Warehouses were vacant in December

Weekly Chart Spotlight: Trends in Inventory and Warehouse Usage

Featured Data: Logistics Managers’ Index – Tracking Inventory and Warehouse Utilization.

Following a year marked by aggressive stockpiling to mitigate tariff risks and trade policy uncertainties, companies have now allowed their inventories to decrease at a record pace not seen in the last ten years. This significant shift marks a pivotal moment for supply chains as 2026 unfolds, offering valuable clues about what may be ahead.

The Logistics Managers’ Index (LMI) evaluates various aspects of the supply chain, including inventory levels (INVL) and warehouse utilization (WHUT). The index uses a scale from 1 to 100, where readings above 50 indicate growth and those below 50 signal contraction. Notably, these numbers reflect the rate of change rather than absolute values.

In December, inventory levels dropped to 35.1, the steepest decline since the index’s inception in late 2016. Warehouse utilization also reached a historic low of 42.9, underscoring that businesses are actively clearing out their storage spaces.

Uncertainty around trade policy persists, especially as the Supreme Court has yet to decide on the legality of IEEPA tariffs, which represent about $131 billion of the $253 billion in tariff revenue collected so far.

While some companies may have factored in the possibility of a court decision when planning restocking, the data suggests otherwise. Import volumes are slightly higher than in 2023, a period when inventories were excessive and being reduced. This ongoing uncertainty is another reason why many firms are postponing new orders as the year begins.

One of the most notable developments is the apparent return to a just-in-time inventory approach, moving away from the more cautious early or excess ordering strategies that dominated the previous year.

Operating with leaner inventories makes businesses more reliant on transportation services and, crucially, on their dependability. However, transportation providers—especially truckload carriers and third-party logistics firms—have also been running lean to manage costs after years of supply outpacing demand.

Carrier Networks Under Pressure

As a consequence, carrier networks have become thinner and less able to adapt quickly to sudden market changes, even though overall demand remains muted. The SONAR Tender Rejection Index (STRI), which tracks how often carriers reject loads, surged from 6.3% in mid-November to over 13% during the Christmas season. This is the highest level since April 2022 and nearly 400 basis points higher than 2024 figures.

By January 8, the STRI remained above 10.5%, despite a period when securing capacity is typically easier. The industry continues to face challenges in returning to normal after holiday disruptions, highlighting the reduced flexibility within carrier networks.

Industry Insights and Outlook

On a recent episode of the Freightonomics podcast, Dr. Zac Rogers, a co-author of the LMI, pointed out that slimmer inventories could heighten the urgency around shipping. Many suppliers are already bracing for significant difficulties in securing transportation capacity in the coming year.

Although many are cautious about predicting a complete turnaround in the transportation market due to subdued demand, the supply side is already tight. Shippers may need to adopt a more reactive approach, driven by cost pressures and economic uncertainty. In this environment, even modest demand increases could trigger a market shift.

About the Weekly Chart Feature

The FreightWaves Chart of the Week highlights a notable data visualization from SONAR, offering insights into current freight market conditions. Each week, a Market Expert selects a chart from thousands of options on SONAR to help readers understand real-time market dynamics. The featured chart and accompanying analysis are published on the front page and later archived for reference.

SONAR compiles information from hundreds of sources, presenting it through charts and maps, and provides expert commentary to keep industry participants informed about the latest freight trends.