Report: Freight Market Faces Truck Shortages, Record Prices
The freight market has entered uncharted territory, with trucks simultaneously scarcer and more expensive, according to a new logistics report.
The freight market has entered uncharted territory, with trucks simultaneously scarcer and more expensive, according to a new logistics report.
The April Logistics Managers' Index (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.
Transportation capacity dropped to 28.4, the second-lowest reading in the index’s 9-and-a-half-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.
“Previous readings have signaled that the market for transportation is tightening and that prices would escalate,” said , Ph.D., associate professor of supply chain management in ֱ̲ Atlantic University’s . “However, this large a gap between the two is notable.”
, a survey of director-level and above supply chain executives, measures the expansion or contraction of the logistics industry using eight unique components: inventory levels, inventory costs, warehousing capacity, warehousing utilization, warehousing prices, transportation capacity, transportation utilization, and transportation prices.
Researchers at Arizona State University, Colorado State University, Rutgers University, the University of Nevada, Reno, and FAU calculate the LMI using a diffusion index to provide a dynamic view of the U.S. supply chain that anticipates economic shifts and trends.
The record transportation spread is not the only cost metric under pressure. Warehousing prices rose to 72.7 and inventory costs held at 74.7, both above the 70.0 threshold the index considers significant expansion. Combined, aggregate logistics costs sit at 242.4, the highest since April 2022. Previous readings above 240.0 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.
“Given the dynamic and unstable geopolitical landscape, coupled with increased fuel prices and tightening capacity across the supply chain, the next few months are likely to be a bit of a roller coaster,” Carnovale said
-FAU-
Tags: business