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Home » Logistics industry growth slows for second straight month

Logistics industry growth slows for second straight month

Economic activity continued to expand in May, but slowed from its rapid pace of the past two years, driven by moderating transportation markets, researchers say.

may-22-lmi.png
June 7, 2022
Victoria Kickham
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The logistics economy grew in May, but cooled from its rapid pace of the past two years, due primarily to moderation in transportation markets, according to the latest Logistics Manager’s Index report (LMI), released today.

The LMI registered 67.1 in May, down 2.6 points from April’s reading of 69.3 and well below March’s all-time high reading of 76.2. The LMI gauges economic activity in the logistics market by surveying logistics managers across a range of industries each month. A reading above 50 indicates growth, and a reading below 50 indicates contraction.

The downward shift over the past two months may signal a return to more modest growth levels following two years of strong expansion across the industry. LMI researchers said transportation loosened during the month as more capacity came online and prices decreased, helping to relieve some pressure. The transportation capacity index rose nearly eight points in May, and the transportation prices index fell nearly nine points.

“Despite this slowdown, it should be noted that we are still observing a healthy rate of growth in transportation, but one that pales in comparison to the unsustainable growth rates observed in 2021,” the researchers wrote in a press release detailing the results Tuesday.

Warehousing and inventory metrics continued at a pace similar to the past 18 months. Inventory levels remain unseasonably high, “packing warehouses to the gills and driving costs up for both inventory and warehousing,” the researchers said. The index for inventory levels registered 69.3, slowing from 72.3 in April, but still well above the 50-point mark indicating expansion. The warehousing capacity index registered 45.9, still in contraction mode, but expanding from its 40.8 level in April. Inventory and warehousing costs both grew at faster rates in May compared to April, with both the inventory costs index and the warehousing prices index remaining in the high 80s.

“For the moment, supply chains are flush with inventory which is keeping inventory and warehousing metrics high, while transportation continues to rebalance,” according to the report.

Looking ahead, respondents predicted that inventory levels and costs will continue to grow over the next 12 months while transportation metrics will continue to moderate.

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 web page for information on participating in the monthly survey.
Supply Chain Strategy
KEYWORDS LMI - Logistics Managers' Index
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Victoria kickham headshot
Victoria Kickham started her career as a newspaper reporter in the Boston area before moving into B2B journalism. She has covered manufacturing, distribution and supply chain issues for a variety of publications in the industrial and electronics sectors, and now writes about everything from forklift batteries to omnichannel business trends for DC Velocity.

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