The Logistics Managers' Index (LMI) has hit a second straight monthly all-time low, but its Transportation metrics are showing signs of life. April's overall index measured at 50.9, down .2 from March's previous historical low. But while Transportation measures were primarily behind the March figure's weakness, Inventory and Warehousing indices had more to do with last month's. Inventory Levels dropped 4.7, also to 50.9, while Warehousing Utilization declined more than double that number (-9.9) to 55.1. In turn, Warehousing Prices fell below 70 (barely, at 69.8) for the first time since August of 2020. All this, LMI authors say, points to a more balanced supply of goods, something that's been difficult to achieve since many companies have dealt with over-supply for several months. Back to Transportation, while Transportation Prices are still by far the lowest index figure, at 36.8, that metric jumped 5.7 points from March to April. Transportation Utilization was up 5.0 to 55, and Transportation Capacity dropped .8 to 70.6. All that suggests at least a bit of positive movement for transportation - as Prices and Utilization were the only metrics with gains in April - though Prices are still firmly in the contracting area. LMI authors say it's unclear at this point whether freight rates have hit bottom, as contract rates may start to come in lower for a brief period while spot rates show signs of rising. Looking forward, survey respondents continue their move away from the optimism they exhibited at the start of the year, predicting more muted growth and a stabilization of rates, rather than major gains in the next 12 months. Authors suggest the freight market seems likely to "remain depressed" until the Fed slows down its interest rate increases.
By the Numbers
See the summary of the April 2023 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 2023.
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