<div class="phx-topic abstract-wrapper">The acquisition is part of a surge in logistics M&amp;A transactions aimed at simplifying access to systems and services for shippers and brokers.</div>

The acquisition is part of a surge in logistics M&A transactions aimed at simplifying access to systems and services for shippers and brokers.

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<div class="phx-topic">Third-party logistics provider (3PL) BlueGrace Logistics on Tuesday said it will acquire FreightCenter, an online truck freight management and pricing platform. The transaction, terms of which were not disclosed, will connect FreightCenter’s shipper customers directly to BlueGrace’s transportation management system (TMS). “This acquisition is the perfect opportunity to enhance the logistics experience for thousands of customers,” BlueGrace CEO Bobby Harris said in a statement. BlueGrace’s technology complements FreightCenter’s commitment to “simplifying freight for our customers,” FreightCenter CEO Matthew Brosious said in the statement. FreightCenter is not a digital logistics newcomer. The company was founded in 1998 by Brosious and his father as a storefront shipping business called “Send It Packing.” In the early 2000s, Brosious leveraged the internet to create an online platform that provided less-than-truckload (LTL) and truckload rates, bookings and shipment tracking. The deal is part of a surge in logistics technology <a href="https://www.joc.com/article/ma-pace-signals-truckload-tech-industry-unsure-about-unbundling-5909043">merger and acquisition activity</a> propelled by customers’ need for ease of service alongside expanded service options. Following a rapid growth of logistics technology systems and companies in recent years, shippers and brokers are looking to get more value from fewer systems. That’s spurring buyouts and integrations in the technology space serving shippers and brokers. Larger logistics tech providers are racing to build end-to-end offerings. For example, DAT, the largest US spot market load board, recently <a href="https://www.joc.com/article/dat-acquires-trucker-tools-in-move-to-reduce-load-board-driver-churn-5907848">acquired Trucker Tools</a>, a platform used by brokers to book loads and track carriers and shipments. At BlueGrace, FreightCenter customers will have access to load optimization tools the Tampa-based 3PL acquired when it purchased Evos Smart Tools last year. Technology providers are also dealing with the impacts of a prolonged freight recession and the proliferation of artificial intelligence (AI) in all types of systems. Acquisitions can help tech companies position themselves for an eventual freight recovery and for more widespread adoption of AI in logistics systems. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a></div>

Third-party logistics provider (3PL) BlueGrace Logistics on Tuesday said it will acquire FreightCenter, an online truck freight management and pricing platform. The transaction, terms of which were not disclosed, will connect FreightCenter’s shipper customers directly to BlueGrace’s transportation management system (TMS). “This acquisition is the perfect opportunity to enhance the logistics experience for thousands of customers,” BlueGrace CEO Bobby Harris said in a statement. BlueGrace’s technology complements FreightCenter’s commitment to “simplifying freight for our customers,” FreightCenter CEO Matthew Brosious said in the statement. FreightCenter is not a digital logistics newcomer. The company was founded in 1998 by Brosious and his father as a storefront shipping business called “Send It Packing.” In the early 2000s, Brosious leveraged the internet to create an online platform that provided less-than-truckload (LTL) and truckload rates, bookings and shipment tracking. The deal is part of a surge in logistics technology merger and acquisition activity propelled by customers’ need for ease of service alongside expanded service options. Following a rapid growth of logistics technology systems and companies in recent years, shippers and brokers are looking to get more value from fewer systems. That’s spurring buyouts and integrations in the technology space serving shippers and brokers. Larger logistics tech providers are racing to build end-to-end offerings. For example, DAT, the largest US spot market load board, recently acquired Trucker Tools , a platform used by brokers to book loads and track carriers and shipments. At BlueGrace, FreightCenter customers will have access to load optimization tools the Tampa-based 3PL acquired when it purchased Evos Smart Tools last year. Technology providers are also dealing with the impacts of a prolonged freight recession and the proliferation of artificial intelligence (AI) in all types of systems. Acquisitions can help tech companies position themselves for an eventual freight recovery and for more widespread adoption of AI in logistics systems. Contact William B. Cassidy at bill.cassidy@spglobal.com

Logistics Technology News

Truckload

Truck brokers

Supply chain

BlueGrace joins logistics M&A wave, adding FreightCenter to its portfolio

<div class="phx-topic abstract-wrapper">The challenges for truck demand growth in 2025 vary depending on activity in four major sectors: warehousing, office, data centers and manufacturing, according to Jason Miller.</div>

The challenges for truck demand growth in 2025 vary depending on activity in four major sectors: warehousing, office, data centers and manufacturing, according to Jason Miller.

<div class="phx-topic">While I forecast that demand conditions in the US for-hire trucking sector will improve in 2025 after approximately 10 quarters of freight volume declines, mixed conditions in nonresidential construction pose headwinds for freight demand, according to an analysis of US Census Bureau data adjusted for inflation, when appropriate. The challenges for truck demand growth vary depending on the four major sectors: warehousing, office, data centers and manufacturing. <h3>Warehouse construction</h3>Warehouse construction experienced a boom after the onset of the COVID-19 pandemic as retailers rushed to add fulfillment center capacity in response to a sharp increase in e-commerce sales, which saw over 40% year-over-year growth starting in the second quarter of 2020 through early 2021. However, <a href="https://www.joc.com/article/us-warehouse-vacancies-expected-to-fall-from-2024-peak-5912895">demand for warehousing space has cooled</a> since 2022 highs as retailers such as general merchandisers, who, after increasing physical inventories by almost 20% above pre-COVID-19 levels by mid-2022, downsized inventories by about 9%. Consistent with cooling warehousing demand, the inflation-adjusted value of warehousing construction declined approximately 19% in 2024 from 2023 levels, with the important caveat that current construction levels remain near those witnessed in late 2019. The good news for trucking companies hauling these construction materials is that construction appears to be moving along the bottom of a trough. Considering that we are entering 2025 with interest rates 100 basis points below their 2024 levels, Chinese e-commerce firms expanding their US warehousing footprint to provide more rapid fulfillment, and increasing scrutiny of de minimis shipments such as Mexico’s recently <a href="https://www.joc.com/article/mexico-curtails-duty-free-fulfillment-option-for-apparel-textile-importers-5911557">announced crackdown</a> of duty-free textile and apparel imports, positive demand tailwinds should result in more demand for warehousing space. <h3>Office building construction</h3><div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5918532_0.1.jpg"></img></div>Despite the attention devoted to warehousing construction, office building construction exceeds warehousing construction by a wide margin on a dollar-value basis (averaging $84.1 billion dollars on an annual basis in 2024 versus $61 billion for warehousing). Unfortunately for trucking firms that haul materials to office building construction sites, inflation-adjusted construction of office buildings has been moving horizontally since early 2023 and is down approximately 29% from levels observed in 2019. Although some companies have curtailed remote work, levels of working from home have been stable since January 2023, according to Stanford economist Nick Bloom. That suggests no uptick in office building construction is coming in 2025. <h3>Data center construction</h3>Data center construction in the US has been surging over the past two years, with inflation-adjusted construction up 80% as of November 2024 from the average level observed in 2023. For perspective, construction levels today are 12 times what they were a decade ago, adjusted for inflation. At present, the greatest hurdle for constructing data centers does not appear to be demand — which is voracious — but rather supply-side constraints such as obtaining enough electricians and electricity, and even municipalities placing limits on datacenter construction. Motor carriers hauling freight for electric equipment manufacturers are set to benefit from the AI computing boom placing strains on current power generation and transmission capacity, with domestic production in this sector currently at the highest levels seen since the global financial crisis. <h3>Manufacturing plant construction </h3>On the surface, data for spending on manufacturing plants looks downright rosy, with the inflation-adjusted value of construction put in place currently 20% above 2023 levels and double levels observed in 2017–19. As manufacturing accounts for most for-hire trucking demand, a cursory look would suggest not only strong demand for hauling materials to build plants, but a surge of demand coming in the future once these plants are completed. However, there is an important caveat: most of the increase in construction spending is for electronics and electrical equipment, appliances and components. These subsectors are capturing investment in semiconductor plants and electric vehicle batteries. In 2019, the value of construction put in place for those subsectors was $8.3 billion; for the first 11 months of 2024, it was $128.3 billion (annualized), or 15.4 times greater. In comparison, construction of all other factories has increased from $72.3 billion in 2019 to $103 billion in 2024 (annualized), and that isn’t considering inflation. On an inflation-adjusted basis, investment in sectors outside of electronics and electrical goods remains unchanged from 2019 levels. Given semiconductor plants generate relatively limited volumes of freight for for-hire trucking companies, the construction spending data for the remainder of manufacturing coupled with the <a href="https://data.census.gov/table/BDSTIMESERIES.BDSEAGE?y=2022&amp;n=31-33">tepid number of new plant openings in the US</a> since the end of the global financial crisis means trucking firms should not anticipate a flood of freight from newly opened US factories in 2025. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="4b6ae736-687b-4c74-b77f-e2ec3ce581c7"></dynamic-object></div><h3>What I’ll be watching</h3>The index I will be watching most closely in 2025 to understand the impact of construction activity on freight demand is the Federal Reserve Board’s industrial production index for construction supplies. Movements of that index, which captures production of architectural and structural metals, concrete and concrete products, construction steel, stone mining and quarrying, and various plastic products, to name a few sectors, correspond well to periods recognized as bull versus bear markets for freight demand. Currently, that index appears to be moving along the bottom of a trough after nearly three years of decline from its most recent peak in the first quarter of 2022. An increase in this index will be a harbinger of better days to come for trucking companies. Contact Jason Miller at <a href="mailto:mill2831@broad.msu.edu">mill2831@broad.msu.edu</a>.</div>

While I forecast that demand conditions in the US for-hire trucking sector will improve in 2025 after approximately 10 quarters of freight volume declines, mixed conditions in nonresidential construction pose headwinds for freight demand, according to an analysis of US Census Bureau data adjusted for inflation, when appropriate. The challenges for truck demand growth vary depending on the four major sectors: warehousing, office, data centers and manufacturing. Warehouse construction Warehouse construction experienced a boom after the onset of the COVID-19 pandemic as retailers rushed to add fulfillment center capacity in response to a sharp increase in e-commerce sales, which saw over 40% year-over-year growth starting in the second quarter of 2020 through early 2021. However, demand for warehousing space has cooled since 2022 highs as retailers such as general merchandisers, who, after increasing physical inventories by almost 20% above pre-COVID-19 levels by mid-2022, downsized inventories by about 9%. Consistent with cooling warehousing demand, the inflation-adjusted value of warehousing construction declined approximately 19% in 2024 from 2023 levels, with the important caveat that current construction levels remain near those witnessed in late 2019. The good news for trucking companies hauling these construction materials is that construction appears to be moving along the bottom of a trough. Considering that we are entering 2025 with interest rates 100 basis points below their 2024 levels, Chinese e-commerce firms expanding their US warehousing footprint to provide more rapid fulfillment, and increasing scrutiny of de minimis shipments such as Mexico’s recently announced crackdown of duty-free textile and apparel imports, positive demand tailwinds should result in more demand for warehousing space. Office building construction Despite the attention devoted to warehousing construction, office building construction exceeds warehousing construction by a wide margin on a dollar-value basis (averaging $84.1 billion dollars on an annual basis in 2024 versus $61 billion for warehousing). Unfortunately for trucking firms that haul materials to office building construction sites, inflation-adjusted construction of office buildings has been moving horizontally since early 2023 and is down approximately 29% from levels observed in 2019. Although some companies have curtailed remote work, levels of working from home have been stable since January 2023, according to Stanford economist Nick Bloom. That suggests no uptick in office building construction is coming in 2025. Data center construction Data center construction in the US has been surging over the past two years, with inflation-adjusted construction up 80% as of November 2024 from the average level observed in 2023. For perspective, construction levels today are 12 times what they were a decade ago, adjusted for inflation. At present, the greatest hurdle for constructing data centers does not appear to be demand — which is voracious — but rather supply-side constraints such as obtaining enough electricians and electricity, and even municipalities placing limits on datacenter construction. Motor carriers hauling freight for electric equipment manufacturers are set to benefit from the AI computing boom placing strains on current power generation and transmission capacity, with domestic production in this sector currently at the highest levels seen since the global financial crisis. Manufacturing plant construction On the surface, data for spending on manufacturing plants looks downright rosy, with the inflation-adjusted value of construction put in place currently 20% above 2023 levels and double levels observed in 2017–19. As manufacturing accounts for most for-hire trucking demand, a cursory look would suggest not only strong demand for hauling materials to build plants, but a surge of demand coming in the future once these plants are completed. However, there is an important caveat: most of the increase in construction spending is for electronics and electrical equipment, appliances and components. These subsectors are capturing investment in semiconductor plants and electric vehicle batteries. In 2019, the value of construction put in place for those subsectors was $8.3 billion; for the first 11 months of 2024, it was $128.3 billion (annualized), or 15.4 times greater. In comparison, construction of all other factories has increased from $72.3 billion in 2019 to $103 billion in 2024 (annualized), and that isn’t considering inflation. On an inflation-adjusted basis, investment in sectors outside of electronics and electrical goods remains unchanged from 2019 levels. Given semiconductor plants generate relatively limited volumes of freight for for-hire trucking companies, the construction spending data for the remainder of manufacturing coupled with the tepid number of new plant openings in the US since the end of the global financial crisis means trucking firms should not anticipate a flood of freight from newly opened US factories in 2025. What I’ll be watching The index I will be watching most closely in 2025 to understand the impact of construction activity on freight demand is the Federal Reserve Board’s industrial production index for construction supplies. Movements of that index, which captures production of architectural and structural metals, concrete and concrete products, construction steel, stone mining and quarrying, and various plastic products, to name a few sectors, correspond well to periods recognized as bull versus bear markets for freight demand. Currently, that index appears to be moving along the bottom of a trough after nearly three years of decline from its most recent peak in the first quarter of 2022. An increase in this index will be a harbinger of better days to come for trucking companies. Contact Jason Miller at mill2831@broad.msu.edu .

Surface

Nonresidential construction a headwind for trucking demand: analyst

<div class="phx-topic abstract-wrapper">Carriers adopting a “wait-and-see” approach to the new regulation will face significant penalties and a potential loss of income from decarbonization-focused customers, according to a report from the classification society.</div>

Carriers adopting a “wait-and-see” approach to the new regulation will face significant penalties and a potential loss of income from decarbonization-focused customers, according to a report from the classification society.

<div class="phx-topic">The <a href="https://www.joc.com/article/container-carriers-to-shoulder-bulk-of-europe-fuel-intensity-rule-5192246">FuelEU regulation</a> that came into effect on Jan. 1 is “a major market intervention” by the European Union that will determine the long-term profitability and sustainable operation of vessels in European waters, according to Lloyd’s Register. While compliance with the EU <a href="https://www.joc.com/article/european-parliament-approves-shipping-ets-but-stakeholders-wary-5202492">Emissions Trading Scheme</a> (ETS) carbon tax represents an immediate cost for shipping companies, the financial implications of FuelEU for shipowners electing to continue using fossil fuels may be gradual but would ultimately be significantly higher. “Today, many owners and managers are concerned with the EU Emissions Trading Scheme designed to reduce emissions produced by shipping,” Ryan Bax, lead business advisory consultant at Lloyd’s Register (LR), noted in a recent report from the classification society. “However, LR projections show that the impact of FuelEU will eclipse that of the ETS around 2035 and dwarf it beyond that,” Bax added. “Business as usual is therefore no longer an option and progressive decisions must be made to deal with this challenge.” FuelEU requires shipping companies to increase their uptake of renewable and low-carbon fuels by setting limits on the yearly average greenhouse gas (GHG) intensity of the energy used by vessels calling at European ports. The limits start this year with a 2% reduction and require an 80% reduction by 2050. The ETS tax of 40% on carbon emissions in 2024 increases to 70% this year. To recover and pass on those costs to cargo owners, carriers have announced plans to simplify the process by <a href="https://www.joc.com/article/carriers-roll-out-new-fuel-surcharges-as-eu-emissions-rules-tighten-5906178">merging compliance with the ETS and FuelEU</a> regulations into one fuel surcharge. Bax warned that carriers adopting a “wait-and-see” approach would find themselves subject to penalties and the need to buy surplus fuels to comply with the rule, as well as facing reduced income from customers wanting to reduce their indirect “scope 3” value chain emissions. The Lloyd’s report estimated that for a fleet of five ships running the same marine fossil fuel mix as today, and each using 5,000 metric tons of fuel per year between 2030 and 2034, the shipowner would pay penalties of €5.6 million ($5.8 million) in 2030, rising to €7.2 million in 2034. <h3>Significant revenue driver </h3>Bax said increasing the use of lower emission fuels comes at a cost, but it could also generate returns that “can be significant.” “If a ton of CO2 equivalent emissions could be worth at least €500 on the open market, and you can save 7,500 tons of CO2 equivalent emissions a year, you see how this can quickly turn into a significant driver of revenue,” he noted. While shipping companies wrestle with the cost implications of FuelEU compliance, the commercial and contractual implications of the regulations add another highly complex element, according to Eirik Nyhus, director of environment for maritime at classification society DNV. “Dealing with responsibilities, liabilities and assets in this ever-changing interplay between managers, owners and charterers is going to require new contract structures, and that needs to happen quickly,” Nyhus said in a recent podcast. “This has commercial and contractual implications, as charter parties rarely line up with the annual compliance cycle, meaning that contracts need to deal with how incurred liabilities and assets are handled as charters start and end during the reporting year,” he added. Another key part of managing the regulation was data, Nyhus noted. ”If the managers, owners and charterers don’t have a common agreement on what the real data underpinning contract settlements is, there will be real difficulties and potential litigation,” he said. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

The FuelEU regulation that came into effect on Jan. 1 is “a major market intervention” by the European Union that will determine the long-term profitability and sustainable operation of vessels in European waters, according to Lloyd’s Register. While compliance with the EU Emissions Trading Scheme (ETS) carbon tax represents an immediate cost for shipping companies, the financial implications of FuelEU for shipowners electing to continue using fossil fuels may be gradual but would ultimately be significantly higher. “Today, many owners and managers are concerned with the EU Emissions Trading Scheme designed to reduce emissions produced by shipping,” Ryan Bax, lead business advisory consultant at Lloyd’s Register (LR), noted in a recent report from the classification society. “However, LR projections show that the impact of FuelEU will eclipse that of the ETS around 2035 and dwarf it beyond that,” Bax added. “Business as usual is therefore no longer an option and progressive decisions must be made to deal with this challenge.” FuelEU requires shipping companies to increase their uptake of renewable and low-carbon fuels by setting limits on the yearly average greenhouse gas (GHG) intensity of the energy used by vessels calling at European ports. The limits start this year with a 2% reduction and require an 80% reduction by 2050. The ETS tax of 40% on carbon emissions in 2024 increases to 70% this year. To recover and pass on those costs to cargo owners, carriers have announced plans to simplify the process by merging compliance with the ETS and FuelEU regulations into one fuel surcharge. Bax warned that carriers adopting a “wait-and-see” approach would find themselves subject to penalties and the need to buy surplus fuels to comply with the rule, as well as facing reduced income from customers wanting to reduce their indirect “scope 3” value chain emissions. The Lloyd’s report estimated that for a fleet of five ships running the same marine fossil fuel mix as today, and each using 5,000 metric tons of fuel per year between 2030 and 2034, the shipowner would pay penalties of €5.6 million ($5.8 million) in 2030, rising to €7.2 million in 2034. Significant revenue driver Bax said increasing the use of lower emission fuels comes at a cost, but it could also generate returns that “can be significant.” “If a ton of CO2 equivalent emissions could be worth at least €500 on the open market, and you can save 7,500 tons of CO2 equivalent emissions a year, you see how this can quickly turn into a significant driver of revenue,” he noted. While shipping companies wrestle with the cost implications of FuelEU compliance, the commercial and contractual implications of the regulations add another highly complex element, according to Eirik Nyhus, director of environment for maritime at classification society DNV. “Dealing with responsibilities, liabilities and assets in this ever-changing interplay between managers, owners and charterers is going to require new contract structures, and that needs to happen quickly,” Nyhus said in a recent podcast. “This has commercial and contractual implications, as charter parties rarely line up with the annual compliance cycle, meaning that contracts need to deal with how incurred liabilities and assets are handled as charters start and end during the reporting year,” he added. Another key part of managing the regulation was data, Nyhus noted. ”If the managers, owners and charterers don’t have a common agreement on what the real data underpinning contract settlements is, there will be real difficulties and potential litigation,” he said. Contact Greg Knowler at greg.knowler@spglobal.com .

Container Shipping News

Transport, Trade and Regulation News

Container lines

Trans-Atlantic

Asia-Europe

Maritime

High price to pay for non-compliance with FuelEU rules: Lloyd’s Register

<div class="phx-topic abstract-wrapper">Whereas 2024 was a banner year for US West Coast ports, the pendulum could swing back to East and Gulf coast ports in 2025. </div>

Whereas 2024 was a banner year for US West Coast ports, the pendulum could swing back to East and Gulf coast ports in 2025.

<div class="phx-topic">The big picture: US West Coast ports lost some of their share of imports from Asia in 2022–23 during the protracted contract negotiations between the International Longshore and Warehouse Union and West Coast employers. The tables turned in 2024, when East and Gulf coast dockworkers engaged in contentious contract negotiations of their own and discretionary cargo returned to the West Coast. The main challenge facing West Coast ports entering 2025 will be to mitigate the rail container backlogs that inevitably occur during peak periods when import volumes exceed the railroads’ designed network capacity. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5914610_0.1.png"></img></div>A look back: The lengthy and contentious contract negotiations between the International Longshoremen’s Association (ILA) and employers on the East and Gulf coasts drove a large volume of discretionary imports to the West Coast in 2024. Frontloading of imports through the West Coast continued last fall in anticipation of the threatened tariffs under a second Trump administration this year. In the first 11 months of 2024, West Coast ports handled 59.2% of US imports from Asia, up from 56.5% in 2023, according to PIERS, a sister product of the Journal of Commerce within S&amp;P Global. The Northwest Seaport Alliance of Seattle and Tacoma was the first gateway to experience severe congestion last summer due to diversion from Canadian ports, which contended with now-resolved labor issues. The ports of Los Angeles and Long Beach experienced a 25%-plus year-over-year increase in import volumes for three consecutive months, spawning terminal congestion and several months of extended rail container dwell times. However, the BNSF and Union Pacific railroads had worked through those backlogs by year-end. A look ahead: West Coast ports were relatively fluid entering 2024 and have sufficient capacity to handle the lower cargo volumes forecast for 2025. When the ILA reaches a contract settlement this year, discretionary cargo is expected to return to the East and Gulf coasts. That means cargo flows should return to the normal seasonal trends throughout the year. The main challenge facing West Coast ports in 2025 will be mitigating peak inland point intermodal (IPI) volumes next fall. The industry has come to expect some level of disruptions when IPI traffic surges during peak periods, but port stakeholders learned valuable lessons from the epic meltdowns of the COVID-19 pandemic, and future disruptions should be less intense and shorter than before. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="b78cb350-f07f-4a00-9299-490e4013fbeb"></dynamic-object></div>The next inflection: Whereas 2024 was a banner year for US West Coast ports, the pendulum could swing back to the East and Gulf coast ports in 2025. If Trump’s threatened tariffs on China push even more production to Southeast Asia and the Indian subcontinent in 2025, the China-dependent West Coast gateways will lose market share to East Coast ports, which are better suited geographically to handle imports from those regions. If and when hostilities in the Red Sea cease and vessels return to the Suez Canal, West Coast ports could lose additional share. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com.</a></div>

The big picture: US West Coast ports lost some of their share of imports from Asia in 2022–23 during the protracted contract negotiations between the International Longshore and Warehouse Union and West Coast employers. The tables turned in 2024, when East and Gulf coast dockworkers engaged in contentious contract negotiations of their own and discretionary cargo returned to the West Coast. The main challenge facing West Coast ports entering 2025 will be to mitigate the rail container backlogs that inevitably occur during peak periods when import volumes exceed the railroads’ designed network capacity. A look back: The lengthy and contentious contract negotiations between the International Longshoremen’s Association (ILA) and employers on the East and Gulf coasts drove a large volume of discretionary imports to the West Coast in 2024. Frontloading of imports through the West Coast continued last fall in anticipation of the threatened tariffs under a second Trump administration this year. In the first 11 months of 2024, West Coast ports handled 59.2% of US imports from Asia, up from 56.5% in 2023, according to PIERS, a sister product of the Journal of Commerce within S&P Global. The Northwest Seaport Alliance of Seattle and Tacoma was the first gateway to experience severe congestion last summer due to diversion from Canadian ports, which contended with now-resolved labor issues. The ports of Los Angeles and Long Beach experienced a 25%-plus year-over-year increase in import volumes for three consecutive months, spawning terminal congestion and several months of extended rail container dwell times. However, the BNSF and Union Pacific railroads had worked through those backlogs by year-end. A look ahead: West Coast ports were relatively fluid entering 2024 and have sufficient capacity to handle the lower cargo volumes forecast for 2025. When the ILA reaches a contract settlement this year, discretionary cargo is expected to return to the East and Gulf coasts. That means cargo flows should return to the normal seasonal trends throughout the year. The main challenge facing West Coast ports in 2025 will be mitigating peak inland point intermodal (IPI) volumes next fall. The industry has come to expect some level of disruptions when IPI traffic surges during peak periods, but port stakeholders learned valuable lessons from the epic meltdowns of the COVID-19 pandemic, and future disruptions should be less intense and shorter than before. The next inflection: Whereas 2024 was a banner year for US West Coast ports, the pendulum could swing back to the East and Gulf coast ports in 2025. If Trump’s threatened tariffs on China push even more production to Southeast Asia and the Indian subcontinent in 2025, the China-dependent West Coast gateways will lose market share to East Coast ports, which are better suited geographically to handle imports from those regions. If and when hostilities in the Red Sea cease and vessels return to the Suez Canal, West Coast ports could lose additional share. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com.

Port News

North American ports

Tariffs, Suez resumption could crimp US West Coast share gains

<div class="phx-topic abstract-wrapper">Pitt Ohio’s acquisition of Sutton Transport is the latest in a string of acquisitions rebuilding the LTL sector from the middle out, and more regional acquisitions are expected.</div>

Pitt Ohio’s acquisition of Sutton Transport is the latest in a string of acquisitions rebuilding the LTL sector from the middle out, and more regional acquisitions are expected.

<div class="phx-topic">The US less-than-truckload (LTL) market is entering a new phase of consolidation in early 2025, led by regional LTL trucking companies building greater density and reach. The action is hottest perhaps in the Midwest, where the shutdown of Holland, a regional subsidiary of Yellow, in 2023 left a hole in the LTL market that has not been filled. There is a need for LTL carriers that can provide premium on-time, next-day service at scale across the region stretching from Ohio and the Great Lakes to the Great Plains. As M&amp;A activity continues, shippers may see regional LTL pricing stabilize or rise, but not drop, as larger carriers impose more disciplined pricing in local and regional markets. And although the LTL landscape may appear crowded, “there is still room in the market for good carriers,” said Mike Moran, president of Moran Transportation, a regional LTL provider based in Chicago. Moran <a href="https://www.joc.com/article/smaller-us-ltl-carriers-increasingly-merging-in-sink-or-swim-market-5783875">acquired RMX Freight Systems</a> in October, adding three Midwestern states to its LTL network. Pitt Ohio Transportation Group’s purchase of Sutton Transport, completed Jan. 1, is the latest in a string of acquisitions. Terms of the acquisition were not disclosed. Sutton, with 13 terminals across eight states, will bolster the 10-state network of Dohrn Transfer, a separate Pitt Ohio company that has its headquarters in Rock Island, Illinois. “The trend moving forward is going to be increased growth and scale of LTL operations,” said Geoffrey Muessig, chief marketing officer for Pittsburgh-based Pitt Ohio. Wisconsin-based Sutton will help Pitt Ohio build greater density within Dohrn’s existing market footprint, speeding freight and maintaining fluidity as demand grows — as is expected in 2025. “In the regional LTL market, density improves service and results,” said Muessig. “We saw the opportunity to combine the strengths of the Sutton and Dohrn networks.” Pitt Ohio will employ a “three-pronged” approach to the integration, blending sales first, then technology and ultimately operations, he said, adding: “We’re going to take our time.” <h3>More M&amp;A seen ahead </h3>The Pitt Ohio-Sutton deal won’t be the last significant LTL acquisition this year, according to an LTL freight and parcel market consultant. “Count on at least three smaller regional LTL carriers folding into bigger ones in 2025,” said Satish Jindel, president of transportation research firm SJ Consulting Group, which helped broker the Pitt Ohio-Sutton transaction.Jindel pointed to the Moran-RMX deal as well as Knight-Swift Transportation Holdings’ purchase of <a href="https://www.joc.com/article/knight-swift-acquisition-expands-ltl-network-coast-to-coast-5703164">Dependable Highway Express</a> last July as examples of the trend. The Pitt Ohio-Sutton deal is the latest development reshaping LTL networks while helping to broaden the sector’s role in supply chains from ports to last-mile delivery. LTL carriers are broadening their retail, warehousing and specialized services and adding more <a href="https://www.joc.com/article/estes-express-plans-near-port-expansion-as-new-generation-takes-charge-5220656">port transloading business</a>. As shippers work to shorten distances between distribution centers, suppliers and end-customers, LTL carriers see more opportunity to expand beyond their industrial base. The LTL market is already highly consolidated, with the 40 largest LTL providers claiming 84% of total LTL revenue of $62.2 billion in 2023, according to Jindel’s data. The largest Midwestern LTL provider, Dayton Freight System, has about 70 terminals throughout the region and more than $1 billion in annual revenue. Pitt Ohio is the 13th largest US LTL provider ranked by revenue, while Sutton is ranked 31st. Combined, the companies would have had more than $1 billion in revenue in 2023 — coming in just below Dayton Freight in the SJ Consulting Group/Journal of Commerce <a href="https://www.joc.com/article/journal-of-commerce-rankings-ltl-sector-revenue-drops-despite-yellow-distortion-5199865">Top 40 LTL Carrier rankings</a>. “The Top 10 LTL carriers [revenue-wise] are getting bigger, the Top 20 are all aiming to get into the Top 10 and everyone else is scrambling to get into the Top 20,” Muessig said. Larger LTL players have been more focused on growth through real estate purchases, particularly the ongoing auction of hundreds of terminals once operated by Yellow. The bankrupt company still has about 100 leased or owned terminals to auction or sell. Rising operating costs, including the need for more sophisticated technology, are putting more pressure on smaller LTL carriers to find larger partners or purchasers. “I think there’s absolutely going to be more consolidation as the time goes on,” Moran said. Many smaller carriers “are not pricing the freight right,” he said. By that, he means pricing shipments at too low a margin. “After a period of time, they simply can’t survive,” he said. “They need a way out and an acquisition is one.” For that reason, he thinks more regional mergers may be good for the LTL sector in the Midwest and elsewhere, with larger firms imposing more disciplined pricing. “There’s a need for carriers that can provide excellent service at an acceptable price,” Moran said. “‘Acceptable’ is a challenging term at times, depending on whether you’re a carrier or a shipper, but there’s plenty of room out there for good quality carriers.” Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>. </div>

The US less-than-truckload (LTL) market is entering a new phase of consolidation in early 2025, led by regional LTL trucking companies building greater density and reach. The action is hottest perhaps in the Midwest, where the shutdown of Holland, a regional subsidiary of Yellow, in 2023 left a hole in the LTL market that has not been filled. There is a need for LTL carriers that can provide premium on-time, next-day service at scale across the region stretching from Ohio and the Great Lakes to the Great Plains. As M&A activity continues, shippers may see regional LTL pricing stabilize or rise, but not drop, as larger carriers impose more disciplined pricing in local and regional markets. And although the LTL landscape may appear crowded, “there is still room in the market for good carriers,” said Mike Moran, president of Moran Transportation, a regional LTL provider based in Chicago. Moran acquired RMX Freight Systems in October, adding three Midwestern states to its LTL network. Pitt Ohio Transportation Group’s purchase of Sutton Transport, completed Jan. 1, is the latest in a string of acquisitions. Terms of the acquisition were not disclosed. Sutton, with 13 terminals across eight states, will bolster the 10-state network of Dohrn Transfer, a separate Pitt Ohio company that has its headquarters in Rock Island, Illinois. “The trend moving forward is going to be increased growth and scale of LTL operations,” said Geoffrey Muessig, chief marketing officer for Pittsburgh-based Pitt Ohio. Wisconsin-based Sutton will help Pitt Ohio build greater density within Dohrn’s existing market footprint, speeding freight and maintaining fluidity as demand grows — as is expected in 2025. “In the regional LTL market, density improves service and results,” said Muessig. “We saw the opportunity to combine the strengths of the Sutton and Dohrn networks.” Pitt Ohio will employ a “three-pronged” approach to the integration, blending sales first, then technology and ultimately operations, he said, adding: “We’re going to take our time.” More M&A seen ahead The Pitt Ohio-Sutton deal won’t be the last significant LTL acquisition this year, according to an LTL freight and parcel market consultant. “Count on at least three smaller regional LTL carriers folding into bigger ones in 2025,” said Satish Jindel, president of transportation research firm SJ Consulting Group, which helped broker the Pitt Ohio-Sutton transaction. Jindel pointed to the Moran-RMX deal as well as Knight-Swift Transportation Holdings’ purchase of Dependable Highway Express last July as examples of the trend. The Pitt Ohio-Sutton deal is the latest development reshaping LTL networks while helping to broaden the sector’s role in supply chains from ports to last-mile delivery. LTL carriers are broadening their retail, warehousing and specialized services and adding more port transloading business . As shippers work to shorten distances between distribution centers, suppliers and end-customers, LTL carriers see more opportunity to expand beyond their industrial base. The LTL market is already highly consolidated, with the 40 largest LTL providers claiming 84% of total LTL revenue of $62.2 billion in 2023, according to Jindel’s data. The largest Midwestern LTL provider, Dayton Freight System, has about 70 terminals throughout the region and more than $1 billion in annual revenue. Pitt Ohio is the 13th largest US LTL provider ranked by revenue, while Sutton is ranked 31st. Combined, the companies would have had more than $1 billion in revenue in 2023 — coming in just below Dayton Freight in the SJ Consulting Group/Journal of Commerce Top 40 LTL Carrier rankings . “The Top 10 LTL carriers [revenue-wise] are getting bigger, the Top 20 are all aiming to get into the Top 10 and everyone else is scrambling to get into the Top 20,” Muessig said. Larger LTL players have been more focused on growth through real estate purchases, particularly the ongoing auction of hundreds of terminals once operated by Yellow. The bankrupt company still has about 100 leased or owned terminals to auction or sell. Rising operating costs, including the need for more sophisticated technology, are putting more pressure on smaller LTL carriers to find larger partners or purchasers. “I think there’s absolutely going to be more consolidation as the time goes on,” Moran said. Many smaller carriers “are not pricing the freight right,” he said. By that, he means pricing shipments at too low a margin. “After a period of time, they simply can’t survive,” he said. “They need a way out and an acquisition is one.” For that reason, he thinks more regional mergers may be good for the LTL sector in the Midwest and elsewhere, with larger firms imposing more disciplined pricing. “There’s a need for carriers that can provide excellent service at an acceptable price,” Moran said. “‘Acceptable’ is a challenging term at times, depending on whether you’re a carrier or a shipper, but there’s plenty of room out there for good quality carriers.” Contact William B. Cassidy at bill.cassidy@spglobal.com .

Trucking News

M&A activity redrawing regional LTL map in US Midwest and beyond

<div class="phx-topic abstract-wrapper">More uptake of transactional pricing in the less-than-truckload market is a sign that some carriers are targeting smaller or more infrequent LTL shippers.</div>

More uptake of transactional pricing in the less-than-truckload market is a sign that some carriers are targeting smaller or more infrequent LTL shippers.

<div class="phx-topic">Dynamic pricing tools are allowing less-than-truckload (LTL) shippers and brokers, especially smaller ones, to connect with LTL carriers looking for new sources of freight. That is widening the market reach for LTL carriers that have typically relied almost exclusively on contracts or general tariff rates for pricing. The incremental shift toward more spot pricing in the LTL market speaks less to titanic change in how shippers are procuring than it does about there being easier paths for certain LTL carriers to reach shippers directly. While the vast majority of LTL freight continues to move on shipper-specific contract pricing or more general pricing often used by brokers, there is an uptick in spot, or transactional, pricing in the LTL market, sources tell the Journal of Commerce. Some attribute this uptick primarily to the currently soft LTL market, with regular customers seeking competitive rates outside their contracts, or first-time LTL shippers or brokers using transactional rates to test the LTL waters. US LTL shipment volume in 2024 was relatively flat after a more than 6% drop in 2023, according to Satish Jindel, president of SJ Consulting Group. But digital tools are making transactional pricing easier for carriers to provide to customers, especially infrequent shippers or ones not accustomed to shipping LTL. “We are seeing and hearing of an increased demand and usage of transactional or spot LTL quotes both from discussions with carriers and 3PLs,” said Brian Thompson, chief commercial officer at SMC3, a trucking data and technology provider specializing in LTL pricing. <h3>APIs make LTL accessible </h3>Thompson said the increase in spot-quoted shipments is due to a boost in the availability of application programming interface (API)-based quoting, with more LTL carriers now offering this option for their customers to obtain spot quotes. Many shipper- and broker-focused transportation management systems (TMSs) now offer direct API connections to carriers. Additionally, a number of carriers are requiring or incentivizing their customers to come directly to them for a quote via API, especially 3PL partners offering transactional quotes, Thompson said. Spot quotes used to be limited to large LTL shipments weighing a minimum of 4,000 or 5,000 pounds, but in recent years carriers have expanded the use of those quoting methods to price transactional business from brokers, 3PLs, freight forwarders and small shippers, Thompson added. “Carriers are also starting to utilize more advanced pricing methodologies that incorporate prospective costing of individual shipments and an advanced business rules engine to price individual shipments with more certainty based on the carrier’s needs at the time of quote,” he said. Indeed, LTL carriers have even started to vacuum up shipments in the 500-pound ballpark that ordinarily would have been routed to parcel carriers. <h3>Targeting small shippers </h3>LTL carriers are looking for new customers and new sources of freight, including smaller shippers and even transloaded international freight. “In the last quarter we grew shipment count with small customers by more than 10%,” Mario Harik, CEO of XPO, the third-largest US LTL provider, told the Journal of Commerce. XPO has invested in technology, real estate and in its sales force, increasing its number of sales agents by 25% in 2024 to pursue smaller shippers, Harik said, adding contractual rates represent about 80% of XPO’s business. Shippers can obtain rate quotes based on pricing agreements directly from XPO’s website. The development of transactional pricing tools accomplishes a couple of key goals for certain LTL carriers. It lets them lure in shippers that would have been outside their traditional customer bases, either in terms of the size, number or frequency of shipments. Secondly, it lets carriers work directly with shippers, taking that business out of the hands of brokers. ”Carriers dynamically adjust these rates,” said Curtis Garrett, CEO of LTL technology provider RateHero and a consultant to the LTL industry. “It’s a lever they have to fill capacity.” Garrett said the newest transactional pricing development is that some carriers are using it as a quicker way to onboard customers, either direct to shipper or through small and midsized brokers. “It cuts down on the admin back and forth and length of time to get a new customer set up and quoting,” he said. “Some carriers are putting this in the hands of their sales reps when they go visit a prospect. They can set them up and turn pricing on for them on the spot, which means more business quicker, but it usually falls into that transactional or dynamic bucket.” Not all LTL carriers are going this route, however. An LTL carrier executive who asked not to be identified told the Journal of Commerce they’re not seeing any major shift away from contractual business but added that the carrier doesn’t encourage that type of business, either. The executive said brokers are getting a bit more transactional business and that some LTL freight that moved to full truckload when truckload rates were low may be shifting back to LTL in drips and drabs. “Everybody has a TMS now, and that makes tendering an irregular, smaller LTL shipment outside of a contract easier,” the source said. <h3>A more ‘layered’ market </h3>Wider access to TMSs, whether it’s a shipper TMS that can manage across multiple modes or an LTL carrier TMS through which dynamic pricing can be offered, is impacting the market. “The rapid acceleration of technology, particularly through TMSs that offer multiple rate options, has created new opportunities for smaller clients,” said Dean Jones, chief commercial officer at third-party logistics provider AFS Logistics. “These systems allow them to access competitive rates without the need for traditional contractual arrangements.” Jones said 3PLs are also luring shippers outside contractual rate structures through ancillary services, whether via access to diverse rate options, a bundled TMS, freight audit and payment (FAP) or fully managed transportation. “This bundled approach eliminates the need for individual rate negotiations and provides clients with a streamlined, end-to-end solution powered by transactional rates embedded within the broader program,” he said. Jones added, however, that the majority of AFS’s clients operate under so-called client-specific pricing (CSP) contracts. “Across our customer base we don’t see any transactional spot quoting happening with LTL carriers,” said Shannon Vaillancourt, CEO of RateLinx, which provides TMS and freight audit tools to shippers. “All of our customers are on contract rates and are rate-shopping between the carriers.” Vaillancourt said customers he spoke to about an increase in transactional rates were skeptical about relying on spot quotes. “They really like the certainty of their contract rates and also were very confident that their contract rates were the ‘best’ rate out there,” he said. The uptick in transactional rates then speaks to a more layered market, with some carriers embracing dynamic rate availability and others more than happy to rely wholly on contractual pricing for shippers. The emergence of MyCarrier, a technology platform that lets LTL carriers provide a digital quoting and booking interface direct to shippers, is an example of this evolution. Last Thursday, FreightWise announced a partnership to incorporate rates from LTL carrier Estes directly into its TMS and that of Kuebix, a shipper-oriented, LTL-focused TMS that FreightWise acquired in 2023. Garrett said his company is working with a few LTL carriers on streamlining the process to get small and midsized brokers set up so they can push volume to those LTL carriers. The intent is to use technology to offset the high cost and risk that carriers have historically seen with small or infrequent LTL customers due to poor data and shipping practices. Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. Senior Editor William B. Cassidy contributed to this report. </div>

Dynamic pricing tools are allowing less-than-truckload (LTL) shippers and brokers, especially smaller ones, to connect with LTL carriers looking for new sources of freight. That is widening the market reach for LTL carriers that have typically relied almost exclusively on contracts or general tariff rates for pricing. The incremental shift toward more spot pricing in the LTL market speaks less to titanic change in how shippers are procuring than it does about there being easier paths for certain LTL carriers to reach shippers directly. While the vast majority of LTL freight continues to move on shipper-specific contract pricing or more general pricing often used by brokers, there is an uptick in spot, or transactional, pricing in the LTL market, sources tell the Journal of Commerce. Some attribute this uptick primarily to the currently soft LTL market, with regular customers seeking competitive rates outside their contracts, or first-time LTL shippers or brokers using transactional rates to test the LTL waters. US LTL shipment volume in 2024 was relatively flat after a more than 6% drop in 2023, according to Satish Jindel, president of SJ Consulting Group. But digital tools are making transactional pricing easier for carriers to provide to customers, especially infrequent shippers or ones not accustomed to shipping LTL. “We are seeing and hearing of an increased demand and usage of transactional or spot LTL quotes both from discussions with carriers and 3PLs,” said Brian Thompson, chief commercial officer at SMC3, a trucking data and technology provider specializing in LTL pricing. APIs make LTL accessible Thompson said the increase in spot-quoted shipments is due to a boost in the availability of application programming interface (API)-based quoting, with more LTL carriers now offering this option for their customers to obtain spot quotes. Many shipper- and broker-focused transportation management systems (TMSs) now offer direct API connections to carriers. Additionally, a number of carriers are requiring or incentivizing their customers to come directly to them for a quote via API, especially 3PL partners offering transactional quotes, Thompson said. Spot quotes used to be limited to large LTL shipments weighing a minimum of 4,000 or 5,000 pounds, but in recent years carriers have expanded the use of those quoting methods to price transactional business from brokers, 3PLs, freight forwarders and small shippers, Thompson added. “Carriers are also starting to utilize more advanced pricing methodologies that incorporate prospective costing of individual shipments and an advanced business rules engine to price individual shipments with more certainty based on the carrier’s needs at the time of quote,” he said. Indeed, LTL carriers have even started to vacuum up shipments in the 500-pound ballpark that ordinarily would have been routed to parcel carriers. Targeting small shippers LTL carriers are looking for new customers and new sources of freight, including smaller shippers and even transloaded international freight. “In the last quarter we grew shipment count with small customers by more than 10%,” Mario Harik, CEO of XPO, the third-largest US LTL provider, told the Journal of Commerce. XPO has invested in technology, real estate and in its sales force, increasing its number of sales agents by 25% in 2024 to pursue smaller shippers, Harik said, adding contractual rates represent about 80% of XPO’s business. Shippers can obtain rate quotes based on pricing agreements directly from XPO’s website. The development of transactional pricing tools accomplishes a couple of key goals for certain LTL carriers. It lets them lure in shippers that would have been outside their traditional customer bases, either in terms of the size, number or frequency of shipments. Secondly, it lets carriers work directly with shippers, taking that business out of the hands of brokers. ”Carriers dynamically adjust these rates,” said Curtis Garrett, CEO of LTL technology provider RateHero and a consultant to the LTL industry. “It’s a lever they have to fill capacity.” Garrett said the newest transactional pricing development is that some carriers are using it as a quicker way to onboard customers, either direct to shipper or through small and midsized brokers. “It cuts down on the admin back and forth and length of time to get a new customer set up and quoting,” he said. “Some carriers are putting this in the hands of their sales reps when they go visit a prospect. They can set them up and turn pricing on for them on the spot, which means more business quicker, but it usually falls into that transactional or dynamic bucket.” Not all LTL carriers are going this route, however. An LTL carrier executive who asked not to be identified told the Journal of Commerce they’re not seeing any major shift away from contractual business but added that the carrier doesn’t encourage that type of business, either. The executive said brokers are getting a bit more transactional business and that some LTL freight that moved to full truckload when truckload rates were low may be shifting back to LTL in drips and drabs. “Everybody has a TMS now, and that makes tendering an irregular, smaller LTL shipment outside of a contract easier,” the source said. A more ‘layered’ market Wider access to TMSs, whether it’s a shipper TMS that can manage across multiple modes or an LTL carrier TMS through which dynamic pricing can be offered, is impacting the market. “The rapid acceleration of technology, particularly through TMSs that offer multiple rate options, has created new opportunities for smaller clients,” said Dean Jones, chief commercial officer at third-party logistics provider AFS Logistics. “These systems allow them to access competitive rates without the need for traditional contractual arrangements.” Jones said 3PLs are also luring shippers outside contractual rate structures through ancillary services, whether via access to diverse rate options, a bundled TMS, freight audit and payment (FAP) or fully managed transportation. “This bundled approach eliminates the need for individual rate negotiations and provides clients with a streamlined, end-to-end solution powered by transactional rates embedded within the broader program,” he said. Jones added, however, that the majority of AFS’s clients operate under so-called client-specific pricing (CSP) contracts. “Across our customer base we don’t see any transactional spot quoting happening with LTL carriers,” said Shannon Vaillancourt, CEO of RateLinx, which provides TMS and freight audit tools to shippers. “All of our customers are on contract rates and are rate-shopping between the carriers.” Vaillancourt said customers he spoke to about an increase in transactional rates were skeptical about relying on spot quotes. “They really like the certainty of their contract rates and also were very confident that their contract rates were the ‘best’ rate out there,” he said. The uptick in transactional rates then speaks to a more layered market, with some carriers embracing dynamic rate availability and others more than happy to rely wholly on contractual pricing for shippers. The emergence of MyCarrier, a technology platform that lets LTL carriers provide a digital quoting and booking interface direct to shippers, is an example of this evolution. Last Thursday, FreightWise announced a partnership to incorporate rates from LTL carrier Estes directly into its TMS and that of Kuebix, a shipper-oriented, LTL-focused TMS that FreightWise acquired in 2023. Garrett said his company is working with a few LTL carriers on streamlining the process to get small and midsized brokers set up so they can push volume to those LTL carriers. The intent is to use technology to offset the high cost and risk that carriers have historically seen with small or infrequent LTL customers due to poor data and shipping practices. Contact Eric Johnson at eric.johnson@spglobal.com . Senior Editor William B. Cassidy contributed to this report.

US LTL carriers widen market reach through spot pricing technology

<div class="phx-topic abstract-wrapper">After 200 years of building the world’s greatest economy on the settled Commerce Clause jurisprudence of Gibbons v. Ogden, no one has been reckless enough to try to upend it. </div>

After 200 years of building the world’s greatest economy on the settled Commerce Clause jurisprudence of Gibbons v. Ogden, no one has been reckless enough to try to upend it.

<div class="phx-topic">Last year marked 200 years of the Commerce Clause jurisprudence that underpins the modern, national American economy. In 2025, we may need to protect it. In 1824, the US Supreme Court decided Gibbons v. Ogden, the first major case to interpret the constitutional power of Congress to “regulate commerce among the several states,” or commonly known as the Commerce Clause. To reach this decision, the Court struck down a significant restriction on which ships were allowed access to navigation and an individual state’s seaports. And, as a result, Gibbons created the legal underpinnings of a unified national economy.  The specific legal question at issue in Gibbons was whether one state could deny access to ships from other states based on their means of propulsion: the use of a steam engine instead of sail. But the bigger implication of the question was whether the country would return to the fractured multi-state economy that existed under the Articles of Confederation. In 2024, however, Gibbons’ bicentennial was not celebrated by the environmental advocacy group Pacific Environment, who started advocating for the state of California to institute a “port access fee” based on “the carbon intensity of ship engines.”  This is literally advocating for a Gibbons-like state imposition of a restriction on navigational access to a port based on a ship’s use of a certain type of propulsion system.  In a May 2024 report, Pacific Environment also proclaimed that California should “lead the world to reduce emissions from ocean cargo ships, lower climate impacts, and improve air quality around ports.” The justification? The California “State Legislature is relatively nimble compared to the US Congress and less affected by national politics.” In the early 1800s, before canals and railroads opened up the interior of the continent, the introduction of steam propulsion on ships revolutionized commerce by virtually eliminating physical constraints on river trade. The State of New York wanted to limit the means of propulsion of ships calling on its ports, at the expense of free trade, competition, consumers and the burgeoning US economy. As a result, the Supreme Court in Gibbons needed to decide if New York could constitutionally restrict navigation by barring certain types of vessels from its ports based on their use of a steam engine. And to answer this, the young nation’s highest Court first had to grapple with another, larger question: If the Constitution guarantees free rights of navigation to ships under the Commerce Clause, then is New York’s ban preempted? Gibbons minced no words: “All America understands, and has uniformly understood, the word ‘commerce’ to comprehend navigation.” The Constitution granted the federal government authority over “commercial intercourse between nations, and parts of nations,” and “the power over commerce with foreign nations, and among the several states is vested in Congress as absolutely as it would be in a single government,” the court said.   <h3>California proposals </h3>In 2025, after two centuries of giving Chief Justice John Marshall the final word on the matter, should we reopen this fundamental question of whether states should be able to decide which ships are allowed to call on their ports based on a vessel’s system of propulsion?   In Southern California in 2023, the staff of the South Coast Air Quality Management District (AQMD) started a process to consider indirect regulation of ship propulsion systems. The staff was musing about the adoption of a regulation that would penalize ports or marine terminals that did not “route cleaner ships” or require “new, cleaner vessel designs” for vessels calling at the nation’s busiest container port complex in Los Angeles and Long Beach. AQMD’s board has yet to decide if the staff’s proposed concepts will proceed. California State’s air regulators are also starting a discussion in 2025 around reducing emissions from oceangoing vessels in transit. But whether they stick to incentives and voluntary measures in support of federal and International Maritime Organization (IMO) standards or they take the bait of the ship engine regulations proposed by Pacific Environment remains to be seen.  If either the state or a local air district acts directly to restrict the means of vessel propulsion as a condition of access to state seaports, it would be a novelty — the first direct tests of Gibbons’ rules and its conclusion that the right of navigation is commerce, and therefore the province of Congress and the federal government. And these would be novel cases for good reason. After 200 years of building the world’s greatest economy on the settled Commerce Clause jurisprudence of Gibbons, no one has been reckless enough to try to upend it. Contact Mike Jacob at <a href="mailto:mjacob@pmsaship.com">mjacob@pmsaship.com.</a></div>

Last year marked 200 years of the Commerce Clause jurisprudence that underpins the modern, national American economy. In 2025, we may need to protect it. In 1824, the US Supreme Court decided Gibbons v. Ogden, the first major case to interpret the constitutional power of Congress to “regulate commerce among the several states,” or commonly known as the Commerce Clause. To reach this decision, the Court struck down a significant restriction on which ships were allowed access to navigation and an individual state’s seaports. And, as a result, Gibbons created the legal underpinnings of a unified national economy.  The specific legal question at issue in Gibbons was whether one state could deny access to ships from other states based on their means of propulsion: the use of a steam engine instead of sail. But the bigger implication of the question was whether the country would return to the fractured multi-state economy that existed under the Articles of Confederation. In 2024, however, Gibbons’ bicentennial was not celebrated by the environmental advocacy group Pacific Environment, who started advocating for the state of California to institute a “port access fee” based on “the carbon intensity of ship engines.”  This is literally advocating for a Gibbons-like state imposition of a restriction on navigational access to a port based on a ship’s use of a certain type of propulsion system.  In a May 2024 report, Pacific Environment also proclaimed that California should “lead the world to reduce emissions from ocean cargo ships, lower climate impacts, and improve air quality around ports.” The justification? The California “State Legislature is relatively nimble compared to the US Congress and less affected by national politics.” In the early 1800s, before canals and railroads opened up the interior of the continent, the introduction of steam propulsion on ships revolutionized commerce by virtually eliminating physical constraints on river trade. The State of New York wanted to limit the means of propulsion of ships calling on its ports, at the expense of free trade, competition, consumers and the burgeoning US economy. As a result, the Supreme Court in Gibbons needed to decide if New York could constitutionally restrict navigation by barring certain types of vessels from its ports based on their use of a steam engine. And to answer this, the young nation’s highest Court first had to grapple with another, larger question: If the Constitution guarantees free rights of navigation to ships under the Commerce Clause, then is New York’s ban preempted? Gibbons minced no words: “All America understands, and has uniformly understood, the word ‘commerce’ to comprehend navigation.” The Constitution granted the federal government authority over “commercial intercourse between nations, and parts of nations,” and “the power over commerce with foreign nations, and among the several states is vested in Congress as absolutely as it would be in a single government,” the court said.   California proposals In 2025, after two centuries of giving Chief Justice John Marshall the final word on the matter, should we reopen this fundamental question of whether states should be able to decide which ships are allowed to call on their ports based on a vessel’s system of propulsion?   In Southern California in 2023, the staff of the South Coast Air Quality Management District (AQMD) started a process to consider indirect regulation of ship propulsion systems. The staff was musing about the adoption of a regulation that would penalize ports or marine terminals that did not “route cleaner ships” or require “new, cleaner vessel designs” for vessels calling at the nation’s busiest container port complex in Los Angeles and Long Beach. AQMD’s board has yet to decide if the staff’s proposed concepts will proceed. California State’s air regulators are also starting a discussion in 2025 around reducing emissions from oceangoing vessels in transit. But whether they stick to incentives and voluntary measures in support of federal and International Maritime Organization (IMO) standards or they take the bait of the ship engine regulations proposed by Pacific Environment remains to be seen.  If either the state or a local air district acts directly to restrict the means of vessel propulsion as a condition of access to state seaports, it would be a novelty — the first direct tests of Gibbons’ rules and its conclusion that the right of navigation is commerce, and therefore the province of Congress and the federal government. And these would be novel cases for good reason. After 200 years of building the world’s greatest economy on the settled Commerce Clause jurisprudence of Gibbons, no one has been reckless enough to try to upend it. Contact Mike Jacob at mjacob@pmsaship.com.

Protecting navigation and the Commerce Clause in 2025

<div class="phx-topic abstract-wrapper">MSC, which embarked on a major journey to establish a competitive independent network post-2M, has been helped by forging something mutually beneficial with the Premier Alliance and ZIM.</div>

MSC, which embarked on a major journey to establish a competitive independent network post-2M, has been helped by forging something mutually beneficial with the Premier Alliance and ZIM.

<div class="phx-topic">When it became clear that the restructuring of the industry in the east-west trades in early 2025 meant moving from three major networks — 2M, Ocean Alliance and THE Alliance — to four major networks — Ocean, Gemini, Premier and a standalone Mediterranean Shipping Co. — radical overcapacity was in the cards. Even though the carriers knew they were moving into dangerous territory, they didn’t have many options to curtail capacity if they wanted to build robust networks benefiting from the economies of scale that come with larger ships. The most viable option to limit the overall capacity injection at the front end was for the carriers to orchestrate some overlap of the reconfigured networks. Maersk and Hapag-Lloyd made it clear at the outset that the Gemini Cooperation alliance could not entertain more members or slot agreements if it was to deliver the kind of quality level it aspires to. This left it to MSC, Ocean and Premier to take some initiatives; as we have seen, MSC has led the charge. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="bc8c7bab-e415-4fea-861b-3926a4691794"></dynamic-object></div>With the dissolution of the 2M alliance, many industry observers assumed that MSC would operate entirely independently in the east-west trade. This was based on its clear desire to control its own destiny and be nimble in building products to answer client needs. Pundits underestimated MSC’s history of balancing its longer-term objectives with the realities and opportunities of the immediate market. We don’t know the number of slots bought and sold in MSC’s deal with Premier, but with the number of loops MSC will be operating to North Europe and the Med and the capacity it has deployed, it’s a reasonable assumption it is selling more slots than it’s buying, which probably suits the carrier well at this point of evolution. Conversely, the ZIM Integrated Shipping Services deal has helped reduce the capacity injection that MSC needed to make post-2M. (Maersk has been a much bigger contributor of tonnage to the US East Coast than MSC within 2M.) Furthermore, in as much as it has reduced the overall injection of capacity, which reduces overall oversupply in the east-west trade, that will also help rates stay up longer, which MSC also benefits from. It’s hard to see — once all the 25 new deployments are bedded in — that it will stem the capacity influx tide sufficiently to defy rate level gravity. Short, of course, of labor troubles becoming long term or other black swan events over and above the Suez problem. <h3>‘Competitive edge’ for MSC </h3>Meanwhile, the other benefit of the slot agreements MSC has made — particularly for the USEC and Gulf — is that it has enhanced the quality of its network and thus given it more of a competitive edge. The charts don’t give the full picture on service, and every shipper will look at their particular mix of port pairs and what service combo of frequency, transit time and reliability they want. Gemini will point out that this dry set of numbers does nothing to factor in the reliability they will be targeting. It would be correct, but the charts do highlight the fact that shippers will often have to make their pick between frequency and more direct port pairs on one side and dependable departures/arrivals on the other. What the charts also confirm is that in the trades where it has made slot deals, MSC has a competitive overall product that has been enhanced by the slot arrangements. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="886ef5d7-6ed6-45c1-b099-a851968de973"></dynamic-object></div>MSC, which embarked on a major journey to establish a competitive independent network post-2M, has been helped by forging something mutually beneficial with Premier and ZIM. If MSC carries on accumulating tonnage at the rate it is now, it’s an open question whether the deals with Premier and ZIM will look as attractive for them in the future as they do now. Of course, Premier — or its individual carriers — and ZIM may also have other options when the time comes. Contact Jeremy Masters at <a href="https://www.joc.com/article/jeremy@shippingmastershk.com">jeremy@shippingmastershk.com.</a></div>

When it became clear that the restructuring of the industry in the east-west trades in early 2025 meant moving from three major networks — 2M, Ocean Alliance and THE Alliance — to four major networks — Ocean, Gemini, Premier and a standalone Mediterranean Shipping Co. — radical overcapacity was in the cards. Even though the carriers knew they were moving into dangerous territory, they didn’t have many options to curtail capacity if they wanted to build robust networks benefiting from the economies of scale that come with larger ships. The most viable option to limit the overall capacity injection at the front end was for the carriers to orchestrate some overlap of the reconfigured networks. Maersk and Hapag-Lloyd made it clear at the outset that the Gemini Cooperation alliance could not entertain more members or slot agreements if it was to deliver the kind of quality level it aspires to. This left it to MSC, Ocean and Premier to take some initiatives; as we have seen, MSC has led the charge. With the dissolution of the 2M alliance, many industry observers assumed that MSC would operate entirely independently in the east-west trade. This was based on its clear desire to control its own destiny and be nimble in building products to answer client needs. Pundits underestimated MSC’s history of balancing its longer-term objectives with the realities and opportunities of the immediate market. We don’t know the number of slots bought and sold in MSC’s deal with Premier, but with the number of loops MSC will be operating to North Europe and the Med and the capacity it has deployed, it’s a reasonable assumption it is selling more slots than it’s buying, which probably suits the carrier well at this point of evolution. Conversely, the ZIM Integrated Shipping Services deal has helped reduce the capacity injection that MSC needed to make post-2M. (Maersk has been a much bigger contributor of tonnage to the US East Coast than MSC within 2M.) Furthermore, in as much as it has reduced the overall injection of capacity, which reduces overall oversupply in the east-west trade, that will also help rates stay up longer, which MSC also benefits from. It’s hard to see — once all the 25 new deployments are bedded in — that it will stem the capacity influx tide sufficiently to defy rate level gravity. Short, of course, of labor troubles becoming long term or other black swan events over and above the Suez problem. ‘Competitive edge’ for MSC Meanwhile, the other benefit of the slot agreements MSC has made — particularly for the USEC and Gulf — is that it has enhanced the quality of its network and thus given it more of a competitive edge. The charts don’t give the full picture on service, and every shipper will look at their particular mix of port pairs and what service combo of frequency, transit time and reliability they want. Gemini will point out that this dry set of numbers does nothing to factor in the reliability they will be targeting. It would be correct, but the charts do highlight the fact that shippers will often have to make their pick between frequency and more direct port pairs on one side and dependable departures/arrivals on the other. What the charts also confirm is that in the trades where it has made slot deals, MSC has a competitive overall product that has been enhanced by the slot arrangements. MSC, which embarked on a major journey to establish a competitive independent network post-2M, has been helped by forging something mutually beneficial with Premier and ZIM. If MSC carries on accumulating tonnage at the rate it is now, it’s an open question whether the deals with Premier and ZIM will look as attractive for them in the future as they do now. Of course, Premier — or its individual carriers — and ZIM may also have other options when the time comes. Contact Jeremy Masters at jeremy@shippingmastershk.com.

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<div class="phx-topic abstract-wrapper">The charges come as spot rates for ex-Asia cargo into the US have climbed sharply over the past month.</div>

The charges come as spot rates for ex-Asia cargo into the US have climbed sharply over the past month.

<div class="phx-topic">The number of container lines preparing surcharges ahead of potential disruption to US East and Gulf coast service networks has reached at least five as a Jan. 15 longshore strike deadline nears and new carrier alliances launch. CMA CGM, Yang Ming and Hapag-Lloyd said they would implement surcharges ranging from $1,125 to $1,700 per FEU linked to the expected disruption should 45,000 dockworkers from the International Longshoremen’s Association (ILA) walk off the job in less than two weeks.The three carriers join Mediterranean Shipping Company and Zim Integrated Shipping, <a href="https://www.joc.com/article/trans-atlantic-carriers-cue-fresh-surcharges-for-early-2025-risks-5908990">which in December announced they could implement disruption-related surcharges</a> in mid-January. Zim cited the potential ILA strike, while MSC said its charge was linked to the restructuring of its trans-Atlantic network from Feb. 1 when it will <a href="https://www.joc.com/article/mscs-global-scale-enables-standalone-network-coverage-5726563">begin operating as a standalone carrier following its exit from the 2M Alliance with Maersk</a>. CMA CGM said Thursday it will implement a $1,500 per unit “Peak Season Surcharge” (PSS) on Jan. 15 for all cargo from the Indian Subcontinent, Middle East, Red Sea and Egypt to the US East and Gulf coasts.Hapag-Lloyd said it will implement an $850 per TEU or $1,700 per FEU “Work Disruption Surcharge” (WDS) and “Work Interruption Destination Surcharge” (WID) on any cargo gated in on or after Jan. 20. The WID would apply to trans-Pacific cargo, while the WDS would cover trans-Atlantic shipments, the carrier said.“This surcharge covers additional costs from labor disruptions, strikes, slowdowns, unrest, congestion, and other unforeseen events that may delay operations and incur extra handling, storage, and feeder service costs,” Hapag-Lloyd said.Yang Ming will implement a “Port Congestion Surcharge” (PCS) on Jan. 15 for all cargo moving into the US and Canada of $800 per TEU and $1,000 per FEU. The carrier said the potential labor unrest could increase its costs. Sources said other carriers are planning to implement surcharges, which are often actually negotiated between carriers and their customers down from the originally announced amount.“The others are hinting at it with their adjustments, just not openly stating it,” said a freight forwarding source. The announced surcharges come as <a href="https://www.joc.com/article/trans-pacific-spot-rates-on-the-rise-amid-pre-lunar-new-year-cargo-bump-5912763">spot rates for ex-Asia cargo into the US have climbed sharply in the past month</a>, according to Platts, a Journal of Commerce sister company within S&amp;P Global. The Platts Container Index measured trans-Pacific East Coast import rates at $6,400 per FEU and West Coast rates at $5,000 per FEU as of Jan 2. Contact Laura Robb at <a href="mailto:Laura.Robb@spglobal.com">laura.robb@spglobal.com</a>. </div>

The number of container lines preparing surcharges ahead of potential disruption to US East and Gulf coast service networks has reached at least five as a Jan. 15 longshore strike deadline nears and new carrier alliances launch. CMA CGM, Yang Ming and Hapag-Lloyd said they would implement surcharges ranging from $1,125 to $1,700 per FEU linked to the expected disruption should 45,000 dockworkers from the International Longshoremen’s Association (ILA) walk off the job in less than two weeks. The three carriers join Mediterranean Shipping Company and Zim Integrated Shipping, which in December announced they could implement disruption-related surcharges in mid-January. Zim cited the potential ILA strike, while MSC said its charge was linked to the restructuring of its trans-Atlantic network from Feb. 1 when it will begin operating as a standalone carrier following its exit from the 2M Alliance with Maersk . CMA CGM said Thursday it will implement a $1,500 per unit “Peak Season Surcharge” (PSS) on Jan. 15 for all cargo from the Indian Subcontinent, Middle East, Red Sea and Egypt to the US East and Gulf coasts. Hapag-Lloyd said it will implement an $850 per TEU or $1,700 per FEU “Work Disruption Surcharge” (WDS) and “Work Interruption Destination Surcharge” (WID) on any cargo gated in on or after Jan. 20. The WID would apply to trans-Pacific cargo, while the WDS would cover trans-Atlantic shipments, the carrier said. “This surcharge covers additional costs from labor disruptions, strikes, slowdowns, unrest, congestion, and other unforeseen events that may delay operations and incur extra handling, storage, and feeder service costs,” Hapag-Lloyd said. Yang Ming will implement a “Port Congestion Surcharge” (PCS) on Jan. 15 for all cargo moving into the US and Canada of $800 per TEU and $1,000 per FEU. The carrier said the potential labor unrest could increase its costs. Sources said other carriers are planning to implement surcharges, which are often actually negotiated between carriers and their customers down from the originally announced amount. “The others are hinting at it with their adjustments, just not openly stating it,” said a freight forwarding source. The announced surcharges come as spot rates for ex-Asia cargo into the US have climbed sharply in the past month , according to Platts, a Journal of Commerce sister company within S&P Global. The Platts Container Index measured trans-Pacific East Coast import rates at $6,400 per FEU and West Coast rates at $5,000 per FEU as of Jan 2. Contact Laura Robb at laura.robb@spglobal.com .

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<div class="phx-topic abstract-wrapper">Shanghai and Ningbo are dealing with “serious” congestion, according to a forwarder, while labor shortages in Hamburg are causing berthing delays of up to 10 days.</div>

Shanghai and Ningbo are dealing with “serious” congestion, according to a forwarder, while labor shortages in Hamburg are causing berthing delays of up to 10 days.

<div class="phx-topic">Shippers and ocean carriers on the Asia-Europe trade will be facing vessel delays into February as a raft of issues ranging from holiday port closures, vessel bunching in Asia and labor shortages in Hamburg cause serious port congestion with lengthy ship queues and berth waiting times. Port congestion is severe in China, Japan and the Philippines partly due to a pre-holiday cargo rush, bad weather and yard congestion. “Shanghai and Ningbo are still suffering from serious port congestion,” a spokesperson at forwarder FIBS Logistics in Singapore told the Journal of Commerce. “There were more than 120 vessels at anchor waiting for berth off both ports last week. We understand it’s the most severe level of congestion worldwide.” The spokesperson added the congestion at the two Chinese ports was “unlikely to improve before the Lunar New Year,” which begins Jan. 29. Guangzhou-based Winsail International Logistics said Shanghai is experiencing berthing delays of three to four days depending on the terminal. “Qingdao and Ningbo are facing delays of two to three days,” a senior executive at the company told the Journal of Commerce. The source pointed out that intra-Asia regional services are suffering more delays than mainline services due to the short voyage lengths of two to three days between ports and the large number of calls on services. That was echoed by FIBS Logistics, with the spokesperson saying the forwarder is experiencing vessel delays of “more than two weeks on the Shanghai-Manila corridor” on a transit that should take five to six days. There were also more than 50 vessels waiting to berth in Manila last week amid severe congestion due to high yard utilization, partly due to the large volume of empty containers and vessel bunching caused by ships arriving late. Taiwan’s Evergreen Line said on Dec. 20 that it had deployed three sweeper vessels to load empty containers at Manila to ease congestion at off-dock container yards and container terminals. That came after the Confederation of Truckers Association of the Philippines had threatened to stop accepting import containers from Evergreen due to congestion issues. The Philippines customs bureau said the problem of handling empty containers was an issue facing all carriers, not just Evergreen. That comes as carriers are again experiencing equipment shortages at ports in China and Vietnam as shippers consign cargo ahead of the Lunar New Year. CMA CGM is the worst affected with a shortage or tight supply of containers last week at all main ports in mainland China, Taiwan and Vietnam, except Guangzhou and Hong Kong. Hapag-Lloyd and Evergreen are also seeing tight supply of 40-foot containers in Shanghai, Ningbo, Qingdao and Chongqing in China. Ocean Network Express (ONE), OOCL, Cosco Shipping and Evergreen are experiencing tight availability of 20-foot and 40-foot containers in Shenzhen. <h3>Lengthy delays in Hamburg </h3>Meanwhile, labor shortages at Hamburg are causing berthing delays of up to 10 days for ships operating Asia-Europe services for THE Alliance, according to sailing schedules released by ONE. The labor issues are part of a wider shortage of personnel, with nearly 40% of companies in Germany reporting staff shortages. The delays have been exacerbated by congestion and labor issues at other ports, including Rotterdam. Strikes, labor shortages and congestion at Genoa will delay berthing at the Italian port in January by up to six days for some vessels operating Asia-Mediterranean services, ONE schedules show. Christmas and New Year port closures at ports including Le Havre, Barcelona, La Spezia and Marseille-Fos have also added to delays on Asia-Europe and Mediterranean services. The holdups have contributed to schedule delays of about a month on some Asia-Europe services, with the longest a 35-day slippage in the arrival of the 23,964 TEU HMM Algeciras operating the Far East 4 service. The vessel was scheduled to arrive at London Gateway on Dec. 29 but is now not expected until Feb. 2, according to the latest port itinerary. Schedules show the ship is expected to face a 10-day delay in Rotterdam and an extra four-day wait at its next call, Hamburg, where it’s due on Jan. 25. The 23,664-TEU Busan Express, operating the FE3 service, is set for a 10-day wait at Hamburg, with berthing now scheduled for Jan. 17, according to ONE schedules. Its arrival has already been held up due to congestion and holiday port closures at Rotterdam. The short voyage between North European ports such as Le Havre and London Gateway gives little opportunity for vessels to claw back the accumulated delays. But schedules also show THE Alliance anticipates it will recover two days on the transit from Antwerp to the final call at Southampton on FE3 services. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com.</a></div>

Shippers and ocean carriers on the Asia-Europe trade will be facing vessel delays into February as a raft of issues ranging from holiday port closures, vessel bunching in Asia and labor shortages in Hamburg cause serious port congestion with lengthy ship queues and berth waiting times. Port congestion is severe in China, Japan and the Philippines partly due to a pre-holiday cargo rush, bad weather and yard congestion. “Shanghai and Ningbo are still suffering from serious port congestion,” a spokesperson at forwarder FIBS Logistics in Singapore told the Journal of Commerce. “There were more than 120 vessels at anchor waiting for berth off both ports last week. We understand it’s the most severe level of congestion worldwide.” The spokesperson added the congestion at the two Chinese ports was “unlikely to improve before the Lunar New Year,” which begins Jan. 29. Guangzhou-based Winsail International Logistics said Shanghai is experiencing berthing delays of three to four days depending on the terminal. “Qingdao and Ningbo are facing delays of two to three days,” a senior executive at the company told the Journal of Commerce. The source pointed out that intra-Asia regional services are suffering more delays than mainline services due to the short voyage lengths of two to three days between ports and the large number of calls on services. That was echoed by FIBS Logistics, with the spokesperson saying the forwarder is experiencing vessel delays of “more than two weeks on the Shanghai-Manila corridor” on a transit that should take five to six days. There were also more than 50 vessels waiting to berth in Manila last week amid severe congestion due to high yard utilization, partly due to the large volume of empty containers and vessel bunching caused by ships arriving late. Taiwan’s Evergreen Line said on Dec. 20 that it had deployed three sweeper vessels to load empty containers at Manila to ease congestion at off-dock container yards and container terminals. That came after the Confederation of Truckers Association of the Philippines had threatened to stop accepting import containers from Evergreen due to congestion issues. The Philippines customs bureau said the problem of handling empty containers was an issue facing all carriers, not just Evergreen. That comes as carriers are again experiencing equipment shortages at ports in China and Vietnam as shippers consign cargo ahead of the Lunar New Year. CMA CGM is the worst affected with a shortage or tight supply of containers last week at all main ports in mainland China, Taiwan and Vietnam, except Guangzhou and Hong Kong. Hapag-Lloyd and Evergreen are also seeing tight supply of 40-foot containers in Shanghai, Ningbo, Qingdao and Chongqing in China. Ocean Network Express (ONE), OOCL, Cosco Shipping and Evergreen are experiencing tight availability of 20-foot and 40-foot containers in Shenzhen. Lengthy delays in Hamburg Meanwhile, labor shortages at Hamburg are causing berthing delays of up to 10 days for ships operating Asia-Europe services for THE Alliance, according to sailing schedules released by ONE. The labor issues are part of a wider shortage of personnel, with nearly 40% of companies in Germany reporting staff shortages. The delays have been exacerbated by congestion and labor issues at other ports, including Rotterdam. Strikes, labor shortages and congestion at Genoa will delay berthing at the Italian port in January by up to six days for some vessels operating Asia-Mediterranean services, ONE schedules show. Christmas and New Year port closures at ports including Le Havre, Barcelona, La Spezia and Marseille-Fos have also added to delays on Asia-Europe and Mediterranean services. The holdups have contributed to schedule delays of about a month on some Asia-Europe services, with the longest a 35-day slippage in the arrival of the 23,964 TEU HMM Algeciras operating the Far East 4 service. The vessel was scheduled to arrive at London Gateway on Dec. 29 but is now not expected until Feb. 2, according to the latest port itinerary. Schedules show the ship is expected to face a 10-day delay in Rotterdam and an extra four-day wait at its next call, Hamburg, where it’s due on Jan. 25. The 23,664-TEU Busan Express, operating the FE3 service, is set for a 10-day wait at Hamburg, with berthing now scheduled for Jan. 17, according to ONE schedules. Its arrival has already been held up due to congestion and holiday port closures at Rotterdam. The short voyage between North European ports such as Le Havre and London Gateway gives little opportunity for vessels to claw back the accumulated delays. But schedules also show THE Alliance anticipates it will recover two days on the transit from Antwerp to the final call at Southampton on FE3 services. Contact Keith Wallis at keithwallis@hotmail.com.

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Shippers, carriers face wave of port congestion, vessel delays in Asia, Europe 

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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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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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<div class="phx-topic abstract-wrapper">Shippers must weigh the merits of a single-source relationship on drayage through key ports over splitting volume among regional and national carriers, or even brokers. </div>

Shippers must weigh the merits of a single-source relationship on drayage through key ports over splitting volume among regional and national carriers, or even brokers.

<div class="phx-topic">Industry dynamics are driving shippers to diversify their allocation of volume to drayage carriers in a bid to manage increased volatility through the US ports they use for their import supply chains. Whereas shippers have historically tended to rely on a single drayage carrier in a specific gateway, the underlying technology and changing attitudes toward resilience on a chronically overlooked transportation leg are enabling that diversification. The change impacts a part of the industry that is especially fragmented, with more than 12,000 drayage carriers operating in the US on a local, regional or national basis, accounting for more than 49,000 drivers, according to the Intermodal Association of North America (IANA). And that fragmentation includes everything from national providers with as many as 2,500 trucks, to owner-operators running single-vehicle businesses. Drayage is also notorious for thin margins for operators, a reality that only deviated from the norm temporarily during the pandemic. For shippers, the hard work of managing a network of dray partners, as opposed to a single relationship, is theoretically offset by better performance and more flexibility to get the capacity required through a given gateway. While drayage capacity has been largely loose in aggregate the past two years despite solid container growth in 2024, shippers still deal with episodic periods of tightness week to week or through specific ports. “The landscape has changed significantly over the last five years,” said Reade Kidd, CEO of EDRAY, a managed transportation platform that helps importers, including Crate &amp; Barrel, Floor &amp; Decor and Samsung, to coordinate their shipments. “Pre-COVID, you saw many shippers with large volume lanes allocated to one dray carrier, leveraging one contract, one integration and one feedback loop,” Kidd said “While there are synergies and benefits from increasing scale with one provider, we have seen a significant adoption of strategies around diversification of carriers, ports and overall networks across the industry.” Michael Kroul, CEO of drayage broker KTI, said the days of using a single carrier for large volumes in a single gateway are largely gone. “There are examples of shippers only using one primary carrier in a market, but in truth they always now have backups as COVID taught them that exceptions can occur no matter how tight the bond is,” Kroul said. “We have shippers use us and two other carriers in a market, and others put 30% for spot price moves. Others stick solely through what they granted through their requests for proposal [RPFs]. My safe answer would be four to five at minimum per market, even if you primarily use one for everything.” <h3>No single solution </h3>As with every other aspect of international logistics, there is no one-size-fits-all strategy that applies to all shippers, or even for a single shipper across all the US import gateways they use. The decision to allocate cargo to more than one dray carrier is primarily influenced by the overall volume moved and the week-to-week consistency of that volume. “If you have 50 containers a week on a lane, that could be ideal to have multiple carriers on the lane,” Kidd said. “However, if the volume is not consistent — 30 containers on week one and 70 containers on week two — you could be at risk of increasing bobtails if you diversify your carrier mix.” There are ways to offset that inconsistency while using multiple carriers through the use of empty container pools and dedicated chassis programs. But most shippers have historically tended to take the path of least resistance and just pick one drayage carrier, or hand off the allocation of drayage volume to a third-party logistics provider (3PL) or shipping line, many of which route that to a favored or in-house carrier. Kidd advocates for some sort of split — generally between 50-50 and 70-30 between two carriers — that keeps options open and costs in a manageable band. “We have a number of shippers with five or more carriers on lanes, some of which are due to certain container types, like overweight, refrigerated, or hazardous, and some are just due to a high-volume lane that they keep highly competitive across their carriers,” he said. <h3>Benefit of multiple relationships </h3>Kroul said the complexity of the shipper’s needs at destination also determines the extent to which they are willing to diversify, or to stick with one carrier. “It depends on the time of year, the specific gateway, whether it’s a port or inland move, the equipment needed, and the delivery need,” he said. “Do they need transload, a distribution center, direct to warehouse, a drop yard, a reload?” Additional relationships are always of benefit, said Paul Brashier, vice president of global supply chain at the 3PL ITS Logistics, which specializes in drayage. For instance, he said that a shipper may add a 3PL not just to diversify its drayage options, but to add a specialized service, such as warehousing or domestic truckload, in addition to drayage. “Depending on the complexity of a shipper’s supply chain, it is usually best to delineate the spend by the mode or services supplied,” he said. “If a shipper is going to bring on multiple partners, it is best to ensure that they add a mode or service diversity to your portfolio.” Kroul agreed: “That is why you have seen large national carriers add transload, container yards, drop yards, and warehouses in specific areas,” he said. “The goal is to lure large national enterprise accounts that need all of those services. Some large national carriers, like IMC and RoadOne, have done a great job of that.” But even all large shippers are not alike in their usage of national drayage providers with broad service capabilities. “Many like to prioritize the local carriers or the brokers with the relationships with the local carriers, and then work with a broker like us and a large national carrier,” Kroul said. <h3>Ease of procurement </h3>Kidd said a proliferation of transportation procurement tools, which simplify the bidding process for shippers, is allowing importers that previously single-sourced to dabble in dual sourcing. “This enables shippers to try out a new carrier in a market, putting them at a smaller percentage — around 20% of their volume through a gateway — and earning their way into the network,” he said. Kidd ultimately recommends shippers with a significant enough threshold of volume, even if inconsistent, to dual source because it minimizes the vulnerability to both shippers and their capacity providers. “If one dray carrier has 30 containers a week and then needs to surge up to 100 a week during certain times of the year, that could be challenging,” he said. “As long as freight is balanced, having two carriers evenly split, each would need to surge from 15 to 50, instead of 30 to 100, containers for that week. Having a smaller volume of surge is easier for an asset-based carrier to absorb.” <h3>Size of carrier a factor </h3>Ian Weiland, COO at Southern California drayage provider Junction Collaborative Transports, said the size of the asset-based carrier factors into these decisions as well. Junction operates more than 350 trucks, so Weiland said the carrier can “easily commit to a 2,500-TEU to 4,000-TEU annual account on the fly, and it does not cause an operational disaster.” For a smaller dray carrier, one with about 10 trucks, a comfortable volume commitment level would be approximately 300 TEU to 500 TEUs per year. “Many in the drayage industry try to sell themselves or their services as if they are larger than they actually are,” Weiland said. “I assume it has to do with appealing to a larger account.” Once a small carrier lands a large account, it then has to figure out how to provide the capacity, Weiland said, and if the account leaves, that carrier is back to square one, sometimes with excess trucks that it cannot immediately fill. As a local operator, Weiland also has to consider how Junction fits into a larger framework where its customers have volume moving through gateways outside of Southern California. Junction could theoretically be the sole provider in Southern California, but not the sole provider nationwide, so some of its customers may use a national dray carrier for some volume in its territory in service of maintaining a strong relationship with the national carrier. “It really depends on the volume per gateway,” Weiland said. “We have a few customers where we are the only carrier at 300-plus containers per month. We have some where we are the primary, but at around 50% of their total volume.” Diversification is primarily about giving shippers options, and a part of that is maintaining communication with both asset-based and broker partners, sources emphasized. “We have a customer who has not given us a load in almost a year when we used to do a ton with them because the market for their particular commodity went south,” Kroul said. “They had to give more to their primary carrier. But they talked to us every week. And sure enough, two weeks ago they sent more than 50 loads. Relationships matter.” Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. </div>

Industry dynamics are driving shippers to diversify their allocation of volume to drayage carriers in a bid to manage increased volatility through the US ports they use for their import supply chains. Whereas shippers have historically tended to rely on a single drayage carrier in a specific gateway, the underlying technology and changing attitudes toward resilience on a chronically overlooked transportation leg are enabling that diversification. The change impacts a part of the industry that is especially fragmented, with more than 12,000 drayage carriers operating in the US on a local, regional or national basis, accounting for more than 49,000 drivers, according to the Intermodal Association of North America (IANA). And that fragmentation includes everything from national providers with as many as 2,500 trucks, to owner-operators running single-vehicle businesses. Drayage is also notorious for thin margins for operators, a reality that only deviated from the norm temporarily during the pandemic. For shippers, the hard work of managing a network of dray partners, as opposed to a single relationship, is theoretically offset by better performance and more flexibility to get the capacity required through a given gateway. While drayage capacity has been largely loose in aggregate the past two years despite solid container growth in 2024, shippers still deal with episodic periods of tightness week to week or through specific ports. “The landscape has changed significantly over the last five years,” said Reade Kidd, CEO of EDRAY, a managed transportation platform that helps importers, including Crate & Barrel, Floor & Decor and Samsung, to coordinate their shipments. “Pre-COVID, you saw many shippers with large volume lanes allocated to one dray carrier, leveraging one contract, one integration and one feedback loop,” Kidd said “While there are synergies and benefits from increasing scale with one provider, we have seen a significant adoption of strategies around diversification of carriers, ports and overall networks across the industry.” Michael Kroul, CEO of drayage broker KTI, said the days of using a single carrier for large volumes in a single gateway are largely gone. “There are examples of shippers only using one primary carrier in a market, but in truth they always now have backups as COVID taught them that exceptions can occur no matter how tight the bond is,” Kroul said. “We have shippers use us and two other carriers in a market, and others put 30% for spot price moves. Others stick solely through what they granted through their requests for proposal [RPFs]. My safe answer would be four to five at minimum per market, even if you primarily use one for everything.” No single solution As with every other aspect of international logistics, there is no one-size-fits-all strategy that applies to all shippers, or even for a single shipper across all the US import gateways they use. The decision to allocate cargo to more than one dray carrier is primarily influenced by the overall volume moved and the week-to-week consistency of that volume. “If you have 50 containers a week on a lane, that could be ideal to have multiple carriers on the lane,” Kidd said. “However, if the volume is not consistent — 30 containers on week one and 70 containers on week two — you could be at risk of increasing bobtails if you diversify your carrier mix.” There are ways to offset that inconsistency while using multiple carriers through the use of empty container pools and dedicated chassis programs. But most shippers have historically tended to take the path of least resistance and just pick one drayage carrier, or hand off the allocation of drayage volume to a third-party logistics provider (3PL) or shipping line, many of which route that to a favored or in-house carrier. Kidd advocates for some sort of split — generally between 50-50 and 70-30 between two carriers — that keeps options open and costs in a manageable band. “We have a number of shippers with five or more carriers on lanes, some of which are due to certain container types, like overweight, refrigerated, or hazardous, and some are just due to a high-volume lane that they keep highly competitive across their carriers,” he said. Benefit of multiple relationships Kroul said the complexity of the shipper’s needs at destination also determines the extent to which they are willing to diversify, or to stick with one carrier. “It depends on the time of year, the specific gateway, whether it’s a port or inland move, the equipment needed, and the delivery need,” he said. “Do they need transload, a distribution center, direct to warehouse, a drop yard, a reload?” Additional relationships are always of benefit, said Paul Brashier, vice president of global supply chain at the 3PL ITS Logistics, which specializes in drayage. For instance, he said that a shipper may add a 3PL not just to diversify its drayage options, but to add a specialized service, such as warehousing or domestic truckload, in addition to drayage. “Depending on the complexity of a shipper’s supply chain, it is usually best to delineate the spend by the mode or services supplied,” he said. “If a shipper is going to bring on multiple partners, it is best to ensure that they add a mode or service diversity to your portfolio.” Kroul agreed: “That is why you have seen large national carriers add transload, container yards, drop yards, and warehouses in specific areas,” he said. “The goal is to lure large national enterprise accounts that need all of those services. Some large national carriers, like IMC and RoadOne, have done a great job of that.” But even all large shippers are not alike in their usage of national drayage providers with broad service capabilities. “Many like to prioritize the local carriers or the brokers with the relationships with the local carriers, and then work with a broker like us and a large national carrier,” Kroul said. Ease of procurement Kidd said a proliferation of transportation procurement tools, which simplify the bidding process for shippers, is allowing importers that previously single-sourced to dabble in dual sourcing. “This enables shippers to try out a new carrier in a market, putting them at a smaller percentage — around 20% of their volume through a gateway — and earning their way into the network,” he said. Kidd ultimately recommends shippers with a significant enough threshold of volume, even if inconsistent, to dual source because it minimizes the vulnerability to both shippers and their capacity providers. “If one dray carrier has 30 containers a week and then needs to surge up to 100 a week during certain times of the year, that could be challenging,” he said. “As long as freight is balanced, having two carriers evenly split, each would need to surge from 15 to 50, instead of 30 to 100, containers for that week. Having a smaller volume of surge is easier for an asset-based carrier to absorb.” Size of carrier a factor Ian Weiland, COO at Southern California drayage provider Junction Collaborative Transports, said the size of the asset-based carrier factors into these decisions as well. Junction operates more than 350 trucks, so Weiland said the carrier can “easily commit to a 2,500-TEU to 4,000-TEU annual account on the fly, and it does not cause an operational disaster.” For a smaller dray carrier, one with about 10 trucks, a comfortable volume commitment level would be approximately 300 TEU to 500 TEUs per year. “Many in the drayage industry try to sell themselves or their services as if they are larger than they actually are,” Weiland said. “I assume it has to do with appealing to a larger account.” Once a small carrier lands a large account, it then has to figure out how to provide the capacity, Weiland said, and if the account leaves, that carrier is back to square one, sometimes with excess trucks that it cannot immediately fill. As a local operator, Weiland also has to consider how Junction fits into a larger framework where its customers have volume moving through gateways outside of Southern California. Junction could theoretically be the sole provider in Southern California, but not the sole provider nationwide, so some of its customers may use a national dray carrier for some volume in its territory in service of maintaining a strong relationship with the national carrier. “It really depends on the volume per gateway,” Weiland said. “We have a few customers where we are the only carrier at 300-plus containers per month. We have some where we are the primary, but at around 50% of their total volume.” Diversification is primarily about giving shippers options, and a part of that is maintaining communication with both asset-based and broker partners, sources emphasized. “We have a customer who has not given us a load in almost a year when we used to do a ton with them because the market for their particular commodity went south,” Kroul said. “They had to give more to their primary carrier. But they talked to us every week. And sure enough, two weeks ago they sent more than 50 loads. Relationships matter.” Contact Eric Johnson at eric.johnson@spglobal.com .

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