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Home » Logistics economy expanded in June

Logistics economy expanded in June

But growth slowed for the third straight month, marking a steep decline from record-level expansion in March, LMI researchers said.

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July 7, 2022
Victoria Kickham
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Economic activity in the logistics industry continues to slow from its record-setting pace of the past year and a half, decelerating for the third-straight month in June, according to the latest Logistics Manager’s Index (LMI) report, released Wednesday.

The LMI registered 65, down more than two points from May and slightly below the all-time index average of 65.3, but still well above the 50-point mark indicating growth across the market. An LMI reading above 50 indicates expansion; a reading below 50 indicates contraction.

Inventory levels remained high during the month and warehousing capacity continued to contract, reflecting ongoing tight conditions in warehousing.

“As has been the case for most of this year, inventory levels are still higher than we would want them to be,” said LMI researcher Zac Rogers, assistant professor of supply chain management at Colorado State University.

Inventory levels registered 71.8 in June, marking the fifth time in the past six months that metric has been above 70, a reading that indicates high growth. Prior to 2022, the inventory levels index had only reached 70 twice. Coming ahead of peak holiday shipping season, the elevated inventory levels signal “a real pain point” across the supply chain, according to Rogers.

“It’s pretty unusual to have this rate of growth for inventory—especially when this should be the lull [before back-to-school and holiday shopping gets underway],” Rogers said. “I’m not sure how we handle a lot of stuff coming in at the ports in late summer and early fall … We’re not that well positioned in terms of warehousing capacity to deal with a big wave for the holiday season.”

On the flip side, the LMI indicates a continued loosening across transportation markets. The transportation prices index continued its steep decline from elevated levels throughout 2020 and 2021, registering 61.3–below the all-time average of 74 and slightly below the transportation capacity index’s reading of 61.7. Transportation capacity had been contracting from June 2020 through March 2022, but began to expand in April.

Looking ahead, logistics managers surveyed for the June LMI report said they expect moderate industry expansion over the next 12 months, with a softening of inventory expectations as companies attempt to balance supply, and continued expansion in transportation capacity.

“[Future inventory conditions] are predicting growth to be at 59.5, which would be a very mild rate of growth,” Rogers said. “That’s probably reflective of a decrease in ordering. I think [companies] will do whatever they can to run down inventories, while also not running out.”

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.

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Logistics Strategy
KEYWORDS LMI - Logistics Managers' Index
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Victoria Kickham, an editor at large for Supply Chain Quarterly, 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 Supply Chain Quarterly's sister publication, DC Velocity.

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