Freight Costs Surge to COVID-Era Highs as Strait of Hormuz Closure Disrupts Supply Chains
Event summary
- March Logistics Manager’s Index (LMI) hit 65.7, up 4.2 points from February, marking the fastest expansion since May 2022.
- Transportation prices rose 12.7 points to 89.4, the highest since March 2022, while transportation capacity contracted to 39.2.
- Inventory levels sit at 54.8, with larger companies driving the movement while smaller firms report little to no change.
- Inventory costs rose 8.4 points to 75.2, the highest rate of growth since August 2025.
The big picture
The surge in freight costs to COVID-era levels highlights the vulnerability of global supply chains to geopolitical disruptions. The closure of the Strait of Hormuz has created a significant positive inversion between transportation prices and capacity, reminiscent of the COVID-era freight boom. This situation is compounded by lean inventory strategies that may leave companies exposed to further supply chain interruptions. The rebalancing act between 'just-in-time' and 'just-in-case' inventory strategies will be critical in navigating these turbulent times.
What we're watching
- Geopolitical Risk
- How the closure of the Strait of Hormuz will affect global freight costs and capacity in the short to medium term.
- Inventory Strategy
- Whether firms can sustain lean inventory strategies amid rising costs and tightening capacity.
- Supply Chain Resilience
- The pace at which companies adapt their supply chain strategies to mitigate future exogenous shocks.