Record-breaking fall in transportation prices observed in February

Logistics Managers’ Index captures fastest price drop in 6.5-year history

According to the Logistics Managers' Index (LMI) study of supply chain executives, transportation costs decreased at a record rate in February. According to the research, transportation expenses scored 36.1 in February, a fall of 5.9 percentage points from January and a new record low, where a score below 50 indicates contraction and a score above 50 indicates expansion.

The report said that rate drops in transportation prices were "a little more pronounced at the end of the month than they were at the beginning." The research also linked the lower rate in February to the consumer spending hangover from the U.S. holidays, as well as import delays due to Chinese New Year, a normally low-seasonal period.

FreightWaves' spot truckload rates likewise reflected the drop in transportation costs observed in February. While spot rates surged significantly from late December to early January, they decreased in February, reflecting the LMI report's views on rate commentary.

Chart: (SONAR: NTIL.USA). The National Truckload Index (linehaul only – NTIL) is based on an average of booked spot dry van loads from 250,000 lanes and 10,000 daily spot market transactions. The NTIL is a seven-day moving average of linehaul spot rates excluding fuel

In February, transportation capacity grew at a rapid rate of 70.4, reaching the all-time high of 73.1 established in October. Although transportation utilization remained in the expansionary zone in February at 51.9, it was 5.1 points lower than in January. Downstream respondents, primarily retailers, reported a usage rate of 59.5, whilst upstream wholesalers reported a rate of 45.1. Compared to upstream suppliers, downstream supply chain operators reported higher transportation costs (44.9). (30.6).

When questioned about the costs of transportation over the next 12 months, respondents gave a neutral score of 50. Nonetheless, respondents from the downstream (61.5) projected large price hikes, and those from the upstream (44.4) anticipated rate decreases.

The survey indicated that inventory levels grew at the same rate as in January, at a rate of 62.4, showing that corporations continue to rebuild stockpiles after depleting them in the second half of 2022. Even though inventory costs continued to increase rapidly, the subindex declined by 3.3 points sequentially.

First time in thirty months that warehouse capacity has been in expansion area, with a score of 56.6 and an increase of 10.2 points consecutively. Nonetheless, warehouse utilization continued to increase, increasing by 3.2 points during the month, while warehouse prices remained excessive at 73.3, but were 13.1 points lower than a year ago when inventories reached their peak.

In February, the LMI was at 54.7, down 2.9 points from January. Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno are collaborating with the Council of Supply Chain Management Professionals to conduct the LMI.