As of now, a recession doesn’t appear imminent, but U.S. business momentum is clearly slowing, and economic uncertainty continues to rise heading into the fourth quarter, according to a monthly report from ITS Logistics.
This assessment comes just as industry professionals prepare for the onset of the domestic logistics peak season, further evaluating strategies related to tariff arbitrage, assessing de minimis opportunities, seeking new warehouse locations throughout the U.S., and evaluating the trucking sector’s capacity gains, the Reno, Nevada-based firm said in its “September ITS Supply Chain Report.”
A clear sign of that volatility is the end of the de minimis exemption, which previous to August 29 had allowed parcels valued under $800 to enter the country duty- and tax-free. Its recent elimination leaves many direct-to-consumer marketplaces scrambling to adjust their peak season strategies ahead of the Q4 holiday shopping rush, ITS said.
To cope with those increased shipping prices, many retailers have turned to a “tariff hacking” strategy known as business-to-business-to-consumer (B2B2C), ITS said. In a move to dodge the Trump Administration’s import tax hike, those retailers route customer e-commerce orders to a third party wholesale platform which serves as a middleman, allowing the shippers to save 30% to 60% by paying tariffs on wholesale prices instead of retail markups.
“We’re now seeing e-commerce companies implement a tariff arbitrage strategy in response to the ongoing changes in global trade,” Josh Allen, chief commercial officer of ITS Logistics, said in a release. “These companies include everything from the luxury sector on down to those that provide what are considered to be lower-valued goods. This strategy is being leveraged to mitigate shifting tariff impacts and keep overall costs down for their consumers. It is a genius evolution in how companies are adapting to the economic impacts of tariffs and global supply chain management overall.”
The report also tracks the country’s stubbornly high inflation, which clocked in at 3.1% for August, significantly above the Fed’s 2% target. That statistic indicates a small but notable upward movement in costs or prices within the warehousing and storage industry, ITS said.
“As a result, businesses that rely on warehousing and storage services should anticipate slightly higher costs moving forward, particularly those with contracts that contain variable labor or utility components. As for the trucking sector, spot and contract rates continue to see minimal shifts at the onset of peak season. The ongoing capacity gains since January, combined with easing price growth at the start of peak season, suggest an ongoing softer truckload environment,” Allen said.
