Peak season inventory surge bolsters TL carriers’ double-digit rate ask

The Logistics Managers' Index, which surveys supply chain executives, revealed that demand for truckload carriers' services is expected to surge in the coming months. The October reading of 70.7 for the index marked a 50 basis point increase from the previous month and the second-highest level in over four years. This surge in indices is largely due to inventory levels rising at the fastest rate in four years, driven by hopeful holiday expectations.

Truckload carriers, who operate under non-dedicated agreements, are targeting double-digit rate increases in their upcoming negotiations. Knight-Swift Transportation, for instance, is experiencing the most peak-season project freight in its network since the pandemic. While cost pressures have affected truckload carriers' earnings in the third quarter, the group expects to capture double-digit rate increases during the bid season.

Warehouse capacity, on the other hand, has been contracting, with a 4.2 point slowdown in the rate of decline. Warehouse prices surged 7.2 points, while aggregate logistics costs, including inventory, warehousing, and transportation, increased by 11.4 points sequentially, marking the fastest growth rate since March 2022.