January 2026 Logistics Manager’s Index: Supply Chain Momentum Builds with Rising Costs and Tight Capacity

Kelsea Ansfield
22 hours ago
3 min read

The latest Logistics Manager’s Index (LMI®), released by researchers from Arizona State University, Colorado State University, Florida Atlantic University, Rutgers University, the University of Nevada, Reno, and in partnership with the Council of Supply Chain Management Professionals (CSCMP), shows the U.S. logistics sector accelerating into 2026. The January LMI registered at 59.6, up +5.2 points from December's 54.2 (an 18-month low) and marking the fastest expansion since May 2025. While still below the all-time average of 61.3 for the 11th straight month, this rebound signals renewed activity driven by post-holiday restocking.

The index, a diffusion-based measure where readings above 50 indicate expansion, reflects responses from supply chain professionals across eight key components: Inventory Levels & Costs, Warehousing Capacity/Utilization/Prices, and Transportation Capacity/Utilization/Prices.

Key Highlights from January 2026

Overall LMI: 59.6 (+5.2 from December) – Expansion accelerating, though milder restocking than typical January patterns.
Inventory Levels: 53.9 (+18.8) – Rebounded from December's historic low of 35.1 (fastest contraction ever) into mild expansion. Suggests lean inventory strategies persisting despite replenishment.
Inventory Costs: 71.3 (+8.4) – Strong expansion (12 of 13 months above 70), reflecting high carrying costs amid tariffs and domestic shifts.
Warehousing Capacity: 50.0 (-11.2) – Neutral (no movement) after multi-year high; vacancy rates steady at 7.1%.
Warehousing Utilization: 54.4 (+11.6) – Back to expansion after temporary holiday contraction.
Warehousing Prices: 64.8 (-1.5) – Still robust expansion, with Upstream firms seeing faster increases.
Transportation Capacity: 47.1 (+10.2) – Continued contraction (milder than December's 36.9), driven by larger firms and Upstream respondents.
Transportation Utilization: 58.1 (-0.1) – Steady expansion.
Transportation Prices: 71.4 (+4.8) – Fastest growth since April 2022, fueled by tight capacity and winter weather impacts.

Growth is increasing at an increasing rate for Inventory Levels, Inventory Costs, Warehousing Utilization, and Transportation Prices. Warehousing Prices and Transportation Utilization show increasing at a decreasing rate, while Warehousing Capacity shows no movement, and Transportation Capacity remains in contraction.

Broader Economic and Market Context

The logistics uptick occurs amid mixed signals: The Fed held rates steady at 3.5-3.75%, with potential shifts under new leadership. Major layoffs at UPS (up to 30,000 jobs), Amazon (16,000 white-collar roles), and Nike (775 warehousing positions) highlight automation-driven restructuring rather than demand collapse. Consumer confidence dipped sharply (CCI to 84.5, lowest since 2014), citing living costs, tariffs, and labor concerns, yet spending persists in a "k-shaped" pattern—stronger among high earners, boosting thrift sectors like Goodwill.

Trade dynamics remain volatile: U.S. November trade deficit surged to $56.8 billion amid Q4 imports, while Canada eased tariffs on Chinese EVs, and the EU pursued deals with Mercosur and India to reduce U.S. reliance. Domestic manufacturing gains (factory orders up 2.7%) and reshoring efforts (e.g., GM targeting 2 million U.S. units annually) add Upstream pressure.

Severe January winter storms likely exacerbated capacity tightness, potentially shaving 0.5-2.0% off GDP. Diesel prices edged higher weekly but remain below year-ago levels.

Upstream vs. Downstream and Firm Size Insights

Activity balanced more evenly than in 2025:

Upstream (manufacturing/wholesale) and Downstream (retail) LMI readings nearly identical (59.7 vs. 58.3).
Larger firms (>1,000 employees) reported significantly higher Inventory Costs (77.5 vs. 65.0 for smaller) and tighter Warehousing Capacity.
Future predictions show Upstream expecting busier conditions (overall 66.6 vs. Downstream 59.1), with stronger Inventory Levels, Warehousing Prices, and Transportation Utilization.

12-Month Forward Outlook

Respondents forecast robust growth:

Overall LMI: 65.8 (+0.5 from prior prediction) – Above historical average.
Inventory Levels: 60.9
Inventory Costs: 74.2
Warehousing Prices: 74.5
Transportation Prices: 79.5
Cumulative cost metrics projected at 228.25 – Highest since 2022 peak inflation period.
Capacity remains constrained: Warehousing 51.9 (near neutral), Transportation 42.3 (contraction).

This points to sustained supply inflation, leaner inventories, and higher turnover—potentially a "heightened JIT" era driven by tariff avoidance and efficiency.

Strategic Implications for Supply Chain Leaders

The January LMI rebound, combined with ISM Manufacturing PMI's return to expansion (52.6 in January), suggests building momentum—but with caution. Tight transportation capacity and soaring prices (71.4+) demand proactive strategies:

Capacity planning — Secure contracts early; explore multimodal or regional alternatives amid weather and structural tightness.
Inventory management — Balance lean policies with risk; monitor Upstream/Downstream divergences for tariff impacts.
Cost mitigation — Leverage AI/automation (e.g., computer-vision for returns) and optimize warehousing amid rising utilization/prices.
Risk diversification — Prepare for persistent inflation (costs >70) and potential labor/automation shifts.

At Gain Consulting LLC, we help clients translate LMI insights into actionable plans—whether optimizing freight procurement, evaluating nearshoring, or building resilient networks. The data points to opportunity in efficiency and agility amid uncertainty.

The full January 2026 LMI report is available at the-lmi.com.

Contact Gain Consulting LLC today to discuss how these trends affect your operations. Follow us on X @gainconsulting_ for ongoing freight, manufacturing, and logistics updates.