The Source for December 2025: Inventory Builds, Returns Surge, and 2026 Planning Gets Real 

Welcome to The Source — your monthly market intelligence from Source Logistics, where we connect logistics trends to operational strategies you can act on today.  

As we close out 2025, three storylines are colliding: 

• Inventories are swelling as manufacturers keep production steady while demand cools. 
• Holiday returns are about to hit in two waves, testing reverse logistics and value-added capacity. 
• Freight, ocean, and industrial real estate remain relatively stable, giving operators space to rethink networks before conditions reset in 2026. 

For Food & Beverage, CPG, Grocery Retail, and Health & Beauty brands, December is less about chasing outbound volume and more about turning data, inventory, and returns into a cleaner, faster start to 2026. 

Logistics at a Glance – Key Trend Data 

• Freight volumes stay soft, costs plateau: The latest Cass Freight Index report shows U.S. shipment volumes down about 7-8% year over year, with freight expenditures roughly flat year over year after several months of flattish performance. 
• Truck tonnage slides to a 21-month low: ATA’s For-Hire Truck Tonnage Index fell 2.1%, following a 0.8% drop the month before, reaching its lowest level since early 2024, confirming broad trucking softness even as some lanes stay busy. 
• Ocean rates bounce along the bottom: After a brief November uptick, Drewry’s World Container Index slipped 2% in late November to about $1,806 per 40-foot container, still near multi-year lows and reflecting weak demand and competitive carriers pricing on key trades. 
• Manufacturing signals – expansion on one gauge, strain on another:  
  • The S&P Global U.S. Manufacturing PMI eased from 52.5 to about 52.2 in November, still in growth territory but with slower new orders and a record rise in finished-goods inventories. 
  • ISM’s manufacturing PMI, by contrast, fell to 48.2, marking a ninth month of contraction and underscoring tariff-driven cost pressure and uneven demand.
    
    Together these suggest production is holding up, but warehouses are filling with unsold stock – a key backdrop for December’s strategy. 

• Holiday demand is strong, but returns will be massive: NRF expects U.S. holiday sales to surpass $1 trillion for the first time, with November-December spending projected to grow 3.7-4.2% year over year. At the same time, retailers anticipate that roughly 15-17% of holiday sales will be returned, with NRF data indicating consumers will send back nearly $850 billion in merchandise in 2025, including about 17% of holiday sales and 15.8% of total merchandise. 
• Two distinct return waves are now the norm: As we covered in Source Logistics’ recent post on the two-wave returns surge, brands should expect Wave 1 (Dec. 1-10) after “try it” Cyber Week purchase returns and Wave 2 (Dec. 26-Jan. 15) with the classic post-holiday flood. 

The Big Picture for December 

The story for December isn’t volatility – it’s imbalance: 

• Freight and ocean capacity remain accessible. 
• Warehouse vacancy is stabilizing. 
• Manufacturing is still producing, but demand is uneven, and warehouse stocks are at or near record highs. 
• Holiday sales are strong, but returns are poised to erase margin and clog networks for brands that haven’t built out reverse logistics.

For operators, this creates three priorities: 

1. Turn inventory from risk into optionality. With warehouses filling up, the advantage goes to brands that can rapidly relabel, re-kit, and reposition stock to chase demand or clear underperformers. 
2. Treat returns as an inbound replenishment channel, not a post-holiday chore. Returns strategy in December determines how clean your April inventory position feels. 
3. Lock in 2026 advantages while the market is calm. Stable capacity and soft volumes make this the time to renegotiate contracts, test new nodes, and tighten data foundations before conditions tighten again. 

Operational Insights for December 

Warehousing & Distribution 

Market Insight: Manufacturers continue building product even as new orders cool, driving finished-goods inventories toward cycle highs. Industrial vacancy is elevated but likely past its peak. 

Impact: Nodes are tightening, and aging SKUs restrict flexibility heading into the returns-heavy January period. Inbound congestion could limit your ability to reposition inventory early in Q1. 

Recommended Focus: Redistribute slow-movers to nodes with Value-Added Service capacity and secure overflow & quality control space ahead of Wave 2 returns. Use December to pre-stage inventory for Q1 reset and promotional cycles. 

Fulfillment & Ecommerce 

Market Insight: Holiday sales remain strong, but up to 17% of purchases will return – split between early December “trial returns” and the post-Christmas surge. Carrier appointments tighten with inbound volume. 

Impact: Returns risk slowing replenishment and draining fulfillment labor, while mixed conditions create quality control delays. Outbound speed can deteriorate if receiving isn’t isolated. 

Recommended Focus: Segment returns into Wave 1 (rapid restock) and Wave 2 (bulk processing). Dedicate receiving and labor buffers to protect outbound flow and pre-sort SKUs for restock, refurb, or liquidation. 

Transportation (TL, LTL, Drayage, & Middle Mile) 

Market Insight: Truckload demand is weak and ocean rates remain near multi-year lows. January’s inbound returns will test appointment availability more than linehaul itself. 

Impact: Shippers have leverage for Q1-Q2 contract extensions but risk disruption if inbound windows aren’t secured. Low ocean rates offer flexibility for routing experiments before conditions shift. 

Recommended Focus: Lock in TL/LTL terms into mid-2026, reserve January delivery appointments early, and use ocean softness to test alternative ports and transload strategies. 

Value-Added Services 

Market Insight: Elevated inventories and heightened retailer compliance requirements are driving demand for relabeling, repacking, and reconfiguration. Returns add large volumes needing fast disposition. 

Impact: VAS capacity becomes the key to salvaging margin on distressed or seasonal SKUs. Without predefined rules, January throughput slows and inventory integrity suffers. 

Recommended Focus: Finalized disposition maps by SKU and retailer and build January VAS queues now. Use VAS to reposition or reconfigure slow-movers before Q1 markdown season. 

Technology, Data, & Compliance 

Market Insight: PMI data shows rising finished-goods inventories and margin pressure, while FDA’s FSMA 204 expectations remain firm. January returns will generate high volumes of condition and disposition data. 

Impact: Data silos slow restock decisions and create compliance risk across importer, co-packer, and retailer handoffs. Returns expose visibility gaps faster than standard operations. 

Recommended Focus: Run a year-end data cleanup (ASN, SSCC, lots/batches, retailer EDI). Strengthen WMS/TMS/parcel alignment for January inbound velocity and advance FSMA 204 traceability mapping. 

What’s Ahead for Q1 2026? 

1. Inventory Correction Likely: Sustained production alongside softening demand suggests manufacturers may trim output early in 2026 – reducing inbound volumes and resetting inventory positions. 
2. Returns Data Will Drive SKU Strategy: Holiday returns will expose packaging weaknesses, labeling inconsistencies, and SKU complexity. Brands that mine this data will refine assortments faster than competitors. 
3. Freight Could Move Off the Floor: If consumer spending stays resilient and inventories rebalance, transportation markets may tighten in the second half of 2026 – making Q1’s calm an important contracting window. 
4. FSMA 204 Becomes a 2026 Imperative: Once the compliance extension finalizes, brands will need to accelerate digital traceability. Early movers will avoid the Q4 compliance crunch. 
5. Network Design Window Narrows: With vacancy stabilizing and construction slowing, the next 12-18 months may offer the last “tenant-friendly” window for network redesign and multi-temp strategy. 

Turn Year-End Complexity Into 2026 Momentum 

December’s mix of soft freight, elevated inventories, and heavy returns is not a challenge – it’s an opportunity. The brands that use this moment to reset inventory, strengthen data, pressure-test networks, and streamline returns will enter 2026 with a decisive operational advantage. 

If you’re planning your 2026 supply chain strategy – from cold chain to omnichannel fulfillment to reverse logistics – connect with Source Logistics to build a unified, forward-looking plan.