Why has trucking capacity contracted for 11 straight months?

The Transportation Capacity Index hit 38 in October (any reading below 50 indicates contraction), marking the longest contraction streak on record. Root causes include ongoing driver shortages, older carrier fleets leaving the market, reduced equipment investment during economic uncertainty, and regulatory pressures. Simultaneously, manufacturing demand remains robust with production at 5-year highs, creating a structural mismatch between supply and demand.

What do current rate increases signal about the market outlook?

New truckload contracts are being written 13.11% above the rates they replace, per Sonar data cited in the LMI report. Logistics managers surveyed expect transportation prices to climb above 90 on the index (they currently sit at 88) over the next 12 months. This data suggests the market expects no meaningful capacity relief, meaning shippers should budget for sustained elevated transportation costs through 2027.

How are inventory levels contributing to this crisis?

Customer inventories registered just 41.6 on the ISM Manufacturing survey, which ISM characterizes as too low. The LMI Inventory Index reached 66.9 in October, the fastest build since September 2022, suggesting retailers are rushing to stock for the holiday season. Low inventory levels point to sustained future production and freight demand, exacerbating the capacity shortage.

What is the Tender Rejection Index and why does it matter?

The Sonar Tender Rejection Index stood at 12.86% on November 3, with October averaging 13.5% compared to 5.73% a year ago. This index measures the percentage of freight offers carriers refuse or do not accept. A doubling in rejection rates indicates severe capacity scarcity: available carriers can afford to be selective, and many shippers cannot find capacity at any price.

Which industries face the most immediate pressure?

Retail, automotive, and manufacturing are most exposed due to holiday season inventory builds and sustained production demand. Aggregate logistics costs rose to 257.5 in October from 246 in September, the highest reading since March 2022. Companies dependent on just-in-time or time-sensitive deliveries face particular risk as tender rejections increase.

Shipping & Freight

High Impact

Trucking Capacity Hits 11-Month Low as Rates Soar 47%

Nov 3, 2026

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The signal

Capacity across North American trucking has now contracted for 11 consecutive months, with the Logistics Managers Index Transportation Capacity Index plummeting to 38 (down from 54.5 a year ago). This structural tightness is driving spot rates up 47% year over year, contract rates up 20% to 52-week highs, and diesel prices remaining above $6 per gallon, a 71% increase.

The crisis reflects strong underlying demand: manufacturing production is at its highest level in five years, customer inventories remain dangerously low at 41.6, and tender rejection rates have doubled from 5.73% to 13.5% year over year, signaling shippers cannot find available capacity. Industry analysts expect these constraints to persist well into 2027, with new truckload contracts being written 13.11% above the rates they replace, indicating the market has priced in no near-term relief.

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#transportation-costs

#logistics-managers-index

Frequently Asked Questions

What This Means for Your Supply Chain

Simulation Suggestion

this month

What if transportation rates increase an additional 15% over the next 6 months?

Model a scenario where trucking spot rates continue climbing at current velocity, rising 15% from current 47% YoY highs. Assume contract rates also climb 8-10% from current 52-week highs. Assess impact on landed cost of goods, margin compression, and customer price increases necessary to maintain profitability. Evaluate which product categories are most vulnerable.

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Simulation Suggestion

this month

What if tender rejection rates climb to 20% by Q1 2024?

Model a worsening capacity scenario where Tender Rejection Index rises from current 13.5% to 20%, reflecting continued driver departures and equipment underinvestment. Simulate impact on service level targets, including delayed deliveries, missed customer commitment dates, and lost orders. Model safety stock increases and expedited shipping surcharges required to maintain in-stock positions.

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Simulation Suggestion

immediate

What if you shift 20% of shipments to contract rates instead of spot market?

Model a strategic procurement shift where 20% of currently spot-market shipments are locked into 12-month contract agreements at current 52-week high rates. Compare cost stability, service level predictability, and carrier relationship quality versus remaining flexible on spot market. Assess breakeven rate at which contract strategy becomes favorable given spot rate trajectory.

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