The logistics economy continued to grow in April, although at its slowest pace in 14 months, driven by a shift in transportation sector metrics, according to the latest Logistics Manger’s Index (LMI) report, released today.
The LMI registered 69.7 in April, down 6.5 points compared to March’s all-time high reading of 75.2 and falling below the 70-point mark for the first time since January 2021. An LMI reading above 50 indicates industry expansion, and a reading below 50 indicates contraction. Sustained readings above 70 indicate considerable growth in the industry.
LMI researchers said the shift continues a softening that began in late March as transportation capacity began to open up in some areas. That trend continued in April, as transportation capacity expanded for the first time in nearly two years, bumping up more than 11 points to a reading of 56.9. At the same time, growth in transportation pricing eased, falling nearly 16 points compared to March.
The monthly results may indicate a market shift toward more sustainable, moderate levels of growth, according to LMI researcher Zac Rogers, assistant professor of supply chain management at Colorado State University.
“In general, what we’re really seeing is a move toward moderation. We’re actually slowing down to a sustainable speed,” Rogers said, adding that the lengthy contraction in transportation capacity was unsustainable, and that a market shift was inevitable. “The last time [transportation capacity] grew was May of 2020. That’s almost two years of contraction in capacity. And now, we again have growth–not an outrageous rate of growth, but growth [nonetheless]. It seems like we’re making a shift. We knew things would flip, and they did in April.”
There was less change in the LMI’s inventory and warehousing metrics, where costs continued to grow and capacity remained tight. The inventory levels index was 72.3 in April, down from 75.5 in March, and the inventory costs index was 87.7, down from 91 in March. The warehousing capacity index was 40.8, compared to 36.1 in March.
“Inventory continues to accumulate, [and] continues to be very expensive,” Rogers said.
The 12-month outlook calls for more moderate growth ahead. The LMI’s future predictions index registered 67.8 in April, down from 70.2 in March.
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).