Transportation capacity index drops to its lowest point in four years this December

December Sees Sharp Decline in Transportation Capacity as Rates Surge

According to the latest monthly survey of supply chain professionals, transportation capacity experienced a significant drop in December, while shipping rates continued their upward trend. This decrease in available capacity was more severe than what has typically been observed during previous holiday periods.

The Logistics Managers’ Index (LMI), which measures expansion or contraction in the sector with readings above or below 50 respectively, reported a transportation capacity score of 36.9 for December. This figure represents a 13.1-point decrease from November and marks the lowest level since October 2021. It also signifies the first time since March 2022—when the freight downturn began—that the capacity metric has contracted.

While the report acknowledged that stricter English-language requirements have played a role, it suggested that the surge in holiday deliveries was likely the primary factor behind December’s capacity squeeze.

SONAR Truckload Rejection Index – Van (STRIV.USA) for 2026 (blue shaded area), 2025 (yellow line), 2024 (green line), and 2023 (pink line). This index, which tracks the rate at which carriers reject loads, serves as an indicator of truck capacity. The current data points to a tightening truckload market.

Transportation utilization climbed to 58.2, up 6.7 points from the previous month. Meanwhile, transportation pricing rose to 66.7, an increase of 1.8 points, reaching its highest level since January 2025 (70.4).

Utilization rates showed a slight decline among retailers, falling to 47.6, but increased to 62.1 for manufacturers and wholesalers.

The report explained, “Retailers had largely restocked their shelves for the holidays by early December and then maintained their inventory levels, except for last-mile delivery needs.”

Transportation pricing outpaced capacity by nearly 30 points, indicating that December’s freight market was the most robust in over three years.

Looking ahead, forecasts for the next year predict capacity at 40.5, utilization at 70.3, and pricing at 76.8, signaling a potential major shift in transportation dynamics.

“The accuracy of this outlook depends on whether consumer demand remains stable despite possible price hikes,” the report noted. “Demand exceeded expectations throughout 2025, so it’s possible this trend—and a corresponding freight market rebound—could continue.”

SONAR: National Truckload Index (linehaul only – NTIL.USA) for 2026 (blue shaded area), 2025 (yellow line), 2024 (green line), and 2023 (pink line). This index is based on the average spot rates for dry van loads across 250,000 lanes, using a seven-day moving average that excludes fuel. Spot rates increased during the peak season as new driver restrictions, including non-domiciled CDL and English proficiency requirements, took effect.

Inventory Levels Plunge to Historic Lows

The overall LMI registered at 54.2 in December, down 1.4 points from November and the lowest since April 2024. The index has remained below its historical average of 61.4 for ten consecutive months. This slowdown is largely attributed to a sharp reduction in inventories and challenging year-over-year comparisons after two years of growth.

Inventory levels dropped to 35.1, entering a phase of “extreme contraction.” This is a decrease of 17.4 points from November and 14.9 points lower than December 2024. The decline was especially steep in the first 18 days of December (28.2), compared to the final two weeks (42.9).

Inventory and Warehousing Trends

Inventory costs remained inflationary at 62.9, though the rate of increase slowed by 8.1 points compared to November. However, costs surged by 17.1 points in the latter half of the month as more last-mile delivery options were utilized. The report also highlighted that tariffs contributed to higher inventory costs throughout 2025.

Projections for the coming year indicate that inventory levels will remain inflationary at 59, with costs expected to rise even faster, reaching 72.1.

Retailers plan to keep inventory levels steady, with a forward outlook of 50, aiming to manage cash flow and delay tariff-related expenses. In contrast, wholesalers anticipate growth in inventory (63), but may accelerate the movement of goods downstream if storage costs continue to climb. The report also mentioned that some smaller upstream businesses, burdened by high-interest loans, may be unable to hold onto inventory as long as before.

Warehouse Prices Increase Despite Lower Utilization

Reduced inventory levels negatively impacted warehousing metrics in December.

Warehouse capacity rose to 61.2, up 6.4 points from November, while utilization dropped by 4.7 points to 42.9—a new low for the nine-year history of the dataset.

The report attributed the softness in the warehousing sector to both retailers and wholesalers clearing out inventory backlogs and a continued slowdown in manufacturing.

Warehouse pricing remained inflationary, climbing 3.3 points to 66.2 during the month.

“Warehouse pricing is the only metric in the LMI that has never shown contraction. Regardless of inventory trends, storage costs continue to rise,” the report stated.

Respondents expect warehouse prices to keep increasing over the next year, with a forward outlook of 74.7.

The LMI is a collaborative effort among Arizona State University, Colorado State University, Florida Atlantic University, Rutgers University, and the University of Nevada, Reno, in partnership with the Council of Supply Chain Management Professionals.