For the first time since the onset of the index, inventory levels fell below the threshold of 50, at 43.2, indicating a decline in inventory levels. All other indicators showed growth (above
the 50 threshold). Inventory costs and transportation prices exhibited increasing growth, while the other indicators exhibited growth at a decreasing rate.
The rate of growth in logistics activities slowed down slightly in the third quarter of 2022. A prime reason for this slowdown is the high cost of inventory and the associated cost of warehousing and
transportation prices. Inventory costs and transportation costs were both at an all-time high for the year, at 94.2 and 97.1 respectively. Over the first three quarters of 2022, warehousing capacity and
utilization as well as transportation capacity and utilization saw consistent decreases. The decline in inventory levels was also quite consistent but rather worrying as inventory levels correlate highly with logistics growth. The expectation was that inventory levels would pick up. However, that has
not happened, and the downward trend continued into the third quarter. We think that this may be due to the increasing high cost of doing business in Ghana.
Key findings from the third LMI report include:
- For the first time since the quarterly LMI survey began in early 2022, one of the eight logistics metrics studied (inventory levels) scored below the threshold value of 50%, which could signal a possible recession.
- Both warehouse capacity and utilization in the third quarter of 2022 hit all-time lows for the year.
- The two metrics that show stronger growth than in the previous quarter are both cost-related: inventory costs and transportation prices.
- The use of electronic payment systems grew much slower than had been predicted the previous quarter.
- Despite the third-quarter results, logistics managers expressed optimism for improved growth in the fourth quarter.
CARISCA will continue to capture, analyze and share LMI findings quarterly on its website, visit https://carisca.knust.edu.gh/LMI to read more