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Freight markets show mixed signals as demand, capacity dynamics evolve

Photographic portrait of Sumit Dutta
Sumit Dutta

Principal, Supply Chain & Operations, Ernst & Young LLP

12 minute read 05 Feb 2026
Related topics
Supply-chain
Consulting

How can organizations navigate supply chain challenges with agility, innovation and a strategic embrace of emerging technologies?

In brief
  • Global supply chains should leverage AI to shift risk management from reactive responses to proactive strategies amid ongoing volatility.
  • The return of tariffs is forcing businesses to diversify sourcing strategies and rethink traditional trade partnerships.
  • While labor productivity rises, underlying economic pressures threaten growth and complicate efforts to build supply chain resilience.

The fourth quarter of 2025 reflected a cautiously optimistic tone across global supply chains, with select macro indicators pointing toward early signs of stabilization. The Global Supply Chain Pressure Index (GSCPI) fell to -0.16 in November 2025, signifying steadier global trade and the Global Container Freight Index (GCFI) rebounded to $2,437 on 2nd January 2026. Rail network fluidity saw year-end surge indicating holiday-driven volume rebound.

How EY can help

Yet, underlying pressures remain. The US Manufacturing Purchasing Managers’ Index (PMI) slipped further to 47.9 in December 2025, marking its tenth consecutive month of contraction. December saw narrowing spot-contract gaps for dry van and reefer, while flatbed rates grew 4.4% YoY, signaling mixed demand dynamics.

 

Freight markets indicate continued volatility. Ocean freight rates are trending upward on major trade lanes, driven by structural pricing adjustments and seasonal demand patterns. Truckload markets are tightening as carriers enforce stricter yield discipline amid capacity contraction. Air cargo remains stable despite isolated disruptions, with seasonal adjustments expected.

 

Trade realignment accelerated with the US expanding tariffs on more than 60 countries, prompting sourcing shifts and early purchasing strategies. Retailers intensified “China + 1” diversification, favoring Vietnam, Thailand, the Philippines, India and Mexico to build long-term resilience.

 

In focus this quarter is the transformative role of artificial intelligence (AI) in supply chain resilience. Leading firms are embedding AI into forecasting, supplier diversification and logistics optimization, moving from reactive recovery to proactive risk sensing. As volatility becomes structural, supply chains must evolve by embedding AI at the core of operations, enhancing digital fluency across teams and investing in talent management.

 

Thriving in this unpredictable environment requires not just data and decentralization, but intelligent systems, adaptive skills and reimagined workflows built for agility and foresight.

Key supply chain macro indicators

On the positive front:

  • Global Supply Chain Pressure Index (GSCPI): Fell to −0.16 in November from −0.09 in October, signaling eased supply chain pressures and smoother global operations
  • Global Container Freight Index (GCFI): Spot rates rebounded in Q4 2025; Trans-Pacific lanes expected to strengthen ahead of Lunar New Year. Rates were $2,437 in January 2026
  • Rail network fluidity: Year-end surge with Norfolk Southern up 21%, BNSF and Union Pacific up 9%, indicating holiday-driven volume rebound
  • Labor productivity: Rose by 2.4% in Q2 2025, reversing a previous decline and signaling improved efficiency and output

However, a few indicators suggest strain on the economy:

  • Purchasing Managers’ Index (PMI): Manufacturing PMI fell to 47.9 in December, marking 10th straight contraction; weak new orders and inventories highlight persistent uncertainty
  • Freight rates: December saw narrowing spot-contract gaps for dry van and reefer, while flatbed rates grew 4.4% YoY, signaling mixed demand dynamics

Global supply chain pressure index:

Aggregate of indicators like transportation costs and PMI to assess the strain on supply chains and its correlation with inflation.

Chart 1

Source: Federal Reserve Bank of New York: November 2025

  • Trend: The GSCPI fell to −0.16 in November from −0.09 in October, indicating supply chain pressures eased further and remained below historical norms, signaling smoother operations and fewer disruptions.

Global container freight index:

The GCFI is a benchmark of the average shipping costs for containerized freight across global trade routes.

Chart 2

Source: “Freightos - Global Container Freight Index,” Freightos Baltic Index, January 2025

  • Trend: Container freight spot rates continued to rebound in Q4 2025 alongside a modest uptick in global trade volumes. Trans-Pacific rates from Asia are expected to strengthen further as shippers front-load demand ahead of Lunar New Year holidays. For context, rates were around $2,437 on 2nd January 2026, highlighting the scale of the recent recovery.

Rail network fluidity:

Average terminal dwell time indicates the duration for which a container remains at a terminal, affecting supply chain flow and transportation costs.

Chart 3

Source: “Rail Service Data – STB,” December 2025

  • Trend: All three railroads show a broad year‑end rebound at Dec 31, 2025, with Norfolk Southern (+21% w/w to 26.9) posting the sharpest increases, while BNSF (+9% to 24.5) and Union Pacific (+9% to 21.6) also rise—suggesting a late‑December surge in volumes (likely holiday pull‑through and inventory positioning).

Labor productivity:

This indicator quantifies the amount of goods and services produced per hour of labor, serving as a key metric for evaluating worker efficiency and sectoral productivity gains.

Chart 4

Source: “U.S. Bureau of Labor Statistics,” 2nd Quarter 2025

  • Trend: Labor productivity in the US rose by 2.4% in Q2 2025, rebounding from a 1.8% decline in the previous quarter, driven by a 3.7% increase in output alongside a 1.3% rise in hours worked.

Purchasing managers’ index:

Manufacturing PMI gauges the health of the manufacturing sector based on new orders, inventory levels, production, supplier deliveries and employment environment.

Chart 5

Source: “US Institute for Supply Management, Trading Economics,” December 2025

  • Trend: US factory sector slumped to a 14-month low as ISM Manufacturing PMI fell to 47.9 in Dec (vs 48.2 in Nov), marking the 10th straight month of contraction; weak new orders, falling inventories, and persistent price pressures underscore economic uncertainty despite slight improvements in backlog and exports.

Freight rates:

This chart represents the comparison between national average ($ per mile, excluding fuel) dry van, reefer and flatbed contract rates and spot rates over time.

Chart 6

Source: “US FTR Transportation Intelligence,” December 2025

  • Trend: In Dec’25, Dry van spot-contract gap narrowed to $0.22 (from $0.35–$0.43), reefer gap dropped to $0.18 (from $0.33–$0.36), while flatbed spot linehaul rates show stable growth at +4.4% YoY after mid-year gains of 3.4–4.1%.

Key news events from the quarter

US freight markets in motion: ocean, truckload and air trends

Trade realignment: navigating the impact of expanding US tariffs

US retailers are shifting supply chains beyond China to boost resilience

EY US economic outlook, November 2025

Signal lost? decoding a K-shaped, tariff-tinged expansion K-shaped economy:

The 43-day government shutdown — the longest on record — will leave a modest but permanent dent in real GDP (0.1%–0.2%). Yet its most significant effects are intangible. The lack of timely statistics on the economy has amplified uncertainty already stoked by a patchwork of mixed indicators and policy volatility. On the margin, labor demand continued to soften into November, though layoffs remained subdued. Inflation appears to have firmed, but the pass-through from tariffs is unfolding gradually and unevenly. At the same time, a growing cohort of consumers are increasingly hesitant to spend ahead of the holidays.

Business investment remains concentrated in artificial intelligence (AI)-linked segments, while broader capex reflects a more cautious tone. The recent surge in stock market valuations — particularly among AI-adjacent firms — has also prompted renewed concerns about a potential asset bubble, contributing to investment hesitancy in other sectors. We expect US GDP to grow by around 2.0% in 2025, moderating slightly to 1.9% in 2026 — constrained by tariffs and tighter immigration, but supported by ongoing AI investment, a modest fiscal impulse in early 2026 and some deregulatory momentum.

Read more: US economic outlook November 2025 | EY - US

In spotlight: AI-enabled supply chain reimagination and resilience

Most organizations are still at the initial phase of their AI integration journey for supply chain, highlighting a significant opportunity that requires deliberate change management to realize its full potential. As adoption progresses, those that invest early in building robust data foundations and cross-functional collaboration will be better positioned to unlock advanced capabilities.

Figure 7

Potential benefits from AI and GenAI use cases across supply chain functions:

Leading AI adopters are realizing significant benefits, including improved forecast accuracy, reduced manual effort and faster recovery times. By embedding AI into supply chain workflows, they enable early disruption detection, rapid decision-making and automated execution. Leveraging diverse data sources, AI surfaces weak signals, runs real-time trade-off simulations and shifts resilience from reactive to proactive.

Figure 8

While AI holds transformative potential, embedding it into supply chains is a complex endeavor that extends beyond technology. Organizations should address challenges such as data governance, infrastructure readiness and cultural mindset shifts. Key barriers include data privacy concerns, high implementation costs, talent shortages, fragmented data silos, accessibility limitations, geopolitical uncertainties and varying risk appetites. Overcoming these hurdles is essential to accelerate AI integration and realize greater value.

To navigate this complexity, leading organizations position AI as a strategic enabler, embedding it into redesigned supply chain workflows to enhance resilience and agility. They adopt advanced practices such as predictive risk sensing, dynamic demand forecasting, scenario planning, pre-emptive actions, compliance evaluation, AI-driven digital twins, supplier diversification, autonomous supply planning and optimized logistics — driving faster decisions and stronger supply continuity.

In a recent EY Center for Executive Leadership roundtable, leaders cited a shift from globalization to structural volatility. Resilient supply chains now demand commercial alignment — jointly managing pricing, channel exposure and SKU complexity — beyond operational fixes, as disruption becomes a persistent norm amid geopolitical and trade tensions.

Organizations are deploying AI to streamline operations, reduce costs, accelerate decision-making and enhance quality control across complex supply chain networks:

  • A leading company used AI to prioritize operations and reduce service risks, cutting operator alerts by more than 40%
  • A manufacturer shortened sourcing cycle time using an AI-driven platform
  • A company runs 160 to 170 AI projects to lower resource extraction cost

Piyush Baid, Associate Director, Clients & Industries and Rohit Makker, Supervising Associate, Clients & Industries also contributed in this article.


See previous reports

Download supply chain quarterly update Q2 2025

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Download supply chain quarterly update Q1 2025

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Summary 

Key takeaways from the roundtable include:

  • AI scaling starts with organizational change: Reimagine workflows, don’t just automate them
  • Prioritize data relevance over perfection: Use imperfect but useful data to accelerate value
  • Empower decentralized execution: Centers for excellence (CoEs) should guide, not control — enable distributed ownership
  • Integrate AI into operations: Link AI to core metrics like service levels, inventory turnover and throughput for tangible impact

About this article

Photographic portrait of Sumit Dutta
Sumit Dutta
Principal, Supply Chain & Operations, Ernst & Young LLP
Supply chain aficionado. A true global citizen and explorer with experience working in over 25 countries. Father and personal tutor/homework helper to two daughters.
Related topics
Supply-chain
Consulting

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