After a slight increase in September, the October logistics index reached 57.5 points, the lowest since May 2020, according to Logistics Manger's Index (LMI).

Inventories continue to increase, and congesting supply chains, narrow warehouse space, and declining transportation indicators drag the logistics market. The LMI fell from 61.4 points in September to 57.5 points in October. This is the lowest point of the LMI since May 2020.

The LMI fell from 61.4 points in September to 57.5 points in October. (Image source: Supplychain)

However, 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.

The LMI has remained in the 60-70 range throughout the pandemic. However, the LMI score lost the 60 mark in August and rose slightly in September before recording a record low in October 2022.

This change is explained by slowing the transport market and the excess inventory that increases costs. According to reports, freight rates have fallen for seven consecutive months. Prices in October fell more than 2 points from September to 42.2. This is the lowest result recorded since April 2020.

Inventories continued to increase in October, but at a slower rate than in previous months. "This shows that companies are doing well to weather the inventory bubble that has persisted for most of 2022. However, this needs to be looked at in the long run, at least through early 2023." Zac Rogers expert of LMI, Colorado State University said.

In addition, according to the LMI, warehouse capacity continued to decline, but remained on par with September levels, reaching 44.7. Inventory costs and warehouse prices both increased in October at 80.9 and 75.5 respectively - reflecting expansion in the two sectors.

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 including inventory level, inventory cost, ability storage capacity, warehouse utilization efficiency, transportation capacity, transportation efficiency, and transportation costs. These indicators are aggregated and expressed through the general index LMI.