August 6, 2019

Logistics industry growth accelerates in July

Monthly Logistics Manager's Index rises 2 percent to 57.2; researchers cite continued decline in transportation prices.

By DC Velocity Staff

Business activity in the logistics sector continued to grow in July, according to the latest monthly Logistics Manager's Index (LMI) report, released today.

The LMI registered 57.2 in July, up 2 percent compared with June and marking the first increase following seven straight months of declining growth. Although the index remains above the 50-point mark indicating growth in the sector, July's reading is below the index's historical average of 64.1 and well below its year-ago reading of 70.8, researchers said.

The LMI tracks logistics industry growth overall and across eight areas: inventory levels and costs; warehousing capacity, utilization, and prices; and transportation capacity, utilization, and prices. In July, growth accelerated for inventory levels, inventory costs, warehousing utilization, warehousing prices, and transportation utilization compared with June. Growth decelerated during the month in warehousing capacity and transportation capacity. 

The LMI's transportation prices index contracted during the month, slipping below 50 to a reading of 49.2. The reading is in sharp contrast to last July's reading of 92.7 and continues a downward trend that researchers say signals a shift in the market.

" ... to go from growing at close to the fastest rate possible to contracting in the span of 12 months suggests a significant shift in the market," researchers said in a statement announcing the July findings. "This lack of growth, with the continued, although slowed, growth of Transportation Capacity [at 62.7, up from 38.4 in July 2018], corroborate[s] recent reports of slowing freight markets, which some have termed a 'freight recession.'"

LMI researchers said they expect modest growth in the transportation prices index over the next 12 months.

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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