LMI reaches highest level of expansion since September 2022

On Tuesday, the Logistics Managers’ Index released its September report, which saw its overall index increase for the 10th consecutive month to its highest level since September 2022. The LMI’s overall index rose 2.2 points from an August reading of 56.4 to 58.6 in September. One positive trend impacting the overall average was a continuation of August inventory levels into September. The report said, “We saw a continuation of August’s trends in September as Inventory Levels increased (+4.1) to 59.8. This is largely driven by the long-expected restocking of Downstream retailers. After several months of contraction, Downstream respondents are reporting expansion for Inventory Levels at a rate of 55.7.”

Regarding the East and Gulf Coast port strikes, the report cautioned that a prolonged work stoppage could have a meaningfully negative impact on capacity. The report highlighted a recent example where an imbalance of freight capacity relative to demand caused a massive boost in transportation prices in 2021. Prolonged port strikes have the potential to create a disproportionate demand for capacity as goods are rerouted to West Coast ports, potentially taking capacity out of other areas in the country and driving up prices.

The report adds, “It is likely that a prolonged strike would push us back towards that imbalance, artificially depressing available Transportation Capacity and inflating Transportation Prices across the country. This price growth is due to demand and not costs.”