ITS Logistics’ Q2 ITS Logistics US Distribution and Fulfillment Index, Powered by Cresa reveals some conflicting outlooks across the industry, underscoring current global supply chain uncertainty.
“While warehouse rents have begun to stabilize or decline in certain regions, such as Southern California, they remain significantly higher than pre-pandemic levels,” says Ryan Martin, president of distribution and fulfillment at ITS Logistics. “Companies have also been adjusting their inventory strategies, leading to changes in warehouse space utilization. These market dynamics have put significant pressure on tenets across the nation as demand has slowed due to focus on inventory optimization, but overall costs structures have remained the same if not increased in certain geographies and everyone is looking to bridge the cost gap in every way possible.”
Key takeaways:
· The Producer Price Index, which offers a regional markets overview for warehousing, storage, and related services, showed consistent increase throughout the quarter as well as 7.12% year-over-year growth. These increases are likely the result of current and potential tariffs, supply constraints, and increasing labor costs.
· The Logistics Managers Index (LMI), which surveys logistics professionals from a variety of industries, decreased to 57.1 this month. Warehousing services prices have sharply corrected to 61.0 from February’s 77.0, indicating eased pricing power. Inventory levels also stand at 61.2, with downstream growth at 66.7 now outpacing upstream at 58.9, largely due to retailers preparing for tariffs.
· Warehousing utilization also remained largely flat throughout Q1, following a spike in December 2024 and early January likely caused by shippers responding to early tariff announcements and Mexico’s announcement to end de minimis exemptions, resulting in a rush to relocate inventory domestically.
