Supply Chain Market Update: Overcapacity and Tariffs Keep Recovery on Hold

Trade tensions and overcapacity continue to weigh on global supply chain sentiment. Overall, trade activity remains cautious, with lingering tariff uncertainty and capacity imbalances delaying rate recovery across modes.

Key themes highlighted in this month’s update feature:

Transportation and warehousing:

• Ocean freight rates declined further as weak demand and vessel oversupply persisted, with new U.S. port fees on Chinese-built ships posing near-term disruption risk
• Air freight demand stayed positive but slowed, reflecting shifting Asia sourcing from China to Vietnam and expanding capacity that continues to pressure rate
• Truckload conditions remained soft, with weak demand, excess capacity, and carriers prioritizing cost control, automation, and M&A to sustain margins
• U.S. parcel inflows fell ~70% week-over-week following the end of the de minimis rule
• Rail volumes continued to fall amid restructuring and leadership changes
• Warehousing demand strengthened with higher utilization and stable rents but record-low seasonal hiring signaling labor cooling

Tariffs:

• The U.S. imposed new tariffs—25% on imported trucks and 10% on buses effective November 1—paired with a 3.75% credit for U.S.-made vehicles and engines through 2030
• China extended its tariff truce to November 10 but introduced rare-earth export controls and reciprocal port fees