Transportation capacity tightens further in May

Logistics Managers’ Index shows growth rates slow but capacity continues to dwindle

 

Transportation capacity diminished further in May, according to a supply chain survey. The capacity subindex of the Logistics Managers’ Index fell 50 basis points from April to 32.7%, “indicating continued downward pressure,” the Tuesday report read.

The LMI is a diffusion index wherein a reading above 50% indicates expansion and a reading below 50% indicates contraction.

The overall index, which is designed to capture the rate of change in areas like transportation, inventory and warehousing, declined 3.2 percentage points to 71.3%. The latest reading remains firmly in expansion territory and only 4.4 percentage points off the all-time high.

“The strains of this continued rate of growth is being felt most acutely on price metrics, which continue to grow at a meteoric pace,” the report said. The transportation prices subindex declined 1.4 percentage points to 91.2%, but still at an elevated level indicative of “a furious rate of change.”

Heightened consumer demand and a lack of capacity remain the catalysts for higher transportation rates. A strong consumer wallet and the need for continual inventory replenishment has kept freight flowing while headwinds finding equipment and the drivers to move it constrains capacity.

 

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