What is the LMI?
The LMI (Logistics Managers Index) is a tracking metric of logistics activity in the United States. It is a bi-monthly measure of activity, as measured by a survey of supply chain professionals from across the country.
The LMI score is a combination of eight components that make up the logistics industry including inventory levels and costs, warehouse capacity, utilization and prices, transportation capacity, utilization and prices.
What’s going on with inventory levels?
Costs of storing inventory have drastically increased in 2021. Rising demand and lack of available space has been the main driver in that. That means any available space within existing buildings comes at a premium.
With a continual rise in the cost of real estate, it is more costly for providers to acquire additional space if it is available. Unfortunately this trend will continue for the foreseeable future as there is just not enough space to accommodate the influx of freight.
What about inventory costs?
The pandemic shifted American’s spending habits causing a rise in e-commerce transactions. Because of this, the amount of money spent on online goods reached it’s highest point than ever before.
In addition to increased e-commerce traffic, the reduction in travel purchases lead to an increase in inventory costs. As a result, there was an increase in freight volume leading to heightened storage needs.
What happens next?
The logistics industry as a whole is dealing with never before seen conditions. While providers struggle to maintain service levels, the volume of inbound freight continues with the holiday shopping season upon us.
Many predict that things won’t get better until at least mid-2022 or early 2023. If you are importing product, be prepared to face continued rising costs to bring it here, to store it, and to get it in the hands of your customers.