Economic activity in the logistics industry expanded in March, but at a slower rate compared to the first two months of the year, according to the latest Logistics Mangers’ Index report (LMI), released this week.
The LMI registered 57.1 in March, down nearly 6 points from February’s reading and down 5 points from January—both of which represented the fastest rates of growth in the overall index since June 2022.
An LMI reading above 50 indicates expansion in the sector; a reading below 50 indicates contraction.
The March shift was driven by a sharp decline in industry price and cost metrics, according to LMI researchers.
The LMI’s Inventory Costs, Warehousing Prices, and Transportation Prices indices all rose sharply in January and February as companies replenished inventory following the holiday peak and rushed to stock up and avoid impending tariffs. The trend reversed this month, with those indices falling 7, 16, and 9 points, respectively—with activity slowing considerably toward the end of March, according to the researchers.
“This suggests that supply chains revved up in February and early March to bring goods in but have slowed in more recent weeks as more trade controls have been implemented,” according to the LMI researchers.
The lower inventory and warehousing metrics may indicate a stabilizing of the market, but the decline in transportation prices may signal a cause for concern, they added—primarily because transportation prices dipped below capacity at the end of March.
Logistics Managers’ Index Report
“Traditionally, a negative freight inversion (in which Transportation Capacity expands faster than Transportation Prices) signals a downturn in the transportation market,” the researchers wrote. “To be clear, we need to see several full months of this continued dynamic to declare a freight recession.
“It is possible that this is a one-time blip that will flip back in April and that the market will continue the positive trend it has demonstrated over the last 11 months … Dynamics in the transportation market are often a leading indicator for movements in the overall economy. If we see a sustained pullback in freight, it may signal coming issues in the overall economy.”
Looking ahead, logistics managers surveyed for the report said they expect moderate expansion across the industry over the next 12 months.
The LMI is a monthly survey of logistics managers from across the country. It tracks 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).
