Inflation is likely here to stay, even if gas prices fall

The market is likely underestimating the lagged inflation impulse from a short-lived shipping disruption. Even if crude retraces quickly, the bigger earnings hit comes from freight, parcel, air cargo, and input-cost pass-through, which tend to reprice with a 1-3 quarter delay and then stick via surcharge frameworks and annual contract resets. That makes the trade less about energy beta and more about margin compression in logistics-heavy, low-price-elasticity sectors.

UPS is vulnerable not because volume collapses immediately, but because it sits at the wrong point in the chain: it has to absorb volatility in fuel and linehaul costs while pricing power is constrained by competition and customer pushback. The second-order risk is that small and mid-sized merchants, already margin-stressed, will respond by cutting discretionary shipments, discounting less, or shifting to slower/cheaper fulfillment, which can pressure parcel mix and accelerate share loss to regional carriers and in-house logistics. That dynamic is more damaging than a simple fuel-surcharge headline because it affects both revenue quality and operating leverage.

The contrarian setup is that “the Strait is open” may invite complacency just as cost inflation becomes embedded. If consumers have already absorbed higher transport and grocery costs, the reversal in headline geopolitics won’t unwind sticky prices or restored demand; it can instead leave the economy with weaker real purchasing power and still-elevated logistics costs. That’s a bad combination for late-cycle cyclicals: the market may fade the event risk too quickly while earnings revisions for transportation, retail, and discretionary names are only beginning.