Transportation capacity in the US has contracted for 11 straight months, with the Logistics Managers Index's capacity reading at 38 in October, down from 54.5 a year earlier. The overall LMI rose to 70.7, while transportation prices jumped from 61.7 to 88 year over year. Spot rates are up nearly 47%, contract rates nearly 20%, and diesel sits above $6 a gallon, a 71% annual increase. October's ISM Manufacturing PMI came in at 55.5, its 10th month of expansion, with production at a five-year high of 59 and customer inventories at 41.6. Julie Van de Kamp expects capacity to stay constrained into 2027.
Transportation capacity in the United States has contracted for 11 consecutive months, according to the October Logistics Managers Index released Nov. 3, as reported by FreightWaves. The Transportation Capacity Index fell to 38, well below the 50-point expansion threshold and down sharply from 54.5 a year earlier, even as demand indicators from the manufacturing sector continue to strengthen.
Capacity index stuck below expansion line
The overall LMI climbed to 70.7 in October, up from 70.2 in September and 13.3 points above the 57.4 recorded a year earlier — the second-highest reading in four years. The capacity component, however, remained deep in contraction territory for the 11th straight month.
Julie Van de Kamp noted that the capacity reading has stayed below the 50-point mark without interruption, contrasting with the expansion seen a year ago. The index has now spent nearly a full year signaling that available transportation capacity is shrinking rather than growing.
“Transportation capacity is at 38. It’s continuing to sit in that contraction portion of the report at under 50 for the 11th straight month. A year ago it was at 54.5. All the way down to 38 this month.” — Julie Van de Kamp
The reading arrived the same morning as October’s ISM Manufacturing PMI, and both reports point in the same direction: demand is building while capacity continues to fall short of it.
Manufacturing demand adds pressure
The ISM Manufacturing PMI printed at 55.5 in October, a full point above expectations and the 10th straight month of expansion. Production registered 59, its highest level in five years, while customer inventories stood at 41.6, a level the ISM continues to characterize as too low.
That combination — strong production against thin inventories — points to sustained future production and freight demand. The ISM’s prices index held at 75.2, with survey respondents citing pricing volatility, extended lead times, tariffs, the Iran war, and elevated diesel costs as primary concerns.
Inventory levels registered 66.9 on the LMI, the fastest build since September 2022, suggesting retailers may be making a late push to stock for the holiday season — a dynamic that aligns with the ISM’s too-low inventory signal.
Spot rates, contract rates and diesel all climb
Transportation prices, the most dramatic mover in the index, surged from 61.7 last October to 88 this October. Respondents expect that figure to climb above 90 over the next 12 months, signaling no expectation of pricing relief.
Sonar tender data corroborates both reports. The Sonar Tender Rejection Index stood at 12.86% on Nov. 3, with October averaging around 13.5% compared with 5.73% in October of the prior year. Tender volume ran approximately 7% higher year over year in October.
Spot rates are up nearly 47% year over year, contract rates are up nearly 20% and sitting at a 52-week high, and diesel remains above $6 a gallon — a 71% year-over-year increase.
“The LMI report does cite Sonar data showing new truckload contracts are up 13.11% over the contract rates that they are replacing. So more evidence that we are going to continue to see increased rates as we get into 2027.” — Julie Van de Kamp
Aggregate logistics costs rose to 257.5 in October from 246 in September, the highest reading since March 2022.
No relief expected into 2027
Van de Kamp said she expects capacity to remain constrained “certainly into 2027,” with new truckload contracts being written 13.11% above the rates they replace, per LMI citing Sonar data.
The combined signals — an 11-month capacity contraction, a 10th month of manufacturing expansion, inventories the ISM calls too low, and diesel above $6 a gallon — leave shippers facing continued high costs and tight networks as 2024 approaches.
Source: FreightWaves
Compiled from international media by the SCI.AI editorial team.
