Logistics index shows accelerating growth in supply chain costs

In March, the Logistics Managers Index (LMI), a key measure of supply chain health, rose to 65.7, marking a 4.2-point increase from February’s reading of 61.5. This latest figure represents the fastest pace of expansion since May 2022.

The March surge was largely driven by continued momentum in the freight market, as demand for transportation and logistics services increased.

Dale Rogers, a professor at the W. P. Carey School of Business at Arizona State University, joined “Arizona Horizon” to discuss what the growth in the logistics and transportation sectors means for the overall economy.

According to Rogers, the Logistics Manager’s Index is a rate of change with a scale of zero to one hundred. If the rate is declining, the number is zero; if it stays the same, it receives a 50, and a hundred if it is increasing.

“…the idea is before something goes into GDP it first goes on a truck, on a train, on a plane.” Rogers said, “…if you can see what’s happening upstream, you can sort of tell the future, and so far it has pretty well.”

In light of recent events, Rogers emphasized growth while also being wary, as this could have a massive impact on the overall economy.

“I’ve been thinking that the impact of the tariffs would really start to hit most in June and July,” Rogers discussed, “…and now we’ve got this war, which is going to exacerbate that, and actually be a bigger factor than the tariffs.”

Upstream refers to the beginning of a supply chain, or process, while downstream refers to the end stages of the process.

“There are cases where you’ve got somebody really tough at the end, like say a Walmart or Amazon,” Rogers said, “…and they say, no, you’re not passing the cost on to us…so there’s a push and pull.”