The economy could be headed for a downturn as the supply chain starts to contract amid tariff policies and rising uncertainty, according to researchers at Florida Atlantic University and four other schools.
The economy could be headed for a downturn as the supply chain starts to contract amid tariff policies and rising uncertainty, according to researchers at Florida Atlantic University and four other schools.
The March Logistics’ Managers Index (LMI) reads at 57.1, down from February’s 62.8 reading. March’s score is the lowest since August 2024 for the index. A score above 50 indicates that the logistics industry is expanding, while a score below 50 indicates that the industry is shrinking.
“The recent announcements of tariffs, though widely broadcasted, have had considerable effects on global supply chains by way of increased material costs, and administrative complexity,” said Steven Carnovale, Ph.D., associate professor of supply chain management in FAU’s College of Business. “The heightened costs of doing business, coupled with slowing demand and decreased utilization of warehousing on the consumer-facing portion of the supply chain, could move the needle toward recessionary territory.”
The LMI, a survey of director-level and above supply chain executives, measures the expansion or contraction of the logistics industry using eight unique components: inventory levels, inventory costs, warehousing capacity, warehousing utilization, warehousing prices, transportation capacity, transportation utilization and transportation prices. Along with FAU, researchers at Arizona State University, Colorado State University, Rutgers University and the University of Nevada at Reno calculated the LMI using a diffusion index.
March’s decline was due to contractions in inventory costs, warehousing prices and transportation prices. It is the third largest decline in the index’s history: a 6.6-point decline in April 2022 after Russia invaded Ukraine and a 7.6-point decline in April 2020 after the COVID lockdowns.
The supply chain ramped up in the beginning of the year to accommodate for incoming trade policies. After the announcement of tariffs, cross-border traffic from Mexico to the United States slowed as some firms looked for alternative ways to import. Retailers like Walmart and Target are adjusting product mixes and warehouse networks to mitigate tariff impacts.
“Global trade dynamics are experiencing a shock, and supply chains are reconfiguring rapidly. Over the next six to12 months, the key will be resilient and responsive supply chain management, focused on agility and risk management,” Carnovale said.
-FAU-
Latest News Desk
- FAU Social Work Professor Receives Lifetime Achievement AwardAllan Barsky, Ph.D., an FAU professor of social work, has received the Significant Lifetime Achievement in Social Work Education Award from the CSWE.
- FAU's CA-AI Makes AI Smarter by Cleaning Up Bad Data Before It LearnsFAU engineering researchers from the CA-AI have developed a method to automatically detect and remove label noise from data before training begins, resulting in smarter, faster and more reliable AI.
- Logistics Leaders See Tight Capacity, High Prices Through Mid-2026The Logistics Managers' Index rose for the second consecutive month due to rising costs as the economy remains uncertain, according to researchers at Florida Atlantic University and four other schools.
- Green Seaweed Replaces Seagrass, But Sea Slugs Pose New ThreatsFAU Harbor Branch researchers found that Caulerpa prolifera has taken over seagrass in the Indian River Lagoon, reducing biodiversity, and recently raising concerns over rising numbers of sap-sucking sea slugs.
- To Build Muscle and Gain Strength, Train Smarter - Not LongerThink you need marathon gym sessions to build muscle? Think again. Less is more, according to a study by FAU exercise scientists, which confirms ditching long gym sessions will still show real results.
- Rings of Time: Unearthing Climate Secrets from Ancient TreesResearchers used radiocarbon dating and tree-ring analysis on subfossil bald cypress trees in a Southeast Georgia swamp, uncovering dramatic growth pattern shifts over centuries.