Good morning readers,

America's freight market is heating up again.

U.S. transportation prices surged at their fastest pace on record in May, with the Logistics Managers' Index's transportation-cost gauge climbing to 96—the highest reading in the survey's 10-year history. Inventory costs also jumped to a four-year high as warehousing expenses continued to rise.

The catalyst? The closure of the Strait of Hormuz. Higher fuel prices, shrinking carrier capacity, and mounting supply chain disruptions have combined to push freight costs sharply higher.

Let's dive into today's edition.

The Trump administration has unveiled a new tariff proposal targeting dozens of major U.S. trading partners, signaling that Washington's aggressive trade agenda will continue despite recent court setbacks.

Key Details: The plan would impose tariffs ranging from 10% to 12.5% on imports from countries accused of failing to prevent goods produced with forced labor from entering global supply chains.

Hit List: The proposed duties would affect economies that account for the bulk of U.S. trade, including China, India, Japan, South Korea, the European Union, Canada, Mexico, Taiwan, and the United Kingdom.

Why Now? The move comes after the Supreme Court struck down a key set of Trump-era tariffs, forcing the administration to seek alternative legal mechanisms to preserve tariff revenues and maintain pressure on trading partners.

The Backlash: The sharpest criticism came from the European Union, which called the allegations "absurd" and argued that it already has some of the world's strictest forced-labor regulations. China also rejected the findings, accusing Washington of using concerns about forced labor as a pretext to advance its broader tariff agenda and engage in "political manipulation."

A coalition of nearly 200 organizations, including the American Trucking Associations, is urging the U.S. Senate to pass the Combating Organized Retail Crime Act (CORCA), warning that increasingly sophisticated cargo-theft rings are disrupting supply chains and costing the trucking industry more than $18 million per day.

Parties Involved: Industry groups, including the U.S. Chamber of Commerce, the Association of American Railroads, and the National Retail Federation, argue that cargo theft has evolved beyond isolated incidents into coordinated criminal operations targeting trucks, rail networks, warehouses, and distribution centers.

Current Status: The legislation has already passed the House with bipartisan support and would establish a national coordination center within the Department of Homeland Security to help federal, state, and local authorities investigate organized retail and supply chain crime. Supporters say current enforcement tools have failed to keep pace with multistate and transnational theft networks.

Big Picture: The renewed push comes ahead of the back-to-school shipping season, with freight stakeholders warning that theft-related disruptions are raising costs, threatening worker safety, and creating additional strain across already complex supply chains.

U.S. manufacturing activity expanded in May at its fastest pace in four years, signaling renewed momentum across the industrial economy despite ongoing concerns over higher energy costs and global supply chain disruptions.

Key Numbers: The Institute for Supply Management's manufacturing index rose to 54, marking the fifth consecutive month of expansion and the strongest reading since 2022. Growth was driven by rising new orders and stronger factory production, with nearly every manufacturing sector reporting expansion.

Multiple Factors: The rebound reflects a combination of factors, including surging investment in AI infrastructure, favorable tax policies, easing trade uncertainty, and resilient customer demand. However, some manufacturers reported that the conflict in the Middle East and disruptions around the Strait of Hormuz are pushing up the cost of oil, transportation, and raw materials.

The Trump administration has reduced tariffs on imported agricultural and construction equipment, offering relief to U.S. farmers struggling with soaring fuel and fertilizer costs.

Key Details: Under the new policy, tariffs on products such as tractors, harvesters, forklifts, and other industrial machinery will fall from 25% to 15%, with a further reduction to 10% available for equipment containing at least 85% U.S.-made steel or aluminum. The changes take effect on June 8 and will remain in place through 2027.

Rising Cost: The move comes as rising energy costs linked to the Iran conflict have pressured farm incomes and delayed purchases of new machinery. A recent Purdue University/CME Group survey showed farm investment sentiment falling to its lowest level since September 2024.

Welcome Sign: Equipment manufacturers welcomed the decision, saying lower tariffs should reduce input costs, strengthen supply chains, and encourage investment. Investors reacted positively, sending shares of major manufacturers such as Deere, CNH Industrial, AGCO, Caterpillar, and Kubota higher.

Global container freight rates are beginning to spike as an early peak shipping season collides with ongoing disruptions from the Iran conflict and the closure of the Strait of Hormuz.

What’s Happening? Carriers are reporting stronger demand across major east-west trade lanes, with some shippers already facing reduced capacity allocations and additional surcharges.

According to the Freightos Baltic Index, spot rates from Asia to North America and Europe have climbed steadily in recent weeks, while June rate hikes and peak-season surcharges have pushed daily prices up by as much as $1,800 per container on some routes.

Multiple Reasons: The surge in rates is driven by stronger seasonal demand, elevated fuel costs, congestion at key transshipment hubs, and ongoing supply chain disruptions linked to the Middle East conflict. Additional bottlenecks, including rail congestion in Germany, are also adding pressure to global logistics networks.

C.H. Robinson is tightening its carrier qualification standards following a landmark U.S. Supreme Court ruling that expanded broker liability for crashes involving unsafe trucking companies.

What’s Happening? According to reports, the company is raising its minimum insurance requirement from $750,000 to $1 million, ending its practice of working with carriers holding a "Conditional" safety rating, and imposing a seven-day waiting period for newly authorized carriers. It is also removing carriers deemed high-risk under its internal safety metrics.

Why now? The changes follow the Supreme Court's May ruling in Montgomery v. Caribe Transport II, which found that freight brokers can be held liable if they knowingly hire carriers with poor safety records. The decision is widely viewed as one of the most significant legal developments for the brokerage industry in years.

Future Outlook: The move could have far-reaching implications across the trucking sector, particularly for smaller carriers and owner-operators. Industry observers expect other brokers to review their carrier vetting processes as they seek to reduce legal exposure in the wake of the ruling.

FedEx has officially completed the spin-off of its less-than-truckload business, creating an independent, publicly traded company called FedEx Freight, marking one of the most significant restructurings in the transportation industry in recent years.

New Beginnings: The new company began trading on the New York Stock Exchange under the ticker FDXF on June 1. FedEx distributed 80.1% of FedEx Freight shares to existing shareholders while retaining a 19.9% stake, which it plans to divest over the next two years. The separation creates two standalone companies focused on distinct segments of the freight market.

Key Details: FedEx Freight enters the market as one of North America's largest LTL carriers, while FedEx will continue focusing on its parcel delivery, e-commerce, and global logistics operations. CEO Raj Subramaniam said the move positions both businesses to pursue growth opportunities independently and create greater long-term shareholder value.

Major airlines are pushing back against warnings that Europe could face a jet fuel shortage this summer, saying they expect fuel supplies to remain sufficient despite ongoing disruptions linked to the Iran conflict and instability around the Strait of Hormuz.

No Shortage: Air Canada, Lufthansa, and Ryanair have all reassured travelers that they do not anticipate significant fuel shortages affecting summer operations. The comments mark a sharp contrast from April, when the head of the International Energy Agency warned Europe had only weeks of jet fuel supply remaining if Middle East disruptions persisted.

Alternate Sources: The outlook has improved as demand growth slows and suppliers secure alternative fuel sources from regions such as Africa and the U.S. Gulf Coast. At the same time, jet fuel prices have eased from recent highs, reducing immediate pressure on airlines ahead of the peak travel season.

Increased Caution: Fuel inventories continue to decline, and any further disruption to energy flows through the Strait of Hormuz could quickly reignite supply concerns and send jet fuel prices sharply higher.