September Consumer Price Index proves the point I have been making for months. The stealth inflation caused by the Iran War would hit harder in the Fall.

As I have written before, and energy experts Andy Lipow, president of Lipow Oil Associates, and Kevin Book, managing director of ClearView Energy Partners, have explained, diesel is a stealth tax that hits the consumer’s pocketbook. Energy is the essential building block in the global supply chain.

Oil needs to be refined to be used. The latest International Energy Agency (IEA) Oil Market Report for October estimated Middle East refined product exports at 1.9 mb/d in September, down from 4.7 mb/d before the war. That is less than half of normal.

On a positive note, crude exports have recovered faster. Gulf crude exports, led by Saudi Arabia, jumped by 4.4 mb/d to 13.9 mb/d in September, more than 75% of pre-war levels. Ship-to-ship transfers and energy escorts by the U.S. have helped with this increase.

Because of the bottleneck at the Strait of Hormuz, petrochemical inventories remain low. This is inflating the prices of household products we use (think paint) or wear (apparel, accessories, and footwear).

A product or refined commodity can be sourced and manufactured in different locations. That means each node within their value chain is exposed to risk. Bottlenecks at one node can have a cascading impact.

This is an inflationary cocktail. The ingredients: the trickle-down impact of the war with Iran, with lower exports of oil, LNG, petrochemicals, and refined products, layered with rising ocean and air freight costs and, of course, tariffs.

In a recent note to clients, ClearView Energy Partners wrote that the dramatic increase in jet fuel prices could be a factor in increased flight cancellations and negatively impact jet fuel consumption.

U.S. airfares are up 22.4% from a year ago, per this morning’s CPI report. The September CPI release lists airline fares (+22.4 percent) among the indexes that rose notably over the last year, while overall inflation was 3.7%.

“Current events—especially conflict in the Middle East, diesel dynamics and stock releases—continue to outweigh the outcome of OPEC+ meetings,” the ClearView Energy report noted.

The 42nd OPEC and non-OPEC Ministerial Meeting is scheduled for November 29.

Stretched Purse Strings

Nationwide surveys and reports from food-assistance groups like Feeding America show food banks and pantries across the nation are seeing steady or dramatically higher traffic than in previous years.

Soaring gas prices, coupled with rising grocery costs, are thinning Americans’ wallets. Money for food is going into their gas tanks.

Remember, diesel powers the trucks that deliver groceries to stores.

Here are the truck and rail surcharges to show what logistics providers are charging.

Because fruits and vegetables have a shorter shelf life, transportation costs hit much faster than non-consumable items, which can sit in warehouses for months.

The September Logistics Management Index showed higher warehouse costs because freight is sitting longer in warehouses. Remember, every node in the logistics chain eventually affects a product’s final price for consumers.

The Russian “deal” with the United States is less impactful than promised. The 4.8 million tonnes Putin agreed to release works out to about 36 million barrels and covers about half of the cumulative shortfall.

“This is verbal intervention,” said Lipow. “The announcement makes it appear that Trump is taking action to reduce diesel prices, while Putin wants to be thought of as the good guy making diesel available to the world. Trump and Putin both blame Ukraine for the diesel shortage as they conveniently forget that Russia invaded Ukraine, and the USA bombed Iran.”

Russia has had a Diesel export ban because of the refinery damage due to its war with Ukraine. You can see the 30-day running average of Russian oil Exports.

Energy pain will also increase for those living in colder climates.

Americans are turning on their furnaces to heat their homes with fuel oil or other distillate fuels. These consumers will get socked twice. Once with higher delivery costs because of diesel prices, and twice with the increase in heating fuel prices.

Consumer Outlook

Given the breadth of products that arrived for this holiday, you can expect more promotional items. The National Retail Federation will announce its holiday sales outlook tomorrow, but don’t be fooled by the headline number, which will surely be impressive. The forecast will be on sales. Not units sold. We need to look at the units that will be sold. Remember, you can sell fewer products and still set a record because people are buying the items at higher prices.

Sticker shock will continue into 2027. It’s not a spitball prediction; it’s based on the higher supply-chain costs companies have been paying.

Brands I spoke with in April told me they would have to raise prices for their Spring 2027 lines because raw material costs for orders placed in July would be higher.

If you follow the supply chain, you understand how each node faces its own sets of risks and, as a result, influences the rest of the supply chain. Today’s CPI should come as no surprise, and it’s why you should brace for more inflation.

• Supply-chain planning has become increasingly short-term and difficult to predict.

• Frequent tariff and policy changes prompt companies to make quick decisions

• “More companies are now saying tariffs are going to be a permanent feature,” said Willy Shih, professor of management practice in Business Administration at Harvard Business School.

Frequent supply chain disruptions and bottlenecks have tested companies’ resilience, but their pivots have affected global trade flows.

I was recently asked on the Supply Chain Unchained Podcast about the strategies companies are using in today’s challenging supply chain landscape due to tariffs and wars. I said it’s no longer just-in-time. It’s about getting the product in.

This frontloading is also one of the drivers fueling record volumes at the Port of Los Angeles.

Gene Seroka, executive director for the Port of Los Angeles, and Willy Shih, professor of management practice in Business Administration at Harvard Business School, discussed this practice at length at the port’s October media press briefing.

Supply Chain Optionality

Companies, large and small, are seeking optionality in their supply chains.

“I see more companies moving from purely optimizing for cost to optimizing for options,” said Shih. "The questions they are asking themselves are, ‘How do I create more optionality so I can move around?’ or ‘How do I hedge for tariffs?”

Front-loading has been a lower-cost option for companies right now than relocating and rebuilding supply chains elsewhere. Why? Because tariffs keep changing, companies don’t have a clear picture of where to invest. Building supply chains in other countries takes time.

Many products, from cheap T-shirts and fast-fashion clothing to electronics and footwear, are too costly to make in America and don’t make sense to produce here. For products that can be reshored, building that manufacturing base won’t happen overnight.

“Diversification of supply chains is happening, but it’s going a lot slower than people would like,” said Shih.

“The big change I see is that more companies are now saying tariffs are going to be a permanent feature,” said Shih. “It used to be this way back in the 1960s through the 1980s. Tariffs were higher, and trade flows weren’t as strong as they are today.”

Shih said companies are changing their sourcing strategies based on where suppliers can deliver.

“So we’re seeing a lot of contract renegotiation, though that’s a different game than reshoring,” said Shih.

Both Seroka and Shih warned that this short-term trade strategy has created surges in container volumes, but the numbers could be misleading. The high container count may not reflect strong consumer demand. It’s more likely a combination of challenges facing shippers: tariffs, Panama Canal restrictions, and tight raw-material supply.

This is why you need to know the why behind the numbers.

Cargo surges may reflect inventory timing, disruptions, or attempts to get ahead of policy changes rather than a lasting shift in demand. This goes back to the discussion about data vs. intelligence. You need the intelligence to decipher the data and understand why it is happening.

Knowing the reasons lets you create scenarios and a solid game plan.

Asian Export Demand Expected to Continue

The movement of a container offers clear insight into the future of trade. You need the box to transport goods.

A telltale sign of strong demand for Asian goods is the high volume of empty containers that returned to the Port of Los Angeles in September. These containers are expected to come back loaded with more product. The Port of Long Beach and the Port of Seattle/Tacoma have also seen an increase in empty containers heading back to Asia. The Port of Oakland has seen a decrease.

For the near term, Seroka said purchase orders in Asia remained solid, but November and December are harder to forecast.

“While China’s share of our business at the port has dropped from 60 to 40%, we’ve continued to grow, as that sourcing starts to really take effect in Southeast Asia,” said Seroka. “When I’m in Hong Kong, Guangzhou, and Shanghai over the next 10 days, the one thing I’ll be checking is: what do these purchase orders look like? Is there a rate of cancellation, or are orders steady 90 to 120 days out?”

The manufacturing buildout in Southeast Asia has been a major driver of U.S. imports.

Vietnam exports to the U.S. have quadrupled over the last 10 years. This intra-Asia trade has been lucrative for ocean carriers.

Supply Chain Planning

Before the first trade war and pandemic, there was a cyclicality to maritime trade.

“It used to be you could do planning on an annual basis,” said Shih. “Now, with all these tactical things, it’s making it really hard. So, until our leaders get together and get some stability, we’re just going to have to be in an environment where people are planning contingencies and creating options.”

Supply chain experts say companies can plan for optionality by using AI across their entire product value chain. A value chain is the full cycle of a product: from creation to delivery. This includes sourcing materials, manufacturing, assembly, and transporting the product to customers.

The us of AI supports company employees in their decision-making across suppliers, procurement, production, inventory, logistics, and sales. All parts of the value chain depend on one another to complete a product and deliver it to market.

By using AI at each origin point of the supply chain, companies can prepare multiple scenarios. If a supply chain node is delayed, the effects snowball throughout the value chain. By understanding each node intimately, a company can plan for delays and pivot.

For example, a company might adjust a planned promotion so customers aren’t encouraged to buy products that won’t arrive on time. No company wants a sale if it doesn’t have the inventory to fulfill it.

“AI will memorize all the decisions that have been made, their context, their optionality, their expected outcome, and then puts that in a memory,” explained Fred Laluyaux, CEO of decision intelligence AI company, Aera Technology. “That memory doesn't lie. You can plan with optionality by using AI to keep track of choices considered and what happened after the decision. It’s more than identifying the risk. You manifest the decisions that need to be made with the help of humans in real time.”

Laluyaux said ongoing tariff disruptions and wars are prompting companies to rethink their supplier networks.

“This has forced organizations to rethink what their supplier network is, and to build a couple of options and backups,” said Laluyaux. “And that’s creating a lot of complexity as well.”

In practice, this kind of decision memory can help teams compare alternatives, learn which ones worked, and respond more consistently when similar supply-chain risks arise.

• U.S. trade balance hits 17-month high despite Trump tariffs

• Expect more tariff threats by President Trump

• AI, data centers fueling deficits with Taiwan

Buckle up for more trade war rhetoric.

U.S. President Dona…

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• The September Logistics Managers' Index rose its second-highest reading in four years.

• Increasing inventory levels are squeezing space, increasing costs.

• One of the highest rates of space contraction ever measured by the LMI.

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Just as we have seen with tariffs, sanct…

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The United States Department of Treasury has announced sanctions on Iran's railway…

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• Key regions for Supply Chain Risk were the southern U.S. and Gulf, China, and Latin and Central America- Marsh.

• Sea-dependent products such as server racks, switchgear, cooling systems, and petrochemical feedstocks face greater exposure than air-freighted chips.

• Panama Canal drought is affecting bulk commodities, container shipping, costs, delays, and acc…

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• The Pinglu Canal project is a man-made canal that is part of China’s international land-sea trade corridor.

• The canal connects southwestern China with the Beibu Gulf Port and international shipping routes.

• The canal could shift cargo away from barging or rail transport to the Pearl River Delta and effectively bring the coastline hundreds of kilometers inland in logistics terms, according to Lloyd’s List.

Logistics is always looking for new ways to shorten freight transit times. This speeds up manufacturing and delivery. To do this, it needs a vision of what the new tomorrow will look like, and investments in both physical and digital infrastructure need to be made.

Those who control the flow of trade have the ultimate power and make the most money. Yes, trade is agnostic and should flow freely, but the participants in building the waterways, ports, and terminals make money by expanding that trade.

China is a classic example of how a country has used trade infrastructure expansion to build out its own manufacturing base and trade relations.

No matter what part of the maritime industry- tankers, containerships, or bulk vessel owners- the majority say China’s long-game approach to building maritime infrastructure and expanding trade relationships has helped it mitigate the U.S./China trade war and find new markets to sell its goods.

According to the Council on Foreign Relations, China is not only the world’s largest trading country and second-largest economy, but also conducts about 95 percent of its international trade by sea lanes.

This chart shows you China’s overseas footprint.

Since the acceleration of the Belt and Road Initiative (BRI) in 2013, China has invested and committed around $1.4 trillion in cumulative infrastructure investments and construction contracts globally. The majority of that money goes to transport, maritime ports, and logistics corridors. China invested $50 billion in Africa’s port and related coastal transport infrastructure alone. Tanker owner-operators call this trade today the “China-to-China” oil trade.

Recently, China’s latest land-sea project, the Pinglu Canal, officially opened to commercial navigation on September 16, 2026. The 134.2-kilometer waterway is a key part of China’s “New International Land-Sea Trade Corridor”.

The canal connects the inland regions such as Chongqing, Chengdu, Guizhou, and Yunnan and offers a more direct maritime gateway to Southeast Asia, rather than routing cargo east through Guangdong.

State-backed entities like the Pinglu Canal Group operate and manage the canal, under regional coordination by the Guangxi Zhuang Autonomous Region authorities.

This canal will help China expand its trade, and here’s why.

China built this canal to turn its fragmented logistics network into a continuous corridor. The more nodes you have within a logistics system, the longer it takes for a product to arrive at its final destination. Slow trade = slower manufacturing = delayed payments.

A more continuous system lets trade move more smoothly. For example, experts have said commodities like potassium fertilizer from Laos can reach factories 5 to 7 days faster via the canal than through traditional routes. This benefits companies that use those factories to make their goods.

That potential improvement in transit times is one reason the canal could become an important part of China’s wider supply chain strategy.

The first cargo traversing the canal reflected the bulk-heavy, cost-sensitive freight the canal hopes to move more of.

On the canal’s opening day, Nanning Customs cleared 1,679.8 tons of import and export goods moving via the canal, including auto parts, plywood, thenardite, and fiberboard. Exports included a bulk carrier loaded with Australian bauxite that left Qinzhou Port bound for Nanning Port and Baise Port. A 5,000-ton inland demonstration vessel was carrying limestone and came down the Guigang–Pinglu Canal–Qinzhou route.

The list of freight and the industries that stand to benefit from this new canal is lengthy.

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There will be a lot of headlines about the summit between Presi…

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• Consumers around the world will be paying a lot more to heat their homes

• U.S. Treasury has sanctioned Japan’s BitBank, shows Iran still making money on oil sales

• Iran is still selling oil through ship-to-ship transfers to China

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When you look at the flow of trade, many headlines focus solely on the number of containers coming into the nation’s ports. But trade is more than the port itself. It’s the nodes beyond those gates: the trucks, trains, and warehouses that help keep trade fluid.

Each node makes revenue by moving or storing those containers. This is the investable actionability of the logistics data.

2026 marks a historic year for West Coast ports processing historic container volumes. Shippers have frontloaded freight to avoid tariffs and bottlenecks tied to the U.S. war with Iran, as well as increasing imports of AI power infrastructure components to support the massive buildout of data centers.

Adding to these volumes are diverted containers due to Mother Nature.

Lessons from the 2023/24 El Niño’s devastating impact on the Panama Canal have ocean carriers proactively changing their game plan now, instead of reacting in the coming months.

I’ve covered how trucking and warehousing are benefiting from the container increase before, so in this article I am focusing on rail.

The increase in rail volumes comes at a time when the Surface Transportation Board is reviewing the merger of Union Pacific and Norfolk Southern, which would create the nation’s first transcontinental railroad. The companies say the connectivity would create seamless travel and reduce costs.

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• Higher winter bills set to impact consumers around the U.S. Midterms

• Heating oil prices well above the last 10 years

• Saudi Arabia refining capacity outtage more than Russia

The latest U.S./ Iran war shock is l…

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• On Middle East Landbridge: “There is nothing that you will build that cannot be destroyed. If someone wants to prevent this from being solved, it’s easily done. There is only one solution. We have to live. Humanity has to learn to live with one another. You need peace.”

• “The situation over the last two years has been one where the U.S. has done everythin…

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• Major ocean carriers have announced higher Panama Canal surcharges and fee adjustments and are actively rerouting transits to limit or avoid the Canal because of the Panama Canal Authority’s ongoing water-saving draft restrictions and booking changes.

• Retail Industry Leaders Association said consumers are prioritizing value in product purchases

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• China's cumulative trade surplus through August reached $805.5 billion

• China’s trade surplus grew from July’s trade surplus of $112.5 billion

• Latest data puts China on pace to exceed $1 trillion for the second consecutive year.

• U.S. trade deficit for July grew to $99.3 billion

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Global energy markets continue to focus on crude prices, but as I have written before, it’s more than the black gold being transported in tankers through the Strait of Hormuz.

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The latest release of the Logistics Management Index for August shows inventory still sitting in warehouses and costs rising due to a lack of space.

Warehousing Capacity increased (+7.2) at 53.5.

“This is only the second time in the last six months that this metric has been in expansionary territory and is the highest reading since December of last year when inventories were run down during the holiday shopping season,” said Dale Rogers, professor in the supply chain management department at Arizona State University and one of the authors of the LMI.

This freight cocktail has LMI creators warning of inflation in the next several months.

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• U.S. rail traffic growing 3.2% YOY

• El Niño mitigation measures have the Panama Canal Authority reducing vessel transits in September

• Ocean Carrier, ACL is offering North America landbridge alternatives for shippers

• Port delays in 2022 led Hapag Lloyd, Norfolk Southern, Union Pacific, and Port of Virginia to come up with a new trade model for East Coast to …

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Canada is a necessary trading partner in the U.S. supply chain. History was made when U.S. President Donald Trump announced he would invoke the never-used Great Depression tariff, Section 338 of the Trade Act of 1930. The Smoot-Hawley Tariff allows the president to impose additional tariffs of up to 50% on goods from countries that discriminate against U.S. commerce.

Both the U.S. and Canada are targeting highly sensitive economic sectors.

Canada is hitting hard at swing states ahead of the midterm elections. The country’s strategy is targeting U.S. sectors: steel, agricultural equipment, household appliances, consumer and commercial electronics, dairy, and pulp and paper.

The United States has taken a broader approach but thankfully has omitted key items to keep the U.S. supply chain and energy moving.

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