2024 to be marked improvement over 2022-2023 US logistics sector: LMI

Warehousing capacity was tighter (minus 5.5) while utilisation (plus 7.4) and prices (plus 1.2) were both expanding at increasing rates.

Transportation continues to be in a bit of a holding pattern, showing the lowest average level of movement among the three sets of metrics. Transportation capacity expanded at a slightly faster (plus 1.4) rate of 63.3 in December.

Inventory levels continued to decline at a steady pace. This movement is likely the catalyst behind transportation utilisation moving back into expansion (plus 4.6).

Despite this, freight continues to struggle, with transportation prices decreasing at an increasing rate (minus 1.1).

Finally, inventory costs are growing at 55.8 (minus 6.3) but at the lowest level recorded in the history of the index.

Researchers from Arizona State University, Colorado State University, Florida Atlantic University, Rutgers University, and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals (CSCMP), started the LMI survey in 2016. LMI is released on the first Tuesday of every month.

As is always the case in December, movements in the logistics industry were driven by holiday shopping.

Over $105 billion worth goods have been diverted away from the Red Sea due to attacks by Houthi pirates. Between the instability in the Red Sea and the low water levels at the Panama Canal, moving goods from Asia to Europe or the US East Coast—or vice-versa—has become difficult.

More of the manufacturing base continues to nearshore to Mexico to take advantage of low-cost labour, technical expertise, proximity to the United States and the free border crossings.

Reflective of the increased freight volume coming in from Mexico, US Customs and Border Protection is re-opening critical freight lines on the Texas/Mexico border after they had been closed due to immigration concerns, an LMI press release noted.

If the US economy exhibits the growth that both the consumers and logistics professionals are anticipating, 2024 will be a marked improvement over the logistics industry of 2022-2023, it added.

Fibre2Fashion News Desk (DS)