2026 CSCMP State of Logistics Report - Logistics in Chaos (6/17/26)

Ellie Thornton

Welcome to the show everyone! I'm Ellie Thornton, here with Steve DeNunzio. And Steve I want to start with a number that genuinely made me double-check my notes. Two point four trillion dollars. That is the total US logistics spend according to the brand new 2026 CSCMP State of Logistics Report. Now, it actually declined by just one percent, but the authors are warning us that this tiny drop is hiding some massive structural chaos.

Steve DeNunzio

Two point four trillion, Ellie. I mean, to put that in perspective, that is roughly the entire annual gross domestic product of Canada. And you are spot on—that one percent dip is a complete mirage. What we are actually seeing is a transition into what the report calls being "Forged in Disruption." It is this era of permanent, compounding volatility where the old baseline is just completely gone.

Ellie Thornton

Right, and they have this brilliant term for it in the report—"network drift." It basically describes what happens when supply chain managers are forced to make constant, frantic tweaks to their networks because the rules of global trade keep changing. Get this: in 2025, trade policy adjustments happened on average every one point five weeks!

Steve DeNunzio

A week and a half is just nuts. Think about trying to run a global supply chain when the rules change literally every ten days. It means you are constantly rerouting, changing suppliers, and shifting warehouses. That is the "drift." Your network becomes incredibly complex, highly inefficient, and really expensive because you can never actually optimize it. You are just constantly reacting to the next policy headline.

Ellie Thornton

And it is not just policy. It is physical chokepoints too, right? Like the Strait of Hormuz. The report mentions it carries twenty million barrels of oil daily. When that gets disrupted, oil prices spike, and suddenly every single mile of freight on earth gets more expensive.

Steve DeNunzio

Exactly. Twenty million barrels a day—that is roughly twenty percent of the world's petroleum consumption passing through a single narrow channel. When that gets pinched, it triggers a domino effect of fuel surcharges and global inflation that hits every truck, plane, and container ship.

Ellie Thornton

Which brings us to how companies are actually fighting back. For years, we have heard all this endless hype about artificial intelligence, but this year's report shows we are finally moving from flashy pilots to actual, hard proof points. They lay out this four-tier framework for AI: interpreting, predicting, recommending, and executing.

Steve DeNunzio

I love that framework because it moves away from the generic "AI will solve everything" talk. Most companies used to stop at the first two—interpreting data and predicting what might happen. The real money is made when you move to recommending and executing. Take FedEx and their MOBIUS platform. It is a predictive maintenance system, and it is saving them ten million dollars annually by fixing planes and trucks before they actually break down.

Ellie Thornton

Ten million dollars a year just on predictive maintenance! That is a massive proof point. And on the brokerage side, look at C.H. Robinson. They are using generative AI agents to automate thousands of pricing quotes every single day. Instead of a human spending ten minutes on a routine quote, the AI does it in seconds, which frees up their team to handle the really complex, high-risk shipments.

Steve DeNunzio

And that speed is everything in brokerage. But we are also seeing this AI and automation divide play out in the physical warehouse. There is a huge shift toward flexible, modular automation. Look at Walmart—they managed to unlock one point five billion dollars in inventory savings by using these highly adaptable, modular robotic setups that can scale up or down based on seasonal demand.

Ellie Thornton

One point five billion is staggering. But then you look at the flip side of that coin, where companies went too rigid. Kroger, for example, partnered with Ocado on those massive, high-tech, highly structured automated warehouses, and they just had to close several of them, resulting in multi-billion dollar impairments. It turns out if your robot system is bolted to the floor and cannot adapt when consumer habits change, it becomes a multi-billion dollar liability.

Steve DeNunzio

That is the ultimate lesson of 2026. In a volatile world, rigidity is death. If you spend five years building a hyper-specialized automated facility, by the time it is finished, the market has already moved on.

Ellie Thornton

That is so true, and we saw a perfect example of the market moving instantly when the US suspended the de minimis tariff treatment in mid-2025. That change absolutely collapsed direct-from-China e-commerce parcel volumes by eighty-five percent! It completely broke the business model for players like Temu and Shein overnight.

Steve DeNunzio

An eighty-five percent drop is essentially an extinction-level event for that specific supply chain model. You cannot survive on direct-to-consumer air freight from Shenzhen when you suddenly have to pay standard import duties on a fifteen-dollar t-shirt. So what did they do? They had to pivot instantly to domestic US fulfillment, buying up warehouse space and moving inventory in bulk via ocean freight instead of individual air parcels.

Ellie Thornton

It completely reshaped the domestic industrial real estate market. But speaking of domestic shipping, the trucking sector is having its own massive reckoning. We have seen eighty-nine thousand carrier exits since 2022. Eighty-nine thousand! Finally, that supply-side purge has pushed national spot rates up to two dollars and one cent per mile.

Steve DeNunzio

Two oh one a mile is a critical threshold. It means the market is finally bottoming out, but it is not a uniform recovery. Instead of a rising tide lifting all boats, it is this incredibly fractured, lane-by-lane battle for leverage. Shippers who treated carriers terribly during the downturn are suddenly finding themselves with zero capacity on key lanes, while those who collaborated are keeping their rates stable.

Ellie Thornton

Karma is a logistics metric, it seems! Meanwhile, out on the water, the ocean freight market is facing the exact opposite problem: massive structural overcapacity. Get this Steve—carrier earnings globally are projected to plummet from thirty-two billion dollars down to just one billion dollars in 2026. One billion!

Steve DeNunzio

Going from thirty-two billion to one billion is an absolute bloodbath. All those massive container ships ordered during the pandemic boom are finally being delivered, and there is just way too much slot capacity for the current demand. It means ocean carriers are going to be cutting rates to the bone, and freight forwarders cannot just survive on buying and selling space anymore. They have to differentiate by offering high-value advisory services, tariff compliance, and helping shippers navigate that crazy network drift we talked about.

Ellie Thornton

So basically, the era of easy logistics is gone. You cannot just book a cheap container and hope for the best. You need real-time data, flexible warehouse robots, and compliance experts on speed dial just to keep your head above water.

Steve DeNunzio

Exactly. The companies that win in 2026 will not be the ones with the cheapest static plan, but the ones who build their networks to expect the next disruption.

Ellie Thornton

Well, on that note, that is all the time we have for this quick take. Thanks for joining us, and we will see you on the next episode!

Steve DeNunzio

Take care everyone!