In this issue6 sections
The tariff clock slowed down, but the cost clock didn’t. On Wednesday, as Xi Jinping arrived for his first U.S. trip in nearly three years, Treasury Secretary Scott Bessent said the U.S.–China truce would run to January 10 instead of expiring on November 10. That takes the one tariff cliff that sat in the middle of peak season off the calendar. Everything else that sets landed cost this week kept rising. Retail diesel set a third straight weekly record at $6.529 a gallon, about 74% above a year ago. The Federal Reserve raised rates for the first time since 2023, and 16 of the 18 officials who submitted projections expect another increase. “The plain fact is that inflation is too high and has been for too long,” Chair Kevin Warsh told reporters. S&P Global’s flash manufacturing PMI jumped to 57.0 as supplier delivery times lengthened by the most since July 2022. General Mills named freight, packaging and new Canadian tariffs as the reasons its inflation is running at the top of its guidance. The shopper held up better than last edition feared: August retail sales rose 1.2% and Costco’s U.S. comparable sales rose 10.7%. But Costco also booked $184 million in IEEPA tariff refunds and spent part of it on lower prices, so some of that strength is borrowed from a pool that runs dry. Supply chain teams can now plan past November. The trouble is that the delay does nothing about the costs that are actually rising: fuel, financing and factory lead times.
Retail & Consumer Spotlight: The Shopper Wasn’t Kroger’s, but the Margin Might Be
Last Edition’s Question, Answered
Last edition asked whether Kroger’s “disciplined” shopper was the national one. August retail sales, released September 16, say no, at least in nominal dollars. Sales reached $773.9 billion, up 1.2% from July and 6.0% from a year earlier, against a consensus of 0.8%. The control group, which excludes autos, gasoline stations, building materials and food services, rose 1.4%, its strongest gain since September 2024. TD Economics estimates sales still rose about 0.8% after inflation. Read the mix before celebrating, though. Gasoline station sales rose 3.1%, which reflects diesel and gasoline prices as much as demand, and the July figure that August rebounded from was the first decline in nine months. The shopper is spending, but on essentials that cost more and at the formats that price them lowest.
Costco Is Spending Its Tariff Refunds on Price
Costco’s fiscal fourth quarter, reported Thursday, shows the value-format winner in action. Earnings were $6.75 a share against $5.87 a year ago and a $6.48 Zacks consensus. Comparable sales rose 9.4% overall and 10.7% in the U.S. over the 16-week quarter, or 6.7% and 7.2% excluding gasoline prices and currency. The detail that matters for supply chains is the refund. Costco received $184 million in refunds of IEEPA tariffs during the quarter, $174 million in principal and $10 million in interest, worth $0.15 a share net of what it reinvested. CEO Ron Vachris said the reinvestment went mostly into price cuts in the second half of the quarter, on everyday items in produce, meat and beverages and on non-food items such as home furnishings and hardware. CFO Gary Millerchip said Costco has already received a similar amount this quarter and intends to keep reinvesting the majority of refunds in member value. Costco is using a temporary cash inflow to fund a permanent price gap. Competitors without refunds, or with smaller ones, will have to match those prices out of operating margin. Suppliers that sell to both channels should expect those prices to come up in their next negotiation.
General Mills Puts Freight Back in the Guidance
General Mills beat on the first quarter of fiscal 2027, reporting adjusted EPS of $0.75 against $0.72 expected, and reaffirmed its $3.00 to $3.20 full-year range. The inflation language is what matters here. The company now expects input cost inflation at the high end of its 4% to 5% range because of Q1 spot increases in freight, grains and packaging and new Canadian tariffs, and it said inflation could run near 6% by the fourth quarter. It plans at least $750 million in savings this year from its productivity and transformation programs to cover that. Freight now sits in a packaged-food company’s full-year earnings guidance next to wheat and packaging. If your freight budget for next year is still a percentage of this year’s spend, it is already below what food manufacturers are guiding to. Rebuild it from $6.50 diesel and current spot rates.
Global Logistics Pulse: Every Input Is Rising Except the Volume
Diesel: Three Records in Three Weeks
The Department of Energy’s weekly on-highway diesel average reached $6.529 a gallon for September 21, up 24.4 cents from $6.285 on September 14 and 56.2 cents above the $5.967 record last edition covered. It is $2.78 above a year ago, a gain of about 74%. The structural driver has not changed. The Strait of Hormuz remains effectively closed to normal commercial traffic. IMF PortWatch counted 8 transits on September 13 and no more than 7 a day since, against a 2025 average of about 85. On September 21, UKMTO reported a projectile strike on an inbound tanker. A 150-gallon fill costs about $979 at the current average, about $161 more than in mid-August. At 6 miles per gallon, a surcharge table pegged to a $3.50 base now moves roughly 50 cents a mile from shipper to carrier, and more on older, thirstier equipment. A correction: last edition put that pass-through at roughly 70 cents a mile at $5.97 diesel; the same arithmetic gives about 41 cents. Redo your surcharge-table audit at $6.53, and write a cap-and-collar into any schedule you sign this quarter.
Truckload: Linehaul Is Flat, All-In Is Rising
DAT’s report for September 13 to 19 shows why the headline rate misleads. Dry van linehaul, excluding fuel, slipped 3 cents to $2.17 a mile, still up 33% year over year and 20% above the nine-year seasonal average. The all-in van rate including fuel rose 4 cents to $2.96. Van load posts rose 15% on the week and truck posts 8%, pushing the load-to-truck ratio to 11.2 from 10.6. DAT’s 35-day RateCast has van linehaul easing to $2.15 by late October. Carrier margins are not widening. Fuel is taking the increase. The Cass Freight Index for August, released this month, points the same way. Shipments rose 2.1% year over year, the first gain after 42 months of declines, while expenditures rose 18.7%. When volume rises 2% and spend rises 19%, the difference is price and fuel, not demand. Contract talks this fall will focus on fuel pass-through, not linehaul. Shippers who separate the two in their bids will be able to see what they are paying for.
Ocean: The September 15 GRI Held Where Carriers Wanted It
Last edition’s open question was whether the September 15 transpacific increase would stick in a schedule thinned for Golden Week. It did. Drewry’s World Container Index slipped 1% to $4,468 per 40-foot box on September 24. Shanghai to Los Angeles rose 2% to $7,838, up about 7% from $7,352 two weeks ago, and Shanghai to New York held at $10,373. Asia–Europe kept falling. Shanghai to Genoa dropped 5% to $3,835 and Shanghai to Rotterdam 4% to $3,485, putting Genoa about 30% below its $5,506 reading in early August. Carriers are aiming their capacity cuts at the transpacific. Drewry’s September 25 tracker counts 58 blank sailings on the main East–West trades from late September through October, 8% of 712 planned sailings, down from 79 two weeks earlier, but 64% of them now fall on the transpacific eastbound. On that lane alone, 15 blankings are announced for next week, up from nine this week. Mid-Autumn Festival runs September 25 to 27 and National Day October 1 to 7, which leaves three working days in between for Chinese ports and factories to work through backlogs. Drewry expects rates to ease into the holiday. Blankings are lighter than last year: Xeneta and eeSea data show just under 13% of October Asia capacity cancelled, against roughly 18% on the transpacific and 21% on Asia–Europe during last year’s Golden Week. That suggests carriers are confident enough to hold rates without deep cuts. Book October transpacific space now, and treat any post-holiday softening on Asia–Europe as the time to lock in Q4 cover.
Manufacturing: The PMI Surge Looks Like Hedging
S&P Global’s flash U.S. manufacturing PMI jumped to 57.0 in September from 53.9, against a consensus of about 53.6. It is the strongest reading since May 2022. Output grew at its fastest pace since April 2022, new orders at their fastest in nearly four and a half years, and employment at its fastest since February 2021. Supplier delivery times lengthened by the most since July 2022, and inventories grew faster. Some of that is real demand. But longer lead times, faster stockbuilding and surging orders in a month of record diesel and a looming rate hike are also what buyers do when they fear shortages: order earlier and bigger. Rail supports the physical side. U.S. carloads rose 2.4% in the week ending September 19, led by metallic ores and metals, up 3,073 cars. Intermodal rose 6.9% to 301,456 units. Last edition’s 18% reading was, by our math, mostly calendar: the 2025 comparison week contained Labor Day, and against a normal week the gain would have been about 4%. Watch whether the October ISM confirms the S&P number. If supplier delivery times keep lengthening while new orders cool, the gap is inventory building, not a sustained upturn, and inbound lead times will get longer before they get shorter.
Parcel: The Surcharge Clock Starts Sunday
UPS’s peak size and handling surcharges begin September 27. Per-package demand surcharges at UPS and Amazon Shipping follow on October 25 and run through January 16, peaking from November 22 to December 26. The flat per-package fees are up about 22% to 25% from last year. Amazon Shipping now matches UPS to the penny on every published peak line and applies its per-package peak fee to commercial as well as residential deliveries. With pricing identical, the lever left is package profile. If you haven’t redesigned cartons to avoid dimensional and additional-handling triggers, this weekend is the last chance before peak pricing starts.
Trade Policy Watch: The China Deadline Moved Past Peak. The Canada Deadline Didn’t.
Two Months of Relief
The truce extension matters more for timing than for content. The November 10 expiry would have hit just as holiday inventory landed, and it was one of the two tariff deadlines that last edition argued were driving September’s record imports. Pushing it to January 10 takes it out of peak season but does not settle anything. The arrangement from the leaders’ October 2025 meeting in Busan, which cut bilateral tariffs back from triple-digit levels and paused Beijing’s rare-earth and critical-mineral export curbs, stays as it is for two more months. Bessent said Beijing is meeting its commitment to buy 25 million metric tons of soybeans a year but is behind on May’s pledge to buy $17 billion a year of other farm goods, and U.S. officials say rare-earth deliveries are falling short.
Importers who were planning to land cargo before November 10 no longer have that deadline, which weakens the rush that kept NRF’s September forecast 9.6% above last year. Expect October and November imports to come in closer to NRF’s flat-to-negative projections, around 2.11 million TEUs in October, up 1.7%, and about 2.00 million in November, down 0.9%. The new deadline carries its own risk. January 10 falls after the holiday selling season but before Lunar New Year production and the spring order cycle. It is the worst possible time to lose tariff certainty for companies placing spring and summer orders in December. Plan those orders under two scenarios: the truce rolls over, or it doesn’t.
Canada: Four Days to the Ban
The 50% Section 338 list was revised on September 15. Specialty cheeses, chemically modified fats and oils, bovine hides and ATVs were added, and rock salt, cement and chemically pure sugars were among the items removed. (Last edition’s “toilet paper” was tissue parent-roll stock.) Outright import bans begin Monday, September 29. They cover Canadian beer, wine, cider and other fermented drinks, most spirits, non-alcoholic beer, whey and molasses, and motorcycles and mopeds over 800cc. Cheese stays under the 50% tariff rather than the ban. Ottawa’s dollar-for-dollar counter-tariffs of 15%, 25% and 50% on about C$27.6 billion of U.S. goods have been in force since September 8. General Mills’ mention of Canadian tariffs in its guidance shows that the costs are spreading beyond the named products. For importers, the work before Monday is mechanical. Anything imported but not entered by September 29 pays the 50% duty instead of being refused, so file the entries now. Confirm privileged foreign status on foreign-trade-zone admissions, and check your customs broker’s handling of the September 15 revisions line by line.
What the Extension Changes
The China deadline moved out this week; Canada’s first hard date is Monday. Last edition warned that concentrating North American sourcing on one border was risky. The truce extension creates the same risk for China. A two-month window invites buyers to put more volume back into China, because the landed-cost math through January looks favorable. Resist that. Keep the diversification you have built, use the window to qualify alternates rather than to rebuild China volume, and treat January 10 as a real deadline.
📊 Numbers That Matter
Weekly Dashboard: Week of September 21–25, 2026
| Metric | Reading | Source |
|---|---|---|
| Retail diesel (DOE weekly, Sept 21) | $6.529/gal, +24.4¢ WoW; $6.285 Sept 14; +$2.78 (~74%) YoY; third straight record | EIA |
| Fed decision (Sept 16) | +25 bp to 3.75–4.00%, 12–0 vote; first hike since 2023; 16 of 18 submitted projections show another hike | Federal Reserve statement and SEP |
| August retail sales | $773.9B, +1.2% MoM (consensus +0.8%), +6.0% YoY; control group +1.4%; gas stations +3.1%; ~+0.8% real | Census; TD Economics (consensus, real) |
| S&P Global flash PMI (Sept) | Manufacturing 57.0 vs. 53.9 Aug (highest since May 2022); composite 58.4; supplier delays longest since July 2022 | S&P Global |
| Drewry WCI (Sept 24) | $4,468/40ft, −1%; Shanghai–LA $7,838 (+2%); Shanghai–NY $10,373 (flat); Shanghai–Genoa $3,835 (−5%); Shanghai–Rotterdam $3,485 (−4%) | Drewry |
| Blank sailings | 58 of 712 East–West sailings (8%), weeks 40–44, 64% transpacific; TP 15 next week vs. 9; ~13% of Oct Asia capacity vs. ~18% TP / 21% AE last Golden Week | Drewry Cancelled Sailings Tracker; Drewry WCI; Xeneta/eeSea via TBGFS |
| Freightos FBX | Asia–USWC $8,402/FEU (FBX01, Sept 25; +3.7% WoW); Asia–USEC $9,606/FEU (FBX03) | Freightos Terminal |
| DAT truckload (Sept 13–19) | Van linehaul $2.17/mi (−3¢; +33% YoY; +20% vs. 9-yr avg); all-in van $2.96 (+4¢); load-to-truck 11.2 vs. 10.6; RateCast $2.15 by late Oct | DAT; AJOT |
| Cass Freight Index (Aug) | Shipments +2.1% YoY, first gain after 42 months of declines; expenditures +18.7% YoY | Cass |
| Rail (week ending Sept 19) | Intermodal 301,456 (+6.9% YoY); carloads 234,207 (+2.4%); total 535,663 (+4.9%); YTD intermodal +4.1% | AAR |
| Costco FQ4 | EPS $6.75 vs. $5.87; comps +9.4% (U.S. +10.7%), 16 weeks, reported; $184M IEEPA refunds ($0.15/share net of reinvestment) | Costco 8-K; earnings call |
| General Mills FQ1 FY27 | Adj. EPS $0.75 vs. $0.72 est.; input inflation at high end of 4–5% (freight, grains, packaging, Canadian tariffs), ~6% in Q4; FY EPS guide $3.00–3.20 reaffirmed | General Mills 8-K; earnings call |
| U.S.–China truce | Extended from Nov 10 to Jan 10; China on track for 25M metric tons of soybeans a year, behind on $17B/yr other farm goods; rare-earth deliveries short | Al Jazeera; White House fact sheets; Reuters/NBC |
| U.S.–Canada Section 338 | 50% list re-scoped Sept 15; import bans on alcohol, whey, molasses, non-alcoholic beer, motorcycles >800cc from Sept 29; Canadian counter-tariffs on C$27.6B since Sept 8 | Proclamations 11061–11065 (Federal Register); Blakes |
| Hormuz | 8 transits Sept 13, 1–7/day through Sept 20, vs. ~85/day 2025 average; inbound tanker struck by projectile Sept 21 | IMF PortWatch; UKMTO via gCaptain/AP |
Looking Ahead
- September 25–27: China’s Mid-Autumn Festival, leaving three working days before Golden Week; watch Shanghai and Ningbo backlogs
- September 27: UPS peak size and handling surcharges begin; parcel profile changes need to be live by now
- September 29: U.S. Section 338 import bans on Canadian alcohol, whey, molasses, non-alcoholic beer and motorcycles over 800cc take effect; goods imported but not yet entered pay 50% instead
- October 1: ISM Manufacturing PMI, the test of whether S&P’s 57.0 was restocking or a real expansion. The Panama Canal’s draft cut to 47.5 feet, once set for this date, was postponed on September 4; the 48-foot limit holds
- October 1–7: China National Day Golden Week; Drewry expects rates to ease into the holiday, which is the moment to price Q4 Asia–Europe cover
- October 25: UPS and Amazon Shipping per-package demand surcharges begin, up about 22–25% from last year
- November 10: The original truce expiry passes without a cliff; watch whether October–November imports soften as the pull-forward incentive disappears
- December FOMC: Markets price one more 25 bp hike; the cost of carrying peak inventory into Q1 depends on it
- January 10, 2027: New U.S.–China truce expiry, right in the middle of the spring ordering cycle
The Bottom Line
The tariff calendar gave you two extra months. Your cost structure did not get the same break.
Plan past November, but not past January. The truce extension removes the peak-season tariff cliff. Stop paying to accelerate cargo to beat November 10, and let October and November inbound schedules return to demand-based timing. Then put January 10 on every spring and summer order you place in December. Price those orders under a rollover and a lapse, and make sure your supplier contracts say who pays in each case before you commit.
Budget freight at today’s prices. Diesel at $6.53, van all-in at $2.96, parcel peak fees up 25%, and a Fed that has started hiking and expects to do so again. General Mills is already guiding to the high end of its inflation range because of freight. Rebuild the 2027 freight budget from current fuel and spot levels, separate linehaul from fuel in every bid, and add cap-and-collar fuel mechanisms before carriers ask for them.
Treat the PMI surge as a lead-time warning. A 57.0 PMI with the sharpest supplier delays in four years is what a supply base looks like when every buyer orders early. Extend inbound lead-time assumptions on components and packaging now, expedite only where a stockout costs more than the freight, and avoid adding speculative inventory yourself. At 3.75% to 4% rates, a pallet bought early costs more to hold than it did last month.
Strategic question for supply chain leaders: Now that the China deadline has moved and the Canada ban starts Monday, how much of your fourth-quarter plan was built around a tariff date? What does that plan look like if the costs you can’t delay, fuel and financing, turn out to be the ones that decide the quarter?
