Freight Costs Squeeze Retail Margins Ahead of Holidays
Retailers that ship goods and rely on imported inventory should review freight and fuel terms before peak season.
Updated on Nov. 2, 2026 in Retail
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Retailers absorbed higher freight and fuel costs in the third quarter, according to company reports from Amazon, Tractor Supply and Carter's. Amazon's shipping costs rose 11% year over year while its units rose 12%, and Tractor Supply's gross margin slipped to 36.4% from 37.4%, which matters for any business that ships goods or depends on inbound inventory.
Why it matters
Transportation expenses are flowing directly into retail margins, and port congestion has left at least one apparel retailer's inventory below plan heading into the holiday season. Operators who buy or move freight are seeing cost pressure that is hitting margins across the sector rather than in a single company.
Amazon's shipping costs rose 11% from a year earlier while its units rose 12%, and excluding fuel and line-haul inflation its shipping expenses still increased 8%. Tractor Supply's gross margin fell to 36.4% from 37.4% even as sales grew 5.1%, and Carter's ended the quarter with $587 million in inventory, down 11% from a year earlier.
The players
Amazon
Amazon operates the largest e-commerce marketplace and logistics network in the United States, and its shipping cost structure reflects the scale of its fulfillment operations.
Tractor Supply
Tractor Supply is a rural lifestyle retailer operating a large store footprint focused on farm, ranch and pet supplies, and its margins are sensitive to transportation costs.
Carter's
Carter's is a children's apparel company that sells through its own retail stores and wholesale channels, and it relies heavily on imported inventory.
The details
Amazon's fulfillment operations absorbed higher fuel costs and line-haul rates on long-distance trucking between facilities, while better inventory placement, shorter shipping distances and package consolidation helped offset part of the increase. Tractor Supply attributed its gross-margin pressure primarily to higher transportation and fuel costs, along with investments in pricing. Carter's inventory fell below plan because port congestion and container availability problems slowed inbound product flow.
Timeline
Third quarter of 2026: retailers reported higher fuel and transportation expenses.
Heading into the holiday season: retailers faced continued shipping inflation and inventory delays.
Market Landscape
The third-quarter pressures echo the port congestion and container shortages that disrupted U.S. retail supply chains in 2021 and 2022, though the company reports describe a narrower strain than that crisis. Retailers with diversified logistics and stronger inventory placement are better positioned than those reliant on single inbound routes.
Operators who ship goods or manage inbound inventory should recheck freight contracts and fuel surcharge terms before the holiday season. Procurement and finance teams should model how sustained transportation costs and port delays would affect margins and stock levels.
The takeaway
Freight and fuel costs are now eroding margins across retail, not just at one company. Operators should review shipping and inbound logistics costs against their current holiday inventory plan and track port congestion data before committing to peak-season orders.
Further reading
For broader context on how these cost pressures are playing out across the sector, see our coverage of Retail trends.
Source note: This article includes information reported by FreightWaves.
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