"Given the create/redeem process, do ETFs have transaction costs and why?"

Absolutely. While the create-redeem process handles much of the fund's flow in-kind, ETFs still trade securities regularly. They rebalance portfolios, reinvest dividends, manage cash flows, and adjust holdings when index methodologies change. Each trade incurs bid-ask spreads, commissions, and market impact costs. The in-kind mechanism reduces transaction costs significantly compared to mutual funds, but it doesn't eliminate them. Every portfolio change still comes with a price tag that impacts returns.