This is up from October 206 results when the overall LMI was 54.9. This most recent reading is much more consistent with the September index, when the LMI was 63.9. As mentioned above, 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.

Every reading since the beginning of this project in September has indicated growth in the logistics industry. While the researchers feel strongly that warehousing, transportation, and inventory trends are key economic indicators, the exact relationship between the LMI and the overall economy as indicated by GDP has yet to be established empirically.

THE LAST 3 READINGS

Month LMI Average for 3 readings – 60.6

High – 63.9

Low – 54.9

Nov/Dec 2016 62.9
Oct 2016 54.9
Sep 2016 63.9

Inventory Levels

The LMI Inventory Levels Index came in at 58.6 in the November/December reading. This is an increase of 8 percent over the October reading, which was 45.9. This is a marked shift from the contracting inventory levels reported in October, and a return to the growth observed in the September reading.

The four industries reporting Inventory growth during the November/December reading are: Consumer Goods, Food & Drug, Home Furnishings, Shipping & Transportation, and Warehousing. The three industries reporting a decrease in Inventory Levels during November/December are: Apparel, Automotive, and Electronics. Logistics was the only industry reported little-to-no change in Inventory Levels in November/December.

inventory-levels

Inventory Costs

LMI’s Inventory Costs Index read in at 58.6 percent in November/December. This was an increase of 12.7 percentage points from 45.9 percent in October.

The 8 industries reporting growth in production during the November/December reading are: Warehousing, Shipping & Transportation, Logistics, Home Furnishings, Food & Drug, Consumer Goods, Automotive and the Apparel industry. The only industry reporting a decrease in Inventory Cost during November/December is the Electronics industry.

inventory-costs

 

Warehousing Capacity

The Warehousing Capacity Index registered 55.2 percent in November/December.  This is an increase of 11 percentage points over the October reading of 44.2.

The three industries reporting higher Warehouse Capacity in November/December are: Automotive, Consumer Goods and Warehousing. The two industries reporting lower inventories in the November/December reading are: Food & Drug and Shipping & Transportation.  The Apparel, Electronics, Home Furnishings, and Logistics industries reported little to know change over this period.

warehousing-capacity

Warehousing Utilization

The Warehousing Capacity Utilization Index registered 67 percent in November/December.  This is an increase of 4.5 percentage points over the October reading of 62.5.

The four industries reporting increased Warehouse Capacity Utilization during the November/December reading are: Food & Drug, Logistics, Shipping & Transportation, and Warehousing. The two industries reporting decreased Warehouse Capacity Utilization during November/December are: Automotive and Consumer Goods. The Apparel, Electronics, and Home Furnishings industries reported little-to-no change over this period.

warehousing-utilization

 

Warehousing Prices

The Warehousing Capacity Utilization Index registered 71.8 percent in November/December.  This is an increase of 2.9 percentage points over the October reading of 68.9.

The five industries reporting increased Warehouse Prices during the November/December reading are: Apparel, Consumer Goods, Logistics, Shipping & Transportation, and Warehousing. None of the industries in our survey reported decreasing Warehousing Prices for the November/December reading. However, the Automotive, Electronics, Food & Drug, and Home Furnishings industries reported little-to-no change over this period.

warehousing-prices

Transportation Capacity

The Transportation Capacity Index registered 49.1 percent in November/December.  This is an increase of 15 percentage points over the October reading of 34.1. While the rate of decrease has slowed, Transportation Capacity is the only metric in this period where survey respondents have reported as decreasing. And, a reading of 49.1 is barely decreasing transportation capacity.

The three industries reporting increased Transportation Capacity during the November/December reading are: Automotive, Food & Drug, and Warehousing. The two industries reporting decreased Transportation Capacity during November/December are: Apparel and Consumer Goods. The Electronics, Home Furnishings, Shipping & Transportation and Logistics industries reported little-to-no change over this period.

transportation-capacity


 

Transportation Utilization

The Transportation Utilization Index registered 68.5 percent in November/December.  This is an increase of 9.2 percentage points over the October reading of 59.3.  Transportation Utilization is the only metric in which respondents have reported an increase across all iterations of our survey.

The five industries reporting increased Transportation Utilization Utilization during the November/December reading are: Automotive, Consumer Goods, Food & Drug, Logistics, Shipping & Transportation, and Warehousing. The only industry reporting decreased Transportation Utilization during November/December is Electronics. The Apparel and Home Furnishings industries reported little-to-no change over this period.

transportation-utilization


 

Transportation Prices

The Transportation Prices Index registered 67.2 percent in November/December.  This is an increase of 2.2 percentage points over the October reading of 65.1.

The seven industries reporting increased Transportation Prices during the November/December reading are: Apparel, Automotive, Consumer Goods, Food & Drug, Logistics, Shipping & Transportation, and Warehousing. The only industry reporting decreased Warehouse Capacity Utilization during November/December is Home Furnishings. The Electronics industry reported little-to-no change over this period.

transportation-prices

About This Report

The data presented herein is 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. 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. If you would like to participate in the January reading, please click here

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, Portland State University and Rutgers University, supported by CSCMP.

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