Warehouse Wisdom, Weekly. 11/21/2025

🚚 Happy Friday.

USPS spent four years forcing shippers upstream to charge higher rates, then reversed course after discovering building your own last-mile network costs more than using the one you're mandated to operate. Meanwhile, FAA terminated air traffic cuts after ordering 40 airports to reduce operations, while China imported 42 million tons of soybeans from Brazil versus 16.57 million from the U.S. Freight volumes keep sliding as the Cass Index hit 7.8% annual decline while shippers consolidate LTL into truckload. Let's get right to it, there's a lot happening!

Global Logistics

Air traffic barely blinks while shipping fees hammer farmers

FAA terminated air traffic cuts Monday after ordering 40 major airports to reduce operations by up to 10% during the government shutdown. Air cargo barely noticed. Large carriers protected hub-to-hub flying and widebody aircraft handling most domestic volumes. UPS operated mostly outside the 6 a.m. to 10 p.m. restriction window since its network runs overnight. Regional carriers took the hit—SkyWest and Envoy Air flew planes too small to carry meaningful cargo anyway.

The U.S. and Beijing suspended reciprocal shipping fees for one year as part of October's trade deal. Chinese vessels had faced $50 per net ton per voyage. Cosco and OOCL paid approximately $42 million in the first week after fees launched October 14th. The Agriculture Transportation Coalition called the fees "ugly" and misguided, making U.S. exports more expensive than competing countries without creating demand for American-built ships.

DP World plans $3 billion in African port expansion this decade as the U.S.-China trade war creates arbitrage opportunities for third-party transit hubs.

Small Parcel Freight

USPS returns to last-mile after expensive self-delivery experiment

New Postmaster General David Steiner sees last-mile delivery partnerships as revenue opportunities after predecessor Louis DeJoy spent four years dismantling workshare programs. DeJoy pushed consolidators to drop parcels at sorting centers where USPS could charge higher rates. The strategy culminated in the UPS breakup late last year. Late October brought a tentative agreement. UPS would resume last-mile service after self-delivery proved more expensive than promised. USPS posted $80.5 billion revenue ending September 30th with a $2.7 billion operating loss versus $1.8 billion in 2024. Steiner wants last-mile delivery at larger scale, using 33,000 post offices as e-commerce return locations. The playbook: leverage what you already own, deliver everywhere you're required to reach, and bill others for the access.

Major carriers published 2025 holiday shipping deadlines for pre-Christmas delivery with ground services requiring earlier ship dates than expedited options. FedEx ground packages need to ship by December 9th for Christmas Eve delivery, while UPS ground requires December 17th, and USPS ground advantage by December 18th. Published deadlines eliminate excuses but don't eliminate the coordination headaches. Shippers managing multiple carriers face five different cutoff calendars, varying service guarantees, and the annual gamble of whether peak surcharges justify expedited backup plans.

Uber Freight invested in Better Trucks extending its network to 68% of U.S. population coverage. Tech platforms call it "end-to-end solutions." Independent truckers call it margin compression.

Logistics Vitals

Freight volumes slide while shippers play modal arbitrage

The Cass Freight Index tracks $36 billion in paid freight expenses across hundreds of large shippers. October's shipments reading hit 0.997, down 7.8% annually and steeper than September's 5.5% decline. The expenditures component fell 0.2% annually to 3.169 after September's 2.2% gain. ACT Research analyst Tim Denoyer attributes recent declines to LTL concentration as rate increases push shippers to consolidate into truckload shipments.

• 7.8% annual decline in October shipments, accelerating from September's 5.5% drop

• 10% two-year stacked decline in shipments through October, consistent with September's 10.4% fall

• 8.2% inferred rate increase driven largely by modal mix shift toward truckload and away from LTL

• 38% expenditure surge in 2021 followed by 23% increase in 2022, then 19% drop in 2023 and 11% decline in 2024

• November shipments projected to fall 10% annually on normal seasonal patterns

Warehouse Tech

Automation delivers savings when systems speak the same language

Kroger plans to close three automated fulfillment centers in January. Facilities in Pleasant Prairie, Wisconsin; Frederick, Maryland; and Groveland, Florida will shut down as Kroger targets $400 million in e-commerce profitability improvements for 2026. The CFCs opened between June 2021 and June 2023 as part of Kroger's Ocado partnership. The digital business remains unprofitable despite strong sales growth. Interim CEO Ron Sargent will pilot "capital-light, store-based automation" instead. Sometimes the most expensive infrastructure isn't the most profitable.

PepsiCo began testing warehouse consolidation in Texas, integrating snacks and beverages into unified distribution. Chairman Ramon Laguarta said Texas offers the biggest opportunity given PepsiCo's low beverage share and high snack share. One distribution point delivers better economics than separate warehouses. After Texas testing, PepsiCo will expand nationwide with nuanced solutions by market. The company closed two Frito-Lay facilities in Orlando preparing "to solve for the demand of the future, not the demand of the past." Distribution networks consolidate to match buying patterns, not reverse.

Supply chain automation initiatives fail not from lack of technology but from lack of shared understanding across systems. Import teams work off container IDs. Procurement tracks purchase orders. DCs operate on ASNs. Merchandising uses promotional calendars. No system sees the full picture, so automation can't either. Automation fails when systems can't agree on what problem they're solving.

Green Logistics

Micro EVs scale on practicality while overhead wires power Chinese trucks

Royal Mail deployed 104 micro electric vehicles across six UK locations, replacing 52 traditional vans and projecting 242 tonnes in annual carbon savings. The three-wheel and four-wheel MEVs charge using standard three-pin plug sockets, eliminating specialist EV infrastructure requirements. Each postal worker operates their own MEV instead of sharing larger vehicles, improving route planning efficiency and eliminating shared vehicle scheduling delays. The compact design handles tight urban parking and narrow lanes better than full-size vans. Royal Mail's MEV rollout follows a 2021 trial supporting its net zero 2040 commitment.The company deployed its 7,000th electric vehicle in May, committing to 1,800 additional electric vans within 12 months. Simple charging requirements—just a normal outlet—open up wider networks of local delivery offices that couldn't accommodate standard EVs. Fleet electrification accelerates through operational simplicity, not capital investment.

China unveiled an electrified "braided heavy truck" drawing power via pantographs connected to overhead catenary systems, overcoming range limitations of conventional electric heavy-duty vehicles. Targeted at heavy cargo operations on roads and mining areas with abundant wind and photovoltaic energy, the vehicle completed nearly 10,000 km of trial operations including bumpy, undulating terrain.

The global logistics sector stands to reach $8 trillion in value supporting 10% of global employment while contributing 11% of global emissions. China's approach: build the electrical infrastructure into the road instead of waiting for battery technology to catch up. Infrastructure moves faster than press releases. And as electrification expands, warehouse automation faces its own bottlenecks.

Warehouse Quick Deliveries

Network shifts, automation milestones, autonomy tests

• Aptean's Paragon routing software optimizes delivery routes with half of new business from manual processes taking days versus 20 minutes

• FedEx Network 2.0 reached 25% completion targeting 40% by May 31st, integrating Ground and Express across 360 stations

• Aurora Tech ships cargo autonomously on Texas highways with former drivers as observers while computers drive trained on their patterns

• Port of Los Angeles processed 848,431 TEUs in October nearing 10 million for the year, third time in history