On Februrary 20, researchers at Arizona State University, Colorado State University, Florida Atlantic University, Rutgers University, and the University of Nevada, Reno, and in conjunction with the Council of Supply Chain Management Professionals (CSCMP) issued the January Logistics Manager’s Index.
The index reads in at 62.0, up (+4.7) from December’s reading. This is the fastest reading of expansion in the overall index since June of 2022, the report notes. Movements in eight of the seven sub-metrics of this index contributed to this increasing velocity of positive change.
After registering in at 50.0 (no change) in December, inventory levels are back up (+8.5) to 58.5 – spurred on by a 22.2-point bump in downstream inventory levels as retailers went from contraction at 33.9 to expansion at 56.1.
This led to notable cost/price increases as inventory costs (+8.5 to 70.2), warehousing prices (+5.1 to 73.1), and transportation prices (+3.5 to 70.4) are all over 70.0 since April of 2022 when transportation started its two-year slide.
Expansion for both capacity metrics slowed in January with both warehousing capacity (-5.2 to 51.7) and transportation capacity (-0.5 to 52.6) reading in at only very mild rates of expansion, suggesting that prices are up due to demand and not other factors like inflation. This notion is cemented by the continued strong expansion in warehousing utilization (68.3) and transportation utilization (60.1).
Report Analysis (excerpted)
This is the fastest rate of expansion in the overall index in nearly three years, reflecting both the steady growth we have seen across the U.S. economy over the past year (but especially the last 6-9 months), but also a faster-than-expected increase in inventories due to uncertainty regarding trade regulations.
Potential tariffs are a fluid situation at the time of this writing (or more accurately, rewriting, as the situation has changed several times in the last few days). The tariffs in questions are potential between the U.S., Mexico, Canada, and China.
At the time of this writing the tariffs on Mexico and Canada have been delayed by a month, making it unclear whether or not they will be implemented. The uncertainty surrounding these potential regulations is difficult to supply managers due in part to their scale.
This is because 25% tariffs on Mexico and Canada would represent significant regulation on the U.S.’s two biggest trade partners which accounted for $1.475 trillion in the trade of goods in 2024. Of this, $843.8 billion are imports, meaning that a 25% tariff on all incoming goods from these countries, with a carve out of 10% on Canadian oil, would amount to approximately $185 billion in additional costs paid by the importers.
This increases to approximately $225-$230 billion when 10% tariffs on the $400 billion of imports from China is included). A blanket tariff on the U.S.’s two largest trade partners would impact several industries. Automotive, oil and gas production, electronics, medical equipment, and food would be heavily impacted.
The additional charges on oil and petroleum from Canada alone would be approximately $11 billion if imported volumes do not change – leading to significant increase in costs at the pump for both consumers and transportation fleets. It should be pointed out that the $11 billion would only in direct costs, with indirect supply chain costs for customer industries such as steel production or oil refining. The administration is also considering imposing additional tariffs on several other items including computer chips, steel, oil and gas, and pharmaceuticals sometime in mid-February.
