Transportation Prices continue to contract, and the March Logistics Managers' Index (LMI) fell with them to its lowest-ever figure. The overall index comes in at 51.1, down 3.6 from February and the lowest reading in the LMI's 6.5 year history. Driving the drop is the Transportation Prices metric, which at 31.1 hit a new low after setting one last month at 36.1 - showing that last month was not in fact a bottom in this area. And in another repeat from February, Transportation Utilization fell in March as well to an even 50 - which means no upward movement. With all three measures, LMI authors note that they were worse in the first half of the month than the second - so things were picking up a bit the last couple of weeks. Transportation Capacity (up 1.0 to 71.4) and Warehouse Capacity (up 1.6 to 58.2) were the only index metrics to show gains in March. Otherwise, Inventory Levels dropped 6.8 to 55.6, while Warehousing Utilization fell 5.3 to 65. Inventory Costs fell as well, down 4.8 to 66. This metric's move was significant, as it's the first time since September 2020 with the number below 70. Authors suggest this could be a particularly positive signal for inflation and supply chain costs - one they hope the Federal Reserve considers regarding interest rate activity. Finally, respondents in March showed less optimism than they had previously that the freight market would heat up in the latter part of the year, though some still expressed hope that would be the case.
By the Numbers
See the summary of the March 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 March 2023.
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