Logistics sector grows for 14th consecutive month, LMI forecasts robust expansion ahead

Despite ongoing levels of uncertainty from the White House’s various tariff actions, positive momentum in the logistics sector continues to gain traction for the 14^th consecutive month in February according to the new edition of the February 2025 Logistics Manager’s Index (LMI), which was released this week.

The monthly LMI is a joint project among researchers from Arizona State University, Colorado State University, University of Nevada, Reno, Florida Atlantic University, and Rutgers University, and also receives support by Council of Supply Management Professionals (CSCMP). CSCMP. The LMI is written by Zac Rogers Ph.D., Steven Carnovale Ph.D., Shen Yeniyurt Ph.D., Ron Lembke Ph.D., and Dale Rogers Ph.D.

The report’s authors explained that the LMI score, or reading, is based on eight “unique components” within the logistics sector, including: inventory levels and costs, warehousing capacity, utilization and prices and transportation capacity, utilization, and prices.

The February LMI reading, at 62.8, edged out January’s 62.0 reading by 0.8%, with the report noting that both January and February represent “the fastest reading of expansion in the overall index since June 2022, at 61.7,” with both Upstream and Downstream firms seeing steady growth, with matching 64.2 readings. What’s more, while the LMI average over the last two months is 61.7, the previous 30 months

In a previous edition, the report’s authors explained that the sweet spot for the macroeconomy is when the LMI is in the high-50s range, observing that solid growth remains intact—with the caveat that it is not crazy growth, which can be viewed as disruptive.

Dr. Dale Rogers observed that there was a big difference this month between the beginning of the month and the end of the month—especially on inventories. 

“We saw inventories grow quicker during the beginning of February than at the end of February,” he said.

The report’s authors noted that the February LMI was paced by the continuing expansion of inventory levels, with a 6.3% increase to 64.8, marking the fastest rate of inventory expansion going back to June 2022—which it said was also the last time inventory levels posted a higher reading. What’s more, the report added that the increase in inventories is partially attributable to shifting trade policies, coupled with a 7.1% increase in Inventory Costs to 77.3, and a 4.0% gain in Warehousing prices to 77.0—representing the fastest rate of expansion for each in several years, “as supply chains strain to shoulder both the volume and velocity of inventory that poured across U.S. borders in January and early February as firms attempted to avoid costs associated with potential tariffs.”

On March 4, those tariffs went from “potential” to “actual,” with the White House formally rolling out matching 25% tariffs on Canada and Mexico, as well as an additional 10% tariff on U.S.-bound imports from China.

Looking at other readings, the LMI found that Warehousing Utilization remained steady, while falling 2.8% to 65.5, towards what it called more normal levels of growth, whereas Warehouse Prices climbed 4.0% to 77.0, for the fastest rate of expansion since June 2022.

On the transportation side, the LMI said that Transportation Capacity, which has not seen a decline since March 22, rose 2.5 to 55.1, with Capacity Expansion going up from 51.9 early in February to 58.2 over the back half of the month.

“Because of this constant rate of moderate expansion, the majority of firms have been able to locate capacity when needed, which has kept Transportation Prices from spiking. The loosening of capacity seems to have manifested in Transportation Price expansion slowing (-4.9) to 65.5,” said the LMI. “January’s reading of 70.4 was the highest in nearly three years. Expanding at 65.5 and having price expansion come in 10 points higher than capacity expansion suggests that the freight market is still moving in an overall positive direction.”

With an eye on the coming months, LMI respondents are calling for more growth, with the 12-month LMI forecasted at 66.2, in line with the January LMI’s 66.1 prediction, with Upstream and Downstream firms coming in at 66.2 and 66.1, respectively, which LMI described as robust rates of expansion. The report said that with Inventory Levels expected to continue to rise at a 69.1 pace, which will also result in anticipated cost increases, for the same period, with Inventory Costs, Warehousing Prices, and Transportation Prices, expected to come in at 80.2, 78.4, and 76.8, respectively.