That’s a Wrap on 2025… What Awaits the Logistics & Supply Chain Industry in 2026?
If 2025 could be described in a few simple words, it would be Volatility and Unpredictability.
Whilst a recap provides clarity of what went wrong and how not to repeat the mistakes of the past, it is the measures that businesses implement NOW that will make the difference in 2026.
Regarding economic sentiment in Australia, it’s a dichotomy with Trading Economics reporting Consumer Sentiment Index increased to 103.8 in November 2025 from 92.1 in the previous month, marking the highest reading since December 2021.
But…
Business Confidence Index slipped to 1 in November 2025 from 6 in the previous month, marking the weakest reading since April.
At the same time, business conditions softened (7 vs 10 in October), retreating from their highest level since March 2024, as declines in sales and profitability offset relatively stable employment.
Despite softer sentiment, capacity utilisation edged higher to 83.6%, the strongest in 18 months, suggesting firms continue operating near full capacity.
Price indicators also firmed, with growth in purchase costs rising at a quarterly pace of 1.3% and retail prices climbing 0.8%.
“Overall, the survey continues to tell us that businesses are capacity constrained, and if economic growth accelerates further from the current starting point, we may quickly see additional pressure on prices,” said NAB Chief Economist Sally Auld.
The best indicator? How much money is in your bank account, and how much are you spending versus saving for the rainy days to come?
A Summary of the Year That Was
1. Geopolitical and Trade Pressures
Global supply chains in 2025 were heavily shaped by trade policy uncertainty and geopolitical tensions:
Tariffs and trade reshuffling: Increasing tariffs, especially between major economies such as the U.S., China, and the EU, reshaped sourcing decisions and raised costs for many industries, delaying investment in digital tools and forcing firms to redesign supply networks.
Diversification away from China as a trading partner: Many EU and Western firms accelerated relocation of suppliers to reduce dependency on politically sensitive trade lanes.
Local content rules debates: Proposals in regions like the EU to mandate higher local content for clean-tech goods created planning challenges and increased configurational complexity for global manufacturers.
Impact: Higher prices, longer lead times, and complex compliance requirements across borders.
2. Transportation & Logistics Bottlenecks
Persistent disruptions in freight and transport logistics continued to constrain global flows:
Aerospace bottlenecks: Airlines faced ongoing production backlogs and delivery delays due to constrained aerospace supply networks, ageing fleets, and engine shortages, raising costs and curbing growth.
Freight system fragility: Shipping disruptions (e.g., the Red Sea crisis), port congestion, and rerouting around bottlenecks added days to transit times and significantly raised freight rates.
Rising cost pressures: Fuel price volatility, freight rate swings, and inflationary inputs elevated logistics costs across sectors.
Impact: Reduced delivery reliability, increased lead times, and pressure on logistics margins.
3. Labour & Workforce Challenges
Labour market issues strained operations across transport, warehousing, and logistics:
Shortages and rising wages: Ongoing shortages of skilled truck drivers, warehouse staff, and logistics professionals pushed up costs and slowed throughput.
Workforce transformation lag: Adapting to automation and robotics required training investments, even as many companies struggled to attract and retain workers.
Impact: Labour costs increased; digital transformation was uneven across regions and organisations.
4. Visibility, Technology & Data Issues
Despite advances, many companies struggled with digital integration and real-time transparency:
Lack of end-to-end visibility: Fragmented systems and incomplete data slowed decision-making and made it harder to respond quickly to disruptions.
Tech adoption gaps: While AI, IoT, and analytics offered resilience benefits, adoption was uneven, and legacy systems still created manual bottlenecks.
Impact: Forecasting and responsiveness gaps persisted, increasing the risk of stockouts or overstocking.
5. Environmental & Regulatory Pressures
Climate and regulatory forces increasingly factored into logistics planning:
Climate impacts: Extreme weather events (e.g., heat waves, droughts affecting waterways) disrupted inland transport and port operations.
Sustainability mandates: Firms faced rising pressure to reduce emissions, adapt to green regulations, and invest in eco-friendly logistics solutions.
Impact: Infrastructure vulnerability and compliance costs added complexity and required strategic agility.
6. Cost, Inflation & Consumer Expectations
Economic pressures influenced nearly every part of the supply chain:
Inflationary environment: Persistent inflation in energy, materials, and transport costs squeezed margins and challenged planning.
E-commerce expectations: Rising expectations for fast, accurate delivery put more stress on last-mile logistics and fulfilment accuracy.
And the Outlook for 2026…
Geopolitics & Trade Uncertainty, Mixed to Slightly Worse (Regionally Uneven)
Forecast: Trade growth is expected to slow in 2026 as higher tariffs and reshoring choices take fuller effect, so geopolitical risk will remain high in several corridors even as firms continue to diversify sourcing (nearshoring/reshoring). WTO and major banks expect trade to moderate next year, while firms keep re-routing and re-sizing networks, so don’t expect a quick return to 2019 “normal.”
Implication: Expect sustained complexity (more suppliers, more compliance) and continued need for regional supply-chain strategies.
Transportation & Freight Bottlenecks, Mixed, but Risk of Localised Worsening
Forecast: Some congestion and bottlenecks will ease as companies expand regional DCs and diversify modes, yet geopolitical events and route rerouting (e.g., Red Sea disruption impacts) mean freight volatility and occasional acute bottlenecks will persist into 2026. Logistics providers and carriers are advising route diversification for the 2026 peak season.
Implication: Build multi-modal backup plans and capacity flexibility rather than assuming steady improvement.
Labour & Workforce Shortages, Slow Improvement (but Patchy)
Forecast: Labour tightness (drivers, warehouse staff, skilled technicians) will ease only gradually as automation investment rebounds and some markets expand hiring, but skills mismatches will persist, so shortages will reduce slowly rather than vanish. Reports show investment in regional DCs and automation rising into 2026, which should help, but won’t immediately replace skilled labour.
Implication: Accelerate upskilling & targeted automation now, it’s a multi-year fix, not a quick patch.
Visibility, Tech & Data Adoption, Likely to Improve Materially
Forecast: End-to-end visibility, digital control towers, IoT, and digital twin adoption are accelerating into 2026; investments paused in 2025 are rebounding, and AI/analytics deployments are becoming more mainstream, so visibility and responsiveness should materially improve for firms that invest. Several industry outlooks point to stronger adoption and a rebound in automation orders startingin 2026.
Implication: Firms that prioritise data integration and control-tower capabilities will gain outsized resilience in 2026.
Environmental & Regulatory Pressures, Worsen (More Work, Nearer Term)
Forecast: Mandatory climate disclosures, tougher ESG rules, and supply-chain due-diligence proposals are ramping up for 2026 in many jurisdictions (including Australia and the EU). That increases compliance workload and puts pressure on supplier transparency, so regulatory burden and related supply-chain disruption are likely to rise next year.
Implication: Treat 2026 as a compliance inflection point, get emissions and risk data from suppliers now.
Cost, Inflation & Fuel Price Risk, Mixed; Cost Pressure Remains but May Moderate
Forecast: Macro outlooks see growth and inflation profiles changing through 2026 (some forecasts expect moderation or easing of policy), but energy/fuel balance and continued tariff effects mean logistics costs will remain volatile, with possible pockets of relief if energy markets ease but upside risk from sanctions/supply issues. Energy forecasts for 2026 are mixed (IEA/OPEC show different balances), which feeds freight-cost uncertainty.
Implication: Keep dynamic freight cost hedging and pricing levers ready; scenario plan for both higher and lower fuel-regimes.
Quick, Actionable Summary (What to Prioritise for 2026)
- Strengthen regional/nearshore capacity and multi-modal routing to shorten lead times and reduce exposure.
- Invest in visibility (control towers / digital twins), it’s one of the highest ROI resilience moves for 2026.
- Treat climate/ESG reporting as non-optional, start supplier data collection now.
- Maintain labour programs (upskilling + selective automation), this will smooth operations while tech scales.
- Scenario-plan for freight cost volatility (fuel, tariffs, route disruptions).
Sue Tomic
SCLAA Chair | Board Advisor – Institute of Transport & Logistics Studies, University of Sydney Business School