The Logistics Managers’ Index (LMI) recorded its lowest overall reading since March, reflecting ongoing economic uncertainty and changes in the supply chain, according to researchers from Florida Atlantic University (FAU) and four partner universities.
In September, the LMI registered 57.4, a decrease of 1.9 points from August’s 59.3. This marks the seventh consecutive month with a reading below the historical average of 61.5. The LMI, which surveys director-level and above supply chain executives, uses eight components to measure industry expansion or contraction: inventory levels, inventory costs, warehousing capacity, warehousing utilization, warehousing prices, transportation capacity, transportation utilization, and transportation prices. A score above 50 indicates expansion; below 50 suggests contraction.
The transportation sector, which typically experiences growth in September due to holiday merchandise shipping, showed minimal change. Transportation prices grew slightly to 54.2, the lowest rate since April 2024. Transportation utilization fell by 4.7 points to 50, and transportation capacity decreased by 2.2 points to 55.1.
Steven Carnovale, Ph.D., associate professor of supply chain management at FAU’s College of Business, said: “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. As a result, we see a utilization decrease in this metric, which can be a harbinger of an overall freight slowdown in general.”
Inventory levels dropped three points from August to 55.2, and inventory costs declined by 3.7 points to 75.5. The warehousing sector saw some improvement: warehousing capacity increased by 1.1 points to 51.6 and warehousing utilization rose by 3.2 points to 65.3.
Carnovale added: “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). 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.”
He also noted that two consecutive months of concerning LMI data, combined with rising inventory levels and decreased holiday orders and shipments, could indicate a freight recession. “The key to watch for will be orders for the holiday season, which in general exhibits heightened demand to prepare for increased orders,” Carnovale said.
