August LMI Mystery: Why Prices Soar Despite Capacity Hitting 40%?

August LMI: Capacity at 40 as Transportation Prices Surge

The August Logistics Managers’ Index shows a freight market moving in opposite directions. Transportation capacity remains deep in contraction, with an index reading of 40, while transportation prices climbed to 90. For drivers and carriers, the figures point to a market where demand for available trucks is strong, but the overall supply of capacity remains constrained.

The capacity reading improved by 11 points from July, marking the slowest rate of contraction in six months. Even so, any reading below 50 indicates contraction under the LMI’s diffusion-index methodology. A reading of 40 therefore still reflects a significant shortage of available transportation capacity rather than an expanding supply of trucks.

At the same time, transportation prices rose another 3.1 points in August to reach 90. That is a substantial increase from the August readings of 55 in 2025, 61 in 2024 and 42 in 2023 cited in the analysis. The widening gap between capacity and pricing is the central feature of the latest data.

For carriers, the pricing increase offers an opportunity to recover from an extended period of weak rates. However, higher market prices do not immediately translate into more operating capacity. Many carriers have spent years dealing with depressed rates and difficult operating conditions. Bringing trucks back into service, replacing equipment, hiring drivers and maintaining safety standards all require time and capital.

“Carriers are coming out of this multi-year, really, really tough environment where it was nearly impossible to be profitable — and at some point carriers have to get rates back up to a price point that’s profitable so they can continue to invest in capable and competent drivers, safety, and maintenance,” said Julie Van de Kamp.

The August capacity result also needs to be viewed in context. The reading of 40 compares with approximately 55 in August 2024 and 60 in August 2023, while the index reached 71 in June 2023. Although capacity conditions improved from July, the year-over-year comparison shows that the market remains considerably tighter than it was during the same period in previous years.

Transportation utilization provided another indication that available trucks are being used heavily. The utilization index increased 5.6 points in August to 70.6. That was only the second time in five years the measure reached what the analysis describes as robust growth, or a reading above 70.

High utilization alongside limited capacity helps explain why prices can rise sharply even as the capacity index remains below 50. The two measures track different conditions: capacity reflects the availability of transportation resources, while utilization reflects how much of that available capacity is being used. In August, the data showed that trucks in the market were working at elevated levels while the broader supply of capacity remained contracted.

The overall LMI was 66.6 in August, down 2.2 points from July. Slower inventory growth was identified as the primary drag on the overall index. Despite the monthly decline, the broader reading remained well above the 50-point mark that separates expansion from contraction and was approximately 10 points higher than the comparable August readings from the prior three years.

Manufacturing data also pointed to continued activity. The Institute for Supply Management’s Manufacturing PMI registered 54.6 in August, one point below July’s level. The New Orders Index remained in expansion for the eighth consecutive month at 53.7. Manufacturing employment also stayed positive for a second consecutive month after turning positive in July for the first time in 33 months.

Not all market participants viewed conditions favorably. Overall sentiment among manufacturing respondents was 42% positive and 58% negative, with pricing volatility identified as the leading concern in negative comments. For trucking operations, unstable pricing can complicate decisions about equipment, staffing and lane commitments, even when current rates are moving higher.

The LMI analysis indicates that pricing pressure could continue over the next 12 months. Respondents expect the transportation market to remain tight, although the July and August data showed some cooling from the stronger conditions recorded earlier in 2025. Van de Kamp said capacity remains “absolutely in that contraction range and incredibly tight.”

For professional drivers and small fleets, the market’s direction will depend on whether higher prices last long enough to support reinvestment and encourage additional capacity to return. The August figures show that the improvement in capacity has not yet been large enough to move the index into expansion. Until that changes, strong utilization and limited truck availability are likely to remain important factors in freight pricing and operating conditions.

The analysis identified three indicators to watch: the Sonar Tender Rejection Index for changes in capacity conditions, particularly in the Midwest and along the coasts; the Sonar Truckload Volume Index for regional shifts in freight demand; and the National Truckload Index for movement in spot rates.