US logistics growth slows in July as LMI falls to 59.2

It was just below the all-time average of 61.5 for the overall index and represents a moderate rate of expansion.

The movement back above 60 marks only the third time since July of 2022. The increase in the overall slowdown in expansion is driven by a decreased rate of expansion for inventory costs, which are down by 9 points to 71.9. While this is notably slower than June’s rate of expansion of 80.9, it still represents a significant rate of expansion.

The LMI score is a combination of eight unique components that make up the logistics industry: inventory levels and costs, warehousing capacity, utilisation and prices, and transportation capacity, utilisation and prices.

A reading above 50 indicates that logistics is expanding; a reading below 50 is reflects shrinking.

Cost growth has likely slowed due to the dip (minus 4.2) in the expansion of inventory levels, which came in at a more modest 55.2 in July.

This led directly to warehousing capacity moving (plus 3.3) back into expansion territory at 51.1.

An official release said all of these shifts were primarily driven by either upstream or smaller (less than 999 employees) respondents. Larger firms and downstream retailers actually reported contracting inventories, more capacity and lower price expansion as they attempt to maintain just-in-time (JIT) inventory management strategies to avoid higher costs.

Transportation utilisation was up by 6.6 points to 59.5, but transportation capacity (plus 0.2 points to 52.6) and transportation prices (plus 1 point to 63) remained fairly consistent with readings from June, as what had been a slow freight recovery remains in the holding pattern that we have observed through much of 2025.

Continuing the trend 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 larger respondents.

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. They are largely distributors, wholesalers, and logistics service providers.

As the middle-mile entities like wholesalers and distributors will be hit the hardest by US reciprocal tariffs, they are holding the high levels of inventory that were brought into the United States to avoid tariffs, but have not been moved down to retailers yet. The expense of these inventories is high, but the idea is that they will act as buffers to the current uncertainty, the release added.

Researchers at Arizona State University, Colorado State University, Florida Atlantic University, Rutgers University, and the University of Nevada, Reno, and in conjunction with the Council of Supply Chain Management Professionals (CSCMP) issued the LMI report.

ALCHEMPro News Desk (DS)