The Logistics Managers' Index (LMI) was down again in June, marking its second straight month of contraction. The drop from May was 1.7 to reach an overall number of 45.6 - the fourth straight month the LMI has set a new all-time low. While last month's primary downward driver was Transportation Utilization, this month it was Inventory Levels. That metric dropped 6.5 points to 42.9, firmly in contraction territory.
Relatedly, with low levels of inventory, Warehousing Capacity (up almost a mirror image 6.8 to a figure of 63.5) and Transportation Capacity (which grew 1.9 to 71.2) both saw gains - which are both negatives for the overall Index. LMI authors point out that both forms of capacity expanded to meet the outsized demand during the pandemic peak, demand which doesn't currently exist. However, there are some signs of the demand equation stabilizing.
Back to the other transportation metrics. Transportation Prices bounced back a bit from May, increasing 4.8 to 32.8. Transportation Utilization went up 1.3, to 46.8. Both of those increases only served to slow their rates of contraction, but they serve as at least a less negative sign.
Survey respondents seem to agree that a return to some level of normal is coming over the next 12 months, as they place every projected index figure in growth territory. These projections are far better than the last couple of months, indicating LMI respondents are in general agreement with U.S. consumers with an attitude of cautious economic optimism.
By the Numbers
See the summary of the June 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 June 2023.
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