September 6, 2019

Logistics sector growth slows in August

Business activity remains strong, though researchers point to slowing freight markets as transportation prices continue to fall.

By DC Velocity Staff

Business activity in the logistics sector grew in August, although at a slower pace compared with July, according to the latest Logistics Manager's Index (LMI) Report, released this week.

Researchers said the LMI registered 56.6 during the month, down slightly from July's reading of 57.2, but still above the 50-point mark indicating growth in the sector. 

The group's transportation metrics continued to signal a shift in the market, researchers said. Transportation prices declined for the third time in four months and remained well below year-ago levels, registering 48.9 compared with a reading of 92.7 a year ago. Combined with an increase in transportation capacity—which was up more than 26 points compared to year-ago levels—the findings point to a continued slowdown in freight markets, the researchers said.

The August LMI also showed an increase in warehouse prices which, although up sequentially, are still down sharply form year-ago levels. Warehouse capacity remained steady during the month. Inventory levels were down nearly 8% compared to July—to a reading of 59.6, indicating that although companies are still adding inventory, they are doing so at a slower pace than in July and historically, the 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. The report 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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