September, usually a boom month for shipping, shows signs of freight slowdown and rising warehouse costs.
September, historically one of the busiest months for shipping ahead of the holiday season, is showing signs of a freight slowdown, according to the latest Logistics Managers’ Index (LMI). Data from the transportation and supply chain sector suggests conditions more typical of a freight recession, rather than the usual surge in shipments.
The LMI, which tracks inventory levels, warehouse costs, transportation capacity, and pricing, recorded the lowest transportation utilisation reading ever for September, with a score dropping to 50.0, indicating essentially no movement in freight from warehouses to stores or consumers. By comparison, the average reading over the last eight years for September was 65.1, signalling strong growth.
Overall, the LMI for September came in at 57.4, down 1.9 points from August, marking the lowest reading since March 2025, the end of the previous freight recession.
Key Insights from Experts:
- Dale Rogers, supply chain professor at Arizona State University, notes that front-loaded inventories ahead of tariffs are still sitting in warehouses, pushing inventory levels to 54.2, driving up storage costs.
- Upstream firms handling raw materials and manufacturing supply reported very marginal transportation price growth at 51.4, reflecting a slowdown in logistics demand.
- Transportation prices remain positive but are barely expanding, while downstream activity may still remain elevated through 2025.
The report highlights a “slight negative freight inversion” that began in August and continued into September, indicating slower growth in future freight orders. Manufacturing and wholesale sectors have seen relatively stagnant inventory movement due to goods being front-loaded earlier in the year.
Rogers cautioned that while the current data suggests a softening in freight demand, a potential freight recession would require three consecutive months of negative trends. September marks the second month in a row of negative-leaning data, suggesting the logistics sector could be entering a cautious slowdown.
With ongoing trade tensions and tariff-driven shipping patterns, the freight and logistics industry faces atypical demand fluctuations, rising warehouse costs, and uncertainty in transportation utilisation as it approaches the peak holiday season.
Source: CNBC
