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Logistics industry growth is at a record low in March
Logistics growth has steadily declined since the beginning of 2023 and recorded a record low of 51.1 points in March, according to Logistics Manger’s Index (LMI).
The LMI index
LMI in March recorded the lowest level in more than 6 years of experts tracking the index, reaching 51.1 points, down more than 3 points from February.
The LMI index is evaluated based on research that collects answers from more than 100 experts about movements and trends of the logistics industry through 8 main indicators:
- Inventory level
- Inventory cost
- Ability storage capacity
- Warehouse utilization efficiency
- Transportation capacity
- Transportation efficience
- Transportation costs.
These indicators are aggregated and expressed through the general index LMI.
According to experts, the LMI index above 50 still shows the growth potential of the logistics industry.
On the contrary, when this index is below 50, it warns of a narrowing of the logistics market.
In March, the main indicators in the LMI index such as transport prices, transportation performance, and transport capacity continued to decline.
General Situation
Specifically, experts assess that freight rates are maintaining a record low when the index dropped 5 points to 31.1 points.
In addition, the transportation performance index also failed to record a growth trend for the first time since 2023.
Excess transport capacity shows that the demand for services continues to decline.
Some of the challenges in shipping are assessed by the researchers: “The freight downturn flared up again in March”.
The drop in volume was the main reason for the slowdown in logistics growth in March.
According to LMI experts, the prolonged drop in transportation demand makes carriers struggle to fill their improved capacity in the past time.
In addition, expired contracts leave some importers choosing to keep prices low or take advantage of the convenience of spot delivery.
The slow growth occurred in the context of the volatile world economy.
CONCLUSION
“This is the lowest index in more than 6 years of tracking LMI, but the industry still records growth,” researchers at LMI wrote.
At the same time, a number of logistics business leaders also assessed the degree of recession in the second half of this year.
