Structural Volatility is New Reality for Supply Chain

The disruptions reshaping logistics are no longer temporary, but structural—and geopolitics is the primary engine driving that shift, according to a new report, State of Logistics 2026, from Kearney.

Of course, the main factor is the closure of the Strait of Hormuz, which, on top of the disrupted Red Sea routing, has driven oil prices up nearly 60% since the end of 2025.

This situation is compounded by effects across all modes through fuel surcharges, tanker rates, and insurance costs.

Added to this are "trade policy has become equally unpredictable, with the most visible factor being tariff changes that averaged every 1.5 weeks during 2025, triggering front-loading behavior, supply chain restructuring, and the permanent maturation of China+1 strategies that had long been theoretical."

The report offers this overall analysis:

The cumulative effect is a fundamental redefinition of what good logistics management requires. Resilience is no longer an attribute that organizations aspire to, but the minimum viable condition for operating. Trade compliance and geopolitical intelligence, once the domain of specialized teams, are now core capabilities required across the organization. The risk has shifted from “network debt,” or the accumulated inefficiency of deferred redesign, to “network drift,” which denotes the accumulated incoherence of reactive adjustments made without strategic intent.

The effect on logistics is as follows:

• For shippers, networks built for the prior decade’s efficiency imperative require structural redesign, not incremental adjustment.
• For carriers, route, pricing, and fleet strategies calibrated to historical patterns carry material risk.
• For logistics service providers, clients are seeking partners that can navigate complexity in real time, not merely execute against predetermined plans.

Key findings of the report are as follows (excerpted):

Macroeconomic outlook

Five structural forces define the macroenvironment: asymmetrical global growth, tightening financial conditions, geoeconomic realignment, labor and productivity constraints, and energy volatility.

Regional growth is uneven, with the US, India and Southeast Asia outperforming Europe and the Gulf countries' economies. 

Air

Air freight delivered record cargo volumes in 2025, with global demand growing 3.4%, but corridor-level divergence, not global averages, defined the market.

Tariff-driven front-loading produced sharp early-year demand surges, while Asia-Europe surged 10.3.% and Asia-North America contracted 0.8%.

Early 2026 showed strong demand acceleration, but rising fuel costs, SAF requirements, constrained Gulf routing, and geopolitical uncertainty create volatility.

The market is shifting toward value-dense cargo where speed and reliability outweigh freight costs.

Parcel and last-mile

The US parcel and list-mile sector has undergone a structural reset, not post-pandemic normalization. The removal of de minimis treatment for China-origin particles collapsed daily volumes by about 85%, forcing shifts to domestic fulfillment.

Carrier costs have reset with 5.9% general rate increase plus fuel and accessorial surcharges. 

Demand remains supported by $1.23 trillion in US e-commerce, but has bifurcated into ultra-low-cost regional delivery and premium-speed categories.

Platform-controlled routing is shifting advantage from network ownership to intelligence, integration, and great adaptability.

Water/ports

The ocean freight market remains oversupplied, though disruptions reduce effective capacity. Fleet growth outpaced demand in 2025, and new-build capacity entering in 2026 is deepening the imbalance.

Multiple chokepoints, including the Red Sea, Strait of Hormuz, Panama Canal and Black Sea, have sustained short-term rate support while constraining alternatives. 

For shippers, the soft market creates a procurement window, but volatility makes contract flexibility and scenario-based procurement more valuable than market timing. 

Rail

Rail enters 2026 in structural change dominated by the proposed Union Pacific-Norfolk Southern merger, which would create the first coast-to-coast single-line railroad in US history if approved.

A revised filing for the merger was submitted in April 2026. The rationale centers on truck diversion and faster transit, but competitors and shippers cite concerns about competition, rates and service. 

This follows a challenging 2025. Class 1 revenues were flat, carload volumes grew marginally, and intermodal revenue declined despite volume gains. 

Warehousing

The warehouse sector has largely absorbed prior-cycle disruptions and entered a period of recalibration.

Labor has stabilized at about 1.8 million to 1.9 million workers, but shortages are concentrated in higher-skilled technical and supervisory roles, while turnover remains above 40-50% annually.

Real estate is normalizing, with vacancy at 7.1% and new supply is at its lowest since 2017.

Inventory has stabilized, shifting from board stockpiling to targeted buffers. 

Leaders are deploying technology at network scale. 

3PL

The 3PL industry is at a strategic inflection point as shipper demand shifts from transaction execution to end-to-end supply chain orchestration.

Regulatory complexity, tariff volatility and evolving cross-border flows are driving shippers to seek partners that coordinate modes, data, and decisions across the network.

Leading 3PLs are responding by expanding scale, increasing node density and warehousing footprint, embedding real-time visibility, and deploying AI.

Provider's positions to win are evolving toward integrated 4PL-like orchestrators. 

State of AI in logistics

AI has crossed a threshold in logistics, moving from evaluation to measurable commercial returns in specific, well-defined applications.

AI creates value through four capabilities: interpret, predict, recommend and execute, with interpret and predict being the most mature. 

Physical AI, including warehouse robotics and autonomous vehicles, is producing commercial milestones.

Adoption remains uneven, widening the gap between embedded AI workflows and isolated point solutions.

The lesson is clear: value comes from selecting specific high-value workflows, redesigning them around AI and sequencing targeted wins outward.