Logistics Watch: Ground shipping costs drop, med device shortages, Mexican nearshoring, and more.

Shifting dynamics in shipping costs, supply chain strategies, retail challenges, and healthcare regulations highlight the interplay between economic pressures, policy changes, and technological advancements.

Last mile: Despite recent rate hikes from FedEx and UPS, ground shipping costs are expected to dip slightly in Q1 2025, thanks to ongoing discounts amid fierce competition and low demand, according to the TD Cowen/AFS Freight Index and reporting from Supply Chain Dive. While shippers can still negotiate favorable rates, the future of these discounts is uncertain as carriers focus on tightening pricing controls. Even with discounts, holiday surcharges have cut into savings, with FedEx and UPS benefiting from increased surcharge revenue during peak season.

Nearshoring: Mexico is rolling out a $1.4 billion nearshoring incentive package under President Claudia Sheinbaum's Plan México to boost its role in North America's supply chains. The initiative, which runs until 2030, allocates funds for companies investing in Mexico and aims to strengthen regional integration, create jobs, and increase domestic production. Unlike previous strategies, this package is open to both foreign and domestic companies across all sectors, marking a shift towards broader economic inclusion.

Returning to normal: Retailers are struggling with a surge in returns, expected to hit $890 billion in 2025, largely due to online shopping habits like over-buying with the purpose of returning unwanted items. To combat rising costs and fraud, companies are tightening return policies, charging for return shipping, and using data analytics to tailor strategies, all while trying to maintain customer satisfaction. The environmental impact of returns is also a concern, pushing retailers to explore more sustainable practices and leverage loyalty programs for better data collection.

Device shortage: FDA's new medical device director, Michelle Tarver, warns that the U.S. is at risk of falling behind due to its lack of mandatory reporting on potential device shortages, unlike Europe, which recently implemented stricter rules. The current U.S. system relies on voluntary notifications, often leaving the FDA unable to act until shortages impact patient care. Tarver's call for change targets the new Congress under President Trump's second term, urging statutory authority and funding to align with international standards and better protect the healthcare system.

We're following these stories and more. Check back for commentary from the industry's top thought leaders, discussing the macro and micro trends they're seeing in their fields.