<div class="phx-topic abstract-wrapper">The acquisition of a majority stake in Roadrunner by an investment group sets the stage for further growth at the carrier as the LTL sector readies for expansion in 2025. </div>

The acquisition of a majority stake in Roadrunner by an investment group sets the stage for further growth at the carrier as the LTL sector readies for expansion in 2025.

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<div class="phx-topic">An investor group led by CEO Chris Jamroz is acquiring a majority stake in less-than-truckload (LTL) carrier Roadrunner. The deal, announced Friday, sets the stage for further organic growth and acquisitions by the direct point-to-point LTL trucking company at a time when the US LTL sector is preparing for expansion, building out networks <a href="https://www.joc.com/article/us-ltl-carriers-laying-groundwork-for-higher-pricing-in-2025-5822094">and raising rates</a>. The deal between Prospero Staff Capital, owned by Jamroz and partner Ted Kellner, a long-time investor in Roadrunner, leaves Elliott Investment Management with a minority stake in the Illinois-based company. Terms of the transaction were not disclosed. “After comprehensively unwinding the prior management’s roll-up strategy to get to a pure-play LTL network, Roadrunner now stands as a premium long-haul carrier,” Jamroz said in a statement. “Today marks the beginning of our growth phase, driven by new capital, strategic investments and acquisitions.” Activist investor Elliott acquired a majority stake in Roadrunner through a <a href="https://www.joc.com/article/roadrunner-gets-540-million-infusion-new-leadership-5195821">$540 million investment</a> in 2017. Jamroz joined the company in 2019; Prospero is part of his investment company, LyonIX Holdings. Roadrunner is the 20th-largest LTL provider in the US and Canada, with about $410 million in revenue in 2023, according to SJ Consulting Group data. Merger activity is picking up speed <a href="https://www.joc.com/article/smaller-us-ltl-carriers-increasingly-merging-in-sink-or-swim-market-5783875">among smaller LTL carriers</a>, which could provide several targets for Roadrunner in markets where it wants to grow. The US LTL sector as a whole is in the midst of a growth phase kicked off by the exit of Yellow, then the third-largest LTL provider, from the market in July 2023. That sharply reduced LTL capacity, which enabled carriers to raise pricing despite tepid freight demand. Yellow’s collapse also launched an ongoing land rush as LTL carriers battle for terminals. Yellow is <a href="https://www.joc.com/article/yellow-puts-remaining-112-ltl-terminals-on-the-block-5737425">preparing to sell</a> its remaining 112 terminals, including some of its largest sites, in a move that will release pent-up LTL capacity. Roadrunner played a small part in that land rush, rebuilding a terminal formerly leased by Yellow in Atlanta as a new regional hub. Roadrunner has put more focus on reducing transit times in hundreds of lanes to meet shipper demand for faster service. In October, the company accelerated shipments in more than 200 lanes and opened more than 40 new lanes. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

An investor group led by CEO Chris Jamroz is acquiring a majority stake in less-than-truckload (LTL) carrier Roadrunner. The deal, announced Friday, sets the stage for further organic growth and acquisitions by the direct point-to-point LTL trucking company at a time when the US LTL sector is preparing for expansion, building out networks and raising rates . The deal between Prospero Staff Capital, owned by Jamroz and partner Ted Kellner, a long-time investor in Roadrunner, leaves Elliott Investment Management with a minority stake in the Illinois-based company. Terms of the transaction were not disclosed. “After comprehensively unwinding the prior management’s roll-up strategy to get to a pure-play LTL network, Roadrunner now stands as a premium long-haul carrier,” Jamroz said in a statement. “Today marks the beginning of our growth phase, driven by new capital, strategic investments and acquisitions.” Activist investor Elliott acquired a majority stake in Roadrunner through a $540 million investment in 2017. Jamroz joined the company in 2019; Prospero is part of his investment company, LyonIX Holdings. Roadrunner is the 20th-largest LTL provider in the US and Canada, with about $410 million in revenue in 2023, according to SJ Consulting Group data. Merger activity is picking up speed among smaller LTL carriers , which could provide several targets for Roadrunner in markets where it wants to grow. The US LTL sector as a whole is in the midst of a growth phase kicked off by the exit of Yellow, then the third-largest LTL provider, from the market in July 2023. That sharply reduced LTL capacity, which enabled carriers to raise pricing despite tepid freight demand. Yellow’s collapse also launched an ongoing land rush as LTL carriers battle for terminals. Yellow is preparing to sell its remaining 112 terminals, including some of its largest sites, in a move that will release pent-up LTL capacity. Roadrunner played a small part in that land rush, rebuilding a terminal formerly leased by Yellow in Atlanta as a new regional hub. Roadrunner has put more focus on reducing transit times in hundreds of lanes to meet shipper demand for faster service. In October, the company accelerated shipments in more than 200 lanes and opened more than 40 new lanes. Contact William B. Cassidy at bill.cassidy@spglobal.com .

Trucking News

Surface

Investors plan to expand US LTL carrier Roadrunner after takeover

<div class="phx-topic abstract-wrapper">Major retailers such as Ralph Lauren and Target say they successfully mitigated disruptions from the early October port strike and are ready for the next labor threat and the fallout from likely higher tariffs on Chinese goods. </div>

Major retailers such as Ralph Lauren and Target say they successfully mitigated disruptions from the early October port strike and are ready for the next labor threat and the fallout from likely higher tariffs on Chinese goods.

<div class="phx-topic">US retailers are telling investors that after successfully managing the three-day port strike along the East and Gulf coasts in early October, they’re prepared to navigate whatever operational challenges arise from the higher tariffs on Chinese goods that President-elect Donald Trump has promised for his second term. Ralph Lauren, Williams Sonoma and Target, during their respective third-quarter earnings calls, highlighted how they diverted cargoes to West Coast ports ahead of the Oct. 1 expiration of the labor contract between the International Longshoremen’s Association (ILA) and maritime employers. Ralph Lauren said it tapped air cargo transport in the days before the strike to ensure it had key products on hand. Following the tentative deal that ended the brief strike, the three retailers said they are now monitoring developments ahead of the Jan. 15 expiration of that extended pact. ILA last week announced it <a href="https://www.joc.com/article/ila-breaks-off-contract-talks-accuses-usmx-of-semi-automation-push-5810392">pulled out of negotiations</a> over what it said was a desire by employers to introduce semi-automated equipment at marine terminals. The cargo diversions to the West Coast “came at a cost, but allowed us to be well-positioned for our guests through the strike and into the holiday season,” Target CFO Michael Fiddelke said during a Nov. 20 earnings call. ”Thankfully, the strike was short-lived,” he added. “We’ll continue to watch the situation closely in the lead up to continued negotiations in January.” US inventories in comparison to sales have risen this fall as shippers experience an extended peak season highlighted by frontloading linked to renewed ILA strike threats, the <a href="https://www.joc.com/article/us-importers-dabbling-in-frontloading-ahead-of-new-tariff-threat-5821448">anticipation of higher US tariffs</a> on Chinese retail imports and a shorter post-holiday period due to an earlier Lunar New Year. <h3>Retail inventories rising</h3>The ratio of US retail inventories to sales climbed to 1.42 in September from 1.27 in August, according to US Census Bureau data. The 1.42 level, also observed in February 2023 and February 2021, is the highest since 1.69 in April 2020 at the outset of the pandemic.Facing Trump’s threat of tariffs on Chinese goods of more than 60%, retailers took pains on earnings calls to stress the limits of their exposure to Chinese sourcing because of multiyear preparation to diversify away from the world’s largest factory. Williams Sonoma has mapped out its various product lines and will evaluate sourcing by tariffs levels and alternatives, CFO Jeff Howie told investors Wednesday. The high-end home furnishing retailer can also lean on domestic manufacturing plants in North Carolina, Mississippi and Oregon, and will considering front-loading some goods from China early next year to avoid tariffs, he said. ”I just want to remind everyone that it’s not our first time at this,” Howie said. “We’ve always been a leader and proactively responded to changes in the trade environment. ”There’s a lot of change since the last time this came up,” he added. “We’ve significantly reduced our China-sourced goods from 50% to 25% over the last few years.” Lowe’s has been working its suppliers in recent years to diversify away from China, giving it confidence that the company can handle “whatever it is that gets thrown as us,” said Bill Boltz, the company’s executive vice president of merchandising. Contact Mark Szakonyi at <a href="mailto:mark.szakonyi@spglobal.com">mark.szakonyi@spglobal.com</a>. </div>

US retailers are telling investors that after successfully managing the three-day port strike along the East and Gulf coasts in early October, they’re prepared to navigate whatever operational challenges arise from the higher tariffs on Chinese goods that President-elect Donald Trump has promised for his second term. Ralph Lauren, Williams Sonoma and Target, during their respective third-quarter earnings calls, highlighted how they diverted cargoes to West Coast ports ahead of the Oct. 1 expiration of the labor contract between the International Longshoremen’s Association (ILA) and maritime employers. Ralph Lauren said it tapped air cargo transport in the days before the strike to ensure it had key products on hand. Following the tentative deal that ended the brief strike, the three retailers said they are now monitoring developments ahead of the Jan. 15 expiration of that extended pact. ILA last week announced it pulled out of negotiations over what it said was a desire by employers to introduce semi-automated equipment at marine terminals. The cargo diversions to the West Coast “came at a cost, but allowed us to be well-positioned for our guests through the strike and into the holiday season,” Target CFO Michael Fiddelke said during a Nov. 20 earnings call. ”Thankfully, the strike was short-lived,” he added. “We’ll continue to watch the situation closely in the lead up to continued negotiations in January.” US inventories in comparison to sales have risen this fall as shippers experience an extended peak season highlighted by frontloading linked to renewed ILA strike threats, the anticipation of higher US tariffs on Chinese retail imports and a shorter post-holiday period due to an earlier Lunar New Year. Retail inventories rising The ratio of US retail inventories to sales climbed to 1.42 in September from 1.27 in August, according to US Census Bureau data. The 1.42 level, also observed in February 2023 and February 2021, is the highest since 1.69 in April 2020 at the outset of the pandemic. Facing Trump’s threat of tariffs on Chinese goods of more than 60%, retailers took pains on earnings calls to stress the limits of their exposure to Chinese sourcing because of multiyear preparation to diversify away from the world’s largest factory. Williams Sonoma has mapped out its various product lines and will evaluate sourcing by tariffs levels and alternatives, CFO Jeff Howie told investors Wednesday. The high-end home furnishing retailer can also lean on domestic manufacturing plants in North Carolina, Mississippi and Oregon, and will considering front-loading some goods from China early next year to avoid tariffs, he said. ”I just want to remind everyone that it’s not our first time at this,” Howie said. “We’ve always been a leader and proactively responded to changes in the trade environment. ”There’s a lot of change since the last time this came up,” he added. “We’ve significantly reduced our China-sourced goods from 50% to 25% over the last few years.” Lowe’s has been working its suppliers in recent years to diversify away from China, giving it confidence that the company can handle “whatever it is that gets thrown as us,” said Bill Boltz, the company’s executive vice president of merchandising. Contact Mark Szakonyi at mark.szakonyi@spglobal.com .

Supply chain

Port News

Transport, Trade and Regulation News

Trans-Pacific

Container Shipping News

US retailers prepare for new ILA strike threat, tariffs on China imports

<div class="phx-topic abstract-wrapper">By connecting to forwarder-customers of software vendor e2open, Freightos is continuing its push to develop electronic booking capability in the air freight industry.</div>

By connecting to forwarder-customers of software vendor e2open, Freightos is continuing its push to develop electronic booking capability in the air freight industry.

<div class="phx-topic">Software vendors Freightos and e2open have integrated their systems to help forwarders access dynamic air freight rates within Freightos’ rate database and make associated electronic bookings on those rates. The integration embeds Freightos’ WebCargo booking tool into e2open’s transportation management system (TMS). “It will cut down on manual entry and give our team real-time access to rates and bookings within the TMS, helping us respond faster to client needs and eliminate the back-and-forth that used to slow us down,” Megan Kelley, vice president of enterprise applications at Crane Worldwide Logistics, one of the companies that’s been trialing the integration, said in a statement Thursday. WebCargo has become a dominant player in the airfreight technology space, predominantly by enabling forwarders and air cargo airlines to connect with one another digitally to transmit rates and bookings. e2open is a widely used supply chain software provider that has acquired a number of TMS solutions over the past five years serving different modes, including air. The company has an internal ocean freight booking capability through its 2018 acquisition of INTTRA. The software provider is very partner-friendly, adding integrations to visibility providers, freight brokers, freight procurement tools and payment systems to support its planning and execution tools. Freightos CEO Zvi Schreiber said in the statement that Freightos’ goal is to “deliver better cargo pricing and booking to our global forwarders wherever they work, whether it's through our [application programming interfaces] for their own systems, with integrations to third-party solutions, or on our platform.” Freightos’ customers include shippers Electrolux and ABB, forwarders FedEx, UPS and Scan Global Logistics, as well as carriers American Airlines Cargo, Qatar Airways Cargo and Emirates SkyCargo. e2open’s customers include shippers L’Oreal and Leggett &amp; Platt and forwarders such as Geodis and Leschaco. Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. </div>

Software vendors Freightos and e2open have integrated their systems to help forwarders access dynamic air freight rates within Freightos’ rate database and make associated electronic bookings on those rates. The integration embeds Freightos’ WebCargo booking tool into e2open’s transportation management system (TMS). “It will cut down on manual entry and give our team real-time access to rates and bookings within the TMS, helping us respond faster to client needs and eliminate the back-and-forth that used to slow us down,” Megan Kelley, vice president of enterprise applications at Crane Worldwide Logistics, one of the companies that’s been trialing the integration, said in a statement Thursday. WebCargo has become a dominant player in the airfreight technology space, predominantly by enabling forwarders and air cargo airlines to connect with one another digitally to transmit rates and bookings. e2open is a widely used supply chain software provider that has acquired a number of TMS solutions over the past five years serving different modes, including air. The company has an internal ocean freight booking capability through its 2018 acquisition of INTTRA. The software provider is very partner-friendly, adding integrations to visibility providers, freight brokers, freight procurement tools and payment systems to support its planning and execution tools. Freightos CEO Zvi Schreiber said in the statement that Freightos’ goal is to “deliver better cargo pricing and booking to our global forwarders wherever they work, whether it's through our [application programming interfaces] for their own systems, with integrations to third-party solutions, or on our platform.” Freightos’ customers include shippers Electrolux and ABB, forwarders FedEx, UPS and Scan Global Logistics, as well as carriers American Airlines Cargo, Qatar Airways Cargo and Emirates SkyCargo. e2open’s customers include shippers L’Oreal and Leggett & Platt and forwarders such as Geodis and Leschaco. Contact Eric Johnson at eric.johnson@spglobal.com .

Air Cargo Carriers News

Logistics Technology News

Air Cargo Forwarder News

Freightos, e2open link up on airfreight e-bookings for forwarders

<div class="phx-topic abstract-wrapper">Converting an existing vessel to be able to operate on methanol requires major engineering work and could cost more than building a new ship with a shorter time to depreciate the investment, according to the carrier. </div>

Converting an existing vessel to be able to operate on methanol requires major engineering work and could cost more than building a new ship with a shorter time to depreciate the investment, according to the carrier.

<div class="phx-topic">Maersk has made its first dual-fuel, methanol-capable vessel conversion as the carrier tests the feasibility of retrofitting existing container ships as another way to accelerate the energy transformation of its fleet. The Maersk Halifax returned to trans-Pacific duty in early November after major engineering work in a Chinese yard over 88 days that saw the vessel cut in half so a 15-meter extension could be dropped in to accommodate additional fuel tanks. The ship is now 368 meters long and its capacity has increased from 15,000 TEUs to 15,690 TEUs. “Since we set the ambitious climate goal of reaching net-zero emissions by 2040, we have explored the potential in retrofitting existing vessels with dual-fuel engines,” Leonardo Sonzio, head of fleet management and technology at Maersk, said in a statement this week. ”In the coming year, we will take learnings from this first conversion of a large vessel,” he added. “Retrofits of existing vessels can be an important alternative to newbuilds in our transition from fossil fuels to low-emission fuels.” While Maersk did not put a price on the conversion, the carrier’s decarbonization head, Morten Bo Christiansen, told reporters in a recent press briefing that there was not yet a clear business case for retrofitting a ship to be methanol capable as it could cost more than building a new vessel. For context, Maersk’s 16,592-TEU Alexandra Maersk that was launched in August, the fifth such vessel in an 18-ship order, was built at a cost of $150 million. <h3>Effective greenhouse gas framework </h3>Christiansen said the business case for retrofitting to methanol would depend on whether ongoing International Maritime Organization (IMO) negotiations resulted in an effective greenhouse gas framework. There is <a href="https://www.joc.com/article/crunch-time-for-regulators-as-shipping-seeks-clarity-on-net-zero-ambitions-5221524">growing urgency for global regulatory support from the IMO</a> that is essential to drive an accelerated and large-scale shift to zero-emission fuels. The IMO is currently considering mid-term measures that include a pricing mechanism to tax carbon emissions and the establishment of a fuel standard. The measures are aimed at narrowing the price gap between fossil fuels and the green alternatives and must be approved at the MEPC 83 meeting in April if they are to be implemented by the October deadline. “If the outcome of the ongoing IMO negotiations is an effective greenhouse gas framework, then I think the business case of retrofitting for methanol will be good,” Christiansen told reporters. “Otherwise, a retrofit will always be more expensive because it costs more than a newbuilding and there is a shorter time to depreciate the investment, so it will always be cheaper to build a new ship,” he added. “But in a good IMO scenario, retrofits for methanol will be a pretty good business case, and for LNG ships.” Maersk Halifax is one of 11 Hong Kong-class vessels in the carrier’s fleet. During the conversion process, besides extending the length of the vessel, the retrofit operation at Zhoushan Xinya Shipyard in China involved adding the new fuel tanks, a fuel preparation room and a fuel supply system. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="1a054077-7728-4ffd-abb8-b7aff17c3235"></dynamic-object></div>All the top 10 ocean carriers, which operate a combined 84% share of the world’s container ship capacity, have now committed to vessels with alternative propulsion options, according to Alphaliner. The carriers have procured the tonnage both through direct ownership and via long-term charter contracts. In August, Maersk placed an order for newbuilding and time charter vessels <a href="https://www.joc.com/article/maersks-lng-order-hedges-bet-on-green-fuel-technology-ceo-5703200">with a total capacity of 800,000 TEUs</a> as part of a fleet renewal program. The vessels will be dual-fuel — capable of running on conventional bunkers and LNG if required, and on bio-LNG, a cleaner version of the fuel.Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Maersk has made its first dual-fuel, methanol-capable vessel conversion as the carrier tests the feasibility of retrofitting existing container ships as another way to accelerate the energy transformation of its fleet. The Maersk Halifax returned to trans-Pacific duty in early November after major engineering work in a Chinese yard over 88 days that saw the vessel cut in half so a 15-meter extension could be dropped in to accommodate additional fuel tanks. The ship is now 368 meters long and its capacity has increased from 15,000 TEUs to 15,690 TEUs. “Since we set the ambitious climate goal of reaching net-zero emissions by 2040, we have explored the potential in retrofitting existing vessels with dual-fuel engines,” Leonardo Sonzio, head of fleet management and technology at Maersk, said in a statement this week. ”In the coming year, we will take learnings from this first conversion of a large vessel,” he added. “Retrofits of existing vessels can be an important alternative to newbuilds in our transition from fossil fuels to low-emission fuels.” While Maersk did not put a price on the conversion, the carrier’s decarbonization head, Morten Bo Christiansen, told reporters in a recent press briefing that there was not yet a clear business case for retrofitting a ship to be methanol capable as it could cost more than building a new vessel. For context, Maersk’s 16,592-TEU Alexandra Maersk that was launched in August, the fifth such vessel in an 18-ship order, was built at a cost of $150 million. Effective greenhouse gas framework Christiansen said the business case for retrofitting to methanol would depend on whether ongoing International Maritime Organization (IMO) negotiations resulted in an effective greenhouse gas framework. There is growing urgency for global regulatory support from the IMO that is essential to drive an accelerated and large-scale shift to zero-emission fuels. The IMO is currently considering mid-term measures that include a pricing mechanism to tax carbon emissions and the establishment of a fuel standard. The measures are aimed at narrowing the price gap between fossil fuels and the green alternatives and must be approved at the MEPC 83 meeting in April if they are to be implemented by the October deadline. “If the outcome of the ongoing IMO negotiations is an effective greenhouse gas framework, then I think the business case of retrofitting for methanol will be good,” Christiansen told reporters. “Otherwise, a retrofit will always be more expensive because it costs more than a newbuilding and there is a shorter time to depreciate the investment, so it will always be cheaper to build a new ship,” he added. “But in a good IMO scenario, retrofits for methanol will be a pretty good business case, and for LNG ships.” Maersk Halifax is one of 11 Hong Kong-class vessels in the carrier’s fleet. During the conversion process, besides extending the length of the vessel, the retrofit operation at Zhoushan Xinya Shipyard in China involved adding the new fuel tanks, a fuel preparation room and a fuel supply system. All the top 10 ocean carriers, which operate a combined 84% share of the world’s container ship capacity, have now committed to vessels with alternative propulsion options, according to Alphaliner. The carriers have procured the tonnage both through direct ownership and via long-term charter contracts. In August, Maersk placed an order for newbuilding and time charter vessels with a total capacity of 800,000 TEUs as part of a fleet renewal program. The vessels will be dual-fuel — capable of running on conventional bunkers and LNG if required, and on bio-LNG, a cleaner version of the fuel. Contact Greg Knowler at greg.knowler@spglobal.com .

Container lines

Trans-Atlantic

Asia-Europe

Maritime

Maersk’s methanol ship conversion tests retrofitting business case

<div class="phx-topic abstract-wrapper">General rate increases ranging from 4.9% to 7.9% are setting expectations for higher contract pricing as less-than-truckload carriers attempt to recoup the costs of network expansion. </div>

General rate increases ranging from 4.9% to 7.9% are setting expectations for higher contract pricing as less-than-truckload carriers attempt to recoup the costs of network expansion.

<div class="phx-topic">US less-than-truckload (LTL) carriers are laying the groundwork for higher pricing in 2025, well before higher freight volumes hit their docks. Several of the largest LTL carriers in recent weeks have released average general rate increases (GRIs) for 2025 ranging from the mid- to upper single digits. The GRIs are for non-contract business, but they set expectations for contract pricing in 2025. Old Dominion Freight Line set the base with a 4.9% GRI announced Monday that will take effect Dec. 2. FedEx Freight earlier announced a 5.9% GRI effective Jan. 6, while TForce Freight, the former UPS Freight, raised its LTL rates 5.9% on average in October. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="4a956aa9-0f8d-4079-ab21-88b58ab2775a"></dynamic-object></div>The biggest GRI came from Saia, which raised rates 7.9% on average in October. That GRI matched the average rate increase Saia claims it is getting in contract renewals. “We’ve got to really continue to focus on pricing,” Saia President and CEO Frederick J. Holzgrefe told Wall Street analysts during Saia’s third-quarter earnings call last month. “The rates have got to go up across the board in all elements of the business.” Higher rates and revenue are needed to support the <a href="https://www.joc.com/article/yellow-puts-remaining-112-ltl-terminals-on-the-block-5737425">ongoing expansion of terminal networks</a> and to keep pace with operating costs, carrier executives say. Saia, for example, will spend $1 billion this year on real estate, employees, equipment and technology. Shippers have told the Journal of Commerce they expect LTL costs to rise in 2025, but not as steeply as some carriers anticipate. But shippers may be surprised. <h3>Costing, pricing discipline </h3>Before the 2008-2009 Great Recession, GRIs often were whittled down in contract negotiations, especially in years when the market was soft. That’s less likely to happen today. “Now it’s all about measuring profitability, not just putting freight on trucks” to gain market share, said Dean Jones, chief commercial officer of AFS Logistics, a third-party logistics company that offers LTL cost management and other services.LTL carriers are not only disciplined when it comes to pricing, resisting rate discounting, but they’re also more disciplined in their approach to costing, Jones said in an interview. “The carrier pricing teams are way more sophisticated than they’ve ever been,” he said. “All their costing models for every contractual customer will be run with their GRIs. They know exactly what they need to make the margins they want lane by lane.” The GRIs, he pointed out, are averages, which means some shippers will pay less and others more. “They know who’s a good client and who’s a bad client, who delays shipments and who expedites them,” Jones said. In many ways, LTL carriers are taking pages from the playbook of Old Dominion, which pioneered a cost- and profitability-based <a href="https://www.joc.com/article/qa-david-congdon-old-dominion-freight-line-5196932">approach to LTL pricing</a>. Companies that didn’t adopt some version of that approach and relied on lower rates to draw shippers and freight have failed, from Yellow to <a href="https://www.joc.com/article/central-freight-shutdown-adds-to-ltl-pressure-5206107">Central Freight Lines</a>. <h3>Looking beyond rates </h3>But LTL trucking companies aren’t relying on higher rates alone to grow revenue. They’re expanding their use of accessorial charges, tinkering with fuel surcharges, adding premium-priced services and using technology to reach new customers. They’re also using dimensioning equipment on docks and forklifts to check and double-check shipment dimensions to ensure freight is correctly classified and priced. The LTL sector is cribbing pages from the playbook used by parcel companies, Jones said. “We never used to see remote delivery charges in LTL, and now LTL carriers are doing that,” he said. “Like the parcel carriers, if it costs them more to deliver, they’re going to charge more.” Accessorial charges are also being used to change shipper behavior. During the COVID-19 pandemic, LTL carriers with congested terminals introduced higher surcharges for shipments that exceeded length limits; those surcharges remain in place. FedEx Freight, for example, has an extreme length surcharge that runs from $672 to $1,430 per shipment depending on the length of the shipment. “At first people thought it was a fad, but today every LTL carrier doesn’t want anything over 8 feet in length,” Jones said. What they do want is palletized, stackable freight that will efficiently fill trailers. Shippers have told the Journal of Commerce that LTL carriers are increasingly willing to turn away freight that doesn’t match their requirements — or charge much higher rates to haul it. The cumulative result of all these strategies will be higher LTL costs to shippers, but also pricing that is more closely based on the actual cost to move freight. And while accessorial fees may be added or raised, “the place to move the needle the most is the base rates,” Jones said. “The carriers that are more focused on the larger picture are going to go after the line-haul rates.” Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>. </div>

US less-than-truckload (LTL) carriers are laying the groundwork for higher pricing in 2025, well before higher freight volumes hit their docks. Several of the largest LTL carriers in recent weeks have released average general rate increases (GRIs) for 2025 ranging from the mid- to upper single digits. The GRIs are for non-contract business, but they set expectations for contract pricing in 2025. Old Dominion Freight Line set the base with a 4.9% GRI announced Monday that will take effect Dec. 2. FedEx Freight earlier announced a 5.9% GRI effective Jan. 6, while TForce Freight, the former UPS Freight, raised its LTL rates 5.9% on average in October. The biggest GRI came from Saia, which raised rates 7.9% on average in October. That GRI matched the average rate increase Saia claims it is getting in contract renewals. “We’ve got to really continue to focus on pricing,” Saia President and CEO Frederick J. Holzgrefe told Wall Street analysts during Saia’s third-quarter earnings call last month. “The rates have got to go up across the board in all elements of the business.” Higher rates and revenue are needed to support the ongoing expansion of terminal networks and to keep pace with operating costs, carrier executives say. Saia, for example, will spend $1 billion this year on real estate, employees, equipment and technology. Shippers have told the Journal of Commerce they expect LTL costs to rise in 2025, but not as steeply as some carriers anticipate. But shippers may be surprised. Costing, pricing discipline Before the 2008-2009 Great Recession, GRIs often were whittled down in contract negotiations, especially in years when the market was soft. That’s less likely to happen today. “Now it’s all about measuring profitability, not just putting freight on trucks” to gain market share, said Dean Jones, chief commercial officer of AFS Logistics, a third-party logistics company that offers LTL cost management and other services. LTL carriers are not only disciplined when it comes to pricing, resisting rate discounting, but they’re also more disciplined in their approach to costing, Jones said in an interview. “The carrier pricing teams are way more sophisticated than they’ve ever been,” he said. “All their costing models for every contractual customer will be run with their GRIs. They know exactly what they need to make the margins they want lane by lane.” The GRIs, he pointed out, are averages, which means some shippers will pay less and others more. “They know who’s a good client and who’s a bad client, who delays shipments and who expedites them,” Jones said. In many ways, LTL carriers are taking pages from the playbook of Old Dominion, which pioneered a cost- and profitability-based approach to LTL pricing . Companies that didn’t adopt some version of that approach and relied on lower rates to draw shippers and freight have failed, from Yellow to Central Freight Lines . Looking beyond rates But LTL trucking companies aren’t relying on higher rates alone to grow revenue. They’re expanding their use of accessorial charges, tinkering with fuel surcharges, adding premium-priced services and using technology to reach new customers. They’re also using dimensioning equipment on docks and forklifts to check and double-check shipment dimensions to ensure freight is correctly classified and priced. The LTL sector is cribbing pages from the playbook used by parcel companies, Jones said. “We never used to see remote delivery charges in LTL, and now LTL carriers are doing that,” he said. “Like the parcel carriers, if it costs them more to deliver, they’re going to charge more.” Accessorial charges are also being used to change shipper behavior. During the COVID-19 pandemic, LTL carriers with congested terminals introduced higher surcharges for shipments that exceeded length limits; those surcharges remain in place. FedEx Freight, for example, has an extreme length surcharge that runs from $672 to $1,430 per shipment depending on the length of the shipment. “At first people thought it was a fad, but today every LTL carrier doesn’t want anything over 8 feet in length,” Jones said. What they do want is palletized, stackable freight that will efficiently fill trailers. Shippers have told the Journal of Commerce that LTL carriers are increasingly willing to turn away freight that doesn’t match their requirements — or charge much higher rates to haul it. The cumulative result of all these strategies will be higher LTL costs to shippers, but also pricing that is more closely based on the actual cost to move freight. And while accessorial fees may be added or raised, “the place to move the needle the most is the base rates,” Jones said. “The carriers that are more focused on the larger picture are going to go after the line-haul rates.” Contact William B. Cassidy at bill.cassidy@spglobal.com .

US LTL carriers laying groundwork for higher pricing in 2025

<div class="phx-topic abstract-wrapper">While some shippers say they are still facing a measure of disruption, CSX says it has recovered following a rough patch in keeping cargo flowing through central Florida after hurricanes Helene and Milton battered the state.</div>

While some shippers say they are still facing a measure of disruption, CSX says it has recovered following a rough patch in keeping cargo flowing through central Florida after hurricanes Helene and Milton battered the state.

<div class="phx-topic">Intermodal shippers are still facing disruption in service to central Florida on CSX Transportation in the aftermath of back-to-back hurricanes that wreaked havoc on the state in September and October. Hurricane Milton made landfall on Oct. 9, leaving damage in its wake across the Interstate-4 corridor, home to CSX terminals in Tampa and Winter Haven. One month later, CSX’s partners say there are still significant delays shipping 53-foot containers into Winter Haven, according to comments made in the latest Journal of Commerce Intermodal Service Scorecard survey. “Yes, there were hurricanes, but a month later and CSX Winter Haven is at a standstill,” one intermodal marketing company (IMC) wrote in the survey. “Empty containers are being left behind. Drivers are waiting hours for containers to be mounted on chassis due to the massive stacks of boxes in Winter Haven.” Another IMC said it was “struggling with chassis availability” as recently as this week. Still, other IMCs noted that conditions have improved significantly in the last two weeks. Norfolk Southern Railway (NS) does not have any terminals on the I-4 corridor. NS has a terminal in Jacksonville, while partner Florida East Coast Railway operates along the east coast of Florida from Jacksonville to Miami. CSX told the Journal of Commerce that hurricanes Helene and Milton caused power outages and damaged roadways and warehouses, disrupting the flow of the final-mile dray at its Winter Haven terminal. But the railroad said operations in Winter Haven have recently returned to normal. “Goods experienced delays leaving the terminal, increasing dwell time both in the terminal and on the street,” CSX said in a statement Wednesday. “This created significant congestion and delayed the turnaround of key assets, such as chassis. To address these challenges, CSX implemented several recovery measures, including establishing alternate service options in Tampa and Jacksonville and deploying additional equipment and personnel to manage the surge in volume.” Intermodal volumes in the Southeast US have been relatively muted compared with lanes such as Los Angeles to Chicago, which saw a 20% surge in October year over year, according to Journal of Commerce estimates. The Intermodal Association of North America reported railroads in October moved 47,000 containers into the Southeast from originations in the Midwest and Northeast, up 3.4% year over year. The data, however, doesn’t differentiate between specific origin and destination pairs, and trains to Atlanta have more cargo than Tampa or Winter Haven. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>. </div>

Intermodal shippers are still facing disruption in service to central Florida on CSX Transportation in the aftermath of back-to-back hurricanes that wreaked havoc on the state in September and October. Hurricane Milton made landfall on Oct. 9, leaving damage in its wake across the Interstate-4 corridor, home to CSX terminals in Tampa and Winter Haven. One month later, CSX’s partners say there are still significant delays shipping 53-foot containers into Winter Haven, according to comments made in the latest Journal of Commerce Intermodal Service Scorecard survey. “Yes, there were hurricanes, but a month later and CSX Winter Haven is at a standstill,” one intermodal marketing company (IMC) wrote in the survey. “Empty containers are being left behind. Drivers are waiting hours for containers to be mounted on chassis due to the massive stacks of boxes in Winter Haven.” Another IMC said it was “struggling with chassis availability” as recently as this week. Still, other IMCs noted that conditions have improved significantly in the last two weeks. Norfolk Southern Railway (NS) does not have any terminals on the I-4 corridor. NS has a terminal in Jacksonville, while partner Florida East Coast Railway operates along the east coast of Florida from Jacksonville to Miami. CSX told the Journal of Commerce that hurricanes Helene and Milton caused power outages and damaged roadways and warehouses, disrupting the flow of the final-mile dray at its Winter Haven terminal. But the railroad said operations in Winter Haven have recently returned to normal. “Goods experienced delays leaving the terminal, increasing dwell time both in the terminal and on the street,” CSX said in a statement Wednesday. “This created significant congestion and delayed the turnaround of key assets, such as chassis. To address these challenges, CSX implemented several recovery measures, including establishing alternate service options in Tampa and Jacksonville and deploying additional equipment and personnel to manage the surge in volume.” Intermodal volumes in the Southeast US have been relatively muted compared with lanes such as Los Angeles to Chicago, which saw a 20% surge in October year over year, according to Journal of Commerce estimates. The Intermodal Association of North America reported railroads in October moved 47,000 containers into the Southeast from originations in the Midwest and Northeast, up 3.4% year over year. The data, however, doesn’t differentiate between specific origin and destination pairs, and trains to Atlanta have more cargo than Tampa or Winter Haven. Contact Ari Ashe at ari.ashe@spglobal.com .

North-American rail

Intermodal providers

Intermodal shippers still feeling ripple effects from Florida hurricanes

<div class="phx-topic abstract-wrapper">The large fuel tanks needed for low-density alternative fuels could make them a non-starter for multipurpose vessels.</div>

The large fuel tanks needed for low-density alternative fuels could make them a non-starter for multipurpose vessels.

<div class="phx-topic">The “future fuel” dilemma is a 21st century conundrum for shipowners of every type of ship, but perhaps more so for the multipurpose (MPV) and heavy-lift fleet. With their heavy and outsized cargoes, finding room for the larger fuel tanks needed for low-density fuels is a real challenge, which makes emerging fuels hydrogen and ammonia a much tougher option for MPV newbuilds today. Green methanol has potential, but there are caveats to that choice, too. The market is coming to terms with the time it will take to scale up the production and distribution of green methanol. While supplies can and are being secured for some pioneering ship operators, it is likely to be much harder to procure green methanol supplies for tramping MPVs with their variable routings and port calls. However, some carriers are choosing methanol from the newbuild stage, having implemented a “ready” approach with plans to convert. These include AAL with a series of eight 32,000-deadweight ton (dwt) liner-type MPVs, three of which have been delivered; Griegstar and Gearbulk with eight ammonia/methanol-ready 82,300-dwt open-hatch general cargo newbuilds; Skarv with four 7,000-dwt ammonia/methanol-ready project cargo carriers; and SAL’s methanol-ready heavy-lift MPV Orca class. Biofuels offer a more immediate solution for MPV operators, especially for those operating in European Union waters, where from next year FuelEU Maritime regulations will heavily penalize vessels that cannot comply with the requirements for using alternative fuels with lower fossil carbon content. Many owners and operators in the sector have already tested different kinds of biofuels with various “drop-in” ratios. A steep increase in demand for biofuels is expected in the coming years. At DNV, we see benefits in the pooling mechanism allowed in the EU’s FuelEU Maritime regulation to encourage future fuel procurement at scale. This could serve the MPV sector well as an emissions-reduction strategy. This novel approach gives MPV shipowners the option to pool well-to-wake greenhouse gas fuel intensity (GFI) compliance across several ships from the same or different companies. This means that a non-compliant vessel could rely on others in a pool to achieve a compliant combined GFI. This cooperative approach could provide a pathway for MPV operators to secure the benefits of using low- or zero-carbon fuels. <h3>‘New nuclear’ a long-term possibility </h3>Nuclear propulsion as an alternative fuel for MPVs falls in a much longer-term window, in my view. Small modular reactors (SMRs) are still in the testing stage on land for power generation, and it will be many years before they will be ready for commercial use in shipping. Expect to see SMR testing for ultra-large container carriers well before MPVs are ready for new nuclear. The industry is looking closely at the possibilities, however, so at DNV, we have recently joined with companies and stakeholders in the maritime and nuclear sector to explore the technology as part of the new Nuclear Energy Maritime Organization (NEMO). Batteries, as part of hybrid propulsion solutions, are on the rise. We estimate that some 900 ships are operating with batteries systems — from a few fully electric vessels, mainly in operation on short-sea point-to point ferry trades, to varying degrees of hybridization where batteries are combined with generators or fuel cells. Batteries as part of hybrid solutions are a relatively mature technology. Combine this with energy efficiency improvements, improved battery and charging technology, and a decrease in costs, and the economics of hybridization are likely to continue to improve. No matter the fuels, a greener choice will mean higher costs for MPVs. This puts an even greater premium on reducing losses through energy efficiency. Operational and technical energy-efficiency measures we can deploy today can reduce fuel consumption by up to 16%. The business case for these technologies, including wind-assisted propulsion, waste heat recovery, and hybrid systems is very strong compared with the cost of alternative fuels. Carbon capture and storage is a potential — but niche — option for emissions reduction for MPVs, but again the room required on board to store the CO2 is the sticking point. This takes us back to the key limitation of MPVs when switching to lower-density fuels: a lack of onboard space. For now, the most likely solution is that the MPV sector will need to rely on biofuels, dual-fuel and future fuel-ready notations, perhaps with demand aggregation and GFI pooling as we move ahead on the path to zero. Contact Jost Bergmann at <a href="mailto:jost.bergmann@dnv.com">jost.bergmann@dnv.com</a>. DNV is a Norway-based classification society. </div>

The “future fuel” dilemma is a 21st century conundrum for shipowners of every type of ship, but perhaps more so for the multipurpose (MPV) and heavy-lift fleet. With their heavy and outsized cargoes, finding room for the larger fuel tanks needed for low-density fuels is a real challenge, which makes emerging fuels hydrogen and ammonia a much tougher option for MPV newbuilds today. Green methanol has potential, but there are caveats to that choice, too. The market is coming to terms with the time it will take to scale up the production and distribution of green methanol. While supplies can and are being secured for some pioneering ship operators, it is likely to be much harder to procure green methanol supplies for tramping MPVs with their variable routings and port calls. However, some carriers are choosing methanol from the newbuild stage, having implemented a “ready” approach with plans to convert. These include AAL with a series of eight 32,000-deadweight ton (dwt) liner-type MPVs, three of which have been delivered; Griegstar and Gearbulk with eight ammonia/methanol-ready 82,300-dwt open-hatch general cargo newbuilds; Skarv with four 7,000-dwt ammonia/methanol-ready project cargo carriers; and SAL’s methanol-ready heavy-lift MPV Orca class. Biofuels offer a more immediate solution for MPV operators, especially for those operating in European Union waters, where from next year FuelEU Maritime regulations will heavily penalize vessels that cannot comply with the requirements for using alternative fuels with lower fossil carbon content. Many owners and operators in the sector have already tested different kinds of biofuels with various “drop-in” ratios. A steep increase in demand for biofuels is expected in the coming years. At DNV, we see benefits in the pooling mechanism allowed in the EU’s FuelEU Maritime regulation to encourage future fuel procurement at scale. This could serve the MPV sector well as an emissions-reduction strategy. This novel approach gives MPV shipowners the option to pool well-to-wake greenhouse gas fuel intensity (GFI) compliance across several ships from the same or different companies. This means that a non-compliant vessel could rely on others in a pool to achieve a compliant combined GFI. This cooperative approach could provide a pathway for MPV operators to secure the benefits of using low- or zero-carbon fuels. ‘New nuclear’ a long-term possibility Nuclear propulsion as an alternative fuel for MPVs falls in a much longer-term window, in my view. Small modular reactors (SMRs) are still in the testing stage on land for power generation, and it will be many years before they will be ready for commercial use in shipping. Expect to see SMR testing for ultra-large container carriers well before MPVs are ready for new nuclear. The industry is looking closely at the possibilities, however, so at DNV, we have recently joined with companies and stakeholders in the maritime and nuclear sector to explore the technology as part of the new Nuclear Energy Maritime Organization (NEMO). Batteries, as part of hybrid propulsion solutions, are on the rise. We estimate that some 900 ships are operating with batteries systems — from a few fully electric vessels, mainly in operation on short-sea point-to point ferry trades, to varying degrees of hybridization where batteries are combined with generators or fuel cells. Batteries as part of hybrid solutions are a relatively mature technology. Combine this with energy efficiency improvements, improved battery and charging technology, and a decrease in costs, and the economics of hybridization are likely to continue to improve. No matter the fuels, a greener choice will mean higher costs for MPVs. This puts an even greater premium on reducing losses through energy efficiency. Operational and technical energy-efficiency measures we can deploy today can reduce fuel consumption by up to 16%. The business case for these technologies, including wind-assisted propulsion, waste heat recovery, and hybrid systems is very strong compared with the cost of alternative fuels. Carbon capture and storage is a potential — but niche — option for emissions reduction for MPVs, but again the room required on board to store the CO2 is the sticking point. This takes us back to the key limitation of MPVs when switching to lower-density fuels: a lack of onboard space. For now, the most likely solution is that the MPV sector will need to rely on biofuels, dual-fuel and future fuel-ready notations, perhaps with demand aggregation and GFI pooling as we move ahead on the path to zero. Contact Jost Bergmann at jost.bergmann@dnv.com . DNV is a Norway-based classification society.

Breakbulk News

Breakbulk carriers

Heavy-haul transport

Project cargo

MPV fuel challenge complicated by heavy and outsized cargoes

<div class="phx-topic abstract-wrapper">Beneficial cargo owners have numerous market factors and risks to weigh when formulating a strategy for negotiating next year’s service contracts, writes John McCauley.</div>

Beneficial cargo owners have numerous market factors and risks to weigh when formulating a strategy for negotiating next year’s service contracts, writes John McCauley.

<div class="phx-topic">Beneficial cargo owners (BCOs) will need to consider multiple macro factors — both immediate and long term — as they approach negotiations on their annual service contracts with ocean carriers. First, is the possibility of the end of militant attacks in the Red Sea and Gulf of Aden. Any resumption of sailings through the Suez Canal will happen, at best, by mid-year. It is also necessary to factor in a three- to six-month delay in carrier schedule and shipper/consignee supply chain adjustments from any cessation of hostilities. My view is to plan for no resumption of Red Sea transits in 2025. The second factor is whether seasonality will continue at historical levels or we will see some smoothing of demand and volume similar to that which we saw in 2024 and partly in 2023. Those BCOs that can smooth demand, having fought the internal battle to minimize transportation risk, have largely done so to the degree possible allowing for increased warehousing and higher working capital from increased inventory. Therefore, I expect in 2025 that there will be some improvement in volume smoothing, but nothing game changing. Thirdly will be the supply situation. Much has been made of the new tonnage coming into service, and indeed without Suez transits there would be overcapacity on the Asia-Europe trade. However, the new capacity will be asynchronous with demand, particularly in the trans-Pacific. Another significant issue on the supply side is the sheer scale and size of Mediterranean Shipping Co., which now operates about 20% of global container capacity. Their impact will be at least twofold: for any BCO with reasonable volume, purely on berth capacity and schedule alone, you will likely need to use them. But more importantly, they were the traditional price makers when they were on par with others in capacity terms and part of vessel-sharing agreements/consortia and were often the earliest movers in the market. Will that continue given their market share and agile and adventurous commercial actions? Not so easy when you are a solo player. Finally, do not expect any improvement in service levels beyond (at my best estimate) 60% to 65% globally. While I am healthily skeptical and highly hopeful that Gemini Cooperation delivers on its service level target of 90%, this will not kick in until first shipments start arriving in at least the second quarter of 2025. <h3>Options for BCOs </h3>So, where does all this leave BCOs trying to make sense of who to contract with and at what levels in 2025? The likelihood is that we are in balance in a buyer’s market with two caveats: it all depends on your relation and value to the carriers and the current levels you are paying versus spot and forward freight agreement (FFA) projections for the third and fourth quarters of 2025. If you choose to commit for a full year, indeed in the current and near-term environment, the likelihood of carriers wanting to contract for less than one year without a significant risk premium is very low. This leaves several options, any of which may suit your business or not. You can go long this year, committing all your volume to a range of carriers, but being sure to include standalone liners and one from each of the main alliances. Pretty traditional, but at least this locks you in. The quid pro quo for this commitment must be next to zero surcharges through the life of the contract. This will mitigate short-term shocks during the contract duration. The more adventurous option will be some form of index linked for a portion of the volume, accepting the risk of fluctuation. This also means you must lock in your critical lanes and product lines. Again, keep an eye on surcharges. The most aggressive option would be a mix of contracts for key volumes/lanes with a proportion on the spot market. Your level of conviction of supply-side easing and a Suez reopening needs to be very high, and even in those scenarios coming together, carriers will still blank sailings and even lay up capacity, so the reward may be elusive. With no constraints, I would lock in my key lanes and buy FFAs to hedge up to 50% of the upside risk. In summary, not an easy year (are they ever?) with the potential for rates to increase, but more likely to fall, particularly for trades outside North America. For the trans-Atlantic and north/south lanes, expect little change while I remain convinced the surge in US imports will be unsustainable. The outcome and impact of the US presidential election is a further wild card not included in the factors above! John McCauley, formerly a long-standing vice president of transportation and logistics at Cargill, now consults for shippers. Contact him at <a href="mailto:john-mccauley1@outlook.com">john-mccauley1@outlook.com</a>. </div>

Beneficial cargo owners (BCOs) will need to consider multiple macro factors — both immediate and long term — as they approach negotiations on their annual service contracts with ocean carriers. First, is the possibility of the end of militant attacks in the Red Sea and Gulf of Aden. Any resumption of sailings through the Suez Canal will happen, at best, by mid-year. It is also necessary to factor in a three- to six-month delay in carrier schedule and shipper/consignee supply chain adjustments from any cessation of hostilities. My view is to plan for no resumption of Red Sea transits in 2025. The second factor is whether seasonality will continue at historical levels or we will see some smoothing of demand and volume similar to that which we saw in 2024 and partly in 2023. Those BCOs that can smooth demand, having fought the internal battle to minimize transportation risk, have largely done so to the degree possible allowing for increased warehousing and higher working capital from increased inventory. Therefore, I expect in 2025 that there will be some improvement in volume smoothing, but nothing game changing. Thirdly will be the supply situation. Much has been made of the new tonnage coming into service, and indeed without Suez transits there would be overcapacity on the Asia-Europe trade. However, the new capacity will be asynchronous with demand, particularly in the trans-Pacific. Another significant issue on the supply side is the sheer scale and size of Mediterranean Shipping Co., which now operates about 20% of global container capacity. Their impact will be at least twofold: for any BCO with reasonable volume, purely on berth capacity and schedule alone, you will likely need to use them. But more importantly, they were the traditional price makers when they were on par with others in capacity terms and part of vessel-sharing agreements/consortia and were often the earliest movers in the market. Will that continue given their market share and agile and adventurous commercial actions? Not so easy when you are a solo player. Finally, do not expect any improvement in service levels beyond (at my best estimate) 60% to 65% globally. While I am healthily skeptical and highly hopeful that Gemini Cooperation delivers on its service level target of 90%, this will not kick in until first shipments start arriving in at least the second quarter of 2025. Options for BCOs So, where does all this leave BCOs trying to make sense of who to contract with and at what levels in 2025? The likelihood is that we are in balance in a buyer’s market with two caveats: it all depends on your relation and value to the carriers and the current levels you are paying versus spot and forward freight agreement (FFA) projections for the third and fourth quarters of 2025. If you choose to commit for a full year, indeed in the current and near-term environment, the likelihood of carriers wanting to contract for less than one year without a significant risk premium is very low. This leaves several options, any of which may suit your business or not. You can go long this year, committing all your volume to a range of carriers, but being sure to include standalone liners and one from each of the main alliances. Pretty traditional, but at least this locks you in. The quid pro quo for this commitment must be next to zero surcharges through the life of the contract. This will mitigate short-term shocks during the contract duration. The more adventurous option will be some form of index linked for a portion of the volume, accepting the risk of fluctuation. This also means you must lock in your critical lanes and product lines. Again, keep an eye on surcharges. The most aggressive option would be a mix of contracts for key volumes/lanes with a proportion on the spot market. Your level of conviction of supply-side easing and a Suez reopening needs to be very high, and even in those scenarios coming together, carriers will still blank sailings and even lay up capacity, so the reward may be elusive. With no constraints, I would lock in my key lanes and buy FFAs to hedge up to 50% of the upside risk. In summary, not an easy year (are they ever?) with the potential for rates to increase, but more likely to fall, particularly for trades outside North America. For the trans-Atlantic and north/south lanes, expect little change while I remain convinced the surge in US imports will be unsustainable. The outcome and impact of the US presidential election is a further wild card not included in the factors above! John McCauley, formerly a long-standing vice president of transportation and logistics at Cargill, now consults for shippers. Contact him at john-mccauley1@outlook.com .

BCOs should approach new service contracts with broad market view

Index

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 {name} {categoryY.formatNumber('#.0%')} 

The JOC Truckload Capacity Index (TCI) measures truck capacity at large, publicly traded trucking companies on a quarterly basis using end-of-quarter truck counts reported within their earnings statements. The index covers a group of full truckload carriers with combined annual revenue of more than $10 billion, using the group’s average truck count in the fourth quarter of 2006, prior to Great Recession of 2007–09, as its base (Q4 2006 = 100). Large truckload carriers represent a core sector of capacity for high-volume shippers.

Truckload capacity index (Journal of Commerce)

JOC Truckload Capacity Index Gateway

<div class="phx-topic abstract-wrapper">Frontloading and Red Sea diversions pushed volume and rates higher in the third quarter, and ongoing geopolitical disruption will allow carriers to extend their robust financial health into next year, according to the founder of the global equity firm.</div>

Frontloading and Red Sea diversions pushed volume and rates higher in the third quarter, and ongoing geopolitical disruption will allow carriers to extend their robust financial health into next year, according to the founder of the global equity firm.

<div class="phx-topic">The 47 million TEUs transported by ocean carriers in the third quarter comprised the highest quarterly volume on record, besting the previous high set in 2021 at the height of the pandemic by just over 2%, according to the founder of global equity firm Blue Alpha Capital. John McCown wrote in his quarterly market report this week that volume data from Container Trades Statistics (CTS) also showed that for the first nine months of 2024, the 136.7-million-TEU volume moved worldwide was up 6.3% year over year and 1.5% above the first nine months of 2021. The robust volume was accompanied by higher rate levels that saw the average revenue per load assessed by CTS up 52.5% in the third quarter year over year and 23.4% higher compared with the second quarter. “Driven by the capacity tightening resulting from the Red Sea situation and augmented by robust volume, the sector moved to a $5.4 billion Q1 profit that was doubled in the second quarter and more than doubled in the third quarter,” McCown said. Average global spot rate levels in the third quarter recorded by the Shanghai Containerized Freight Index (SCFI) of $3,074 per TEU were more than double the year-ago period and up 19% from the second quarter. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="b1d23881-2ae2-4545-ac9b-03e4ae60579e"></dynamic-object></div>McCown said the carriers’ third-quarter net profit of $26.8 billion was up 164% sequentially over the second quarter and almost nine times higher year over year. It was also more than twice what the container shipping industry earned in any full pre-pandemic year, he noted. The three consecutive quarters of exponential net profit growth this year followed an industry loss of $700 million in the last three months of 2023. Maritime consultancy Drewry has estimated that container shipping will report a pre-tax profit of $50 billion this year, up from $28 billion in 2023. While it is a fraction of the $298 billion recorded in 2022, the carriers will enter an uncertain 2025 in solid financial health. “Stronger-than-expected volume has certainly buoyed rates, but much of the recent pricing strength remains tied to the Red Sea situation that is effectively absorbing 8% of worldwide capacity,” McCown wrote. <h3>Tariffs on China ‘now more of a reality’ </h3>Looking ahead to next year, McCown said in addition to continued diversions around southern Africa to avoid the Red Sea, US President-elect Donald Trump’s stated intention to impose tariffs of 60% and more on Chinese imports and 10% to 20% on all other imports iss now more of a reality. The tariffs would also follow <a href="https://www.joc.com/article/ila-breaks-off-contract-talks-accuses-usmx-of-semi-automation-push-5810392">a possible second strike</a> by the International Longshoremen’s Association (ILA) when its tentative contract extension expires on Jan. 15. “The combined impact of those two, happening at the same time, would indeed be a perfect storm for the sector,” McCown warned. “My hope is that reason prevails and that the supposed silver bullet of tariffs was more about campaigning and less about administering.” Global bank HSBC also highlighted tariffs and ILA industrial action as catalysts for strong volume development on the US import trades for the rest of the year and into 2025. “We expect the looming US East [and Gulf] coasts labor union strike and an earlier Lunar New Year [Jan. 29] <a href="https://www.joc.com/article/us-importers-dabbling-in-frontloading-ahead-of-new-tariff-threat-5821448">to drive cargo frontloading into the year-end</a>,” HSBC said in a market update. “Separately, following the election of Donald Trump, we expect further frontloading due to potential tariff concerns to keep near-term freight rates elevated.” US imports from Asia were up 10.5% year over year in October, according to PIERS, a Journal of Commerce sister product within S&amp;P Global. <h3>‘Meaningful uplift to 2025 earnings’ </h3>Carriers will reap the benefits of elevated rate levels on the east-west trade lanes, which HSBC believes will see 2025 contract rates on Asia-Europe rising sharply compared with this year, providing “meaningful uplift to 2025 earnings.” Potentially standing in the way of continuing profitability is shipping supply, with the order book approaching 30% of the in-fleet capacity. Data from shipping association BIMCO has forecast cargo volume this year will grow between 4% and 5% against 16% growth in capacity. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="b1577241-6a7f-498a-8c5d-7a1e12ab9b6b"></dynamic-object></div>However, assuming Red Sea diversions last through 2025, container shipping analyst Clarksons estimates that nominal fleet capacity growth will slow from over 10% to 5% against estimated 18% growth in TEU-mile demand in 2024 and 3% growth in 2025. “While supply growth still exceeds demand and we continue to assume freight rates to trend lower in 2025 as our base case, we think the pace of supply delivery and demand from frontloading indicates that near-term freight rates may not capitulate as the market feared,” HSBC noted in its report. Ocean carriers are also becoming more optimistic in their capacity outlooks for next year as the Red Sea diversions absorb capacity. Maersk CEO Vincent Clerc told analysts in a third-quarter earnings call that demand would remain solid into 2025 and <a href="https://www.joc.com/article/scrapping-slow-steaming-demand-will-limit-capacity-overhang-clerc-5785020">the supply-demand balance could be smoothed out</a> by carriers pulling on the capacity management levers of increased scrapping and slow steaming. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

The 47 million TEUs transported by ocean carriers in the third quarter comprised the highest quarterly volume on record, besting the previous high set in 2021 at the height of the pandemic by just over 2%, according to the founder of global equity firm Blue Alpha Capital. John McCown wrote in his quarterly market report this week that volume data from Container Trades Statistics (CTS) also showed that for the first nine months of 2024, the 136.7-million-TEU volume moved worldwide was up 6.3% year over year and 1.5% above the first nine months of 2021. The robust volume was accompanied by higher rate levels that saw the average revenue per load assessed by CTS up 52.5% in the third quarter year over year and 23.4% higher compared with the second quarter. “Driven by the capacity tightening resulting from the Red Sea situation and augmented by robust volume, the sector moved to a $5.4 billion Q1 profit that was doubled in the second quarter and more than doubled in the third quarter,” McCown said. Average global spot rate levels in the third quarter recorded by the Shanghai Containerized Freight Index (SCFI) of $3,074 per TEU were more than double the year-ago period and up 19% from the second quarter. McCown said the carriers’ third-quarter net profit of $26.8 billion was up 164% sequentially over the second quarter and almost nine times higher year over year. It was also more than twice what the container shipping industry earned in any full pre-pandemic year, he noted. The three consecutive quarters of exponential net profit growth this year followed an industry loss of $700 million in the last three months of 2023. Maritime consultancy Drewry has estimated that container shipping will report a pre-tax profit of $50 billion this year, up from $28 billion in 2023. While it is a fraction of the $298 billion recorded in 2022, the carriers will enter an uncertain 2025 in solid financial health. “Stronger-than-expected volume has certainly buoyed rates, but much of the recent pricing strength remains tied to the Red Sea situation that is effectively absorbing 8% of worldwide capacity,” McCown wrote. Tariffs on China ‘now more of a reality’ Looking ahead to next year, McCown said in addition to continued diversions around southern Africa to avoid the Red Sea, US President-elect Donald Trump’s stated intention to impose tariffs of 60% and more on Chinese imports and 10% to 20% on all other imports iss now more of a reality. The tariffs would also follow a possible second strike by the International Longshoremen’s Association (ILA) when its tentative contract extension expires on Jan. 15. “The combined impact of those two, happening at the same time, would indeed be a perfect storm for the sector,” McCown warned. “My hope is that reason prevails and that the supposed silver bullet of tariffs was more about campaigning and less about administering.” Global bank HSBC also highlighted tariffs and ILA industrial action as catalysts for strong volume development on the US import trades for the rest of the year and into 2025. “We expect the looming US East [and Gulf] coasts labor union strike and an earlier Lunar New Year [Jan. 29] to drive cargo frontloading into the year-end ,” HSBC said in a market update. “Separately, following the election of Donald Trump, we expect further frontloading due to potential tariff concerns to keep near-term freight rates elevated.” US imports from Asia were up 10.5% year over year in October, according to PIERS, a Journal of Commerce sister product within S&P Global. ‘Meaningful uplift to 2025 earnings’ Carriers will reap the benefits of elevated rate levels on the east-west trade lanes, which HSBC believes will see 2025 contract rates on Asia-Europe rising sharply compared with this year, providing “meaningful uplift to 2025 earnings.” Potentially standing in the way of continuing profitability is shipping supply, with the order book approaching 30% of the in-fleet capacity. Data from shipping association BIMCO has forecast cargo volume this year will grow between 4% and 5% against 16% growth in capacity. However, assuming Red Sea diversions last through 2025, container shipping analyst Clarksons estimates that nominal fleet capacity growth will slow from over 10% to 5% against estimated 18% growth in TEU-mile demand in 2024 and 3% growth in 2025. “While supply growth still exceeds demand and we continue to assume freight rates to trend lower in 2025 as our base case, we think the pace of supply delivery and demand from frontloading indicates that near-term freight rates may not capitulate as the market feared,” HSBC noted in its report. Ocean carriers are also becoming more optimistic in their capacity outlooks for next year as the Red Sea diversions absorb capacity. Maersk CEO Vincent Clerc told analysts in a third-quarter earnings call that demand would remain solid into 2025 and the supply-demand balance could be smoothed out by carriers pulling on the capacity management levers of increased scrapping and slow steaming. Contact Greg Knowler at greg.knowler@spglobal.com .

Global ocean volume in Q3 beat pandemic record: Blue Alpha Capital

<div class="phx-topic abstract-wrapper">NVOs will enter 2025 hoping that their experience this year with carriers taking a get-tough approach to their business dealings was merely cyclical, a product of an unusual market following the Red Sea diversions and an early peak season.</div>

NVOs will enter 2025 hoping that their experience this year with carriers taking a get-tough approach to their business dealings was merely cyclical, a product of an unusual market following the Red Sea diversions and an early peak season.

<div class="phx-topic">Non-vessel-operating common carriers (NVOs) will look back on 2024 as a challenging year in two key respects: it was when carriers, seizing on an unexpectedly favorable market, got tough in demanding more spot cargo as a condition for granting contracts to NVOs’ customers, while putting further pressure on NVOs by closely monitoring their adherence to those contracts. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5821197_0.1.jpg"></img></div>“In 2024, ocean carriers began tightening their grip on the market,” analyst Jon Monroe wrote on Nov. 19. “They became more selective with NVOCC contracts, making ‘named account’ deals, [i.e.] contracts reserved for large, high-volume customers, harder to secure.” NVOs will go into 2025 hoping that experience was merely cyclical, a product of an unusual market following the Red Sea diversions and an early peak season. For beneficial cargo owners (BCOs), the idea that NVOs are coming under pressure from carriers is relevant in terms of NVOs’ ability to access vessel space. Indeed, some BCOs have recently raised concerns to the Journal of Commerce about the presence in their NVO contracts of clauses absolving the NVO if space can’t be procured. Unfortunately, there is no guarantee the market will weaken in the New Year even as a glut of capacity threatens to weigh on the market. Some NVOs contacted by the Journal of Commerce believe a softening is likely next year — and may already have begun. But others believe the stretch of good fortune for carriers — seen in a fully deployed fleet and still-elevated spot rates — hasn’t run its course and won’t until the Suez becomes a safe route again, whereupon capacity will pour back into the market. Maersk CEO Vincent Clerc suggested as such in a recent earnings call, <a href="https://www.joc.com/article/scrapping-slow-steaming-demand-will-limit-capacity-overhang-clerc-5785020">noting carriers have untapped levers to forestall overcapacity</a>. Maersk “highlighted that supply discipline in the form of slow steaming, blanked sailings and scrapping could emerge once the market returns to a normal level of profitability,” Parash Jain, HSBC Commercial Banking’s global head of transport and logistics research and a TPM25 speaker, wrote on Nov. 1. <h3>Carriers’ evolving positions on NVO cargo </h3>For NVOs, as long as carriers are in control such that spot rates end up higher than contract rates, carriers will demand more spot market cargo, also called freight-all-kinds (FAK), as the price for granting NVOs’ contract, or named account rates (NAC), for their BCO customers. “The ratio between nominated account rates and FAK rates varies among different carriers. However, we are observing an increasing demand for a more balanced approach as we approach 2025,” meaning carriers seeking a larger share of FAK cargo from NVOs, said Marc Meier, global head of ocean freight at Toll Global Forwarding. Others see an already softening market reflected in carriers’ evolving positions relative to NVO cargo. “Carriers have taken such a policy each year during annual negotiations on NAC rates to request for at least 50-50 on NAC/FAK bookings, but when space is tighter, some even ask for 4 to 1 (FAK to NAC) to even 5 to 1 as happened in June-July of this year,” said Christian Sur, executive vice president for ocean freight/contract logistics at Unique Logistics International. “We are back to more 1 to 1 or even a better ratio to receive NAC space.” Others see it similarly, given that new tonnage deliveries will add 11% to existing capacity by the end of 2024 and another 6% next year, growth only minimally reduced by scrapping at least so far, according to S&amp;P Global Market Intelligence. “NVOCCs could find themselves in a more favorable position in 2025 as the market shifts and carriers face increased competition to fill excess vessel capacity,” Monroe wrote on Nov. 19. “With the surge of available capacity in the ocean freight market, carriers are likely to adopt more flexible and reasonable terms for NVOCCs in order to maintain their vessel utilization.” <h3>Carriers monitoring NVOs’ use of NAC rates </h3>Carriers’ NVO policies this year forced some NVOs to be more aggressive in scrounging up FAK cargo, often from the smaller end of the shipper market that is too small to secure contract rates. But while market cyclicality might make carriers hungry for NVO cargo, what will likely not change so fast is carriers’ increasingly sophisticated monitoring of NVOs’ use of named account rates, especially when spot rates exceed contract rates. That monitoring has disrupted longstanding practice under which NVOs — when contract rates fall below spot rates — utilize named account rates to ship multiple shippers’ cargo, not just the shipper named in the account, thereby taking advantage of lower buy rates than were available on the open market. Not anymore, as carriers have developed technology and systems enabling them to closely monitor NVO named account volumes. When they see commodities or volumes shipped beyond what was agreed in an NAC contract, or the NVO not providing agreed-upon volumes in a given month, they intervene. In a soft market, carriers may pressure NVOs less but won’t stop monitoring the volumes. That is something unlikely to change irrespective of where the market goes. Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>. </div>

Non-vessel-operating common carriers (NVOs) will look back on 2024 as a challenging year in two key respects: it was when carriers, seizing on an unexpectedly favorable market, got tough in demanding more spot cargo as a condition for granting contracts to NVOs’ customers, while putting further pressure on NVOs by closely monitoring their adherence to those contracts. “In 2024, ocean carriers began tightening their grip on the market,” analyst Jon Monroe wrote on Nov. 19. “They became more selective with NVOCC contracts, making ‘named account’ deals, [i.e.] contracts reserved for large, high-volume customers, harder to secure.” NVOs will go into 2025 hoping that experience was merely cyclical, a product of an unusual market following the Red Sea diversions and an early peak season. For beneficial cargo owners (BCOs), the idea that NVOs are coming under pressure from carriers is relevant in terms of NVOs’ ability to access vessel space. Indeed, some BCOs have recently raised concerns to the Journal of Commerce about the presence in their NVO contracts of clauses absolving the NVO if space can’t be procured. Unfortunately, there is no guarantee the market will weaken in the New Year even as a glut of capacity threatens to weigh on the market. Some NVOs contacted by the Journal of Commerce believe a softening is likely next year — and may already have begun. But others believe the stretch of good fortune for carriers — seen in a fully deployed fleet and still-elevated spot rates — hasn’t run its course and won’t until the Suez becomes a safe route again, whereupon capacity will pour back into the market. Maersk CEO Vincent Clerc suggested as such in a recent earnings call, noting carriers have untapped levers to forestall overcapacity . Maersk “highlighted that supply discipline in the form of slow steaming, blanked sailings and scrapping could emerge once the market returns to a normal level of profitability,” Parash Jain, HSBC Commercial Banking’s global head of transport and logistics research and a TPM25 speaker, wrote on Nov. 1. Carriers’ evolving positions on NVO cargo For NVOs, as long as carriers are in control such that spot rates end up higher than contract rates, carriers will demand more spot market cargo, also called freight-all-kinds (FAK), as the price for granting NVOs’ contract, or named account rates (NAC), for their BCO customers. “The ratio between nominated account rates and FAK rates varies among different carriers. However, we are observing an increasing demand for a more balanced approach as we approach 2025,” meaning carriers seeking a larger share of FAK cargo from NVOs, said Marc Meier, global head of ocean freight at Toll Global Forwarding. Others see an already softening market reflected in carriers’ evolving positions relative to NVO cargo. “Carriers have taken such a policy each year during annual negotiations on NAC rates to request for at least 50-50 on NAC/FAK bookings, but when space is tighter, some even ask for 4 to 1 (FAK to NAC) to even 5 to 1 as happened in June-July of this year,” said Christian Sur, executive vice president for ocean freight/contract logistics at Unique Logistics International. “We are back to more 1 to 1 or even a better ratio to receive NAC space.” Others see it similarly, given that new tonnage deliveries will add 11% to existing capacity by the end of 2024 and another 6% next year, growth only minimally reduced by scrapping at least so far, according to S&P Global Market Intelligence. “NVOCCs could find themselves in a more favorable position in 2025 as the market shifts and carriers face increased competition to fill excess vessel capacity,” Monroe wrote on Nov. 19. “With the surge of available capacity in the ocean freight market, carriers are likely to adopt more flexible and reasonable terms for NVOCCs in order to maintain their vessel utilization.” Carriers monitoring NVOs’ use of NAC rates Carriers’ NVO policies this year forced some NVOs to be more aggressive in scrounging up FAK cargo, often from the smaller end of the shipper market that is too small to secure contract rates. But while market cyclicality might make carriers hungry for NVO cargo, what will likely not change so fast is carriers’ increasingly sophisticated monitoring of NVOs’ use of named account rates, especially when spot rates exceed contract rates. That monitoring has disrupted longstanding practice under which NVOs — when contract rates fall below spot rates — utilize named account rates to ship multiple shippers’ cargo, not just the shipper named in the account, thereby taking advantage of lower buy rates than were available on the open market. Not anymore, as carriers have developed technology and systems enabling them to closely monitor NVO named account volumes. When they see commodities or volumes shipped beyond what was agreed in an NAC contract, or the NVO not providing agreed-upon volumes in a given month, they intervene. In a soft market, carriers may pressure NVOs less but won’t stop monitoring the volumes. That is something unlikely to change irrespective of where the market goes. Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

Forwarding

NVOs eager to get past carriers’ tight grip on unexpectedly favorable market

<div class="phx-topic abstract-wrapper">The new charges apply to both spot market business originating in Southern California and to contractual agreements when weekly limits are surpassed by shippers using rail-owned containers.</div>

The new charges apply to both spot market business originating in Southern California and to contractual agreements when weekly limits are surpassed by shippers using rail-owned containers.

<div class="phx-topic">Union Pacific Railroad (UP) has again increased surcharges on shippers exceeding their weekly allotments in Southern California as domestic intermodal volumes show no signs of the seasonal slowdown typically seen by mid-November. Low-volume shippers will now face a surcharge of $850 per container above their peak season allotment, up from $750, UP said Monday. High-volume shippers will see their surcharges double to $600 per container. It’s the third time UP has increased surcharges on small shippers since August and the second boost for large shippers. The new charges apply both to spot market business originating in Southern California and to contractual agreements when weekly limits are surpassed on rail-owned containers. UP partners Hub Group, Schneider National, STG Logistics and Swift Intermodal control pricing on their privately-owned boxes. Raising surcharges is meant to discourage one-off business from occupying containers that otherwise would be used by long-term customers, notably parcel giant UPS with the holiday shopping season about to ramp up. Class I railroads are facing the challenge of an <a href="https://www.joc.com/article/strong-imports-low-blanks-extend-peak-season-on-eastbound-trans-pacific-5782101">elongated peak season</a> for ocean and domestic freight, which has put significant pressure on North American intermodal networks. Intermodal marketing companies (IMCs) are experiencing difficulties in getting containers into terminals, onto trains, and to inland destinations with consistent transit times. Volume has been a factor in the service disruptions in international and domestic rail, including higher dwell times, more railcars idling and additional trains being held up compared with a year ago. “Union Pacific’s strategic intermodal investments are enabling us to capture the largest peak season volume increase in five years while maintaining fluidity across the network,” UP said in a statement to the Journal of Commerce. “Los Angeles to Chicago domestic intermodal is experiencing double-digit growth, including setting a volume record last week.” UP and competitor BNSF Railway hauled 1.5 million domestic containers out of the Southwest US between January and October, according to the Intermodal Association of North America (IANA), up 8.4% compared with a year ago and a new record high for the period. The Southwest region includes the ports of Los Angeles and Long Beach, the busiest US gateway. October also set monthly volume records for Southwest originations to the Midwest, Southeast and south-central US, according to IANA. Rails hauled 82,381 domestic containers from the Southwest to Midwest, the first ever monthly total exceeding 80,000, putting pressure on service from Los Angeles to Chicago, Cincinnati, Cleveland and Columbus. The Journal of Commerce estimates that rails hauled nearly 50,000 domestic containers from Los Angeles to Chicago in October, up more than 20% compared with a year ago. UP reported that international intermodal volume in Southern California jumped 30% year over year in the third quarter, further challenging network fluidity in Los Angeles and Long Beach. <h3>Service metrics show worst is over </h3>Despite recent improvement, UP and BNSF service was inconsistent between September and mid-October. After UP reported that an average of 58 loaded intermodal railcars idled for more than 48 hours per week between January and August, that rose to 139 railcars in September and then jumped to 231.5 in the first half of October, surpassing levels seen during the pandemic surge. However, in the past four weeks, UP’s average has dropped to 131.3 railcars per week, according to data from the US Surface Transportation Board. BNSF reported a similar trend. Both western US railroads also reported slower train speeds and an increase in the number of delayed intermodal trains during September and early October before the metrics improved in the last four weeks. Despite those service gains, some IMC partners remain concerned. Two IMC executives who did not want to be identified said ongoing service issues on UP’s network are a threat to the ability of their companies to retain current customers and attract new ones. “It’s better than it was a month ago, but service is still not where it needs to be, and with UPS ramping up holiday shipments, that’s not helping things,” said one executive. “The problem is inside the terminals. They’ve got terminal issues in Los Angeles, in Houston, in Memphis. I understand service challenges arise with record volumes. But two-week transit times from Los Angeles to Houston, or San Antonio? How do I explain that to our customers?” A second IMC executive shared similar frustrations, especially when attempting to convert truckload freight to rail in Southern California. “When we have that opportunity in hand for a truck conversion, we can save the shipper money, and we’ve finally convinced the shipper to try the intermodal product, it’s disheartening when it’s not a positive experience, leaving a poor first impression,” the source said. “I recently explained to a new customer that shipping early in the week was the best way to get cargo onto the train. But if you think about it, they could just say, ‘Well, I’m just going to put it on a truck, and I don’t have to worry about anything.’” UP, for its part, acknowledges that there have been “episodic” events that have caused service disruptions in recent weeks, but says it’s the result of IMCs winning new business and taking market share off the highways, thus showing the strength of intermodal. With fluidity returning to its network, UP also said it believes shippers moving freight off the highways will have a better experience going forward. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>. </div>

Union Pacific Railroad (UP) has again increased surcharges on shippers exceeding their weekly allotments in Southern California as domestic intermodal volumes show no signs of the seasonal slowdown typically seen by mid-November. Low-volume shippers will now face a surcharge of $850 per container above their peak season allotment, up from $750, UP said Monday. High-volume shippers will see their surcharges double to $600 per container. It’s the third time UP has increased surcharges on small shippers since August and the second boost for large shippers. The new charges apply both to spot market business originating in Southern California and to contractual agreements when weekly limits are surpassed on rail-owned containers. UP partners Hub Group, Schneider National, STG Logistics and Swift Intermodal control pricing on their privately-owned boxes. Raising surcharges is meant to discourage one-off business from occupying containers that otherwise would be used by long-term customers, notably parcel giant UPS with the holiday shopping season about to ramp up. Class I railroads are facing the challenge of an elongated peak season for ocean and domestic freight, which has put significant pressure on North American intermodal networks. Intermodal marketing companies (IMCs) are experiencing difficulties in getting containers into terminals, onto trains, and to inland destinations with consistent transit times. Volume has been a factor in the service disruptions in international and domestic rail, including higher dwell times, more railcars idling and additional trains being held up compared with a year ago. “Union Pacific’s strategic intermodal investments are enabling us to capture the largest peak season volume increase in five years while maintaining fluidity across the network,” UP said in a statement to the Journal of Commerce. “Los Angeles to Chicago domestic intermodal is experiencing double-digit growth, including setting a volume record last week.” UP and competitor BNSF Railway hauled 1.5 million domestic containers out of the Southwest US between January and October, according to the Intermodal Association of North America (IANA), up 8.4% compared with a year ago and a new record high for the period. The Southwest region includes the ports of Los Angeles and Long Beach, the busiest US gateway. October also set monthly volume records for Southwest originations to the Midwest, Southeast and south-central US, according to IANA. Rails hauled 82,381 domestic containers from the Southwest to Midwest, the first ever monthly total exceeding 80,000, putting pressure on service from Los Angeles to Chicago, Cincinnati, Cleveland and Columbus. The Journal of Commerce estimates that rails hauled nearly 50,000 domestic containers from Los Angeles to Chicago in October, up more than 20% compared with a year ago. UP reported that international intermodal volume in Southern California jumped 30% year over year in the third quarter, further challenging network fluidity in Los Angeles and Long Beach. Service metrics show worst is over Despite recent improvement, UP and BNSF service was inconsistent between September and mid-October. After UP reported that an average of 58 loaded intermodal railcars idled for more than 48 hours per week between January and August, that rose to 139 railcars in September and then jumped to 231.5 in the first half of October, surpassing levels seen during the pandemic surge. However, in the past four weeks, UP’s average has dropped to 131.3 railcars per week, according to data from the US Surface Transportation Board. BNSF reported a similar trend. Both western US railroads also reported slower train speeds and an increase in the number of delayed intermodal trains during September and early October before the metrics improved in the last four weeks. Despite those service gains, some IMC partners remain concerned. Two IMC executives who did not want to be identified said ongoing service issues on UP’s network are a threat to the ability of their companies to retain current customers and attract new ones. “It’s better than it was a month ago, but service is still not where it needs to be, and with UPS ramping up holiday shipments, that’s not helping things,” said one executive. “The problem is inside the terminals. They’ve got terminal issues in Los Angeles, in Houston, in Memphis. I understand service challenges arise with record volumes. But two-week transit times from Los Angeles to Houston, or San Antonio? How do I explain that to our customers?” A second IMC executive shared similar frustrations, especially when attempting to convert truckload freight to rail in Southern California. “When we have that opportunity in hand for a truck conversion, we can save the shipper money, and we’ve finally convinced the shipper to try the intermodal product, it’s disheartening when it’s not a positive experience, leaving a poor first impression,” the source said. “I recently explained to a new customer that shipping early in the week was the best way to get cargo onto the train. But if you think about it, they could just say, ‘Well, I’m just going to put it on a truck, and I don’t have to worry about anything.’” UP, for its part, acknowledges that there have been “episodic” events that have caused service disruptions in recent weeks, but says it’s the result of IMCs winning new business and taking market share off the highways, thus showing the strength of intermodal. With fluidity returning to its network, UP also said it believes shippers moving freight off the highways will have a better experience going forward. Contact Ari Ashe at ari.ashe@spglobal.com .

UP hikes LA-LB surcharges again as volumes remain elevated

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The world of LTL is slow to embrace change. Business anachronisms permeate current supply chain processes. These vestiges of the way things used to work define the LTL freight transportation procurement process of many modern shippers.David Knuth, logistics specialist at IEWC, a global supplier of cable and wire based in Wisconsin, is happy to have modernized the RFP process, automating the entire LTL bidding procedure with Bid$ense, SMC³’s automated truckload and LTL freight transportation sourcing solution. But when prompted, he can still recall what once was.In his previous job, a large part of his duties were consumed by creating an intermodal bid package for carriers. In a spreadsheet, Knuth detailed the company’s volumes lane by lane, taking care to delete any errant keystrokes or misleading data. He would then email out the information to each carrier, taking time to respond to detailed technical questions about the spreadsheet data. Finally, he had to compile all the results, create an algorithm that would compare the carriers on each lane, and award the business.“It was a huge undertaking. It took about four months to do,” Knuth said of the old process. “It was almost a full-time job for that part of the year, every year.”In his new job at IEWC, he sat down with Bid$ense on day one and was amazed at the capabilities. Knuth had never before used a bid tool. SMC³’s latest versions of Bid$ense automate the process even further, taking truckload and LTL RFPs entirely online. The tool draws on RFP best-practices protocols to streamline the bidding communication process, enabling bidding carriers to respond accurately and promptly to shipper requests. The solution also does all the distribution work automatically, electronically submitting shipper bid data to carriers based on their actual service capabilities and performance records. Carriers are alerted with timely prompts for RFP deliverables, so shippers aren’t waiting by the phone for responses.Another benefit of automating the process is the data-cleansing assistance. When Knuth sent spreadsheets to carriers, data errors might cloud the bidding process; he might have to resend data or simply accept a price that did not truly reflect the costs of doing business. Data cleansing is incredibly beneficial, he said.The spreadsheet technique also made bidding analysis an onerous task. Since Bid$ense automates and streamlines the entire RFP process, intensive examination is now simple. SMC³ knows that each bid has more than one best outcome. With uniform responses from each carrier, shippers can quickly rank results and create an unlimited quantity of what-if scenarios to make the optimal procurement decision.Jesse Burnett of Central Garden &amp; Pet experiences many of the same benefits. Founded in 1980, Central Garden &amp; Pet has spent the last three decades growing from a small garden supply company to a provider of a range of products from dog chews and bird seed to soil supplements and natural insecticides. For much of its life, the company shipped these disparate goods via LTL and truckload carriers to retailers throughout the country, relying on each business unit to negotiate directly with their freight transportation providers. This arrangement worked fairly well for a small company, but as Central Garden &amp; Pet expanded, leadership decided to consolidate decision making.Burnett helped centralize the transportation decision making in 2015 with SMC³’s Bid$ense. Before Bid$ense, every business unit operated independently as far as negotiating with carriers.“There were a lot of different things just floating around,” he said. “We didn’t have master agreements in place; no national pricing at all. The pricing from carriers was just all over the place, depending on where you were.”The transformations he saw with Bid$ense were immediate. Burnett has been using the tool about every other year since its implementation at the company. Central Garden and Pet’s $19.6 million 2019 LTL bid saved the company just more than 9 percent when compared to its historical average. For Burnett, though, bid automation extends far beyond savings.“We knew that we weren’t getting the best pricing offer from our carriers just because nothing was centralized,” he continued. “We knew that if we combined everything from all these business units and paired it with one corporate offering, then it would drive some cost benefit with it.”When the company initially decided to centralize bid procurement, executives researched a number of different methodologies and technologies. In the end, though, Burnett found that Bid$ense was both widespread and well known, and that his carrier partners already knew how to use the application. Burnett also highlighted the data-cleansing process as a major benefit, saying the rigorous process ensures that carriers always return the best price.“It definitely has helped drive savings,” he said. “Any time you go out there and you drive that competitiveness with the carriers and they know they’re in a bid environment, it seems to sharpen their pencils.”Transportation procurement is an integral part of the modern supply chain. With Bid$ense, shippers can develop a strategic implementation plan that saves them time and money, but also helps them create strong relationships with their carrier partners. These carriers appreciate the solution’s data-cleansing process; when carriers receive a complete shipment history and future volume forecast, they don’t have to guess on pricing. Carriers that receive more data from shippers get a complete picture of that shipper’s freight, allowing them to accurately plan instead of simply preparing for the worst-case scenario. Clean data presented through an automated system can lead to both bigger shipment savings and a lasting partnership between carrier and customer.Whether customers are looking to streamline over-the-road transportation bidding by automating the RFP process or create an entirely new, centralized sourcing process, Bid$ense has the analytical horsepower to get the job done.SMC³ 2020 Customer Case Study

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Shippers save money, time with automated transportation bidding tools

SSA Marine Mexico has made significant strides in modernizing its infrastructure at the Port of Manzanillo, investing $15 million to enhance operational efficiency and sustainability at its facilities. This move is part of the company's broader strategy to remain at the forefront of the shipping and logistics industry. •	Strengthening Sustainability with Advanced Technology <figure class="joc_admin__inline-image-position-left joc_admin__inline-image-size-medium" data-figure-size="medium" data-figure-position="left"><img src="/content-assets/1730488295264_Cranes%20arrival%20to%20TEC%20I.png" alt="Cranes arrival to TEC I" class="joc_admin__inline-image-inherit"></figure> In July, SSA Marine Mexico added seven state-of-the-art E-RTG (Electric Rubber-Tired Gantry) cranes to its fleet, valued at $14 million. These advanced cranes were distributed across its two terminals: four cranes were assigned to the Multipurpose Terminal, and three to the Specialized Container Terminal I. What sets these cranes apart is their dual-operation capability, allowing them to function either on electric power or diesel fuel. This innovation plays a critical role in reducing the environmental impact of operations, contributing to a 7% increase in energy efficiency. This efficiency improvement is equivalent to eliminating nearly 4,000 tons of CO2 emissions annually, underscoring SSA Marine Mexico's commitment to sustainability. Through this acquisition, SSA Marine Mexico not only enhances its cargo-handling capabilities but also reinforces its leadership in integrating cutting-edge, eco-friendly technology in the maritime industry. The company continues to push the boundaries of efficiency and sustainability, ensuring long-term value for both its customers and the environment. •	Upgraded Facilities to Meet Growing Demand <figure class="joc_admin__inline-image-position-left joc_admin__inline-image-size-medium" data-figure-size="medium" data-figure-position="left"><img src="/content-assets/1730488350634_Multipurpose%20terminal.png" alt="Multipurpose Terminal" class="joc_admin__inline-image-inherit"></figure> In addition to the new cranes, SSA Marine Mexico has completed crucial modernization and repair work across its Multipurpose Terminal and Specialized Facility at the Port of Manzanillo. This $1 million investment targeted critical infrastructure enhancements, focusing on both structural integrity and operational functionality. Key improvements included leveling approximately 12,000 square meters in the dock area, along with the removal of outdated concrete curbs and asphalt layers. The upgraded space now features high-resistance pavers designed to optimize water drainage and prevent pooling, ensuring safer and more efficient operations. Moreover, the Specialized Facility saw significant upgrades, including the leveling of key warehouse areas to facilitate smoother cargo handling processes. These infrastructure improvements directly enhance the handling of TEUS (Twenty-foot Equivalent Unit containers), further demonstrating SSA Marine Mexico's unwavering commitment to continuous modernization, operational safety, and efficiency. With these initiatives, SSA Marine Mexico is well-positioned to meet the growing demands of the global shipping industry while setting new standards in sustainable port operations. LINK:<a href="https://www.ssamarine.mx/ssa-ing/index" rel="noreferrer" class="joc_admin__link"> https://www.ssamarine.mx/ssa-ing/index</a>

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SSA Marine Mexico Modernizes Facilities with $15 Million Investment 

If there’s one immutable truth in the world of logistics, it’s this: LTL is an inherently complex form of transportation. Tariffs, rates, DIM weights, transit times — it’s enough to confuse even seasoned logistics professionals. The solution to this knowledge gap has historically been on-the-job training or university supply chain education, but for a variety of reasons there is now a pressing need for third-party, remote LTL training that prepares logistics workers for transportation success. Global Scope Can Overlook Local Intricacies In the past, professionals looking to move into a supply chain career learned about the basics of supply chain from universities. However, many of these college supply chain programs are now global in scope, focusing on worldwide supply chain management instead of the intricacies of specialized domestic transportation. And even these programs, which used to be widespread, are becoming less common. LTL is not an industry of broad-brush strokes; supply chain professionals really need a pointillistic understanding of the logistics of LTL in order to excel in the industry. Accelerating Need for Dedicated LTL Education This lack of specified training put the onus on employers to prepare new hires with the LTL knowledge needed to do their jobs. Dedicated LTL study is a necessity, not a luxury. At the same time, changes in LTL and the broader supply chain world are accelerating. The reliance on e-commerce has ballooned since the start of the pandemic, and last-mile LTL shipments and related e-commerce strains on the supply chain won’t diminish once social distancing abates. That genie isn’t going back into the bottle. So supply chain employers need logistics workers that are fully versed in all aspects of the industry, ready to solve unique shipping and delivery problems based on their extensive supply chain knowledge But why care about LTL? It’s been reported that some shippers in today’s world are no longer concerned with what mode is used to ship their goods. A Multimodal Approach Ensures On-Time Delivery This mode agnosticism means supply chain stakeholders have to be well versed in all modes of transportation. As unforeseen weather events and other disruptions, such as protests, become more common, savvy logistics employees will need to be armed with familiarity of all modes, not just the most popular, to ensure that freight is delivered on time, without damage, and in the most financially expedient way possible. Offerings like SMC³’s LTL online education courses cover a wide range of topics from LTL basics and operations to more advanced concepts like pricing analytics and transportation law. The company also has plans to continually refresh content, adding new expert presenters and taking the feedback of students to make the courses even better as time goes on. Learn more about&nbsp;<a href="https://logisticstrainingcenter.com/smc3-courses/" rel="noreferrer" class="joc_admin__link">SMC³’s LTL Online Education program</a>&nbsp;and view the 2021 hybrid schedule, featuring live industry experts,&nbsp;<a href="https://www.smc3.com/onlinelearning2021/" rel="noreferrer" class="joc_admin__link">here.</a>

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Filling the Supply Chain Education Gap with LTL Education Courses

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<div class="phx-topic abstract-wrapper">Shippers, brokers and trucking executives at a Traffic Club of Chicago forum all said the long freight downturn isn’t finished — but are hopeful it’s nearing an end.</div>

Shippers, brokers and trucking executives at a Traffic Club of Chicago forum all said the long freight downturn isn’t finished — but are hopeful it’s nearing an end.

<div class="phx-topic">CHICAGO — The so-called freight recession may be close to its end, but it is still very much alive, shippers, brokers and trucking executives told the Traffic Club of Chicago this week. Logistics executives don’t expect the US freight market to flip and expand until 2025, perhaps closer to mid-year, driven by increased manufacturing output and home sales. “We are in a transitionary period in the market,” Ryan Hammett, director of market intelligence and insights at C.H. Robinson Worldwide, told the Traffic Club’s Transportation &amp; Logistics Customer Forum on Wednesday. “There are signs that things are changing, and we’re moving from a period of oversupply into a little bit more balance,” Hammett said, referring to <a href="https://www.joc.com/article/large-carrier-truckload-capacity-stabilizing-alongside-rates-5788958">truckload capacity</a>. But while supply in the form of trucks may be contracting, demand in the form of shipments hasn’t yet expanded significantly, Hammett and other speakers told the forum. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="dbbd4237-84d4-4708-a9bb-cde62ec92462"></dynamic-object></div>“There’s only a certain amount of freight out there,” said Mitch Morrin, North American outbound logistics lead for Owens Corning. “You can say the freight recession is over all you want, but if the freight doesn’t materialize in the marketplace, it’s not.” Morrin expressed concern that some trucking companies will push for rate increases based on premature claims the <a href="https://www.joc.com/article/mid-level-us-freight-recession-packs-larger-truck-rate-wallop-analyst-5225206">freight downcycle</a> that began in May 2022 is finished. “Are they going to talk expansion into existence? That’s going to be tough,” he said. <h3>Seasonality, regional growth </h3>There are “green shoots” that signal improvement in freight demand, other speakers said. Much of that improvement, however, has been seasonal and regional. “The experience right now between Southern California and the East Coast in terms of freight markets is drastically different,” Hammett said. “I think that we need to begin to expect regional tightness in certain places that you may not see across the rest of America. Regional tightness doesn’t mean a freight market shift.” In the Midwest, “We’re still very flat on our volumes, but what we have seen in the last three months is fewer companies are seeing drops in volume,” said Matt Hart, executive director of the Illinois Trucking Association. “We know volumes have stopped declining, but they’re still very flat,” he said. “They haven’t taken off.” Other economic indicators support claims that a freight recovery is not yet under way, although spot and contract truckload rates have begun rising. The Cass Freight Shipments Index dropped 1.7% in September from August before seasonal adjustment. The American Trucking Associations For-Hire Freight Tonnage Index was 6.4% below its non-seasonally adjusted August reading in September. Routing guide depth metrics from C.H. Robinson Worldwide have dropped in recent months after rising toward July, Hammett said, indicating that primary carriers in contract routing guides are still picking up their customers’ freight most of the time. “A change in a freight recession is not a flat line,” Hammett said. <h3>Manufacturing malaise </h3>Hammett also noted that US manufacturing capacity utilization has dropped from its most recent peak in May 2022, the start of the freight recession. The seasonally adjusted S&amp;P Global US Manufacturing Purchasing Managers’ Index (PMI) was 48.5 in October, up from 47.3 in September but below the 50 “no-change” mark for a fourth consecutive month. The Institute for Supply Management (ISM) PMI <a href="https://www.reuters.com/markets/us/us-manufacturing-drops-15-month-low-october-2024-11-01/">also remained in contraction</a>, at 46.5 in October. “Industrial production is not doing well,” said Hammett. “[But] an upside is the consumer is still healthy.” Hammett sees consumer spending on goods and services becoming more balanced. “To really say that the market is turned we’re going to have to see manufacturing come back, we have to see housing starts coming back,” said Vince Paperiello, senior vice president of intermodal at STG Logistics. For Paperiello, a key indicator that the freight recession is ending will be seeing intermodal containers “come down off the stacks” where they’ve piled up around the US over the past two years. “When you see that, we’ll be out of the freight recession,” he said. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

CHICAGO — The so-called freight recession may be close to its end, but it is still very much alive, shippers, brokers and trucking executives told the Traffic Club of Chicago this week. Logistics executives don’t expect the US freight market to flip and expand until 2025, perhaps closer to mid-year, driven by increased manufacturing output and home sales. “We are in a transitionary period in the market,” Ryan Hammett, director of market intelligence and insights at C.H. Robinson Worldwide, told the Traffic Club’s Transportation & Logistics Customer Forum on Wednesday. “There are signs that things are changing, and we’re moving from a period of oversupply into a little bit more balance,” Hammett said, referring to truckload capacity . But while supply in the form of trucks may be contracting, demand in the form of shipments hasn’t yet expanded significantly, Hammett and other speakers told the forum. “There’s only a certain amount of freight out there,” said Mitch Morrin, North American outbound logistics lead for Owens Corning. “You can say the freight recession is over all you want, but if the freight doesn’t materialize in the marketplace, it’s not.” Morrin expressed concern that some trucking companies will push for rate increases based on premature claims the freight downcycle that began in May 2022 is finished. “Are they going to talk expansion into existence? That’s going to be tough,” he said. Seasonality, regional growth There are “green shoots” that signal improvement in freight demand, other speakers said. Much of that improvement, however, has been seasonal and regional. “The experience right now between Southern California and the East Coast in terms of freight markets is drastically different,” Hammett said. “I think that we need to begin to expect regional tightness in certain places that you may not see across the rest of America. Regional tightness doesn’t mean a freight market shift.” In the Midwest, “We’re still very flat on our volumes, but what we have seen in the last three months is fewer companies are seeing drops in volume,” said Matt Hart, executive director of the Illinois Trucking Association. “We know volumes have stopped declining, but they’re still very flat,” he said. “They haven’t taken off.” Other economic indicators support claims that a freight recovery is not yet under way, although spot and contract truckload rates have begun rising. The Cass Freight Shipments Index dropped 1.7% in September from August before seasonal adjustment. The American Trucking Associations For-Hire Freight Tonnage Index was 6.4% below its non-seasonally adjusted August reading in September. Routing guide depth metrics from C.H. Robinson Worldwide have dropped in recent months after rising toward July, Hammett said, indicating that primary carriers in contract routing guides are still picking up their customers’ freight most of the time. “A change in a freight recession is not a flat line,” Hammett said. Manufacturing malaise Hammett also noted that US manufacturing capacity utilization has dropped from its most recent peak in May 2022, the start of the freight recession. The seasonally adjusted S&P Global US Manufacturing Purchasing Managers’ Index (PMI) was 48.5 in October, up from 47.3 in September but below the 50 “no-change” mark for a fourth consecutive month. The Institute for Supply Management (ISM) PMI also remained in contraction , at 46.5 in October. “Industrial production is not doing well,” said Hammett. “[But] an upside is the consumer is still healthy.” Hammett sees consumer spending on goods and services becoming more balanced. “To really say that the market is turned we’re going to have to see manufacturing come back, we have to see housing starts coming back,” said Vince Paperiello, senior vice president of intermodal at STG Logistics. For Paperiello, a key indicator that the freight recession is ending will be seeing intermodal containers “come down off the stacks” where they’ve piled up around the US over the past two years. “When you see that, we’ll be out of the freight recession,” he said. Contact William B. Cassidy at bill.cassidy@spglobal.com .

Rail News

Truckload

Prolonged US freight ‘recession’ to drag into 2025: transportation executives

<div class="phx-topic abstract-wrapper">Forwarders and industry analysts forecast strong import volumes through the early Lunar New Year that begins Jan. 29 as importers of time-sensitive merchandise and manufacturing components route shipments through the country’s busiest gateway.</div>

Forwarders and industry analysts forecast strong import volumes through the early Lunar New Year that begins Jan. 29 as importers of time-sensitive merchandise and manufacturing components route shipments through the country’s busiest gateway.

<div class="phx-topic">Rail container dwell times at the ports of Los Angeles and Long Beach rose to their highest level in two years last month and will likely remain elevated through January amid higher-than-normal import volumes driven in part by cargo diversions from the US East and Gulf coasts. Rail-destined container dwell times in the largest US port complex increased to an average of 9.86 days in October, up from 9.25 days in September and 8.2 days in August, according to data from the Pacific Merchant Shipping Association (PMSA), which represents terminal operators and shipping lines on the West Coast. “I think dwell times will remain elongated until the rails get some relief on the volumes,” said Lawrence Gross, president and founder of Gross Transportation and a Journal of Commerce analyst. US imports from Asia moving through Los Angeles-Long Beach have been exceptionally strong since the earlier-than-usual peak season began in early summer. Asian imports in the gateway were up 30% in July through September compared with the same period last year, according to PIERS, a Journal of Commerce sister product within S&amp;P Global. “The continued upward trajectory in dwell times through October underscores both the complexity and adaptability of our supply chain as we manage increased cargo volumes and try to balance intermodal equipment availability with demand,” said Natasha Villa, external affairs manager for the PMSA. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="155dedc1-99f2-4adf-a449-1c9ab2510f95"></dynamic-object></div>Forwarders and industry analysts forecast strong import volumes through the early Lunar New Year that begins Jan. 29 as importers of time-sensitive merchandise and manufacturing components route shipments through Los Angeles-Long Beach. Importers are <a href="https://www.joc.com/article/ila-breaks-off-contract-talks-accuses-usmx-of-semi-automation-push-5810392">concerned about the possibility of another strike by the International Longshoremen’s Association (ILA)</a> when its extended contract expires on Jan. 15. Importers are also front-loading shipments in anticipation <a href="https://www.joc.com/article/hapag-lloyd-sees-possible-pre-lny-cargo-rush-amid-very-healthy-demand-5817691">of a large increase in tariffs under the new Trump administration</a>.<h3>Terminals, railroads say rail dwells have peaked </h3>Railroad and terminal operator sources, meanwhile, told the Journal of Commerce that while import volumes will remain higher than normal through January, imports through Southern California peaked last month. Terminal operators are now focusing on relieving the backlog of rail containers that built up in recent months. “It definitely plateaued in October and we’re chipping away at the backlog,” said Alan McCorkle, president of Yusen Terminals in Los Angeles. Rail container dwell times at Long Beach Container Terminal (LBCT) last week were down to about three days, said Anthony Otto, LBCT’s president. “We’re all caught up and things are headed in the right direction,” Otto said. Union Pacific Railroad said the past month has seen significant improvement in Southern California. “So much has changed since October. Today (Nov. 14), Union Pacific’s total LA-LB inventory count is down to its lowest level since mid-July 2024,” a UP spokesperson told the Journal of Commerce. “We have also made significant progress in working with individual port terminals to significantly reduce aged containers.” UP this year has experienced a higher jump in loaded railcars idling. Between January and August, the railroad averaged 68 loaded intermodal railcars idling per week, according to the US Surface Transportation Board (STB). The average grew to 139 in September and 199 in October, although it peaked at 241 in the second week of October. BNSF Railway averaged 221 railcars idling in January through August, 170 in September, and 237 in October, with the peak in the third week of October, according to the STB data. <h3>Shippers still experiencing delays </h3>The upbeat analysis of the terminals and railroads is of little solace to shippers who say they still struggle with delays at the marine terminals. An importer in the automotive sector said he has no recourse but to build a buffer for rail container dwell times into his Southern California supply chain. “We have been doing this for months,” said the importer, who did not want to be identified. “Big guys move quicker, the rest of us slower.” Steve Hughes, president and CEO of the consultancy HCS International, said Southern California is an important gateway for automotive industry imports due to its extensive intermodal rail connections to the eastern half of the US. For many importers, rerouting shipments to other ports is not an option. “If you’re looking for good rail connections, there are not many viable alternatives,” Hughes said, noting that other West Coast gateways such as Seattle-Tacoma and Vancouver are also experiencing rail container dwell issues. Mario Cordero, executive director of the Port of Long Beach, said he feels “very comfortable” about the ability of terminal operators in the port complex to handle the continued high import volumes projected through the Lunar New Year. Cordero noted that Long Beach in October had its busiest month ever in terms of total cargo volume. With Los Angeles this week scheduled to report a strong October, Cordero said the port complex is handling the record volumes without the backlog of 109 container ships it experienced in January 2022. “We [Long Beach] are at 70% of capacity,” he said. “We’re already receiving cargo diverted from the East Coast. If there’s a bump in cargo, we’ll handle it.” Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>.Ari Ashe, Senior Editor, contributed to this story </div>

Rail container dwell times at the ports of Los Angeles and Long Beach rose to their highest level in two years last month and will likely remain elevated through January amid higher-than-normal import volumes driven in part by cargo diversions from the US East and Gulf coasts. Rail-destined container dwell times in the largest US port complex increased to an average of 9.86 days in October, up from 9.25 days in September and 8.2 days in August, according to data from the Pacific Merchant Shipping Association (PMSA), which represents terminal operators and shipping lines on the West Coast. “I think dwell times will remain elongated until the rails get some relief on the volumes,” said Lawrence Gross, president and founder of Gross Transportation and a Journal of Commerce analyst. US imports from Asia moving through Los Angeles-Long Beach have been exceptionally strong since the earlier-than-usual peak season began in early summer. Asian imports in the gateway were up 30% in July through September compared with the same period last year, according to PIERS, a Journal of Commerce sister product within S&P Global. “The continued upward trajectory in dwell times through October underscores both the complexity and adaptability of our supply chain as we manage increased cargo volumes and try to balance intermodal equipment availability with demand,” said Natasha Villa, external affairs manager for the PMSA. Forwarders and industry analysts forecast strong import volumes through the early Lunar New Year that begins Jan. 29 as importers of time-sensitive merchandise and manufacturing components route shipments through Los Angeles-Long Beach. Importers are concerned about the possibility of another strike by the International Longshoremen’s Association (ILA) when its extended contract expires on Jan. 15. Importers are also front-loading shipments in anticipation of a large increase in tariffs under the new Trump administration . Terminals, railroads say rail dwells have peaked Railroad and terminal operator sources, meanwhile, told the Journal of Commerce that while import volumes will remain higher than normal through January, imports through Southern California peaked last month. Terminal operators are now focusing on relieving the backlog of rail containers that built up in recent months. “It definitely plateaued in October and we’re chipping away at the backlog,” said Alan McCorkle, president of Yusen Terminals in Los Angeles. Rail container dwell times at Long Beach Container Terminal (LBCT) last week were down to about three days, said Anthony Otto, LBCT’s president. “We’re all caught up and things are headed in the right direction,” Otto said. Union Pacific Railroad said the past month has seen significant improvement in Southern California. “So much has changed since October. Today (Nov. 14), Union Pacific’s total LA-LB inventory count is down to its lowest level since mid-July 2024,” a UP spokesperson told the Journal of Commerce. “We have also made significant progress in working with individual port terminals to significantly reduce aged containers.” UP this year has experienced a higher jump in loaded railcars idling. Between January and August, the railroad averaged 68 loaded intermodal railcars idling per week, according to the US Surface Transportation Board (STB). The average grew to 139 in September and 199 in October, although it peaked at 241 in the second week of October. BNSF Railway averaged 221 railcars idling in January through August, 170 in September, and 237 in October, with the peak in the third week of October, according to the STB data. Shippers still experiencing delays The upbeat analysis of the terminals and railroads is of little solace to shippers who say they still struggle with delays at the marine terminals. An importer in the automotive sector said he has no recourse but to build a buffer for rail container dwell times into his Southern California supply chain. “We have been doing this for months,” said the importer, who did not want to be identified. “Big guys move quicker, the rest of us slower.” Steve Hughes, president and CEO of the consultancy HCS International, said Southern California is an important gateway for automotive industry imports due to its extensive intermodal rail connections to the eastern half of the US. For many importers, rerouting shipments to other ports is not an option. “If you’re looking for good rail connections, there are not many viable alternatives,” Hughes said, noting that other West Coast gateways such as Seattle-Tacoma and Vancouver are also experiencing rail container dwell issues. Mario Cordero, executive director of the Port of Long Beach, said he feels “very comfortable” about the ability of terminal operators in the port complex to handle the continued high import volumes projected through the Lunar New Year. Cordero noted that Long Beach in October had its busiest month ever in terms of total cargo volume. With Los Angeles this week scheduled to report a strong October, Cordero said the port complex is handling the record volumes without the backlog of 109 container ships it experienced in January 2022. “We [Long Beach] are at 70% of capacity,” he said. “We’re already receiving cargo diverted from the East Coast. If there’s a bump in cargo, we’ll handle it.” Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .Ari Ashe, Senior Editor, contributed to this story

North American ports

Marine terminals

Importers navigate two-year high rail container dwells in Los Angeles-Long Beach

<div class="phx-topic abstract-wrapper">While there is some frontloading of US imports from China to get ahead of expected tariffs in the coming Trump administration, most cargo owners appear to be holding their fire, writes Journal of Commerce Executive Editor Mark Szakonyi. </div>

While there is some frontloading of US imports from China to get ahead of expected tariffs in the coming Trump administration, most cargo owners appear to be holding their fire, writes Journal of Commerce Executive Editor Mark Szakonyi.

<div class="phx-topic">US importers are better prepared for the imminent tariffs that President-elect Donald Trump has promised to slap on goods from China, yet the majority don’t seem to be significantly rushing orders to get those goods across the docks ahead of his inauguration. Rather, tariff fears are just one of several factors pushing US importers to book more than usual during this extended peak season. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5821199_0.1.jpg"></img></div>In Trump’s first term, US importers were at first unsure how serious the president was about following through with his tariff threats; indeed, he was very serious. In his second term, it’s less a question of “if” and more “when” Trump will implement harsher tariffs on China, which he says will be higher than 60%. The extent to which US importers frontload ocean cargoes has implications for shipping price and service. Trump’s first term was marked by three waves of escalating US tariffs on Chinese goods and two postponements of implementations. That created five periods in which US importers moved goods earlier, artificially creating demand that fueled differing degrees of spot rate volatility and pulled down ocean reliability. And, to a lesser degree, slowed cargo flow through ports. This time, however, knowing that more tariffs will be a reality rather than a possibility gives shippers a firmer base to scope out potential responses and make plans, said Chris Rogers, head of supply chain research at S&amp;P Global Market Intelligence. S&amp;P Global is the parent company of the Journal of Commerce. There’s also some degree of knowing what types of goods are first in the firing line for higher US tariffs, given the first Trump administration in December 2019 suspended tariffs targeting imports of mobile phones and laptops from China. Such high-value items could easily be moved via faster air transport rather than ocean shipping to narrowly avoid any tariff deadline. <h3>Multiple factors drive booking bump </h3>Based on discussions with three cargo owners and various forwarders, a degree of frontloading to avoid imminent Chinese tariffs is occurring and will continue. The logistics directors at three midsize importers said they had an internal goal to get more goods from China into US ports by Jan. 1. “We are experiencing an overwhelming surge in booking demands, with available space becoming increasingly constrained for both the USWC and the USEC,” Marc Meier, global head of ocean freight at Toll Global Forwarding, told the Journal of Commerce. The stronger-than-normal booking demand, Meier said, was due to a litany of factors: Chinese tariff fears, strong blank sailings and the <a href="https://www.joc.com/article/ila-breaks-off-contract-talks-accuses-usmx-of-semi-automation-push-5810392">looming Jan. 15 deadline for longshore workers and employers</a> to reach a deal or risk another strike along the US East and Gulf coasts. Beyond knowing that tariffs are coming, US importers have higher carrying costs than they did during Trump’s first term, thanks to higher interest rates. The more elevated prices to store goods will prompt some importers to be more conservative with just how much they frontload. How much of that frontloading is fueled by importers moving goods to avoid the strike threat and earlier Lunar New Year celebrations is unclear. Chinese factories stall or slow production during the nearly two-week holiday period that next year begins on Jan. 29. US import bookings out of China haven’t jumped despite the tariff threat, according to logistics software provider e2open. “While November has seen a slight uptick compared to October, this is likely due to the lower order volume during China’s Golden Week holiday in October,” e2open said in a statement to the Journal of Commerce. US imports from Asia were up 10.5% year over year in October, according to PIERS, a Journal of Commerce sister product within S&amp;P Global. Stephen Nothdurft, vice president of North America sales at forwarder MOL Consolidation Service, said tariffs were playing just “a bit of a role” in extending peak season volumes. He also expected importers dependent on the East and Gulf coasts to wait out the Jan. 15 deadline. “Nobody is looking to rush to get crazily ahead of this East Coast situation,” he said. “[And] nobody is charging forward on the tariff [risk].” That seems to be the sentiment of approximately 100 shippers polled by Ravi Shanker, Morgan Stanley's managing director and lead analyst for North American freight transportation. More than 70% of those polled said they didn’t plan to restock differently due to Trump winning a second term. Of those shippers, a little more than a third said they are considering “moderating or significantly” increasing inventories ahead of tariffs while an amazing 42% of shippers don’t expect to change behavior in the face of impending tariffs. Contact Mark Szakonyi at <a href="mark.szakonyi@spglobal.com">mark.szakonyi@spglobal.com</a>. </div>

US importers are better prepared for the imminent tariffs that President-elect Donald Trump has promised to slap on goods from China, yet the majority don’t seem to be significantly rushing orders to get those goods across the docks ahead of his inauguration. Rather, tariff fears are just one of several factors pushing US importers to book more than usual during this extended peak season. In Trump’s first term, US importers were at first unsure how serious the president was about following through with his tariff threats; indeed, he was very serious. In his second term, it’s less a question of “if” and more “when” Trump will implement harsher tariffs on China, which he says will be higher than 60%. The extent to which US importers frontload ocean cargoes has implications for shipping price and service. Trump’s first term was marked by three waves of escalating US tariffs on Chinese goods and two postponements of implementations. That created five periods in which US importers moved goods earlier, artificially creating demand that fueled differing degrees of spot rate volatility and pulled down ocean reliability. And, to a lesser degree, slowed cargo flow through ports. This time, however, knowing that more tariffs will be a reality rather than a possibility gives shippers a firmer base to scope out potential responses and make plans, said Chris Rogers, head of supply chain research at S&P Global Market Intelligence. S&P Global is the parent company of the Journal of Commerce. There’s also some degree of knowing what types of goods are first in the firing line for higher US tariffs, given the first Trump administration in December 2019 suspended tariffs targeting imports of mobile phones and laptops from China. Such high-value items could easily be moved via faster air transport rather than ocean shipping to narrowly avoid any tariff deadline. Multiple factors drive booking bump Based on discussions with three cargo owners and various forwarders, a degree of frontloading to avoid imminent Chinese tariffs is occurring and will continue. The logistics directors at three midsize importers said they had an internal goal to get more goods from China into US ports by Jan. 1. “We are experiencing an overwhelming surge in booking demands, with available space becoming increasingly constrained for both the USWC and the USEC,” Marc Meier, global head of ocean freight at Toll Global Forwarding, told the Journal of Commerce. The stronger-than-normal booking demand, Meier said, was due to a litany of factors: Chinese tariff fears, strong blank sailings and the looming Jan. 15 deadline for longshore workers and employers to reach a deal or risk another strike along the US East and Gulf coasts. Beyond knowing that tariffs are coming, US importers have higher carrying costs than they did during Trump’s first term, thanks to higher interest rates. The more elevated prices to store goods will prompt some importers to be more conservative with just how much they frontload. How much of that frontloading is fueled by importers moving goods to avoid the strike threat and earlier Lunar New Year celebrations is unclear. Chinese factories stall or slow production during the nearly two-week holiday period that next year begins on Jan. 29. US import bookings out of China haven’t jumped despite the tariff threat, according to logistics software provider e2open. “While November has seen a slight uptick compared to October, this is likely due to the lower order volume during China’s Golden Week holiday in October,” e2open said in a statement to the Journal of Commerce. US imports from Asia were up 10.5% year over year in October, according to PIERS, a Journal of Commerce sister product within S&P Global. Stephen Nothdurft, vice president of North America sales at forwarder MOL Consolidation Service, said tariffs were playing just “a bit of a role” in extending peak season volumes. He also expected importers dependent on the East and Gulf coasts to wait out the Jan. 15 deadline. “Nobody is looking to rush to get crazily ahead of this East Coast situation,” he said. “[And] nobody is charging forward on the tariff [risk].” That seems to be the sentiment of approximately 100 shippers polled by Ravi Shanker, Morgan Stanley's managing director and lead analyst for North American freight transportation. More than 70% of those polled said they didn’t plan to restock differently due to Trump winning a second term. Of those shippers, a little more than a third said they are considering “moderating or significantly” increasing inventories ahead of tariffs while an amazing 42% of shippers don’t expect to change behavior in the face of impending tariffs. Contact Mark Szakonyi at mark.szakonyi@spglobal.com .

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