Logistics industry growth continues in July

The logistics industry continues to recover from the hit it took this spring at the height of the coronavirus pandemic, according to the July Logistics Manager’s Index (LMI) report, released today.

The July LMI reached a reading of 63, up considerably from its all-time low of 51.3 in April. The index jumped to a reading of 54.5 in May and 61.7 in June, pushing it further into levels the industry hasn’t seen since late 2018/early 2019. LMI researcher Zac Rogers pointed to the strong results Tuesday, but said they don’t necessarily signal a return to the sustained, robust growth the industry had enjoyed through early 2019.

An LMI above 50 indicates growth in the industry; an LMI below 50 indicates contraction. 

“We haven’t been above average in a pretty long time, so that part is nice,” said Rogers, assistant professor of supply chain management at Colorado State University. “This does not necessarily mean that the logistics industry is as robust as it was in early 2019, merely that it is growing at a similar rate … Still, this is encouraging news for logistics professionals after the massive drop-off experienced this spring.”

Rogers said transportation and warehousing continue to paint a picture of what’s happening in the industry. Transportation metrics continue to recover, as capacity tightened during the month and prices continued to rise. Transportation capacity fell nearly 7 points to a reading of 42.8 and prices rose more than 8 points to a reading of 72.6. At the same time, he said warehousing remains tight as companies continue to build out their e-commerce fulfillment plans. 

“We’re still low on warehousing space,” Rogers said, noting that the index grew from a state of contraction the month before to reach a neutral level of 50. “That, combined with the high inventory levels we already had, [means] we couldn’t have more constraints in terms of available warehouse space.”

Looking ahead, LMI respondents said they expect continued tightness in both transportation and warehousing. That could signal rapid growth across the industry, Rogers said—barring any further economic shutdowns due to the pandemic. 

“[The] sort of ‘comeback’ in transportation is really interesting and it really highlights a more robust level of consumer confidence and spending on the retail side,” Rogers said, adding that although trucking activity is up in the transportation sector, rail and sea activity has been down. “It’s interesting that those other modes of transportation [are down] while trucking is elevated. It might suggest that it’s really the consumer that is driving the economy right now.”

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 monthly 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).

Visit the LMI website to participate in the monthly survey.