Transportation prices grow for first time in 19 months

Transportation prices have grown for the first time in 19 months, with the Logistics Managers’ Index (LMI) rising to 55.6 in January, indicating overall expansion.

The increase is attributed to heightened inventory restocking by retailers after a busy holiday season, reflecting improved consumer confidence in the economy.

Despite transportation capacity still growing (54.5), the rate has slowed, while transportation prices (55.8) surged into growth territory, signaling a potential shift in the market cycle.

The report suggests a tentative end to the freight recession, emphasizing the need for sustained growth for confirmation. Inventory levels expanded (52.8) for the first time in three months, primarily driven by brisk restocking by downstream companies like retailers. Respondents anticipate slight growth in capacity and substantial growth in utilization and prices one year from now.

Overall, the report suggests optimism for the logistics industry’s future growth.

Carefully Assessing Current Trends in Transportation Costs

“While our team has observed a slight uptick in overall cost per load across our Domestic and International operations, we’re viewing this increase with measured caution and resist interpreting it as a definitive sign of a market rebound.

Time will be the true indicator, determining whether this uptick represents an emerging trend of future increases or merely reflects the market’s attempt to recover and recognizing that several temporary factors may have contributed to the current rise, citing geopolitical disruptions in the Red Sea shipping lanes and the worsening drought crisis in the Panama Canal. Chinese New Year will significantly influence the trajectory of rates.

Realistically, we anticipate it will take a good 4-6 months before we gain clarity on whether the market is indeed undergoing a fundamental shift.”

-Aaron Zofkie – VP Enterprise Sales & Domestic Brokerage