The news
The inventory costs reading in the Logistics Managers’ Index rose 8.9 points to 88.8 in October, its highest since reaching a record 91.0 in March 2022. Readings above 50 indicate that costs are increasing.
The increase accelerated through the month, with the reading rising from 85.3 in the first half of October to 92.4 in the second half.
The index’s researchers pointed to “retailers stocking up for holiday sales” as a significant driver of the jump.
The details
Retailers’ holiday preparations pushed inventory levels up at their fastest pace since September 2022. Inventory levels rose 8.0 points to 66.9. Both inventory levels and costs jumped in October after costs spent most of 2026 in the 70s.
Downstream firms, which are closer to shoppers, reported inventory levels of 69.6, compared with 64.1 for upstream firms.
Researchers expect downstream inventory levels to have peaked this year, although projected imports remain high through much of November.
Inventory costs are 15.6 points higher than a year ago and 23.0 points above October 2024.
Warehouse prices are rising as more goods take up space. The warehousing prices reading rose 7.2 points to 80.7, its first time above 80 in more than two years.
Warehousing capacity continued to contract, with its reading at 43.5, although the decline was slower than in September.Â
Upstream firms reported a sharper contraction at 37.5, while downstream capacity was unchanged at 50.0.
Researchers also pointed to the added costs of operating increasingly automated and connected warehouse systems.
Freight prices are also rising much faster than carrier capacity. The transportation prices reading eased 4.7 points to 88.0 but remained well above 61.7 a year earlier. Transportation capacity contracted at a reading of 38.0, down from 54.5 in September.
Researchers tie the tight capacity to limited investment by carriers, smaller trucking companies struggling to return to the market and driver shortages.
Higher diesel prices were another major factor behind freight costs.
Worth noting
Overall logistics costs are growing at their fastest pace since March 2022. The index's aggregate logistics costs reading, which combines inventory, warehousing and transportation costs on a 300-point scale, rose 11.4 points to 257.5 in October. It stood at 202.6 a year earlier.
The last time costs rose this quickly, supply-driven inflation was running high as pandemic-era demand eased and Russia invaded Ukraine, the researchers noted.
What’s next
Respondents expect inventory costs to keep rising over the next 12 months, with the forward-looking reading at 81.3. The November index is due in early December.
(Photo: AFINIS Group / Unsplash)
