From efficiency to resilience: North American supply chain is undergoing a fundamental transformation.

A Strategic Transformation, Not a Temporary Response

While most companies still view supply chain volatility as a cyclical disruption, the 37th Annual State of Logistics Report offers a deeper insight: volatility has become a permanent feature. This annual report, written by Kearney and published by Penske Logistics, for the first time defines "continuous adaptation" rather than "cycle optimization" as the core capability of supply chain management.

This is not just a description of the current environment—it implies a fundamental shift in corporate strategic logic. Over the past three decades, the hallmark of supply chain success was efficiency maximization: minimizing inventory, lowering transportation costs, and optimizing on-time rates. These metrics remain important, but they are no longer sufficient to guarantee competitive advantage. When trade policies change on average every 1.5 weeks, when the Red Sea, the Strait of Hormuz, and the Panama Canal become bottlenecks simultaneously, and when labor shortages become a structural norm, companies relying on fixed plans find themselves trapped in "network drift"—discrete adjustments made to cope with short-term shocks that instead lead to a continuous decline in overall performance.

Key Observations: Five Structural Forces

The report identifies five forces that will continue to shape the logistics landscape, with no solutions in sight in the short term:

1. Asymmetric global growth: Divergent recovery speeds across regions deepen supply chain complexity. 2. Tightening financial conditions: Rising inflation and public debt compress financing space. 3. Trade flow and geopolitical restructuring: Frequent changes in tariff policies force supply chain networks to reconfigure. 4. Labor and productivity constraints: Worker shortages coexist with skills mismatches, with annual turnover rates exceeding 40%. 5. Energy price volatility: Dual pressure from fossil fuel and sustainable aviation fuel costs.

These forces do not act independently; rather, they compound each other. For example, tariff uncertainty accelerates nearshoring, nearshoring drives up demand for warehouses along the Mexico border, and warehouse labor shortages in turn force automation investments. Decisions at each link create ripple effects in other links.

Who Benefits? Who Is Under Pressure?

• Beneficiaries:
• Companies that have embedded AI into core workflows first: The report points out that AI creates value through interpretation, prediction, recommendation, and execution. Pioneers have moved from experimentation to large-scale deployment, achieving measurable returns in demand forecasting, route optimization, and anomaly alerting.
• Shippers with dynamic procurement capabilities: In the LTL and truckload markets, where capacity is increasingly defined by lane fragmentation, annual contract bidding is being replaced by real-time pricing strategies. Buyers who skillfully leverage data gain bargaining advantages.
• Third-party logistics providers offering end-to-end services: The industry is at a "strategic inflection point." 3PLs capable of coordinating transportation, warehousing, data, and decision-making are winning premium contracts.Those under pressure:
• Enterprises that have not implemented AI or automation independent projects: The productivity gap between humans and AI is widening, and lagging companies face structural cost disadvantages.
• Operators reliant on a single transport mode or fixed routes: After the fragmentation of regional trade patterns, global average data masks actual risks. For example, Asia-North America air freight volume decreased by 0.8%, while Asia-Europe increased by 10.3%.
• Small and medium-sized carriers: The wave of market exits continues. Since 2022, approximately 89,000 carriers have exited, and new entrants find it difficult to replicate the post-pandemic dividends.

Logistics Costs: A Long-term Story from 19% of GDP to 7.8%

Perhaps the most eye-catching figure in the report is that U.S. business logistics costs as a share of GDP fell to 7.8% (8.7% in 2025). This number could easily lead one to mistakenly believe that logistics efficiency is continuously improving. However, a historical perspective is important: in 1979 (before trucking deregulation), this ratio was about 19%. The long-term downward trend reflects tremendous progress brought by marketization, informatization, and standardization.

Nevertheless, the low point of 7.8% itself also indicates that current cost compression is nearing its limit. Further reductions will require more fundamental technological breakthroughs—rather than continuing to squeeze existing factors. This may explain why AI and automation are no longer "optional" but have become necessary for competition.

AI: From Experiment to Value Inflection Point

The report's conclusion on AI is worth every enterprise's careful consideration: "AI has moved from experimentation to the stage of measurable commercial value." But the application is extremely uneven. Some organizations have embedded AI into core processes, while others remain stuck in isolated pilots—or have not even started at all.

• In the logistics and supply chain field, the value of AI is mainly reflected in four levels:
• Interpretation: Identifying patterns and anomalies from massive amounts of data.
• Prediction: Anticipating demand fluctuations, capacity shortages, or delay risks.
• Recommendation: Proposing optimal action plans based on predictions.
• Execution: Automatically triggering adjustments, such as rerouting or reallocating inventory.

It is worth noting that currently, most enterprises are still stuck in the "Interpretation" and "Prediction" stages, while the real competitive advantage comes from the "Recommendation" and "Execution" capabilities—which require deep integration of AI with operational processes.

Industry Trends: Fragmentation of the Truckload Freight Market

At the market structure level, the report reveals an important trend: The U.S. truckload market is evolving from a unified national market into a "collection of lane-defined markets." The differences in rates, capacity, and service levels for each lane are significant. Behind this are the combined effects of carrier exits, regional economic divergence, and changes in shipper procurement strategies.

For investors, this means carriers exposed to a single region or a single customer face higher risks. Companies that can operate across multiple high-density lanes and have dynamic pricing capabilities are more likely to achieve stable cash flows.

Implications for North American Regional CompetitionWhile the report primarily focuses on the United States, its findings have direct implications for North American regional competition.

• Mexico's manufacturing rise: The nearshoring trend is reshaping North American supply chain geography. The report mentions tariff-driven inventory buildup and trade flow restructuring, directly benefiting Mexican manufacturing and industrial parks.
• Canada's resource supply chain: Energy price volatility and demand for sustainable fuels present both new opportunities and policy uncertainty for Canada's resource exports (crude oil, natural gas, critical minerals).
• Interstate competition in the U.S.: States vie for supply chain nodes through tax incentives, workforce training investments, and infrastructure improvements. Those offering low-cost energy, abundant labor (including automation-skilled workers), and proximity to the Mexican border (e.g., Texas, Arizona) are more likely to succeed.

Long-term Trend Outlook (Next 3–5 Years)

1. Supply chain design shifts from "efficiency-first" to "resilience-first": Companies will accept slightly higher inventory and transportation costs in exchange for buffer capacity against disruptions. Financial metrics will need updating. 2. AI and automation evolve from "efficiency tools" to "core capabilities": In five years, supply chain operations without AI assistance may not be competitive. The question is not whether to adopt, but how deeply to integrate. 3. Freight market further stratifies: The gap between high-end services (speed + reliability) and low-cost services (regionalization + minimalism) will widen, squeezing mid-range general service providers. 4. Third-party logistics (3PL) industry consolidation accelerates: Platform-based 3PLs with strong end-to-end capabilities will acquire or eliminate pure execution-focused competitors. 5. Labor shortages drive new human-machine collaboration models: Warehouses with 40% annual turnover cannot solve problems through hiring alone. The economics of automation and robotics will push companies to redesign workflows rather than simply replace labor.

Conclusion: Companies Are Redefining Their Competitive Dimensions

The 37th Annual State of Logistics Report sends a clear signal: supply chain competitiveness no longer depends on scale and experience, but on adaptive capability and digital intelligence. Companies that treat volatility as the norm, AI as a necessity, and resilience as a priority will define the next decade.

For North American business observers, it is more important to understand how this transformation reshapes the regional economic landscape: the roles of the United States, Mexico, and Canada are being rewritten. The process of supply chains shifting from "cost centers" to "strategic capability centers" will also change capital flows, employment patterns, and the priorities of technology investment.