The Logistics Managers’ Index had the lowest overall reading since March as the supply chain reacts to economic uncertainty, according to researchers from Florida Atlantic University (FAU), Arizona State University, Colorado State University, Rutgers University, and the University of Nevada at Reno.
“The apparent stagnation in the transportation sector, is likely a result of the previous pull forward and preemptive push of ordering from firms responding to the tariffs earlier in the year,” says Steven Carnovale, associate professor of supply chain management in FAU’s College of Business. “As a result, we see a utilization decrease in this metric, which can be a harbinger of an overall freight slowdown in general.”
Key takeaways:
· September’s LMI read in at 57.4, down 1.9 from August’s reading of 59.3. The score marks the seventh consecutive month of reading below the historical average of 61.5. Any score above 50 indicates the industry is expanding; a score below 50 suggests contraction.
· The transportation sector, typically the strongest in September due to holiday merchandise shipping, saw little to no growth. Transportation prices expanded minutely to 54.2, the lowest growth rate since April 2024. Transportation utilization dropped 4.7 points to 50, while transportation capacity dropped by 2.2 points to 55.1.
· Inventory levels dropped three points from August’s reading to 55.2, while inventory costs also sunk 3.7 points from the month prior to 75.5. The warehousing sector, however, did see some improvement: warehousing capacity rose 1.1 points to 51.6, while warehousing utilization rose 3.2 points to 65.3.
“Since August, there have been warning signs in the transportation space, and signals that the freight market is heading toward an inversion (the pricing to capacity relationship is upside down),” Carnovale says. “For example, in the September report, we see firms in the upstream portion of the supply chain with a minor increase in pricing, likely because the previously ordered goods are sitting in warehousing causing an increase in this metric as well.”
