Logistics Leaders Predict Tight Capacity, High Prices Through Mid-2026

The Logistics Managers’ Index rose for the second consecutive month due to rising costs as the economy remains uncertain, according to researchers at Florida Atlantic University (FAU), Arizona State University, Colorado State University, Rutgers University and the University of Nevada at Reno.

“The persistent uncertainty with respect to tariffs seems to be causing upward pressure on inventory costs, likely because of stockpiling effects,” says Steven Carnovale, associate professor of supply chain management in the College of Business. “The previous pause on tariffs opened up an opportunity to stockpile, which is also likely reflected in the rise in warehousing utilization and costs, as well as the rise in upstream warehouse utilization.”

Key takeaways:

·        May’s index read in at 59.4, up slightly from April’s reading of 58.8. The reading is up 3.8 from the year prior. A score above 50 indicates that the logistics industry is expanding, while a score below 50 indicates that the industry is shrinking.

·        Costs, particularly inventory costs, led to this month’s expansion. Inventory costs rose to 78.4, the highest level since October 2022, while inventory levels were only 51.5. The gap between the two suggests that many inventories are sitting stagnant.

·        Warehousing readings also point to further uncertainty among firms on the direction of the U.S. economy and tariff policy. Warehousing capacity was flat at 50, while warehousing costs and warehousing utilization read at 72.1 and 62.5, respectively. The readings suggest that inventories are sitting longer amid slower consumer demand and firms have been holding goods in anticipation of future tariff changes.

·        Overall, respondents expect inventory levels to increase in the year ahead, with capacity growing tighter and costs expanding, highlighting the overall sentiment that trade issues and uncertainty will be wrapped up by the end of the year.        

“At a certain point, the see-saw effect of increased/decreased tariffs is likely going to lead to firms stockpiling when tariffs come down, and likely be forced to sit on excess inventory,” Carnovale says. “In this case, the decision will be: are the holding costs of excess inventory less than the (potential) future tariffs? And to what degree will these increased prices pass through to consumers?”