Amidst bustling economic activity, the logistics industry has emerged as a particularly noteworthy sector. The latest Logistics Managers' Index (LMI) report reveals that despite facing persistent cost increases and warehouse capacity challenges, the industry recorded its second consecutive month of expansion in May.
The index—developed by researchers from Arizona State University, Colorado State University, University of Nevada, Florida Atlantic University, and Rutgers University with support from the Council of Supply Chain Management Professionals—showed a May reading of 59.4 , marking a 0.6% increase from April's 55.8 and a significant 12.3% jump from last year's 47.3 .
Mounting Cost Pressures
The report highlights growing financial strains across the sector, particularly in inventory management where flow has noticeably slowed. "Inventory movement has slowed significantly compared to observations earlier this year," the report states. May saw inventory costs rise 2.8% to 78.4 —the highest level since October 2022.
The gap between inventory costs and inventory levels reached 26.8% , representing the third-largest disparity since the report's inception. This indicates that inventory that entered the system rapidly earlier in the year is now incurring substantial storage expenses.
Warehousing Challenges
Warehouse availability declined 5.4% to exactly 50.0 , signaling tightening capacity. Meanwhile, warehouse prices saw a marginal 0.2% decrease to 72.1 .
Transportation Metrics
Transportation capacity remained flat at 50.0 , while transportation utilization dipped slightly to 52.6 —the lowest level since November 2023. This downward trend warrants close monitoring in coming months.
Economic Context
The May LMI reading reflects ongoing market volatility, positioned between March's seven-month low of 57.1 and February's near three-year high of 62.1 . This comes as the U.S. economy and supply chain sector navigate uncertain conditions, with consumer confidence showing signs of erosion.
Recent economic data reveals U.S. GDP declined 0.2% in the first quarter, following a 2.4% growth rate in Q4 2024—marking the nation's first economic contraction in three years.
Consumer concerns about future economic conditions and potential tariff policies appear to be significant contributing factors. While consumer spending remains stable—with 150,000 new jobs projected for May—April's spending growth slowed markedly to 0.2% after stronger performance in previous months.
Looking Ahead
The logistics sector faces dual challenges of rising inventory costs and warehouse constraints that will likely shape economic trajectories in coming months. As policy adjustments and uncertainties persist, businesses both domestic and international may need to adopt more flexible operational approaches.
In this environment, supply chain resilience becomes paramount, requiring companies to make timely strategic adjustments to navigate evolving market conditions effectively.