March 3, 2025 - Commercial transportation costs have steadily risen over the past few years due to supply shocks and their knock-on effects. The cost of 40-foot containers spiked during the pandemic, fell to near-normal, but then spiked again last year.

Container costs are rising in part because we are only now seeing supply disruptions aftershocks. Some companies that made it through the pandemic on emergency funds have begun to fail, such as a few shipping providers and trucking companies.

Tariffs may also begin to factor in heavily; we explore those scenarios in depth here. If your company relies on shipping costs, we recommend paying attention to these factors and planning for greater resilience and redundancy in your supply chain than in prior years.

Trucking is Less Stable After Supply Shocks

Trucking costs fell, then spiked to an all-time high in mid-2022 as companies reeled from supply disruption. Transportation costs have mostly declined since then, but reports from within the industry suggest that trucking companies have had a very difficult time restabilizing for several years.

“We all hoped the market would bounce back quicker in 2024 than it has,” says Mark Gallagher, VP of transportation services at the trucking insurer RPS.

To make matters worse, criminal enterprises began preying upon idle trucks more frequently. According to CargoNet, an analytics provider, cargo theft rose 27% in North America in 2024, with an average theft costilatest ng hundreds of thousands of dollars. This, among other factors, has driven up trucking insurance costs (see below for more on rising insurance costs).

As a result of trucking disruption:

• 50,000+ trucking companies have gone bankrupt in the past two years
• Many more appear financially unstable

There are also a few barriers to entry to trucking. Many small operators have entered the market and carved out pieces of larger suppliers’ routes. This makes it even more difficult for larger suppliers to plan, fill trucks, and make ends meet.

Outlook: Expect a few trucking bankruptcies to potentially affect routes and rates.

The Cost of Oil Remains Steady

There is good news, too. After soaring pump prices just a few years ago, fuel prices have returned to a historically normal level. Russia’s February 2022 invasion of Ukraine raised diesel prices 53%, to a high of $5.81, and it has gradually fallen to the present $3.66.

Overall, oil prices are steady and look to remain constant despite the U.S. administration pressuring OPEC to lower prices. Meanwhile, China and India seem poised to use more oil, but markets look set to factor these costs in.

Outlook: Expect no significant oil-driven shipping price increases.

Rising Insurance Costs

The U.S. insurance industry feels embattled from two sides — persistently high interest rates and roiling natural disasters. From hurricanes and blizzards to wildfires up and down the West Coast, including in Los Angeles, property and casualty insurers are facing losses.

While not all these losses affect commercial insurance lines directly, they affect the insuring companies and the mood among adjusters more broadly.

Insurers who expanded their commercial coverage over the past few years are now finding it difficult to anticipate and control losses. A McKinsey study of 25 major insurers over the past decade found little correlation between growth and profit. This is another factor that may continue to drive up prices.

The effect is that transportation and warehousing companies may start to see higher increases in premiums, but there are signs of moderation according to Insurance Business Magazine. Notably:

• Commercial property
• Umbrella/excess liability
• Commercial auto
• Maritime insurance

Open hull maritime insurance premiums alone rose 7.6% last year, reports the International Union of Maritime Insurance. Rising insurance costs may mean a higher shipping cost for manufacturers, whether on land or sea.

Outlook: Anticipate the possibility of distributors passing off higher insurance costs through higher fees and rates.

The Potentially Falling Cost of Warehousing

The cost of warehousing goods has only risen since its pandemic trough, including a modest 2.4% last year, but may soon reverse. The Baltic Dry Index, a reliable indicator of future warehousing and manufacturing demand, is down this past quarter and year.

“The dry bulk market is currently experiencing a challenging environment, marked by weak demand and anticipated vessel deliveries that will lead to surplus ships compared to the amount of goods to be transported in 2025," said Yannis Parganas, head of research at the shipping brokerage Intermodal.

There is potential that the expected drop in cost is somewhat offset by companies and countries stockpiling goods in response to current and proposed trade disputes. But it is too early in the year and news cycle to tell.

Outlook: The cost of warehousing is expected to fall modestly.

Global Instability

Climate change significantly impacted international trade and shipping last year, revealing how fragile supply networks still are, reports The Economist. A drought in Central America forced the Panama Canal to conserve water, decreasing shipping throughput by 36%. This, in turn, doubled the cost of shipping gas by that route.

Meanwhile, the world suffered a record number of armed conflicts last year, and some failed states continue to serve as a base for pirates to attack cargo vessels. Thankfully, piracy in the Strait of Malacca was down an estimated 50% last year, as was piracy in the Red Sea. This is partly due to a muscular response from a coalition of nations led by the U.S. But while states can use warships to deter theft, they can’t do as much about terrorism. In late 2024, Yemeni rebel groups targeted several cargo ships with drones and missiles.

Relations between the world’s most powerful countries are likely to grow more unstable this year, says the World Economic Forum. Geopolitics are growing more volatile. As a result, many manufacturers are stockpiling goods.

Outlook: Expect some supply shocks from new conflicts.

The Best Response is a Resilient Supply Chain

As we discussed in our latest manufacturing and distribution opportunities report, many companies are re-shoring and nearshoring. They are proactively diversifying their suppliers and scenario-planning for tariffs. We may be entering a post-global world, and while it won’t happen suddenly, every company should think about stabilizing its supply chain given the aftershocks and, potentially, pending future shocks.

If you would like to discuss accounting and finance strategies for managing supply disruption, please contact our Manufacturing and Distribution Industry Practice.