August LMI: Capacity at 40, Yet Prices Soar. Why This Disconnect?

The August Logistics Managers’ Index (LMI) reveals a striking paradox in the freight market: transportation capacity continues its deep contraction with a reading of 40, yet prices are surging. This disconnect creates a challenging environment for carriers striving for profitability. Julie Van de Kamp breaks down the latest PMI and LMI data, exploring key indicators like new orders, customer inventories, and transportation utilization. Learn why pricing pressures are expected to persist over the next 12 months and what this means for your supply chain strategy.

Transportation prices climbed another 3.1 points in August to a reading of 90 on the Logistics Managers’ Index, even as the capacity contraction showed early signs of moderating — a disconnect that reflects carriers’ urgent need to restore profitability after years of depressed rates, according to a Wednesday Sonar Update.

The overall LMI came in at 66.6 for August, down 2.2 points from July, with slower inventory growth the primary drag. Transportation capacity registered a reading of 40 — still signaling deep contraction below the 50-expansion threshold — but that figure represents an 11-point improvement from July and the slowest rate of capacity contraction recorded in six months. Transportation utilization surged 5.6 points to 70.6, only the second time in five years the index has hit what the report categorizes as robust growth, defined as anything above 70.

On the manufacturing side, the ISM Manufacturing PMI returned a 54.6 reading for August, one point below July’s level — which had been the highest since May 2022 — and above the economist consensus of 55.2. The New Orders Index held in expansion territory for the eighth consecutive month at 53.7, while manufacturing employment remained positive for the second straight month after turning positive for the first time in 33 months in July. Overall respondent sentiment was 42% positive and 58% negative, with pricing volatility cited as the top concern among negative comments.

“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.

Year-over-year comparisons underscore how much the market has shifted. The August capacity reading of 40 compares with 57 in August of last year, roughly 55 in 2024, and 60 in 2023, with the index peaking at 71 in June 2023. Meanwhile, transportation prices at 90 this August stand far above prior August readings of 55, 61, and 42 for 2025, 2024, and 2023 respectively — a rise Van de Kamp described as an “incredible increase in pricing” year over year. The overall LMI of 66 also runs approximately 10 points higher than the prior three Augusts, which came in at 59, 56, and 51.

Van de Kamp said the pricing pressure is expected to persist, noting that LMI survey respondents anticipate the transportation market will remain very tight over the next 12 months. She added that while some cooling has appeared in July and August data compared to earlier 2025 peaks, capacity is still “absolutely in that contraction range and incredibly tight.”

Looking ahead, Van de Kamp highlighted three Sonar metrics to watch: the Sonar Tender Rejection Index (STRI) for capacity signals, particularly in the Midwest and along the coasts as import-driven demand builds into the fourth quarter; the Sonar Truckload Volume Index (STVI) for regional volume shifts heading into peak season; and the National Truckload Index (NTI) for spot rate movement.

• August LMI transportation prices rose 3.1 points to 90, far above prior-year readings of 55, 61, and 42 for 2025, 2024, and 2023 respectively.
• Capacity index improved 11 points to 40 in August — the slowest contraction in six months — but remains well below the 50-expansion threshold.
• ISM Manufacturing PMI came in at 54.6 for August, above the 55.2 economist forecast, with the New Orders Index expanding for the eighth consecutive month.

This Summary is generated thanks to a transcription of the interview, for the full interview please enjoy the video above.