The U.S. supply chain expanded in September with rising inventory levels, but tightening warehousing and transportation capacity could make it more expensive and difficult to deliver goods to consumers, potentially keeping prices higher. According to researchers tracking the Logistics Managers' Index, constrained storage and shipping capacity combined with rising costs suggest businesses may pass additional expenses to consumers.
- The Logistics Managers' Index rose to 70.2 in September, indicating supply chain expansion, but warehousing capacity dropped 14.2 points to 39.3 due to seasonal shopping preparations.
- Inventory levels increased 6.1 points to 58.9 in September, with most growth among wholesalers and distributors in the supply chain's upstream segment.
- Transportation capacity fell 5.6 points to 34.4, creating a mismatch between available inventory and the ability to move and store goods efficiently.
- Inventory costs rose to 79.9 and transportation prices jumped to 92.7, reflecting inflationary pressures that businesses are likely to pass on to consumers.
- Experts warn that continued inventory accumulation with constrained warehousing and transportation capacity will result in higher costs for consumers in the coming months.
The U.S. supply chain expanded in September as companies built up inventory levels, but tightening warehousing capacity could make it difficult and more expensive to bring the goods to consumers, according to researchers at Florida Atlantic University. Arizona State University, Colorado State University, Rutgers University, and the University of Nevada, Reno.
The Logistics Managers’ Index rose to 70.2 in September, up from 66.6 in August, largely driven by rising inventory levels and warehousing utilization. Any score above 50 suggests expansion in the supply chain, while a score below 50 suggests contraction.
“The warehouse contraction is one of the fastest rates of change we have seen over the 10-year history of the LMI and is likely due to seasonal shopping preparations (largely at the retail level),” says Steven Carnovale, associate dean of graduate programs in FAU’s College of Business. “The month of October is often when inventories at wholesalers, which are currently at high levels, get transferred down to retailers. Given the cost of freight in today’s market, this will be a key point to monitor.”
Key takeaways:
· Inventory levels rose to 58.9 in September, up 6.1 points from the prior month. Most of the growth in inventory levels came in the first half of September among upstream firms as wholesalers and distributors carried most of the goods.
· Despite increasing inventory levels, transportation capacity and warehousing capacity contracted further in September, suggesting that system-wide supply chain capacity is tightening and the current capacity to store and transport available goods to retailers continues to decline.
· Transportation capacity dropped 5.6 points in September to 34.4, and warehousing capacity dropped 14.2 points to 39.3.
· If inventory continues to accumulate while transportation and warehousing capacity remain constrained, businesses could face additional costs and consumers could see those costs reflected in higher prices.
· Inflationary effects were reported across the supply chain. Inventory costs rose to 79.9, the second-highest rate of expansion since August 2025, as consumers reported buying durable goods ahead in anticipation of future price increases. Transportation prices rose 2.7 points to 92.7 as fuel costs affect larger carriers and retail prices.
· Looking ahead, respondents expect a tight, expensive supply chain as inventory grows, but warehousing and transportation firms struggle with rising costs that could be passed on to consumers.
