Tariff whiplash, tight capacity add volatility to U.S. supply chains: ITS report

U.S. supply chains showed signs of returning to seasonal norms in January before a fresh round of tariff upheaval injected new uncertainty into global trade flows, according to the February ITS Supply Chain Report from ITS Logistics.

The report said January import volumes pointed to more normalized behaviour following months of frontloading, while trucking capacity remained unseasonably tight and warehousing conditions shifted quickly from post-holiday softness to early-cycle tightening.

On Feb. 20, the U.S. Supreme Court struck down President Donald Trump’s IEEPA tariffs, prompting U.S. Customs and Border Protection to halt duty collections and deactivate tariff codes. Trump subsequently announced a blanket 10 per cent tariff under Section 122 of the 1974 Trade Act, allowing temporary import surcharges of up to 150 days without congressional approval. The new tariffs took effect Feb. 24, and the White House said it is working on a formal order to raise the rate to 15 per cent.

The company said the renewed geopolitical uncertainty is forcing shippers to reassess sourcing strategies.

“Similar to mid-year 2025, we will likely see a split in behavior between shippers who repeat frontloading activity to seize potential cost-saving opportunities and those who pause and wait for clarity in the coming months. This stop-and-go supply chain traffic will contribute to ongoing volatility,” said Josh Allen, chief commercial officer, ITS Logistics. “As it relates to warehousing, this month’s report shows conditions shifted quickly from post-holiday softness to early tightening in January, as inventory drawdowns reversed and utilization rebounded into expansion territory. While excess capacity was briefly absorbed faster than typical seasonal patterns, warehousing prices and inventory carrying costs remained firmly expansionary, highlighting persistent structural cost pressure across the sector.”

The report said trucking capacity, despite marginal cooling in mid-February, remains tight, with volumes and rates above recent historical averages in dry van and refrigerated markets.

“Newly announced non-domiciled restrictions will continue to place strain on the capacity pool over the coming months, converging with peak produce seasons and likely downstream effects from the new global tariffs ruling,” Allen added.

U.S. container import volumes totalled 2,318,722 twenty-foot equivalent units in January, down 6.8 per cent year over year but slightly above the six-year average for the month and up modestly from December. ITS said the early-year dip may signal a return to typical import patterns after a year disrupted by frontloading.

The report also pointed to a resilient U.S. labour market in January 2026, with about 130,000 jobs added, above consensus expectations, and the unemployment rate edging down to 4.3 per cent from 4.4 per cent in December.

“The labour market saw stronger than expected job gains and a stable unemployment rate offset by signs of softer underlying momentum and sector specific weakness,” said Allen. “Consumers demonstrated mixed behavior, and spending held up. However, confidence fell sharply amid lingering concerns about jobs and prices. While January showed resilience, overall momentum remained moderate and uneven across sectors. Employers added about 130,000 jobs, well above the consensus expectations, and the unemployment rate decreased to 4.3 per cent from 4.4 per cent in December 2025.”

Looking ahead, the report said pricing pressure and constrained capacity growth are expected to persist across transportation and warehousing sectors.