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The global logistics industry shrank to a new all-time low during July 2023 due, in part, to decreasing inventory and transportation utilization levels, after the sector registered an LMI (Logistics Managers' Index) score of 45.4, down from 45.6 in June. This marks the third consecutive month the sector has contracted and the fifth straight month that the index hit a new all-time low.
Any reading above 50.0 on the LMI indicates the logistics market is expanding while a score below 50.0 signifies the logistics market is contracting.
The index showed that inventory levels fell once again from 42.9 to a score of 41.9, the steepest rate of decline in LMI history. Contracting inventories led to slower growth rates for warehouse pricing and warehouse utilization. However, warehousing capacity is expected to be growing.
The rate of growth for transportation capacity also appears to be slowing while transportation prices are declining at their slowest rate since April. Additionally, transportation utilization is on the decline.
“Respondents are not expecting warehousing metrics to continue plummeting into negative territory,” the July 2023 report’s authors wrote. “With e-commerce stabilized at around 15% of retail, it is more likely that the warehousing market is reaching an equilibrium after three years of wild swings. Warehousing is more stable than transportation and less prone to wild swings.”
Data for the Logistics Managers’ Index is collected each month in a survey of more than 100 leading logistics professionals conducted by researchers at Arizona State University, Colorado State University, Florida Atlantic University, Rutgers University and the University of Nevada, Reno in conjunction with the Council of Supply Chain Management Professionals (CSCMP). Respondents are asked to identify monthly changes across eight metrics while also forecasting future trends for each category over the next 12 months.
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