ITS Logistics June Report: Energy Prices, Capacity Challenges Drive Record Transportation Costs
ITS Logistics' June report indicates that rising energy prices and supply chain capacity constraints have pushed transportation costs to record highs.
RENO, Nev. – ITS Logistics, a subsidiary of Echo Global Logistics, released its June Supply Chain Report, highlighting how escalating energy prices and capacity challenges are driving transportation costs to unprecedented levels.
The report notes that U.S. inflation reached 4.2% year-over-year in May, its highest point in over two years. This surge is primarily attributed to fuel prices. Consumer confidence has also seen a decline, prompting a shift in spending towards essential goods like fuel and food.
The Logistics Managers' Index (LMI) recorded its highest-ever transportation price reading in May. Despite subdued demand, freight rates continue to climb, influenced by regulatory actions that reduce available capacity in the market.
These cost pressures are extending to parcel and last-mile delivery services, with companies like UPS and FedEx reducing networks while increasing rates. Warehousing costs have also seen a significant rise.
"Despite objectively low demand, shippers are paying materially more to move freight — and they should not expect that trend to reverse any time soon," stated Josh Allen, Chief Commercial Officer at ITS Logistics.