Logistics Manager's Index at Lowest Expansion Rate Since April 2024
Earlier this week, 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 December Logistics Manager’s Index.
The Index is at 54.2, down -1.5 from November’s reading of 55.7. This is the lowest rate of expansion since April 2024.
The authors note that the majority of the downward pressure comes from inventory and warehousing markets. This was led by a downward shift (-17.4) into extreme contraction at 35.1 for inventory levels. This led to Inventory cost expansion slowing (-8.1) to 62.9.
At the same time, warehousing capacity increased (+6.4) to 61.2 and warehousing utilization hit a second consecutive all-time low, decreasing (-4.7) to 42.9.
All of these downward movements are due to firms continuing to move inventories downstream towards consumers, providing a final wave of relief to the firms that had been holding onto unprecedented levels of inventory throughout 2025.
This downstream push catalyzed transportation metrics, with transportation capacity (-13.1) moving back to contraction at 36.9 in a move that carriers have been waiting on for nearly three years. The contraction in available capacity pushed transportation prices up (+1.8) to 66.7, which is the highest reading for this metric since January and the initial inventory pull-forward that started the year
"The contraction in the first half of December was not indicative of slowness in the logistics industry," the report said. "Rather, it was likely a product of the rapid holiday rundown of extreme levels of inventory. Evidence of this lies in the expansion of transportation metrics, which suggests that firms were pushing inventories ahead as quickly as possible towards consumers."
Trade Pressure
The report concludes that cross pressures in the manufacturing and global trade provide the volumes that feed the logistics industry. The Purchasing Managers’ Index read in at 51.8 in December, down slightly (-0.4) from November and marking the slowest rate of growth in the ongoing five-month expansion.
Despite the U.S. import volume contracting 8% in 2025, global container volumes are up 2.1% due to the expansion of imports into Africa, the Middle East, India, and Latin America – some of which is due to redirected Chinese products that are no longer moving to the U.S.
In November, Chinese exports to the U.S. were down 29% year-over-year, reflecting this new world order and leading to Chinese Premier Li Qiang to declare that higher tariffs have dealt a “severe blow” to the global economy.
Inventory Costs
Inventory levels read in at 35.1 in December, which is the lowest in the history of the index. The 17.4-point reduction from November’s reading of 52.5 to December’s 35.1 is the largest month-to-month movement in the history of this metric.
Even with the contraction in inventory volumes, inventory costs continued their run of price increase in December, albeit at a slower rate (-8.0) of increase at 62.9. Inventory costs also saw a significant shift over the course of the month, going from a slight expansion at 54.3 early in December to a much more robust 71.4 later on.
The authors explained that inventory costs outpacing inventory levels has been a trend in 2025. They say it is partially due to the increased costs inherent in tariffs. The Customs and Border Protection (CBP) agency estimates that the U.S. has collected over $200 billion from the tariffs that were newly deployed in 2025.
Since the removal of the de minimis exception in August, U.S. imports worth less than the $800 maximum have decreased by 54% according to the Universal Postal Union.
Warehousing
Warehousing utilization dropping (-4.7) to 42.9, marking the second consecutive month that this metric has reached an all-time low. This was driven by movements early in December, when it contracted at a rate of 37.5. Utilization contracted later in the month as well, but at the more moderate rate of 48.6.
The drop in utilization is reflected in the uptick (+6.3) in available warehousing capacity, which was up to 61.2 and is the fastest rate of expansion for this metric since July 2023, which was the height of the previous freight recession and inventory drawdown. However, where that prior peak was driven by slow, static inventories, this was driven by dynamic movements of inventories downstream, the author said.
Looking at broader statistics, U.S. warehousing vacancy was up to 7.6% in Q3. This exceeds the pre-pandemic average of 7.1% and provides further evidence that the construction cycle that kicked off at the start of the decade is slowing down, the authors noted.
The softness in the warehousing market is due to a combination of retailers and wholesalers emptying out inventory backlogs as well as the ongoing slowdown in manufacturing. This trend could continue as U.S. manufacturers reported a pullback on orders for components and raw materials in November, with purchasing activity hitting its lowest level since May, said the report.
Respondents of the report predict that vacancies will decline in 2026 as tariff normalization gives supply chains greater certainty regarding infrastructure decisions.
Warehousing prices continued to expand (+3.3) at a rate of 66.2. Whether inventories are up or down, the cost of storing them continues to grow. Respondents predict future expansion of 74.7 over the next 12 months.
Transportation Capacity
Transportation capacity is down (-13.1) to 36.9, which is its lowest level since October 2021. This is also the first time this metric has contracted since March of 2022, which was the start of the previous long freight recession.
The authors note that there is some conjecture that the decline in capacity is due to English-language crackdowns. Transportation Secretary Sean Duffy stated that 9,500 truck drivers have been pulled off the road due to failing English-language proficiency tests.
The authors explain that while that is a significant impact, it is worth noting that the Bureau of Labor Statistics estimates that there are just over 2 million heavy and tractor-trailer truck drivers in the U.S., so it is more likely that the decrease in capacity is being caused by the proliferation of holiday season deliveries, the report says.
Transportation metrics had been stunted by the static buildup of inventories throughout most of 2025. However, from the second half of October through the end of the year, they picked up significantly in a way that has been consistent with seasonality.
Holiday shopping drove FreightWaves’ truckload rejection index to increase to almost 9.5% in mid-December, which is up from the same time last year. The tightening of available capacity led to an increase in prices as well, with truckload spot rates increasing 8% from November 19th to December 4th.
U.S. consumers spent $187.3 billion online between November 1st and December 12th, which is up 6.1% year-over-year and likely accounted for at least some of the positive momentum in the freight market. It is also worth noting that e-commerce purchases often slow sharply in the week before Christmas, which may have taken some of the pressure off of last-mile delivery later in the month.
This is reflected in expansion in both transportation utilization (+6.7) at 58.2 and transportation prices (+1.7) at 66.7.