RENO, Nev., April 17, 2025 (GLOBE NEWSWIRE) -- ITS Logistics today released the Q2 ITS Logistics US Distribution and Fulfillment Index, Powered by Cresa. This quarter, the index reveals some conflicting outlooks across the industry, underscoring current global supply chain uncertainty.

The Producer Price Index, which offers a regional markets overview for warehousing, storage, and related services, showed consistent increase throughout the quarter as well as 7.12% year-over-year growth. These increases are likely the result of current and potential tariffs, supply constraints, and increasing labor costs.

“While warehouse rents have begun to stabilize or decline in certain regions, such as Southern California, they remain significantly higher than pre-pandemic levels,” explained Ryan Martin, President of Distribution and Fulfillment at ITS Logistics. “Companies have also been adjusting their inventory strategies, leading to changes in warehouse space utilization. These market dynamics have put significant pressure on tenets across the nation as demand has slowed due to focus on inventory optimization, but overall costs structures have remained the same if not increased in certain geographies and everyone is looking to bridge the cost gap in every way possible.”

In contrast to the PPI, the Logistics Managers Index (LMI), which surveys logistics professionals from a variety of industries, decreased to 57.1 this month. Warehousing services prices have sharply corrected to 61.0 from February’s 77.0, indicating eased pricing power. Inventory levels also stand at 61.2, with downstream growth at 66.7 now outpacing upstream at 58.9, largely due to retailers preparing for tariffs.

“When warehousing construction costs rise, that tends to indicate a future increase in service price and rent,” Martin clarified. “However, that’s not exactly what we’re seeing in the actual market. From a boots-on-the-ground perspective, there’s still a lot of hesitation in the marketplace. This is driving developers and property owners to offer strong incentives to close deals at higher paper rates. Indecision is driving the market right now, because no one knows what’s going to happen in the next 30, 60, or even 90 days.”

Warehousing utilization also remained largely flat throughout Q1, following a spike in December and early January likely caused by shippers responding to early tariff announcements and Mexico’s announcement to end de minimis exemptions, resulting in a rush to relocate inventory domestically.

As tariffs continue to take shape, U.S. importers are eager to find warehouses that allow them to store merchandise while deferring duties. As confirmed by Bloomberg this week, customs bonded warehouses have for centuries appealed to importers for this very reason. These federally licensed warehouses enable them to bring products closer to customers while simultaneously delaying their obligation to pay tariffs until the merchandise is sold. They offer financial flexibility and convenience as they are located near coastal ports.

The mixed trends in key warehousing metrics suggests that businesses face a challenging year ahead, underscoring the importance of efficient inventory management and cost-effective logistics strategies. The data projects that the intersection of rising costs and fluctuating regional availability has signaled the need for shippers to ensure their strategies are rooted in strong fundamentals to stay agile:

• Efficient Inventory Management: With tariffs and global trade policies impacting sourcing strategies, efficient inventory management enables businesses to maintain optimal stock levels, reduce carrying costs, and swiftly adapt to changing market conditions.
• Location Optimization: Proximity to consumers reduces delivery times and transportation costs, ensuring products are strategically positioned to minimize risk from geopolitical disruptions and maximize responsiveness to demand fluctuations.
• Optimized Inbound and Outbound Logistics: Streamlined transportation networks mitigate tariff exposure and fuel cost volatility, creating consistent, predictable delivery schedules, reducing delays, and enhancing overall customer satisfaction.
  

“History has shown us time and time again that investing when the chips are down is the best way to be prepared for success when the market turns,” Ryan advised. “It’s not just about staying lean in the moment; it’s using this as an opportunity—while maybe not the most ideal—to discover efficiencies and turn your supply chain into competitive advantages you can use for long-term strategy.”

ITS Logistics offers a full suite of network transportation solutions across North America and omnichannel distribution and fulfillment services to 95% of the U.S. population within two days. These services include drayage and intermodal in 22 coastal ports and 30 rail ramps, a full suite of asset and asset-lite transportation solutions, omnichannel distribution and fulfillment, and outbound small parcel.

The ITS Logistics US Distribution and Fulfillment Index tracks the Producer Price Index (PPI) for Warehousing and Storage and offers a regional markets overview to optimize warehousing and delivery costs. All major markets in the US are highlighted each quarter via the Index. Visit here for a full, comprehensive copy of the index with expected forecasts for the US distribution and fulfillment sector of the supply chain industry.

About ITS Logistics
ITS Logistics is one of North America's fastest-growing, asset-based modern 3PLs, providing solutions for the industry’s most complicated supply chain challenges. With a people-first culture committed to excellence, the company relentlessly strives to deliver unmatched value through best-in-class service, expertise, and innovation. The ITS Logistics portfolio features North America's #18 asset-lite freight brokerage, the #12 drayage and intermodal solution, an asset-based dedicated fleet, an innovative cloud-based technology ecosystem, and a nationwide distribution and fulfillment network.

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