A four month streak of increasing growth rates is over with April's Logistics Managers' Index (LMI). Last month's overall figure still shows some expansion in the logistics industry, but the reading - at 52.9 - was down 5.4 from March and marks the lowest it's been this year. LMI authors say the push toward supply and demand equilibrium in the industry headed the wrong direction as well, as Transportation Capacity (61.4 in April) is 17.3 points higher than Transportation Prices (44.1).
Those transportation figures show the idea of a freight recession is still in force, with the Transportation Prices drop of 8.9 points also placing it in contraction. The major culprit behind last month's slowdown is Inventory Levels, which suffered the largest drop of 12.8 points month-to-month to a reading of 51 - just barely remaining in an expanding direction.
The inventory drop also led to a drop of 8.5 for Warehousing Utilization to 55.1 and a corresponding gain in Warehousing Capacity of 9.4 to 54 - taking it from contraction to expansion. The aforementioned Transportation Capacity metric gained 1.8 from March to widen the gap with prices as well.
On a positive note for the industry, the second half of April was much healthier than the first, which actually had the LMI in contraction. The second half falls more in line with the behavior of the index over the first few months of the year, but it's unclear which piece of April will carry forward. The other positive? In spite of the drop month to month, the LMI held onto expansion, a stance it's carried for eight of the past nine months.
Logistics businesses - and many others - continue to watch the Federal Reserve to see if interest rates will be cut at any point this year. Many still think rates will come down (with the latest jobs report perhaps a catalyst), though less drastically than some predicted coming into the year.
Looking ahead, optimism about the LMI a year from now only dropped slightly from March, down 0.8 to 62.7. That's a fairly consistent figure as pros show continued optimism about a more normal logistics industry featuring healthy, sustainable growth returning by late 2024 or early 2025.
By the Numbers
See the summary of the April 2024 Logistics Managers' Index, by the numbers:
About the Logistics Managers' Index (LMI)
Researchers at Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno - in conjunction with the Council of Supply Chain Management Professionals (CSCMP) - issue the report. 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. The LMI is calculated using a diffusion index, in which any reading above 50.0 indicates that logistics is expanding; a reading below 50.0 is indicative of a shrinking logistics industry. The latest results of the LMI summarize the responses of supply chain professionals collected in April 2024.
Need assistance with your shipping operations? Request a quote with us, and we'll get back to you to discuss your unique needs. Go to our Freight Guides to learn more about everything freight and logistics. Additionally, visit our blog for information and updates on the freight industry. Or start with these links below:
- Domestic Freight Services: Intermodal, Truckload, LTL
- Outsourced Managed Transportation Service Solutions
