Good morning.

The U.S. Navy recently released its new 2026 shipbuilding plan, warning that America’s naval industrial base is struggling to keep pace with rising global threats. Despite shipbuilding budgets doubling over the past two decades, the Navy still operates just 291 battle force ships—far below its legally required target of 355.

The plan outlines a major industrial expansion push, including increasing distributed shipbuilding work from 10% today to 50%, scaling modular ship production, and rebuilding U.S. maritime manufacturing capacity as competition with China intensifies.

Let’s dive into today’s edition.

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The U.S. and China are discussing a potential $30 billion-for-$30 billion tariff-reduction framework for non-sensitive goods as part of a broader effort to stabilize trade relations ahead of President Donald Trump’s summit with Chinese President Xi Jinping.

What’s the deal? The proposed mechanism—internally referred to by U.S. officials as a “Board of Trade”—would focus on lowering tariffs and trade barriers in sectors considered non-strategic while keeping restrictions on sensitive technologies, semiconductors, and national security-related industries largely intact. Reuters reported that both sides could initially identify roughly $30 billion worth of goods eligible for tariff relief.

Products of Interest: Energy and agricultural products are expected to be central to the negotiations. China currently imposes retaliatory tariffs, including 10% on U.S. crude oil, 15% on liquefied natural gas and coal, and up to 55% on American beef imports.

Meanwhile, the U.S. continues to maintain layered tariffs on a wide range of Chinese consumer products, including electronics, footwear, and household goods.

The U.S. Customs and Border Protection has finalized roughly $35.5 billion in tariff refunds tied to President Donald Trump’s IEEPA-based tariffs that were later ruled illegal by the U.S. Supreme Court, marking one of the largest trade reimbursement processes in recent U.S. history.

Refund Details: According to a court filing, CBP had received more than 126,000 refund applications as of May 11 covering millions of import entries. The agency validated nearly 87,000 applications tied to 15.1 million shipments, while refunds for 8.3 million entries have already been finalized. Including interest payments, the total approved reimbursement value now stands at $35.46 billion.

Big Picture: The refunds are expected to deliver a significant financial boost to major importers across retail, manufacturing, and consumer goods industries. Companies ranging from automakers to Under Armour have already indicated that tariff reimbursements could improve earnings and margins in upcoming quarters.

U.S. shipper spending surged 12.9% in the first quarter of 2026—the largest quarterly increase since late 2020—even as national freight shipment volumes slipped 0.3%, according to the latest U.S. Bank Freight Payment Index.

High Spot Rates: On a year-over-year basis, shipment volumes edged up just 0.6%, but freight spending jumped 21.8% as tightening trucking capacity, rising diesel prices, and carrier exits pushed transportation costs sharply higher. DAT spot rates also climbed 11.9% quarter over quarter, levels not seen since the pandemic-era freight boom.

Regional Performance: The Midwest posted the strongest gains, with shipments rising 5.4% sequentially and freight spending surging 19.6% quarter over quarter and 26.7% year over year. Meanwhile, the Southwest recorded its 10th consecutive quarter of double-digit annual shipment declines, with volumes falling 14.3% year over year even as freight spending still increased 21.4%.

Global container spot rates recorded their sharpest weekly jump in months as ocean carriers imposed emergency fuel surcharges, cut vessel capacity, and raised peak-season pricing amid escalating disruptions across Middle East shipping routes.

Key Numbers: According to Drewry’s World Container Index, global spot rates climbed 12% this week to $2,553 per 40-foot container. The biggest increases came on Transpacific routes, where Shanghai-to-New York spot rates surged 14% to $4,252 per FEU, while Shanghai-to-Los Angeles rates rose 10% to $3,357 per FEU.

Asia-Europe trade lanes also saw major increases as shippers accelerated cargo movements ahead of what analysts say is an unusually early peak shipping season. Shanghai-to-Genoa spot rates jumped 20% to $3,701 per FEU, while Shanghai-to-Rotterdam rates climbed 11% to $2,413 per FEU.

Hapag-Lloyd warned that the Middle East conflict is significantly increasing shipping costs and disrupting global liner networks as container carriers reroute vessels around the Strait of Hormuz, Red Sea, and Suez Canal to avoid escalating hostilities.

Number Game: The world’s 5th largest container shipping line said its core liner shipping revenue fell 18% in the first quarter, while EBITDA dropped to €422 million from €1.05 billion a year earlier as weaker freight demand, weather disruptions, and geopolitical instability pressured results. Average freight rates declined 9.5%, while transport volumes slipped 0.7%.

Costly Detour: Hapag-Lloyd said rerouting vessels onto longer voyages and disruptions across key seaports have sharply increased operating expenses. Adjusted for currency movements, transport costs rose €147 million, or 4.6%, largely due to higher fuel prices, extended transit times, and conflict-related diversions across Middle East trade routes.

Despite the weaker quarter, Hapag-Lloyd maintained its full-year outlook, though executives warned that earnings visibility remains highly uncertain as volatility across global shipping lanes continues to intensify.

The U.S. Supreme Court ruled unanimously that freight brokers can be held liable under state negligence laws for highway accidents involving carriers they hire, a landmark decision that could reshape legal risk, insurance costs, and compliance standards across the U.S. logistics industry.

What Happened? The case centered on a 2017 Illinois crash involving a truck operated by Caribe Transport. Plaintiff Shawn Montgomery argued that broker C.H. Robinson should share responsibility for hiring the carrier despite alleged safety red flags, including a prior careless driving citation involving the driver. The Supreme Court overturned a lower court ruling that had sided with C.H. Robinson.

Key Details: The logistics industry had argued that freight brokers should remain protected under federal law governing interstate transportation, warning that exposing brokers to varying state negligence standards could create a fragmented regulatory system.

Companies, including Amazon, backed those arguments, while more than two dozen U.S. states supported the lawsuit, saying it would strengthen transportation safety oversight.

Big Picture: Industry leaders now warn that the decision could significantly increase litigation exposure and insurance costs for brokers, particularly smaller firms.

President Donald Trump has delayed plans to reduce U.S. beef tariffs as the White House struggles to balance rising food inflation against mounting political pressure from domestic cattle ranchers ahead of the midterm elections.

Key Details: According to the Financial Times, the administration had been considering lowering tariffs of more than 26% on imported beef to allow larger volumes into the U.S. at reduced duty rates in an effort to ease soaring meat prices.

But officials unexpectedly postponed the announcement after backlash from ranchers, many of whom are based in key Republican states and oppose expanding beef imports.

U.S. beef prices have surged sharply, with ground beef prices rising 16% year over year in March to $6.71 per pound, while sirloin steak prices climbed more than 18% to $14.12 per pound

Global coal shipments are rising sharply as countries scramble to replace oil and gas supplies disrupted by the Middle East conflict, triggering a major rebound in demand for one of the world’s most carbon-intensive fuels.

Coal Times: According to analytics firm Kpler, global coal imports in May are expected to exceed 464,000 tonnes, making it the third-highest monthly import volume on record.

Ripple Effect: Freight rates for medium-sized coal vessels have also surged, with shipping costs from Indonesia—the world’s largest coal exporter—jumping 60% to 75% since February, while Australian export freight rates climbed as much as 50%.

Rising Imports: Several countries that had previously committed to reducing coal dependence are now reversing course. Coal shipments to Japan, South Korea, and the EU rose 27% year over year in April, according to shipping association Bimco.

The Port of Los Angeles processed 890,861 TEUs in April, making it the second-busiest April in the port’s history as U.S. import demand remained stronger than expected despite tariff uncertainty, inflation concerns, and geopolitical tensions.

Rise in Imports: Loaded imports rose 5% year over year to 459,825 TEUs and jumped 21% from March, as retailers accelerated shipments tied to back-to-school inventory and early holiday merchandise.

Key Numbers: Through the first four months of 2026, the port handled 3.28 million TEUs—roughly 2% above its five-year average for the period but still 2% below last year’s pace. Loaded exports fell 0.5% to 127,726 TEUs, while empty container volumes climbed 10% to 303,310 TEUs.

Big Picture: Port Executive Director Gene Seroka said the latest cargo data points to continued resilience in consumer spending and growing shipment activity across Asian export markets. He added that another wave of imports tied to the holiday season is already beginning to build