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MFW Musings – January 2024

Industry Insights / January 17, 2024

Container Freight: 

Source | Descartes

The U.S. container import volume increased to 2,107,012 TEUs last month. This is a 0.4% increase MoM, and a 9.2% increase YoY. While the East and Gulf Coast ports experienced growth, their counterparts on the West Coast witnessed a decline in volume. The Panama drought had minimal impact on U.S. container imports at East and Gulf Coast ports in December, but it did cause delays in processing shipments, particularly along the Gulf Coast. This shows consistent container import volume, but global supply chain performance will be under pressure in 2024 due to conditions at the Panama and Suez Canals and labor negotiations ahead.

Logistics Manager Index (LMI):

Source |

The Logistics Managers’ Index (LMI) moved into expansion territory in December, reading 50.6. The growth is due to increased activity in warehousing metrics seeing rapid expansion in utilization (+7.4) and Prices (+1.2). The steady decline in Inventory Levels, despite breaking even downstream and indicating the swift sale of products due to just-in-time inventory practices, has likely sparked the expansion of Transportation Utilization (+4.6). The freight industry is still facing challenges though, as Transportation Prices are declining (-1.1). It is important to highlight that Inventory Costs are experiencing a significant growth rate of 55.8, which is the lowest level ever recorded in the history of the index. This raises curiosity and prompts us to closely monitor this metric to determine if it continues to moderate in light of the evident shift towards just-in-time inventory management.

US Manufacturing Purchasing Manager’s Index (PMI):

Source |

The Manufacturing PMI registered at 47.4%, which is a 1.5% MoM increase while remaining in contraction for the third consecutive month. The contraction of the U.S. manufacturing sector persisted in December, although the rate of decline was slightly less compared to November. Despite the ongoing softness in orders, companies are effectively managing their outputs. Primary Metals emerged as the sole manufacturing industry to showcase growth, while the remaining 16 industries experienced a contraction.

The U.S. Manufacturing PMI remained in contraction at 47.4% in December, with a slight improvement compared to November. Primary Metals showed growth, while the remaining 16 industries experienced contraction.

  • New Orders Index: 47.1%
  • Production Index: 45.2% 
  • Price index: 45.2%
  • Backlog of Orders index: 45.3%
  • Employment index: 48.1%
Trucking Tonnage:

Source |

The ATA Truck Tonnage reported a notable increase of 2.1% from the previous month, reaching 115.7. However, there has been a 1.7% annual decline compared to the previous year, marking the lowest annual figure since 2020. It is important to note that trucking plays a crucial role in assessing the state of the U.S. economy, as it accounts for a significant 72.6% of the total tonnage carried by all modes of domestic freight transportation, including both manufactured and retail goods.

Retail Sales:

Source |

In December 2023, retail and food services sales in the United States reached an impressive $709.9 billion, with a monthly increase of 0.6 and a significant 5.6 percent increase compared to the previous year. Sales for the entire year of 2023 experienced a growth of 3.2 percent (±0.4%) compared to the previous year, showcasing the upward trajectory of the retail and food services industry. Nonstore retailers saw substantial growth of 9.7% increase YoY, while food services and drinking places witnessed a noteworthy surge of 11.1% from the previous month. 

Cass Freight Index:

Source |

  • Expenditures
    • Last month measurements on the total amount spent on freight, fell 3.0% MoM and 24% YoY. 
  • Shipments
    • The shipments fell 1.6% MoM, reporting at 1.077, marking a negative 7.2% change YoY
  • Real disposable incomes, sharp disinflation, and a strong labor market suggest freight demand will improve in 2024.
Future Outlook:

FTL rates thus far in Q1 have ticked up slightly, driven by winter weather and carriers continuing to exit the marketplace. LTL rates are expected to remain stable throughout the year. Nearshoring in Mexico is becoming popular among U.S.-based companies in 2024, allowing for diversified manufacturing locations and reduced supply chain risks. Mexico has become an appealing destination for manufacturing.

To stay ahead of the competition, it’s important to be flexible in your strategies and explore ways to optimize costs. If you require any help with carrier partnerships, TMS technology, or auditing your current processes, please don’t hesitate to reach out. We would be more than happy to provide assistance throughout the upcoming year.