U.S. December Logistics Manager's Index down slightly from November

LOS ANGELES, Jan. 6 (Xinhua) -- U.S. Logistics Manager's Index (LMI) in December read as 70.1, down 3.3 points from 73.4 in November, according to a latest report, with overall growth of the index standing over 70.0 for 11 months in a row.

The latest index, designed to measure activity throughout various points in the supply chain in the United States, means that the country's supply chain still stands at a level classified as "significant expansion," the monthly report released Tuesday said.

The LMI score is a combination of eight unique components that make up the logistics industry, including inventory levels and costs; warehousing capacity, utilization and prices; and transportation capacity, utilization and prices.

Among these eight factors calculated in the newest index, inventory costs, warehousing utilization, warehousing prices, transportation utilization, and transportation prices all grew at decreasing rate comparing to November.

But growth rose at an increasing rate for inventory levels while warehousing capacity and transportation capacity were contracting, the report said. Those sub-index involving upstream warehousing, inventory levels, and downstream transportation especially pushed the overall index going up.

"Capacity remains constrained, and prices continue to grow quickly. Looking forward, respondents do not predict much relied over the next 12 months. Given the current shortages in capacity, it is difficult to disagree with them," the report read.

The index also suggested that some supply chains may be carrying too much inventory as a potential result of firms stocking up too much in order to avoid potential missed holiday sales.

"This could foreshadow a coming bullwhip effect in which supply chains over-ordered to avoid shortages and are now dealing with the burden of having too much inventory - or too much of the wrong type of inventory - on hand," the report said.

The LMI, founded in 2016, is a collaboration among Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University and University of Nevada, Reno, conducted in conjunction with the Council of Supply Chain Management Professionals.

The index measures key supply chain data from 100 upper-level industry managers in the country to analyze month-to-month changes in warehousing, transportation and inventory.