The freight market has entered uncharted territory, with trucks simultaneously scarcer and more expensive, according to the April Logistics Managers' Index (LMI), presented by Florida Atlantic University (FAU) in collaboration with Arizona State University, Colorado State University, Rutgers University, the University of Nevada, Reno.
The LMI read in at 69.9, up more than four points from March’s reading of 65.7. Any score above 50 indicates the logistics industry is expanding; a score below 50 indicates contraction.
“Previous readings have signaled that the market for transportation is tightening and that prices would escalate,” says Steven Carnovale, associate professor of supply chain management in Florida Atlantic University’s College of Business. “However, this large a gap between the two is notable.”
Key takeaways:
· Transportation capacity dropped to 28.4, the second-lowest reading in the Index’s 9.5-year history, while transportation prices surged to 95, the second-highest measure ever recorded. The resulting 66.6-point spread between freight costs and available capacity is the largest gap ever measured.
· Warehousing prices rose to 72.7 and inventory costs held at 74.7, both above the 70 threshold the index considers significant expansion. Combined, aggregate logistics costs sit at 242.4, the highest since April 2022. Previous readings above 240 have historically preceded supply-driven inflation, which is harder for the Federal Reserve to combat because higher interest rates cannot create more trucks or warehouse space.
· Supply chain professionals do not expect conditions to ease. Respondents predict the overall LMI will rise to 73.2 over the next 12 months, up from March’s forecast of 67.8, a significant upward revision driven largely by anticipated changes in how companies manage inventory.
