Warehouse Wisdom. Weekly. 09/19/2025

Happy Friday!

88 postal operators suspended U.S. service rather than figure out duty collection in two weeks. The de minimis elimination just cost small businesses $71 billion in unexpected duties. Even mail services choose panic over impossible deadlines. FedEx announced its annual 5.9% rate hike right on schedule. At least chaos has a schedule.

But here's your survival story: Ann Clark's cookie-cutter company sources everything domestically and treats tariff headlines like entertainment. Twenty years ago, friends said "just buy from China." Today they're cranking out 5 million cutters annually in Vermont while competitors scramble for alternatives.

Global Logistics

USMCA review starts, ports surge on tariff pauses

The U.S. launched its official USMCA review this week with 45 days for public comments ahead of July 2026's joint review meeting. Here's the timing disaster: Mexico's USMCA exemption expires in October. The Supreme Court still decides whether Trump can use emergency powers for unlimited tariffs.

Translation: reviewing your trade foundation while it crumbles isn't strategic planning—it's regulatory chaos.

Long Beach posted its second-busiest August on record with 901,846 containers as retailers rushed Trump's 90-day China tariff pause. Turns out "tariff pause" creates the same panic buying as "tariff increase." Just with better timing.

Empty containers rose 3.7%—the maritime equivalent of shrugging shoulders at future demand. Designer Brands responded by shifting 80% more digital orders from stores to distribution centers, cutting SKU variety 25% while increasing inventory depth 15%. When trade policy changes daily, fewer products with deeper stock beats broad assortments with shallow availability.

Small Parcel Freight

FedEx raises rates while Canada Post shifts tactics

FedEx announced its annual 5.9% rate increase for January 2026, matching its 2024 and 2025 hikes. Additional handling fees jump from $43.50 to $46. Per-package ground rates hit record highs in Q2 with reduced discounting activity. The timing comes as small shippers grapple with chaos everywhere else. FedEx's hikes may be the only predictable thing left in shipping.

Canada Post workers shifted strike tactics from overtime bans to stopping unaddressed direct mail deliveries. The union abandoned overtime restrictions after parcel volumes plummeted 36.5% year-over-year, making the ban pointless. Now they're targeting Canada Post's $421 million Neighbourhood Mail business.

Meanwhile, Target expands next-day delivery to 35 metro areas by October, covering 85% of its in-store assortment with free shipping on orders over $35. While carriers raise prices and create uncertainty, retailers double down on faster fulfillment. Speed becomes the competitive battleground when everyone else is busy extracting fees.

Logistics Vitals

Peak season peaked early, 10% drop incoming

LA ports had their best summer ever. Now they're bracing for a 10% drop through year-end. Gene Seroka achieved "the best two-month stretch for any port in the Western Hemisphere" with nearly 2 million containers in July-August. Peak season peaked in July. Holiday cargo arrived early. Economic caution kicked in. Success came too early?

• LA processed 958,355 containers in August, achieving 4.5% growth through eight months

• Container dwell times improved to under 3 days for trucks, 8 days for rail

• China ship fees in October will add $175-300 per container to shipping costs

• Two major drayage companies, TGS and GSC Logistics, shut down amid trucking's freight recession

• Empty containers down 1% to 326,462 units, signaling cautious import planning

Warehouse Tech

System chaos creates AI translator opportunity, warehouse robots get billions

Warehouses juggle WMS, OMS, TMS, vendor portals, and automation controls that don't talk to each other. Operators spend 40% of their time clicking between systems. Another 40% following up. Just 20% actually solving problems. With margins at 8-12%, companies now hire dedicated orchestration teams to make systems cooperate. The AI opportunity isn't replacing these systems—it's becoming the translator.

Figure raised over $1 billion at a $39 billion valuation to deploy humanoid robots. The company finished two robot generations in three years. Building Figure 03 now. Funding supports manufacturing at BotQ facility plus a partnership with Brookfield's 100,000 residential units for training data. Humanoid robots have more venture funding than most countries' GDP.

Turns out AI in supply chains isn’t just about warehouses—Coca-Cola joined MIT's AI consortium to combat citrus greening disease. The disease infected most Florida orange trees and 45% of Brazil's Citrus Belt. U.S. production dropped from 45% to 5% of global supply. When your ingredient is going extinct, AI becomes about survival, not efficiency.

Marketplaces

De minimis chaos spreads from Temu to Lululemon

4 million daily packages lost duty-free status overnight when the de minimis exemption died. Even major brands suddenly realized they'd been running duty arbitrage operations—Lululemon processes two-thirds of its U.S. orders through Canada, most under $800. Tapestry faces $160 million in profit headwinds. FedEx braces for a "muted air peak season."

Nobody saw this coming, apparently.

Amazon unveiled agentic AI tools for third-party sellers that generate 60% of its retail sales. The upgraded Seller Assistant promises to monitor inventory and adjust listings automatically. With sellers averaging $290,000 annually and Amazon collecting $156 billion from services, these AI tools matter. Assuming sellers trust Amazon's robots with their business decisions.

Here's the plot twist: Walmart is becoming an AI powerhouse by solving actual physical problems. Moving billions of items monthly using AI models and digital twins. With 4,700 stores and 20,000 tech staff, Walmart's AI gets milk to doorsteps instead of generating LinkedIn inspirational quotes.

Warehouse Quick Deliveries

Rail mergers face pushback…

• Kroger reviews its automated fulfillment network, shifting toward store-level fulfillment as delivery orders outpace pickup

• Ann Clark sources tin-plated steel from Maryland, produces 4-5M cookie cutters annually in Vermont, laughs at tariff chaos

• Rail Customer Coalition warns $85B Union Pacific-Norfolk Southern merger will increase costs as rail rates climbed 40% over 20 years

• China placed zero U.S. soybean orders for 2025—down from $12.8B in 2024 shipments (25% of total U.S. exports) as 34% tariffs push Beijing toward Brazil.