Retailers spent much of 2026 grappling with whether to pay more now or risk paying much more later.
This challenge prompted merchants to bring a large share of holiday merchandise in the U.S. months earlier than they traditionally would. Tariffs, volatile fuel prices, Middle East conflict and constraints at the Panama Canal altered shipping schedules and changed the value retailers placed on certainty.
In a press briefing on Wednesday Gene Seroka, executive director of the Port of Los Angeles, and Brian Dodge, president and CEO of the Retail Industry Leaders Association (RILA), discussed where retailers are intentionally accepting inefficiency to protect themselves from larger unknowns.
Retailers moved substantial holiday volume during late spring and early summer, Dodge said, choosing to incur additional warehousing expenses rather than leave goods exposed to potentially higher freight costs or transportation disruption later in the year.
“They get it in early. They absorb the warehousing costs that come with that, and ultimately, they have confidence that the product is here,” Dodge said.
For apparel executives, represents a change in the economics of inventory. For years, working-capital discipline pushed companies toward leaner inventories and tighter arrival windows. Today, inventory can also function as insurance. Warehousing costs are known. A sudden tariff, routing disruption or fuel spike is not.
That means the cheapest supply chain may no longer be the one with the lowest carrying cost. It may be the one that limits exposure to the largest range of unpredictable costs.
Sourcing and Logistics Are Moving at Two Different Speeds
Another important point emerged when Dodge separated sourcing decisions from transportation decisions.
Retailers can redirect freight relatively quickly. They cannot relocate manufacturing with the same speed.
“Supply chains are built for decades,” Dodge said, noting that production decisions can extend 10 or 20 years and depend on far more than tariff rates, including manufacturing capabilities and workforce skills.
That creates a problem for sourcing organizations operating under trade policies that can change in weeks.
A tariff differential may make one country look more attractive today, but by the time that capacity is ready, the tariff calculation that triggered the move could look entirely different.
Transportation provides a much faster release valve. Cargo can move from an East Coast routing to a West Coast port or be brought into the country earlier without rebuilding an entire production network.
The Real Freight Risk May Be Outside the Contract Rate
Seroka also highlighted an area that can get lost when companies focus primarily on headline ocean freight rates.
More than 90% of import trade moves under contracted volume, he said, giving many large importers relative stability in their base ocean freight price. But that does not necessarily protect landed cost.
Bunker fuel prices have increased more than 80% since the Iran war began on Feb. 28, according to Seroka, while ships avoiding the Suez Canal can add two to two-and-a-half weeks to voyages. Diesel prices in Southern California, meanwhile, have risen more than 50%.
That means apparel companies evaluating freight exposure need to look beyond the contracted container rate. Fuel surcharges, additional transit time, inventory carrying costs, trucking and other landside expenses can increase even while the underlying ocean contract remains stable.
The pressure may also appear first among smaller supply chain partners.
Seroka noted that most of the 1,200 trucking firms registered at the Port of Los Angeles are small or midsized businesses. Those companies have less ability to absorb a sudden jump in diesel expenses than larger logistics providers.
For brands and retailers, supplier financial health therefore extends beyond factories. A transportation partner operating on thin margins can become another point of vulnerability when energy costs jump.
Visibility Is Starting Earlier Than the Physical Supply Chain
Dodge pointed to AI as increasingly useful for demand planning, particularly as consumer behavior becomes more difficult to forecast.
When retailers can connect demand signals with logistics signals it equals a competitive advantage.
A retailer that knows a product is gaining momentum but does not know where its containers are has only half the information it needs. A port that knows cargo is coming but lacks insight into downstream demand has the same problem from the opposite direction.
Risk Is Also Moving Upstream
Even retail crime is becoming a supply chain issue.
Dodge said organized criminal groups that historically concentrated on stealing merchandise from stores are increasingly targeting trucks, rail cargo and other points upstream.
“We’ve seen them move upstream into the supply chain,” he said.
For apparel companies, that makes loss prevention broader than a store-operations concern. As merchandise spends more time in warehouses and moves through increasingly complicated routing networks, security has to follow the inventory.
What retailers need to focus on is where to place inventory, when to move it, how much visibility to build into the process and which costs are worth accepting before disruption forces the decision on them.
Increasingly, supply chain performance is not about avoiding extra cost altogether. It is about choosing which costs buy the most control.
