The latest data from the Logistics Managers Index (LMI) indicates a significant decline in supply chain manager sentiment, marking the third-fastest rate of decline in the nine-year history of the dataset. According to a report, the index fell by 5.6 percentage points to 57.1 in March, the lowest reading since August. This drop is a notable shift from the high readings observed in the first two months of the year, which were the highest since June 2022.

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The decline was driven by sharp decreases in pricing and cost subindexes, including inventories, warehousing, and transportation. In January, these subindexes were above 70, indicating significant growth. However, the recent slowdown in pricing growth reflects a deceleration in deliveries as new tariffs are set to take effect.

Transportation capacity remained slightly in expansion territory at 53.6, despite a 1.6-point drop. Transportation utilization and prices also saw declines, with prices falling 9 points to 56.4, marking the largest drop since July 2022. The transportation prices subindex notably fell to 51.1 in the latter half of March, suggesting a potential downturn in the transportation market.

Inventory levels grew at a slower pace, with a 3.6-point decline from February. Downstream firms, such as retailers, reported higher inventory levels compared to upstream wholesalers, indicating a shift in inventory dynamics. Warehousing metrics also reflected these changes, with warehousing capacity increasing slightly while utilization and prices fell. Despite these challenges, respondents still expect transportation prices to rise over the next year, with a one-year-forward expectation of 64, albeit 13 points lower than in February. The March survey also showed a one-year-forward expectation for supply chain growth at 60.6, down from February’s expectation.

Source: IndexBox Market Intelligence Platform