July 2025 Logistics Managers’ Index Report: Key Insights for Supply Chain Strategies

Kelsea Ansfield
Aug 6
4 min read

The July 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), provides critical insights into the current state of the logistics industry. At Gain Consulting, we’re breaking down the key takeaways from this report to help your business navigate the evolving supply chain landscape.

LMI Overview: Moderate Expansion with Diverging Trends

The LMI registered at 59.2 in July 2025, a slight dip (-1.5) from June’s 60.7, yet still indicating moderate expansion in the logistics sector. This score, just below the all-time average of 61.5, reflects a dynamic environment shaped by tariff uncertainties and shifting inventory strategies. The LMI tracks eight key components: inventory levels, inventory costs, warehousing capacity, utilization, and prices, and transportation capacity, utilization, and prices. A reading above 50.0 signals expansion, while below 50.0 indicates contraction.

Key Metrics at a Glance

Growth Increasing at an Increasing Rate: Warehousing Capacity (+3.3 to 51.1), Warehousing Prices (steady at 68.3), Transportation Capacity (+0.2 to 52.6), Transportation Utilization (+6.6 to 59.5), and Transportation Prices (+1.0 to 63.0).
Growth Increasing at a Decreasing Rate: Inventory Levels (-4.2 to 55.6), Inventory Costs (-9.0 to 71.9), and Warehousing Utilization (-2.8 to 59.4).

Upstream vs. Downstream: A Tale of Two Strategies

The report highlights significant disparities between upstream (wholesalers, distributors, and logistics service providers) and downstream (retailers) firms, particularly in inventory management:

Upstream Firms: Reported robust inventory expansion (58.5) and tighter warehousing capacity (48.6), reflecting a strategy of stockpiling goods to buffer against tariff-related uncertainties. This is evident in the significant import surge at the Port of LA, which saw a 35.2% year-over-year increase in July, defying expectations of a 27.2% drop.
Downstream Firms: Focused on Just-in-Time (JIT) inventory practices, reporting contracting inventories (47.6) and looser warehousing capacity (52.4). This cautious approach aims to minimize costs amidst high inventory expenses and tariff volatility.

These differences underscore the pressure on middle-mile entities, with smaller firms (<999 employees) bearing a disproportionate burden, holding high inventory levels to mitigate tariff impacts, as noted by Eric Hoplin of the National Association of Wholesaler-Distributors.

Tariff Impacts and Economic Context

The reintroduction of tariffs, effective August 8, 2025, has significantly influenced logistics dynamics. With tariffs ranging from 15% (EU, Japan, South Korea) to 50% (Brazil), and an average U.S. tariff rate of 18.3%, businesses face increased costs and uncertainty. This has led to strategic inventory buildups, particularly upstream, to preempt tariff hikes. However, the fluid tariff environment, coupled with ongoing federal court reviews, creates challenges for long-term planning.

Economic indicators add complexity:

U.S. GDP grew by 3% in Q2 2025, driven by a positive trade balance, though inventory drawdowns subtracted 3.2%.
Job Growth slowed, with only 73,000 jobs added in July, and manufacturing lost 37,000 jobs over three months, signaling challenges in capacity expansion.
Consumer Sentiment rose to 61.7, but cautious spending patterns, as seen in Proctor & Gamble’s reports of consumers seeking value, suggest price sensitivity.

Warehousing and Transportation Trends

Warehousing: Capacity loosened slightly to 51.1, but remains tighter for upstream firms (48.6) compared to downstream (52.4). Utilization slowed to 59.4, with upstream firms reporting robust expansion (62.0) while downstream firms contracted (47.6). Prices held steady at a robust 68.3, reflecting sustained demand despite a rise in vacancy rates to 7.1%, the highest since 2014.
Transportation: Utilization surged to 59.5, driven by upstream firms (60.7), while downstream firms reported no change (50.0). Capacity remained stable at 52.6, and prices ticked up to 63.0, partly due to rising diesel costs ($3.805/gallon in late July). The freight market remains in a holding pattern, with no significant expansion expected unless capacity tightens further.

Future Outlook: Cautious Optimism

Looking ahead, respondents predict an LMI of 62.6 for July 2026, slightly above the historical average. However, expectations diverge:

Upstream Firms anticipate strong inventory growth (62.0), higher warehousing prices (78.5), and robust transportation utilization (67.3) and prices (78.3).
Downstream Firms expect continued JIT strategies, with inventory contraction (45.2) and tighter transportation capacity (47.6).

These projections suggest that upstream firms will face significant cost pressures, while downstream retailers aim for leaner operations to mitigate tariff-driven price increases.

What This Means for Your Business

At Gain Consulting, we understand that navigating these dynamics requires strategic agility. Here’s how you can respond:

Upstream Firms: Leverage high inventory levels as a competitive advantage by optimizing warehousing utilization and exploring cost-effective storage solutions. Consider long-term leases for custom-built facilities to secure capacity amidst tightening markets.
Downstream Firms: Strengthen JIT strategies with robust demand forecasting and flexible transportation partnerships to maintain low inventory costs while meeting consumer demand.
All Firms: Monitor tariff developments closely and diversify supply chains to mitigate risks. Invest in technology, such as warehouse management systems, to enhance efficiency and visibility.

Partner with Gain Consulting

The July 2025 LMI report underscores a logistics landscape shaped by tariff uncertainty, divergent inventory strategies, and steady expansion in warehousing and transportation. At Gain Consulting, we specialize in tailoring supply chain solutions to your unique needs, whether you’re managing high upstream inventories or optimizing downstream JIT operations.

Source: July 2025 Logistics Managers’ Index Report, www.the-lmi.com