While the freight industry still hopes for the market to fire on all cylinders, the August Logistics Managers' Index (LMI) continues trending in the right direction. There have been no silver bullets so far, but the LMI has been in a growth stance for nine straight months. August's reading of 56.4 was down 0.1 from the month prior, but still showing stable growth. Authors point out just how steady the index has been of late, as the last four months were within about a point of each other.
The reason this month didn't climb further comes down at least partially to a narrowing of the gap between two key metrics, Transportation Prices and Transportation Capacity. While Prices remain comfortably growing at 61.6, it dropped 2.2 points from July. Capacity on the other hand jumped considerably, up 5.8 to 56.7 and thus cutting the distance between the two measures from 13 to five. Perhaps the explanation, the authors posit, is that smaller carriers and owner-operators are seeing enough positive signs to re-enter the market.
On the inventory side, there were clear signals of companies building up their stock for the busier shopping season to come - after the metric showed contraction figures earlier in the summer. The shift was +6.2 in fact, taking levels from contraction at 49.5 in July into expansion at 55.7. Indications are retailers are returning to normal seasonal patterns for the first time in awhile.
Warehousing, in dichotomous fashion, actually gained capacity in spite of the inventory growth - seeing a five point jump from July to 59.5. Authors suggest the reason is an imbalance between upstream and downstream inventory - as in, most is sitting near its point of entry, waiting to get to retail shelves as downstream has significantly more space available than upstream facilities.
Looking ahead, LMI respondents still see a positive future for the industry, projecting an index figure of 62.4 in 12 months, up 0.4 from July's prediction. The closeness is much like the small range for recent LMI readings as a whole, suggesting the current steady growth is likely to continue around its current pace at least a year from now.
By the Numbers
See the summary of the August 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 August 2024.
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