Logistics’ extended expansion run continued in October

Economic activity in the logistics industry continued its strong run of growth in October, driven by red-hot consumer demand and a transportation and warehousing crunch that continues to drive up costs, according to the latest Logistics Manager’s Index (LMI) report, released today.

The LMI registered 72.6, up slightly from September’s reading and marking its ninth straight month above the 70-point mark. The LMI gauges business activity across warehousing and transportation markets by surveying supply chain professionals each month; a monthly index above 50 indicates expansion in the industry, and a reading below 50 indicates contraction.

“Overall growth has now been over 70.0—a level we would classify as significant expansion—nine months in a row and 12 of the last 14 …” according to the LMI researchers. “This month’s number is driven by many factors, including continual growth in cost metrics, and further contraction in available capacity. We also observe that after four consecutive periods of decreasing rate[s] of growth, inventory levels are up again (+3.2) to 61.8. Analysis of upstream and downstream firms reveals that inventory levels are growing 10.3 points faster for upstream respondents—reflecting the difficulty retailers are having building up inventories to sufficiently meet consumer demand.”

Warehousing and transportation prices continued to grow in October, with the warehousing prices index reaching an all-time high of 89.3 and the transportation prices index reaching 92.7. Inventory costs remained high as well, with the index coming in at 85.9. Warehousing and transportation capacity remained low, with the warehousing capacity index falling slightly to 47.6 for the month and the transportation capacity index falling more than three points to 34.1.

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.