Logistics industry growth slows in May

Business activity in the logistics sector continued to grow in May, although at a slower rate compared with April and with the year-ago period, according to the latest Logistics Manager's Index (LMI) Report, released this week.

The May LMI registered 56.7, down from April's reading of 57.9 and down considerably compared to last May's reading of 72.6. The current reading is the lowest score in the index's more than two-year history, but still above the 50-point mark indicating expansion in the sector, according to LMI researchers.

Researchers said transportation capacity expanded during the month and that transportation prices contracted for the first time in the history of the LMI, a combination that may signal softening demand. As LMI researcher Zac Rogers, of Colorado State University, explained, the Transportation Price index has been the LMI's highest-scoring metric, reaching 94 out of 100 last May, indicating that more people were seeing increases in transportation prices. This month, the prices index dropped to 48, indicating a decrease in transportation prices.

"This is an abnormal level of change for a 12-month period," Rogers explained. "It coincides with [an] increase in Transportation Capacity (more capacity = lower prices). This may be partially due to fleet expansion and there being more trucks on the road, but it's also probably a result of softening demand."

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).