ITS Logistics Distribution + Fulfillment Q3 Index: LMI Declines Amid Tariff Uncertainty and Weaker Consumer Demand

-- Economic tension drives an increase in warehouse capacity and utilization due to significant declines in transportation utilization --

RENO, Nev., Oct. 30, 2025 (GLOBE NEWSWIRE) -- ITS Logistics today released the Q3 ITS Logistics US Distribution and Fulfillment Index, Powered by Cresa. This quarter, the index reveals that Q3 2025 marked a turning point from rapid expansion to disciplined optimization. The decline in the Logistics Managers’ Index (LMI) from 59.2 to 57.4 highlighted an industry slowdown as companies recalibrate amid tariff uncertainty and weaker consumer demand. Inventory levels also reflect the shift from bulk replenishment via tariff-driven frontloading to shorter, more flexible cycles. Equally important, warehousing prices eased slightly, though they remain elevated year-over-year, which continues to pressure margins and favor efficiency over expansion.

“The LMI closed Q3 with a composite reading of 57.4 in September, marking the lowest level since March, yet remaining well within expansion territory,” said Ryan Martin, President of Distribution and Fulfillment for ITS Logistics. “The data illustrates a logistics environment that continues to grow as supply chain companies remain active. These companies are managing uncertainty as decision-making becomes more cautious amid tariff changes, uneven consumer confidence, and elevated capital costs, which are shaping inventory and facility strategies across industries. As a result, there was a notable increase in warehouse capacity and utilization, mainly due to significant declines in transportation utilization and the increasing number of stored goods.”

Warehousing utilization increased to its highest level in over a year, reaching 65.3 in September, while capacity remained balanced at 51.6, suggesting that supply and demand for storage space are finally nearing equilibrium. Despite this shift, profitability pressures persisted. Operating costs, although slightly easing, remain significantly higher than pre-2023 levels. It is for this reason that many operators have made the previously mentioned shift from expansion to an efficiency-focused approach.

Industry publication SupplyChainBrain reported this month that the latest data suggests the post-summer freight and warehousing rebound has begun to taper off as companies recalibrate inventories and brace for a softer peak season. The drop in warehouse price ratings by more than six points to 66.0 marks the slowest rate of growth since spring. In addition, the publication noted that the transportation capacity sector readings fell by 2.2 points to 55.1 between August and September, indicating that available freight capacity continued to expand at a slower pace, with carriers adjusting to softer shipping volumes as demand leveled off. Transportation utilization values also dipped by nearly five points month-to-month to a 55.0 reading, well short of September’s eight-year average of 65.1.

Martin went on to state that, “As for the Producer Price Index (PPI) for Warehousing and Storage, it continued to soften through late Q3, trending downward to approximately 154.5 in August, following 155.8 in July and 156.7 in June. This marks the third consecutive month of easing after a two-year period of persistent escalation that peaked near 159.0 in early 2024. September is pending release due to the current government shutdown, but the trajectory points toward a gradual normalization in pricing pressure across the industry. Together, the LMI and PPI trends suggest a short-term reprieve for shippers to renegotiate rates and contracts before structural costs stabilize again in 2026.”

Overall, Q3 2025 reflects an industry entering a phase of controlled momentum with resilient growth, where operators are recalibrating to prioritize sustainability rather than scale. It is a logistics landscape that rewards operational intelligence and disciplined execution heading into peak season and beyond. Strategic themes that shippers should recognize for Q4 2025 include:

Functional, Not Speculative, Space Wins – The national industry vacancy rate of Q3 2025 conceals a shortage of functional, move-in-ready space. Many newly completed speculative projects remain shell-only or lack automation infrastructure, dock packages, and power density required for modern fulfillment. Some warehouse providers are also augmenting existing space to create purpose-built fulfillment operations for industries with complex or niche operations. ITS Logistics, for example, operates networks of tailored logistics hubs for shippers within retail, EV batteries, and food & beverage.
Inventory Agility that Matters – Companies are pivoting from volume-based inventory strategies to agility-based positioning, with some third-party logistics companies responding by offering modular storage terms and multi-client space utilization models, enabling customers to minimize stranded capital.
Pricing Normalization, Not Retreat – After two years of sustained escalation, warehousing prices and PPIs are entering a controlled normalization phase. For shippers, the next two quarters represent a window to renegotiate renewal and overflow rates before inflationary cost floors reassert in 2026.
Regional Resilience that Defines Growth – Inland markets such as Dallas-Fort Worth, Columbus, and Indianapolis continued to post strong utilization in Q3, illustrating that, even as national vacancy stabilizes, occupiers continue to favor centrally located nodes with lower drayage costs and increased outbound coverage.
Peak Planning Shifts – The upcoming holiday season emphasizes repositioning and network optimization over massive import inflows, due to earlier inventory frontloading. As a result, transportation pricing is expected to remain constrained, even as warehouse labor demand tightens temporarily around December.

ITS Logistics offers a full suite of network transportation solutions across North America and omnichannel distribution and fulfillment services to 95% of the U.S. population within two days. These services include drayage and intermodal in 22 coastal ports and 30 rail ramps, a full suite of asset and asset-lite transportation solutions, omnichannel distribution and fulfillment, and outbound small parcel.

The ITS Logistics US Distribution and Fulfillment Index tracks the Producer Price Index (PPI) for Warehousing and Storage and offers a regional markets overview to optimize warehousing and delivery costs. All major markets in the US are highlighted each quarter in the Index. Visit here for a comprehensive copy of the index with expected forecasts for the US distribution and fulfillment sector of the supply chain industry.

About ITS Logistics

ITS Logistics is one of North America's fastest-growing, asset-based modern 3PLs, providing solutions for the industry’s most complicated supply chain challenges. With a people-first culture committed to excellence, the company relentlessly strives to deliver unmatched value through best-in-class service, expertise, and innovation. The ITS Logistics portfolio features North America's #18 asset-lite freight brokerage, a top drayage and intermodal solution, an asset-based dedicated fleet, an innovative cloud-based technology ecosystem, and a nationwide distribution and fulfillment network.

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Amber Good
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amber@leadcoverage.com

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ITS Logistics Distribution + Fulfillment Q3 Index

LMI Declines Amid Tariff Uncertainty and Weaker Consumer Demand

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