Logistics Managers' Index: Transportation Capacity Still Contracting, Just More Slowly

The Logistics Managers' Index came in at 66.6 for August, down 2.2 points from July's 68.9, according to the August 2026 LMI report published Sept. 1 by a research consortium spanning Arizona State, Colorado State, Florida Atlantic, Rutgers and the University of Nevada, Reno, in partnership with the Council of Supply Chain Management Professionals. Any reading above 50 indicates expansion in logistics activity; the index has stayed well above that line, but the month-over-month direction is down.

Transportation capacity registered 40.0 — a reading below 50 still signals contraction, but it's an 11.6-point improvement from July's even tighter print, meaning the rate of capacity loss slowed sharply during the month. Transportation utilization rose 5.6 points to 70.6. Transportation prices held at 90.0, up 3.1 points and among the highest readings the index tracks this cycle.

On the warehousing side, capacity climbed 7.2 points to 53.5 — moving back into expansion after tighter readings — while warehousing prices eased slightly to 75.0. Inventory levels came in at 52.8, down 2.2 points, while inventory costs rose 1.6 points to 78.6. The report's authors flagged the resulting spread — a 25.8-point gap between inventory levels and inventory costs, against a historical average gap of 13.1 points — as a sign that "logistics costs seem to be rapidly increasing no matter what the underlying situation is."

Respondents' 12-month forward expectations point to further normalization rather than relief: capacity is expected to average 43 over the coming year, utilization 71.9, and pricing 86.1 — all suggesting the current tight-but-easing pattern is expected to persist rather than reverse.

Forwarder angle

Transportation pricing power isn't loosening at the pace capacity is. A capacity reading moving from deep contraction toward the 40s would normally be read as early relief for shippers. But the pricing index staying near 90 — one of its highest readings this cycle — says carriers aren't passing that improvement through yet. For contract negotiations this fall, the LMI data argues against assuming that easing capacity translates quickly into softer rates.

The inventory-cost gap is a warehousing story as much as a transportation one. Inventory levels barely moved (52.8) while inventory costs jumped to 78.6 — nearly double the historical spread between the two metrics. For 3PLs and warehouse operators pricing space this fall, that gap is evidence that cost pressure is structural (labor, insurance, real estate) rather than simply a function of how much freight is actually sitting in the building.

The 12-month forecast argues for locking terms now rather than waiting. Respondents expect transportation pricing to average 86.1 over the next year — elevated, though below August's 90.0 spot reading. That's a signal the panel doesn't expect a sharp reversal; multi-quarter transportation contracts negotiated against an assumption of near-term rate relief run against what the survey's own respondents are forecasting.