Economic activity in the logistics industry slowed for a second straight month in November, continuing a steady decline from the pandemic-induced record high growth levels of mid-2020 through early 2022, according to the latest monthly Logistics Managers’ Index (LMI) report, released today.
The LMI registered 53.6 in November, down nearly four points from October to reach the second lowest level in the index’s history, according to LMI researchers. The LMI measures economic activity in the industry by surveying logistics managers each month. A reading above 50 indicates growth, and a reading below 50 indicates contraction. The index hit its lowest level in April 2020 at the height of the Covid-19 pandemic–coming in at 51.3–and then soared to readings in the 70s, which indicates strong growth.
The November slowdown was driven by what the researchers called a “long-anticipated wind down” of inventories. Inventory levels hit an all-time high reading of 80.2 in February and have been declining ever since, falling to 65.5 in October and then dropping nearly 11 points to a reading of 54.8 last month, due primarily to peak season holiday shopping.
Although it’s good news that the industry is working through the glut of inventory from earlier in the year, other measures remain tight and continue to challenge companies up and down the supply chain. Warehousing space is still hard to come by, for instance. The LMI’s warehousing capacity index came in at 46.8–up slightly compared to recent months but still in contraction mode, where it has been for the past two years. Warehousing prices remain high–the index came in at 74.4–but are falling from their record-high readings over the past two years.
“On the flipside, the transportation market continues to fall from the dizzying heights that had become the norm during 2021,” according to the report. “This is epitomized by Transportation Prices, which read in at 37.4–the most severe rate of contraction we have measured in the over six years of the Logistics Managers’ Index.”
The LMI tracks logistics industry growth overall and across eight areas: inventory levels and costs; warehousing capacity, utilization, and prices; and transportation capacity, utilization, and prices. The report is released monthly by researchers from 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).
Visit the LMI web page for information on participating in the monthly survey.