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The monthly Logistics Managers Survey, compiled by five U.S. universities, rose from 75.2 in February to 76.2 in March. The survey samples conditions related to managing stock inventories, warehousing, and transportation.
Ratings above 50 indicate business momentum; the higher the number, the stronger the activity.
The amount of inventory in warehouses dropped from February’s rating of 80.2 to 75.7, indicating less stock on hand.
However, the cost of keeping inventory shot to a record 91, the report said.
Available warehouse space suffered a “a rather precipitous drop” last month, the survey noted, driving prices for storage space to an all-time high rating of 90.5.
“Continued inventory congestion has driven inventory costs, warehousing prices, and overall aggregate logistics costs to all-time high levels,” the report said. “This is putting even more pressure on already-constrained capacity.”
Businesses stockpiled inventory during the COVID War and afterward as consumer demand roared back.
Now the same companies are building cushions of stock against worldwide shortages and future price increases while wondering if keeping large inventories on hand will be a new necessity or “an important element of safety in uncertain times,” the survey report said.
Inventory costs “are anticipated to remain very high throughout the next 12 months,” the survey found. Some businesses “expect to hold a lot of inventory in the next year, and to pay a significant amount to do so,” it said.
The transportation industry is “at a much stronger place in terms of supply and demand relative to the last freight recession we saw in 2019,” assistant business professor Zac Rogers at Colorado State University told Bloomberg.
“With capacity as short as it has been over the last 18 months, it would take a lot to get to the point where supply is really outstripping demand,” he added.
TREND FORECAST: The less storage space, the higher the cost for storage, the higher inflation will rise. The bottom line will be if consumers, whose wages are well below the inflation rate, will be able to buy enough goods and services to keep the economy from sinking.
Our forecast is Dragflation: Consumer spending will decrease, economic growth will decline and inflation will increase.