Distribution & Logistics Report 1H 2026

DISTRIBUTION & LOGISTICS 1H25: WHAT TO KNOW

• The 2025 elimination of the de minimis exemption – which allowed overseas sellers to ship products valued at less than $800 to U.S. consumers duty free – may shake up the distribution market for foreign manufacturers and retailers as well as U.S. ports, warehousing, and distribution.

• Online retailers in a bid for customer loyalty have “trained” consumers to expect free, unlimited returns. Now they’re dealing with the consequences, and the growing field of "reverse-to-forward” third-party logistics is evolving to speed returns and help retailers repackage and resell returned goods.

• Tariff management, AI, robotics, and blockchain tracking are streamlining distribution networks and uncovering new efficiencies to meet customer demands and consumer expectations. Distribution and logistics providers are adapting to consumer behavior and government policies.

In the past year, there has been plenty of talk about the politics and policy moves around tariffs. Pundits and academics can debate the “geostrategic lenses” and global financial implications at length, but we’re watching what matters on the ground and the consumers and the industries that serve them. 1,2

In 2025, two key areas stood out challenging the logistics and distribution of online retail purchases. For one, this time when new tariffs were imposed, there was no easy workaround for offshore sellers peddling low-value sales directly to American consumers (think cheap clothing provider Shein and low-budget Amazon knock off Temu). Under the old de minimis tariff rules, packages entering the U.S. valued at less than $800 escaped import duties. The two Chinese importers used that to avoid duties and keep prices low by shipping small packages direct to consumers rather than importing containers full of goods for retail distribution. More than half of all packages exempt under de minimis came from China, more than 30% from Shein and Temu. The exemption ended in 2025, forcing overseas direct-to-consumer retailers to raise prices and overhaul their models. 3,4,5

The other emerging factor is consumer behavior. Americans have gotten used to easy online purchases and generous e-commerce return policies. Who goes to a store to try on clothes anymore? So long to retailer Forever21, a discount clothing retailer that closed in the U.S. in the past year. Instead, buyers are “bracketing” – one report calls it “the living room is the new fitting room” – where online shoppers buy a few sizes, keep the one that fits best, and return the others. Buyers were expected to return $890 billion in merchandise in 2025. This is creating a new frontier in both logistics and retailing. Simply handling the returns is a logistics issue. Someone has to bring the stuff back to the warehouse. But now managing those returns has also become an issue, as even when items come back unworn and undamaged, nearly 10 billion pounds of returns are ending up in landfills each year. 6,7,8

Together, these two issues are challenging the logistics and distribution environment to reinvent themselves. Higher import costs are driving fulfillment onshore, inside the U.S., but more returns are challenging the domestic retailers to return, restock, and resell.

Some 1.4 billion packages came into the country duty free under de minimis in 2024. Since the exemption ended in August, it’s now estimated that small package imports have dropped 54%. With tariffs as high as $200 and the average de minimis package valued at about $54, the end of the exemption is challenging retailers and reshaping the retail, and e-retail, market. The end of the exemptions also included a focus on eliminating the old China-Mexico-U.S. workaround, with Chinese producers shipping to Mexico and then crossing the border. For overseas sellers, costs are rising, and smaller producers are struggling to comply. Shipping is shifting from small-batch air travel to containerized sea crossings. Domestic retailers are having to make bigger “inventory bets” by buying in bulk. Warehouses risk overflowing. Interest in Foreign Trade Zone warehousing and deferred tariff payments is on the rise, and – maybe a good thing – domestic fulfillment providers are seeing an uptick in domestic sales. 9,10,11

Proponents of ending the exemption say as a result consumers won’t be vulnerable to potentially dangerous and uninspected products from overseas. And for U.S. workers and businesses, more goods may be shipped directly to American ports and warehouses rather than shipping to third-party countries and storing goods there at a discount. Businesses are also examining their supply chain, challenging their logistics providers to adapt and modernize existing shipping and warehousing operations. Meanwhile, one of the biggest beneficiaries of the emptions, Temu, has started sourcing from U.S. suppliers and producers to avoid the added cost of duties. 12,13,14,15

As the new rules take hold, agility and innovation will be key. When situations demand rapid change, opportunities may open for those who can adjust and provide solutions, whether that’s in supply, delivery, storage, or technical logistics management. As one publication noted, for those who provide solutions, the logistics industry is seeing what has been called a new “gold rush.” 16

No matter where cute blouses or fashionably ripped jeans came from, consumers have been taking advantage of easy return policies from online retailers. And while it’s a headache for retailers, it’s been good news for third-party logistics (3PL) providers who have adapted to consumer behavior and retailer needs to expand from a ship-and-store model into the business of returns and strategic cost recovery management. 17

As retailers expect nearly 16% of all sales to be returned, U.S. annual sales returns are sneaking up on a trillion dollars and are expected to rise according to the 3PL company Happy Returns, a division of UPS. While that’s a bite, retailers are reluctant to harden policies at the risk of customer experience and brand loyalty. The issue may only intensify as young-but-getting-older Gen Z is a leading culprit in the returns game as those 18-30-year-olds returned, on average, nearly eight online purchases in the past year. Nearly two thirds of retailers say updating their returns process will be a priority this year, but it may prove to be a delicate dance. While traditionally supply chains moved one way, producer to consumer, returns are turning that model on its head. 18,19

As a clever Forbes headline labeled the issue, it’s “From Here to Returnity,” calling it “too large to dismiss and too consequential to treat as operation background noise.” But if returns are a new headache for online retailers, it’s a new opportunity for entrepreneurs pitching their return management systems to retailers. Logistics management can focus on returning items to the closest hub, rather than to the point of origin. 3PL firms are developing value-added services (VAS) including cleaning, repair, repackaging, and even reselling in secondary markets. 20

By one estimate, the 3PL market is expected to reach $4 billion a year by 2034 incorporating AI, blockchain tracking, robotics, Internet of Things (IoT) equipment management, transportation management logistics and route optimization, and data analytics. There is money to be made and deals being done. One 3PL company, (Re)vive, reported 10x growth over a single year by cleaning, repairing, and reselling returned items (for a cut of the price) and is earning interest from venture capital firms. On its website, (Re)vive trumpets, “We’ve Turned Deadstock Into $200M+ of ‘Found GMV” (gross merchandise value). 8,17,21

While (Re)vive found its niche in its value-added services including repair, refresh, and resell, others are working in sales to liquidators and even donation management for tax benefits. Jewelry, for example, requires high-security return management. Buske Logistics manages returns of high-value, small package jewelry services offering secure storage, shipping, and real-time inventory tracking and forecasting. Nutraceutical products require FDA registered facilities, expiration date management, returns inspections, temperature control, and compliant disposal processes. Food and beverage sales and returns present their own challenges including spoilage, alcoholic beverage age restrictions, and liquidation. 22,23,24

• As demand for e-commerce return services boomed, consolidation was a big part of 2025. To begin the year, in January global shipper DHL acquired Inmar Supply Chain Solutions, a player in the reverse flow of goods. DHL said the move made it the “largest provider of revers logistics” in North America. The deal was seen as a response to UPS’ 2023 $465 million acquisition of 3PL startup Happy Returns. DHL also acquired e-commerce and retail logistics provider and shipper IDS Fulfillment, including four shipping and warehousing centers covering 1.3 million square feet. Publicly traded Global-e in July acquired AI-powered return and exchange service ReturnGo LTD. The following month Blue Yonder snapped up returns tech company Optoro, marking its sixth acquisition in less than two years as it broadens efforts to provide end-to-end supply chain solutions including planning, fulfillment, and returns. 26,27,28,29,30

• A clash, well a merger, of titans shook up the U.S. rail shipping landscape as Union Pacific announced plans to acquire Norfolk Southern, creating the first transcontinental freight railroad that would place some 40% of rail freight under one company. The $85 billion deal, including the assumption of debt, some of it from a Norfolk Southern rail disaster in Ohio, would create a 50,000-mile rail network across 43 states. The proposed acquisition quickly attracted bipartisan concerns as the move would reduce the number of Class 1, large, rail providers from six to five and would require federal approval from the Surface Transportation Board. The railroads are hoping to complete the deal in 2027. 31,32

• In a private equity deal, third party logistics provider BWT Logistics acquired RAZR Logistics in September. Atlanta-based BWT, a nationwide warehousing and transportation company and a portfolio company of Argosy Private Equity and Bluejay Capital Partners, said the deal brings aboard 500 RAZR customers and boosts its end-to-end supply chain services on-demand warehousing capacity. Terms were not disclosed. 33

Across the industry, logistics management development, customer habits, technology, and government policies continue to shake up the way importers, retailers, and consumers acquire and return goods. Since the Boston Computer Exchange electronic bulletin board, considered the first online sales site, allowed computer nerds to buy and sell components in 1982, online shoppers show no signs of turning back. Those who understand and manage needs – both for sellers and consumers – continue to find opportunities. 34

With shifting import regulations, duties, and tariffs that vary from country to country, finding the most efficient way to bring consumer goods into the U.S. is increasingly specialized, and managing those imports is a growing field. If Bon Jovi’s “Tommy” had a job on the docks today, he wouldn’t be “livin’ on a prayer”. He’d be living on a complex software platform and investing in trade management programs, AI data analysis, and blockchain tracking – all while calculating import duties. 35,36,37

The reverse-to-forward sector continues to generate value across the market. The National Retail Foundation goes as far to call reverse logistics “the cornerstone of the circular economy.” Getting goods out of the warehouse is one thing, but increasingly the growing industry of return management is helping retailers get returned goods back on warehouse shelves and then back out the door while managing customer expectations, tracking inventory, and adjusting to consumer behaviors. 38,39

Getting from Point A to Point B may have seemed simple in the days of the mail order catalog. Today, the goal is still the same – moving goods from producer to consumer – but it’s an increasingly tangled web of shifting demands, customer expectations, global trade snarls, supply chain challenges, warehouse networks, and advances in automation. For those who understand today’s challenges and manage the evolution, the business of distribution and logistics management is proving to be an exciting and challenging environment. 40