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Q4 2025 Market Conditions Report

by Roel Aguilar and Tim Jed 29 minute read

This article is included in the Great Things: Issue 14 edition of the DPR Newsletter.

Our Q4 2025 Market Conditions report summarizes current market conditions, industry trends, and mitigation strategies to make more informed business decisions in the quickly changing construction landscape.

Q4 Market Conditions Key Takeaways

Industry Insights

Construction Industry Transformation: Economic volatility, tech breakthroughs, and major federal policies are accelerating changes in project delivery and design standards.
OBBBA Impact: New tax incentives and credits under the One Big Beautiful Bill Act drive innovation, advanced manufacturing, and automation—creating opportunities for contractors to reduce costs and expand capabilities.
Executive Orders Driving Demand: Streamlined AI/data center permitting, classical architecture mandates, and tariff clarifications reshape priorities, timelines, and cost structures.
AI Adoption Imperative: Competitive advantage hinges on upskilling teams and integrating AI into workflows for scheduling, safety, and design coordination.

Managed Supply Chain

Trade and Tariff Shifts Drive Strategic Realignment: Manufacturers are reshaping supply chains and investing heavily in U.S. production, while tariffs accelerate automation adoption and smarter procurement strategies to manage cost volatility and build resilience.
Economic and Construction Outlook: Inflation is trending upward despite Fed rate cuts, unemployment has ticked up, and tariffs plus policy changes have delayed or scaled back projects. Non-residential construction—especially data centers—remains strong.
Labor Shortages Remain a Critical Challenge: Persistent workforce gaps—88% of firms report openings—continue to drive project delays, compounded by skill shortages and immigration enforcement. Firms are responding with higher pay, expanded training, and digital recruiting, while exploring innovation and automation to ease labor pressures.
Supply Chain and Trade Pressures Shape Strategy: Tariffs, rising material costs, and logistics instability are pushing contractors toward smarter procurement, diversified sourcing, and scenario planning. Reshoring strategies, robotics, and AI adoption are accelerating as firms seek flexibility, cost control, and resilience in a volatile global trade environment.

Continue scrolling or click the link above to read the full report.

Mass timber room shown on second level above stadium building

Industry Insights Economic Curveballs, Tech Breakthroughs, and Big Policy Moves

As we close out 2025, the construction industry continues to evolve at an extraordinary pace, shaped by economic shifts, emerging technologies, and sweeping legislative changes. Between economic curveballs, tech breakthroughs, and big policy moves, the way we build is changing fast. Whether it’s new federal takes on tariffs and architecture or incentives pushing advanced manufacturing and AI infrastructure, these shifts are reshaping how we think about projects, from the drawing board to delivery. At DPR and across the broader industry, staying ahead of these changes isn’t just smart, it’s essential.

Industry Insights The OBBBA Effect: What’s Changing and Why It Matters

In our Q3 Market Conditions Report, we highlighted early indicators that the One Big Beautiful Bill Act (OBBBA) could reshape construction economics through contractor-friendly tax policies and manufacturing incentives. Since that publication, new guidance and executive orders have clarified how these provisions will be implemented—and their broader impact is now coming into focus.

Spoiler: it’s big.

Research & Experimental Expense

As signed into law on July 4, 2025, the OBBBA introduced significant updates to Research & Experimental (R&E) expense treatment. The changes apply retroactively, allowing firms to recover costs capitalized between 2022 and 2024.

For construction firms, this means a renewed opportunity to pursue deductions for technology-driven and innovative investments. Domestic R&E expenses, such as those tied to developing new materials, modular systems, or software-driven construction methods can now be immediately expensed, easing tax burdens during the development phase.

The bottom line is, if you’ve been innovating, now’s the time to cash in. These changes make it easier to invest in experimental techniques, prefabrication, and automation—all crucial in today’s tight labor market.

Advanced Manufacturing Investment Credit Possibilities

Under the OBBBA, the 48D Advanced Manufacturing Investment Credit for semiconductor and equipment manufacturing facilities has increased from 25% to 35% for property placed in service after December 31, 2025.

Translation: expect a surge in manufacturing projects. Owners will be looking to take advantage, and that means more demand for specialized design, retrofits, and infrastructure work. It’s a win for contractors ready to lean into tech-forward builds.

Industry Insights Executive Orders: What’s New & What They Mean

Building on our earlier insights from Q1, several new executive orders are reshaping construction priorities in the U.S., from streamlined data center development to shifts in architectural standards and tariff policy.

AI/Data Centers Permitting

DATE ISSUED: July 23, 2025

Artificial Intelligence continues to dominate market focus, and the federal government’s latest executive order accelerates data center permitting. The order streamlines reviews, enables financial support, and even allows federal land use for high-capacity AI-related projects exceeding 100 MW.

For builders, this means more data center work—and faster timelines. Think long-lead procurement, resilient supply chains, and tight coordination with trade partners.

Making Federal Architecture Beautiful Again

DATE ISSUED: August 28, 2025

This one’s stirred up some debate. The government’s push for classical and traditional styles in new federal buildings has designers talking. While DPR may not be deep in federal work, the ripple effects are real, especially for firms with expertise in classical design and trades like stone masonry and ornamental metals. As the industry faces ongoing labor shortages, demand for these specialized trades could tighten further, driving cost implications and workforce shifts.

Tariff Overlap/Stacking

DATE ISSUED: April 29, 2025

Executive Order 14289 addresses a longstanding challenge of overlapping or “stacked” tariffs on imported materials. By clarifying which duties apply, the policy reduces the risk of “double duty” and enhances predictability for key construction inputs such as steel, aluminum, wire, and switchgear.

While not a complete solution, this added transparency allows for better cost forecasting, risk planning, and procurement strategies. Firms should remain attentive to how vendors and suppliers implement these changes, especially for projects budgeted before the new rules took effect.

Industry Insights AI in Construction: Buzzword or Breakthrough?

AI is everywhere, but in construction, adoption is still uneven. The next big leap? Training teams to use these tools effectively. Estimators, field staff, and project teams need upskilling to make the most of AI in scheduling, safety, and design coordination. Firms must also manage “technology fatigue,” balancing innovation with practical, human-centered deployment. The winners in this race will be those who not only adopt new tools but also transform their workflows to take full advantage of them.

Looking Ahead

As we head into 2026, the construction landscape is one of both opportunity and complexity. Legislative shifts such as the OBBBA, coupled with executive orders on AI infrastructure and tariff reform, are creating new momentum for innovation and growth.

For everyone in the project ecosystem—owners, architects, engineers and builders—the message is clear: those who lean in now will be leading the charge tomorrow. Let’s build smarter, more resilient, and more future-ready spaces together.

Supply Chain From Brain Freeze to Brain Flex

While tariffs have churned plenty of uncertainty, they’ve also prompted companies to get creative. Take Vadilal Industries USA, which is moving ice cream production to its U.S. facility by April 2026. Instead of importing frozen treats subject to higher duties, they’ll be scooping locally—a cool example of how tariff pressure can sweeten incentives for domestic production.¹

More broadly, the trade environment is nudging manufacturers to reshape their footprints. Abbott, Apple, Chobani, Honda, Hyundai, IBM, Merck, TSMC, Johnson & Johnson, and others are plowing capital into U.S. factories, while others like Husqvarna are reshuffling supply chains away from China to Europe, aiming for smoother logistics and higher-margin product mixes.² It’s less about brain freeze and more about brain flex.

Tariffs are also giving automation a cherry on top. Robots-as-a-service providers are in higher demand as firms try to keep production efficient and costs contained.³ Meanwhile, procurement leaders are investing in smarter strategies like alternative sourcing, scenario planning, and stockpiling critical components to build resilience against the next policy shock.⁴ And let’s not forget the tech giants: Nvidia has committed to spending hundreds of billions on U.S. supply chains over the next four years. Tariffs may be the little sprinkles, but AI is the sundae driving this build-out.⁵

So yes, tariffs have added some crunch, but not all supply chain stories are rocky road. In fact, many are turning challenges into a sundae of opportunity. But there are things to look out for, even as we try to make the best of the situation.

Supply Chain Talent, Timber, and Trends: The Plot Thickens

We’ve seen a significant spike in price increase notices from suppliers as the tariffs have rolled out, but that seems to be leveling out as we get past the new tariff implementation. So what can we infer from the economic indicators?

As of August 2025, the U.S. unemployment rate rose slightly to 4.3%, up from 4.2% in July—its highest level since October 2021. Job growth was notably weak, with nonfarm payrolls increasing by just 22,000, well below the pace seen earlier in the year through May. The modest rise in unemployment reflects both an increase in people reentering the labor force after a period of inactivity and a decline in the number of unemployed workers finding jobs. Normally, this report would include data through October, but the government shutdown has disrupted operations at the Bureau of Labor Statistics, leaving August as the most recent official data available. The Chicago Federal Reserve, however, estimates that October inflation rose to 4.4%, suggesting an upward trend in prices.⁶

After easing through April, inflation has begun to edge up again. In September, U.S. inflation stands ticked up to 3.0% year-over-year, rising from this year’s low of 2.3% in April, but still well below the peaks seen in 2022.⁷ This is above the target of 2.0%, leading the Fed to cut interest rates twice by 1/4% (September and October).⁸ This has been complicated for Fed policymakers, as while keeping the rates higher could hurt employment numbers, easing the rates may further spur inflation.⁹

12-month inflation (YOY)	2020	2021	2022	2023	2024	Jul-25
WPU801 Nonresidential	2.5	5.2	19.9	7.9	0.1	1.0
WPU801101 Warehouse	1.6	7.6	28.0	4.8	-0.2	0.6
WPU801102 School	2.6	3.6	16.4	7.4	0.5	1.1
WPU801103 Office	2.4	6.1	20.7	10.0	0.6	1.0
WPU801104 Industrial	3.0	5.2	22.3	7.6	-0.3	1.8
WPU801105 Healthcare	2.4	4.8	17.2	8.2	-0.5	0.6

Table: Year-Over-Year Producer Price Index by Construction Type¹⁰

Mixed Manufacturing Momentum in September

GEP’s September Supply Chain Volatility Index fell slightly for the U.S. Global manufacturing showed mixed momentum across regions. Asia, led by China, saw a sharp rebound in factory activity and input purchasing—the strongest since mid-2022. North America faced weaker activity due to tariff disruptions and a cautious outlook, while Europe’s recovery remained slow, with purchasing at a six-month low. Globally, manufacturers reduced stockpiling, material shortages and labor constraints eased, and transportation costs normalized, signaling stabilized supply conditions despite regional disparities.ⁱ

ⁱ^{https://www.gep.com/newsroom/c...}

What type of inflation are we seeing in construction? The Bureau of Labor and Statistics tracks the cost of construction by segment. Year-Over-Year, we’re seeing only moderate increases through July, but we’d expect that to increase as the effects of tariffs are felt.

Homebuilding traditionally feels the effects of reduced demand prior to commercial construction. In homebuilding, lumber is a bellwether. Lumber futures fell 24% from early August to September, driven in part by a sharp 13.3% year-over-year decline in housing demand and by importers rushing to pre-buy Canadian lumber ahead of the tariff hike from 15% to 35%.¹¹ Prices remain volatile, however, following the Administration’s decision to impose a new 10% tariff on softwood lumber.¹² Large producers are responding: Interfor will cut output 12% and Domtar is taking downtime and idling capacity. Time will tell if the easing of interest rates will shore up demand for housing.¹³

And while residential starts are expected to continue to decline, Construction Connects’ August 2025 Construction Starts Forecast projects non-residential construction starts will be up in 2025, contracting in 2026, and up again in 2027 through 2029, citing growth tied to large megaprojects.¹⁴ Data center construction is setting records. U.S. data center construction spending hit a seasonally adjusted annual rate of $40 billion in June 2025, a 30% increase over the prior year.¹⁵ But challenges remain. The Associated General Contractors of America reports that tariffs and government policy changes have resulted in two-thirds of firms having at least one project postponed, canceled, or scaled back, with 16% citing tariffs as the reason for reduced demand or disruption, and 26% pointing to changes to government policy as a cause for slowing need.¹⁶

Supply Chain Shutdowns, Sanctions, and Shifting Supply Chains

A federal government shutdown that began October 1 has disrupted trade and customs operations across multiple agencies.

President Trump signed a bill to end the shutdown and reopen the government on November 12. The agreement extends funding for most federal agencies through January 30 and provides full-year appropriations for several others,¹⁷ however, it will likely take some time for affected services to recover and address backlogged work.

While essential functions related to law enforcement, safety, and national security largely continued during the shutdown, many administrative, policy, and regulatory operations were paused. The impact varied across agencies, and it’s uncertain whether lawmakers will be able to reach a longer-term agreement by the January deadline to prevent another shutdown. Here’s how agencies have been affected:¹⁸

DHS/CBP (Department of Homeland Security Customs and Border Protection): Core operations (tariff collection, inspections, law enforcement) continue; planning, policy, and training halted.
USTR (United States Trade Representative): Trade negotiations continue; routine engagements and admin work paused.
DOC (Department of Commerce): Export enforcement and Section 232 investigations continue; most trade and economic agencies suspended.
ITC (International Trade Commission): Maintains tariff schedule and litigation; investigations and technical support halted.
USDA (United States Department of Agriculture): Import/export ops and emergency animal/plant programs continue; regulatory and trade service work paused.
FMC (Federal Maritime Commission): Entire agency furloughed; all filings and dispute processes suspended.
State/DDTC (Department’s Directorate of Defense Trade Controls): National security-related export controls continue; licensing and reviews delayed.
CPSC (Consumer Product Safety Commission): Imminent safety actions continue; most import, recall, and compliance functions suspended.

This may impact imports for projects, so we recommend staying on top of developments for products coming from outside the U.S.

The U.S. Supreme Court heard oral arguments on November 5, 2025, in the case challenging the Administration’s “reciprocal” tariffs. At the heart of the action is whether the president’s decision to impose sweeping global tariffs under the International Emergency Economic Powers Act (IEEPA) was lawful. The challengers contend that invoking IEEPA to levy large-scale tariffs encroaches on Congress’s exclusive authority to impose taxes, while the government argues the action was a legitimate regulatory response to national and economic security threats.

During oral arguments, the justices signaled skepticism toward the government’s expansive interpretation of executive power, raising concerns about granting the presidency unchecked authority over policies that so directly affect Americans’ economic well-being. Their tone reflected a sharp awareness of both the constitutional stakes and the broader economic implications.

If the Court strikes down the tariffs, the consequences could be widespread. Companies that paid the duties would likely pursue refunds approaching a trillion dollars. Processing those claims could create a heavy administrative burden on both businesses and the federal government, potentially overwhelming key agencies. This could also complicate efforts to manage the federal deficit, given that the tariffs would partially offset revenue losses from the “One Big Beautiful Bill” tax cuts. It remains unclear when a decision will be issued, but in no event later than June 2026.²²

Global Trade

The U.S. administration has reaffirmed its commitment to strictly enforce oil sanctions against Russia, stepping up pressure on Moscow to end the war in Ukraine. The Treasury Department is giving companies until November 21 to end any business with Lukoil and Rosneft. The sanctions freeze assets, block U.S. transactions, and mark a tougher use of energy policy as a tool of foreign pressure. In response, Lukoil, Russia’s second-largest oil producer, has agreed to sell its international assets to global commodities trader Gunvor after being hit by the sanctions. This move could put other foreign buyers, including those in India, China, and Central Europe, at risk of facing secondary sanctions.

These actions are reshaping global energy markets, tightening supply lines, and shifting trade routes. They’ve also added uncertainty to industries sensitive to fuel and shipping costs, like construction and manufacturing. Despite this, oil prices haven’t risen–they’ve been trending down since May 2022 and are currently around $60 per barrel.¹⁹

Also reshaping global trade, tariffs have continued to evolve through the fall:²⁰

100% on pharmaceuticals, quickly paused indefinitely, following a deal with Pfizer.
10% on softwood lumber, 25% on certain upholstered furniture (increasing to 30% January 1).
25% on kitchen cabinets and vanities (increasing to 50% January 1).
25% on medium- and heavy-duty trucks, potentially affecting delivery fleets, semi-trucks, and construction vehicles.

The good news on the global trade front? The Administration secured a commitment from Australia to provide access to its rare earth minerals, helping diversify sources of critical materials. The U.S. also agreed to reduce the 20% import duty on China linked to fentanyl concerns to 10%, China will suspend its latest rare earth export restrictions for one year, and both nations have further agreed to extend their trade truce for another year, continuing the pause that has prevented tariff hikes exceeding 100%.²¹

Two workers wearing personal protective equipment talk on an active jobsite.

Supply Chain Labor Pains and Immigration Enforcement

In August, the Associated General Contractors of America and the National Center for Construction Education and Research surveyed 1,342 individuals from a broad range of firms to evaluate the state of the construction labor market. The results highlight persistent worker shortages, which continue to be the leading cause of project delays, although such delays were slightly less common than in previous surveys.

Key findings on labor shortages and project impacts:

88% of firms employing craft workers and 80% employing salaried staff report job openings.
45% of respondents report delays due to shortages of their own or subcontractors’ workers.
78% of firms experienced at least one delayed project.
83% of firms with craft openings and 84% with salaried openings say positions are as hard or harder to fill than a year ago.
57% of firms believe available candidates lack essential skills, certificates, or licenses.

To address these challenges, construction firms are taking proactive measures. Many have raised base pay, expanded training and professional development programs, and adopted digital recruiting strategies, such as social media outreach and targeted advertising, to attract younger applicants. Additionally, firms are strengthening pipelines by engaging with career-building programs at high schools, colleges, and technical education institutions. But immigration enforcement is also affecting work attendance.²³

On September 4, U.S. federal agents raided Hyundai’s $4.3 billion battery plant in Ellabell, Georgia. 475 workers, including more than 300 South Koreans, were detained over alleged visa violations, creating startup delays of at least 2–3 months.²⁴ This dynamic can create trepidation in our workforce (see Q3 2025 Market Conditions Report for information on foreign born workers by trade).

How is this affecting our industry?

28% of firms report direct or indirect effects.
5% experienced jobsite or offsite visits by immigration agents.
10% report workers leaving or not showing up due to immigration actions.
20% say subcontractors lost workers.

Overall, these surveys underscore that the construction industry is grappling with widespread labor shortages, compounded by skill gaps and external factors like immigration enforcement, while firms actively pursue multifaceted strategies to attract, train, and retain talent.²⁵

Nestlé is adapting to labor and price challenges through innovative approaches. They’ve developed a patented method to extract up to 30% more usable cocoa from each pod by fermenting and processing not only the beans but also pulp, placenta, and husks, turning what was once waste into chocolate flakes. Positioned as both an efficiency gain and a resilience strategy, the approach could also boost farmer incomes in climate-affected regions while reducing supply chain exposure to volatile cocoa prices, which have surged in recent years. Nestlé’s technique enhances yields from existing harvests, aligning with a broader industry shift toward circular production and supply resilience.²⁶

DPR is also using innovation to help mitigate labor pressures by collaborating with manufacturers on the development of labor and time saving products. For example, DPR’s support of USG in testing, site application, and feedback for USG’s Ready-Spray™ joint compound, which vastly reduces the steps required in drywall finishing, illustrates how contractors can help manufacturers advance smarter products, drive efficiency, and ease workforce constraints.

DPR Helps USG Test Innovative Time Saving Finishing Product

In 2023, DPR partnered with USG to test the SHEETROCK® Brand Ready-Spray™ Joint Compound on active projects, providing real-world feedback that directly informed its development and helped bring the product to market. This collaboration is a strong example of how DPR applies innovative products and methods to overcome industry-wide labor shortages and improve project schedules, ensuring better outcomes for both workers and clients.

The USG SHEETROCK® Brand Ready-Spray™ Joint Compound addresses the construction industry’s challenges of labor shortages, tight schedules, and the physically demanding nature of traditional drywall finishing. The solution is a spray-applied joint compound engineered for faster, easier, and less physically strenuous application. Its features include ready-to-spray consistency, fast drying, low shrinkage, and easy sanding.

The benefits are significant: faster recoats, same day finishing up to a level five finish, improved productivity that mitigates the impact of labor shortages, and reduced physical strain on workers. This combination helps projects stay on schedule, improves jobsite efficiency, and makes drywall finishing more accessible to a broader labor pool.

Supply Chain Forged in Tariffs: The Future of Construction Metals

Steel, aluminum, and copper are the particularly important construction materials impacted due to the global nature and degree of tariffs. While each material market carries its own nuances, the common thread is that tariffs have become a defining factor influencing costs, competitiveness, and investment decisions. Because of their vast role within construction materials, we are taking a deeper dive into each to understand not only how tariffs are altering supply and pricing, but also how broader forces like demand cycles, policy shifts, and global capacity changes interact to shape risks and opportunities ahead.

Steel is under pressure from tariffs, weak demand, and rising costs.

U.S. steel demand hasn’t grown in ten years—2024 shipments were about the same as in 2015—and imports dropped from 29% of the market in 2015 to 22% in 2024.

Even with flat demand, producers are planning to expand capacity by about 25%. Nippon Steel is buying U.S. Steel in a $14 billion deal that includes a new mill and upgrades, while Nucor, Steel Dynamics, and ArcelorMittal also have expansion plans. Hyundai Steel and Posco plan to build a new plant in Louisiana.

Tariffs, raised to 50% in June, have driven up U.S. steel prices, though they’ve eased slightly in recent weeks. Higher steel costs are hitting downstream sectors such as automotive and construction. Analysts warn that if U.S. economic growth slips below roughly 2%, new capacity could outpace demand, leading to oversupply.

Looking forward, steel prices will likely stay volatile with some downward pressure unless demand improves. U.S. producers will lean on tariffs and tight supply control to protect profits, but weak end markets raise the risk of oversupply and lower prices. Over the long term, competitiveness will depend on clear policy, affordable energy, and infrastructure investment. ²⁷
Aluminum is facing major pressure from tariffs, high costs, and supply shortages.

Import duties were raised to 50%, causing some exporters to divert shipments away from the U.S., which has tightened supply and driven prices sharply higher—Midwest prices in mid-September were up 177% compared to January. Global supply is also constrained by Chinese production caps and smelter closures, while U.S. stockpiles are falling quickly.

U.S. smelting capacity remains limited because many plants are shut down or running below capacity due to high electricity costs. Alcoa has warned that without cheaper power and supportive policies, tariffs could put nearly 100,000 U.S. jobs at risk across production and downstream industries. With about half of U.S. aluminum coming from imports—mainly from Canada—many manufacturers are turning to recycled aluminum and scrap, which are exempt from tariffs, to reduce costs.

There are signs of new capacity coming online: Emirates Global Aluminum is planning a $4 billion smelter in Oklahoma, the first major U.S. facility in nearly 45 years, expected to add 600,000 tons per year and almost double current U.S. production. Still, the industry faces a tough balance between immediate supply strain and long-term structural challenges, with its future hinging on affordable energy.²⁸
Copper markets are highly volatile as tariffs, strong demand, and limited supply collide.

The recent collapse of the world’s largest copper mine, El Teniente in Chile, is further complicating this. The U.S. raised import duties to 50%, creating market uncertainty, pushing prices higher, and prompting traders to recall copper shipment exports back to the U.S. before the tariff took effect. Demand remains strong, driven by electric vehicles, renewable energy, and data center growth.

Global copper supply is heavily concentrated, with Chile, Peru, Australia, the Democratic Republic of Congo, and Russia holding over half of known reserves. This creates geopolitical and supply chain risks. The U.S. depends on imports for about 46% of its copper needs. Analysts warn of a major shortfall this year, as new mines take more than a decade to develop and years of low prices discouraged exploration and investment.

Producers are trying to ramp up output, but face challenges such as declining ore quality, water shortages, investment delays, and environmental opposition. With demand outpacing supply in 2022, 2023, and 2024, prices are expected to stay elevated and volatile, with further increases likely through 2029.²⁹

Metal	Main Demand Drivers	Tariff Impact	Top 5 Producers	Key Risks
Steel	Construction, automotive, durable goods	Up to 50%, protects domestic mills but raises costs for users	China, India, Japan, U.S., Russia	Oversupply, weak demand in construction/auto
Aluminum	Aerospace, automotive, packaging	Up to 50%, raises costs, reliance on imports and recycling	China, India, Russia, Canada, UAE (U.S. is #14)	High energy costs, smelter closures, job losses
Copper	Electrification, EVs, renewable energy, data centers	Up to 50% fueling volatility and stockpiling	Chile, Congo, Peru, China, U.S.	Declining ore grades, permitting delays, supply crunch

Supply Chain It Takes a Village to Move a Pallet

Transportation and logistics are under pressure to modernize, with half of industry respondents citing unstable rates and fuel costs as their top concern. Ocean freight demand is barely growing while carriers face rising fees and excess fleet capacity. Rail is the standout, with steady long-term growth, major government-backed upgrades, and new technologies making it safer, more efficient, and greener than trucks. Trucking, critical for last mile delivery and “kitted” deliveries, remains the most strained, with weak demand, shrinking margins, and fleets holding back on new equipment due to tariffs and regulatory uncertainty.

Together, these challenges highlight why managed supply chains are critical: no single mode is stable on its own, but using them in combination helps companies control costs, reduce risks, and improve reliability.³⁰

Xeneta’s Mid-Year Ocean Market Outlook 2025 highlights growth in global demand for 2025 projected at 0–2%, lower than the 3% forecast made in October 2024. A return to Red Sea shipping routes this year is unlikely, but this may ease into 2026. Shipping fleet capacity is expected to grow by 5–6%, but carriers may struggle to manage this growth in the second half of this year. Higher port fees for Chinese-built vessels that were set to start on October 14th would have driven up costs for shippers up to $1.5 million for Chinese-built vessels, but those have now been paused for a year.³¹ Rates may decline later in 2025, but stricter environmental regulations have been introduced following record-high emissions in 2024, which may buffer pricing.³²

Asia-North America spot rates have increased 17%. Rates to the West Coast decreased 20% to $2,027 per FEU last week. East Coast prices fell 14% to $3,500 per FEU for a 14% weekly increase.³³

Analysis: While rates are increasing on FEUs, the larger concern is the tariffs.

Recommendation: If tariff concerns are mitigated then book ocean freight as necessary.
The U.S. rail traffic through September 13, 2025 rose 2.5% from last year, and the market is expected to grow steadily between 2025 and 2035 at about 5.5% per year, mainly due to infrastructure upgrades and higher freight demand. Investments in better tracks, signaling, and energy-efficient locomotives are making rail safer, more reliable, and more efficient. Modern tools like automated monitoring, predictive maintenance, and positive train control help prevent accidents and reduce delays. Governments are also backing modernization with digital signaling and automated controls, which ease highway traffic and improve supply chains, making rail a strong choice for long-distance shipping and cleaner city travel. Freight trains use about 70% less energy than trucks, high-speed trains can cut city-to-city travel times by up to 40%, and automation boosts reliability by about 25%. Partnerships with technology providers are pushing smart rail solutions forward, with predictive maintenance expected to reduce delays by 10% and positive train control covering nearly all main lines.³⁴

For the first 43 weeks of 2025, U.S. railroads reported cumulative volume of 9,552,801 carloads, up 1.9 percent from the same point last year; and 11,672,717 intermodal units, up 3.0 percent from last year. Total combined U.S. traffic for the first 43 weeks of 2025 was 21,225,518 carloads and intermodal units, an increase of 2.5 percent compared to last year.³⁵

Analysis: The Rail industry continues to make steady gains. However, tariffs in the commercial market will cause less containers and intermodal port use.

Recommendation: Use rail for heavy items which require cheaper per mile costs, afford flexibility in delivery, and are close to intermodal facilities.
Freight demand is weak now that the pre-tariff shipping rush is over. For-hire carriers are struggling with low profits, while private fleets gain share. Truck makers have cut production, and fleets are selling extra vehicles, pushing used prices down.

Demand for new trucks and trailers is low. Fleets are holding back on purchases due to higher costs from tariffs (up 2–4% not including the just-announced new tariffs mentioned above) and uncertainty around regulations. The EPA’s Low-NOx Mandate emissions rule is expected to be delayed to 2031, so there’s no rush to buy.

Driver supply has improved a bit, but immigration limits may reduce the workforce over time. Overall, the industry is cautious, relying more on used equipment until the outlook is clearer.³⁶

The national average flatbed spot rate, excluding fuel, rose 1.0% MoM, or just under $0.02, in September to $2.01.

Compared to September 2024, the flatbed LTR continues to trend well above year-ago levels, registering 114.7% higher YoY and is 5.4% above the 5-year average.³⁷

Analysis: Rates have increased due to large scale AI data centers.

Recommendation: Continue to bid level the spot market when volume does not make it cost competitive for contract rates.

What is the Low-NOx Mandate?

The EPA low-NOx mandate is a regulation requiring new heavy-duty trucks to cut nitrogen oxide (NOx) emissions—pollutants that contribute to smog and respiratory problems—starting in 2027. The rule is one of the toughest emission standards ever proposed for trucks and would significantly raise vehicle costs. Many industry groups expect it to be postponed until 2031, which has removed the incentive for fleets to buy trucks early (a “prebuy”) before the rule takes effect.

Supply Chain From IOU to OMG in Minutes

A Mitsubishi HC Capital America survey reveals that nearly 70% of manufacturers say they’re on track with supply chain modernization, but rising costs, tariffs, and worker shortages are slowing progress. A survey found 74% faced higher equipment costs in the past year, with 47% calling the increases significant. To manage this, 90% plan to finance new equipment. At the same time, 9 in 10 firms struggle to connect new technologies to legacy systems. Workforce challenges are also severe: 46% report talent shortages, and projections warn of 2.1 million unfilled U.S. manufacturing jobs by 2030, a gap likely to widen as tariffs drive more reshoring. Despite these pressures, most companies are adapting.

Tokenized invoicing is speeding up supplier finance by turning approved invoices into digital tokens that can be traded right away. Instead of waiting days for banks to process payments, suppliers can get cash within hours at rates based on their buyer’s credit strength. Smart contracts make these invoices secure and programmable, turning them into tradeable assets that attract funding from investors, companies, and funds—reducing dependence on banks. In pilots like Citi and Maersk, processing times have dropped from days to minutes. Industries such as electronics and agribusiness are already showing how this approach helps suppliers strengthen resilience across their supply chains. As tokenized finance shifts from pilot projects to mainstream infrastructure, the speed of working capital is becoming a key measure of competitiveness, making payment systems a strategic advantage in global procurement.³⁸

Contractors are becoming increasingly confident in adopting robotics and AI in construction. These technologies are seen as powerful tools to automate repetitive tasks, enhance safety, and boost productivity while maintaining high-quality results.³⁹ The industry is also advancing toward the use of autonomous drones equipped with machine learning to proactively identify and mitigate safety risks.⁴⁰ This shift is especially important because the industry faces serious labor shortages, made worse by tighter immigration rules and limited training programs. By filling labor gaps and making projects more efficient, robotics and AI can help reduce delays and keep construction moving, supporting the wider economy.

Reshoring is moving away from building large, fixed factories that risk sitting idle and driving up costs when demand shifts. Instead, companies are using more flexible models—like keeping only part of production onshore, writing contracts that adjust with demand, sharing facilities with other firms, using AI to forecast needs, and designing plants that can be repurposed or leased out. These approaches let businesses match onshore capacity to real demand, spread out risks, and stay adaptable, making reshoring a smarter, more cost-effective strategy.⁴¹

How Can We Help?

Our mitigation strategies align closely with broader industry approaches for adapting to trade pressures. Diversifying sourcing / near-shoring / friend-shoring is central to how we operate—we research products and manufacturers by scope, evaluate origin risks, and pursue domestic options wherever feasible. Adjusting inventory buffers is another tool we rely on, bulk buying commodities, locking in pricing when advantageous, and leveraging our Critical Equipment Purchasing Program to secure off-market inventory.

We remain flexible on logistics, proactively looking for issues so we can resolve them early and avoid costly delays. Partnering with suppliers is also key: we analyze each scope to steer sourcing toward lower-risk geographies or domestic alternates, and we carefully time major equipment and switchgear purchases to reduce tariff exposure. We use smarter procurement, alternate sourcing, and precise timing, while keeping allowances and expectations transparent, so stakeholders stay aligned when residual risk can’t be avoided. Owner allowances are applied where needed, and tariffs are treated as modeled financial variables rather than unpredictable shocks.

We emphasize cost control and scenario planning by beginning on Day One, using systems-level estimates and risk scoring to set escalation contingencies, and continuously monitoring high-risk scopes. Above all, we don’t panic—we plan.

Our core value of Integrity means we conduct all business with the highest standards of honesty and fairness. Instead of pushing blanket risk onto trade partners—which only drives up costs—we start early, tailoring mitigation strategies by material, and staying flexible throughout design and buyout so that savings flow back to project owners as markets shift.

GUEST CONTRIBUTOR

Raj Komuravelli

Critical Equipment Procurement Program Lead

Efficient Procurement and Logistics Planning in the Life Sciences Industry

Supply Chain Mitigation Strategies: Spotlight Story

In a hospital setting, triage refers to the process of classifying patients based on the urgency of their medical condition. Originating from the French work “trier,” meaning to sort, determining the most critical to be treated first. At DPR, the Critical Equipment Procurement Program (CEPP) serves a similar purpose. If critical is understood to be of the highest importance to the way a project might unfold, CEPP Leader Raj Komuravelli directs triage by “focusing on critical equipment purchase for the projects which have these pieces of equipment which are deemed critical—always.”

The CEPP team puts its attention on “directly procuring any equipment that results in schedule delays, fee erosion and/or financially impacts [the project].” Born out of the understanding for the planning of engineering approval, production lead times, and supplier relationships, CEPP has developed a dashboard called MEP Marketplace. Updated every two weeks, the intention of the MEP Marketplace is to provide an avenue “where project teams can go and find the equipment that is available and matches their specs.”

The MEP Marketplace dashboard provides visibility to internal teams to see what equipment is readily available. When lead times and schedules get tight, the marketplace can provide a viable solution. The MEP Marketplace includes equipment that has become available from projects on hold, items from trade partners with available equipment, and inventory items held in stock by manufacturers that are not committed.

The MEP Marketplace operates to meet equipment needs within DPR, but “because there are so many situations where projects, for different reasons, are cancelled or go on hold. If an existing owner has [an equipment] need for another GC and asks for our help, we try to help them out.”

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Resource Materials

Information in this report is compiled from third-party reporting that is available to the public. It is not owned by DPR Construction.

As of November 17, 2025, the content in this section reflects the most current market data available. Given the dynamic nature of the global market, changes occur daily. For the latest updates and insights, please consult your local DPR contact.

United States Census Bureau
United States Department of Labor
United States Energy Information Administration
United States Chamber of Commerce
United States Bureau of Labor Statistics
Engineering News Record
American Institute of Architects
Cumming Corporation