SPLYLINE Supply Chain Intelligence

May 22, 2026

The data this week broke in opposite directions across nearly every domain. Ocean container rates surged 6% to a 2026 high even as Maersk, Hapag-Lloyd, and ZIM all posted Q1 losses or earnings collapses. The Trump-Xi summit produced a confirmed 200-aircraft Boeing order on May 20, less than half of what Wall Street analysts expected. Walmart and Target raised guidance and grew comparable sales; Home Depot and Lowe's described the most difficult housing market since the financial crisis. U-Michigan consumer sentiment hit a new all-time low of 44.8, missing every Bloomberg-surveyed economist's projection. Section 122 was struck down by the Court of International Trade on May 7, then reinstated by the Federal Circuit five days later. The noise this week is the story. Underneath it, three signals matter for Q3 planning, and they are the ones the headlines obscure.

Drewry's World Container Index rose 6% to $2,712 per 40-foot container on May 21, the third consecutive weekly increase this month. The rally on the published trade lanes was led by Asia-Europe: Shanghai-Rotterdam jumped 15% to $2,773, Shanghai-Genoa climbed 10% to $4,082. Transpacific anchors from the May 14 Drewry print ($3,357 Shanghai-Los Angeles, $4,252 Shanghai-New York) embedded fresh Emergency Fuel Surcharges and Peak Season Surcharges that carriers stacked into base rates ahead of the June 1 GRI window. Drewry framed the composite move as "early peak season demand and carrier surcharges," not fundamental demand recovery. Thirty-four blank sailings were announced across major East-West trades for weeks 20 to 24.

The carrier earnings releases this week told a darker story than the rate sheet. Maersk reported Q1 revenue of $13.0 billion (down 2.6% YoY), EBITDA of $1.8 billion, and EBIT of $340 million, with the Ocean segment posting a $192 million operating loss. Ocean volumes grew 9.3% on 96% asset utilization. CEO Vincent Clerc told CNBC that higher oil prices and Hormuz-related rerouting are costing Maersk approximately $500 million per month, "much of which has been passed on through higher freight rates." Maersk held its 2026 EBITDA guidance at $4.5 billion to $7 billion. Hapag-Lloyd posted a net loss of €219 million in Q1, versus a €446 million profit a year ago, with EBITDA down 55% to €494 million. ZIM reported a net loss of $86 million on revenue of $1.40 billion (down 30% YoY), average freight rate of $1,310 per TEU (down 26% YoY), and volumes of 866,000 TEU (down 8%). The ZIM-Hapag-Lloyd combination is now targeted to close in Q4 2026 pending Israeli, EU, and US regulatory approval.

The Strait of Hormuz entered its 12th week of effective closure to container traffic, dating from the February 28 escalation. Maersk's Q1 report described traffic through the strait as "at a near standstill." The Port of Los Angeles handled 890,861 TEU in April, up 5.7% year-over-year, the second-busiest April in its history. Executive Director Gene Seroka described "consistent flows" of back-to-school and early holiday inventory.

The story embedded in this week's prints: the mode most exposed to the war is losing money. The mode least exposed (domestic truckload) is gaining pricing power. Section 4 explains why.

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The May 14-15 Trump-Xi summit in Beijing produced its most concrete deliverable on May 20, when China's Ministry of Commerce confirmed that Chinese aviation will import 200 Boeing aircraft "in accordance with commercial principles." Boeing characterized the deal as "an initial commitment for 200 aircraft and we expect further commitments will follow after this initial tranche." This is China's first major Boeing order since 2017. The deal also includes US engine and parts supply guarantees, with GE Aerospace identified as the engine supplier for what Trump described to reporters as "approximately 400 to 450 engines." The 200-unit total was less than half of the roughly 500 aircraft analysts had projected given Boeing CEO Kelly Ortberg's presence in the US delegation. Aircraft type, delivery schedule, and order-versus-backlog conversion remain unspecified.

Other summit deliverables: agreement to pursue mutual tariff reductions on $30 billion of goods per side; US resumption of beef exports from 17 states; clearance for Nvidia H200 sales to China; a framework for $17 billion in annual US agricultural purchases for 2026 to 2028; and Trump's invitation to Xi for a September 24 White House visit. Council on Foreign Relations' Rush Doshi described the outcome as "heavy on optics" with "pomp, pageantry, symbolism, but not quite a lot of substance." There was no movement on Hormuz mediation, rare-earth export licensing, or Taiwan.

The Section 122 court whiplash defined the week's tariff narrative. On May 7, the Court of International Trade ruled in a divided decision that Proclamation 11012 exceeded the President's authority under Section 122 of the Trade Act of 1974, holding that the cited indicators did not constitute the "balance-of-payments deficits" the statute requires. The court limited relief to the three named importer plaintiffs: the State of Washington, Burlap and Barrel, and Basic Fun. On May 12, the Federal Circuit issued an administrative stay, meaning CBP continues collecting the 10% surcharge while the appellate motion for a longer stay is briefed on an expedited schedule. The original plaintiffs have seven days to respond. The surcharge expires by its own terms on July 24, 2026 absent congressional extension. For non-plaintiff importers, the practical posture is unchanged: pay the duty at entry, preserve refund rights through timely protests and post-summary corrections, and assume Section 301 actions will replace Section 122 as the long-term tariff vehicle.

April retail sales rose 0.5% month-over-month and 4.9% year-over-year per the May 14 Census release. The composition matters more than the headline: gasoline station receipts contributed materially, while furniture fell 2%, autos fell 0.5%, department stores fell 3.2%, and clothing fell 1.5%. Non-store retailers grew 11.1% YoY. Consumers are absorbing higher fuel costs by trading down on big-ticket discretionary categories.

Walmart Q1 FY27 (May 21): Total revenue $177.8 billion (+7.3%), Walmart US comparable sales +4.1%, global eCommerce +26% and now 23% of net sales. Membership and other income rose 27.0%. Walmart called out a 100 basis point gross margin headwind from "maximum fair pricing legislation in pharmacy" and reaffirmed the FY27 outlook. Q2 net sales guided up 4% to 5% in constant currency.

Target Q1 FY26 (May 20): Net sales $25.44 billion (+6.7%), comparable sales +5.6%, traffic +4.4%, digital +8.9%, adjusted EPS $1.71 versus $1.30 a year ago. The full-year net sales growth forecast was raised to approximately 4%, two percentage points above the prior guide. CFO Jim Lee said Target is "working through the process" of applying for tariff refunds; the raised guidance excludes any refund benefit.

Home Depot Q1 FY26 (May 19): Revenue $41.77 billion (+4.8%), adjusted EPS $3.43, FY guidance reaffirmed. CFO Richard McPhail attributed soft DIY performance "almost completely" to weather.

Lowe's Q1 FY26 (May 20): Sales $23.1 billion (+10.3% with the Foundation Building Materials and Artisan Design Group acquisitions), comparable sales +0.6% (fourth consecutive positive comp), adjusted EPS $3.03. CEO Marvin Ellison called the operating environment "the most difficult housing market that I've faced in this business since the financial crisis." FY26 adjusted EPS guidance of $12.25 to $12.75 was held.

The signal: consumables and trade-down beneficiaries are taking share. Big-ticket housing-adjacent categories are in cyclical retreat. Shippers planning Q3 inventory should weight these two reads differently.

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The April ATA Truck Tonnage Index registered 117.8 on a seasonally adjusted basis, unchanged from a revised-higher March print, up 3.5% year-over-year. Chief Economist Bob Costello described the level as "back to fall 2022 levels." Year-to-date tonnage is up 2.6%.

The American Association of Railroads reported total US weekly rail traffic of 511,216 carloads and intermodal units for the week ending May 16, up 4.2% YoY, with intermodal up 7.3% and carloads up 0.6%. This is the sixth consecutive week of growth. Through 19 weeks, US rail traffic is up 2.0% YoY cumulative, with intermodal up 0.9% and carloads up 3.4%. Grain (+2,066 carloads), metallic ores (+1,044), and petroleum (+1,004) led the gains. Coal continued to decline, down 3,667 carloads.

The on-highway diesel price averaged $5.596 per gallon for the week ending May 18 per EIA, down 4.3 cents weekly but still $2.04 above the year-ago average. California averaged $7.40, Hawaii $7.21, Washington $6.78. PADD 5 (West Coast) average was $6.52. Per FreightWaves SONAR's National Truckload Index, the all-in spot rate including fuel surcharge is near $2.80 per mile, up roughly 23% from the Q4 2025 lows. The Outbound Tender Rejection Index pushed past 14%, the highest since mid-2022. RXO's Q2 Truckload Forecast noted that the May 12-14 CVSA Roadcheck week drove the largest week-over-week spot rate increases in four years.

Two structural items closed out the week. On May 14, the Supreme Court ruled unanimously in Montgomery v. Caribe Transport that brokers retain negligent-hiring liability under common-law tort claims, a material shift in broker risk underwriting that will accelerate carrier-vetting tightening. On the rail merger, Union Pacific CEO Jim Vena told the May 21 Wolfe Research Global Transportation Conference that he is confident the May 2 revised application addresses every STB concern. CN, BNSF, CPKC, and the American Farm Bureau have filed in opposition. The STB is expected to rule on application completeness by approximately May 30.

The Federal Reserve's G.17 release on May 15 showed April industrial production up 0.7% month-over-month after a 0.3% March decline. Manufacturing rose 0.6%, motor vehicles +3.7%, business equipment +1.5%, defense and space +1.9%. Capacity utilization climbed to 76.1%, with manufacturing at 75.8%. Both remain roughly 3 percentage points below long-run averages. The April reading is the first data point suggesting that the Q1 EV pullback may have stabilized, with motor vehicle production accelerating sharply.

On the security side, the TeamPCP / "Mini Shai-Hulud" npm supply-chain campaign continued through this week, with GitHub officially confirming on May 21 that internal Nx Console repositories were breached through a poisoned VS Code extension. SafeDep observed a single compromised developer account publishing 630 malicious package versions across 317 packages within approximately 20 minutes during the May 19 wave, including the Alibaba-maintained Antv graphics library. OpenAI, Mistral AI, and Grafana Labs were among downstream parties affected. Apple revoked OpenAI's macOS code-signing certificates with an effective expiration of June 12. ADT separately disclosed a 5.5 million-customer Salesforce breach via compromised Okta SSO. For supply chain operations, the takeaway is unchanged from prior weeks: every npm and PyPI package installed since April 22 in CI/CD pipelines should be audited, and publish credentials rotated.

Weekly Dashboard — Week of May 18-22, 2026

Three things are happening simultaneously this week that point in conflicting directions, and getting Q3 right requires holding all three at once.

The first: the Drewry composite rallying 6% to a 2026 high in the same week that Maersk, Hapag-Lloyd, and ZIM all posted Q1 losses or sharp earnings collapses is not a contradiction. It is a transfer mechanism. Carriers absorbed roughly $500 million per month in rerouting and fuel costs over Q1 because their contract structures forced them to. Bunker and emergency fuel surcharges have begun passing those costs through to shippers starting in late April, and the May 21 Drewry print is the first clean read of that pass-through. Shippers approaching Q3 contract renewal with a "carriers are losing money so they will be soft" posture are reading the income statements and misapplying them to the rate sheet. Lock 60% to 75% of Q3 ocean volume on contract floors at current levels and leave 25% on spot. If Hormuz reopens, contracts cap upside; if it does not, they cap exposure.

The second: Walmart and Target raising or holding guidance in the same week that Home Depot and Lowe's described the worst housing market since the GFC, and U-Michigan sentiment hitting a record low of 44.8, is not a contradiction either. It is the trade-down economy operating in real time. Consumers are absorbing fuel prices and tariff pass-throughs by buying more consumables at lower price points and deferring big-ticket discretionary. Inventory plans built on uniform Q3 demand assumptions are wrong in both directions. Restock consumables and grocery-adjacent categories aggressively. Defer big-ticket commitments until the July CPI print and the Section 122 July 24 expiry resolve at least one of the two dominant cost-uncertainty vectors.

The third: the Court of International Trade striking down Section 122 on May 7, followed by the Federal Circuit reinstating it on May 12, is the cleanest signal of the year that the tariff baseline is being set by the appellate calendar, not the executive branch or Congress. The July 24 statutory sunset will arrive before the Federal Circuit decides the merits. Most importers are treating the refund question as a binary "win or lose." The asymmetric move is to preserve refund rights on every Section 122 entry paid since February 24, while simultaneously building Section 301 contingency planning for the likely replacement tariff vehicle. The two are not mutually exclusive, and the deadline to perfect the first is running on 180-day protest clocks that started at the entry date.

Strategic question for supply chain leaders: Which of your Q3 cost assumptions is most exposed to being wrong in both directions, and what is the smallest reversible commitment you can make this week to preserve optionality on it?

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SPLYLINE • Supply Chain Intelligence • Delivered Weekly

Three signals broke in three different directions this week. Which one are you reading hardest, and which one are you most likely underweighting? Share your perspective in the comments.

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