After racking up numerous quarters of record financial performances, truckload carriers are acknowledging the historic strength of the recent freight cycle has finally petered out. Sentiment from some of the nation’s largest fleets has turned considerably more tepid around freight demand and the outlook for 2023. Carriers were largely optimistic heading into peak season, calling for a normal stretch of stocking up ahead of the holidays, albeit not as robust as the last two years. However, as September progressed demand cooled and capacity continued to loosen. A deceleration in fundamentals during late September was notable in responses to a monthly supply chain survey. The Logistics Managers’ Index showed respondents said transportation capacity loosened and pricing fell at an accelerated pace during the last 15 days of the month. The diffusion index, wherein a reading above 50 indicates expansion while one below 50 indicates contraction, showed the view on capacity was 9.2 percentage points higher at 76.9 with pricing down 14 points to 36.8 in the back half of the month.
The space race is heating up as more companies look to colonize like the Jetsons. Among those is a small Japanese company seeking to make a mark as early as this month with what could be a first for a commercial firm. Tokyo-based ispace Inc. is scheduled to send a lunar lander earliest by November 22, carrying multiple government and commercial payloads, including two rovers. Like Musk’s dream for a Martian colony, the startup’s grand vision is to build a human settlement on the moon by 2040, but before that it wants to become the lunar version of FedEx — earning money by ferrying scientific equipment and commercial goods to the moon. Ispace’s maiden mission will put to the test not just the technological credentials it’s built since its founding in 2010 but also the faith of its backers, one of whom is a former SoftBank Group Corp. executive. A lot rides on its success, including a potential initial public offering as early as this fiscal year and a shot at a bigger sliver of an industry pie that Morgan Stanley estimates will triple to $1 trillion in two decades from 2020.
Economic activity in the logistics industry slowed in October, continuing a moderating growth trend that began earlier this year, according to the monthly Logistics Manager’s Index (LMI) report, released today. The LMI registered 57.5, its lowest reading since May 2020, when the height of the pandemic ushered in an era of exceptionally strong growth in demand for logistics services. Although slowing, the monthly index still indicates industry expansion, as an LMI reading above 50 indicates growth, and an LMI below 50 indicates contraction across logistics markets. The LMI had remained in the upper 60s and 70s range throughout the pandemic, falling to the low 60s and high 50s for the past four months. The change continues to be driven by a slowdown in transportation markets and a glut of inventory that is driving up costs. The transportation capacity index edged up 1.3 points compared to September to a reading of 73.1; this is the highest such reading in the history of the index, exceeding the freight recession of 2019 and marking a new low in the downturn being felt in transportation, the researchers wrote. Transportation prices fell for the seventh straight month, declining more than two points from September to a reading of 42.2.
That’s all for this week. Enjoy the weekend, and the song of the week, the Geto Boys’ Damn it Feels to be a Gangsta from Office Space.
The post This Week in Logistics News (October 29 – November 4) appeared first on Logistics Viewpoints.