Around this time last year, businesses found themselves with too much inventory on the shelves as consumers pulled back on spending. Since then, businesses have been trying to reduce that excess inventory.
But in December, inventories finally reached pre-pandemic levels, according to the Logistics Managers Index. And in January, inventories actually expanded. This is a sign that supply chains have become much healthier.
A big problem with supply chains during the pandemic was that things were stagnant. Ports were reserved. Inventory was not moving. But recently this has changed.
“While inventory and commodity flow is not completely back to normal, it is much better than it was a year or two ago,” said Dale Rogers, a professor at Arizona State University who helps create the Index. of Logistics Managers.
He also said that transportation costs have been falling more slowly, indicating that demand for transportation is increasing.
“If you’re looking for hopeful signs in the economy, I think we’re seeing them,” Rogers said.
That’s because busier supply chains are a sign that businesses are struggling to meet strong consumer demand, said Weston LaBar, Chief Strategy Officer for freight broker Cargomatic.
“Consumer spending continues to remain fairly solid,” LaBar said. “They can buy different things. They can buy it in different ways. But they’re still buying.”
This robustness in spending is a sign that the economy is looking less like it was during the pandemic and more like 2019.
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