July 2026 Logistics Manager’s Index: Expansion Continues Amid Tight Capacity and Rising Costs

The Logistics Manager’s Index (LMI®) registered 68.9 in July, a moderate slowdown from June’s 71.1 (the fastest expansion rate since March 2022). While expansion eased, the reading remains well above the all-time average of 61.7 and higher than any monthly figure recorded between 2023 and 2025. Logistics activity is still growing robustly, but the nature of that growth is shifting.

Key Drivers of the July Reading

Cost pressures continue to dominate:

• Inventory Costs rose to 77.0 (up 1.1 points), the highest level in a year and 22 points higher than Inventory Levels.

• Warehousing Prices climbed to 75.5 (up 1.8), the strongest expansion since early 2025.

• Transportation Prices eased to 86.9 (down 5.5) but remain elevated—still reflecting the impact of the Iran conflict and diesel prices that rose sharply in July.

Capacity remains severely constrained:

• Transportation Capacity contracted to 28.4 (down 2.4), tying April for the second-fastest contraction in the nearly 10-year history of the index.

• Warehousing Capacity tightened further to 46.3.

Inventory Levels slowed to 55.0 (down 5.5), largely because Downstream retailers shifted from strong expansion (66.0 in June) into contraction (46.3). Upstream firms held steady near 59.0, suggesting that goods pulled forward ahead of anticipated tariff increases are still sitting at the wholesale level.

Upstream vs. Downstream Dynamics

A clear divergence has emerged. Upstream respondents report significantly tighter warehousing conditions and faster cost expansion, while Downstream firms are easing inventory builds. This “tortoise and the hare” pattern mirrors last year’s dynamic, when inventory sat upstream through summer and fall before moving downstream ahead of the holiday season. Whether that pattern repeats in 2026 remains a key watchpoint.

Transportation utilization also cooled (down 9.7 points to 65.0) after June’s near-record reading, yet demand for available capacity continues to outstrip supply. Tender lead times have lengthened, and intermodal volumes are running strong as shippers seek lower-cost alternatives to over-the-road moves amid high diesel prices.

Looking Ahead

Respondents expect the overall LMI to remain elevated at 70.5 over the next 12 months. They anticipate continued inventory growth, persistent capacity tightness (especially in transportation), and sustained high costs across inventory, warehousing, and transportation. Aggregate projected cost growth remains significant, underscoring ongoing inflationary pressure in physical logistics.

Broader economic signals are mixed. Consumer sentiment improved modestly in one major survey but remains subdued overall, with ongoing concerns about groceries, fuel, and international conflict. Inflation risks, potential Fed rate action, new tariff measures, and housing-market weakness continue to create uncertainty for freight volumes.

What This Means for Shippers

July’s LMI paints a picture of a logistics environment still expanding but increasingly constrained and expensive. Key implications include:

• Higher carrying costs for inventory held longer Upstream.

• Limited warehousing and transportation capacity that favors shippers with strong carrier relationships and flexible networks.

• Continued pressure on transportation rates even as some metrics moderate.

• The need to plan carefully for peak season, given the current Upstream inventory position and tight capacity.

At Gain Consulting, we help shippers and logistics leaders navigate exactly these conditions. Our team supports clients with capacity strategy, network optimization, cost modeling, inventory positioning analysis, and multi-modal planning so they can protect service levels and margins in a high-cost, constrained market.

Facing rising logistics costs or capacity constraints? 

Contact Gain Consulting for a complimentary assessment and practical recommendations tailored to your network.

Gain Consulting partners to optimize supply chains, manage cost volatility, and build resilience in dynamic markets.