US logistics manager's index 59.3 in Aug; slightly up from Jul reading

The upward pressure comes from inventory and warehousing metrics. Inventory level expansion was up by 2.7 points to 58.2, which in turn pushed up inventory costs by 7.3 points to 79.2 and warehousing prices by 3.9 points to 72.2.

Researchers at Arizona State University, Colorado State University, Florida Atlantic University, Rutgers University, and the University of Nevada, Reno, and in conjunction with the Council of Supply Chain Management Professionals issued the LMI report recently.

The LMI score is a combination of eight unique components that make up the logistics industry: inventory levels and costs, warehousing capacity, utilisation and prices, and transportation capacity, utilisation and prices.

Warehousing capacity expansion was also observed to have slowed by 0.6 point to 50.5, just above the break-even of 50 and represents very marginal rates of expansion.

The downward pressure came from transportation metrics. Notable drops were observed in both transportation prices (minus 6.9 to 56.1) and transportation utilisation (minus 4.8 to 54.7).

At the same time, available transportation capacity was up by 4.7 points to 57.3. While these are not necessarily seismic shifts on their own, the fact that transportation capacity expanded faster than transportation prices is significant as it represents a mild negative freight inversion.

In the past, negative freight inversions have been associated with a move towards slowdowns in the transportation market. The August inversion is fairly mild and it is only one reading.

Traditionally, a move like this would need to go on for at least three months before it begins to consider it an actual freight recession, an official release said. It does, however, represent the continuation of a trend that is being observed since January this year when transportation prices came in 17.7 points higher than available transportation capacity during the beginning of the big stock-up ahead of tariffs.

ALCHEMPro News Desk (DS)