LMI: Logistics industry continues swift recovery

Economic activity in the logistics industry continued to grow in August, recovering to a level of 66 from an all-time low reading of 51.3 in April at the height of the coronavirus pandemic, according to the latest Logistics Manager’s Index (LMI) report, released today. LMI researchers said the August upswing was driven by transportation metrics, as prices continued to rise and capacity slowed dramatically.

“We’re seeing this real hot logistics recovery,” LMI researcher Zac Rogers, assistant professor of supply chain management at Colorado State University, said this week, pointing to the strength of the consumer economy and the shift to e-commerce that is boosting demand for transportation, last-mile delivery, and warehousing services. “In some ways, we’re in a similar place to where we were before the pandemic in that we’re still largely consumer driven.”

The LMI measures business activity across the logistics industry via a monthly survey of logistics and supply chain professionals; a reading above 50 indicates expansion in the industry and a reading below 50 indicates contraction. Since its April low, the index has risen to 54.5 in May, 61.7 in June, and 63 in July before hitting the current high of 66.

Rogers and his colleagues said a shift in consumer buying habits due to the pandemic is a boon to the industry. While “digital-heavy retail methods” allow concerned shoppers to avoid-in person stores, they are also more logistics intensive, they explain. 

“Right now, for retailers, transportation is especially important, but logistics services overall have never been more important,” Rogers said, pointing to growing demand for trucks as well as a pickup in port activity and rising demand for intermodal services. Warehousing remained at a premium during the month as well.

The situation bodes well heading into the peak holiday season, although the unemployment picture could cause ripple effects: A recent wave of layoffs and questions surrounding a next wave of financial stimulus could slow the pace of recovery.

“The whole recovery right now is retail,” Rogers siad. “As retail goes, so goes everything else.”

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.