What percentage of retail returns are actually caused by freight handling issues?

The ITF report does not provide a specific percentage, but argues that many returns currently attributed to customer dissatisfaction or product defects actually originate from transportation failures. The NRF data shows 9% of 2025 returns are fraudulent, but the portion tied to freight damage is not quantified in publicly available data, highlighting a major measurement gap in the industry.

How does choosing a low-cost carrier create hidden costs for retailers?

According to the report, a marginal discount from a lower-cost carrier often represents a risk transfer rather than genuine savings. Costs migrate to missed appointment windows that trigger chargebacks, cargo damaged in handling, and product damage that may not be traced back to the freight decision. These costs surface in different departments (customer service, returns processing) rather than in procurement's P&L, making the true total cost of ownership invisible.

What is the Montgomery v. Caribe Transport II ruling and why does it matter?

In May 2024, the U.S. Supreme Court ruled 9-0 that freight brokers can face state negligent-hiring suits over carrier selection. While the ruling explicitly covered brokers, the court did not decide whether shippers carry the same exposure. This creates legal urgency for retailers to vet carriers rigorously before peak season, as liability exposure has sharpened considerably.

What should retailers measure to improve freight quality accountability?

ITF recommends retailers track freight's effect on return rates, score carrier bids on total risk (not just cost), understand where liability sits in the supply chain, vet carriers after onboarding (not just selection), and build freight relationships before peak season. The report notes that standard carrier scorecards should expand beyond on-time delivery to include return rate correlation.

How does cross-department silos contribute to the returns problem?

Retailers typically handle returns, freight costs, and margin timing as separate conversations in procurement, logistics, and customer service departments. A product mishandled during transportation may surface weeks later as a return statistic in a different department's report, preventing visibility into root cause and accountability for the decision that led to the damage.

Risk & Disruption

High Impact

Freight Quality Gaps Drive $850B Retail Returns Crisis

Nov 12, 2026

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The signal

ITF Group's Retail Reality Check Report challenges conventional wisdom about retail returns, arguing that a substantial portion of the projected $849.9 billion in 2025 returns stems from poor carrier management and freight handling rather than pure customer preference. The analysis suggests retailers are misallocating return costs across departments, with procurement optimizing for lowest-cost carriers without accounting for downstream damage, missed deliveries, and quality issues that surface as returns weeks later.

This structural disconnect becomes particularly acute during peak season, when contract truckload rates reached 52-week highs of $2.72 per mile plus fuel, forcing retailers to choose between premium carriers and budget alternatives that may transfer risk downstream. The report's core argument centers on broken accountability: standard carrier scorecards measure on-time delivery but ignore how transportation decisions affect return rates, creating blind spots across finance, procurement, and customer service functions.

#procurement-strategy

#transportation-cost

Frequently Asked Questions

What This Means for Your Supply Chain

Simulation Suggestion

immediate

What if peak season truckload rates spike another 20% and force carrier substitution?

Simulate the impact of contract truckload rates increasing 20% above current 52-week highs of $2.72 per mile. Model the scenario where procurement responds by switching to lower-cost carriers without pre-peak vetting, and measure the resulting increase in damage rates, missed deliveries, and return volumes in January.

Run this scenario

Simulation Suggestion

this month

What if you implement carrier scorecard metrics that include return rate correlation?

Expand carrier performance evaluation beyond on-time delivery to include damage rates and correlation with product returns. Model the impact of selecting carriers that score high on both delivery speed and cargo handling quality, compared to current low-cost carrier strategy.

Run this scenario

Simulation Suggestion

this month

What if you implement pre-peak carrier vetting and reduce in-transit damage by 50%?

Model the impact of establishing carrier relationships and vetting processes 8-12 weeks before peak season, targeting a reduction in in-transit damage rates from industry average (ITF reports 0.004%, but this may be non-representative). Simulate the corresponding reduction in return volume, reverse logistics costs, and customer satisfaction improvement.

Run this scenario

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Retail's $850B Returns Crisis Stems from Freight, Not Customer Service

Oct 2, 2026

Shipping & FreightHigh Impact

Retail Returns Crisis Reaches $849.9B as Freight Costs Soar

Oct 21, 2026

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