ITF ties part of $849.9B retail returns to freight decisions

By James Calloway

Consumers were expected to return $849.9 billion of merchandise in 2025, equal to 15.8% of retail sales, according to the National Retail Federation and Happy Returns’ 2025 Retail Returns Landscape. That is down from $890 billion, or 16.9% of sales, in 2024.

Most retailers focus first on getting products onto store shelves or to doorsteps. For supply chain executives, what happens after delivery is increasingly a top-of-mind issue.

ITF Group, a third-party logistics provider based in Hazelwood, Missouri, released its “Retail Reality Check Report” on Sept. 30. It argues that retailers book part of the returns bill in the wrong department, tracing many returns to how they vet and manage carriers.

Why do freight decisions show up in returns?

The report lands as retailers pay more to move holiday freight. Contract truckload rates reached a 52-week high of $2.72 a mile plus fuel on Oct. 9, up 18% year over year, according to FreightWaves SONAR data.

ITF calls a marginal discount from a lower-cost carrier a risk transfer. Missed appointment windows can trigger chargebacks, cargo can suffer damage during handling, and retailers can receive returns they never trace back to the original freight decision.

Agyemang, ITF’s vice president of business development and sales, said: “We’ve accepted a false premise in this industry. We talk about returns as if they’re a customer service issue, something e-commerce has to deal with. In reality, many of those returns are symptoms of an execution failure. And it’s always upstream.”

Agyemang previously worked on the shipper side of retail. In a FreightWaves interview, he said returns often get blamed for a failure along the logistics route, even though supply chain can make a problem visible without being where it started.

His example was a hit holiday toy loaded at its manufacturing origin, palletized for domestic or international shipment, opened and put on a shelf, then boxed again for delivery. The many hands touching the goods can leave it slightly damaged or looking used, which can contribute to a return.

The cost then shifts downstream. In a Kenco survey of more than 350 North American consumers, 47% said they expect free returns, leaving the retailer to cover reverse logistics and the work of returning the item to inventory.

Agyemang said a rate that looks good on procurement’s profit-and-loss statement can become a customer-service problem when the transported product has been mishandled.

Do the public numbers prove freight caused the returns?

No public figure establishes how many returns begin with freight. NRF found that 9% of 2025 returns were fraudulent, but its release does not break out damage in transit from the remainder. ITF’s report provides no percentage for returns tied to freight handling.

ITF also argues that retailers treat returns, freight cost and margin timing as three conversations in three departments. A product mishandled in a warehouse can surface weeks later as a percentage in another department’s report.

Agyemang said retailers, especially in the West, operate segmented structures in which departments do not always talk about their profit-and-loss results with one another.

Should carrier scorecards go beyond on-time delivery?

ITF says the standard carrier scorecard stops when freight is delivered, leaving the link between transportation and returns unmeasured. “A question every shipper should ask themselves is how many companies measure transportation success only by on-time delivery, and never measure transportation affects return rates,” ITF CEO Sam Burkhan said in the report.

ITF closes with five questions for retailers:

• Do they track freight’s effect on return rates?
• Do they score carrier bids on total risk?
• Do they know where liability sits?
• Do they vet carriers after onboarding?
• Do they build freight relationships before peak?

Does negligent hiring change how shippers buy freight?

The liability question has sharpened this year. In May, the U.S. Supreme Court ruled 9-0 in Montgomery v. Caribe Transport II that freight brokers can face state negligent-hiring suits over the carriers they select. The court did not decide whether shippers carry the same exposure.

Agyemang said the Montgomery ruling means everyone needs to rethink and retrain carrier vetting. He warned that peak season is the wrong time to start, because a retailer cannot rebuild its network in a few weeks during the rush.

What does ITF report about its own operations?

ITF says its operating model catches failures before they become returns, chargebacks or stockouts. The company reports a 98% on-time record across more than 100,000 loads a year.

ITF also says fraud-related incidents and exposure fell about 90% after it added fraud-prevention and turnaround controls. It puts its in-transit damage rate at about 0.004%, while noting that improper loading or driver error can cause damage beyond its own handling.

How much holiday merchandise comes back?

In NRF’s 2025 survey, retailers expected 17% of holiday sales to come back, in line with previous years. Agyemang said good carrier relationships established from the start can remove much of the risk that otherwise shows up in different departments in January.

If ITF is right, retailers face a pre-peak carrier-vetting test: with contract truckload rates at a 52-week high and 17% of holiday sales expected to come back, damage, chargebacks and reverse-logistics costs could surface in January budgets procurement never sees.