January transportation metrics again signaled a tightening market, according to a monthly survey of supply chain managers.
The Logistics Managers’ Index—a diffusion index in which a reading above 50 indicates expansion while one below 50 signals contraction—displayed a 47.1 reading for transportation capacity in January. That was a second straight month of contraction, albeit 10.2 percentage points slower than in December. (December’s 36.9 reading marked the fastest drawdown in transportation capacity since October 2021.)
Large companies (1,000 employees or more) returned a 41.5 reading for capacity while small companies reported modest expansion at 52.5. Downstream retailers reported no change (50) in capacity while upstream manufacturers and wholesalers saw contraction (45.9).
Public truckload carriers and 3PLs reporting fourth-quarter results have consistently pointed to increased regulatory pressure on the driver pool—English-language proficiency requirements, non-domiciled CDL restrictions, and ELD and driver school crackdowns—as a factor forcing truck capacity out of the market. Severe winter weather has also been a catalyst behind the market tightening.
The firming supply-demand dynamic has pushed tender rejections and truckload spot rates to multiyear highs.
The LMI report said capacity reductions have cooled in the seasonally weakest part of the year.
“Transportation Capacity contraction has slowed in each 2-week period since early December, suggesting that the market is leveling off after contracting quickly at the start of the holiday shopping season.”
Transportation capacity registered a 44.1 reading in the first two weeks of January, but moved to near-neutral at 49.3 in the back half of the month.
Transportation utilization (58.1) continued to expand, but remained in line with December. Utilization jumped nearly 6 points in the back half of January, likely due to the winter storms. Utilization rates have largely ranged in the mid- to upper-50s over the past two years.
The transportation prices subindex (71.4) moved 4.8 points higher in the month to the fastest growth rate since April 2022—the last days of the freight boom. The report said some of the surge could be tied to a mix shift away from intermodal to truckload, as inventories are again being managed under just-in-time strategies.
The one-year-forward forecasts for capacity, utilization and pricing are 42.3, 69 and 79.5, respectively, which would represent a significant turn in the market after more than three years of recessionary conditions.
Inventories ‘lean’ to start year
The overall LMI stood at 59.6 in January, 5.4 points higher than December and the fastest rate of expansion since June. “Milder restocking” in the month drove the bulk of the increase. However, the LMI has been below its all-time average of 61.3 for 11 straight months.
The reading for inventory levels (53.9) increased 18.8 points sequentially. December marked an all-time low for the nine-year-old dataset as inventories were drawn down on strong consumer spending through the holiday season. Subdued inventory growth in January (“second-lowest for any January”) suggests companies are “running inventories relatively lean to start the year” as carrying costs remain elevated.
Inventory costs (71.3) were 8.4 points higher sequentially and back into “significant expansion” territory (70 or higher). The index has recorded significant expansion in 12 of the past 13 months. Inventory costs expanded by an average of 65.5 from December 2023 to December 2024, and by 73.7 from January 2025 to January 2026.
The report said tight inventories could lead to faster turnover rates and “increased freight utilization.”
Warehouse capacity (50) was down 11.2 points in January, with warehouse utilization (54.4) moving 11.6 points higher as “firms restocked after the holiday rush.” The warehouse utilization subindex has contracted only twice—November and December 2025—a period described as “a temporary byproduct of a historic rundown in inventories.”
Warehouse prices (64.8) dipped 1.5 points but “remained in robust expansion.”
The LMI is a collaboration among Arizona State University, Colorado State University, Florida Atlantic University, Rutgers University and the University of Nevada, Reno, conducted in conjunction with the Council of Supply Chain Management Professionals.
