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Transportation Pricing Hits 10-Year High as Capacity Crunch Intensifies

Transportation costs surged to record levels in May as carrier capacity contracted sharply, according to supply chain manager surveys. The Logistics Managers' Index recorded a 96 reading for pricing—the highest in the index's decade-long history and up one point from April.

The freight market remains the tightest in over four years. Geopolitical tensions at the Strait of Hormuz and elevated fuel costs have driven rate increases. Regulatory enforcement against non-compliant drivers has further reduced available capacity, forcing carriers to reject growing numbers of daily load tenders. Spot truckload rates continue climbing as shippers face severe capacity constraints.

Upstream manufacturers report considerably tighter market conditions than downstream retailers. This reflects inventory pull-forward strategies to mitigate shortage risks. Retailers, meanwhile, maintain reduced stock levels due to elevated carrying costs and tariffs. Broader economic headwinds including inflation and higher interest rates continue limiting freight volume recovery.