Economic activity in the logistics industry has seen an upsurge recently due to a strong consumer demand that continues to put pressure on warehousing and transportation networks.
In June, the Logistics Managers’ Index (LMI) reached the second-highest level in the history of the last five-year index and was registered at 75, showing a growth of 4%.
According to the LMI researchers, the quarterly three-month moving average also reached a record level this spring, indicating second-quarter growth as the fastest in the history of the index.
The LMI measures monthly business activity in the logistics industry; a reading above 50 indicates growth and a reading below 50 indicates contraction.
As per the researchers, a swift movement of inventory through supply chains is being witnessed with tight capacity and high costs throughout the channel.
While the inventory levels and costs continue to exempt growth in June and rose 9 points and more than 5 points, respectively. The warehousing and transportation capacity continued to contract, registering 40.7 and 34.5 respectively.
“The combined lack of capacity makes it difficult to meet consumer expectations. The mismatch between supply and demand has driven logistics costs up, despite the fact that inventory is flowing quickly,” according to the report.
Further, it added, “Essentially, the changes to logistics demand over the last year mean that it has become significantly more expensive for supply chains to hold and move each unit of inventory, even in cases where they have less inventory than they did before. This will continue until supply chain networks, which are still configured for pre-pandemic business cycles, can be adjusted to better reflect our post-pandemic reality.”
Moving forward, respondents are foreseeing a 12-month future growth rate of nearly 70, indicating strong growth and continued tight industry conditions as 2021 unfolds.
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.