Transportation capacity contraction slows in August

Transportation capacity continued to dwindle in August, but at the slowest rate recorded in six months. Transportation pricing, however, continued to surge, according to a monthly sentiment survey of supply chain professionals. The Logistics Managers’ Index signaled further tightening in transportation capacity last month, returning a reading of 40.

That was 11. 6 percentage points slower than July’s contraction rate, which was the second-fastest recorded in the 10-year history of the dataset. (September 2020 marked the index’s fastest rate of contraction at 23. 8.) The LMI is a diffusion index in which a reading above 50 indicates expansion, while one below 50 signals contraction.

Transportation prices (90) increased 3. 1 points in the month, with the index logging extreme growth rates of 90 or higher in four of the past five months. Transportation utilization (70. 6) was up 5. 6 points, marking only the second time in five years the index has registered “robust” growth (above 70).

“Essentially, this month’s report paints a picture of logistics costs that seem to be rapidly increasing no matter what the underlying situation is,” the Tuesday report said. SONAR: Outbound Tender Rejection Index (OTRI. USA) for 2026 (blue shaded area), 2025 (yellow line), 2024 (green line) and 2023 (pink line).

A proxy for truck capacity, the tender rejection index shows the number of loads being rejected by carriers. Current tender rejections show a tight truckload market. To learn more about SONAR, click here. SONAR: National Truckload Index (linehaul only – NTIL. USA) for 2026 (blue shaded area), 2025 (yellow line), 2024 (green line) and 2023 (pink line).

The NTIL is based on an average of booked spot dry van loads from 250,000 lanes. The NTIL is a seven-day moving average of linehaul spot rates excluding fuel. Rates turned slightly higher at the end of August following a seasonal summer slowdown.

Logistics managers surveyed expect the transportation market to remain very tight over the next 12 months, returning future readings of 43 for capacity, 71. 9 for utilization and 86. 1 for pricing. Upstream companies (manufacturers and wholesalers) expect significant capacity tightening over the next year, returning a reading of 38. 6.

Downstream companies like retailers believe a modest amount of supply will become available or enter the market, returning a one-year-forward reading of 54. 5. The overall LMI (66. 6) was down 2. 2 points from July, largely due to slower inventory growth.

“The major difference between August and readings from earlier this summer is that expansion in inventories has slowed, but logistics cost expansion remains high,” the report said. Aggregate logistics costs (inventory, warehousing and transportation) totaled 243. 6 in August, 4. 1 points higher sequentially and well above the breakeven level of 150.

While tariff implementations last year were slightly inflationary for the dataset, the Iran conflict has sent all-in supply chain costs surging. Inventory levels (52. 8) grew at a pace that was 2. 2 points slower in the month. Downstream companies (61. 9) reported meaningful inventory growth compared to upstream firms (49), which saw slight contraction.

The latest trends were the reverse of July when downstream firms reported declines while upstream companies added inventory. The turnaround likely signals “that retailers are building inventories back up for Q4 after running them down during the back-to-school season.”

Elevated inventory costs, stemming from higher goods costs and warehouse rents, are driving “the start-stop pattern.” Inventory costs (78. 6) continued to balloon in August, climbing 1. 6 points during the month.

“It seems that earlier in the year, retailers were waiting until the last minute to bring inventories forward in an attempt to minimize holding costs,” the report said. “It will be interesting to see if the reigniting of tariffs will have an impact on this.” Slower inventory growth pushed warehousing capacity (53. 5) back into expansion, up 7.

2 points from July’s reading. Even with modest loosening in the market, warehouse prices (75) continued to rise sharply, albeit at a pace that was 50 basis points slower sequentially. Warehouse utilization (59. 6) fell 6. 5 points during the month.

The LMI is a collaboration among Arizona State University, Colorado State University, Florida Atlantic University, Rutgers University and the University of Nevada, Reno, conducted with the Council of Supply Chain Management Professionals. Why it matters? The Logistics Managers’ Index provides a look at all major supply chain costs.

The latest report signals a difficult operating environment for shippers characterized by tight capacity and growing cost pressures.

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