Transportation Prices Hit Record High in May as Capacity Shrinks

The Logistics Managers’ Index transportation prices gauge surged to an all-time high of 96 in May, up one point from April, marking the fastest growth rate in the index’s decade-long history. The reading, well above the 50 expansion threshold, signaled extreme freight cost increases as capacity remained constrained. The Strait of Hormuz closure and higher fuel costs drove the surge, while regulatory enforcement against non-compliant truck drivers removed capacity and pushed spot rates to new highs. Transportation capacity contracted at a slower pace at 31.7, with utilization steady at 69.5. “This is the hottest that the transportation market has been in over four years,” the report said. The overall LMI dipped to 69.5 in May from 69.9 in April. Inventory costs jumped 9.4 points to 84.1, a four-year high, while inventory levels expanded more slowly. The 29-point gap between costs and levels was the widest on record, though leaner stockpiles may soften any freight downturn, according to the report.