Rising transportation pricing in April outpaced capacity growth
Transportation metrics were mixed in April, according to the Logistics Managers’ Index. The post Rising transportation pricing in April outpaced capacity growth appeared first on FreightWaves.
Transportation metrics were mixed in April, according to a monthly survey gauging sentiment among supply chain managers.
The Logistics Managers’ Index – a diffusion index in which a reading above 50 indicates expansion while one below 50 signals contraction – showed capacity, utilization and pricing remained in expansion territory during the month.
Transportation capacity (55.2) ticked higher, up 1.6 percentage points sequentially during the month as utilization (53.3) increased again but at a pace that was 70 basis points lower than in March. Utilization came in at the lowest level recorded since November 2023, turning negative to 45.9 in the second half of the month compared to a 59.6 reading in the first two weeks of April.
Transportation prices (62.3) grew at a rate that was 5.8 points higher sequentially even as capacity expanded and utilization cooled.
The Tuesday report said “the negative freight inversion” experienced in late March, when capacity was growing faster than pricing, didn’t continue into April, “meaning that the transportation market is still officially in expansion.”
Growth was more amplified, according to downstream supply chain managers, who operate at the retail level and closer to the consumer. Pricing sentiment among this group produced a 71.2 reading for April compared to upstream firms, or those at the wholesale level of the supply chain, which returned a 58.3 reading.
“The transportation market has remained resilient through the first four months of 2025,” the report said. “However, with the slowdown in imports on the horizon, it remains to be seen whether this momentum will continue through the summer.”
The one-year outlook among respondents showed capacity growing at a more subdued pace (53.4) with pricing expanding significantly (72.3).
The overall LMI came in at 58.8 during April, recouping just 1.6 points of the 5.6-point drop in March.
Inventory levels (57.1) expanded again but at a pace that was 4.2 points lower than in March. The report described the increase as “a return to normal seasonal inventory buildup,” compared to the pre-tariff freight pull-forward that was occurring earlier in the year.
Inventory costs (75.6) were up 5 points in the month. It’s unusual for inventory costs to grow at a much faster pace than inventory levels. However, there is significant stock sitting in warehouses, which pushed utilization (60.1) slightly higher and sent warehousing prices (72.3) surging, up 11.2 points.
Warehouse capacity (55.4) continued to grow at a moderate pace.
“The increases in Inventory Costs and Warehousing Prices suggest that much of the inventory that was rushed in during Q1 is still sitting stagnant in storage facilities and not being sold to consumers. … The inventories that have been built up now will likely be sold more slowly, leading to higher storage costs across the board.”
Inventory costs are expected to climb, with downstream respondents returning an all-time-high outlook of 94 and upstream firms expecting a significant increase (70.6) as well.
“Generally, our future numbers suggest that we may see dynamics similar to what we saw in the freight recessions of 2019 and 2022. Both of those downturns were led by decreases in B2B activity, during which Upstream activity contracted or expanded very meekly. Downstream activity was a different story during these freight recessions, as U.S. consumers continued spending, leading to more consistent activity at the retail level.”
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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