August 2025 Logistics Managers’ Index: Navigating a Shifting Landscape

The August 2025 Logistics Managers’ Index (LMI) report, released by researchers from Arizona State University, Colorado State University, Florida Atlantic University, Rutgers University, and the University of Nevada, Reno, in collaboration with the Council of Supply Chain Management Professionals (CSCMP), paints a complex picture of the logistics industry. With an overall LMI score of 59.3—marginally up (+0.1) from July’s 59.2—the industry continues to expand at a moderate pace, just below the all-time average of 61.5.

However, counteracting forces in inventory, warehousing, and transportation metrics signal both opportunities and challenges for shippers, retailers, and logistics providers. At Gain Consulting, we’re here to help you interpret these shifts and optimize your supply chain strategy in a dynamic environment shaped by tariffs, changing consumer sentiment, and evolving freight dynamics.

Key Findings from the August 2025 LMI

The LMI, a diffusion index where readings above 50.0 indicate expansion, reflects a balance of upward and downward pressures across its eight components: Inventory Levels, Inventory Costs, Warehousing Capacity, Utilization, and Prices, and Transportation Capacity, Utilization, and Prices. Here’s a breakdown of the August results:

• Inventory and Warehousing Surge: Inventory Levels rose (+2.7) to 58.2, driving Inventory Costs (+7.3) to a high of 79.2, one of the steepest expansions since October 2022. Warehousing Prices climbed (+3.9) to 72.2, reflecting tight Warehousing Capacity (-0.6 to 50.5), which is barely in expansionary territory. Warehousing Utilization also increased (+2.6) to 62.1, signaling heavy demand for storage as inventories move downstream.

• Transportation Softens: Transportation Prices dropped significantly (-6.9) to 56.1, and Transportation Utilization fell (-4.8) to 54.7. Meanwhile, Transportation Capacity expanded (+4.7) to 57.3, outpacing prices and marking a mild negative freight inversion—the first since April 2024. This inversion, though slight (1.2-point difference), suggests a potential slowdown in the freight market, particularly as peak season begins.

• Upstream vs. Downstream Dynamics: The gap between Upstream (60.1) and Downstream (62.7) firms has closed, indicating inventories are now balanced across the supply chain. Smaller firms (0-999 employees) reported higher activity (LMI of 62.7) than larger firms (58.2), driven by tighter capacity and higher Inventory Costs (83.7 vs. 72.2).

  
  

Industry Context: Tariffs, Imports, and Economic Signals

The LMI’s mixed signals align with broader economic trends impacting logistics:

• Tariff Pressures: U.S. businesses absorbed most tariff costs through June 2025, with only 22% passed to consumers, per Goldman Sachs. However, potential increases (up to 67% by Q4) loom if trade policies remain stringent. The closure of the de minimis exception in August, which previously allowed tariff-free imports under $800, has disrupted small businesses, adding an estimated $71 billion in costs. This change, coupled with customs inspection requirements, could slow port operations.

• Import Slowdown: Despite a record-breaking July at the Port of Los Angeles, U.S. container volumes are projected to decline by 5.6% in 2025, with a 17.5% drop in the final five months, per the National Retail Federation. Chinese factory output slowed in July, despite a 7.2% export surge, signaling reduced import orders in Q3.

• Consumer and Economic Trends: U.S. consumer sentiment fell (-5.7%) to 58.2 in August, driven by tariff-related uncertainty and reduced demand for durable goods. The Personal Consumption Expenditure (PCE) index rose 2.6% year-over-year, with goods like furniture and footwear hit hardest. The Producer Price Index (PPI) jumped 0.9% in July, hinting at potential retail price increases in Q4.

  
  

Implications for the Logistics Industry

The August LMI highlights several critical trends for shippers and logistics providers:

• Rising Inventory Costs: With Inventory Costs at 79.2, businesses face pressure to optimize stock levels. Downstream retailers, now at 57.1 for Inventory Levels, are stocking up for back-to-school and holiday seasons, but high costs may force price hikes.

• Tight Warehousing Market: Near-neutral Warehousing Capacity (50.5) and rising Warehousing Prices (72.2) reflect demand for bonded warehouses and Foreign Trade Zones (FTZs) to delay tariff payments. This trend, combined with data center construction and a 101.4% year-over-year increase in flatbed load-to-truck ratios, strains industrial real estate.

• Freight Market Uncertainty: The negative freight inversion suggests softening demand, with Transportation Capacity outpacing Prices. Upstream firms reported near-stagnant Transportation Prices (51.5), while Downstream firms saw stronger expansion (66.1), reflecting holiday inventory movements. A sustained inversion could signal a freight recession, though respondent predictions for 2026 (LMI of 63.9) remain optimistic.

• Retail Strategies Diverge: Large retailers like Walmart are rationalizing product mixes to secure quantity discounts, while discount retailers like Five Below thrive with low-cost offerings. Smaller firms, however, face higher Inventory Costs and competitive disadvantages due to later import timing.

  
  

How Gain Consulting Can Help

At Gain Consulting, we empower clients to turn logistical challenges into opportunities. Here’s how we can support your business in navigating the August 2025 LMI landscape:

• Inventory Optimization: Our experts analyze your inventory data to balance stock levels, minimizing costs while meeting demand. We help implement strategies like Walmart’s, focusing on high-turnover goods to offset tariff impacts.

• Warehousing Solutions: We assess your warehousing needs, identifying cost-effective options like FTZs or bonded facilities to delay tariff payments and improve cash flow. Our analytics forecast capacity constraints, ensuring you secure space proactively.

• Transportation Cost Management: With freight markets softening, we negotiate favorable contracts and leverage AI-driven tools to optimize carrier selection and reduce Transportation Prices. We also monitor capacity trends to mitigate risks of a potential freight recession.

• Tariff and Compliance Support: Our team audits your supply chain to ensure compliance with new trade policies, including the de minimis closure. We provide strategies to minimize tariff exposure and streamline customs processes for small and medium-sized businesses.

• End-to-End Supply Chain Strategy: From upstream sourcing to downstream delivery, we design tailored solutions to enhance efficiency, reduce costs, and prepare for peak season volatility.

  
  

Looking Ahead: Strategic Resilience in Uncertain Times

The August 2025 LMI underscores a logistics industry at a crossroads, with rising inventory and warehousing costs offset by a softening freight market. As tariffs, import slowdowns, and consumer sentiment shape the landscape, businesses must act decisively to stay competitive. Respondent predictions for 2026 suggest continued expansion (LMI of 63.9), with robust Transportation Prices (71.9) and tight Warehousing Capacity (49.4), but vigilance is key to avoiding cost spikes.

At Gain Consulting, we’re committed to guiding you through these complexities with data-driven insights and customized strategies. Contact us today to fortify your supply chain, optimize costs, and seize opportunities in this evolving market.

Source: Logistics Managers’ Index Report, August 2025, Arizona State University, Colorado State University, Florida Atlantic University, Rutgers University, University of Nevada, Reno, and CSCMP.