Rising fuel and shipping costs continued to squeeze retailers’ supply chains in Q3 2026. Some companies benefited from efficiencies in fulfillment operations that helped keep their logistics costs down, while others saw margin declines and delays in getting merchandise to market.

Early earnings from Amazon, Tractor Supply and Carter’s point to a mixed operating environment as retailers gear up for the holiday shopping season. “We’re also seeing some isolated supply chain disruptions, especially around the arrival of merchandise and availability of inventory, which is coinciding with rising freight expenses.

The companies’ results also underscore the importance of logistics efficiency in managing external cost pressures. Retailers are increasingly using better inventory positioning, optimized transportation routes and improved distribution processes as tools to protect profitability.

Amazon offsets some of the transportation cost increases

Amazon (NASDAQ: AMZN) said in the third quarter its fuel costs were up and its line-haul costs for long-haul trucking between its facilities were higher.

But improvements to its fulfillment network helped mitigate the financial impact. More efficient inventory placement, shorter shipping distances and more package consolidation were important factors in reducing the cost to serve customers, the company said.

Shipping costs climbed 11% year-over-year, compared to a 12% rise in units handled. Stripping out fuel and line-haul inflation, shipping costs rose 8%.

The numbers show Amazon was able to absorb greater shipment volumes without a commensurate increase in transportation costs, illustrating how operational improvements have helped keep logistics costs in check.

Pressure on gross margins for Tractor Supply

Tractor Supply (NASDAQ:TSCO) saw a more direct hit from rising transportation costs in its third-quarter earnings results.

The retailer said that investments in pricing and higher fuel and transportation costs were the main factors pressuring its gross margin.

Gross margin fell to 36.4% from 37.4% in the comparable period a year ago. This decline occurred despite a 5.1% increase in sales.

The results show the challenges retailers face in passing on increased distribution and transportation costs without sacrificing competitive pricing. In an increasingly cost-conscious retail environment, companies are still struggling to balance logistics spending and pricing strategies.

Carter points to shipping disruptions for inventory delays

Carter’s (NYSE: CRI) flagged another supply-chain challenge on its third-quarter earnings call: merchandise delays.

Congestion at ports and a lack of containers have hampered inbound shipments, leaving inventories somewhat below the company’s expectations, management said.

Inventory was $587 million, 11% lower than a year ago.

Carter’s said to date disruptions have not materially affected its business, although it is still facing logistical problems. But retailers are still concerned about getting merchandise in time for the crucial holiday selling season.

Freight inflation weighs on holiday profitability

The three retailers’ latest results underscore the impact of transportation costs and supply-chain reliability on financial performance.

Amazon has been helped by improvements in its fulfillment network, but Tractor Supply is facing more margin pressure, and Carter’s is dealing with the fallout from delayed inventory arrivals.

“These are critical issues particularly as we enter the holiday season when merchandise availability and delivery performance can directly impact sales.

Higher freight costs could squeeze retailers' profit margins, while late arriving goods could miss key sales periods and eventually need to be sold at a discount to clear inventory.

The key for retailers will be to control transport costs, maintain consistent inbound flows and strategically place products throughout distribution networks to protect margins during one of the busiest times of the year.