February 21, 2025
This past month, chaos hit supply chains hard as tariffs, breakups, and billion-dollar pivots shaped the narrative. The latest trade punch threatens to jack home builds by $29,000, turning lumber into liquid gold and leaving contractors scrambling. USPS botched its power play — banning Chinese packages entirely before backpedaling in record 24-hour time. Fresh opportunity emerged from the chaos as Veho carved out a new niche, proving slower shipping could be the profit hack nobody saw coming. Then UPS dropped its own bomb, planning to slash Amazon deliveries in half by 2026 — an $11.8 billion “it’s not you, it’s your margins” breakup. Through it all, trucking spot rates took a 10% nosedive. Yet, this winter plunge might be exactly the market correction everyone needed.
Building a house might soon feel like buying a luxury car, minus the new car smell. Newly proposed tariffs threaten to shake up construction costs nationwide and potentially add $29,000 to homebuilding costs.
Lumber deals the heaviest blow to construction costs, which could worsen: Trump’s proposed 25% tariff on Canadian wood may slam builders with an extra $14,000 per home. Wisconsin contractor David Belman sees the writing on the wall — his supplier, heavily dependent on Canadian lumber, is already sounding alarms. Canadian mills promise an immediate 25% price hike if tariffs hit. While Southern U.S. sawmills are running full tilt, they can’t fill the Canadian-sized gap, and European imports offer little relief.
It’s not just lumber in the crosshairs. Mexican tariffs threaten to drive up drywall costs, while the 10% Chinese tax hits appliances and countertops hard. Builders face a brutal trifecta: soaring interest rates, material shortages, and looming tariffs. The numbers tell a stark story — Canada supplies more than 70% of U.S. softwood lumber, while Mexico dominates the drywall market. Though the U.S. Lumber Coalition’s Zoltan van Heyningen downplays lumber’s impact at 1.3% of home costs, dwindling two-month inventories paint a different picture. The clock is ticking, with Canada’s and Mexico’s tariff pause ending in March.
Want to witness a world-record speed backtrack? The U.S. Postal Service pulled off quite the stunner, declaring a total ban on packages from China and Hong Kong one day, then completely reversing course the next.
On Feb. 4, USPS dropped a bombshell, refusing to accept any parcels from China and Hong Kong after Trump nixed an $800 tax-free import loophole and slapped on a fresh 10% tariff. Fast-forward 24 hours — USPS changed its minds with zero explanation and little more than a casual: “Never mind, we’ll work it out with Customs instead.”
The U.S.-China trade machine is a behemoth — $427 billion in imports for 2023, with 4 million small packages landing weekly. But the real story? Budget-friendly direct shipping. This David turned Goliath surged from $5.3 billion in 2018 to $66 billion by 2023. Players like Shein and Temu were the real beneficiaries, riding cheap shipping rates and de minimis loopholes to grab 17% of the market. So when USPS announced its sudden ban, they faced an existential crisis. However, it proved short-lived, like a store posting a Going Out of Business sign only to open its doors as usual the following day.
Money saved on shipping means money earned — and Veho’s new Premium Economy service just cracked that code. The fresh delivery option targets USPS’ soaring rates on lightweight parcels head-on. Sure, packages take two to five days instead of Veho’s usual next day zip, but businesses score major savings without compromising reliability.
Veho’s Premium Economy service runs through a delivery network of regional powerhouse hubs: Philadelphia, Atlanta, Dallas, Cincinnati, Chicago, and Orlando. Detroit and Columbus are also in consideration, with more cities on deck for later this year. Smart tech drives the show here — packages flow through these hubs with precision timing, thanks to advanced scanning systems that keep different service levels running smoothly. CEO Itamar Zur says plainly, “Our technology prioritizes packages from the moment they hit our warehouses, determining what moves first and what follows.”
Premium Economy targets three key players: lightweight consumer goods sellers, subscription brands shipping shelf-stable items, and 3PLs stung by USPS rate hikes. Early testing with select clients proved the formula works — slower delivery times create operational efficiencies that translate to lower shipping costs. For Veho, it’s another strategic leap forward as it expands its reach and partners with players like Flexport and ShipWise.
Giant packages and tiny profits are UPS’ Amazon problem in a nutshell. The carrier dropped a bombshell at the end of January: UPS is cutting Amazon deliveries by over 50% come 2026. Currently, Amazon hogs 20-25% of UPS’ U.S. network space but delivers less-than-stellar profits in return. So, something has to give.
Gone are the days when Amazon packages dominated UPS brown trucks. While Amazon contributes 11.8% of UPS’ revenue, CEO Carol Tomé didn’t mince words: The relationship’s margins are “very dilutive” to domestic business. The math is simple — UPS projects an 8.5% drop in daily U.S. volume for 2025 but expects to boost revenue per package by 6%. Quality over quantity never looked so profitable.
Amazon’s side adds another layer to this shipping saga. The e-commerce giant claims it offered UPS even more volume as its delivery needs expanded. Yet, with Amazon building its own delivery empire, UPS spotted an opportunity to chase greener pastures — namely, healthcare shippers and small to midsize businesses with fatter profit margins. A complete breakup isn’t on the horizon though — UPS Store locations remain valuable real estate for Amazon returns, prompting Tomé to predict they’re “landing at the right spot.”
The trucking world watched spot rates plunge 10% between Jan. 13 and Feb. 9, while dry van tender rejections tumbled from 7.7% to 5.3%. Before anyone hits the panic button though, let’s look at what’s really happening — a seasonal wave that simply packs more punch than usual.
Remember last year when holiday rates topped out at $1.80? Well, they shot up to $1.98 this season, while van rejections jumped from 5% to nearly 9%. The post-pandemic slump had muted these seasonal swings. Yet, now the market moves like a die-hard Eagles fan after the latest Super Bowl — wildly but predictably. When rates climb, carriers and brokers jump on the money train, which sends those numbers climbing even higher.
Want proof we’re in a transitional market? Look at Los Angeles and Atlanta. LA’s contract rates rose 3% year over year, but rejections dropped from 5% to 3% — those higher rates keep trucks rolling steady. Meanwhile, Atlanta’s telling a different story, with rates dipping 1% and rejections increasing from 2.3% to 3.7%. The West Coast sees intermodal freight stealing the show from trucks, while regional differences paint the bigger picture: 2025’s market swings look spicy.
While industry giants stumble through tariff nightmares and billion-dollar breakups, FRAYT delivers rock-solid solutions across retail, manufacturing, construction, and logistics. Whether you’re a retailer rushing inventory, a manufacturer moving materials, a contractor hauling supplies, or a 3PL looking to beef up your fleet — we’ve got the muscle to move your business forward without the drama.
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