Tightness throughout the transportation, logistics and warehousing sectors carried through the end of the year, according to the Logistics Managers’ Index, a survey measuring supply chain activity.
The LMI is a diffusion index, wherein a reading above 50% indicates expansion and a reading below 50% indicates contraction.
While the index was down 3.3% from November, the industry continues to see “significant expansion.” The survey has now logged a reading of 70 or better for 11 straight months and 14 of the past 16.
“Abnormally high inventory metrics, combined with tight capacity and unseasonably high price growth, are the drivers behind this month’s continued expansion,” the report stated. “They also suggest that some supply chains may now be carrying too much inventory — potentially a result of firms choosing the ‘lesser of two evils’ and stocking up to avoid potential missed holiday sales.”
The inventories subindex logged in at 61.6, up 280 basis points sequentially, bucking the seasonal downward trend as goods are normally sold off during the holidays. The current inventory reading was 480 bps higher Y/Y.