Overview of the February report

The Logistics Manager’s Index (LMI) for February registered 61.5, an increase of 1.9% from January’s 59.6. That reading represents the fastest pace of expansion since February 2025 and ended an 11-month run of readings below the long-term average of 61.3.

The report links rising freight costs and tighter transportation capacity to leaner inventories and other market pressures.

Who produced the LMI

The monthly LMI is produced by researchers from Arizona State University, Colorado State University, the University of Nevada, Reno, Florida Atlantic University, and Rutgers University, with support from the Council of Supply Management Professionals (CSCMP).

The current edition was authored by Zac Rogers, Ph.D., Steven Carnovale, Ph.D., Shen Yeniyurt, Ph.D., Ron Lembke, Ph.D., and Dale Rogers, Ph.D.

What the LMI measures

The headline LMI score is composed from eight distinct logistics components. Those components cover inventory, warehousing, and transportation by both levels and cost or utilization.

• Inventory levels
• Inventory costs
• Warehousing capacity
• Warehousing utilization
• Warehousing prices
• Transportation capacity
• Transportation utilization
• Transportation prices

February results in context

The February reading of 61.5 improved on January’s 59.6 and is the quickest monthly expansion since the 62.8 recorded in February 2025. The rise also broke an extended period in which monthly LMI readings sat below the historic average of 61.3.

Authors emphasize that shifts in inventory strategy and asset use are central to recent movements in the index.

Detailed sub-index movements and comparisons

The report highlights year-over-year shifts between February 2025 and February 2026 across several sub-indexes:

• Inventory levels: fell from 64.8 in February 2025 to 53.8 in February 2026 as firms moved to leaner stock positions.
• Inventory costs: eased from 77.3 in 2025 to 67.8 in 2026, reflecting the inventory reduction.
• Warehousing prices: rose strongly in 2025 to 77.0 because of higher stocks, and remained elevated in 2026 at 62.6.
• Transportation capacity: tightened in 2026, with a 41.0 reading versus 55.1 in 2025, indicating reduced available capacity.
• Transportation prices: jumped to 76.7 in 2026 from 65.5 in 2025, driven by higher inventory turnover and more frequent shipments.

Drivers of uncertainty and cost pressure

The authors point to several ongoing forces increasing supply chain uncertainty and inflationary pressure, including conflict in Iran, higher fuel prices, and the lingering effects of tariffs. These factors have encouraged firms to change inventory approaches and affected demand for transport and warehousing capacity.

As inventories were reduced to avoid tariff exposure, pressure shifted to other logistics assets, tightening capacity and pushing up prices across transportation and warehousing.

Authors' outlook on adaptation and risk

The report notes that firms have markedly changed strategies and asset use with the common aim of optimizing cash flow. Researchers describe the sector’s adaptations as notable given the uncertainties caused by tariffs.

They also observe that a recent U.S. Supreme Court ruling is likely to prolong that uncertainty through 2026, and the team intends to continue monitoring how these legal and market shifts affect logistics activity.

Changing expectations and a historical comparison

Mark Twain once wrote that he supported progress but disliked change. Today that tension captures how rapidly consumer expectations around delivery have evolved and how those expectations are transforming freight transportation.

As a historical reference, a promotional film from the New Haven Railroad in the 1940s depicted an aunt in Boston buying a bicycle, taking it to South Station, handing it to an agent who placed it on the express car, and having it delivered at Grand Central to her nephew the next morning. That level of door-to-door service was not unusual in its era.

Fast-forward to a recent personal example: on Jan. 9 the author ordered a Roku streaming device (USB) for $30.41. The carrier confirmed delivery between 4:00 p.m. and 8:00 a.m. the next morning, and the package arrived overnight. That kind of rapid, near-routine fulfillment—neither emergency nor exception—illustrates the new baseline for many consumer goods.

Escalating tensions and risk to maritime arteries

Rising hostility between the United States and Iran has heightened fears of interruptions to international trade lanes, with the Strait of Hormuz taking center stage as a vital chokepoint for energy shipments. Analysts and logistics professionals view instability in the region as a direct threat to the movement of oil and other commodities that rely on that passage.

Interview with a supply chain expert

Supply Chain 24/7 spoke with Sarah Jinhui Wu, a Professor of Operations Management at Fordham University’s Gabelli School of Business, to explore how unrest in the Middle East can cascade through shipping networks, energy markets, and global supply chains.

How uncertainty manifests in supply networks

Wu explains that uncertainty typically appears first as increased supply chain variability. She emphasizes that "variability is the enemy of a lean system," because unpredictable conditions force companies to abandon tight, cost-focused practices in favor of measures that preserve continuity.

Operational consequences for carriers and shippers

When conflict disrupts the region, carriers often slow steaming, reroute vessels, or suspend sailings, making shipping lead times less reliable and schedules harder to trust. Those operational changes increase the time goods spend in transit and make planning and forecasting more difficult for all parties in the chain.

Firm-level responses to preserve continuity

In response to rising variability, firms tend to add buffers and prioritize continuity over lean efficiency. Common actions include expedited shipments, raising safety stock levels for critical SKUs, and pursuing multi-sourcing strategies—particularly for inputs that depend on energy and chemicals.

Why energy prices react sharply

Wu identifies two reinforcing channels that drive up fuel and freight costs during regional conflict. The first is an energy price shock: threats to supply continuity and shipment reliability around the Gulf push oil and gas markets to price in scarcity and elevated risk. The Strait of Hormuz is especially significant because about 20 million barrels per day—roughly 20% of global petroleum liquids consumption—transit that route, so even a partial disruption can rapidly alter price expectations.

How logistics amplify the cost shock

The second channel is a logistics cost shock. Carriers commonly add emergency or conflict surcharges, which quickly appear on shipper invoices. Rerouting traffic increases distance and transit time, ties up vessels and aircraft for longer periods, reduces effective capacity and therefore raises freight rates.

Practical knock-on effects across supply chains

The combined impact of longer transit times, higher fuel costs, and added surcharges creates a broad ripple through supply chains. Companies face higher operating expenses and must adjust inventory and sourcing strategies to maintain service levels. Typical consequences include shipment delays, constrained transport capacity, elevated freight charges and a shift in emphasis from cost optimization toward resilience.

Read the full discussion

For the complete interview and more detailed analysis, see the full article.

Read the full interview