Transportation Prices Hit Record Growth Rate in May, Index at 96

Transportation prices grew faster in May than any month in the past decade. The Logistics Managers' Index returned a 96 reading for transportation prices in May, up 1 point from April and the highest mark since the survey began in 2016. The index maximum is 100. A reading above 50 indicates expansion.

Why did transportation prices jump to a record high in May?

Capacity kept shrinking. The transportation capacity reading came in at 31.7 in May, still in contraction territory but 3.3 points slower than April. Transportation utilization held at 69.5, nearly flat with the prior month. The combination of tight capacity and high utilization gave carriers pricing power they haven't had in years.

Two external shocks amplified the rate surge. The closure of the Strait of Hormuz and higher fuel prices pushed freight costs up across modes. But the truckload market faced an additional squeeze: regulatory agencies and law enforcement ramped up enforcement against non-compliant drivers, pulling more capacity out of the system.

Carriers are rejecting more loads as spot rates climb

Shipping managers reported a larger number of daily tender rejections in May as spot rates continued to reach new highs. When capacity exits the market this fast, carriers can afford to turn down loads that don't meet their rate targets. That forces shippers to the spot market, where rates have been climbing since late Q1.

The May reading extends a rate rally that began in earnest during International Roadcheck Week, when enforcement activity pulled thousands of trucks off the road for violations. Reefer spot rates jumped 52 cents per mile that week, the largest single-week increase ever recorded. Dry van and flatbed followed with 21-cent and 34-cent gains.

What the 96 reading means for small fleets

A diffusion index reading of 96 means nearly every supply chain manager surveyed saw transportation prices rise in May. For a small fleet, that translates to stronger negotiating position on contract renewals and spot loads. Shippers who locked in annual rates in Q4 2025 or Q1 2026 are now paying below-market, which gives carriers leverage to renegotiate or walk.

But the same capacity crunch that's lifting rates is also tightening the driver and equipment markets. Fleets that need to add trucks or hire drivers will face higher costs on both fronts. The 201% jump in Class 8 orders in April signals that larger carriers are already moving to capture the rate environment, which could put pressure on used truck prices and driver wages in the coming months.

How long the rate surge lasts depends on capacity

The transportation capacity index has been below 50 for three consecutive months, meaning capacity has contracted every month since March. The May reading of 31.7 is still deep in contraction territory. As long as enforcement stays aggressive and fuel prices remain elevated, capacity is unlikely to return quickly.

Historically, capacity takes six to nine months to respond to rate signals. The April Class 8 order surge suggests some carriers are betting the rate environment will hold into 2027, but new trucks won't hit the road until late Q3 or Q4 2026 at the earliest. That leaves a window where small fleets with clean CSA scores and available trucks can command premium rates.

The fuel and geopolitical wildcards

The Strait of Hormuz closure is a variable no one can predict. If the waterway reopens in the next 30 days, fuel prices could ease and take some pressure off transportation costs. If it stays closed into Q3, diesel could climb another 50 to 75 cents per gallon, which would push the all-in cost per mile even higher and force another round of rate increases.

For a 10-truck fleet running 100,000 miles per month at 6 miles per gallon, a 50-cent diesel increase adds $8,333 to the monthly fuel bill. That's $100,000 annualized. Fleets that haven't already built fuel escalators into their contracts are absorbing that cost directly, which makes the spot market the only place to recover margin.

What a 5-truck carrier should do with this data

The 96 reading confirms what you've been seeing on your settlement statements: rates are up, and they're up everywhere. If you're still running loads at Q1 contract rates, now is the time to renegotiate or move to spot. Shippers are paying record rates to keep freight moving, and the capacity index says the squeeze isn't over.

Watch your CSA score. Enforcement is the reason capacity is contracting this fast, and carriers with violations are getting pulled off the road. A clean inspection record is worth more in this market than it has been in five years. If you've been putting off maintenance or driver training, the cost of a roadside violation just went up.

Don't chase equipment at the top of the market. The Class 8 order surge means larger fleets are betting on a long rate cycle, but used truck prices are already climbing. If you need to add capacity, consider leasing or waiting until late Q3 when some of the April orders start hitting dealer lots. Buying a $90,000 truck in June to capture a rate environment that could soften by October is a gamble.