Good morning readers,

The AI boom is creating an unexpected supply chain headache for consumer electronics.

Apple says it may raise product prices as surging demand for memory and storage chips from AI data centers squeezes global supply and drives component costs higher.

CEO Tim Cook said Apple has absorbed rising costs for as long as possible, but memory suppliers are increasingly prioritizing high-bandwidth chips used in AI servers, leaving less capacity available for consumer devices.

We saw this coming. Earlier this year, CrossDock explored this issue in depth — If you'd like to go down that rabbit hole, check out our deep dive.

Let's dive into today's edition.

Speaking at the Port of Los Angeles, Transportation Secretary Sean Duffy unveiled the American Supply Chain Sovereignty Initiative, a proposal to create a national freight-visibility network linking ports, ocean carriers, railroads, trucking companies and retailers.

He called on Congress to authorize the program through the 2026 National Defense Authorization Act.

Key Details: The initiative proposes a national freight dashboard and cargo-screening program designed to give ports, carriers and shippers greater visibility into cargo flows and help identify bottlenecks, while creating a fast lane for pre-screened imports that Duffy likened to TSA PreCheck for cargo.

Program Expansion: The initiative would expand on the Freight Logistics Optimization Works (FLOW) program, launched in 2022 after severe congestion at the Ports of Los Angeles and Long Beach. FLOW currently includes 86 members, including Walmart, Target, Nike, UPS, FedEx, DHL, Maersk, MSC, CMA CGM, Hapag-Lloyd and C.H. Robinson, as well as major U.S. ports and terminals.

Big Picture: The proposal also aligns with the DOT's 2026 National Freight Strategic Plan, which focuses on reducing bottlenecks, improving freight visibility and strengthening coordination across the nation's nearly 7-million-mile freight network.

Demand for large distribution centers is returning to the U.S. industrial real estate market, helping reduce vacancy rates for the newest and biggest logistics facilities even as smaller warehouses continue to face oversupply.

What’s Happening? According to CoStar, vacancy rates for industrial properties larger than 500,000 square feet have begun to decline after several quarters of elevated availability, driven by renewed demand from major logistics occupiers and a wave of build-to-suit projects delivered since late 2025.

Dual Play: The recovery has not been uniform. Newer warehouses between 200,000 and 500,000 square feet continue to face slower absorption, while rising supply is putting pressure on vacancy rates across smaller facilities and older industrial properties. Vacancy for small industrial properties stands at 6.4%, below the broader logistics market's 10.9% rate.

Key Details: CoStar said leasing activity among large occupiers has remained relatively healthy, though tenants are becoming more cautious. Average lease terms for the largest warehouse deals have fallen from roughly seven years in 2022 to five years today.

BNSF Railway has secured approval from the Barstow City Council for its planned $4 billion Barstow International Gateway, clearing a major hurdle for one of the largest freight infrastructure projects currently under development in California.

What’s the plan? The 4,500-acre facility will include an intermodal terminal, rail yard and transload warehouses designed to move containers arriving at the Ports of Los Angeles and Long Beach directly inland for sorting and distribution.

Improved Flow: BNSF says the project will improve freight flows by transporting containers via the Alameda Corridor to Barstow, where cargo can be transferred to domestic containers and distributed across its rail network. The company expects the facility to reduce congestion at Southern California ports while providing shippers with additional inland capacity.

The railroad estimates the project could eliminate 205 million truck miles annually by 2028, rising to 269 million miles by 2033 and 312 million miles by 2048 as more freight shifts from highways to rail.

U.S. companies are redesigning supply chains around disruption rather than waiting for conditions to stabilize, according to the latest State of Logistics Report.

Industry leaders said years of shocks—from the pandemic and tariffs to the Iran conflict—have forced businesses to prioritize flexibility and faster decision-making over scale and cost efficiency.

Key Findings: The report found U.S. businesses spent $2.4 trillion on transportation, inventory carrying and logistics costs in 2025, down 1% from the previous year. Logistics costs as a share of GDP fell to 7.8% from 8.3%, helped by a 36% decline in ocean shipping costs as new vessel capacity entered the market.

Tough Times: But the relief may be short-lived. Trucking rates are rising after a four-year downturn, while the Logistics Managers' Index showed transportation, inventory and warehousing costs all increased in May.

DP World is seeking to return to U.S. port operations for the first time in nearly two decades, entering exclusive negotiations to develop and operate a new container terminal at the Port of Corpus Christi in Texas.

Back to U.S.: If finalized, the agreement would mark the Dubai-based logistics giant's first U.S. port operating role since 2006, when political opposition and security concerns forced the company to exit the American terminal business shortly after acquiring P&O Ports.

Key Details: The proposed project would see DP World design, build and operate a new container facility at Corpus Christi, one of the nation's largest ports by cargo tonnage. The company said the terminal would help capture growing trade flows along the U.S. Gulf Coast and expand container-handling capacity in Texas.

Big Picture: While DP World already operates logistics facilities in the United States, including operations in Pennsylvania and North Carolina, its North American port strategy has largely relied on Canadian gateways such as Vancouver for cargo moving into the U.S. interior.

Global air freight rates remain well above historical norms despite recovering capacity and easing fuel costs, as demand from AI-related supply chains continues to absorb available space across major trade lanes.

Key Numbers: Global freighter capacity increased 4% month over month in May and a further 2% in early June, according to Rotate, while Cathay Cargo said its network had recovered to nearly pre-conflict levels. Yet pricing has shown little sign of returning to normal.

The TAC Index's global Baltic Air Freight Index fell just 2.1% over the four weeks through June 1 and remained 32.7% higher than a year earlier. In the first week of June, the index was still up 33.4% year over year.

Rising Cost: WorldACD data highlighted the imbalance. Global air cargo tonnage growth slowed to 3% in May, but average rates remained 36% above last year's levels, suggesting capacity constraints continue to outweigh volume trends. Fuel costs are also contributing. While jet fuel prices fell nearly 25% between April and May, they remain 57% above last year's average.

The European Parliament has approved a trade agreement with the United States that locks in a 15% tariff on most EU exports, ending nearly a year of uncertainty and clearing the way for formal adoption by EU leaders later this week.

What’s the deal? Under the deal, the United States will continue applying a 15% tariff on most European exports, while the European Union will reduce duties on selected U.S. goods, including certain agricultural products and a range of seafood items.

Conditions Apply: Lawmakers attached two conditions to their approval. The agreement will automatically expire on Dec. 31, 2029 unless renewed, and the European Commission will retain the ability to suspend tariff preferences for U.S. goods if Washington continues imposing separate national-security tariffs on products containing steel and aluminum.

Backstory: The vote concludes a lengthy ratification process that began after the agreement was struck between the EU and President Donald Trump at Turnberry, Scotland, in July 2025. The process was delayed twice this year as lawmakers protested U.S. tariff threats and tensions over Trump's comments regarding Greenland.

Imports at the Port of Los Angeles rose 26% year over year in May to 449,370 TEUs, the second-highest monthly import volume on record, as retailers accelerated shipments ahead of expected increases in ocean shipping costs tied to disruptions from the Iran conflict.

Increasing Volumes: The port handled a total of 840,165 TEUs during the month, while June and July volumes are expected to be even stronger as importers continue pulling cargo forward, according to Port of Los Angeles Executive Director Gene Seroka.

Why is this happening? The rush comes as vessel operators prepare to pass higher bunker fuel costs on to customers beginning July 1. Fuel prices across 20 major global ports nearly doubled in March to $1,053 per metric ton following U.S. and Israeli strikes on Iran, though prices have since eased on hopes of a ceasefire.

Big Picture: The trend extended beyond Los Angeles. Descartes Systems Group reported that total U.S. container imports increased 11.5% in May from a year earlier. Imports of plastic goods rose 26% to 251,706 TEUs, including an 87% jump in plastic office and school supplies and a 57% increase in plastic tableware and kitchenware.

Two U.S. companies have filed class-action lawsuits against four Chinese shipping container manufacturers, alleging the companies conspired to restrict production and raise prices during the pandemic-era supply chain crunch. The lawsuits follow criminal charges brought by the U.S. Department of Justice last month against several container-industry executives.

Key Details: The first lawsuit was filed on June 2 by C.A. Spalding, a manufacturer of electromagnetic components and goods. A second complaint was filed on June 9 by trucking company Daybreak Express. Both suits were filed in federal district courts in Northern California and name seven executives charged in the DOJ indictment as co-defendants.

What’s the case? The plaintiffs allege the manufacturers artificially inflated the price of shipping containers by restricting output. According to the DOJ's indictment, the defendants agreed to limit production capacity, helping push the price of a standard 40-foot container from roughly $2,800 in 2019 to more than $5,900 by 2021.