Retail’s $849.9 Billion Returns Problem Starts Upstream in Freight Execution, Report Argues

U.S. retailers projected $849.9 billion in merchandise returns for 2025, or 15.8% of annual sales, according to the National Retail Federation’s 2025 Retail Returns Landscape, produced with Happy Returns, a UPS company. NRF estimated that 9% of all returns were fraudulent. A new report from ITF Group, an asset-based 3PL based in Hazelwood, Mo., argues that many of the remaining returns start in freight execution, in warehouses and on transit legs, before a customer ever opens the box.

The Retail Reality Check Report, released Sept. 30, contends that retailers handle returns, freight cost and peak-season planning in separate departments, when all of them trace back to how a shipper selects and manages carriers. The report draws on NRF data and commentary from ITF executives. It does not include original survey data or estimate what share of returns originates in transit.

“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,” said Sam Agyemang, ITF’s vice president of business development, who worked on the shipper side before joining the company. “In reality, many of those returns are symptoms of an execution failure. And it’s always upstream.”

A product mishandled in a warehouse, a replenishment delay or a shipment handled too many times on its way to the shelf never appears on a return label, according to the report. It surfaces weeks later as a return percentage in a different department’s report, with no line back to the freight decision behind it. Longer return windows and easier portals make a bad delivery less costly for the customer but leave the handling failure in place. ITF’s prescription is tighter carrier vetting, stricter appointment compliance and damage controls at the point of handling.

A shipper that takes a lower rate from a commodity carrier may be shifting exposure into missed appointment windows that trigger chargebacks, cargo that arrives damaged, and returns no one attributes to the carrier choice, the report says. None of those costs appear on the rate sheet at booking.

“Freight is infrastructure. I would avoid calling it a cost center,” said Sam Burkhan, ITF’s CEO. “It’s one of the few business functions that touches every department inside an organization: procurement, manufacturing, inventory, sales, customer experience, finance.”

The report also ties carrier selection to legal exposure, citing a recent wave of broker-liability rulings that have sharpened how responsibility is divided among shippers, brokers and carriers. ITF says shippers that once opened conversations with rate negotiations now ask about liability and accountability first.

“These rulings didn’t hand accountability to one party. They raised the bar on due diligence for everyone in the chain, shippers, brokers, and carriers,” Agyemang said. “The question isn’t who’s liable anymore. It’s who can prove they did the diligence before something went wrong.”

“This time last year was crickets,” he said of ITF’s sales pipeline. “But now people are actually taking our calls, people are scheduling meetings, people want to have these conversations.”

ITF’s five-question Q4 self-assessment for retail finance, merchandising and operations teams asks whether a retailer tracks how freight execution affects its return rate, whether carrier bids are scored on total risk or on rate alone, where liability sits among the retailer, its carriers and its brokers, whether carrier vetting continues after onboarding, and whether freight relationships are established before peak season or during it.

“A question every shipper should ask themselves is how many companies measure transportation success only by on-time delivery,” Burkhan said, “and never measure how transportation affects return rates.”