Forward Thinking
By Victoria Kickham | February 4, 2020
Logistics industry continues path of slow, sustained growth, according to latest Logistics Manager’s Index report.
The logistics industry continued its slow, steady pace of growth in the first month of 2020, according to the latest Logistics Manager’s Index (LMI) report, released today.
The LMI registered 54.1 in January, up marginally compared with December’s reading of 54, but still above the 50-point mark indicating growth in the sector. The index has remained near 54 since September, indicating a holding pattern of sorts, according to LMI researcher Zac Rogers, assistant professor of supply chain management at Colorado State University.
“It seems like we’ve hit a plateau,” Rogers said, pointing to steep drops in the index from November 2018 to April 2019 before it leveled off at around 56 for much of the spring and summer. “Now, we’ve been hovering around 54 for the fall and winter. That tells us there’s stability. Basically, [we’re seeing] really slow, sustained growth.”
January’s reading is down more than 9 points compared to a year ago, and Rogers said the slower growth pattern appears here to stay. Inventory levels rose in January, in line with seasonal expectations as companies restock following the holiday rush, but remained well below year-ago levels. January’s inventory index was 54.2 compared with a reading of 66.3 a year ago. Ongoing uncertainty over global trade and the impact of the coronavirus on the supply chain may have an effect on inventory levels moving forward, Rogers added.
Transportation metrics continue to be the most dynamic measures of the LMI, Rogers added. Both transportation prices and transportation capacity remained in growth mode while transportation utilization slowed during the month, indicating an overall slowing of the sector.
“It seems to be difficult to get a lot of traction right now. Transportation seems like it’s pretty slow,” Rogers said, adding that the industry outlook on transportation capacity is negative. “Looking forward at the next 12 months, the predicted transportation capacity index is 46.7, down very minimally (-0.4) from December’s future prediction of 47.1. This indicates that respondents are not expecting much slack [in] transportation capacity going forward.”
Logistics managers are more positive about the overall industry outlook; January’s overall future prediction index registered 62.8.
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 LMI is calculated using a diffusion index, in which any reading above 50 percent indicates that logistics is expanding; a reading below 50 percent indicates a shrinking logistics industry. 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 websiteto participate in the monthly survey.
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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