The Importance of Trade Deals

In this week’s Roar: Details from the January LMI report and ISM index, the rise in cargo theft and freight fraud, the importance of the USMCA, and 2025 air cargo stats.

The January LMI report shows inventory levels rebounding from their December low, but compared to typical January surges, the rate of restocking remains modest at 53.9 versus last year’s 58.5. This is deliberate, as firms are deciding to stick with leaner inventories, likely in response to high holding costs and uncertainty. That said, Inventory Costs climbed to 71.3%, thanks to tariffs, inflation, and supply chain volatility, all of which continue to outpace inventory growth. This reinforces the need to remain cautious and cost-conscious when it comes to inventory management.

U.S. manufacturing activity expanded in January at the fastest rate since 2022, driven by strong growth in new orders and production. The ISM index rose to 52.6, an indicator of momentum after nearly a year of contraction. Nine industries, including transportation equipment, reported growth, thanks in part to lower customer inventories and preemptive buying to avoid future price increases.

Cargo theft and freight fraud are getting out of control, with criminals shifting from traditional hijackings to sophisticated digital schemes like fake carriers and phantom freight. Losses are now in the billions, with North America and EMEA especially hard-hit. Industry groups are warning that fraud is increasing because of AI and weak identity checks, and urge stricter verification, smarter monitoring, and global cooperation to be better prepared in the face of risks.

The USMCA is arguably the most important trade agreement for the U.S., but that significance may feel underappreciated at the moment. And now, with the July 1 renewal deadline looming, stalled negotiations, political tensions, and potential amendments are making its future uncertain. It covers 30% of global GDP, supports over $1.9 trillion in North American trade, and protects most Canadian and Mexican exports from high U.S. tariffs. Losing it could have drastic and wide-reaching economic and strategic consequences.

Global air cargo demand rose 3.4% in 2025, driven by strong e-commerce activity and front-loaded shipments in response to new tariffs, according to IATA’s Willie Walsh. Capacity grew 3.7%, while yields fell just 1.5%, the smallest drop in three years. Despite volatility, air freight continues to adapt quickly, supporting supply chains worldwide. It’s a bright spot compared with the global ocean and U.S. over-the-road freight markets.

For the rest of the week’s top shipping news, check out the article highlights below.