Transportation capacity contracted for an 11th consecutive month in October, with rising freight demand adding pressure to rates, FreightWaves reported, citing the Logistics Managers Index (LMI). The Transportation Capacity Index fell to 38, below the 50 threshold separating expansion from contraction and down from 54.5 a year earlier. The October LMI was released on 3 November alongside manufacturing data that also indicated continued demand growth.
The overall LMI reached 70.7, compared with 70.2 in September and 57.4 a year earlier, marking its second-highest reading in four years. Its transportation prices component climbed to 88 from 61.7 the previous October. Survey respondents expected that measure to exceed 90 over the following 12 months, suggesting they anticipated further pricing pressure rather than relief. Aggregate logistics costs increased to 257.5 from 246 in September, their highest reading since March 2022.
Manufacturing activity provided another indication of demand for transport. According to FreightWaves, October’s ISM Manufacturing PMI stood at 55.5, one point above expectations and marking a 10th consecutive month of expansion. Production reached 59, its highest level in five years, while customer inventories registered 41.6, which ISM characterised as too low. The manufacturing prices index remained at 75.2, with respondents identifying tariffs, the Iran war, volatile pricing, longer lead times and high diesel costs among their concerns.
FreightWaves also cited Sonar data showing tender rejections at 12.86% on 3 November. October’s average was about 13.5%, against 5.73% a year earlier, while tender volumes increased approximately 7% year on year. Spot rates were nearly 47% higher and contract rates had risen almost 20%, reaching a 52-week high. Diesel prices remained above $6 a gallon, up 71% from a year earlier.
The LMI’s inventory measure reached 66.9, indicating the fastest build since September 2022. FreightWaves suggested this could reflect a late effort by retailers to replenish stocks ahead of the holiday season, consistent with the manufacturing survey’s indication of insufficient customer inventories. Julie Van de Kamp, quoted in the report, expected capacity constraints to persist into 2027.