The reality of AI supply chain hype

That’s according to the new 2026 State of Logistics report from Kearney, sponsored by Penske Logistics. With ongoing conflict in the Middle East and shifting tariff policies, AI advancements are proving a bright spot in a year marked with uncertainty.

“The investment case for AI and automation has grown more compelling by the quarter, driven by persistent labor, scarcity, energy volatility, and the scale of complexity that organizations must now manage,” the report says.

The 3PL platform C.H. Robinson, for instance, built up proprietary AI tools to read inbound shipper emails, classify the intent and reply with a quote. This allows it to book about 3,000 appointments per day across its 26,000 locations.

In another case, freight and logistics company ArcBest says it has used AI to optimize routes, yielding around $15 million in savings.

But Kearney’s report also cautions against over-investment in AI at this time and says that an autonomous, AI-powered supply chain “remains aspirational.” Instead, companies can find value in AI processes built on clean data and embedded in day-to-day operations. “The critical challenge has moved from identifying where AI creates value to executing the workflow redesign and data investment required to capture that value at scale,” Kearney’s report summary says.

Along those lines, a Gartner survey released in May showed just 17% of supply chain organizations are pursuing immediate transformational redesigns of their processes and workflows. But around 83% said they are either applying AI incrementally to specific use cases or gradually scaling it into integrated processes.

Ari Bloom, founder and CEO of A-Frame Brands, which creates private-label products for retailers and celebrities, said AI is modernizing parts of the industry that have typically worked off spreadsheets and emails. In one instance, he said, a supply chain partner had to go through 50 emails to find the right approval. In turn, he said A-Frame is building a portal to let factories and partners see what’s approved, who approved it and what tasks remain in the pipeline.

“That is going to change the way we work with our partners,” he said, “but I am sure the partners will want to work that way themselves, just broadly, because it’s an obvious evolution.”

Product development is also proving to be a ripe area for AI usage.

“Trend identification, concept validation, competitive analysis, … Work that used to take weeks now happens in hours,” Bloom said.

The week in tariffs

• The European Parliament has given its approval to a trade deal with the U.S., reports The Guardian. This agreement, initially reached last year, locks in a 15% tariff on most E.U/ exports. In exchange, it removes or reduces tariffs on some American industrial and agricultural exports.
• Last week, the U.S. Supreme Court declined to hear a challenge to President Donald Trump’s tariffs on China issued back in 2018 under Section 301 of the 1974 Trade Act. The challenge was brought by businesses that said Trump didn’t have the authority to issue the tariffs. Here’s a breakdown of what it means, from USA Today, Sourcing Journal and the law firm Thompson Hine.

What we’re covered

Amazon sellers are feeling better about Prime Day, but they’re still watching margins

Last year, tariff uncertainty dominated conversations among Amazon sellers ahead of the first four-day Prime Day. But this year, many brands say they have a clearer picture of their costs heading into one of Amazon’s biggest shopping events.

MR’s Allison Smith interviewed sellers and consultants who say the mood is generally more positive than it was a year ago. The decision to hold the event in June versus July bodes well for some categories, like outdoor brands. But some are still sitting on the sidelines or offering the minimum discount to protect their margins at a time when fuel costs remain volatile.

Monil Kothari, founder of fine jewelry brand Haus of Brilliance, said he’s trying to preserve margins ahead of the holiday season. “I don’t think I want to discount that hard,” he told Smith.

Utah and Idaho have become key growth markets for Target, Kroger

Rapid population and housing growth in Utah and Idaho are leading major retail chains to open new stores in areas they may once have overlooked. MR’s Mitchell Parton reports that Target plans to open its 18th store in Utah next month, and is building stores in the Idaho cities of Pocatello and Meridian. Over the past five years, Target has grown its headcount 11% in Utah to 3,000 employees and 10% in Idaho to about 1,000.

“We are really helping create some of the commerce ecosystem in some of these fast-growing suburbs,” Clare Lenox, group vice president for Target in its Mountain West region, told MR.

It’s not just Target; Walmart just opened a new store in Eagle Mountain, Utah and has broken ground on a new Supercenter in West Haven set to open in 2027. Kroger is looking to expand its footprint under the Smith’s and Fred Meyer banners.

What we’re reading

• Air freight spot rates spike 41% YoY in May, but relief expected soon -Supply Chain Dive
• State bans on PFAS reduce ‘forever chemicals’ in clothing and textiles, US report finds –The Guardian
• The U.S. economy is leaving these companies behind -The New York Times