The Logistics Manager Index (LMI) signaled a shift in the freight sector during July, characterized by a notable tightening in transportation capacity. According to FreightWaves, the overall index registered 68.9% in July, a decrease from 71.7% in June. Despite this month-over-month decline, the figure remains 7 points above the historical average of 61.7%.

Data indicates that transportation capacity is contracting more rapidly. The index for capacity moved from 30.8 in June to 28.4 in July, reflecting a 2.5-point contraction. Transportation utilization also saw a significant reduction, falling from 74.7 to 65.0, a 9.7-point drop, although it remains in an expansionary phase. Transportation pricing data reflected broader market trends, with the index falling from 92.4 to 86.9.

Financial indicators from the broader freight market align with these findings. The NTI USA index, reported by FreightWaves, fell to $3.47, representing a 7.5% decline month over month. Simultaneously, the tender rejection index (STRI.US) dipped to 13.84%, down 2.74% compared to the prior month. Truckload contract rates, as measured by VCRPM1.USA, remained stable at $271 plus fuel, holding at 18% above levels seen one year ago. Analysts suggest this pricing stability is encouraging a shift back toward routing guides.

Why It Matters

The contraction in available capacity despite softening spot rates suggests a decoupling of traditional seasonal patterns. As shippers rely more heavily on contract rates to secure capacity, the volatility of the spot market is effectively being mitigated by corporate routing guides. This creates a more rigid freight environment where small carriers may find it difficult to capture upside during short-term demand spikes. For the broader economy, this stabilization of contract rates may indicate that inflationary pressure in supply chain logistics is plateauing, though the underlying costs remain historically elevated relative to long-term averages.