After setting a two-year high in September, the October Logistics Managers' Index (LMI) ticked up again, gaining 0.3 to reach 58.9. That's the highest figure for the overall index since September 2022, and marks the eleventh straight month of gains.
One of LMI authors' primary indicators of freight market health is Transportation Prices, and that metric was up 5.7 last month to 64.1. The Prices figure represents the highest value it's reached since in even longer - 29 months in fact. Transportation Capacity gained ground ever so slightly (0.8) to 50.8, putting it barely into growth, but making the gap between the two metrics a healthy 13.1.
Authors see a chance that rising prices may actually bring more capacity that had been sitting the market out - particularly smaller carriers and owner-operators - back in, potentially leading to further increases in that metric. Such a pattern of continued excess capacity would mean a continued slow-burn recovery - something that has been reflected in third quarter earnings reports from transportation heavyweights like J.B. Hunt, Old Dominion and Knight-Swift among others - rather than a quick, catalyst-driven bounce-back.
Inventory Levels were down just 0.4 to 59.4, while Inventory Costs fell 5.5 to 65.8. The LMI report indicates retailers are stocked up for holiday sales - and that continued restocking is expected as well thanks to a greater emphasis on just-in-time inventory management. Slowing inflation and positive numbers from Amazon also suggest consumers will be spending this holiday season.
On the warehousing side, the capacity, utilization and price metrics all stayed fairly steady, with Warehousing Capacity -0.1 to 55.8, Warehousing Utilization up 1.9 to 62.9 and Warehousing Prices down 1.1 to 65.8.
Looking ahead, LMI respondents had a still rosier view than September of the environment a year from now, projecting a reading of 65.7 (up 0.3 from last month). While the index has yet to reach its all-time average of 61.8 the past couple of years, those surveyed expect to easily surpass it in 12 months.
See the summary of the October 2024 Logistics Managers' Index, by the numbers:
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 October 2024.
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