Inventory management strategy shifts once again

Chart of the Week:  Inbound Ocean TEUs Volume Index – USA, Logistics Managers’ Index – Warehouse Utilization SONAR: IOTI.USA, LMI.WHUT

Imports and inventory levels have declined this fall, potentially signaling another shift in supply chain management practices. While nothing is certain, this evolution in order management only increases the value of transportation services.

Looking back over the past five years of import bookings (IOTI) and warehouse utilization figures reported by the Logistics Managers’ Index (LMI), we can identify five distinct periods.

The first period began during the pandemic, marked by widespread over-ordering as the supply of goods was unable to keep pace with demand. Neither production nor transportation networks could accommodate the surge in stay-at-home spending.

The second period was characterized by severe destocking as goods consumption slowed and consumers redirected spending toward travel and entertainment outside the home. This phase lasted from late 2022 through roughly mid-2023.

This was followed by a brief period in which businesses and consumers appeared to settle into a more stable and predictable economic and geopolitical environment. However, in late 2023, escalating tensions in the Middle East led to significant disruptions across global trade routes. In response, shippers once again increased inventory levels and extended order lead times.

The return of trade war dynamics and erratic trade policy implementation further exacerbated and prolonged this behavior into late 2025. Now, with little opportunity left to pull inventory forward, the market appears to be shifting once again—this time toward leaner inventories, though not excessively so.

“Uncertainty” was among the most frequently used terms to describe the U.S. economy this year. Meanwhile, inflation has compounded over several years, leading many economists to anticipate a period of stagflation—an environment defined by low growth and elevated inflation.

This is an especially challenging moment for supply chain professionals, who are being asked to simultaneously contain costs and support revenue growth. That requires ordering just enough inventory while remaining agile enough to respond quickly if demand shifts higher or lower. Predictability remains critical for effective cost management.

Leaner inventories increase the value of transportation services, as fewer buffers are available within the supply chain. The caveat is that if demand weakens further, shippers could once again find themselves overstocked.

There are already signs that transportation service costs are being held at unsustainable levels. Tender rejection rates are averaging 1–3 percentage points higher than last year (excluding this past month) and spot rates are spiking more quickly and to higher levels in response to seasonal pressures. If shippers become understocked and miss revenue opportunities due to insufficient inventory, the market could be in for a turbulent 2026.

About the Chart of the Week

The FreightWaves Chart of the Week is a chart selection from SONAR that provides an interesting data point to describe the state of the freight markets. A chart is chosen from thousands of potential charts on SONAR to help participants visualize the freight market in real time. Each week a Market Expert will post a chart, along with commentary, live on the front page. After that, the Chart of the Week will be archived on FreightWaves.com for future reference.

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