Logistics index expands on rising costs as U.S. port volumes plunge

The June ITS Supply Chain Report from ITS Logistics shows signs of expansion in the Logistics Managers’ Index (LMI), driven largely by rising inventory costs rather than increased freight activity. The report also points to a sharp drop in U.S. port volumes and persistent concerns about tightening transportation capacity.

“The Logistics Managers’ Index saw its second consecutive month of growth, driven primarily by escalating costs,” said Josh Allen, chief commercial officer at ITS Logistics. “Tangentially, the Transportation Capacity Index decreased, falling below 2023 and 2024 levels for what should be a period of increasing demand for trucking. Similarly, van and reefer rates remain flat as we move into the height of retail season.”

The LMI rose to 59.4 in June, with inventory costs hitting 78.4 — their highest point since October 2022. ITS said the growth reflects increased expenses in holding goods, not stronger freight flows, and warned that overstocked warehouses and slower throughput are compounding supply chain inefficiencies.

Container volumes at the Top 10 U.S. ports dropped 10.7 per cent in May. West Coast ports were hardest hit, including a 22.4 per cent decline at Long Beach and an 18.4 per cent decrease in Los Angeles. The Port of Tacoma saw volumes fall 25.6 per cent, contributing to a total monthly loss of over 170,000 TEUs, the steepest decline since 2020.

“Overall, U.S. import volumes declined 9.7 per cent month-over-month (MoM),” said Allen. “The observed drop-off due to import slowdown was a direct result of the impact of the 145 per cent U.S. tariff on Chinese imports. As it pertains to transportation capacity, the current LMI metrics strongly suggest that while transportation capacity is still in expansion territory, the downward trend and disparities between upstream and downstream capacities are resulting in industry professionals questioning whether it is a sign for the potential reality of a tightening for the transportation sector.”

ITS also flagged growing geopolitical risks, particularly around Iran, as a threat to global oil supply. Any disruption in the Strait of Hormuz could raise oil prices and strain both the trucking industry and consumers.

The report comes as the U.S. economy continues to grow modestly, with second-quarter GDP projected to rise between 1.7 and two per cent, and core inflation hovering near three per cent.