This Week in Logistics: Tracking Tariffs, the Rent Reset, and Peak Season Cut-offs

‍Shaun Hagen: The vote is in. The tariffs are still here. Oil just had its biggest weekly drop since 2020, and peak has already started. It's a big month, and all of it lands in your next round of contracts. Hey everyone, I'm Shaun Hagen, CEO of CartonCloud, and this is This Week in Logistics. Javier, welcome back to the desk. We ran a few special episodes through October, so this one catches us up on a whole month, and it's been a big one — then the US went to the polls to top it off. How are you feeling about the run sheet we've got planned for today, mate?

Javier Hernandez: I'll be honest, I've been kinda anxious to get back — there's a lot of news from the past month, with the election and everything, all in one episode. I've got about eleven tabs open in my head, another twenty on my computer, and I'm running on some coffee and some optimism here.

Shaun Hagen: We're in similar boats. Since the last episode recorded, I actually welcomed our first child, so I think we're both running on quite a lot of caffeine and optimism — hopefully we've got the right amount of both for our listeners' sake. Let me try and set the frame before we kick off. The big headline is that control of the US Congress is projected to change hands in January, and one of the first questions we've had from operators is: does that mean the tariffs go away?

Javier Hernandez: Short answer, it's not a clean yes. It's a bit of a grey area right now — honestly, it's still kind of a guess.

Shaun Hagen: Absolutely, and that's still playing out with the final counts and some of the final seats. But what's clearly not going away straight away is the tariffs that are actually being paid. And that's really the whole episode in one line: the results changed, but the cost base didn't, or hasn't yet. Tariffs, fuel, rent, peak — every one of them moved this month, and none of them moves back on a schedule you can control. So we'll stay factual and stick to what that means for your operation. Let's get into the news.

Javier Hernandez: First up, the election. Democrats will control both the House and the Senate when the new Congress sits on 3 January. As of this recording, a handful of races are still being counted, so the final numbers are still to be determined, but the outcome is certain. What matters for this show is what it means for trade and your costs — that's deep dive number one.

Shaun Hagen: Next up, warehouse space. In the US, CBRE has industrial vacancy at 6.4%, after the strongest quarter of demand since late 2022. Prologis, the biggest landlord in the sector, says spare capacity in its customers' networks has largely cleared. And in Australia, JLL says it's had the biggest quarter of warehouse leasing on record, with vacancy down to 4.6%. We'll get into that in deep dive number two.

Javier Hernandez: And every time we talk about automation, this one's a genuine shift. GXO, one of the biggest contract logistics providers, is taking Agility Robotics' Digit humanoid robots to two more US sites early next year. In the same window, Walmart committed about $6 billion over several years to put Symbotic automation into twenty-five of its regional distribution centres.

Shaun Hagen: Not a trend we're unfamiliar with, but the biggest players keep pressing their advantage. What's really interesting is that the rental model is what starts to bring automation within reach of smaller operators — that's what's being called robotics as a service, or hiring automation. We'll come back to that on the watch list.

Javier Hernandez: And while all that's going on, peak's already here. Australia Post expects more than 120 million parcels across November and December. Over here, UPS is hiring more than 100,000 seasonal workers — fewer than last year, but that's because it's carrying less of Amazon's volume and running a much more automated network. That's deep dive number three.

Shaun Hagen: Four main stories, one thread — every one of them is a cost or constraint that moved this month. The operators who come out ahead are the ones who plan for it rather than wait for it to reverse.

Javier Hernandez: And speaking of space, Shaun, I hear you've got a fun fact about bananas.

Shaun Hagen: I do, and I promise the bananas are in their place. Our logistics fun fact for this episode: in Western Sydney, Woolworths' new chilled and fresh distribution centre is more than 95% built. Its builder says it'll be the largest multi-storey temperature-controlled distribution centre in the Southern Hemisphere — more than 93,000 square metres, and it's planned to move over 6,000 tonnes of fruit, veg and chilled food a day. It opens next year, and it has dedicated rooms whose only job is to ripen bananas. Have you ever been in a building where the bananas get their own rooms?

Javier Hernandez: No, but don't tell my siblings — they had to share rooms growing up, so I'm a little jealous on their behalf. Honestly, it's like a hotel where the guests are fruit and checkout time really matters. What gets me is that they built it upward, with chilled and fresh stock across two floors.

Shaun Hagen: And there's a serious point under the banana room. Woolworths, one of the major grocery chains in Australia, looked at fresh food and decided to run distribution itself at enormous scale, rather than hand it to a 3PL. For a 3PL, that's the question to be ready for: your biggest customers can bring it in-house, and some will. The ones who stay are the ones you can show are faster, cheaper or more flexible than doing it themselves — no answers as to why we wouldn't just do this ourselves before our customer asked it, but maybe stop short of building your own dedicated banana room.

Javier Hernandez: And with space getting tighter, the answer matters more — which is a neat way into the deep dives.

Shaun Hagen: Deep dive number one. We sound like a broken record, but we've been tracking tariffs and fuel for a few episodes now, so this is the next chapter. Cost of living was the big issue going into this vote in the US, and tariffs were a big part of that — in one large pre-election poll, three in four voters said tariffs would matter to how they voted. The natural assumption is that tariffs and fuel costs ease from here with the result of the election. But as I said at the start, the tariffs you pay at the border haven't changed, and neither has the diesel bill — or at least not yet.

Javier Hernandez: It's worth being clear on why, because it's a question we keep getting from customers on this side of the border. The new Congress doesn't sit until 3 January. Most of the tariffs in place now rest on trade laws that let the president act without a new vote, and any bill to undo them can be vetoed — overriding a veto needs two-thirds of both chambers. So nothing about the election changes the customs collections this week.

Shaun Hagen: That's right, and that two-thirds majority doesn't look likely to change in the short term. So the honest planning assumption is that this is a 2027 question at the earliest. If your goods touch a US border, don't rebuild your sourcing plan around the results just yet.

Javier Hernandez: For the operator moving goods across the border right now, the real homework isn't politics — it's "what do I do on Monday?"

Shaun Hagen: Same advice we gave in September, when Canada's retaliation went live — it still holds. First, assume current tariffs carry into your next planning cycle, and confirm your contracts actually say who pays for them. Second, don't lock in a multi-year sourcing decision on the assumption that tariffs come off quickly. Plan for them to stay, and treat any relief as upside.

Javier Hernandez: And then there's fuel — the other thing voters were feeling this week. And it actually moved.

Shaun Hagen: It did, and quite a lot. Brent, the global oil benchmark, had its biggest weekly drop since 2020, down more than 13% to just under $100 a barrel, as markets bet on things easing with Iran after the election. But here's the number that matters for a fleet: US diesel was about $6.29 a gallon in the latest weekly figures — down six cents on the week, but still roughly $2.50 higher than a year ago. Pump prices lag crude, we know that, and one week isn't necessarily a trend. OPEC held its output flat at the start of November, and the tanker attacks near the Strait of Hormuz on Friday were a reminder this can turn just as fast the other way.

Javier Hernandez: Which is why the other question I'd ask is how your fuel surcharges actually work. Is it indexed to diesel? Who updates it, and how often? Or is it a flat rate someone reviews once a year — in which case you either eat the spikes or sit on the falls, and customers notice both. A surcharge that moves both ways is a lot easier to defend.

Shaun Hagen: That's right. The playbook is simple: price your contracts for the environment you're actually in, not the one the headlines suggest is coming.

Javier Hernandez: Deep dive two — warehouse space is running out. In the US, CBRE puts industrial vacancy at 6.4%, and demand last quarter was the strongest since late 2022. Prologis, the biggest landlord in the sector, is 95.6% occupied, and when leases come up, the new rents are resetting about 38% higher than the old ones. Their chief executive says customers are running lean on inventory and the excess capacity in their networks has largely cleared.

Shaun Hagen: And as we keep saying, not that it's a competition, but in Australia it's even tighter. JLL says we've just had the biggest quarter of warehouse leasing on record, with vacancy down to 4.6% and new completions dropping to their lowest since 2021. The one thing that hasn't moved yet in Australia is rent — JLL said rents have basically been flat for the quarter. So in Australia, this is a warning, but not an invoice yet. Record demand with half the new supply is exactly how a rent reset can start.

Javier Hernandez: Pretty basic business, right — supply and demand. If your warehouse lease renews in 2027, start the conversation now, because the spare space that kept rent rises modest for the last couple of years is mostly gone.

Shaun Hagen: Sounds a lot like renting in a tight housing market — supply and demand, basic economics: rent goes up, and the landlord knows you've got nowhere else to go. Where does it actually bite for a mid-sized 3PL?

Javier Hernandez: Three places, really. First, map every lease and customer contract that renews in 2027, and start the conversation 18 months out, not six. Second, check that your storage rates and escalators actually track your cost of space — a lot of contracts don't. And third, ask yourself where that storage rate actually lives — is it in a spreadsheet someone updates by hand, or is a rent increase going to turn into a repricing project right before your busiest season?

Shaun Hagen: And a third part is knowing your real capacity. In our CartonCloud Logistics Index episode, operators told us they're using about 77% of their capacity on average, and the smaller operators with the most room to spare were the least confident about the next six months. I think that's a link, not proof.

Javier Hernandez: Like we said — space you can't fill isn't an opportunity, it's a cost. And that cost just went up.

Shaun Hagen: So here's a question for you, Javier — it's the one that logically follows. If my lease renews in 2027, do I reprice my customers now, or wait until the new rent is signed?

Javier Hernandez: My view is: start the conversation now. Don't charge the new price yet, but tell customers early that space costs are going up and a review is coming at renewal. Then when the numbers are actually signed and hit, the price change is a follow-up conversation, not a huge surprise.

Shaun Hagen: And what if customers hear "review coming" and go shopping? Is it safer to wait until you know the number, or how do you avoid scaring customers off?

Javier Hernandez: It's a bit like a restaurant telling you at the door that prices have gone up, rather than you finding out when the bill arrives — the price is the same either way, but it gives you the chance to decide whether to stay. Customers are pretty much the same: the ones who find out from an invoice tend to leave quietly, there's that shock factor. The ones who hear from you early, with a date and a reason, usually stay, because there's been communication. If you wait until the new rent is signed, you've probably already absorbed a few months of the higher cost, and you're not going to get that back.

Shaun Hagen: And as we've said, the earlier conversation is a lot easier, especially if you've got escalators pre-baked into the contract, where customers allow that. If they don't, that's one thing you can look to fix at the next renewal.

Javier Hernandez: Agreed. Reprice on a schedule you choose, not the landlord's.

Shaun Hagen: Deep dive three. In Australia, the headline is more parcels and very little room for error. Australia Post expects more than 120 million parcels across November and December, up from around 111 million last year, which was already a record. Its standard parcel cut-off is 21 December for most of the country, and as early as 14 December for parts of Western Australia and the Northern Territory. Your customers' orders go out through that network, so a missed cut-off or delayed parcel becomes your late delivery.

Javier Hernandez: And over here in the States, not that it's a competition — USPS recommends shipping Ground Advantage by 17 December. FedEx Ground Economy's last day is 15 December, and UPS Ground depends on your route. The UPS hiring number is worth reading properly too: it's hiring more than 100,000 seasonal workers, fewer than last year for the second year running — not because it's short on people, but because it's deliberately cut its Amazon volume, and it says nearly 70% of its packages now run through an automated process. It's sizing the network much more tightly to what customers are actually forecasting.

Shaun Hagen: That's the bit that matters for a 3PL — if UPS expects volumes to jump about 25% from Q3 to Q4, and it's planning that off its customers' forecasts, if your peak is going to run well above that, you need to tell your carrier now, not as soon as Black Friday drops or the Christmas peak starts. Beyond communicating volume to carriers, what else can operators actually do to prepare?

Javier Hernandez: Communication is the theme, but three things. First, know the cut-off dates and work back from them — take the carrier date, set your own two to three days earlier to avoid surprises, put it in your system, and communicate it to customers, not just the spreadsheet. Second, make sure nothing holds a parcel back, and that starts with labels — it's the one thing people forget, and it causes some of the biggest hold-ups. You assume the labels are right, the printers are good, pickups are good, right until the first batch gets stuck.

Shaun Hagen: Australia Post has been saying exactly that to customers — its parcel team has called out warehouse labelling as one of the critical factors in how fast parcels move through the network. A bad label can send a parcel round the sorter again and again, and a parcel stuck in the sorter is a parcel that misses the cut-off.

Javier Hernandez: So test-scan a sample now, before you get busy. Standardise your carton sizes, and treat label validation as a simple safety net for the dates you've just set.

Shaun Hagen: You said there were three things — what was the last one?

Javier Hernandez: People. Black Friday is 27 November, Cyber Monday is 30 November, and volume keeps climbing through December. If your temporary staff aren't locked in yet, do it this week, so they're trained before the spike, not during it.

Shaun Hagen: As I mentioned at the start — once dates, labels and people are sorted, tell your customers the date early so they can plan around it too. That's what keeps everyone calm in December. In Australia, we have a slightly different trend: the Black Friday, Cyber Monday and Christmas peak actually overlaps with the Christmas shutdown period and summer leave. So on top of planning for the peak, we also have to factor in who's actually rostered, not just who's hired — and we've got a bonus little sale called Boxing Day, the day after Christmas, so all of this gets exacerbated right over the summer holidays when we're meant to be relaxing. Peak doesn't create problems, it just exacerbates the ones you already have. Good luck to everyone out there for the next couple of weeks.

Shaun Hagen: The operator playbook. Number one: price for the environment you're in. Even with Congress changing hands in January, the tariffs you pay haven't changed yet — confirm who pays the tariffs on each contract, make sure your fuel surcharge moves both ways, and don't bet your sourcing on tariffs coming off quickly.

Javier Hernandez: Number two: get ahead of the rent reset. Put every 2027 lease on one calendar, and start the landlord conversation 18 months out. Check your storage escalators actually track your cost of space, and reprice your customers on a schedule you choose, not the landlord's.

Shaun Hagen: And number three: work back from the cut-offs. Set your own peak cut-offs a few days earlier than the carriers, validate your labels now, give your carriers an honest peak forecast, and get your temporary staff locked in before Black Friday.

Javier Hernandez: For the watch list — first, trade. Watch whether the new Congress and the ongoing talks with Canada and Mexico actually change any of the tariffs paid, because so far, nothing has.

Shaun Hagen: Second, fuel. OPEC meets again on 29 November — that, and whether this week's fall in crude actually reaches the pump, sets the tone for diesel into the new year.

Javier Hernandez: And third, watch whether more robot makers start offering robotics as a service — once automation is a monthly bill instead of a capital purchase, it becomes a real option for smaller 3PLs too.

Shaun Hagen: And I will die on the hill that that's how robotics enters the mid-market.

Shaun Hagen: I'm Shaun Hagen.

Javier Hernandez: I'm Javier Hernandez.

Shaun Hagen: And this has been This Week in Logistics. Whatever's moving this quarter, check it, price it, and tell your customers before they have to ask. We'll see you next time.