October LMI Hits 70.7: Logistics Costs Are Surging and Capacity Isn't Responding

The October Logistics Managers' Index (LMI) came in at 70.7, up from 70.2 in September. It is the second-highest reading in four years, behind only June's 71.1, and it is 13.3 points above a year ago. The index has now topped 70 in three of the last five months, after going more than four years without doing so.

The headline number matters less than what is underneath it. Costs are rising fast, and the capacity that would normally respond to those prices is not showing up.

What Is Driving the Index

The main driver is a sharp jump in Inventory Levels, up 8.0 points to 66.9, the fastest expansion since September 2022. Retailers are building stock slightly faster than their upstream suppliers (69.6 versus 64.1), which points to holiday preparation. Firms held inventory low most of the year to avoid tariffs and high costs, and now many are pulling it in all at once.

That buildup is expensive. Inventory Costs rose 8.9 points to 88.8, the highest reading since March 2022. Warehousing Prices climbed 7.2 points to 80.7, their fastest growth since May 2022. Transportation Prices eased by 4.7 points but still read 88.0, which the LMI describes as a highly significant rate of expansion.

Together, the three cost and price measures put Aggregate Logistics Costs at 257.5 on a scale of 0 to 300. That is the fastest rate of expansion for this measure since March 2022, and the LMI authors say it may foreshadow continued supply-driven inflation.

The Part That Should Concern Shippers: Capacity Isn't Rising

Normally, higher prices pull new capacity into the market. That is not happening right now:

• Warehousing Capacity reads 43.5 and has contracted in six of the first nine months of 2026.

• Transportation Capacity reads 38.0 and has contracted for eleven consecutive months.

• Upstream firms report the tightest storage, at 37.5 for Warehousing Capacity.

The LMI team flagged this as unusual. Prices have risen for months without a matching rise in capacity, which suggests providers are uncertain about the economy and are postponing investment. The report also cites a lack of driving labor and smaller carriers struggling to re-enter the market.

Respondents expect only partial relief. Their 12-month forecast for Transportation Capacity is 49.3, still just under the 50 line that separates contraction from growth. Their forecast for Transportation Prices is 90.0, which means they expect price pressure to continue.

What This Means for Shippers

The contract market lags the spot market, and the signals line up. The report cites Sonar data showing new truckload contracts 13.11% above the contracts they replace, and tender rejections holding at 13.9%. Diesel averaged $6.352 per gallon in the last week of October, up 71% from a year ago. J.B. Hunt has said it is likely to raise prices to recover higher labor, fuel and insurance costs.

If you are heading into 2027 bids and renewals, plan around these points:

• Budget for higher contract rates. Assume the increases seen in new contracts will keep showing up through the end of the year and into early 2027.

• Audit accessorials and surcharges now. When carriers face rising costs, charges outside the base rate tend to grow, and they are easy to miss on invoices.

• Lock in capacity early. With capacity contracting, carriers have the leverage. Shippers with committed volume and a clear routing guide have the advantage.

• Check warehouse and storage terms. Warehousing Prices are accelerating and smaller firms report tighter space. Review renewal dates and rate escalators.

• Revisit mode and routing choices. Least-cost routing and mode selection matter more when the gap between options widens. The report notes intermodal volumes are up.

The Bottom Line

Higher costs and shrinking capacity at the same time is the combination that squeezes distributors the most. Holiday inventory is already costing more to move and store, and the LMI's own forecasts suggest the pressure will carry into 2027. The shippers who come out best will be the ones who audit what they are already paying, tighten their carrier and warehouse terms, and plan their budgets around costs that are still rising.

Gain Consulting can walk through your freight spend and show where there is room to improve. Reach out to our team to start a conversation.

Source: Logistics Managers' Index, October 2026 report (released November 3, 2026), the-lmi.com. Additional figures are those cited in the report from Sonar, EIA and J.B. Hunt.