December Logistics Manager’s Index helps to put market conditions into perspective

Despite a seasonal decline, logistics sector momentum ended 2024 firmly in growth mode.

That was made clear, as evidenced by the recently-released December 2024 edition of the Logistics Manager’s Index (LMI) growing for the 13th consecutive month.

The monthly LMI is a joint project among researchers from Arizona State University, Colorado State University, University of Nevada, Reno, Florida Atlantic University, and Rutgers University, and also receives support by Council of Supply Management Professionals (CSCMP). CSCMP. The LMI is written by Zac Rogers Ph.D., Steven Carnovale Ph.D., Shen Yeniyurt Ph.D., Ron Lembke Ph.D., and Dale Rogers Ph.D.

The report’s authors explained that the LMI score, or reading, is based on eight “unique components” within the logistics sector, including: inventory levels and costs, warehousing capacity, utilization and prices and transportation capacity, utilization, and prices.

December’s LMI reading, at 57.3, is off 1.1% compared to November’s 58.4 reading and is also down compared to October’s 58.9, the fastest monthly rate of expansion going back to September 2022.

While there has been some recent sequential declines, the December reading remains solid.

To that end, Dr. Zac Rogers explained that the sweet spot for the macroeconomy is when the LMI is in the high-50s range, where it currently resides, observing that solid growth remains intact—with the caveat that it is not crazy growth, which he said can be viewed as disruptive.

“This consistency is further evidence for the thesis that the logistics industry has been expanding at a steady, sustainable pace,” wrote Rogers. “There is clearly some nervousness about the potential for tariffs and that is a primary explanation for the influx of inventories. The new administration appears to be unpredictable and hopefully will not be too disruptive to global supply chains. It sure would be nice if we could get some political leadership that truly understood global supply chains, but we have definitely not seen much of that lately. Given that we know that trade wars have never worked out for any country in the history of the world the threatened tariffs are frightening to supply chain professionals, but the people working in the ‘supply chain trenches’ are gifted at dealing with disruptions and maintaining resilience. Hopefully, the tariffs being threatened are just a negotiating tactic and not something that will be real.”

The December LMI observed that December’s slight decrease was largely driven by the seasonal wind-down in Inventory Levels, falling 6.1, to 50.0. But that comes with the caveat that inventory levels, for manufacturers, wholesalers, and 3PLs, saw gains, to the tune of a 57.9 reading, as these verticals received a high level of imports, which was prevalent, especially over the back half of 2024, as companies took measures to avoid future tariffs expected to be implemented by the incoming Trump administration.

What’s more, the LMI pointed to how downstream retailers saw Inventory Levels significantly contract, coming in at 33.9, which is viewed as typical during the holiday shopping season.

Looking at other key LMI data points and takeaways, the report found that the declining Inventory Levels translated into the Warehousing Capacity rate of growth declining 7.1%, to 61.6, while Transportation Prices headed up 3.0%, to 66.8, marking the fastest rate of expansion for this metric going back to April 2022, according to the report’s authors, and also lifting it over 65.0 for the first time in two-and-a-half years.

“This is likely a function of the strong consumer sales we have seen throughout the second half of 2024,” wrote Rogers. “There has been higher demand for transportation services to move more goods, this was particularly pronounced in December, due to the record levels of e-commerce requiring expensive last-mile delivery.”

For the other metrics comprising the LMI, the report’s authors observed they saw steadier traction, from November to December, with Warehousing Utilization up 2.8%, Warehousing Prices down 0.8%, Transportation Capacity up 0.6%, and Transportation Utilization flat.

Amid uncertain times, replete with mixed views and impressions regarding logistics output, the December LMI’s findings help to, in a sense, gain some fresh industry perspective early into 2025. With a new administration about to come in, coupled with overarching themes such as likely new tariffs, a potential port strike, and the ongoing advent of AI within logistics, among others, there is plenty to monitor and keep our eyes on. And the LMI, as always, helps to make sense of it all. 2025 looks to be a rollercoaster-type of year in logistics so get ready to buckle up.