November 2025 delivered a freight market first: warehousing utilization contracted for the first time in the Logistics Managers' Index's nine-year history. The 47.5 reading—down 9.0 points from October—sent ripples through supply chain circles. But before you panic, understand what's actually happening.
This isn't about warehouse closures or capacity problems. It's about inventory finally doing what it's supposed to do: moving.
The Tale of Two Novembers
Early November told a concerning story. Utilization plummeted to 39.3, suggesting steep contraction across the board. Then something shifted. By late November, utilization rebounded to 54.5, returning to expansion territory.
What happened between those two data points? Retailers took possession of inventory for the holiday season. Goods that had been sitting in upstream warehouses since summer started flowing downstream to stores and distribution centers. The result? Temporary gaps in upstream facilities and a massive transfer of inventory from wholesalers to retailers.
Steve Beda, EVP at Trax Technologies, puts it plainly: "This isn't warehouse closures or capacity reduction—it's the natural consequence of inventory finally moving downstream to retailers for the holiday season."
The Tariff Trade Comes Home
To understand November's collapse, rewind to May. Companies began aggressively pulling forward inventory to hedge against anticipated tariffs. From June through September, upstream firms—wholesalers, distributors, manufacturers—stockpiled goods at unprecedented levels.
The numbers tell the story:
- June upstream inventory levels: 58.7 (significant expansion)
- September upstream inventory levels: 62.3 (peak accumulation)
- Warehousing utilization stayed consistently above 55.0 through Q3
But you can't stockpile forever. Someone has to move that inventory. November became the month of reckoning—when billions of dollars in goods shifted from hundreds of small upstream players to dozens of large downstream retailers.
The result? A historic 19.5-point spread between downstream (65.8) and upstream (46.3) inventory levels. That's a 30-point swing from June's positioning, representing the largest bifurcation in modern freight market data.
Why This Signals Health, Not Crisis
Here's what matters: goods are where they need to be. The collapse in warehousing utilization isn't dysfunction—it's the system working exactly as designed, just compressed into an accelerated timeline.
Transportation data confirms this. Pricing jumped 3.2 points to 64.9, with downstream transportation hitting 70.6 compared to 63.0 upstream. That's genuine demand driving rates higher, not artificial capacity constraints. The 14.9-point spread between transportation pricing and capacity represents the second-largest gap since April 2022.
When utilization drops but transportation pricing surges, you're watching inventory flow through the supply chain efficiently. Warehouses emptying upstream while trucks move goods downstream is precisely what should happen in November.
According to research from the Council of Supply Chain Management Professionals, optimal warehouse utilization typically ranges between 85-90% for peak efficiency, but seasonal variation of 15-20 percentage points is both normal and healthy during major inventory transfer periods.
The Cost Question Nobody's Asking
While everyone focused on utilization numbers, a bigger story unfolded: who's bearing the cost burden?
Small upstream firms held inventory from June through September, absorbing storage fees, working capital expenses, and interest costs. These companies had limited pricing power and thin margins. Many shed jobs—31,000 across private firms under 500 employees in October alone.
Large downstream retailers accepted that same inventory in October and November, but with one crucial difference: they have pricing power. The question for 2026 isn't whether costs exist—it's who ultimately pays them.
Will large retailers pass elevated inventory costs to consumers? Or will they absorb costs to maintain volume? Consumer sentiment is down 29% year-over-year, and credit card debt is "much higher than normal" according to Federal Reserve data. Something has to give.
What to Watch in 2026
The warehousing collapse of November 2025 resolved one chapter of the tariff story. Now comes the harder question: was it worth it?
Companies made massive pull-forward decisions based on regulatory uncertainty. They compressed an entire year's procurement into two quarters. They bore elevated costs and tied up working capital. The bet? That consumer demand would justify those inventory positions.
Track these indicators:
- January-February sell-through rates: Will holiday inventory clear at expected velocity?
- Q1 warehousing utilization: Should normalize to 52-58 range if market is healthy
- Inventory turnover: Fast movement must compensate for elevated per-unit costs
- Small firm employment: Stabilization signals the market is balancing
November's warehousing collapse wasn't a crisis. It was the natural conclusion of extraordinary circumstances. The real test comes when we find out whether those circumstances were worth the cost.
Making Smarter Decisions With Better Data
Understanding these market dynamics requires visibility into your actual freight spend and movement patterns. Trax's Global Freight Audit solutions provide the normalized data executives need to separate signal from noise—whether you're managing upstream inventory positions or downstream distribution strategies.
Ready to gain clearer insight into your warehousing utilization and transportation spend patterns? Contact the Trax team to learn how data-driven freight audit transforms reactive decisions into strategic advantages.