Transportation Prices Decline at Fastest Rate Ever Recorded in May

FreightWaves, a provider of global supply chain market intelligence, reported on Tuesday (6-6-23) that according to data complied in the Logistics Managers’ Index (LMI), supply chain activity slid to an all-time low for the third consecutive month in May.

The LMI is a collaboration among Arizona State University, Colorado State University, Florida Atlantic, Rutgers University, and the University of Nevada, Reno, conducted in conjunction with the Council of Supply Chain Management Professionals.

The report aggregates responses from supply chain executives and showed the index standing at 47.3, the first reading in contraction territory for the 6.5-year-old data set. The mark was 3.6 percentage points below the April level and notably below the neutral level of 50. Further weakening in freight markets helped to drive the decline.

The subindex for transportation capacity stood at 69.3, the fourteenth straight month of expansion. Transportation utilization registered a reading of 45.5 during the month of May, 9.5 points lower than in April and almost 19 points lower year-over-year. In turn, the combination drove transportation prices to a level of 27.9, 8.9 points worse sequentially and the fastest rate of contraction ever recorded. The index pricing measure was more than 37 points worse year-over-year and 63 points lower than two years ago.

In addition, LMI respondents reported weaker trends in the last two weeks of May, returning a reading of 24.1—nearly 9 points worse than the level recorded in the first half of May. According to the report, “No LMI metric is more reactive to movement in the macro economy than Transportation Prices, and the slowdown we’ve seen over the last two years is certainly reflective of the ongoing freight recession that was always going to be difficult to avoid after the runaway growth of 2020–21.”