Executive Summary
Swinging into July, extraordinary macroeconomic trends and geopolitical events and shipping capacity constraints continue to turn up the heat on a very hot logistics and transportation market. Uncertainty is for certain. The economy is adjusting to disruptions from an off-again, on-again conflict with Iran that has direct implications for global supply chains, a difficult-to-predict U.S. trade policy, and U.S. consumers spending yet leery about inflation and job prospects.
Despite the specter of rising inflation, consumer spending is holding firm, prompting larger retailers wary of tariffs that may increase later in July to ship additional inventory ahead of back-to-school shopping days. As a result, warehousing and shipping capacity is tight, exacerbated by nationwide driver shortages that have differing impacts across regions.
Through it all, the June Logistics Managers’ Index came in red hot, at 71.1, up from May’s reading of 69.5 — the first time the index has come in above 70 since the 76.2 reading in March 2020. Even with transportation prices pulling back from May’s high to 92.4, they are growing at historically extreme levels. In fact, they have been above 90.0 for four consecutive months after 52 straight months of readings below 90.
Key Implications for Shippers
Expect Longer Transit Times
Expect longer transit times and shifting summer schedules due to high utilization and regional driver shortages.
Monitor Daily
Monitor conditions daily because they remain dynamic, with the Iran conflict and tariff uncertainty creating rapid changes.
Budget for Elevated Costs
Budget for elevated prices and inventory warehousing costs while exploring carrier diversification and routing strategies.
Strengthen Carrier Vetting
Strengthen carrier vetting, performance monitoring, and contracts following the May 20, 2026, SCOTUS ruling in Montgomery v. Caribe.
Key Statistics
Logistics Industry Expansion Sets a New Record
For the first time since March 2022, the Logistics Managers’ Index registered above 70, with a reading of 71.1 for June, up 1.6 from May and 10.4 points higher than June 2025. Readings above 50.0 indicate expansion in the logistics industry, below a contraction, and those above 70.0 represent a significant rate of expansion.
June’s scalding LMI reading was driven primarily by much higher growth in inventory levels (+5.7 to 60.5), especially those reported by the larger respondents and downstream retailers, and expansion rates accelerated significantly in the second half of June. Warehouse utilization rates grew (+6.5), warehousing prices grew (+3.0), and transportation utilization (+5.2) grew this month, while warehousing capacity contracted (-3.0 to 47.5).
With transportation utilization super-heating to a reading of 74.7 and transportation capacity shrinking (-.9), it’s no surprise that pricing remains high. Though transportation price expansion was down 3.6 from May’s all-time high reading of 96, June’s 92.4 still signals significant upward movement, just at a slower rate.
New Expansion Record Above 70
The logistics industry expansion accelerated in June, surpassing May’s reading by 1.6 points and 10.4 points higher than June 2025 — first reading above 70 since March 2022.
Inventory Build Driving LMI
Larger retailers are bringing inventories forward ahead of back-to-school shopping, reacting to healthy consumer spending and the specter of new restrictive tariff policies.
Utilization at 8-Year High
Transportation utilization surged to its fastest growth rate since October 2018, intensifying competition for available freight capacity.
Capacity at Historic Lows
Transportation capacity contracted for the fourth month in a row with readings below 40, following 51 straight months above 40 and all but five months showing expansion.
Certain Uncertainty
Two factors are compelling retailers to build up inventories. First is sustained consumer spending through the first half of 2026 despite inflation, giving retailers the confidence to boost inventories for the rest of the year. Second is the prospect that tariffs could increase later in July.
Consumer retail spending was up 0.9% in May despite rising gas prices, and 32% of shoppers have already begun their back-to-school shopping. Though 13% below the February reading before the start of the Iran conflict, consumer sentiment was up 10.5% over May to 49.5 as gas prices and concerns about the conflict appear to have eased. Consumer expectations for inflation over the next year are still high, at 4.6%, and the U.S. added 57,000 jobs in June — a good showing — but lower than the 100,000 expected.
Encouraged by steady consumer spending and leery of the potential increase in tariffs in July, larger retailers are stocking goods for the back-to-school season. This emerging retail inventory strategy is the opposite of what was seen most of the year, when manufacturers were pulling inventories through much of the spring.
Higher Utilization + Lower Capacity = Higher Transportation Costs
Expanding warehousing and inventory levels put pressure on transportation capacity, utilization, and costs. Adding to this equation are the elevated fuel prices since the beginning of the Iran conflict. While down from May’s index reading of 96, June’s Logistics Managers’ Index shows transportation prices growing at an extreme rate of 92.4. Prior to that, readings were below 90 for 53 straight months.
Transportation utilization as measured by the June Logistics Managers’ Index is up 5.2 to 74.7, which is the fastest growth since October 2018. The metric moved from 69.2 in early June to 78.8 in the latter half, which would be the highest ever recorded. Downstream firms predict expansion at 82.7 over the next twelve months, significantly higher than the still hot 66.7 predicted by upstream firms.
Capacity Trends
Transportation capacity contraction remains at historically low levels. The Logistics Managers’ Report transportation capacity index dropped .9 points to 30.8 in June and now enters its seventh consecutive month of tightening. This is the fourth month in a row the metric has read below 40. This comes after 51 straight months above 40, and all but 5 of those months were expansionary readings above 50. Expectations for transportation capacity are currently 42.4 for the next twelve months, which still indicates capacity contraction.
On top of high utilization and lower capacity, fuel prices are turning up the heat on transportation costs for carriers and shippers. While U.S. diesel fuel prices are down by 16.4 cents per gallon in the last week of June and down 97.5 cents from the high of $5.64 per gallon in April, prices are still 87.5 cents per gallon higher than the start of the conflict with Iran.
7th Consecutive Month of Tightening
Transportation capacity dropped .9 points to 30.8 in June, entering its seventh consecutive month of tightening with expectations for only marginal improvement at 42.4 over the next twelve months.
Container Shipping Surging
Trucking rates aren’t the only freight prices heating up this summer. Asia-to-U.S. West Coast commercial shipping rates are up a massive 120% since mid-May to $6,175 per FEU. Asia-to-East Coast rates are up to $7,998 per FEU, $1,000 more than last summer.
Fuel Costs Still Elevated
Despite dropping 97.5 cents from April’s high of $5.64 per gallon, diesel prices remain 87.5 cents per gallon higher than before the Iran conflict started, keeping upward pressure on transportation costs.
Up, Up, and Away: Spot Rates
Shippers report high demand for quality carriers, and supply is tight. The Morgan Stanley Truckload Freight Index (TLFI) sits at the highest level for this time of year since Morgan Stanley began tracking data nearly 30 years ago.
The QURE model (MS TLGURE) predicts that truck rates will move from the current rate of $2.37 to $2.48 in six months and $2.52 in 12 months. Though the TLFI (index) has decreased in the past four readings, this is likely due to normal seasonal moderations.
Spot rates are well outside of historical norms. Regular monitoring and ongoing reassessment are prudent, especially if conditions stabilize from the current market shock.
Dry Van Spot Rate Fireworks
Reduced carrier capacity has kept prices high, and shippers are finding it more difficult to secure primary carrier capacity, resulting in more freight moving into the spot market. However, demand is weakening. The seasonally adjusted ton-mile index grew at an anemic 0.2% rate month-over-month and year-over-year.
Demand is highly concentrated in sectors related to AI computing buildout. Still, freight rates are elevated due to fuel surcharges. As of July 7, the 7-day rolling average linehaul rate climbed to $2.49 per mile, and dry van spot rates are 49% ($0.82) above last year and 31% (0.77) higher than the five-year average for typical cycles.
Flatbed Spot Rate Is a Record Beater
The Flatbed market segment continues to be the strongest truckload segment heading into the heat of the summer despite a short-term dip in trucking tonnage. Demand for building materials to keep pace with activity in construction, infrastructure, energy projects, and data center development is keeping prices high. National flatbed spot rates peaked at $3.00 during the week of July 7, higher by 44% ($0.99 per mile) than last year, and beating the prior record set in 2021 by 9%.
Reefer Rates Flying Close to the Sun Despite More Capacity
The reefer market is hyper local and quick to change, especially when it comes to capacity. Produce season is in full swing across California, the Pacific Northwest, and the Upper Midwest. As reported by DAT Freight, capacity moved from a slight shortage to a slight surplus in South Texas, a shortage in Georgia persists, and the California to Seattle lane saw a +22% jump the first week of July.
This season, from mid-April to July 4th, reefer linehaul rates more than doubled the average increase of $0.23 per mile, reaching $0.50. National reefer linehaul rates jumped by $0.10 per mile the week of July 4, and the 7-day rolling average finished 21% ($0.49) over early May levels. Current spot rate for reefers is 39% ($0.80) higher than last year, matching the Week 26 record of 2021.
“Some Like It Hot”
The freight market is running hot as rising utilization, shrinking capacity, elevated fuel costs, and forward inventory moves push rates higher across truckload modes.
June’s LMI reached 71.1, transportation utilization hit 74.7, and capacity fell to 30.8, while flatbed, dry van, and reefer spot rates remain well above historical and year-ago levels.
With retailers pulling freight forward and carrier availability tightening, shippers should expect continued pricing pressure and service volatility through the summer.
Lock in contracted capacity now. Spot market exposure at current rates represents a significant cost premium above contracted alternatives.
Diversify carrier base and routing strategies. Regional driver shortages are creating uneven service levels that multi-carrier approaches can help mitigate.
Navigate Market Volatility with Confidence
Download the full July 2026 Freight Market View to access all data and analyst commentary.