Supply Chain Risk Index Flags Q4 Transportation and Tariff Strain

A quarter that opens tight

The last three months of the year usually test supply chains the hardest. In 2026, they begin under strain from several directions at once. The Lehigh Business Supply Chain Risk Management Index (LRMI) for the fourth quarter shows overall risk easing slightly after a sharp jump in the third quarter. Transportation disruption is still the highest-rated risk category. It has come down from its third-quarter record but remains well above its three-year average.21 Lehigh's Center for Supply Chain Research created the index in 2020 with the Council of Supply Chain Management Professionals. It ranks ten broad risk categories, from cybersecurity to supplier and quality risk.22

Zach G. Zacharia, who directs the Lehigh center, said respondents pointed to four main concerns. These were the unresolved conflict with Iran, volatile fuel prices, driver shortages linked to tougher federal enforcement, and the capacity limits and surcharges that come with peak season.22 Economic risk was close behind transportation. Respondents mentioned energy costs, stubborn inflation, expensive capital and labor shortages.22

The sharpest finding is a split inside the survey. Asked which risks are most likely to get worse over the next three months, respondents chose transportation and economic pressure. When they had to rank all ten risks against each other, though, government intervention came out clearly on top. Economic risk was second, transportation third and cybersecurity fourth.22 Zacharia said this gap is the main story of the quarter. In his view, tariff and policy uncertainty affects sourcing, pricing and transport decisions before anything else does, and it is the hardest thing to plan for.21

That reading holds up. Freight costs can be managed with contracts, surcharges and switching modes. Policy shifts are harder to absorb because they can change the cost of a whole sourcing plan overnight.

The cost data agrees with the sentiment

The LRMI measures how managers perceive risk. The September Logistics Managers' Index (LMI) puts numbers behind that perception, and the two surveys tell largely the same story. The overall LMI rose 3.6 points to 70.2, its second-highest reading in four years after June's 71.1, and well above its all-time average of 61.8.3 Aggregate Logistics Costs combine inventory costs, warehousing prices and transportation costs on a 0–300 scale. That measure reached 246.1, its highest level since April 2022, when supply-driven inflation was widespread.4

Transportation is where costs are rising fastest. The LMI's transportation prices index climbed to 92.7. It has been above 90 in five of the last six months, which is unusual for a scale that tops out at 100.1 Transportation capacity has now shrunk for ten months in a row and fell to 34.4.5 Fuel is behind much of this. Average U.S. diesel reached about $6.83 a gallon in the last week of September, and the three highest readings on record all came in the final three weeks of that month.1 Earlier in September, diesel had already set a record of $5.967, up $2.20 from a year before.10 Carriers are feeling it too. J.B. Hunt warned of a 5–10% hit to third-quarter earnings because fuel surcharges are lagging behind actual costs.1

Warehousing is getting tighter as well. Warehousing capacity fell 14.2 points to 39.3. That is its fastest contraction since March 2022, and Upstream firms reported it nearly 10 points tighter than the overall figure.4 The LMI researchers say most goods are still sitting with wholesalers and manufacturers. They usually move to retailers around mid-October.6 The researchers also say this year's pattern differs from 2025. Inventories were not overbuilt over the summer to get ahead of tariffs, and consumers have stayed strong enough that retailers are now stocking up.3

Respondents do not expect quick relief. Over the next 12 months they forecast transportation capacity at 37.9, still contracting, transportation prices at 86.1 and inventory costs at 81.3.5 KPMG reaches a similar conclusion. It links the closure of the Strait of Hormuz to the jump in logistics costs and notes that diesel now costs more than $1 per gallon above gasoline. Over the previous ten years that gap averaged $0.38.9

Container rates are the exception

Ocean freight is the part of the picture that does not quite fit. Container spot rates are high compared with a year ago but have eased in recent weeks. Drewry's World Container Index fell 2% to $4,351 per 40-foot container on October 8. Shanghai–Los Angeles dropped 3% to $7,624 and Shanghai–New York fell 2% to $10,220, as Golden Week factory closures in China reduced demand.11 Asia–Europe rates have now fallen for 13 weeks in a row. Shanghai–Rotterdam was at $3,337.15 Drewry says the biggest threat to carriers trying to hold rates up is that ships have returned to the Suez route faster than expected. Suez transits in week 39 were 68% higher than in the same week a year earlier.13

The longer-term picture is very different. In early October 2025 the index hit a low of $1,651. It peaked at $4,526 in August 2026, which puts current levels more than double where they were a year ago.12 Averitt's international team says ocean rates have stayed high even though new vessel capacity was expected to bring prices down. It points to Middle East disruption, port congestion and rerouting as the reasons.23

Not everyone reads the trend the same way. One manufacturing newsletter reported that the index rose 9% to $4,530 in the week to October 9.17 Drewry's own October 8 assessment showed a 2% decline.11 Other benchmarks were mixed. The FBX global index was essentially flat at $3,344. On the NYSHEX index, Asia–U.S. West Coast fell while Asia–U.S. East Coast rose 1.4%.20 Drewry's own figures are the official record, so the more reliable reading is a market cooling briefly during the holiday, not starting a new rally.

Carriers are trying to push rates back up. They plan higher freight-all-kinds (FAK) rates for the second half of October, but Drewry says it is unclear whether those increases will stick.16 They are also cutting capacity. Maersk is suspending its seasonal TPX service from Asia to the U.S. West Coast for the rest of the fourth quarter.23 Several sailings were cancelled after Chinese export volumes weakened.15

Choke points everywhere

The comments managers left in the LRMI survey describe a global network under pressure at several points at once. One respondent said ocean carriers are pulling capacity, terrorism is a risk at the Suez gateway and drought is a worry at the Panama Canal. The same respondent said tariff exposure is pushing shippers to bunch their shipments to time arrivals.22 Averitt reports that Panama Canal restrictions linked to El Niño should cut average daily transits from 32 in September to about 29.5 in October.23 In the Strait of Hormuz, Iran said it struck an LPG carrier, while restrictions on commercial traffic continue.19 Separately, Houthi attacks on Saudi oil facilities have kept the risk of a large crude supply disruption high, according to one market analyst. Averitt says Brent crude has risen above $100 a barrel.23

On the ground in the U.S., truck capacity is being squeezed by regulation as well as by fuel costs. Averitt executives say federal enforcement has removed many driver training schools from the federal registry. FMCSA estimates that changes to non-domiciled commercial driver's licenses could eventually affect about 194,000 CDL holders.23 The company expects truckload capacity to stay tight through the end of the year and possibly well into 2027.23

Policy is the hardest variable

The LRMI's focus on government intervention matches what manufacturers are saying. The Institute for Supply Management's September survey found the manufacturing sector still growing. ISM chair Susan Spence said, however, that firms are worried about not being able to count on steady economic policy.29 Respondents pointed to tariffs, the war in Iran and the trade dispute with Canada. One transportation equipment maker said the trade policies have made chaos the only predictable thing.29 KPMG notes that U.S. tariffs of up to 50% now apply to a defined set of Canadian goods, including certain vehicles. It warns that firms should expect more volatility, not a full decoupling.27 There are a few offsetting moves. Section 301 tariffs on 86 countries took effect on September 30, but a U.S.–China agreement would cut tariffs on about $60 billion of goods.1

Some in the industry are more upbeat. Descartes recorded 2.60 million TEUs of U.S. container imports in August, the third-highest monthly total on record.24 Its trade regulations executive argues that importers have built resilience through past shocks. He also says much of the nearly $100 billion in IEEPA tariff refunds has been kept as a cushion against future disruptions rather than passed on to consumers.24

The bottom line

Taken together, the coverage points to a clear conclusion. The fourth-quarter risk is not a shortage of goods. Inventories are building and imports are strong. The risk is cost and capacity: moving and storing those goods is getting more expensive, and policy keeps shifting underneath. Container spot rates may stay flat or even fall a little, but tight trucking, record diesel and shrinking warehouse space will probably matter more to shippers' bottom lines. Recent ocean freight relief does not mean costs are easing overall. Shippers that tie freight pricing to published benchmarks, book capacity early and treat tariff scenarios as core planning will be best placed for the rest of the year.