Freight Cooled. Prices Kept Climbing.

Freight cooled this week, but prices kept climbing. For most of 2026, freight was the cost story: record diesel, a transpacific spot market above $8,000 a container, truckload rates carried by fuel surcharges. This week freight eased. The Department of Energy’s diesel average fell 18.3 cents to $6.199 a gallon, its second straight decline. Asia–Europe container rates kept sliding, and Xeneta’s Peter Sand logged the first dip on the transpacific since mid-September. The pressure did not leave the system; it moved upstream. ISM’s manufacturing prices index jumped to 77.9 from 71.1, and its services prices index reached 74.0, the highest since July 2022. “Tariffs and fuel cost impacts were the most cited issues impacting respondents’ supply chains,” said ISM’s Steve Miller. The minutes of the Fed’s September meeting, released Wednesday, show that “most participants” expect another rate increase “would likely be appropriate by year end.” Payrolls rose only 29,000 in September, and July was revised to a loss. PepsiCo cut its earnings outlook on Thursday and promised more cost cuts to offset “rising input cost inflation.” C.H. Robinson agreed to buy RXO for $5.8 billion. For supply chain teams, cheaper freight is real relief, but it no longer sets landed cost. The fight for margin in Q4 is over what goes into the box and the cost of money, and it lands on suppliers.

Retail & Consumer Spotlight: Price Is Holding Up Revenue. Volume and Refunds Are Carrying Margin.

Last Edition’s Question: Who Pays?

Last edition ended on a question: when Q4 markdowns come, who in the supply chain pays for them? This week’s earnings give a first answer: for now, tariff refunds and cost cuts pay, and neither lasts. PepsiCo reported Thursday that third-quarter net revenue rose 5.6% to $25.3 billion and organic revenue 3.1%. In North America, beverage volume fell about 3%. The company lowered its 2026 core constant-currency EPS growth outlook to 1% to 2%, from the low end of 4% to 6%. Tariff refunds added about 4 points to core operating profit growth in the quarter. “Additional structural cost reduction actions are being identified and will be implemented in the coming months,” said CEO Ramon Laguarta.

PepsiCo is the third major consumer company in three weeks to show refunds in its margin, after Costco and Conagra. Costco’s fiscal fourth quarter, reported September 24, included what it called “a non-recurring benefit of $0.15 per diluted share from IEEPA tariff refunds.” Constellation Brands, reporting Tuesday, credited “recoveries of U.S. tariffs” in Wine and Spirits cost of goods and “lower tariff expenses” in beer. Net sales rose 6% to $2.63 billion, and it reaffirmed its fiscal 2027 comparable EPS range of $11.20 to $11.90. The IEEPA refunds are a one-time payment on duties struck down in February. Every quarter they flatter is a quarter whose margin won’t repeat.

Nike Shows the Other Way to Protect Margin

Nike’s fiscal first quarter, reported October 1, is the counterexample. Revenue fell 4% to $11.2 billion, but gross margin rose 60 basis points to 42.8%, mainly on lower warehousing and logistics costs, and inventory fell 3% to $7.8 billion. Nike guided fiscal 2027 revenue down by a high single-digit percentage and is restructuring its supply chain under a program it says will save about $2.5 billion through fiscal 2031. While the economy’s wholesale inventories run 6.6% above a year ago, Nike is carrying less, and its margin is coming from logistics cost rather than price.

The Shopper Is Stretching, Not Spending More

The jobs data adds pressure on the demand side. Payrolls rose 29,000 in September with unemployment at 4.2%. July was revised to a loss of 10,000 and August down to 133,000, together 60,000 lower than first reported. Average hourly earnings rose 3.0% over the year, below the 3.4% PCE inflation rate cited last edition. Consumer credit grew at a 1.9% annual rate in August, but revolving credit fell at a 4.2% rate. Households aren’t borrowing on cards to keep spending. One retail respondent told ISM: “Shipping containers from overseas are double the cost, causing price increases.” The August trade report shows importers kept buying: imports rose to $420.8 billion and goods imports rose $17.2 billion to $342.2 billion, widening the total deficit to $105.6 billion.

Before your next supplier or customer review, take tariff refunds out of the margin baseline: yours, your suppliers’, and your customers’. A vendor whose Q3 margin was rescued by a refund has no room to fund Q4 markdowns, and a retailer whose margin was rescued will ask you to. Negotiate on the margin that will still be there in Q1, not the one in the quarterly release.

Global Logistics Pulse: Freight Is Finally Giving Some Back

Diesel: Two Weeks Down, and a Tax Deferral That Isn’t a Cut

DOE’s weekly diesel average fell to $6.199 a gallon for October 5, down 18.3 cents from $6.382 and 33 cents below the September 21 record of $6.529. It is still $2.49, or about 67%, above a year ago. A surcharge table pegged to a $3.50 base at 6 miles per gallon now adds about 45 cents a mile, down from 48 cents last week. Crude did not follow diesel down. EIA’s Brent spot assessment was $125.44 a barrel on October 6, up from $113.96 on September 29, after touching $135.51 on October 2, while WTI held near $96. UKMTO reported another tanker struck by a projectile in the Strait of Hormuz on October 1, and Freightos reports that crude exports through the strait are nearing pre-war levels. With Brent spot nearly $30 above WTI, U.S. diesel appears to be tracking the cheaper domestic crude. Another escalation in the Gulf can reverse two weeks of relief in one.

On Monday President Trump signed an executive order directing Treasury to defer diesel excise tax payments from October 5 to December 31 “without any penalties, interest, additional amount, or addition to the tax.” It defers payment; it does not cut the rate, and the order only asks Treasury to “explore avenues, including legislation, to eliminate the obligation to pay the amounts deferred.” Carriers get a cash-flow break, not a cost cut. If a carrier presents the deferral as a reason to cut rates, ask what happens in January. Let your surcharge table do the work, and don’t lock in fuel terms on the basis of a deferral.

Ocean: Golden Week Came and Went Without a Collapse

Last edition advised pricing November–January transpacific cover after Golden Week. The rates are in, and they are flat. Freightos’ October 6 update put Asia–U.S. West Coast at about $8,322 per 40-foot container and the East Coast level at $9,600. Xeneta’s October 7 reading had Far East–U.S. West Coast up 1.1% to $8,336, but on the day itself it slipped $2. “It is a marginal move, but the first dip since mid-September,” said Sand. Drewry’s October 1 index held Shanghai–Los Angeles at $7,835 and put Shanghai–New York up 1% to $10,428.

Asia–Europe is where rates are falling. Xeneta’s Far East–North Europe spot fell 2.5% to $3,645 and the Mediterranean 5.9% to $4,007. “The Mediterranean is taking the biggest hit, down 43% since 1 July, while North Europe is down 34%,” Sand said. Freightos reports that the Premier Alliance, the last holdout, will resume some Red Sea services this month, adding effective capacity to a trade already giving back its Hormuz premium. Freightos expects low demand for a couple of months before the Lunar New Year rush. Panama is loosening too: Ship & Bunker reports the canal authority raised the Neopanamax draft limit to 49 feet and will add a tenth daily Neopanamax slot from October 15.

Run the two lanes differently. On Asia–Europe, tender now for short terms or index-linked contracts. Sand says the market is “not at the floor yet,” and a fixed annual rate set this month will look expensive by January. On the transpacific, get quotes this week but hold commitments until early November. One $2 dip isn’t a trend, and the West Coast rate is still above $8,300.

Truckload and Brokerage: Scale Is the New Insurance

On Monday C.H. Robinson agreed to buy RXO for an implied $5.8 billion: $17.25 in cash plus 0.0856 C.H. Robinson shares for each RXO share, about $30.25, a 29% premium to RXO’s October 2 close. The companies expect about $300 million in net cost savings within two years of closing, which they target for the first half of 2027. C.H. Robinson says it will apply its “Lean AI” operating model to RXO’s brokerage, expedited and last-mile business. According to Transport Topics, CEO Dave Bozeman said broker-liability worries will drive consolidation. Since the Supreme Court ruled in Montgomery v. Caribe Transport II in May that negligent-selection claims against brokers are not preempted, every load a broker books has carried more legal risk, and scale is how brokers spread it. The squeeze shows at the small end. Chicago’s Midwest Expedited Co., with 95 trucks, filed for Chapter 11 on Tuesday, and Newsweek cites a FreightWaves count of 16 trucking bankruptcies from late August to September 21. FMCSA’s comment period on making its English-proficiency requirement for drivers a formal rule closes Friday.

If RXO or C.H. Robinson carries a meaningful share of your freight, get account-team and pricing continuity commitments in writing before integration planning starts, and qualify a backup broker on your top lanes. Across your carrier base, check insurance certificates and safety ratings this month. Small fleets are failing while diesel sits above $6.

Rail and Air: Intermodal Keeps Taking Share

AAR reported U.S. intermodal up 7.4% to 299,001 units in the week ending October 3, with carloads up 2.4% and total traffic up 5.1%. Mexican intermodal rose 36.7%. In air, Xeneta’s September global spot rate was $3.10 a kilo, up 27% from a year earlier, as demand grew 6% and capacity 2%. Sixty percent of new contracts signed in the third quarter ran three months or less. “A one-year fixed rate deal doesn’t fit the current conditions,” said Xeneta’s Niall van de Wouw. Freightos’ China–North America air index fell more than 15% in the week after Golden Week. On lanes with a few days of slack, intermodal is still the cheapest response to high fuel prices. In air, match contract length to the market: three-month terms with an index floor, not annual deals.

Manufacturing Renaissance: The Factories Are Busy. Their Inputs Are the Problem.

ISM Confirms the Activity, and the Inflation

Two editions ago, S&P Global’s 57.0 flash PMI raised the question of whether U.S. factories were really expanding or buyers were ordering ahead. Last edition could only partly answer it, because ISM’s report wasn’t yet available. It is now. ISM’s September manufacturing PMI was 54.5, essentially flat against 54.6 in August and below the 55.0 consensus, but the components moved a lot. New orders rose to 55.3 from 53.7 and order backlogs to 56.4 from 51.8, while inventories fell to 48.6 from 50.6. Supplier deliveries held at 59.0, still a sign of slow delivery. Twelve of 18 industries grew. S&P Global’s final September reading was 55.9. Manufacturing payrolls rose 9,000 in September, and BLS says they are up 72,000 since a low in December 2025.

Backlogs rising while factory inventories fall is a real order book, not a stockpile. The problem is cost. ISM’s prices index jumped 6.8 points to 77.9. First Trust’s write-up of the report attributes the rise to steel and aluminum prices, tariffs on imported goods, and petroleum-based products affected by the Middle East conflict. On the services side, prices reached 74.0, and Miller said “fuel costs were mentioned twice as often as any other single issue impacting performance.” One utilities respondent reported “steel particularly difficult to source domestically.” The Fed minutes see the same thing in core goods. Several officials observed that core goods prices “remained elevated, as effects of the AI buildout appeared to increase while the effects of tariff increases waned.”

Reshoring Has a 2031 Delivery Date

Bayer said on October 2 that it will invest $2.2 billion in a pharmaceutical manufacturing campus in New Albany, Ohio, with about 600 permanent jobs. The first module, for drug substance, is expected to begin operating in 2031, and a second, for finished product, in 2034. It is the sort of investment the 100% Section 232 pharma tariff that took effect September 29 was designed to produce, and it shows how long the payoff takes: the tariff applies now, while the domestic capacity it is meant to create arrives in five to eight years.

Policy Is Building the Wall Around the Factory Floor

Policy moved in the same direction this week. On Wednesday USTR announced that 14 economies, including Canada, the EU, India, Japan, Korea and Mexico, signed a joint ministerial statement on global excess capacity in key manufacturing sectors. “Left unchecked, these issues will continue to cripple domestic industries, displace local production,” said Ambassador Jamieson Greer. The same day, USTR published notice that the original 2018 Section 301 tariffs on China “did not terminate on July 6, 2026, and will remain in effect.” On Monday it opened comments for the 2027 USMCA joint review, due January 12, 2027. On Thursday CBP proposed new filing rules for informal entries of goods valued at $2,500 or less. The Court of International Trade had not ruled on the Section 301 “forced labor” tariffs by Wednesday. Each of these adds to the domestic producer’s advantage, and none of it makes domestic inputs cheaper this year.

Order books are real and input prices are rising quickly, so this is the moment to fix input costs, not finished-goods volumes. Get indexed pricing or short-term fixed quotes on steel, aluminum and resin-heavy components before the October 27–28 Fed meeting. Ask suppliers where their own prices index comes from. Don’t build 2027 landed cost on domestic capacity that won’t exist until 2031.

📊 Numbers That Matter

Weekly Dashboard: Week of October 5–9, 2026

Metric	Reading	Source
ISM Manufacturing PMI (Sept)	54.5 vs. 54.6 (consensus 55.0); new orders 55.3; backlog 56.4 vs. 51.8; inventories 48.6; supplier deliveries 59.0; prices 77.9 vs. 71.1	ISM via First Trust
ISM Services PMI (Sept)	54.9 vs. 55.4; prices 74.0 (highest since July 2022); supplier deliveries 53.2; imports 52.9; new export orders 46.9	ISM via PR Newswire
S&P Global US manufacturing PMI (Sept final)	55.9 vs. 57.0 flash and 53.9 Aug	S&P Global via Trading Economics
Payrolls (Sept)	+29,000; unemployment 4.2%; July revised to −10,000, Aug to +133,000; manufacturing +9,000 (+72,000 since Dec 2025); AHE +3.0% YoY	BLS
FOMC minutes (Sept 15–16)	Range raised to 3.75–4.00%; “most participants” see another hike likely by year end; next meeting Oct 27–28	Federal Reserve
Trade (Aug)	Total deficit $105.6B (+$12.7B); imports $420.8B; goods imports $342.2B (+$17.2B)	BEA/Census
Retail diesel (DOE weekly, Oct 5)	$6.199/gal, −18.3¢ WoW; second straight decline; +$2.488 (~67%) YoY	EIA
Crude (EIA spot)	Brent $125.44 Oct 6 vs. $113.96 Sept 29, peak $135.51 Oct 2; WTI $96.24	EIA
Drewry WCI (Oct 1)	$4,434/40ft (−1%); Shanghai–LA $7,835 (flat); Shanghai–NY $10,428 (+1%); Shanghai–Rotterdam $3,399 (−2%)	Drewry
Freightos FBX (Oct 6 update)	Asia–USWC ~$8,322/FEU; Asia–USEC ~$9,600 (flat); Asia–N. Europe $3,260 (−3%); Asia–Med $3,555 (−2%)	Freightos
Xeneta spot (Oct 7)	FE–USWC $8,336 (+1.1%); FE–USEC $11,512 (+0.5%); FE–N. Europe $3,645 (−2.5%); FE–Med $4,007 (−5.9%)	Xeneta
Rail (week ending Oct 3)	Total 529,712 (+5.1% YoY); intermodal 299,001 (+7.4%); carloads 230,711 (+2.4%); Mexico intermodal +36.7%	AAR
Air cargo (Sept)	Global spot $3.10/kg (+27% YoY); demand +6%, capacity +2%; 60% of new Q3 contracts ≤3 months	Xeneta
C.H. Robinson–RXO (Oct 5)	$5.8B implied; $30.25/share (29% premium); ~$300M net synergies; close targeted H1 2027	RXO 8-K

Looking Ahead

October 9: FMCSA comment period closes on the proposed English-proficiency rule for commercial drivers
October 14: September CPI, the first read on whether ISM’s 77.9 prices index reaches the consumer; also the Fed’s Beige Book and DOE’s next diesel update (moved a day for Columbus Day)
October 15: The Panama Canal’s tenth daily Neopanamax slot returns
October 25: UPS and Amazon Shipping per-package demand surcharges begin; model them against USPS on residential lanes before they start
October 27–28: FOMC meeting; the minutes point to one more hike by year end, which moves inventory carrying costs
October 28: Census advance indicators for September; watch whether wholesale inventories stay above 6.6% YoY
November 9: The suspension of U.S. port fees on China-linked vessels lapses unless USTR publishes an extension; none had appeared by October 8
Any day: The Court of International Trade’s ruling on the Section 301 “forced labor” tariffs

The Bottom Line

Freight costs are easing. What’s in the shipment and the cost of financing it are still rising.

Take the freight relief, but don’t build on it. Diesel fell for a second week, Asia–Europe is down by a third since July, and the transpacific looks to have peaked. Let fuel surcharges and spot rates fall through to you, tender Asia–Europe on short or index-linked terms now, and hold transpacific commitments until early November. Don’t treat the diesel tax deferral or one dip in ocean rates as a new floor while Brent spot sits above $125.

Move procurement attention from freight to inputs. With ISM manufacturing prices at 77.9 and services prices at 74.0, the next landed-cost increase comes from the bill of materials, not the lane. Lock in steel-, aluminum- and resin-heavy inputs on indexed or short fixed terms before the October 27–28 Fed meeting, and require suppliers to show which index their price increases follow.

Negotiate on margins that will still exist next quarter. PepsiCo, Constellation, Costco and Conagra all had tariff refunds in their margins. Those refunds won’t repeat, and payrolls rose only 29,000. Take refunds out of every margin baseline you use in a negotiation. Expect customers to ask suppliers to fund Q4 promotions, and decide now which SKUs you’ll protect on price and which you’ll let go on volume.

Strategic question for supply chain leaders: For two years freight was the number you managed hardest. If the cost pressure now comes from steel, resin, energy and interest rates, does your team have anyone watching those numbers as closely as it has watched freight?