March LMI highlights cooling logistics growth as tariffs and economic concerns weigh heavy

A number of declining data points addressing logistics sector growth patterns, driven by ongoing tariff-driven uncertainty, was apparent in the March 2025 edition of the 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 March LMI reading, at 57.1, is down from February’s 62.8, with the report calling it an “abrupt cooling during the last two weeks of February and into all of March.” That represents a significant downshift compared to January’s 62.0 and February’s 62.8 readings, as those two months collectively represent “the fastest reading of expansion in the overall index since June 2022, at 61.7, while March’s LMI reading marks the lowest one since August 2024.

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.

“What we believe is that the logistics economy was on a positive track going into the election in November,” the report stated. “When businesses realized that Trump would be the new president, there was a belief that regulation would decrease, and that the economy would likely improve. But there was nervousness about potential tariffs and that nervousness has turned into confusion and for several firms—paralysis. Over the next few months, we will probably be able to better see the impacts of the new administration’s policies around supply chain management. Right now, it is confusing and many firms are postponing investments.”

The report attributed March’s LMI decline to what it called a sharp decline for each of its price/cost metrics, with Inventory Costs down 7.6%, to 70.6, Warehousing Prices off 16.0%, to 61.0, and Transportation Prices down 9.0%, to 56.4—each of these metrics were at least 70.0 in January for the first time since 2022, the report stated. And it explained that the declines for each three metrics suggest that supply chains “revved up in February and early March to bring goods in, but have slowed in more recent weeks as more trade controls have been implemented.”

Addressing the 9.0% decline, to 56.4, for Transportation Prices—the lowest reading since April 2024, when LMI said they were in “active contraction following the Federal Reserve’s decision to hold off on lowering interest rates, as well as the largest percentage decline since July 2022, when they moved from expansion to contraction and kicked off an 18-month freight recession, LMI said that was influenced by data culled in the report in late March, when Transportation capacity went from “robust expansion,” with a 60.5 reading in the first half of the month, to “anemic expansion bordering on no movement,” at 51.1.

On the warehousing side, LMI said that Warehousing Capacity loosened up slightly overall, up 1.8%, to 52.3, with downstream capacity tighter, at a 47.9 rate, and contracting lower than it is upstream, at 53.9.

“In general, demand for warehousing space is up. Asian logistics service providers (LSPs) have emerged as a significant source of demand in the U.S. warehousing market,” it said. “Warehouse leasing by Asian LSPs doubled year-over-year in some U.S. markets, as firms too advantage of lower price growth in 2024. Prologis reports that Asian LSPs accounted for 20% of all U.S. warehouse leases through the first three quarters of last year. This surge is attributable to several factors including relatively low costs in 2024, the fear of tariffs in 2025 (which would – and seemingly have – led some firms to stock up quickly), and the facilitating of drop-shipped, De Minimis imports from Asian e-commerce firms such as Shein and Temu.”

Regarding tariffs, LMI said it is a major source of worry, as it relates to the uncertainty surrounding them, noting that the White House’s recently-introduced plans to implements 25% tariffs, effective April 3, on imported cars, could add roughly $6,000 in costs to vehicles assembled in China and Mexico.

Looking ahead at what could be in store in the coming months, LMI stated the following, “Respondents were asked to predict movement in the overall LMI and individual metrics 12 months from now. Respondents continued to predict expansion in March, though at a slower (-5.6) rate than February’s reading of 66.2 or January’s prediction of 66.1. Respondents anticipate that Inventory Levels will grow at a very moderate rate of 55.7 – down significantly (-13.4) from February’s future prediction of 69.1 and also down (-5.5) from the current expansion rate of 61.2. As a result of this slowdown, we also see more moderate predictions across all of our cost metrics, with Inventory Costs (70.6), Warehousing Prices (66.7), and Transportation Prices (64.0) coming in at a combined 34.1-points lower than last month’s predictions. At the same time, Warehousing Capacity is expected to contract at a rate of 45.5. Taken all together, this suggests that the inventory buildup that has characterized the first quarter of 2025 will slow down within the next year, leading to lower costs and tighter storage availability. Generally, we would expect higher prices to go along with capacity that is this tight, potentially suggesting more static levels of inventory than what we have seen in the last year.”