US logistics costs stayed up in August while warehouse capacity grew at its fastest pace of the year
US logistics costs have settled at a higher level, with the Logistics Managers' Index putting aggregate spend on inventories, warehousing and transportation at around 240 on a scale where 150 is breakeven. August broke the usual relationship: the reading held even as warehouse capacity grew at its fastest pace of the year, transport capacity contracted more slowly and inventory building decelerated. Manufacturing meanwhile expanded for an eighth straight month, with the ISM gauge at 54.6.
- 240 Logistics Managers' Index, Costs
- 150 Breakeven On That Scale
- 54.6 ISM Manufacturing, August
The reflex when warehouse capacity opens up is to go back to market and expect a better number. August says that will not work this cycle: the cost line held while capacity grew at its fastest pace of the year and inventory building slowed, because the pressure is coming from input prices rather than from the supply and demand of space and trucks. Inventory, warehousing and transport are budgeted separately in most organisations and the index aggregates them for a reason, so the supplier who can show total cost across all three is answering the question being asked. Eight straight months of manufacturing expansion means the volume is there to justify acting on it.