Transportation capacity sees ‘accelerated contraction’ in February

From Freight Waves.

A February survey of logistics executives showed growth in the supply chain is “increasing at an increasing rate.”

The Logistics Managers’ Index, a reading on changes in several areas of the supply chain, increased 4.2 percentage points during February to 71.4%. The reading was notably higher than the historical average of 62.7% and well above the February 2020 level of 52.6%.

The LMI is a diffusion index wherein a reading above 50% indicates expansion and a reading below 50% indicates contraction. The survey is designed to capture the rate of change in areas like transportation, inventory and warehousing.

“The combination of tight capacity and high prices are the primary drivers behind the increasing rate of growth detected in this month’s LMI,” the report read. A couple of categories — transportation prices (88%), warehousing prices (79%) and inventory costs (76.8%) — hit their highest levels in more than two years.

The transportation capacity subindex remained in contraction territory for the ninth straight month, falling 8.2 percentage points from January to 38.1%. The “accelerated contraction” in February was seen in all modes of transportation.

Trucking continues to struggle to find drivers after a year when driver schools churned out 40% fewer graduates and the Drug & Alcohol Clearinghouse snared more than 50,000 drivers. Roughly 60 container ships remain anchored off the West Coast awaiting a berth to unload, and railroad intermodal networks continue to struggle to right service woes.

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