According to the recently released Logistics Managers’ Index (LMI), which is a survey of leading logistics executives, transportation capacity declined to a 22-month low in July. While demand and prices reached a 19-month high. The LMI is a diffusion index, wherein a reading above 50% indicates expansion and a reading below 50% indicates contraction. The overall LMI increased to a reading of 63% during the month, up 130 basis points from June and well off the all-time April low of 51.3%. The July mark was the highest for the index since January 2019. Similar results have been seen in the FreightWaves’ Outbound Tender Rejection Index (OTRI), a measure of the number of loads tendered to and rejected by carriers. Currently OTRI stands near an all-time high rate rejection rate of 25%. Difficulty in procuring trucks lifted the pricing component of the LMI 820 basis points to 72.6% almost double the low mark reached in April. The report did note that rail and sea rates continue to lag behind the improvement in trucking. Finally, the survey showed that overall respondents expected the LMI to increase to a reading of 69.1% one year from now.
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Transportation capacity near 2-year low; pricing surges