Latest LMI Shows Freight Prices Soar as Capacity Shrinks

Transportation prices jumped 3.1 points to a reading of 90 on the latest Logistics Managers' Index (LMI). This surge occurred even as the capacity contraction showed early signs of moderating, a disconnect that reflects carriers' urgent need to restore profitability after years of depressed rates, according to a Wednesday Sonar Update reported by FreightWaves.

The overall LMI registered 66.6 for the reporting period, down 2.2 points from July. Slower inventory growth was the primary drag. The transportation capacity index, while still deep in contraction territory below the 50-expansion threshold, improved 11 points to a reading of 40. This marks the slowest rate of capacity contraction recorded in six months. Meanwhile, transportation utilization surged 5.6 points to 70.6, a level the report categorizes as robust growth.

Manufacturing and Market Sentiment

On the manufacturing side, the ISM Manufacturing PMI returned a 54.6 reading for the month. This was one point below July's level but above the economist consensus of 55.2. The New Orders Index held in expansion territory for the eighth consecutive month at 53.7. Manufacturing employment remained positive for the second straight month. Overall respondent sentiment was 42% positive and 58% negative, with pricing volatility cited as the top concern among negative comments.

Julie Van de Kamp, cited in the report, explained the carrier perspective. "Carriers are coming out of this multi-year, really, really tough environment where it was nearly impossible to be profitable," she said. She added that carriers must get rates back up to a profitable price point to continue investing in drivers, safety, and maintenance.

Year-Over-Year Comparisons

Year-over-year comparisons underscore a dramatic market shift. The current capacity reading of 40 is far below the 57 recorded in the same month of last year. Transportation prices at 90 this period stand far above prior readings for the month. The overall LMI of 66.6 also runs approximately 10 points higher than the prior three years for this month.

The source provides the following comparable figures for transportation prices and capacity across recent years:

Outlook and Key Metrics

Van de Kamp said the pricing pressure is expected to persist. LMI survey respondents anticipate the transportation market will remain very tight over the next 12 months. She noted that while some cooling has appeared in July and the latest data compared to earlier 2025 peaks, capacity is still "absolutely in that contraction range and incredibly tight."

Looking ahead, Van de Kamp highlighted three Sonar metrics to watch. These are the Sonar Tender Rejection Index (STRI) for capacity signals, the Sonar Truckload Volume Index (STVI) for regional volume shifts, and the National Truckload Index (NTI) for spot rate movement. She specifically pointed to the Midwest and coastal regions for capacity signals as import-driven demand builds into the fourth quarter.