September's Logistic Managers' Index Down Again
The September Logistics Manager’s Index came in at 57.4, down (-1.9) from August’s reading of 59.3. This is the lowest reading for the overall index since March.
Researchers at Arizona State University, Colorado State University, Florida Atlantic University, Rutgers University, and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals (CSCMP), issued the report on October 7.
The authors summarized the results as follows: (excepted below)
The LMI score is a combination of eight unique components that make up the logistics industry, including: Inventory Levels and Costs, Warehousing Capacity, Utilization, and Prices, and Transportation Capacity, Utilization, and Prices. The latest results of the LMI summarize the responses of supply chain professionals collected in September 2025.
The LMI read in at 57.4, down (-1.9) from August’s reading of 59.3. This is the seventh consecutive reading to come in below the all-time overall average of 61.5. The rate of expansion was more pronounced later in September, reading in at 60.5 during the second half of September – which was up significantly from the reading of 55.9 early in the month.
The drop can be largely attributed to slowdowns in the expansion of supply chain costs. Taken together, the three cost/price metrics were down 11.9 points in September, reading in at 195.66. This is the slowest rate of cost expansion since March and the second lowest in 2025.
This slowdown is reflective of uncertainty in the overall economy. The University of Michigan’s consumer sentiment index came in at 55.1, down 5.3% from August’s reading and 21.4% down from the same period one year ago. The drop was more severe for forward-looking expectations, with the reading of 51.7 down 7.5% from August and down 30.5% from a year ago.
This slowdown is reflective of uncertainty in the overall economy. The University of Michigan’s consumer sentiment index came in at 55.1, down 5.3% from August’s reading and 21.4% down from the same period one year ago. The drop was more severe for forward-looking expectations, with the reading of 51.7 down 7.5% from August and down 30.5% from a year ago.
Price increases are a major factor here, with 44% of respondents spontaneously reporting that higher prices have impacted their personal finances. Many of these costs are related to uncertainty regarding tariffs, which continued to roll in this month.
Chief among these were new plans to implement duties of 50% on soft lumber, home goods, and furniture.
There has been some fallout already in related stocks, and these could lead to increased construction costs down the road. The largest exports of soft lumber goods into the U.S. is Canada. The industry-specific tariffs are protected under different laws than country-specific regulations.
The other major economic story at the time of this writing is the U.S. government shutdown. The ongoing government shutdown in the U.S. will leave 750,000 workers furloughed, which the CBO estimates will cost in the neighborhood of $400 million per day. It also presented the release of official jobs data for September.
The BLS numbers may be on hold due to the government shutdown, but payroll firm ADP did release September job numbers. They estimate that the U.S. lost 32,000 jobs in September, a sharp drop from the 3,000 positions that were added in August. The contraction was propelled by smaller firms, with companies with less than 50 employees accounting for 40,000 lost positions.
Conversely, firms with 500 employees or more added 33,000 positions. Throughout the year we have seen that smaller firms have shouldered most of the increased cost due to tariffs. The fact that they are shedding jobs so quickly may be a byproduct of this bifurcated imbalance. Taken altogether, we see that in September, the Congressional Budget Office (CBO) released predictions for the next three years. They have revised their previous predictions for employment, inflation, and overall GDP growth downward due to shifts in policy.
Overall Inventory Level expansion slowed (-3.1) to 55.2 in September. Despite this, costs remain high (-3.7) at 75.5. As has been the case through much of 2025, these costs are driven more by Downstream firms (79.2) than their Upstream counterparts (73.3). The gap in costs comes despite almost no difference in Inventory Levels (55.7 Downstream and 54.2 Upstream) as firms across the supply chain have been hesitant to add significant levels of inventory after the big pull forward of the first seven months of the year. This caution has in turn has led to a softer-than-normal freight market[8]. We also see that seasonal retail hiring is generally an indicator of anticipated consumer activity. Retailers are expected to add less than 500,000 positions in the last three months of the year, which is down 8% from 2024 and would represent the weakest Q4 hiring market since the Great Recession in 2009[9].
There is little relief for U.S.-based manufacturers due to the adverse effect of tariffs on the cost of components. U.S. Manufacturing output was down in September, with the PMI reading in at 49.1. This is up 0.4 points from August but marks the seventh consecutive month. ISM also reports new orders contracting (-2.5 at 48.9) and overall inventories (-1.7 at 47.7)[11].
Overall Inventory Level expansion slowed (-3.1) to 55.2 in September. Despite this, costs remain high (-3.7) at 75.5. As has been the case through much of 2025, these costs are driven more by Downstream firms (79.2) than their Upstream counterparts (73.3). The gap in costs comes despite almost no difference in Inventory Levels (55.7 Downstream and 54.2 Upstream) as firms across the supply chain have been hesitant to add significant levels of inventory after the big pull forward of the first seven months of the year. This caution has in turn has led to a softer-than-normal freight market[8]. We also see that seasonal retail hiring is generally an indicator of anticipated consumer activity. Retailers are expected to add less than 500,000 positions in the last three months of the year, which is down 8% from 2024 and would represent the weakest Q4 hiring market since the Great Recession in 2009[9].
There is little relief for U.S.-based manufacturers due to the adverse effect of tariffs on the cost of components. U.S. Manufacturing output was down in September, with the PMI reading in at 49.1. This is up 0.4 points from August but marks the seventh consecutive month. ISM also reports new orders contracting (-2.5 at 48.9) and overall inventories (-1.7 at 47.7)[11].
Taken together, this suggests that the manufacturing sector has contracted for the last seven months, which has put the brakes on freight volumes. The softness in new orders suggests that this dynamic will continue in the immediate future.
Overall imports into the Port of Los Angeles in August were down 6.6% from the all-time highs reached in July.. This downward trend seems likely to continue, with predicted container imports during the first two weeks of October down a cumulative 42% year-over-year.. Conversely, the port of Savannah saw a 9% increase in year-over year container imports in August[16].
As inventory flows have slowed, we have seen a commensurate decline in the expansion of our warehousing metrics. Warehousing Prices saw the biggest drop of any metric in September, dipping (-6.3) to 66.0. It should be noted that this is still a robust rate of expansion and, while it is the second lowest reading of 2025, would be above the 2024 average of 65.2 for this metric – which speaks to the elevated costs we’ve seen through the first nine months of this year. Some of this reprieve seems to have originated primarily from the first half of the month, when Warehousing Prices read in at 61.1, which was statistically significantly lower than the 70.4 reported in the second half of September. This coincided with Warehousing Capacity going from expansion at 54.2 early in the month to slight contraction at 49.0 in late September. Despite the late contraction, this metric was up slightly (+1.1) overall in September, reading in at 51.6 which is a marginal rate of expansion. Warehousing Utilization continued to expand (+3.2) as well at a rate of 65.3.
Due to their high costs, we have seen some centralization in warehousing networks, with firms who had considered insourcing their storage and distribution moving back towards more of an outsourced model. Delivery by Amazon is now available for over 600,000 unique sellers[18], with their offerings recently expanding to ship goods sold through e-commerce competitors such as Walmart and Shopify. Amazon has announced plans to put $15 billion into the expansion of their existing distribution network (with $4 billion earmarked for rural delivery) to facilitate this increased demand.
Trucking tonnage was up 0.9% in August, reaching its highest level since December of 2023. However, analysts believe that the market will be considerably softer through the last four months of the year due to uncertainty from tariffs[. We see some evidence of this slowdown in Transportation Utilization dropping (-4.7) to 50.0, which is the lowest rate since November 2023, when the industry was still mired in a freight recession.
As inventory flows have slowed, we have seen a commensurate decline in the expansion of our warehousing metrics. Warehousing Prices saw the biggest drop of any metric in September, dipping (-6.3) to 66.0. It should be noted that this is still a robust rate of expansion and, while it is the second lowest reading of 2025, would be above the 2024 average of 65.2 for this metric – which speaks to the elevated costs we’ve seen through the first nine months of this year. Some of this reprieve seems to have originated primarily from the first half of the month, when Warehousing Prices read in at 61.1, which was statistically significantly lower than the 70.4 reported in the second half of September. This coincided with Warehousing Capacity going from expansion at 54.2 early in the month to slight contraction at 49.0 in late September. Despite the late contraction, this metric was up slightly (+1.1) overall in September, reading in at 51.6 which is a marginal rate of expansion. Warehousing Utilization continued to expand (+3.2) as well at a rate of 65.3.
Due to their high costs, we have seen some centralization in warehousing networks, with firms who had considered insourcing their storage and distribution moving back towards more of an outsourced model. Delivery by Amazon is now available for over 600,000 unique sellers[18], with their offerings recently expanding to ship goods sold through e-commerce competitors such as Walmart and Shopify. Amazon has announced plans to put $15 billion into the expansion of their existing distribution network (with $4 billion earmarked for rural delivery) to facilitate this increased demand.
Trucking tonnage was up 0.9% in August, reaching its highest level since December of 2023. However, analysts believe that the market will be considerably softer through the last four months of the year due to uncertainty from tariffs[. We see some evidence of this slowdown in Transportation Utilization dropping (-4.7) to 50.0, which is the lowest rate since November 2023, when the industry was still mired in a freight recession.
As mentioned above, this is a dramatic seasonal departure, as this number has come in at an average level of 65.1 in September over the history of the index. At 50.0, Warehousing Utilization is officially at “no movement”. This metric has not contracted since July of 2023, which was the inflection point in the previous recession. If trends continue and utilization moves back to contraction it would represent a significant shift. We actually did observe mild contraction of 48.1 for larger respondents, but the overall score was pushed up by the slight expansionary read of 52.9 from smaller respondents.
Respondents were asked to predict movement in the overall LMI and individual metrics 12 months from now. Respondent predictions for the overall index are 59.6, down (-4.3) from August’s more optimistic prediction of 63.9. This would represent a slightly slower rate of growth than the all-time average of 61.5. This is driven by notably softer predictions for supply chain costs, with lower future predictions for Inventory Costs (-9.6 to 69.9), Warehousing Prices (-7.4 to 67.9), and Transportation Prices (-5.2 to 66.7). These lower costs come despite steady predictions for Inventory Levels (+0.7) at 55.7, which indicates a fairly lean policy. As will be discussed below, the cost reduction is largely attributable to softer expectations from Downstream retailers. Whether that is inspired by expectations of softer consumer demand, better cost control due to more stable policies, or some combination of the two, remains to be seen.
Respondents were asked to predict movement in the overall LMI and individual metrics 12 months from now. Respondent predictions for the overall index are 59.6, down (-4.3) from August’s more optimistic prediction of 63.9. This would represent a slightly slower rate of growth than the all-time average of 61.5. This is driven by notably softer predictions for supply chain costs, with lower future predictions for Inventory Costs (-9.6 to 69.9), Warehousing Prices (-7.4 to 67.9), and Transportation Prices (-5.2 to 66.7). These lower costs come despite steady predictions for Inventory Levels (+0.7) at 55.7, which indicates a fairly lean policy. As will be discussed below, the cost reduction is largely attributable to softer expectations from Downstream retailers. Whether that is inspired by expectations of softer consumer demand, better cost control due to more stable policies, or some combination of the two, remains to be seen.