Navigating inventory strategies in a changing freight market
The dynamics of the freight transportation industry continue to evolve amid global uncertainties, and many shippers have been forced to adapt their inventory strategies to maintain efficiency and resilience. Recent U.S. tariffs, trade announcements, labor unrest at ports, and consumer behaviors shifting demand have forced companies to consider the importance of supply chain visibility, shipment tracking, and overall inventory management.
As the landscape changes, shippers must evaluate whether to utilize an inventory pull-forward strategy or to recalibrate their import strategies, particularly in relation to the balance of imports through the U.S. West Coast.
This strategy—importing goods ahead of expected disruptions—helped some importers mitigate the risks associated with port congestion, delayed shipments, factory shutdowns, and increased tariffs. However, with a more stable freight market and adjusted demand, this approach may no longer be necessary at the same scale.
Several factors suggest shippers may be shifting toward a more balanced approach to inventory management:
Demand
Consumer demand has moderated in key sectors, such as general merchandise and food and beverage, reducing the urgency to maintain excess inventory.
Warehouse constraints
Distribution centers have become stocked from past pull-forward strategies related to labor and trade policy issues, limiting need for new imports. Companies must consider the increased cost and complexity of adding warehouse space in their decision-making process.
Freight cost stabilization
Transportation costs and capacity constraints have eased compared to pandemic-era highs, allowing shippers the time and flexibility to optimize, instead of expediting, freight movement.
Tariff uncertainty
Ongoing trade policy shifts add complexity, requiring shippers to remain agile in their sourcing and logistics decisions, possibly even their reshoring efforts.
Retail inventory levels
Approximately 70% of imports are retail goods, making import policy especially important to this industry. With retailers having worked hard in 2023-24 to manage inventory levels amid port disruptions, there may be a low appetite for inventory overstock, especially in sectors that have recently brought inventory levels back in line with the pre-pandemic trend; like the furniture, home furnishings, appliances and electronics sector that has decreased inventory levels by $60B over the past 2.5 years.
Inventory expansion trends
The Logistics Managers' Index for January rose to 62, the fastest expansion reading since June 2022, due to a significant and faster-than-expected increase in inventory levels primarily driven by trade policy uncertainties. A similar pull forward of inventory occurred in 2024 ahead of potential port strikes when retail inventories increased $10 billion in six months.
Enhancing supply chain visibility for better decision-making
The ability to track shipments and goods across the entire supply chain allows companies to make data-driven decisions that balance cost, efficiency, and risk.
Key elements of enhanced visibility include:
- Predictive analytics: AI-driven forecasting tools help shippers anticipate disruptions and adjust inventory levels proactively.
- Collaborative platforms: Cloud-based logistics solutions allow multiple stakeholders—suppliers, carriers, and customers—to share real-time data and optimize operations.
- Risk management tools: Enhanced monitoring of geopolitical risks, weather patterns, and labor disputes helps companies adjust import strategies dynamically.
- Real-time tracking: IoT and GPS-enabled tracking provide live updates on shipment locations, reducing uncertainty and improving ETA accuracy.
Actionable takeaways for shippers
Reassess inventory needs
Does the approach you had six months ago still make sense? Evaluate the differences between a just-in-time/just-in-case strategy and a balanced one to determine the best needs for you and your customers.
Utilize visibility tools
Implement technology-driven solutions through C.H. Robinson advanced visibility to enhance shipment tracking, risk assessment, and operational efficiency.
Stay agile with trade policy monitoring
Keep a close watch on tariff developments through C.H. Robinson client advisories and adjust procurement strategies accordingly.
The evolving trade environment demands a more strategic and flexible approach to inventory and supply chain management. Shippers who enhance visibility, optimize inventory levels, and adapt to shifting import trends will be best positioned to navigate future challenges.
While the urgency that drove past pull-forward strategies may have eased, smart, data-driven decision-making remains essential for long-term resilience and competitiveness in the freight transportation industry. Contact your C.H. Robinson account team to discuss the opportunities available to you.