Another month, another nearly two-year high for the Logistics Managers' Index (LMI), with the March edition rising 1.8 to 58.3. That overall figure is the highest reading since September 2022's 61.2, but authors note last month's readings show a logistics industry in a better place than two years ago, when things were on the decline from the pandemic peak period. In fact, they even consider the latest LMI number to suggest the market is on the low end of "healthy and normal growth," with now seven out of the past eight months in expansion.
How healthy is it? All but one metric - Warehousing Capacity - is in the black, and that measure dropping 8.2 into contraction at 44.6 actually can be seen as a positive, with retailers building up inventories in anticipation of consumer goods spending consistency ahead. Still, whether the freight market has fully climbed out of the lengthy downturn comes down to a few other key metrics: Transportation Prices, Transportation Capacity and Transportation Utilization.
Transportation Capacity dropped 1.3 but still remains strongly in a growth stance at 59.6, while Transportation Prices did retreat a bit from February (-4.6) while still expanding at 53. That's three straight months of expansion after 18 straight of contraction. Capacity continuing to outpace Prices though, leads LMI authors to suggest the freight recession cannot yet be declared over, though the discrepancy has shrunk considerably over the past several months. Transportation Utilization was up slightly (0.5) and is also in expansion at 57.
What authors say fueled the overall index growth the most from month-to-month was continued rebuilding Inventory Levels, which were up the most (5.3) to 63.8 - their highest level since October 2022 - again pointing to renewed retailer confidence. Inventory Costs and Warehouse Prices also rose: 3.9 to 66.8 for the former and 2.1 to 66.3 for the latter.
So what do survey respondents think about the future? The one-year-from-now projection rose 1.7 from February to 63.5, slightly above the all-time average for the LMI. That expectation leads to the thought of a steady - if unspectacular - growth in the logistics industry over the next several months.
By the Numbers
See the summary of the March 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 March 2024.
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