New BlueGrace Logistics Confidence Index presents a cautious and flat look at the second quarter

The new edition of the BlueGrace Logistics Confidence Index, which was recently issued by Tampa, Fla.-based non-asset-based 3PL BlueGrace Logistics, pointed to a relatively cautious outlook, as it relates to revenues and inventory management, among other factors.

BlueGrace described this report as an important tool in measuring expected expansion or contraction within the logistics space. And it added that by analyzing revenue forecasts, inventory levels, and order volumes, it provides industry stakeholders with valuable insights into what to expect next quarter and how that reflects the freight market.

Data for the BlueGrace Logistics Confidence Index is aggregated through a survey of shippers and reflects all freight transportation modes, while correlating growth or shrinkage to overall industry volume of shipments and price of products, according to BlueGrace.  

On the revenue side, the report labeled its findings as “cautiously optimistic,” with 65% of shipper respondents expecting positive revenue growth, matching the first quarter. Another 18% expect neutral revenue growth, down from the 18% reported in the first quarter, with 18% calling for negative revenue growth, up from 16% recorded in the first quarter. The median expectation for second quarter revenue growth, at 3.0%, increased 1.0% over the second quarter.

BlueGrace Logistics Chief Marketing Officer Mark Derks noted in commentary accompanying the report that the revenue growth data is viewed as cautious, given the slight 2% uptick in negative revenue sentiment.  

“Prudent confidence for revenue growth can be associated to lower certainty in orders and a notable shrinking forecast with inventories,” Mark Derks.

Inventory data in the report was also viewed as cautious. Forty four percent of respondents said they have a positive view on inventory levels, down 6.9% from the first quarter, with 40% having a neutral view, off only 0.9%. And 16% indicated they have a negative view, up 7.8% over the first quarter, which the report said is the highest level for negative inventory sentiment in the over the last seven quarters.

BlueGrace explained that this data reflects what it called a “more cautious” stance towards inventory management, adding that the stability in neutral sentiment, coupled with the media expected impact, a 1.0% decrease, potentially serving as a sign that while “there is concern regarding the effects of growth or shrinkage on inventory levels, there is also a significant degree of uncertainty about how this will manifest,” adding that “businesses might be advised to monitor these trends closely and remain agile in their inventory planning.”  

BlueGrace’s Derks noted that a continued level of neutrality reflects the uncertainty of inventory growth or shrinkage for the second quarter.

The impact of growth or shrinkage on orders was labeled as cautious and uncertain in the report, with 41% of respondents having a positive view, down from 52% in the first quarter, and 56% maintaining a neutral view, up 13.2% over the first quarter’s 43% reading. Negative sentiment fell from 5% in the first quarter to 3% in the second quarter, with the overall media reading, at 0.0%, down from 1.0% in the first quarter.

The increase in neutral sentiment and the decrease in positive sentiment could portend a wait-and-see approach among businesses, which could be attributed to unpredictable market trends or external economic factors, said BlueGrace.

“The consistent negative sentiment and the stable median impact suggest that while concerns are present, they are not resulting in a significant shift in order expectations,” said BlueGrace.

In looking at report’s data collectively, BlueGrace said that the changes, from the fourth quarter of 2023 to the first quarter of 2024—for revenue, inventory, and orders—points to an improvement in consensus, driven by each segment heading up. Which it said is an indication of stronger alignment for expectations early into 2024.