Transportation Pricing Index Hits Record Growth Rate in May
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The signal
FreightWaves has published data showing the Transportation Pricing Index reaching record growth levels in May, signaling intensifying upward pressure on freight costs across North American logistics networks. This marks a significant inflection point in carrier pricing power, driven by a combination of demand recovery, capacity constraints, and operational cost escalation. For supply chain professionals, this development underscores the urgency of reviewing transportation contracts, optimizing routing strategies, and reconsidering sourcing decisions that depend on freight cost assumptions.
The record growth rate indicates that shippers are experiencing broader cost pressures beyond temporary market volatility. This trend reflects structural challenges in logistics capacity, driver availability, and fuel costs that are unlikely to reverse quickly. Companies with inflexible transportation budgets or long-term fixed-rate contracts may face competitive disadvantages, while those with flexible procurement frameworks can better absorb or pass through these increases.
The implications extend beyond immediate cost management. Rising transportation costs alter the economics of supply chain network design, potentially favoring nearshoring, inventory consolidation, or demand-side adjustments. Supply chain leaders should use this signal to stress-test their logistics cost models, evaluate carrier partnerships, and consider strategic adjustments to sourcing and distribution strategies that account for sustained higher freight rates.
Frequently Asked Questions
What This Means for Your Supply Chain
What if freight rates increase another 15% over the next two quarters?
Simulate a scenario where transportation costs rise an additional 15% across LTL and truckload segments through Q3. Apply the increase to your current freight spend across all lanes and carrier partnerships. Measure the total cost impact, identify which product categories or lanes are most exposed, and evaluate the feasibility of passing through increases to customers.
Run this scenarioShould we shift to nearshoring to reduce transportation cost exposure?
Model the total cost and service level impact of shifting 25% of sourcing from distant suppliers to nearshoring alternatives. Factor in higher sourcing costs but lower freight rates, reduced lead times, and improved inventory velocity. Compare total delivered cost and working capital requirements against the current baseline with elevated transportation rates.
Run this scenarioWhat's the impact if we consolidate distribution centers to reduce freight volume?
Evaluate consolidating regional distribution facilities into fewer, larger hubs to reduce total shipment volume and leverage better LTL rates through higher density. Calculate trade-offs between reduced freight costs, increased inventory holding costs, extended delivery lead times to end customers, and potential service level degradation.
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