US Logistics Update [Jul 19, 2025]-English

The U.S. Department of Labor reported that the U.S. Consumer Price Index (CPI) rose 2.7% year-over-year and 0.3% month-over-month in June. The increase was driven by items more exposed to tariffs, including toys, furniture, appliances, and apparel, which the WSJ characterized as “a potential sign that businesses are beginning to pass on the cost of tariffs to consumers.” Excluding volatile energy and food, core CPI rose 2.9% year-over-year and 0.2% month-over-month. Meanwhile, the annualized and monthlyized inflation rates of producer prices (PPI) in June were 2.3% and 0.0%, respectively, lower than the previous month (2.7% and 0.3%, respectively). The annualized and monthlyized rates of the underlying PPI were also 2.5% and 0.0%. Market reaction to the lower than expected PPI, which affects consumer prices after a period of time, was very surprising. The Fed is taking a wait and see approach to see if the tariffs will be a one-time blow to prices or a persistent inflationary factor.

Following Vietnam and Indonesia's trade deal with the U.S., tariff rates from other countries are in

focus. Based on the tariff rates of existing trade deals with the UK (10%), Vietnam (20%), and

Indonesia (19%), and proposed tariffs on Canada (35%), the EU (30%), and Mexico (30%), the US

reciprocal tariffs with China are expected to be at least 10% and up to 35%. However, high tariffs of

around 30% would significantly undermine trade, so the U.S. is expected to push for a negotiated

settlement with tariffs of around 20%, and in return, push for trade openness to the level the U.S.

wants.

Retail purchases in the U.S., which account for 70% of U.S. GDP and serve as a driver of U.S. economic growth, increased 0.6% in June after two consecutive months of declines, contrary to many experts' expectations that tariffs would reduce spending. The US is now divided on whether to lower or keep interest rates despite the tariffs, with continued low inflation and near full employment (below is a graph of recent retail sales growth). Powell's position as Fed Chairman, which has been rocked by financial markets under Trump's pressure to fire him, could be significantly shaken if he is held accountable for the Fed's wolfish response to tariffs if, as he says, the impact of tariffs on inflation is limited by the end of the summer.

No peak season for frontloading due to tariffs
With importers and exporters facing major disruptions due to the whiplash effect of President Trump's repeated tariff roller coaster, many experts are predicting that frontloading and retail sales will slow down this year. According to the National Retail Federation's Global Port Tracker, import volumes are expected to decline 21.6% year-on-year in September and 20% year-on-year in October.

Vietnam Air Cargo Demand Surges Amid Tariff War
The imposition of high tariffs on China has prompted U.S. importers to shift sourcing to Southeast Asian manufacturing nations, with cargo from Vietnam in particular surging. According to Rotate, through April of this year, U.S.-bound volumes from Ho Chi Minh City grew 62% year-over-year, with further growth likely to follow. In response to the increased volume from Vietnam, APEX Logistics, a subsidiary of Kuehne + Nagel, is chartering 14 weekly cargo flights, with freight rates exceeding $6.00/kg from Ho Chi Minh City to Chicago, according to Freightos. Although the U.S.-Vietnam trade agreement was finalized and reciprocal tariffs on Vietnam were set at 20%, Vietnam's lower manufacturing costs compared to other countries such as China are expected to continue to drive strong volume growth.

Ukraine's AN-124 cargo plane ‘Ruslan’ completes conversion
Ukraine's ANTONOV Airlines completed the conversion of its mega-transporter An-124-100 ‘Ruslan’, a powerhouse of heavy and oversized cargo transport, replacing Russian-made parts with Western and national products, and transported it to Germany on July 11th. The exclusion of Russian-made components symbolizes the resilience and independence of Ukrainian aviation technology. The AN 124 is the world's largest transport airplane in existence, with Russia and Ukraine owning and operating the majority of the 19 total production runs. Ukraine's An-124s were relocated to Leipzig, Germany, in the aftermath of the Russo-Ukrainian war, and are in high demand worldwide.