Industry News

Why Aluminum and Freight Costs Are Rising — And What It Means for Small Businesses

 

Over the past year, customers across the United States have seen noticeable increases in pricing across a wide range of products. For companies like ours—and many other small and mid-sized businesses—these changes are driven primarily by two major factors:

• Rising raw material costs

• Increasing transportation and freight expenses

 

We believe in transparency, so here’s a clear breakdown of what’s happening in the market and why these changes are impacting pricing.

 

The Surge in Aluminum Prices

Aluminum is a core material used across industries including construction, lighting, automotive, and manufacturing. Over the past 12–18 months, its cost has risen sharply due to a combination of policy changes and global supply constraints.

 

1. Tariffs Have Significantly Increased Costs.

In 2025, U.S. tariffs on imported aluminum were increased to 50%, dramatically raising the cost of foreign material.

Because the United States relies heavily on imports (especially from Canada), these tariffs have had an immediate impact on domestic pricing. In fact:

• U.S. aluminum prices have increased roughly 40% since the tariff hike

• The Midwest aluminum premium (a key pricing benchmark) has reached record highs—nearly 4x higher than the previous year

 

2. Year-Over-Year Material Costs Are Climbing Rapidly

According to government-backed data:

• The Producer Price Index (PPI) for aluminum mill shapes rose 30.5% year-over-year in 2025. This is one of the steepest increases seen since the supply chain disruptions of 2021–2022.

 

3. Global Supply Shortages Are Tightening the Market

Beyond tariffs, global supply constraints are pushing prices even higher:

• U.S. aluminum inventories have dropped from ~750,000 tons to under 300,000 tons in 2025

• Analysts estimate a global aluminum deficit of ~1.8 million tons

With less material available worldwide, competition for supply has intensified—driving prices up across the board.

 

Why Freight and Transportation Costs Are Rising

In addition to raw materials, the cost to move products across the country has also increased.

 

1. Freight Is Built Into Material Pricing. The “Midwest premium” included in aluminum pricing doesn’t just reflect the metal—it also includes:

• Transportation

• Storage

• Handling

• Insurance and tariffs

As these costs rise, they are directly passed through the supply chain.

 

2. Higher Costs Across Logistics Networks

• Even outside of raw materials, logistics expenses remain elevated due to:

• Fuel price volatility

• Labor shortages in trucking and warehousing

• Ongoing supply chain inefficiencies

While some freight indexes fluctuate, overall logistics costs remain significantly higher than pre-2020 levels—especially for LTL (less-than-truckload) shipping commonly used by small businesses.

 

The Real Impact on Small Businesses

Large corporations often have the ability to absorb cost increases or negotiate long-term contracts. Small businesses, however, face a very different reality.

 

1. Reduced Margins

When material costs increase by 30%+ and freight continues to rise, businesses are forced to choose between:

• Absorbing costs, or

• Adjusting pricing to remain sustainable

For most small businesses, absorbing these increases long-term simply isn’t viable.

 

2. Limited Buying Power

Unlike large-scale manufacturers, smaller companies:

• Purchase in lower volumes

• Have less leverage with suppliers

• Are more exposed to market fluctuations

This means price changes hit faster—and harder.

 

3. Increased Lead Times and Uncertainty

• Supply shortages and shifting global trade conditions can also result in:

• Longer production timelines

• Material allocation limits

• Frequent price changes from suppliers

 

What This Means for Our Customers

We understand that price increases are never ideal. Like many businesses, we have worked hard to delay adjustments for as long as possible, but the sustained rise in aluminum and freight costs has made it necessary to adapt.

 

Our commitment to you remains the same:

• Transparency in pricing and communication

• High-quality products built to last

• Reliable service despite market challenges

 

Looking Ahead

Market analysts expect continued volatility in both aluminum pricing and supply chains throughout 2026, especially if tariffs remain in place and global supply remains tight.

While conditions may stabilize over time, the current environment reflects a broader shift affecting manufacturers and small businesses across the United States.

 

Final Thoughts

The rising cost of aluminum and freight is not unique to one company or industry—it is a nationwide challenge impacting businesses of all sizes.

For small businesses like ours, these increases are especially significant, but they are necessary adjustments to continue providing the products and service our customers have come to enjoy.

 

We truly appreciate your continued support and understanding.