The logistics sector showed varied performance in August, with smaller firms working to manage rising expenses, according to a report from researchers at Florida Atlantic University and four other universities.
The Logistics Managers Index (LMI) for August registered at 59.3, a slight increase from July’s 59.2 but still below the historical average of 61.5. The LMI uses scores above 50 to indicate industry expansion and below 50 for contraction.
Researchers noted that inventory levels rose by 2.7 points to 58.2, while inventory costs increased by 7.3 points to reach 79.2. These changes were attributed to companies increasing their stock and facing higher holding costs, contributing to the modest rise in the index for August. At the same time, reductions in transportation activity and prices put downward pressure on overall growth.
Steven Carnovale, Ph.D., associate professor of supply chain management at FAU’s College of Business, commented on market dynamics: “Given the fluctuating regulatory environment associated with tariff rates and import duties, it appears that firms are consuming more warehouse capacity, as this metric is approaching contraction, and the prices associated with warehousing are up.”
The LMI survey collects responses from director-level or higher supply chain executives across eight categories: inventory levels, inventory costs, warehousing capacity and utilization, warehousing prices, transportation capacity and utilization, and transportation prices. Researchers from Arizona State University, Colorado State University, Rutgers University, the University of Nevada at Reno and FAU compile these results using a diffusion index method.
Over the past four months, growth in logistics has been led mainly by smaller firms—those with fewer than 1,000 employees—which posted an index reading of 62.7 compared to larger firms’ score of 58.2.
“Typically, larger firms have higher buying power and can act more quickly and in larger volumes such as bulk importing of goods ahead of any published tariff rate increases. We saw this activity in previous reports,” Carnovale said. “This month’s data show that smaller firms are responding to try to hedge cost increases, and this is reflected in their higher overall logistics activity.”
In August there was no longer a gap between upstream companies (manufacturers/suppliers) and downstream businesses (retailers), suggesting smoother movement through supply chains as manufacturers push products toward retailers.
Carnovale added: “The shift to higher activity in the downstream suggests that supply chains might be showing stability but the higher price indexes may result in increased prices to consumers in the coming months,” he said.“This coupled with reports of decreased consumer sentiment and spending needs to be monitored as we enter the forthcoming holiday season.”
