We're seeing an early sign that demand for goods is eroding faster than companies were expecting.
The Logistics Managers’ Index (LMI) inventory level component increased from 55 to 57 from November to December, indicating inventory growth accelerated for the first time since the summer. Meanwhile, trucking demand as measured by the Outbound Tender Volume Index fell.
Trucking companies are hopeful that inventories will be rightsized in the first half of the year, but this chart shows that is not a given. Companies have struggled with demand forecasts coupled with supply chain congestion since 2020. Transportation networks are now mostly unclogged and shippers are receiving their orders on a more timely basis. The problem may be that now the demand for their goods is eroding faster than they expected as they try to reduce their inventory levels.
The LMI is a diffusion index that measures expansion (values over 50) and contraction (values under 50) of various logistics functions based on surveys of supply chain professionals. The inventory level component fell from an all-time high of 80.18 — anything over 70 is extreme — last January to 54.8 in November, indicating that inventories went from growing at light speed to crawling.
While December’s value of 57.3 is still not extreme, it is moving in the wrong direction for many shippers. The fact that trucking demand fell simultaneously suggests that companies still do not have proper alignment of ordering cadence to sales.
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Wayne Cummings
I’m new in this business, and worried that truckers are being ripped off, and some shippers not all are unconcerned. It’s more than just the bottom line. It’s about making an honest living. I haven’t gotten my broker authority yet, just doing research, and praying that we all can survive and support our families. We shall see. God’s blessings to you all.
Hope
Rates are a joke now. we are parking our trucks probably.
Michaellarrywilliams
It’s bad out here everyone is getting no pay for what we do and truck stops are charging 3 times what there products cost them they are robbing us blind and they don’t care
nicholas lopez
How is demand dropping , and warehouses over stocked and shipper and receivers are slower way slower like really really bad. Bring back start charging them. I believe inflation gonna keep being a topic along with layoffs and less demand yet I believe investments are gonna push thru.
Richard M Rehmer
Many of my friends thought I was crazy just to park my truck. I am lucky to own the truck and the trailer outright, but after 36 years of doing this, things just didn’t add up. I love to drive; that is the only reason I do it, but it has to pay. My wife is ready for me to get back on the road, LOL. Now my friend are not so vocal about what I did. I would love to come back out in March. But until I see something more positive, I think I will just leave it parked because the future isn’t looking very good. I can drive someone else dump truck and make more money than the rates I am seeing. Fuel is still up, and the rate is back down to the Obama time. You can not haul .90 cents per mile freight. Pay the higher price for everything else and expect to make a living much less break even. I feel sorry for these young kids that saw a way to make big bucks and ran out and bought new trucks and trailers, big payments, and now the rates don’t support them to make the costs let alone support a family
I warned you
Rate have dropped more than %50 since December 2022.
Huge collapse incoming and it is looking very ugly.
Shipper are very slow taking 24 hours to load.
Receiver refusing product because of “late delivery” because shipper is lazy.
This entire logistics sector is coming apart at the seams and the more FMCSA gets involved the worse it gets for the Average OWNER OPERATOR.
Soon everyone will be driving for big corporations only.
Boone Trucking
There’s more to this than what people are seeing Our rates have dropped Unreal while everything around us is going up 75% If you want more trucks quit playing with our money