LOGISTICS MANAGERS' INDEX
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​September 2019 Logistics Index

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FOR RELEASE: Tuesday, October 7, 2019
Contact:  
Zac Rogers, Ph.D.
Logistics Manager’s Index Analyst
Assistant Professor, Supply Chain Management
Department of Management
Colorado State University
Fort Collins, Colorado
(970) 491-0890
E-mail: Zac.Rogers@colostate.edu
http://www.logisticsindex.org
Twitter: @LogisticsIndex
September 2019 Logistics Manager’s Index Report®

LMI® at 56.6%
Growth is INCREASING AT AN INCREASING RATE for: Warehousing Capacity, Warehousing Utilization, Transportation Utilization, and Warehousing Prices.
Growth is INCREASING AT A DECREASING RATE for: Inventory Levels Inventory Costs, and Transportation Capacity
Transportation Prices went from DECREASING to INCREASING.

(Fort Collins, Colorado) — According to a sample of North American logistics executives, growth continued at the same (albeit slow) rate as last month’s reading. For the first time in a few months, all eight logistics metrics are increasing, although half of them are growing at a decreasing rate and Transportation Prices read in at 50.6, which essentially indicates no movement of any kind.

The overall LMI held steady with a score 56.6, which is tied with last month as the second lowest score in the history of the index. This is also down significantly from this time a year ago, when it registered at 70.8. The lowest seven scores in the history of the index have all occurred within the last seven months. Every score has been above 50.0, which indicates growth in the logistics industry, the growth has just been very slow.
Researchers at Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, and in conjunction with the Council of Supply Chain Management Professionals (CSCMP) issued this report today. 

Results Overview
The LMI score is a combination eight unique components that make up the logistics industry, including: inventory levels and costs, warehousing capacity, utilization, and prices, and transportation capacity, utilization, and prices. The LMI is calculated using a diffusion index, in which any reading above 50 percent indicates that logistics is expanding; a reading below 50 percent is indicative of a shrinking logistics industry. The latest results of the LMI summarize the responses of supply chain professionals collected in September 2019. Seven of the eight metrics read in below their historical average. Only Transportation Capacity reads in above average.

Inventory Levels fell significantly (-4.42). This is interesting because generally inventory levels increase prior to Q4 and the holiday shopping season. When comparing this September’s Inventory Levels to those from the September 2018 and September 2017 (as in the figure below), the rate of growth is considerably lower. Inventory Levels are still growing, just at a much lower rate than they have at this time in previous years. Whether or not this foreshadows anything going forward remains to be seen. Consumer spending has been among the strongest pieces of the U.S. economy in 2019 (although consumer confidence has recently come down[i])
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Transportation metrics have been the most dynamic over the history of the LMI®. Transportation Prices are up slightly (+1.69) to 50.6 after detracting for the third time in four months. The score of 50.6 suggests that prices are essentially the same as they were in August. This is a vast difference from a year ago. In September 2018 Transportation Prices were growing at a rate of 89.8, making for a 39.2 point drop over the course of the year. Transportation Capacity is down (-5.34) from August, suggesting that there is slightly less slack in the transportation market than a month ago. These findings are corroborated by recent reports that volume is up, but prices are still down.
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Warehouse Capacity is up (+4.4) to 54.4, which is the highest rate it has been at in 2019. This suggests that either demand is down (which might line up with the lower readings for Inventory Levels), or that more capacity has finally come online after the long shortage. Warehouse Prices are down very slightly (-0.2), but are still growing at a strong rate of 69.6 (although it should be noted that is down 10.8 points from this time a year ago).
The index scores for each of the eight components of the Logistics Managers’ Index, as well as the overall index score, are presented in the table above. All eight metrics show signs of growth, but many of them are moving at low or considerably decreased rates. The overall LMI® index score is equal to last month, tied for the second lowest point in the history of the index. Our reading indicates a continued trend of slow yet steady growth in the logistics industry. 
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​Respondents were asked to predict movement in the overall LMI and individual metrics 12 months from now. Their predictions for future ratings (which up to this point have been fairly accurate) are presented below.
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​Historic Logistics Managers’ Index Scores
This period’s along with all prior readings of the LMI are presented table below. The values have been updated to reflect the method for calculating the overall LMI: 
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LMI®
The overall LMI index is 56.6 in the September 2019 reading, which is identical to the overall index score in August. Although there is no change in the overall score, many of the individual components shifted during this reading. Although the score is unchanged, September’s reading is tied for the second lowest score (above only the 56.0 reading in June 2019) in the history of the index. Before April of this year, the overall LMI had never dipped below 60.0, it has been below 60.0 in every reading since. The variance in the LMI score in the 6 months since has been minimal, with a standard deviation of 0.61 and a total range of 1.9. Throughout the Summer and into Fall, the logistics industry has displayed signs of very slow, but very steady growth.
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Interestingly, respondents are bullish on the predicted value of the overall index over the next 12 months, estimating it will increase to 63.7, which is up (+1.0) from August’s future prediction. This indicates that our panel is optimistic that the logistics industry will be on firmer footing and growing at a faster rate a year into the future.
 
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Inventory Levels
The Inventory Level index is 55.1, down 4.5 points from August. As mentioned above, this is the lowest September rate of growth was have observed in the history of the LMI. This is the second straight month this metric dipped below 60.0, which is also a first for the index. It is interesting that such a small amount of inventory is being added just before the busy holiday season. Whether this will be reflected in anyway in Q4 growth remains to be seen.
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When asked to predict what will conditions will be like 12 months from now, the average value is 66.2 (+2.9 from August’s future prediction), indicating that professionals are expecting inventories to continue to expand over the course of the next year.
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Inventory Costs
Given the decreasing rates of growth for Inventory Levels, it is not surprising that we observe a similar movement in Inventory Costs, down 2.9 points to 67.5 p the first reading in the 60’s since March and only the second all year. It is possible that costs are being driven down due to a combination of slowed inventory growth and an increase in available Warehouse Capacity.
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Respondents expect Inventory Costs will be 74.0 in 12 months, down slightly (-1.9) from August’s prediction. Respondents clearly expect inventory costs to continue to be high for the next 12 months.
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Warehousing Capacity
The Warehousing Capacity Index registered 54.4 percent in September 2019.  This represents an incline of 4.4 points from the September 2019 reading and a 2.2 point decrease from the reading one year ago. Also of note, is that this reflects a change of the previous three-month trend with a declining growth rate of capacity, reflecting an increased rate of growth in warehousing capacity. This shift could indicate an expansion in preparation for the holiday season.
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Looking forward at the next 12 months, the predicted Warehousing Capacity index is 54.5, down (-3.7) from August’s future prediction.


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Warehousing Utilization
The Warehousing Utilization Index registered 65.8 percent in September 2019.  This represents a slight increase of 1.8 percentage points, and 7.3 points down from the September 2018 reading of 73.1. This reading, also in conjunction with the increased growth rate in capacity, accentuates previous indications that there may be a shift in the market, perhaps related to the forthcoming holiday season.
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Looking forward at the next 12 months, the predicted Warehousing Utilization index is 73.7, up slightly (+2.6) from August’s future prediction, indicating that firms anticipate utilizing more existing warehouse capacity consistently over the next year.

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Warehousing Prices
Warehousing Prices Index registered 69.6 percent in September 2019.  This relatively unchanged from the August’s reading of 69.8. This reading is sharply down over 10 points from one year ago. The three warehousing metrics, taken together with the slower growth in inventory levels, seem to point to a potential slowdown in Q4 2019 relative to Q4 2018.
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Looking forward at the next 12 months, the predicted Warehousing Prices index is 72.2, down slightly (-1.6) from August’s future prediction. While down slightly, this still indicates that firms are expecting an increase growth in Warehouse Prices over the next 12 months.
 
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Transportation Capacity
The Transportation Capacity Index registered 59.5 percent in September 2019. This is a decrease of 5.3 percentage points from the August reading of 64.8. This is the first reading in the 50’s since January 2019, it is possible that the downward trend we observed through most of the summer has resumed after the increase registered in August.
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It should also be noted the data indicates a score of only 47.4 percent for the next year, projecting expectations of tightening transportation capacity in the next 12 months. This is 9.6 points down from August’s future prediction. This may indicate that professionals are bullish on a recovery in the Transportation sector during the next year.

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Transportation Utilization
The Transportation Utilization Index registered 58.1 percent in September 2019.  This is an increase of 3 percentage points from the August reading of 55.1 and constitutes the third consecutive increase from the record low registered in June 2019. This is down 18.1 points from the same period.
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Our future Transportation Utilization Index indicates a 57.6 percent level for the next 12 months. Which is down significantly (-7.7) from future expectations from August.
 
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Transportation Prices
The Transportation Prices Index registered 50.6 percent in September 2019. This is a 1.7 percent decrease from the August 2019 transportation prices reading of 48.9. This is down 37.2 points from this time one year ago. That being said, the 50.6 reading is slightly above the critical 50 percent threshold (that this metric had been below for three of the previous four months) that separates growth and decline.
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The future expectations for transportation prices are at 68.1 indicating expectations of price increases over the next 12 months. This is up 1.4 points from the future prediction in August.
 
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About This Report
The data presented herein are obtained from a survey of logistics supply executives based on information they have collected within their respective organizations. LMI® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.

Data and Method of Presentation
Data for the Logistics Manager’s Index is collected in a monthly survey of leading logistics professionals.  The respondents are CSCMP members working at the director-level or above. Upper-level managers are preferable as they are more likely to have macro-level information on trends in Inventory, Warehousing and Transportation trends within their firm. Data is also collected from subscribers to both DC Velocity and Supply Chain Quarterly as well. Respondents hail from firms working on all six continents, with the majority of them working at firms with annual revenues over a billion dollars. The industries represented in this respondent pool include, but are not limited to: Apparel, Automotive, Consumer Goods, Electronics, Food & Drug, Home Furnishings, Logistics, Shipping & Transportation, and Warehousing.

Respondents are asked to identify the monthly change across each of the eight metrics collected in this survey (Inventory Levels, Inventory Costs, Warehousing Capacity, Warehousing Utilization, Warehousing Prices, Transportation Capacity, Transportation Utilization, and Transportation Prices). In addition, they also forecast future trends for each metric ranging over the next 12 months. The raw data is then analyzed using a diffusion index. Diffusion Indexes measure how widely something is diffused, or spread across a group. The Bureau of Labor Statistics has been using a diffusion index for the Current Employment Statics program since 1974, and the Institute for Supply Management (ISM) has been using a diffusion index to compute the Purchasing Managers Index since 1948. The ISM Index of New Orders is considered a Leading Economic Indicator.
 
We compute the Diffusion Index as follows:
 
PD = Percentage of respondents saying the category is Declining,
PU = Percentage of respondents saying the category is Unchanged,
PI = Percentage of respondents saying the category is Increasing,
Diffusion Index = 0.5 * PD + 0.5 * PU + 1.0 * PI
 
For example, if 25% say the category is declining, 38% say it is unchanged, and 37% say it is increasing, we would calculate an index value of 0*0.25 + 0.5*0.38 + 1.0*0.37 = 0 + 0.19 + 0.37 = 0.56, and the index is increasing overall. For an index value above 0.5 indicates the category is increasing, a value below 0.5 indicates it is decreasing, and a value of 0.5 means the category is unchanged.  When a full year’s worth of data has been collected, adjustments will be made for seasonal factors as well.
 
Logistics Managers Index
Requests for permission to reproduce or distribute Logistics Managers Index Content can be made by contacting in writing at: Dale S. Rogers, WP Carey School of Business, Tempe, Arizona 85287, or by emailing dale.rogers@asu.edu Subject: Content Request.

The authors of the Logistics Managers Index shall not have any liability, duty, or obligation for or relating to the Logistics Managers Index Content or other information contained herein, any errors, inaccuracies, omissions or delays in providing any Logistics Managers Index Content, or for any actions taken in reliance thereon. In no event shall the authors of the Logistics Managers Index be liable for any special, incidental, or consequential damages, arising out of the use of the Logistics Managers Index. Logistics Managers Index, and LMI® are registered trademarks. 
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About The Logistics Manager’s Index®
The Logistics Manager’s Index (LMI) is a joint project between researchers from Arizona State University, Colorado State University, University of Nevada, Reno, Rochester Institute of Technology and Rutgers University, supported by CSCMP. It is authored by Zac Rogers Ph.D., Steven Carnovale Ph.D., Shen Yeniyurt Ph.D., Ron Lembke Ph.D., and Dale Rogers Ph.D.
[i] Edwards, W. (2019, September 24). Consumer Confidence in U.S. Declines by Most in Nine Months. Bloomberg.Com. Retrieved from https://www.bloomberg.com/news/articles/2019-09-24/consumer-confidence-in-u-s-fell-more-than-forecast-in-september
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