September, shipping boom month, looks like freight recession this year

September, a crucial month for shipping before the holiday season, typically sees a surge in the freight business and supply chain, with goods moving from warehouses to stores or consumers.

However, this year is different.

The latest Logistics Managers’ Index shows the lowest transportation utilization reading ever recorded for September.

Despite the usual growth from holiday shipments, Dale Rogers, a professor at Arizona State University and LMI author, notes a lack of such activity.

The LMI score, a combination of key metrics in the logistics supply chain, dropped to 57.4, its lowest since March.

Rogers highlights a decline in future freight logistics growth and rising inventory, leading to higher warehouse pricing.

He mentions a “slight negative freight inversion” that started in August and continued into September.

Transportation prices are still growing, but marginally.

The headwinds are most evident in upstream supply chain companies, where transportation prices have only slightly expanded.

Many manufacturing and wholesale firms have stagnant inventories due to earlier front-loading of goods.

Front-loaded products are now in warehouses, causing increased costs.

Transportation utilization readings indicate no movement, a stark contrast to previous years.

Although transportation prices remain steady for now, the economy’s atypical patterns pose risks.

Rogers mentions the need for sustained negative data before confirming a freight recession.

Trade war impacts and tariff-related shipping patterns have disrupted the economy.

Rogers emphasizes the need for continued negative data before declaring a freight recession.