The July LMI shows the logistics sector is continuing to growThe Logistics Manager’s Index (LMI), which measures whether the logistics sector is growing or contracting, is sitting at 59.2 for July, indicating the industry continues to grow, but the pace at which this is happening is slowing.
The LMI for June was 60.7 - just the third time the index has reached above 60 since July 2022 - while the May LMI was 59.4.
The LMI is produced by researchers at Arizona State University, Colorado State University, Florida Atlantic University, Rutgers University, and the University of Nevada, Reno in conjunction with the Council of Supply Chain Management Professionals (CSCMP).
It is a combination of eight unique components which make up the logistics industry, including: inventory levels and costs, warehousing capacity, utilisation, and prices, and transportation capacity, utilisation, and prices.
The LMI is calculated using a diffusion index, where a reading above 50.0 indicates logistics is expanding while a reading below 50.0 indicates the logistics industry is shrinking.
The authors of the LMI say the overall slowdown in expansion, as suggested by July’s index, is drive by a decreased rate of expansion for inventory costs, which are down (-9.0) to 71.9.
It states cost growth has likely slowed due to the dip (down 4.2) in the expansion of inventory levels which came in at a more modest 55.2 in July.
“Continuing the trend we have observed over the last three months, logistics expansion is being disproportionately driven by smaller firms, who reported an overall index of 62.1, which is statistically significantly higher than the 56.2 that was reported by our larger respondents,” the LMI report states.
“This continued disparity is largely driven by higher inventories and tighter capacity for smaller firms. Many of these smaller firms represent the ‘middle-mile’ of supply chains, sitting between ports and manufacturers upstream and retail customers downstream.”
It states that uncertainty is “still high as the tariff situation continues to be fluid one”.
When asked to predict conditions over the next 12 months, respondents who helped to compile the LMI, believed the rate of expansion would be 62.6, which is down 1.9 points from June’s future prediction of 64.5.