Q4 Industry Update:
Packaging Materials,
Economic Activity,
and Transportation

Although Berlin Packaging cannot control the price of raw materials, we do offer multiple value-added services and income-boosting solutions to help our customers Package More Profit. Over the past few years, Berlin Packaging has added more than $200 million in profit to our customers as a unique benefit of doing business with us.

As we move into the holiday retail season, resilient consumer spending and a strong labor market continue to drive economic growth despite sticky inflation, energy price shocks, and rising fuel prices. Here's a snapshot of recent economic activity, data, and news influencing the consumer packaged goods (CPG) market and the packaging industry in North America.

• U.S. retail sales increased by 0.8% MoM in September.
• Consumer sentiment hit a 5-month low in October.
• Holiday retail sales expected to grow 4+% YoY.
• U.S. annual inflation accelerated to 3.7% in September.
• In Q3, U.S. GDP rose 3.4%, Canada forecasts 0.3% GDP growth.
  

Berlin Packaging's mission is to improve our customers' profitability through our packaging products and services. We help increase their sales, reduce costs, and improve productivity. We also provide accurate, timely information and products that can positively affect their income.

Consumer Spending Rises, Sentiment Declines

U.S. consumer spending and retail sales rose 0.8% MoM in September, after increasing 1.3% in August, according to the Commerce Department. With record-high gas prices, gasoline stations led all retailers, posting a 6.4% MoM increase in September. Other retail categories also recorded monthly gains, including health & personal care stores (0.7%), food & beverage stores (0.4%), and online retailers (0.3%). Over the past 12 months ending in September, U.S. retail sales rose 6.3%.

In Canada, consumer spending and retail sales expanded 1.2% in August, driven by gains in all nine subsectors, according to Statistics Canada. The August advance followed a revised decline in July. Retail sales increased 2.2% in the second quarter in both dollar value and sales volume. Statistics Canada projects that retail sales will increase 0.7% in September.

Consumer sentiment — a measure of how U.S. consumers view their finances and the economy — fell slightly in October, hitting a five-month low, according to the University of Michigan consumer sentiment survey. Consumers remain concerned about their purchasing power, rising prices, and the affordability of big-ticket purchases. Persistent inflation and higher interest rates continue to weigh on consumer confidence and spending decisions.

Holiday Retail Spending: Cheery or Dreary?

Several signs point to a cheery holiday retail season, with consumer spending increasing over last year. According to Bain & Company's 2026 Holiday Shopping Outlook, U.S. retail sales will grow 4.5% YoY during the November–December holiday shopping season and top $1 trillion for the first time. However, half the growth will come from higher inflation.

The National Retail Federation echoes Bain’s forecast, predicting holiday retail sales in November and December will grow 4.2% YoY to $1.01 trillion. By comparison, last year’s holiday sales rose 3.1% over 2024, totaling $972 billion.

According to Deloitte's annual holiday retail forecast, Gen Z and millennials are expected to account for 50% of holiday spending for the first time in the survey's history. Nearly 40% of shoppers qualify as holiday value seekers who hunt for promotions, redeem rewards, and look to private label and other value alternatives to stretch their budgets. While prudent, these value seekers will spend 12% more than average shoppers.

U.S. Annual Inflation Accelerates to 3.7%

The U.S. Consumer Price Index (CPI) rose 0.6% MoM in September, following a 0.4% increase in August, according to the Bureau of Labor Statistics. Annual inflation accelerated to 3.7% for the 12 months ending in September, up from 3.4% in August. Energy prices drove much of the monthly increase, with the energy index rising 5.2% and gasoline prices climbing 9.1%. Food purchased for home consumption declined 0.1%, while food away from home increased 0.2%.

Canada's CPI increased 0.1% MoM in September, following a 0.1% decline in August, according to Statistics Canada. Annual inflation reached 3.1% in September, up from 3.0% in August, largely because gasoline prices increased 27.8% YoY. Grocery-store food prices increased 1.7% YoY, down from 2.8% in August and marking the smallest annual increase since May 2024.

For CPG brand owners, the latest inflation data highlight continued pressure on household purchasing power, particularly from rising energy and transportation costs. Brands may have limited opportunities to pass additional price increases on to cost-conscious consumers without dampening demand.

Q3 GDP: U.S. Grew 3.4%, Canada Estimates 0.3% Expansion 

U.S. real gross domestic product (GDP) grew at an annual rate of 3.4% in the third quarter of 2026, according to the U.S. Bureau of Economic Analysis. Investment, consumer spending, and government spending drove the expansion, while declining exports partly offset those gains. Imports also increased.

In Canada, preliminary estimates indicate that real GDP expanded 0.3% in the third quarter, according to Statistics Canada. Economic activity remained essentially unchanged in August and declined an estimated 0.1% in September. Manufacturing and mining, quarrying, and oil and gas extraction all contributed to September's decline.

As the world's largest Hybrid Packaging Supplier, Berlin Packaging continually tracks consumer behavior, product trends, macroeconomics, geopolitical events, global trade policies, and packaging innovation to fully understand what is happening in the market so we can best help our customers succeed.

North American shippers continue to navigate rising transportation costs as limited capacity, port congestion, supply chain disruptions, higher fuel expenses, and geopolitical tensions affect global freight operations. Typhoons, vessel delays, blank sailings, and instability in the Middle East are disrupting shipping schedules, reducing reliability, and sustaining elevated freight rates across major trade lanes.

Persistent port congestion and carrier capacity management continue to tighten vessel availability and undermine schedule reliability. Congestion at major Chinese ports has tied up approximately 8.5% of global vessel capacity, according to Sea-Intelligence. Ocean carrier schedule reliability has fallen below 50%, the lowest level since the pandemic (2022), reports Sea-Intelligence. Typhoons, geopolitical disruptions, port congestion, blank sailings, and vessel bunching continue to cause delays and make arrival dates less predictable.

As volatility persists in many global trade lanes, Berlin Packaging proactively provides alternate routings and real-time visibility of the international freight market to help our customers minimize any disruptions to their supply chains. Our long-standing carrier partnerships with dynamic pricing and adaptable agreements mitigate market fluctuations.

Strong Import Volumes Extend Peak Season

Tariff uncertainty and geopolitical disruption have extended the ocean freight peak season, keeping cargo volumes and transportation rates elevated. Although the National Retail Federation (NRF) reports that peak season is winding down, September and October import volumes remain more than 8% higher year over year (YoY). Global container volumes increased nearly 5% YoY through the first eight months of the year, reflecting continued strength in worldwide shipping activity, according to Container Trade Statistics.

U.S. container imports have moderated after a stronger-than-expected summer, but elevated volumes continue to strain port operations. At the ports of Los Angeles and Long Beach, September was the busiest month on record, with total container throughput exceeding two million units. Vessels are taking up to a week to discharge cargo, while truck and rail dwell times across the Southern California gateway remain near an 18-month high. The Port of Savannah also reported record September container activity as imports increased.

Asia-to-North America ocean freight spot rates remain near their 2026 highs. Far East congestion, vessel cancellations, and high fuel costs continue to support these elevated rates despite expectations that seasonal demand will ease. Capacity is expected to remain limited through November.

The NRF projects November import arrivals to decline 11% month over month as peak season winds down. However, shippers should expect continued capacity constraints and schedule disruptions through the end of the year. Typhoon-related backlogs, blank sailings, and geopolitical uncertainty will continue to pressure transit times and freight rates, even as import volumes moderate.

Import volume is expected to increase in January as shippers place orders ahead of the Chinese Lunar New Year Holiday. Although the holiday falls on Feb. 6, Asian manufacturing operations will shut down or curtail activity from late January through late February. Blank sailings will also occur during this time.

Suez Canal Routings May Improve Transit Times and Capacity

More vessels returning to the Suez Canal are beginning to reshape global shipping routes. Approximately 50% of freight traffic has returned to the canal, adding capacity to the Asia-Europe trade lane. Carriers can reduce transit times by approximately 10 to 14 days by using the Suez route instead of diverting vessels around the Cape of Good Hope (southern coast of Africa). Additional capacity on Asia-Europe services could eventually benefit the U.S. market in 2027.

However, ongoing Middle East conflicts continue to create uncertainty and volatile pricing. Carriers transiting the Red Sea and Suez Canal are adding war and insurance surcharges to ocean freight rates, increasing shipment costs. If security conditions deteriorate, these ships may return to longer routes, adding transit time and disrupting schedules. The shift back to Suez routings has also contributed to vessel bunching and congestion at European ports as vessels arriving after longer Cape diversions overlap with ships returning to the shorter route.

Air Freight Rates Soar

North American shippers continue to face elevated air freight rates as strong global demand, geopolitical disruptions, and higher fuel costs pressure the market. Global air cargo tonnage increased 9% YoY in September, while average worldwide freight rates rose by 25% compared with September 2025, according to WorldACD market data. North American air freight rates also increased 18% YoY.

Higher jet fuel prices continue to drive up air freight costs. Jet fuel prices increased more than 100% YoY in October. Looking ahead, air freight rates will likely remain elevated as fuel costs, geopolitical instability, and capacity imbalances continue to affect the market.

As a Customs-Trade Partnership Against Terrorism (C-TPAT) certified importer, Berlin Packaging and our customers reap multiple benefits, such as reductions in customs freight examinations, "front of the line" status during inspections/exams, and streamlined processes to prevent delays.

North American transportation costs continue to climb, reaching their highest levels since the pandemic sparked demand for consumer and durable goods and disrupted supply chains. Limited freight availability, surging diesel prices, rising fuel surcharges, higher carrier operating expenses, and firming demand against shrinking capacity have all contributed to the current increase. Recent court rulings have added regulatory requirements, liability exposure, and insurance costs, further driving up fleet operating expenses.

Several years of carrier bankruptcies and closures have shrunk available capacity, while stringent government regulations have narrowed the pool of qualified drivers. Stricter enforcement of English-language proficiency rules is removing about 2,700 drivers from service each month, and a new federal rule limiting commercial driver's licenses for drivers who are not domiciled in the U.S. could affect up to 194,000 drivers over time, according to FreightWaves. Higher insurance costs and tighter lending have also made it harder for new carriers to enter the market and stay in business.

As a result, shippers face greater rate volatility and longer lead times when securing capacity on certain routes and in specific regions. Shippers should expect further cost pressures and tighter capacity during the holiday-driven peak shipping season from November through early January.

Brokerage consolidation is also reshaping the domestic freight market. Echo Global Logistics completed its acquisition of ITS Logistics in March 2026, and C.H. Robinson announced its acquisition of RXO in October. These acquisitions leave shippers with fewer, larger brokers and limit their options for securing competitive rates and finding alternative carriers when capacity tightens.

While transportation conditions remain challenging, Berlin Packaging continues to actively manage freight and secure competitive rates through our established carrier network, market intelligence, and experienced logistics team.

Truckload Costs Rise 50% YoY

Truckload capacity remains tight across North America. About 10 shipments compete for every available truck, compared with nearly six shipments per truck one year ago. As of late October, market benchmarks show that combined line-haul and diesel fuel costs have increased by about 50% YoY across the domestic truckload network.

Spot truckload line-haul rates have eased from their summer peak, a normal seasonal pattern, but remain nearly 40% above last year, and higher diesel prices have offset much of that decline. Line-haul rates typically climb again during the winter peak season, from November through year-end.

Less-than-truckload (LTL) costs hit record highs this year. AFS Logistics and TD Cowen project that LTL rates per pound will reach an all-time high in Q4, marking the third straight record quarter. LTL fuel surcharges were also up 79% YoY in September.

Manufacturing growth supports freight demand. U.S. manufacturing activity expanded for the ninth consecutive month in September, according to the September ISM Manufacturing PMI Report. Three of the four demand indicators — the New Orders, Backlog of Orders, and New Export Orders indexes — remained in expansion in September.

The Production Index expanded for the 11th month in a row, and the Prices Index jumped 6.8 percentage points from August to September, reaching its highest level since the start of the Iran war. The Customers' Inventories Index remained in "too low" territory at 41.6%, which is usually a positive sign for future production activity.

Diesel Fuels Prices Hit All-Time High

Soaring diesel fuel prices rank as the trucking industry's No. 1 concern this year, according to research from the American Transportation Research Institute (ATRI). Notably, fuel prices ranked 18th on ATRI's list of the industry's critical concerns last year. Drivers are also a leading concern, with driver shortages (No. 5), driver compensation (No. 9), and driver retention (No. 10) making the list.

In September, U.S. diesel prices hit a record high of $6.53 per gallon — an increase of $2.78 from a year earlier. Prices pulled back to $6.18 per gallon on Oct. 12 before climbing again to $6.35 on Oct. 26.

Diesel prices will likely remain elevated through year-end as strong holiday freight demand, high crude oil prices, market volatility, and below-normal distillate inventories continue to pressure the market. Ongoing conflicts in the Middle East and Ukraine add further uncertainty to the fuel outlook.