Archer-Daniels-Midland Cutting Costs Up and Down the Supply Chain

Cutting Costs Up and Down the Supply Chain

Nick Terry • March 27, 2024

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While every for-profit business has its own mission and goals, a commonality exists between all of them: maximizing revenue and saving costs. Some businesses in the food and agricultural industry are coming off pandemic-era highs in terms of demand, which means they’re not seeing the same revenue growth they saw over the last several years.

As such, it’s high time to trim the fat and keep costs low. Keeping tabs on the state of the supply chain industry can help with cost savings and spend planning. Here are eight headlines to stay up to date:

ADM Cuts SKUs, Cuts Costs

Archer-Daniels-Midland Co. is on a mission to cut costs. The food and nutrition giant intends to save half a billion dollars over the next two years, Supply Chain Dive reported.

A big reason for the cost cutting is ADM’s nutrition business. The segment’s revenue fell 6% year over year (YOY). The company will cut 17% of SKUs in the nutrition segment. ADM is also commissioning 300 projects to reduce costs, and it already closed more than 20 animal nutrition production lines.

Going forward, simplicity is the name of the game for ADM. “Many of the supply issues are the result of the complexity built into the Nutrition business over time,” Chairman and CEO Juan Luciano told analysts on a recent earnings call.

A Mixed Truck Tonnage Picture

As some companies notice a slowdown in demand, the trucking market is reflecting the state of the market. In February, truck tonnage dropped 1.4% YOY. That was the 12th consecutive YOY dip, according to Transport Topics. On the plus side, though, tonnage was up 4.3% over January.

The conclusion from American Trucking Associations Chief Economist Bob Costello: “Truck freight remains in a recession.”

ACT Research analysts paint a slightly more optimistic picture. The firm predicts that the freight industry could improve in the second and third quarters of this year. One senior analyst at ACT said truckload CEOs are seeing volumes improve – enough that they can be more selective about their freight mix.

Trucking at the Bottom of the Hill

ATA’s assessment of the trucking industry dovetails with observations by owner-operators, brokers, and other freight analysts.

As Trucking Dive reported, several speakers at the Mid-America Trucking Show, which took place in March in Louisville, Kentucky, agreed that the trucking market has bottomed out. One professor pointed out that over-the-road truckload is at the bottom, while the less-than-truckload sector has now passed the low point.

No matter the segment, it's been a rough several months for carriers in the trucking industry. The segment has been in a trough for about a year and a half, and that could continue for much of this year. Contract rates appear to be flattening out, meaning shippers continue to have the upper hand when it comes to pricing power.

Signs of Freight Growth

Shippers are also transporting a lot less freight than they were last year. In February, shipments were down 4.5% YOY, according to the Cass Freight Index. Expenditures, which measure how much shippers spent on transportation, fell almost 20% compared to last year.

But it’s not all doom and gloom. U.S. manufacturing activity is on the upswing, and that’s leading to higher freight demand, the Journal of Commerce reported. The index was 7.3% higher in February compared to January, and expenditures were up 4% month over month.

Transloading Gets a Boost

As trucking contends with its market reality, logistics companies are witnessing increasing popularity in one particular service: transloading.

The process involves moving freight from rail to truck, or vice versa. It was popular during the pandemic as ports were clogged and capacity was tight. Now it’s seeing a resurgence once again, according to CNBC.

Some of the reasons include diversions from the Suez Canal due to attacks in the Red Sea, limited booking slots at the Panama Canal, and the threat of labor-related strikes at East Coast seaports. As a result of these disruptions, some shippers are sending freight to the West Coast and then going over land to reach East Coast destinations. In fact, disruptions have led to a nearly 20% increase in freight into West Coast ports.

Transloading not only adds flexibility, but it can also save costs for shippers. CNBC’s article notes that retailers can save up to $1,000 in transportation and labor costs with transloading.

Owner-Operators vs. the Judge

Aside from the ups and downs of the market, the trucking industry is also busy navigating the highway of regulation. The latest news concerns AB5, a California law which defines whether workers are classified as employees or contractors.

In mid-March, a federal judge in the state tossed a case from the California Trucking Association and the Owner-Operator Independent Drivers Association. The judge rejected arguments that AB5 should be barred from regulating California’s trucking sector.

Now, fights to keep AB5 out of the state’s trucking industry are “likely at a dead end,” FreightWaves reported. It’s possible that groups could appeal the judge’s decision. But one attorney told the publication they’re not sure how successful it could be, and it might be time to move on.

The EV Transition Price Tag

Another regulatory action taking the industry by storm is the Biden administration’s move to decarbonize the trucking industry. The Environmental Protection Agency plans to finalize a rule that would mandate reduced truck engine emissions, from model year 2027 to 2032.

But compliance will be pricey, according to an article in FreightWaves. The Clean Freight Coalition, which features members such as the American Trucking Associations, LTL carriers, truck dealers and truck stop operators, published a study about the costs. The conclusion: Commercial trucking would have to invest $620 billion in charging infrastructure. On top of that, utility companies would need to spend $370 billion to upgrade their grids so they can handle the demand. Altogether, that’s a $1 trillion price tag, which doesn’t even include the cost of purchasing new battery-electric trucks.

The legislation has plenty of supporters, though. Some environmental groups believe the EPA’s rule isn’t aggressive enough and have called for even stricter regulations. One group, the Zero Emission Transportation Association, advocates for 100% electric vehicle sales and called for a quicker transition to zero-emission trucks.

Supercharging Hydrogen Trucking

Battery-electric isn’t the only path to transition to zero-emission trucking. Fuel-cell, hydrogen-electric vehicles are another option. While they’re much less common, with less infrastructure to support them, Nikola is taking big steps to propel hydrogen trucks forward.

Car and Driver reported that Nikola has built HYLA stations that can refill a commercial truck in less than 20 minutes. The name HYLA combines “hydrogen” and “Nikola,” and it’s a subsidiary of the truck manufacturer.

The stations are not only for Nikola trucks. They use industry standards, so fuel-cell trucks from Hyundai or other manufacturers can also fill up.

Optimize Supply Chain Costs and Efficiency With Entourage

Whatever your supply chain needs, Entourage Freight Solutions can help you with personalized services that maximize efficiency. Entourage Freight Solutions offers the following services, and many more:

Our LTL service provides on-demand access to capacity, along with real-time data and peace of mind in this high-stakes world.
Our Freight Management lets your team stay organized across inbound and outbound logistics, tracking market capacity and using automation notifications to keep everyone informed.
Our Refrigerated transport provides expertise in everything from finished goods to raw materials, ensuring products arrive on time and in top condition.

Request a quote today to see how Entourage Freight Solutions can solve your key logistics pain points.

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Tariffs, Trade Policy, and the Great Freight Fallout

By Nick Terry • April 28, 2025

In 2025, trade policy is no longer something that the freight industry can leave on the back burner. Trade policy today is shaping strategy at every level. From tariff escalations and retaliatory duties to sweeping regulatory changes and targeted maritime fees, supply chain leaders are navigating a freight market in which unpredictability is the only constant. Sourcing decisions are shifting, pricing dynamics are unstable, and long-standing operational models are being rewritten in real time. This edition brings together key stories highlighting the growing pressure across logistics channels. Each development points to an industry moving fast, and often reactively, to keep pace with volatile policy decisions. Tariffs Stall US Freight Recovery as Shippers Pause Orders The recent move by the U.S. Trade Representative (USTR) to impose entrance fees on Chinese-built ships calling U.S. ports has only added to the confusion and uncertainty gripping global supply chains and freight operations. Shippers are pausing plans and slashing orders, with truckload volumes, containerized imports, and manufacturing output all showing signs of contraction. Ocean freight spot rates have collapsed: Asia-U.S. West Coast rates have fallen 61% since January to $2,050 per FEU, while East Coast rates have dropped 53.7% to $3,100 per FEU . Blank sailings are rising, with vessels leaving Asia half-empty. Amazon and Five Below are among the major retailers reducing orders from Asia. Container imports jumped 15.3% in 2024, but forecasts now predict a 20-27% decline through the summer. Exporters, particularly agriculture and forestry suppliers, are also squeezed, facing 125% retaliatory tariffs from China. Truckload and intermodal rates remain stagnant, while U.S. factory output fell sharply in March. US Apparel Importers Brace for Long-Term Volume Declines According to Trade Partnership Worldwide, a 124.1% tariff on Chinese clothing and footwear is expected to reduce U.S. apparel imports by 1.6% annually . China still accounts for 41.7% of apparel shipments, leaving limited flexibility for diversion. The American Apparel and Footwear Association (AAFA) is warning of price hikes and mounting infrastructure stress as sourcing pivots toward Vietnam, India, and Indonesia. A looming May 2 deadline for de minimis exemptions could further complicate flows and delay deliveries. Even with a temporary 90-day pause in reciprocal tariffs, the policy uncertainty already affects long-term planning. AAFA CEO Steve Lamar calls the shifting policies “chaotic,” and warned that high tariff pressure will hit both importers and U.S. manufacturers reliant on Chinese components. Port and rail capacity limitations at larger gateways are adding to concerns. Retailers now face rising costs, shrinking margins, and operational delays — all while consumer demand continues to shift rapidly. Freight Pricing Gains Lose Momentum According to the TD Cowen/AFS Freight Index, Q1 truckload rates rose 5.9% above the 2018 baseline, but are expected to decline slightly in Q2. Shippers are responding to tariff threats with aggressive front-loading and shorter-haul routes, driving per-shipment costs to three-year lows. LTL carriers remain focused on profitable lanes and high-quality freight rather than chasing volume. The index forecasts a 0.7% year-over-year increase in LTL rate per pound for Q2 , despite sustained demand softness and macro uncertainty. A key driver behind the softening spot market conditions is a shift to shorter hauls and regionalized distribution, pushing per-shipment costs to their lowest point in more than three years. This trend reflects how retailers and manufacturers are repositioning inventory in response to tariff volatility, as NRF’s Jonathan Gold and DAT analyst Dean Croke noted. Meanwhile, the LTL sector is seeing a 4% rise in fuel surcharges, offsetting lower weights and shorter hauls. With the freight market still under pressure after 26 months of contraction, optimism remains subdued as we enter the midyear period. US Truckload Freight Spot Rates Continue to Fluctuate National benchmark rates have experienced a decline across all categories. As of April 18, dry van decreased by 4 cents to $1.62, reefer by 2 cents to $1.88 , and flatbed by 3 cents to $2.16. This marked the first overall decrease since late January, signaling potential shifts in market dynamics. These changes can be attributed to factors such as tariff uncertainties and tighter capacity, especially affecting the flatbed market. Flatbed rates rely heavily on manufacturing activity in the country, which has been particularly hard-hit by the ongoing trade war with China, and to some extent, with the rest of the world. US Finalizes Tiered Fee Plan Targeting Chinese Ships The U.S. is moving forward with a revised plan to levy voyage-based fees on Chinese-owned and Chinese-built ships calling at American ports. The U.S. Trade Representative (USTR) announced the measure as part of a broader Trump administration effort to counter China’s dominance in shipbuilding and logistics while reigniting domestic ship construction and port infrastructure investment. Starting in six months, Chinese operators will be charged $50 per net ton, with an annual increase of $30 for three years . Non-Chinese carriers using Chinese-built vessels will face lower rates, beginning at $18 per ton or $120 per container, with annual increases. The USTR capped fee applications at five voyages per vessel annually, scaling back its original, more punitive per-port-call proposal after intense industry pushback. The fees are tied to findings from a USTR investigation, which concluded that China’s shipbuilding dominance — producing 29% of global fleet capacity and 70% of all container ships on order — stemmed from unfair trade practices. Exemptions apply to ships arriving empty, those in the Great Lakes or U.S. territories, and some bulk exports. LNG vessel transport restrictions will phase in over 22 years to support U.S. production. China’s largest container carrier, Cosco Shipping Lines, has sharply criticized the USTR’s plan. In a strongly worded statement, Cosco labeled the move as “discriminatory,” and warned it would disrupt global industrial and supply chain stability. Cosco denied allegations from that USTR investigation that claimed China manipulated its shipping and shipbuilding sectors to gain an unfair advantage. The carrier said it upholds “integrity, transparency, and compliance” in global competition and remains committed to ensuring the resilience of international trade. Walmart Investing $6B in Mexico, Central America Store Expansion Walmart of Mexico and Central America will invest $6 billion to open new stores across the region , reinforcing its long-term commitment to growth in Latin America. The expansion will include Bodega Aurrera, Walmart Supercenters, Sam’s Club, and Walmart Express formats, building on a robust network of 3,200 stores across all 32 Mexican states. This latest move echoes Walmart’s earlier $1.3 billion investment in 2016 for regional distribution and operational upgrades. The retailer entered the Mexican market in 1991 with a Sam’s Club in Mexico City. In a statement, Walmart said the new expansion reflects confidence in the region’s economic potential and consumer demand. Globally, Walmart continues to invest aggressively in infrastructure and store development. The company has pledged about $4.5 billion for its Canadian operations and $1.3 billion in Chile to build 70 new stores and a distribution center. In the U.S., Walmart is executing a five-year plan to build or convert more than 150 stores while modernizing 650 existing locations under its “Store of the Future” initiative. Experience Seamless Shipping with Entourage Freight Solutions Entourage Freight Solutions believes in total transparency in the shipping process. That is why we invest in tech solutions that track every shipment extensively, monitor every driver, and extract every bit of efficiency without sacrificing quality. Our state-of-the-art platform utilizes cloud-based GPS tracking to keep you informed, reroutes shipments on the fly to avoid delays, and even responds to real-time market changes to ensure you receive your shipment on time and as soon as possible. Our Services Full Truck Load (FTL): When you need a truck all to yourself. Less-Than-Truckload (LTL): Efficient solutions for multi-stop shipments or combining smaller loads to save on costs. Refrigerated Trucking: Keeping your temperature-sensitive products fresh and safe. Cross-Docking: Strategically located facilities in Shelby, Ohio, Cedar Rapids, Iowa, and Romulus, Michigan, for streamlined consolidation, storage, and distribution. Ready to experience a new level of service and control in your freight shipping? Request a quote today to see how Entourage Freight Solutions can help with your freight movement and other supply chain needs.