FreightWaves fulfills duty to cover tariffs

(Image: FWTV) 

On Monday’s The Stockout show, Grace Sharkey and I discussed the impact that tariffs may have on consumer packaged goods and retail, as well as UPS’ plan to reduce its exposure to Amazon; highlights from fourth-quarter earnings; and Mattel’s entry into the brick-building market to directly compete with Lego. We did the show live on the site first thing Monday morning before the announcement that the tariffs on Canadian and Mexican imports would be delayed 30 days. 

The newly introduced tariffs on the United States’ three largest trading partners bring up many unanswered questions, among them: Will there truly be tariffs on Canadian and Mexican imports or will the 30-day delay turn into an empty threat? That uncertainty makes it unlikely that companies will immediately rearrange supply chains. They might, however, delay investment in Mexico until there is more clarity.

If tariffs lead to an increase in CPG companies’ costs, those companies would likely face margin pressure since they would probably honor price commitments with retailers in the near term. Meanwhile, though apparel retailers would prefer that there be no new tariffs on Chinese goods, the National Retail Federation has toned down its language against tariffs and the industry may be breathing a sigh of relief that the new tariff on China imports is 10% and not something closer to the 60% threatened during President Donald Trump’s campaign. However, given the deteriorating relationship between the U.S. and China, the tariffs on products from China may last longer than those on Canadian and Mexican imports.

Watch Monday’s show here and check out the full playlist here.

UPS to walk away from half of its Amazon volume by H2 2026

(Chart: Yahoo! Finance) 

Parcel carriers and shippers should watch what is happening with UPS and Amazon. UPS shares declined 14% on Thursday and are down about 40% in the past three years as the carrier’s margins have deteriorated. The parcel carrier is taking a multipronged approach to improving profitability, including closing 10% of its buildings, reducing the size of its vehicle and aircraft fleets, and cutting the size of its workforce.

In addition, it came to an agreement with Amazon, its largest customer (representing 11.8% of revenue in 2024 and an estimated 20%-25% of its volume), to reduce the volume it handles for the largest e-commerce retailer by more than 50% by H2 2026. In so doing, UPS plans to focus on more profitable packages, such as those moved for small and medium-size businesses and for shippers in the health care industry. In 2025, UPS expects its U.S. volume to decline 8.5% while its revenue per package will increase by 6%. The implication for other parcel shippers is there will be more capacity available at UPS to fill a portion of the void left by Amazon, but the carrier may insist on higher rates to compensate for an increasingly elevated cost structure following the renewal of the Teamsters contract.

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