Retailers report transportation pricing surge in November

A November survey gauging sentiment among supply chain managers showed transportation capacity didn’t expand for the first time in more than a year while freight rates continued to climb.

The Logistics Managers’ Index – a diffusion index in which a reading above 50 indicates expansion while one below 50 signals contraction – showed transportation capacity fell 4.5 percentage points to a neutral reading of 50 in November. This was the lowest capacity reading in 14 months and only the third time the dataset hasn’t signaled expansion since March 2022, which was just ahead of a prolonged downturn.

Capacity was actually in decline in the second half of the month, with the index recording a 46.1 reading, as retailers continued to stock up for the holidays.

A tightened capacity backdrop pushed freight rates higher during the month. The transportation prices index (64.9) was up 3.2 points to the highest reading since February. Downstream respondents (retailers) flagged significant cost inflation, returning a price reading of 70.6, compared to upstream firms (manufacturers and wholesalers) that weighed in with a 63 reading.

Larger firms, which are more likely to be retailers, also felt the pressure more acutely, seeing prices expand at 72 versus 60.7 for smaller companies.

Growth in transportation pricing outpaced capacity by 14.9 points, a signal that the freight market may be turning. This was the second-largest gap in the metrics since April 2022 and a notable correction from the “negative freight inversions” recorded in August and September.

“Taken together, these metrics suggest that the freight market is relatively healthy in November,” the Tuesday report said.

However, the report noted that pricing growth was higher in the first two weeks of the month and more pronounced downstream, suggesting the changes could reflect typical seasonal movement of inventories within retailer supply chains.

Transportation utilization barely expanded in the month. A 51.5 reading was 5.8 points lower than October. Utilization was 10 points higher among upstream firms (54.1), but rates were higher downstream, suggesting retailers were paying up for last-mile delivery options.

The one-year-forward forecast for capacity was 47, a 5.6-point increase from October. However, pricing (78.4) is expected to move significantly higher over the next year.

The overall LMI stood at 55.7 in November, 1.7 points lower than October and the lowest reading since June 2024. November was also the ninth straight month the index was below the all-time average of 61.4. The dataset was weighed down by “continued softening of inventory and warehousing metrics.”

Inventory levels (52.5) returned to modest growth, increasing 3 points. The increase was due to merchandise moving downstream to retailers. Downstream companies reported inventory growth at 65.8, nearly 20 points higher than upstream firms.

Inventory costs (70.8) remained on the rise but slowed 2.4 points from October.

Warehousing capacity (54.8) was up 2.8 points with warehousing utilization (47.5) down 9 points to the first contractionary reading in the dataset’s nine-year history.

“Never before have LMI respondents reported that they were using less available warehousing space month-over-month,” the report said. “This shift is a product of the continued rundown of the large stocks on inventories that were built up through the first nine months of 2025, which has led to a softening in the warehouse market.”

Warehousing prices (62.9) remained in growth mode, albeit at a pace that was 4.8 points slower than the prior month.

“What will happen with consumer behavior in 2026, at which point firms will no longer have the backlog of inventories that were brought in pre-tariffs, remains an open question.”

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.

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