July 9, 2019

Logistics industry growth slows in June

Logistics Manager's Index reaches historic low of 56, driven by slowdowns in warehouse prices, transportation capacity, and transportation utilization, monthly study shows.

By DC Velocity Staff

The logistics sector continued its slowing growth trend in June, as the Logistics Manager's Index (LMI) declined slightly compared with May and reached a historic low for the fourth straight month, according to the latest monthly Logistics Managers Index Report.

The LMI registered 56 in June, down from a reading of 56.7 in May and down considerably compared to its reading of 72.6 a year ago, researchers said. The index has shown a downward trend since 2018, but has remained above the 50-point mark indicating growth in the sector. Researchers said the most recent decrease was driven primarily by decreasing rates of growth in warehouse prices, transportation capacity, and transportation utilization, along with slightly improved but still low growth rates in transportation prices.

Researchers pointed to dynamic changes in transportation metrics as evidence of a downward shift in the market. Transportation prices went from growing at the fastest rates possible a year ago, registering as high as 94, to showing anemic growth in recent months, hitting 51 in June. The lack of growth combined with a steep drop (-5.0) in transportation utilization in June, "corroborate(s) recent reports of slowing freight markets," the researchers said.

LMI's Warehouse Prices index fell sharply in June, declining nearly 6 percent to a reading of 65.1, while the Warehouse Capacity index rose 6.25 percent to 54.3, indicating considerable growth in available warehousing for the first time since September 2018, the researchers said. The Warehouse Utilization index rose 5.56 percent to 64.2. 

"The Warehousing metrics seem to suggest that capacity is becoming available for the first time, increasing utilization and slowing the growth in price," researchers said, adding that "the logistics industry is still growing, but at a slower rate than it had for most of 2018. It would appear that the market has shifted considerably over the last year." 

The LMI is released each month by researchers from Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals (CSCMP).

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