PE Firms Need to Roar Into March Like Lions

Just about every stakeholder in the U.S. logistics industry probably feels overwhelmed after the unpredictable events of January and February. Broad tariffs on U.S. imports were threatened by U.S. President Donald Trump, then were largely postponed. Then new tariffs were in fact announced for certain countries, including China, and specific products like aluminum and steel. Inflation, downward-trending economic indictors and wavering consumer confidence only add to the confusion. 

Where does all this volatility leave the U.S. logistics industry — and companies with a huge, vested interest in driving down logistics costs, including private equity (PE) firms?  Amid so much uncertainty, how can PE firms generate certain value for investors? 

As we head into March, Redwood believes that PE firms who come in like a lion — aggressively pursuing risk mitigation and cost reduction opportunities — will emerge as winners over those companies that adopt a wait-and-see stance on tariffs and other developments. Here are three actions PE firms can take right now to position their portfolio companies for more predictable logistics results throughout 2025. 

1. Don’t blindly expedite. Instead, strategize carefully. 

Faced with uncertainty about future tariffs, many shippers are moving products into the U.S. as quickly as possible — getting them landed before costs increase. This trend began right after the presidential election in November and continues today. As shipping volumes rise, ocean rates have remained elevated, and vessels have been full. That means rushing these shipments may not be as cost-effective as companies think. And there’s a significant risk of moving too much product — and ending up with excess inventory and high onshore warehousing costs. 

 PE firms with portfolio companies whose business is strongly international in nature must exercise caution — and ensure that logistics teams are making decisions that are strategically sound. Panicked decisions usually aren’t a solid foundation for long-term financial success.  

Expediting shipments is just one strategy for minimizing the impact of tariffs. Before portfolio companies jump onboard an already crowded ship, they should consider other strategies, such as nearshoring or friendshoring their production and distribution. Redwood’s experts can help explore initiatives like network redesign, supplier rationalization, route optimization and shipment consolidation that provide benefits in any logistics landscape. Redwood helped shippers minimize costs and risk during Trump’s first term, and we remain a trusted advisor in the current geo-political environment.  

2. Given the truckload demand-supply mismatch, consider all options. 

Fast-growing demand is also impacting truckload volumes. At Redwood, we continue to be concerned that capacity will not be able to keep up. That will mean higher rates, more tender rejections and shipping delays. Consider these indicators: 

• In January 2025, only 24,000 Class 8 tractor units were ordered, a 28% decrease month-over-month. 

• The load-to truck ratio is currently spiking. This sensitive, real-time indicator of the balance between spot freight market demand and capacity jumped to 7.18 in January, from December’s 6.14. 

• A historic number of truckload carriers continue to exit the market, which has reduced capacity and is already increasing rejection rates. 

• Diesel fuel prices are one bright spot, as they continue to decline. Experts predict fuel costs will remain at an average of $3.66 throughout 2025. Still, it’s important to monitor continued tensions in the Middle East which may affect supply. 

What can PE firms do right now to prepare for future capacity tightening — and the rate increases that will surely accompany it? It’s time for portfolio companies to line up alternative carriers, transportation modes, distribution schemes and routes. As a modern 4PL, Redwood has the strategic expertise, industry partnerships and physical assets to help. Don’t get caught unaware and unprepared when this storm eventually blows in. We can all see it coming. 

3. Enact smarter, and more profitable, parcel shipping strategies. 

Another storm we predicted? The dramatic rise of parcel shipping costs in 2025. Shippers are weathering general rate increases and hidden surcharges from both UPS and FedEx.  

New developments have made the situation even more dire for portfolio companies who rely on parcel shipping. Since the UPS SurePost contract with USPS expired, we’ve seen a 9.9% rate increase on SurePost packages up to 10 pounds — and a 6% increase on packages above 10 pounds. On February 10, FedEx Ground Economy delivery area surcharges increased from $4 to $6.20, and grew from $5.35 to $8.30 for extended delivery areas. 

Back in November, Redwood predicted that new carrier rates would increase shippers’ 2025 parcel spend by 6-11% if they took no actions to accommodate these changes. Yet here we are in March 2025, and a lot of portfolio companies are probably stuck in their past shipping patterns, despite the cost increases. 

Every day that passes is a missed opportunity to dramatically cut parcel shipping costs. PE firms can turn to a 4PL like Redwood ASAP to take action — such as exploring new shipping modes, changing up the carrier mix, optimizing loads and routes, implementing zone-skipping and negotiating with carriers. Consider these results Redwood delivered for parcel shippers in 2024: 

• An average of $1.1 million in annual cost savings  

• An average reduction of 16% in the overall parcel spend. 

• The creation of more favorable carrier contracts in just 43 days  

What Are You Waiting For?  

There’s no question that today’s volatile transportation and distribution landscape can seem overwhelming for PE firms and their portfolio companies, who may lack specialized expertise in logistics strategy. Topics like network redesign, carrier negotiation, and cross-border transportation and distribution may be outside the comfort zone of their internal teams. 

That’s where Redwood comes in. As a modern, full-service 4PL, we’ve helped hundreds of customers — including PE firms and their portfolio companies — succeed in tough markets like this one. Stop waiting for conditions to stabilize. Instead, turn volatility into an advantage by weathering it better than competitors. Learn more about partnering with Redwood today— start being more proactive and less reactive.