SPLYLINE Supply Chain Intelligence

May 9, 2026

The Court of International Trade invalidated the administration's 10% Section 122 global tariff on Wednesday, surcharge-driven container rates rebounded 3% on the Drewry index, and University of Michigan consumer sentiment plunged to an all-time record low of 48.2 — the lowest reading since the survey began in 1952. The week layered three converging shocks onto already-strained supply chains. Maersk maintained 2026 guidance despite an Ocean segment loss, Aurora launched the first revenue-generating fully driverless commercial trucking service with McLane, Brookfield closed its $1.2 billion Peakstone Realty acquisition, and Honda indefinitely shelved its $15 billion Ontario EV complex — the most consequential single retreat in the North American reshoring wave. The reshoring narrative is now visibly bifurcating: semiconductors and AI servers are accelerating onshore (TSMC Arizona packaging, Apple Houston Mac Mini production), but EV manufacturing has cracked. For supply chain leaders, the operative question this week is no longer whether tariff costs land — it is who absorbs them. The divergence between Tapestry's full absorption with no price increases, Carter's tariff-driven margin hit, and Karat Packaging's mid-May price hikes signals a category-by-category reckoning is under way.

Carriers Push Through Surcharges While Base Rates Drift

Drewry's World Container Index closed Thursday, May 7 at $2,286 per 40-foot container, up 3% week-over-week and breaking a three-week decline. Drewry's own commentary made the operative point bluntly: rates rose because MSC raised its Asia-USEC Emergency Fuel Surcharge from $430 to $644 per FEU, CMA CGM introduced a $2,000 Peak Season Surcharge effective May 1, and carriers announced FAK rates of $3,500–$4,500 per FEU on Asia–North Europe — not because demand returned. Drewry explicitly warned that "weak demand and excess capacity" make sustainable rate increases "unlikely." Transpacific did most of the heavy lifting: Shanghai–New York climbed 7% to $3,721 per FEU and Shanghai–Los Angeles rose 5% to $3,062 per FEU, while Asia–Europe lanes were stable. The Shanghai Containerized Freight Index closed Friday at 1,954.21, up 45.3% year-over-year. Drewry's Cancelled Sailings Tracker shows 34 blank sailings scheduled across major East-West trades over weeks 20–24, with effective Asia-Med capacity set to drop 10% month-over-month in May.

Maersk Q1: Volume Wins, Rates Lose, Guidance Holds

Maersk's Q1 print on Thursday, May 7 is the bellwether result of the week. EBITDA of $1.73 billion beat the $1.66 billion consensus but fell from $2.71 billion a year earlier, with revenue down 2.6% to $13.0 billion. The crucial split: Ocean volumes grew 9.3% (outperforming the market) but rate revenue fell $732 million, producing an Ocean EBIT loss of $192 million at 96% utilization. Logistics & Services revenue rose 8.7%, and Terminals delivered a 33.2% EBIT margin. Crucially, Maersk maintained 2026 guidance of $4.5–7.0 billion underlying EBITDA and global container volume growth of 2–4%. CEO Vincent Clerc framed the downside risk: "Higher energy prices and constraints on trade in the Upper Gulf region, which in 2025 accounted for around 6% of global container trade, pose downside risks to the growth momentum." Maersk separately ordered eight 18,600-TEU dual-fuel vessels for 2029–2030 delivery.

Hormuz Cost Layer Continues

Hapag-Lloyd reaffirmed an estimated $50–60 million weekly impact with four to six vessels stranded in the Persian Gulf; CEO Rolf Habben Jansen warned a "full return to normal operations could take 6–8 weeks" even with a ceasefire. On May 5, the Maltese-flagged CMA CGM San Antonio was struck by missiles transiting the strait, injuring eight crew per IMO — the second CMA CGM ship hit since the war began. Per Kpler data published May 7, 81% of 53 trapped top-carrier container vessels remain stuck. Port Houston was the standout volume datapoint of the week, posting Q1 2026 throughput of 1,087,870 TEU, up 2% year-over-year. Los Angeles, Long Beach, NY/NJ, and Savannah April releases cluster May 13–20.

The decisive policy event of the week was the Court of International Trade's May 7 ruling (Slip Op. 26-47) holding the administration's 10% Section 122 global tariff "invalid as contrary to law." The consolidated case, State of Oregon v. United States and Burlap & Barrel v. Trump, found that Section 122 of the Trade Act of 1974 covers only "fundamental international payments problems" — distinct from the goods trade deficit the administration cited as justification. The relief is narrow: a permanent injunction applies only to two private importer plaintiffs (Burlap & Barrel, Basic Fun!) and the State of Washington as importer-of-record via the University of Washington. The court explicitly declined to issue a universal injunction. CBP continues collecting Section 122 tariffs from all other importers, and the government has indicated it will appeal to the Federal Circuit. The court ordered refunds with interest to plaintiffs within five days. President Trump responded: "Two radical left judges... Nothing surprises me with the courts."

This is the second judicial blow after February's Supreme Court 6-3 ruling in Learning Resources v. Trump voided IEEPA tariffs. Section 122 was the administration's replacement vehicle, scheduled to expire by statute on July 24, 2026 anyway — making the appeals timeline potentially moot before resolution. American businesses paid roughly $8 billion in Section 122 tariffs in March 2026 alone, the first full month of collection (Trade Partnership Worldwide). Section 232 paths remain intact: 50% on steel, aluminum, and copper articles, 100% on patented pharmaceuticals effective July 31, and the January Section 232 semiconductor tariff. The week's other major trade development came via Truth Social on May 7: Trump set a July 4, 2026 deadline for EU ratification of the Turnberry trade framework, threatening "much higher" tariffs if the EU Parliament doesn't act. The US-China truce extended to November 10, 2026 remains operative with no fresh developments in the window.

Tapestry Absorbs, Carter's Bleeds, Karat Hikes

Q1 earnings clustered in the back half of the week reveal three distinct tariff playbooks. Tapestry's Q3 FY26 print on Thursday was the standout beat: revenue $1.92 billion, up 21% reported and Coach +29% in constant currency, with non-GAAP gross margin expanding 80 basis points to 76.9% despite a 180 basis-point tariff-and-duty drag (Coach -150 bps; Kate Spade -440 bps). The company raised FY26 EPS guidance to $6.95 and committed $1.6 billion in shareholder returns. CFO Scott Roe was emphatic: "We have not implemented any price increases in direct response to tariffs, reflecting our disciplined and consumer-focused pricing strategy."

Carter's Q1 told the opposite story. Net sales rose 8.1% to $681 million with US retail comparable sales of +10.5%, but adjusted EPS fell from $0.66 to $0.39, and gross margin compressed more than 300 basis points pressured by approximately $50 million in incremental tariffs. Interim CEO Richard Westenberger attributed the profit hit to "higher tariffs, investment spending and other inflationary cost pressures." The full-year outlook was reiterated. Sharon Price John takes over as permanent CEO June 15. Karat Packaging (foodservice disposables) Q1 showed gross margin compression to 35.5% from 39.3% — explicitly attributed to elevated tariffs — and CEO Alan Yu announced price increases on select plastic items beginning mid-May. Weyco Group disclosed it paid approximately $19.8 million in IEEPA tariffs across 2025 plus Q1 2026, lifting product expenses 19–50%; the company cut inventory to $50.5 million from $65.9 million at year-end. Grainger raised FY26 EPS guidance to $44.25–46.25 from $42.25–44.75, with Q1 sales up 10.1% explicitly powered by tariff pass-through to industrial customers. Tyson Foods raised FY26 adjusted operating income guidance by $100 million at midpoint, with CEO Donnie King citing protein-cycle dynamics rather than tariffs.

Amazon Builds the AWS-for-Logistics Play

The structural retail story is Amazon's launch of Supply Chain Services on Monday, May 4, opening its freight, distribution, fulfillment, and parcel network to outside enterprises. Initial customers include P&G (raw-materials freight), 3M (DC moves), and Lands' End (multi-channel fulfillment) — sending UPS and FedEx shares lower. CEO Andy Jassy committed in his annual letter: "All our U.S. large-format fulfillment center launches in 2026 will have this latest generation [robotics] technology." Amazon followed Thursday with Blue Jay multi-arm robotics, Project Eluna agentic AI, and smart delivery glasses. With 750,000+ robots deployed and a target of 75% automation across roughly 40 facilities by end-2027, this is potentially the most structurally significant retail-logistics announcement of 2026: a play that simultaneously threatens parcel incumbents and gives shippers a new tariff-mitigation lever through network density.

ISM Headlines Mask the Defensive Pull-Forward

The April ISM Manufacturing PMI printed 52.7%, unchanged from March and the fourth straight month of expansion, with New Orders at 54.1 and Production at 53.4. The headlines obscure the warning signs: the Prices Index surged 6.3 points to 84.6 — the highest since April 2022 and the 19th consecutive monthly increase — while Employment fell to 46.4, the 31st straight month in contraction. Tariffs were referenced in 18% of respondent comments. S&P Global's final April PMI revised up to 54.5 with new orders at a four-year high. Chris Williamson, S&P Global's chief business economist, was unusually direct: "The surge in manufacturing activity in April is not the cause for cheer that at first glance it suggests. A key driving force behind the upturn is the need for companies to get ahead of further feared price rises and supply shortages... which may prove to be a chimera as the stock building boost fades." The defensive pull-forward thesis is now corroborated across both PMI panels.

Honda Walks Away From $15 Billion

Honda's indefinite shelving of its $15 billion Alliston, Ontario EV and battery complex (Nikkei Asia, May 5; CBC and Globe & Mail, May 6) is the consequential reshoring datapoint of the week. The original April 2024 commitment included a 240,000-vehicle-per-year EV assembly plant, a 36 GWh battery plant, and cathode-materials joint ventures with POSCO Future M and Asahi Kasei, attached to up to C$5 billion in promised federal-provincial subsidies. Honda's existing Alliston gas-vehicle plant employing 4,200 workers is unaffected. The decision pairs with Honda's projected 59% drop in fiscal 2026 operating profit and ¥650 billion in tariff-attributed losses, including ¥300 billion from levies on roughly 550,000 imported vehicles. PM Mark Carney acknowledged "challenges" and cited "unjustified" US tariffs. Q1 2026 US EV sales fell 26% year-over-year per Cox/Kelley Blue Book — context that reframes the entire North American EV battery hub thesis.

Semiconductors and Apple Continue to Move Onshore

TSMC announced expanded advanced packaging operations in Arizona via partnership with Amkor, addressing the back-end gap in US chip onshoring. At the SelectUSA Investment Summit, TSMC indicated potential further US footprint expansion. Apple confirmed Mac Mini production moving to Foxconn's Houston facility later this year, the first time the Mac Mini will be US-made; the same site is producing Apple Intelligence AI servers ahead of schedule. Apple's four-year US commitment is now $600 billion, up from the prior $500 billion figure.

Spot freight markets exited the week at extremes. DAT national van linehaul reached $2.00 per mile, up 25% year-over-year, reefer hit $2.69 per mile (+27% YoY), and flatbed extended an 18-week winning streak to $3.05 per mile. Truckstop's all-in broker-posted rate set an all-time high of $3.32 per mile, up 32% year-over-year. The supply driver is unambiguous: national average diesel jumped 28.9 cents to $5.64 per gallon for the week ending May 4, with the Midwest up 61.1 cents and California at $7.36. National regular gasoline averaged $4.54 per gallon Friday, up nearly 40 cents from a month ago per AAA — Hormuz-driven crude pressure feeding directly into truckload economics and consumer wallets. CVSA International Roadcheck on May 12–14 will compress capacity further. DAT's Dean Croke noted: "If you're running Southeast-to-Northeast corridors, you have real pricing power right now."

Rail confirmed the broad freight strengthening. AAR weekly traffic for the week ending May 2 totaled 518,773 carloads plus intermodal, up 3.9% year-over-year — the strongest weekly comp in months. Carloads rose 4.0% with nine of ten commodity groups gaining (coal the lone decliner). Intermodal hit 283,724 units, +3.9% YoY. ACT Research's preliminary April Class 8 net orders came in at 24,800 units, up 201% year-over-year but down 34% month-over-month from March's 37,200, reflecting normal seasonal moderation as 2026 order boards fill ahead of EPA 2027 NOx pre-buy. Classes 5–7 orders rose 26% to 16,400. LTL April tonnage trends inflected positive across the sector: Saia reported tonnage +6.5%, ArcBest tonnage +5%, XPO -1% but ahead of normal seasonality.

GXO Logistics Q1 on May 5 delivered revenue up 10.8% to $3.3 billion with adjusted EPS of $0.50 beating consensus by 35%; the company won $227 million in new business including PepsiCo, L'Oréal, Heineken, and BAE Systems, and raised FY26 adjusted EBITDA guidance to $935–975 million. The autonomous trucking sector crossed a commercial threshold this week. Aurora Innovation and McLane Co. (Berkshire Hathaway subsidiary) launched fully driverless commercial hauls on Dallas–Houston on May 6 — Aurora's first commercial driverless contract — following a three-year supervised pilot that logged 280,000+ autonomous miles, 1,400 loads, and 100% on-time performance. Aurora plans to scale to 200 driverless trucks by year-end. Two days earlier, Volvo Autonomous Solutions and Aurora opened a 200-mile Dallas–Oklahoma City lane operating five days per week — Volvo's first end-to-end customer deployment.

Symbotic, Locus, and Agentic Sourcing

Symbotic's Q2 FY26 on May 6 delivered revenue of $676 million (+23% YoY), adjusted EBITDA of $78 million (more than double the $35 million YoY), and a backlog of $22.7 billion across 70 deployed systems. Q3 guidance: $700–720 million revenue. Locus Robotics' Locus Array — a 10-foot autonomous robots-to-goods system claiming to reduce fulfillment labor up to 90% — entered customer deployment phase, with 350+ Locus sites globally and DHL passing one billion picks. Fairmarkit launched "Total Agentic Sourcing" for both tail and strategic spend ($500 to $500M contracts), with native integration to SAP Ariba, S/4HANA, Coupa, Oracle, and ServiceNow.

Brookfield Closes Peakstone; Americold-EQT Joint Venture Announced

Two major industrial transactions defined the week, with one closed and one announced. Brookfield completed its $1.2 billion all-cash acquisition of Peakstone Realty Trust on May 6 at $21.00 per share, delisting PKST from the NYSE and folding 70+ industrial properties (mix of traditional and industrial outdoor storage) into Brookfield's global logistics platform of 160+ million square feet across 19 countries. On May 7, Americold and EQT announced a $1.3 billion North American cold storage joint venture, with EQT's Active Core Infrastructure fund taking a 70% stake in 12 facilities (~124 million cubic feet, 400,000+ pallet positions); Americold retains 30% and operations, expecting $1.1 billion in net proceeds for debt repayment. Closing is expected in Q3 2026 pending regulatory approval — a clear announced-not-completed distinction. Executive movement clustered at the May 1 effective date: Aramex installed Amadou Diallo as Group CEO, Envirotainer named former Maersk EVP Aymeric Chandavoine CEO, Logistics Plus elevated COO Yuriy Ostapyak to CEO, and ICAT Logistics named Youssef Annali CFO. The FedEx Freight spinoff remains on track for June 2026.

Industrial Vacancy Passes Peak

Cushman & Wakefield's Q1 2026 US Industrial MarketBeat declared "Peak Industrial Vacancy Likely in Rearview Mirror as Demand Holds and Supply Slows." Net absorption hit 40 million square feet (the strongest first quarter in three years), vacancy held at 7.4%, and asking rents reached $10.20 per square foot — up 2.1% year-over-year versus only 1.1% at year-end 2025. Q1 deliveries fell 27% YoY to 54 million square feet — the lowest quarterly total since mid-2017. JLL measured the first positive YoY rent print since 2024, with mega-box Class A asking rents up 14.5%. The data center crossover story has fully arrived in the industrial pipeline: EastGroup reported approximately 50% of YTD development leasing was for data center-related users, STAG signed eight leases totaling 1.6 million SF to data-center-related tenants, and Prologis disclosed $1.3 billion in build-to-suit data center development starts.

Sentiment Hits a 74-Year Record Low

Friday's University of Michigan preliminary May reading was the news event of the week beyond shipping and trade policy. The headline index printed 48.2 — an all-time record low in survey history dating to 1952 — down from April's final 49.8 (revised up from a preliminary 47.6). Current Conditions fell roughly 9% to 47.8, while Expectations held at 48.5. One-year inflation expectations fell to 4.5% from 4.7%, and five-year expectations dropped to 3.4%. Joanne Hsu, Director of Surveys, framed it: "Consumers continue to feel buffeted by cost pressures, led by soaring prices at the pump. Middle East developments are unlikely to meaningfully boost sentiment until supply disruptions have been fully resolved and energy prices fall." Roughly one-third of consumers spontaneously cited gasoline; about 30% cited tariffs.

The Logistics Manager's Index for April printed 69.9 — the fastest expansion since March 2022, up 4.2 points from March. The internals are unprecedented: Transportation Prices at 95.0 (the second-fastest expansion ever in LMI history) versus Transportation Capacity at 28.4 (the second-lowest reading ever recorded for any LMI metric) — a 66.6-point spread that is the largest delta the index has ever measured. The labor data complicated the picture: April nonfarm payrolls released Friday came in at +115,000, with unemployment holding at 4.3% — softer hiring confirms ISM Employment's 31-month contraction streak. The 43-point UMich-CCI gap (Conference Board CCI was 92.8 in April) is a pattern historically associated with recession onset.

Software Supply Chain Worm and CISA Patches

CISA added CVE-2026-6973 — an actively exploited Ivanti Endpoint Manager Mobile vulnerability — to its Known Exploited Vulnerabilities catalog on May 7, followed by a BerriAI LiteLLM SQL injection (CVE-2026-42208) on May 8 with a three-day FCEB remediation window. The Mini Shai-Hulud worm campaign expanded across the SAP and AI/ML developer ecosystems. The TeamPCP threat group compromised four official SAP JavaScript/cloud-app npm packages (mbt, @cap-js/db-service, @cap-js/postgres, @cap-js/sqlite) representing roughly 572,000 weekly downloads combined, then expanded to PyTorch Lightning on PyPI. Logistics-specific ransomware listings continued at sustained pace, with Boots Transport (SafePay), Lonestar Truck Group (Interlock), Palmers Relocations (MedusaLocker), Argentina's Shipping Services (Qilin), and Japanese packaging/logistics manufacturer Hokuyo all listed within the week.

Weekly Dashboard — Week of May 4–8, 2026

Three things hit simultaneously this week, and each demands a distinct operator response.

The first is that tariff absorption has fragmented by category, and a unified posture on supplier negotiations is now actively wrong. Tapestry held prices flat while absorbing 180 basis points of tariff drag because brand-leveraged premium retailers can swallow that cost. Carter's couldn't and took the margin hit with retail comps still up 10.5%. Karat Packaging is raising prices in mid-May because foodservice disposables run on a different elasticity. Procurement teams treating Q2 supplier conversations as a uniform "tariff impact" exercise are mismatching strategies. Segment your supplier base by absorption capacity — branded vs. commodity, premium vs. price-sensitive, branded direct vs. private label — before you negotiate. The teams that get this right will preserve margin where Tapestry-equivalent suppliers can hold, and accelerate qualification of alternates where Karat-equivalent suppliers can't.

The second is that the freight cost spike is supply-side, not demand-side, and the modes are diverging for opposite reasons. Ocean carriers have structural overcapacity, war-rerouted tonnage absorbing slack, and full fleet employment — and still can't push base rates without surcharges. Domestic truckload has falling shipment volumes and is hitting all-time-high rates because diesel jumped 29 cents in a week and capacity is contracting into Roadcheck. The LMI's 66.6-point spread between Transport Prices (95.0) and Transport Capacity (28.4) — the largest in the index's history — is the cleanest signal of the divergence. Shippers approaching 2026 contract renewal with a unified "market is soft" read are reading ocean data and misapplying it to truckload. Separate the modes; the negotiations are fundamentally different.

The third is that the reshoring narrative now requires sub-segment specificity, and capital allocation should reflect the divergence. Semiconductors and AI servers are accelerating onshore — TSMC's Arizona packaging expansion with Amkor closes the back-end gap, Apple's Houston Mac Mini and AI server production is the first US-made Mac, and the $600 billion Apple commitment is real. EV manufacturing has cracked: Honda's $15 billion Alliston shelving comes against a 26% YoY drop in US EV sales, with up to C$5 billion in subsidies walked away from. Treat the Aurora-McLane commercial autonomous launch as the watershed it is — autonomous trucking is no longer a pilot category — and the Amazon Supply Chain Services launch as a structural threat to UPS/FedEx pricing power that doubles as a tariff-mitigation lever for shippers willing to use it.

Strategic question for supply chain leaders: Looking at your top ten suppliers, how many fall into the Tapestry "can absorb" bucket versus the Karat "must pass through" bucket? The answer to that question is the most important pricing variable in your second-half plan — and it is not a market data exercise. It is a customer-base, brand-equity, and elasticity exercise that only your team can run.

CEDAR ADVISORY

If this week's developments are affecting your operations -- tariff exposure, AI integration decisions, ERP readiness, or supply chain restructuring -- Cedar Advisory helps companies build operational infrastructure that performs under pressure.

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SPLYLINE • Supply Chain Intelligence • Delivered Weekly

The week's defining story is fragmentation — tariff absorption fragmenting by category, freight markets fragmenting by mode, reshoring fragmenting by sub-sector. What's the most important fragmentation showing up in your operations this week? Share your perspective in the comments.

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