<div class="phx-topic abstract-wrapper">The proposed Edgemoor container terminal was slated for groundbreaking in January, but the project timeline is now uncertain after a federal judge ruled its permit was unlawful in a case brought by the nearby Port of Philadelphia. </div>

The proposed Edgemoor container terminal was slated for groundbreaking in January, but the project timeline is now uncertain after a federal judge ruled its permit was unlawful in a case brought by the nearby Port of Philadelphia.

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<div class="phx-topic">Delaware’s port authority is reaffirming support for developing a container terminal near the Port of Wilmington despite a delayed groundbreaking caused by a lawsuit brought by the nearby Port of Philadelphia. The delay for the proposed Edgemoor project also comes amid political turmoil over the port’s leadership. The Diamond State Port Corporation (DSPC) said in a statement this week to the Journal of Commerce that it “intend[s] to move forward with Edgemoor’s groundbreaking as quickly as possible.” Edgemoor, <a href="https://www.joc.com/article/public-private-backing-pushes-delawares-edgemoor-terminal-project-forward-5234283">a 1-million-TEU facility planned for a former chemical factory along the Delaware River</a>, was expected to begin dredging in January, but that has been “pushed back” six to eight months, William Ashe, a nominee to Diamond State’s board of directors, told a state senate confirmation hearing last week. Ashe said the delay was due to a case filed in Pennsylvania and was “not about anyone in Delaware.” “It’s an out-of-state group that knows we would be direct competition and tries to stop the state of Delaware from growing,” he said. The Philadelphia Port Authority (PhilaPort) filed a lawsuit last year that challenged the permit issued for Edgemoor by the US Army Corps of Engineers. Last month, PhilaPort agreed to dismiss its suit against the Corps after a federal judge ruled in favor of PhilaPort’s case. PhilaPort, about 30 miles upriver from the Edgemoor site, contested the Corps’ approval of Edgemoor’s permit. It argued the Corps did not do a proper economic study of the impact Edgemoor would have on Philadelphia, which contributed $140 million toward deepening the Delaware River to the 45-foot depth needed for neo-Panamax ships to call Edgemoor. PhilaPort argued that the Corps did not study the impact on the port of the estimated 244 ships that would call Edgemoor. Ships using Edgemoor’s turning basin could potentially block the Delaware River’s main shipping channel, PhilaPort claimed. DSPC, which applied for the permit, did not outline the changes it might make to its turning basin when reapplying for a permit. But it said it does not anticipate any design changes that would affect Edgemoor’s capacity. “The DSPC is committed to working with the Army Corps to address any permit concerns,” it said. <h3>Governor, state senate at odds </h3>Ashe, a member of the International Longshoremen’s Association (ILA), was among four nominees to DSPC’s board to appear before the Delaware state senate. They were picked by Bethany Hall-Long, the former lieutenant governor who served as governor from Jan. 7-21, the remaining two weeks of the term of previous governor John Carney, who stepped down to take office as mayor of Wilmington. However, Delaware’s new Gov. Mark Meyer sent a letter to the senate committee charged with DSPC’s oversight withdrawing those four nominations about a week before the hearing. Even so, Delaware Sen. Dave Sokola, who led last week’s hearing, said at the time the confirmation process would proceed because the hearing was already scheduled. Sokola added that Meyer had not put forward any director nominations to DSPC and only provided legal justification for withdrawing the previous nominations one day before the scheduled confirmation hearing. “The delay in the governor’s outreach to us until after the nominees were scheduled for their hearing is regrettable and I believe a little manipulative,” Sokola said during the hearing. The senate committee confirmed all four nominees, although it’s not clear when and whether they will take their seats. Four of Meyer’s cabinet secretaries have positions on the board by default. The DSPC did not provide a comment on the nominations. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

Delaware’s port authority is reaffirming support for developing a container terminal near the Port of Wilmington despite a delayed groundbreaking caused by a lawsuit brought by the nearby Port of Philadelphia. The delay for the proposed Edgemoor project also comes amid political turmoil over the port’s leadership. The Diamond State Port Corporation (DSPC) said in a statement this week to the Journal of Commerce that it “intend[s] to move forward with Edgemoor’s groundbreaking as quickly as possible.” Edgemoor, a 1-million-TEU facility planned for a former chemical factory along the Delaware River , was expected to begin dredging in January, but that has been “pushed back” six to eight months, William Ashe, a nominee to Diamond State’s board of directors, told a state senate confirmation hearing last week. Ashe said the delay was due to a case filed in Pennsylvania and was “not about anyone in Delaware.” “It’s an out-of-state group that knows we would be direct competition and tries to stop the state of Delaware from growing,” he said. The Philadelphia Port Authority (PhilaPort) filed a lawsuit last year that challenged the permit issued for Edgemoor by the US Army Corps of Engineers. Last month, PhilaPort agreed to dismiss its suit against the Corps after a federal judge ruled in favor of PhilaPort’s case. PhilaPort, about 30 miles upriver from the Edgemoor site, contested the Corps’ approval of Edgemoor’s permit. It argued the Corps did not do a proper economic study of the impact Edgemoor would have on Philadelphia, which contributed $140 million toward deepening the Delaware River to the 45-foot depth needed for neo-Panamax ships to call Edgemoor. PhilaPort argued that the Corps did not study the impact on the port of the estimated 244 ships that would call Edgemoor. Ships using Edgemoor’s turning basin could potentially block the Delaware River’s main shipping channel, PhilaPort claimed. DSPC, which applied for the permit, did not outline the changes it might make to its turning basin when reapplying for a permit. But it said it does not anticipate any design changes that would affect Edgemoor’s capacity. “The DSPC is committed to working with the Army Corps to address any permit concerns,” it said. Governor, state senate at odds Ashe, a member of the International Longshoremen’s Association (ILA), was among four nominees to DSPC’s board to appear before the Delaware state senate. They were picked by Bethany Hall-Long, the former lieutenant governor who served as governor from Jan. 7-21, the remaining two weeks of the term of previous governor John Carney, who stepped down to take office as mayor of Wilmington. However, Delaware’s new Gov. Mark Meyer sent a letter to the senate committee charged with DSPC’s oversight withdrawing those four nominations about a week before the hearing. Even so, Delaware Sen. Dave Sokola, who led last week’s hearing, said at the time the confirmation process would proceed because the hearing was already scheduled. Sokola added that Meyer had not put forward any director nominations to DSPC and only provided legal justification for withdrawing the previous nominations one day before the scheduled confirmation hearing. “The delay in the governor’s outreach to us until after the nominees were scheduled for their hearing is regrettable and I believe a little manipulative,” Sokola said during the hearing. The senate committee confirmed all four nominees, although it’s not clear when and whether they will take their seats. Four of Meyer’s cabinet secretaries have positions on the board by default. The DSPC did not provide a comment on the nominations. Contact Michael Angell at michael.angell@spglobal.com .

Port infrastructure

Marine terminals

North American ports

Delaware port still backing Edgemoor plans even after lawsuit cancels permit

<div class="phx-topic abstract-wrapper">Investment in wind power and air lubrication gives multipurpose vessel operators an extra shot at compliance with the FuelEU emissions rules.</div>

Investment in wind power and air lubrication gives multipurpose vessel operators an extra shot at compliance with the FuelEU emissions rules.

<div class="phx-topic">Tighter European emissions regulations have pushed multipurpose ship operators toward alternative propulsion technologies to achieve compliance. MOL Drybulk and Jumbo Maritime are the latest multipurpose vessel (MPV) operators to install power assistance technologies to improve fuel efficiency and cut greenhouse gas (GHG) emissions.MOL Drybulk took delivery of the 17,611-deadweight-metric-ton (dwt) Prima Verde on Jan. 30, equipped with two VentoFoil wind power-assisted sails supplied by Netherlands-headquartered Econowind. The move is part of wider plans by parent Mitsui OSK Lines to have more than 25 vessels equipped with wind propulsion equipment by 2030 and 80 ships by 2035 to help meet its goal of net-zero greenhouse gas (GHG) emissions by 2050, the company said.MOL said the ship is unique because it is the first vessel that can run exclusively on marine gas oil (MGO) with a wind assistance ship propulsion (WASP) system, and it has been built using green steel.Separately, Jumbo Maritime retrofitted the installation of two Econowind VentoFoils on the 13,000-dwt heavy-lift vessel Jumbo Jubilee in October as its latest initiative to apply multiple fuel-saving solutions to a single vessel. Jumbo Jubilee had already been equipped with an AI-powered anti-fouling monitoring system and an eco-control system to assess vessel efficiency, the company said.Jumbo said the equipment is also transferrable between vessels.“While not fully optimized for our vessel type, these sails will help us to gather valuable insights on real-world fuel savings and explore further optimizations that will allow Jumbo to reduce its environmental footprint even more,” Andres Cassanova, Jumbo’s technical manager, said in a statement.<h3>Auxiliary systems aid regulatory compliance</h3>European Union fuel and emissions regulations are driving interest in auxiliary propulsion equipment, especially wind and air lubrication-based systems, maritime executives said. Econowind said wind power systems help carriers comply with both the EU’s Emissions Trading Scheme (ETS) and its FuelEU Maritime regulation.For ETS alone, Econowind estimated wind assistance systems would slash carriers’ allowances by 15%, saving on carbon-related expenses. Econowind also forecast that WASP would achieve a 5% reduction in GHG intensity under FuelEU regulations that came into force in January, ensuring carriers avoid penalties and unlocking potential rewards for exceeding compliance standards.Gavin Allwright, secretary-general of the International Windship Association, said there were 48 large ocean-going vessels, equivalent to 3 million dwt, equipped with wind-assist systems at the end of last year. There were also 33 vessels that were either wind-ready or awaiting equipment installations, including ships that use wind as their primary propulsion source, he said.Those include Neoliner Origin, the world’s first commercial sailing roll-on/roll-off (ro/ro) vessel that was launched on Jan. 29 at the Turkish shipyard RMK Marine for French operator Neoline. The 446-foot-long ship, with more than 32,000 square feet of sail, has almost 4,000 feet of deck space capable of carrying 265 20-foot containers or up to 5,300 metric tons, Neoline said.Similarly, air lubrication system (ALS) installer Silverstream Technologies said there is growing appetite among carriers to fit ALS technologies to meet decarbonization goals. Lubrication systems blow a carpet of bubbles along the underside of the hull to reduce friction and improve fuel economy.The London-headquartered company said it has orders for more than 240 ships, including a series of pure car and truck carriers (PCTCs) for Italy’s Grimaldi Lines that will be Silverstream’s first air lubrication system installations on PCTCs.“Air lubrication systems are highly applicable to the MPV and deck carrier segment,” Silverstream Sales Director Gilberto Zambrini told the Journal of Commerce. “This is due to their low draught and operating patterns, which generally see these vessels travel long distances. As a result, Silverstream is seeing market interest within this space.”<h3>Slow uptake so far for propulsion enhancements </h3>Both WASP and ALS have had a relatively low adoption rate since the technologies were introduced about 15 years ago.The 9,820-dwt multipurpose vessel Beluga Skysails, since renamed Onego Deusto, was the first modern wind-assisted ship when it was delivered in December 2007 with a bow-mounted sail that could be raised and lowered similar to a parachute to harness the wind.Japan’s NYK Lines was the first carrier to adopt air lubrication, installing a system on the 2010-built 19,812-dwt heavy deck carrier Yamatai, Daisuke Takahashi, manager at NYK Bulk &amp; Projects Carriers, told the Journal of Commerce. A similar system was installed on a sister ship, Yamato, that was delivered in 2020, he added.Takahashi said two years of trials to test the most effective thickness of the bubble layer and how to make the release of air uniform along the breadth of the vessel resulted in 6% fuel savings. But since Yamatai began operating, fuel savings have actually been between 3% and 5%, he said.“There are lessons to be learned and improvements to be made from 14 years of operations for the future vessels,” Takahashi said.Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>.</div>

Tighter European emissions regulations have pushed multipurpose ship operators toward alternative propulsion technologies to achieve compliance. MOL Drybulk and Jumbo Maritime are the latest multipurpose vessel (MPV) operators to install power assistance technologies to improve fuel efficiency and cut greenhouse gas (GHG) emissions. MOL Drybulk took delivery of the 17,611-deadweight-metric-ton (dwt) Prima Verde on Jan. 30, equipped with two VentoFoil wind power-assisted sails supplied by Netherlands-headquartered Econowind. The move is part of wider plans by parent Mitsui OSK Lines to have more than 25 vessels equipped with wind propulsion equipment by 2030 and 80 ships by 2035 to help meet its goal of net-zero greenhouse gas (GHG) emissions by 2050, the company said. MOL said the ship is unique because it is the first vessel that can run exclusively on marine gas oil (MGO) with a wind assistance ship propulsion (WASP) system, and it has been built using green steel. Separately, Jumbo Maritime retrofitted the installation of two Econowind VentoFoils on the 13,000-dwt heavy-lift vessel Jumbo Jubilee in October as its latest initiative to apply multiple fuel-saving solutions to a single vessel. Jumbo Jubilee had already been equipped with an AI-powered anti-fouling monitoring system and an eco-control system to assess vessel efficiency, the company said. Jumbo said the equipment is also transferrable between vessels. “While not fully optimized for our vessel type, these sails will help us to gather valuable insights on real-world fuel savings and explore further optimizations that will allow Jumbo to reduce its environmental footprint even more,” Andres Cassanova, Jumbo’s technical manager, said in a statement. Auxiliary systems aid regulatory compliance European Union fuel and emissions regulations are driving interest in auxiliary propulsion equipment, especially wind and air lubrication-based systems, maritime executives said. Econowind said wind power systems help carriers comply with both the EU’s Emissions Trading Scheme (ETS) and its FuelEU Maritime regulation. For ETS alone, Econowind estimated wind assistance systems would slash carriers’ allowances by 15%, saving on carbon-related expenses. Econowind also forecast that WASP would achieve a 5% reduction in GHG intensity under FuelEU regulations that came into force in January, ensuring carriers avoid penalties and unlocking potential rewards for exceeding compliance standards. Gavin Allwright, secretary-general of the International Windship Association, said there were 48 large ocean-going vessels, equivalent to 3 million dwt, equipped with wind-assist systems at the end of last year. There were also 33 vessels that were either wind-ready or awaiting equipment installations, including ships that use wind as their primary propulsion source, he said. Those include Neoliner Origin, the world’s first commercial sailing roll-on/roll-off (ro/ro) vessel that was launched on Jan. 29 at the Turkish shipyard RMK Marine for French operator Neoline. The 446-foot-long ship, with more than 32,000 square feet of sail, has almost 4,000 feet of deck space capable of carrying 265 20-foot containers or up to 5,300 metric tons, Neoline said. Similarly, air lubrication system (ALS) installer Silverstream Technologies said there is growing appetite among carriers to fit ALS technologies to meet decarbonization goals. Lubrication systems blow a carpet of bubbles along the underside of the hull to reduce friction and improve fuel economy. The London-headquartered company said it has orders for more than 240 ships, including a series of pure car and truck carriers (PCTCs) for Italy’s Grimaldi Lines that will be Silverstream’s first air lubrication system installations on PCTCs. “Air lubrication systems are highly applicable to the MPV and deck carrier segment,” Silverstream Sales Director Gilberto Zambrini told the Journal of Commerce. “This is due to their low draught and operating patterns, which generally see these vessels travel long distances. As a result, Silverstream is seeing market interest within this space.” Slow uptake so far for propulsion enhancements Both WASP and ALS have had a relatively low adoption rate since the technologies were introduced about 15 years ago. The 9,820-dwt multipurpose vessel Beluga Skysails, since renamed Onego Deusto, was the first modern wind-assisted ship when it was delivered in December 2007 with a bow-mounted sail that could be raised and lowered similar to a parachute to harness the wind. Japan’s NYK Lines was the first carrier to adopt air lubrication, installing a system on the 2010-built 19,812-dwt heavy deck carrier Yamatai, Daisuke Takahashi, manager at NYK Bulk & Projects Carriers, told the Journal of Commerce. A similar system was installed on a sister ship, Yamato, that was delivered in 2020, he added. Takahashi said two years of trials to test the most effective thickness of the bubble layer and how to make the release of air uniform along the breadth of the vessel resulted in 6% fuel savings. But since Yamatai began operating, fuel savings have actually been between 3% and 5%, he said. “There are lessons to be learned and improvements to be made from 14 years of operations for the future vessels,” Takahashi said. Contact Keith Wallis at keithwallis@hotmail.com .

Breakbulk carriers

Project cargo

Breakbulk News

MPVs turn to unconventional propulsion to beat European fuel regulations

<div class="phx-topic abstract-wrapper">The third-most-profitable year in the carrier’s history could be followed by a breakeven result if voyages through the Red Sea resume before the end of the year, the CEO told analysts Thursday.</div>

The third-most-profitable year in the carrier’s history could be followed by a breakeven result if voyages through the Red Sea resume before the end of the year, the CEO told analysts Thursday.

<div class="phx-topic">Maersk’s profitability in 2025 depends on when shipping can resume regular transits through the Red Sea and Suez Canal, with the timing of such a return the difference between breaking even this year or making pre-tax profits as high as $3 billion, CEO Vincent Clerc said Thursday. Clerc told analysts during the carrier’s 2024 earnings call that the Red Sea introduced a significant variable into its forecast for earnings before interest and taxes (EBIT) for the year. “The low end of the range [$0] assumes a mid-year reopening of the Red Sea, while the high end [$3 billion] represents a year-end opening,” he said. The enormous financial benefit to ocean carriers of diverting ships around southern Africa propelled Maersk to its third-most-profitable year in history, with flat volume growth offset by rates that remained significantly elevated compared with 2023. Revenue in 2024 rose 8.6% year over year to $55.5 billion, while earnings before interest, taxes, amortization and depreciation (EBITDA) were up 26% at $12.1 billion. EBIT increased 65% to $6.5 billion and net profit for the year rose 69% to $6.2 billion. Last year’s volume rose 3.6% year over year to 12.3 million FEUs, while the average rate of $2,698 per FEU increased almost 17%, primarily a result of the capacity absorbed by the Red Sea diversions that pushed vessel utilization for the year to 96%. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="ad11e706-10a7-40b1-9b70-90cb139fd6c6"></dynamic-object></div>Despite the potential for the resumption of Red Sea voyages to drag down the carrier’s pre-tax profitability to breakeven growth this year, Clerc played down that eventuality, telling analysts that the excess capacity outlook was now “more nuanced and benign” than before the Houthi attacks on shipping began in late 2023. “The supply-demand imbalance that we could have seen in 2024 has likely been pushed back to 2025,” he said, highlighting the potential market drivers that could affect that balance. New ships being delivered this year could increase global capacity by 2 million TEUs, while a resumption of Red Sea transits would release between 1.5 million TEUs and 2 million TEUs back into the market, Clerc noted. However, increased scrapping, idling of ships and slow-steaming could remove up to 2 million TEUs, while the 4% growth in demand Maersk expects this year could absorb an additional 1.5 million TEUs. <h3>Carriers need safety guarantees </h3>While some carriers have been sending ad hoc sailings through the Red Sea, it remains highly uncertain when the route will be safe enough for a wholesale return of container shipping. Clerc laid out his conditions for Maersk’s resumption of Red Sea voyages that would revolve around a guarantee of safe passage for seamen, ships and cargo. “You need to look at the situation on the ground and say, ‘are the Houthis either no longer capable or whatever gives them the willingness to attack is no longer,’” he said. “It’s either a full degradation of [Houthi militant] capabilities, or there is some type of permanent deal on Gaza and permanent deal between the US administration and Iran that takes away the incentive for [the Houthis] to do something, and then I think it will be safe for us to go back,” he added. Clerc also outlined the cost of returning too soon to the Red Sea and then being forced to move back to diverting ships around Africa. “There is a lot of work and money involved in redoing the network, the berthing lineups in the US, in Europe and in the Mediterranean,” he said. “I need to be sure that it’s not only safe the first time but will be safe for the foreseeable future. “If it’s not, and I risk flipping back three months, six months, even a year later to the Cape of Good Hope, that’s hundreds of millions of dollars of cost to us and huge disruption for our customers,” Clerc added. “Customers are all eager to go back, but they have a caveat: We don’t want to flip flop back and forth.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Maersk’s profitability in 2025 depends on when shipping can resume regular transits through the Red Sea and Suez Canal, with the timing of such a return the difference between breaking even this year or making pre-tax profits as high as $3 billion, CEO Vincent Clerc said Thursday. Clerc told analysts during the carrier’s 2024 earnings call that the Red Sea introduced a significant variable into its forecast for earnings before interest and taxes (EBIT) for the year. “The low end of the range [$0] assumes a mid-year reopening of the Red Sea, while the high end [$3 billion] represents a year-end opening,” he said. The enormous financial benefit to ocean carriers of diverting ships around southern Africa propelled Maersk to its third-most-profitable year in history, with flat volume growth offset by rates that remained significantly elevated compared with 2023. Revenue in 2024 rose 8.6% year over year to $55.5 billion, while earnings before interest, taxes, amortization and depreciation (EBITDA) were up 26% at $12.1 billion. EBIT increased 65% to $6.5 billion and net profit for the year rose 69% to $6.2 billion. Last year’s volume rose 3.6% year over year to 12.3 million FEUs, while the average rate of $2,698 per FEU increased almost 17%, primarily a result of the capacity absorbed by the Red Sea diversions that pushed vessel utilization for the year to 96%. Despite the potential for the resumption of Red Sea voyages to drag down the carrier’s pre-tax profitability to breakeven growth this year, Clerc played down that eventuality, telling analysts that the excess capacity outlook was now “more nuanced and benign” than before the Houthi attacks on shipping began in late 2023. “The supply-demand imbalance that we could have seen in 2024 has likely been pushed back to 2025,” he said, highlighting the potential market drivers that could affect that balance. New ships being delivered this year could increase global capacity by 2 million TEUs, while a resumption of Red Sea transits would release between 1.5 million TEUs and 2 million TEUs back into the market, Clerc noted. However, increased scrapping, idling of ships and slow-steaming could remove up to 2 million TEUs, while the 4% growth in demand Maersk expects this year could absorb an additional 1.5 million TEUs. Carriers need safety guarantees While some carriers have been sending ad hoc sailings through the Red Sea, it remains highly uncertain when the route will be safe enough for a wholesale return of container shipping. Clerc laid out his conditions for Maersk’s resumption of Red Sea voyages that would revolve around a guarantee of safe passage for seamen, ships and cargo. “You need to look at the situation on the ground and say, ‘are the Houthis either no longer capable or whatever gives them the willingness to attack is no longer,’” he said. “It’s either a full degradation of [Houthi militant] capabilities, or there is some type of permanent deal on Gaza and permanent deal between the US administration and Iran that takes away the incentive for [the Houthis] to do something, and then I think it will be safe for us to go back,” he added. Clerc also outlined the cost of returning too soon to the Red Sea and then being forced to move back to diverting ships around Africa. “There is a lot of work and money involved in redoing the network, the berthing lineups in the US, in Europe and in the Mediterranean,” he said. “I need to be sure that it’s not only safe the first time but will be safe for the foreseeable future. “If it’s not, and I risk flipping back three months, six months, even a year later to the Cape of Good Hope, that’s hundreds of millions of dollars of cost to us and huge disruption for our customers,” Clerc added. “Customers are all eager to go back, but they have a caveat: We don’t want to flip flop back and forth.” Contact Greg Knowler at greg.knowler@spglobal.com .

Container Shipping News

Container lines

Maritime

Maersk’s profitability in 2025 hinges on return to Red Sea: Clerc

<div class="phx-topic abstract-wrapper">Forwarders say shippers are booking space to the US for low-value commodities such as plywood, tile and paper, which prior to the rate drop had been limited to less-expensive routes.</div>

Forwarders say shippers are booking space to the US for low-value commodities such as plywood, tile and paper, which prior to the rate drop had been limited to less-expensive routes.

<div class="phx-topic">Exporters shipping low-value products from Brazil to the US are taking advantage of depressed container spot rates driven by retreating volumes, a move forwarders say will hasten a rate recovery given the minimal capacity additions expected on the trade. Rates on the lane have been falling since mid-December, according to Platts, a sister company of the Journal of Commerce within S&amp;P Global. Spot rates for cargo from the East Coast of South America (ECSA) bound for the US Gulf Coast were assessed at $3,400 per FEU on Wednesday, down from $5,300 per FEU at the beginning of January, although still well above the $1,500 per FEU observed a year ago. As spot rates retreat on the lane, forwarders say opportunistic shippers are booking space to the US for low-value commodities such as plywood, tile and paper, which prior to the price drop had been limited to less-expensive routes. “January and February demand does seem to be higher than January 2024,” said a Brazil-based forwarder. Demand for ECSA exports on the north-south trade to the US had been elevated through the second half of 2024; November marked the highest ECSA export volumes to the US since October 2022, with about 49,000 TEUs moved. About 45,000 TEUs were shipped in December, marking the second-strongest December ever on the trade. Meanwhile, data prepared for the Journal of Commerce by UK-based transport consultancy MDS Transmodal shows modest 4% growth in capacity on the Latin America-North America lane in the first quarter compared with the fourth quarter of 2024. According to a second Brazil-based forwarder, even with the capacity addition, the current downward move in rates is likely unsustainable. “[The lower rates] will bring in demand that the market won’t be able to accommodate for very long and we expect to see [general rate increases] from April forward,” said the source. Contact Laura Robb at <a href="mailto:laura.robb@spglobal.com. ">laura.robb@spglobal.com</a>.</div>

Exporters shipping low-value products from Brazil to the US are taking advantage of depressed container spot rates driven by retreating volumes, a move forwarders say will hasten a rate recovery given the minimal capacity additions expected on the trade. Rates on the lane have been falling since mid-December, according to Platts, a sister company of the Journal of Commerce within S&P Global. Spot rates for cargo from the East Coast of South America (ECSA) bound for the US Gulf Coast were assessed at $3,400 per FEU on Wednesday, down from $5,300 per FEU at the beginning of January, although still well above the $1,500 per FEU observed a year ago. As spot rates retreat on the lane, forwarders say opportunistic shippers are booking space to the US for low-value commodities such as plywood, tile and paper, which prior to the price drop had been limited to less-expensive routes. “January and February demand does seem to be higher than January 2024,” said a Brazil-based forwarder. Demand for ECSA exports on the north-south trade to the US had been elevated through the second half of 2024; November marked the highest ECSA export volumes to the US since October 2022, with about 49,000 TEUs moved. About 45,000 TEUs were shipped in December, marking the second-strongest December ever on the trade. Meanwhile, data prepared for the Journal of Commerce by UK-based transport consultancy MDS Transmodal shows modest 4% growth in capacity on the Latin America-North America lane in the first quarter compared with the fourth quarter of 2024. According to a second Brazil-based forwarder, even with the capacity addition, the current downward move in rates is likely unsustainable. “[The lower rates] will bring in demand that the market won’t be able to accommodate for very long and we expect to see [general rate increases] from April forward,” said the source. Contact Laura Robb at laura.robb@spglobal.com .

Port News

International ports

Opportunistic Brazilian exporters move product to US amid spot rate retreat

<div class="phx-topic abstract-wrapper">Sources at Maersk and Hapag-Lloyd in India have confirmed that feeder services for the Bangladesh trade have not been included in the new network structure.</div>

Sources at Maersk and Hapag-Lloyd in India have confirmed that feeder services for the Bangladesh trade have not been included in the new network structure.

<div class="phx-topic">Shippers in Bangladesh who historically rely on feeder networks for trade flows are seemingly missing out on potential supply chain gains from Gemini Cooperation’s hub-and-spoke model designed around dedicated shuttle operations. Sources at Maersk and Hapag-Lloyd in India have confirmed that feeder services for the Bangladesh trade have not been included in the new network structure. “Gemini access for Bangladesh cargo remains confined to mainline transshipment options out of Colombo Port [Sri Lanka] and Tanjung Pelepas [Malaysia],” an official at a Gemini partner carrier who didn’t want to be identified told the Journal of Commerce. “There are no Gemini-specific shuttles [for Bangladesh].” Of the three weekly Gemini sailings out of India, only one string includes a direct call at Colombo, named the ME2 by Maersk and IEX by Hapag-Lloyd, that covers European trades. For Bangladesh-North America loads, Gemini offers Colombo relays via two Asia-US East Coast routings, known as the EC4 for Maersk and AA7 for Hapag-Lloyd. Feeder tonnage shortages and inherent operational strains at Bangladesh’s main port of Chittagong have been a source of concern for shippers and mainline operators, with recent <a href="https://nam11.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.joc.com%2Farticle%2Fbangladeshs-supply-chains-grind-to-a-halt-amid-political-upheaval-5703092&amp;data=05%7C02%7Ckevin.saville2%40spglobal.com%7C735000f4b0264fd5914b08dd46abc42d%7C8f3e36ea80394b4081a77dc0599e8645%7C1%7C0%7C638744425725760591%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&amp;sdata=PMB0zsAZdYg%2FSgqybY0FNicQdHgWORPdZG6uo9e1zqA%3D&amp;reserved=0">adverse political developments in the country</a> aggravating those pain points. Additionally, Colombo has been plagued by capacity challenges, typically making feeder calls the frontline casualty of berthing delays. Local industry experts believe reliable feeder connectivity is critical to Gemini driving the goal of predictable transits for trades in and out of Bangladesh. Maersk and Hapag-Lloyd generally use third-party or common feeders, mostly from Bangladesh-based HR Lines for the latter, for Chittagong-Colombo freight flows. The Gemini partners are betting that Bangladesh trade will markedly benefit from more consistent “hub sailings” as their independent attempts between 2019 and 2021 to provide direct southeast India-Europe routings via Colombo were hobbled by schedule disruptions, culminating in the halt of operations. “The Gemini network offers a robust alternative to previous arrangements, minimizing delays that were often encountered in the Asia-Europe network due to weather disruptions in Asia,” Bhavik Mota, Maersk’s director of regional ocean management for India/Middle East/Africa, told the Journal of Commerce. “Bangladesh continues to maintain multiple cutoffs, a feature highly appreciated by our retail and lifestyle customers.” CMA CGM has also discontinued a direct Bangladesh-India-Gulf (BIGEX) loop it began in early 2023. “We are currently serving Bangladesh trade via Colombo,” a sales executive at CMA CGM India said. Local forwarder sources put average freight-all-kinds (FAK) rates for bookings from Chittagong to the US East Coast at $3,500 per TEU and $4,000 per FEU. Contact Bency Mathew at <a href="mailto:bencyvmathew@gmail.com">bencyvmathew@gmail.com</a>.</div>

Shippers in Bangladesh who historically rely on feeder networks for trade flows are seemingly missing out on potential supply chain gains from Gemini Cooperation’s hub-and-spoke model designed around dedicated shuttle operations. Sources at Maersk and Hapag-Lloyd in India have confirmed that feeder services for the Bangladesh trade have not been included in the new network structure. “Gemini access for Bangladesh cargo remains confined to mainline transshipment options out of Colombo Port [Sri Lanka] and Tanjung Pelepas [Malaysia],” an official at a Gemini partner carrier who didn’t want to be identified told the Journal of Commerce. “There are no Gemini-specific shuttles [for Bangladesh].” Of the three weekly Gemini sailings out of India, only one string includes a direct call at Colombo, named the ME2 by Maersk and IEX by Hapag-Lloyd, that covers European trades. For Bangladesh-North America loads, Gemini offers Colombo relays via two Asia-US East Coast routings, known as the EC4 for Maersk and AA7 for Hapag-Lloyd. Feeder tonnage shortages and inherent operational strains at Bangladesh’s main port of Chittagong have been a source of concern for shippers and mainline operators, with recent adverse political developments in the country aggravating those pain points. Additionally, Colombo has been plagued by capacity challenges, typically making feeder calls the frontline casualty of berthing delays. Local industry experts believe reliable feeder connectivity is critical to Gemini driving the goal of predictable transits for trades in and out of Bangladesh. Maersk and Hapag-Lloyd generally use third-party or common feeders, mostly from Bangladesh-based HR Lines for the latter, for Chittagong-Colombo freight flows. The Gemini partners are betting that Bangladesh trade will markedly benefit from more consistent “hub sailings” as their independent attempts between 2019 and 2021 to provide direct southeast India-Europe routings via Colombo were hobbled by schedule disruptions, culminating in the halt of operations. “The Gemini network offers a robust alternative to previous arrangements, minimizing delays that were often encountered in the Asia-Europe network due to weather disruptions in Asia,” Bhavik Mota, Maersk’s director of regional ocean management for India/Middle East/Africa, told the Journal of Commerce. “Bangladesh continues to maintain multiple cutoffs, a feature highly appreciated by our retail and lifestyle customers.” CMA CGM has also discontinued a direct Bangladesh-India-Gulf (BIGEX) loop it began in early 2023. “We are currently serving Bangladesh trade via Colombo,” a sales executive at CMA CGM India said. Local forwarder sources put average freight-all-kinds (FAK) rates for bookings from Chittagong to the US East Coast at $3,500 per TEU and $4,000 per FEU. Contact Bency Mathew at bencyvmathew@gmail.com .

Bangladesh shippers find no place in Gemini’s integrated shuttle plan

<div class="phx-topic abstract-wrapper">A new report from software vendor Kaleris has found that terminal operators around the globe believe they are providing better visibility data than shippers say are they receiving. </div>

A new report from software vendor Kaleris has found that terminal operators around the globe believe they are providing better visibility data than shippers say are they receiving.

<div class="phx-topic">A lack of alignment around visibility data between container terminal operators around the globe and the shippers and forwarders they serve results in underuse of operating systems and general supply chain inefficiencies, according to a report on the subject. The report, produced by maritime consultant Thetius on behalf of terminal software vendor Kaleris, found that nearly 57% of terminal operators surveyed believe they provide good or very good visibility to their customers, while just 27% of shippers and freight forwarders participating said they are the recipients of good visibility from terminals. Nearly 82% of shippers said they faced discrepancies between the information provided by terminals and the actual status of their shipments, while 61% said they do not receive automated alerts on key events. “Marine terminals have invested in infrastructure to support data sharing, often establishing revenue-sharing agreements and data-as-a-service [DaaS] offerings,” Rene Alvarenga, senior director of execution and visibility product management at Kaleris, said in the report. “Despite all these initiatives, shippers still report feeling left in the dark. Marine terminals, meanwhile, bear the brunt of the blame, often unfairly, as they struggle to balance the demands for transparency with operational realities and evolving technology standards.” At the heart of the disconnect is the reality that shippers and forwarders do not have contractual relationships with terminals, yet need information generated by or housed within terminal systems. “The key element to reiterate is that the collaboration we are referring to is between parties that do not exchange monetary benefits or penalties via contracts,” Alvarenga said. “For all intents and purposes, the collaboration we refer to here is between complete strangers with no relationships.” The report cites more than a dozen systems that either generate, consume or rely on terminal visibility data — from transportation management systems catering to a range of entities to terminal operating systems, port community systems, automated gate systems and fleet and yard management software. The systems mentioned in the report do not include areas such as rail and intermodal systems, nor systems related to customs clearance. “This gap isn’t just a question of technology products,” Alvarenga said. “It’s about objectives alignment, monetary incentives, and the clear definition of visibility itself. Our research shows that a lack of visibility is a result from multiple factors related to data privacy and security concerns, organizational silos and systems not designed to work together, and lack of standardization of execution systems.” The report was based on a survey in which terminal operators represented 54.6% of participants and shippers and forwarders the other 45.4%, spread across all global regions. Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. </div>

A lack of alignment around visibility data between container terminal operators around the globe and the shippers and forwarders they serve results in underuse of operating systems and general supply chain inefficiencies, according to a report on the subject. The report, produced by maritime consultant Thetius on behalf of terminal software vendor Kaleris, found that nearly 57% of terminal operators surveyed believe they provide good or very good visibility to their customers, while just 27% of shippers and freight forwarders participating said they are the recipients of good visibility from terminals. Nearly 82% of shippers said they faced discrepancies between the information provided by terminals and the actual status of their shipments, while 61% said they do not receive automated alerts on key events. “Marine terminals have invested in infrastructure to support data sharing, often establishing revenue-sharing agreements and data-as-a-service [DaaS] offerings,” Rene Alvarenga, senior director of execution and visibility product management at Kaleris, said in the report. “Despite all these initiatives, shippers still report feeling left in the dark. Marine terminals, meanwhile, bear the brunt of the blame, often unfairly, as they struggle to balance the demands for transparency with operational realities and evolving technology standards.” At the heart of the disconnect is the reality that shippers and forwarders do not have contractual relationships with terminals, yet need information generated by or housed within terminal systems. “The key element to reiterate is that the collaboration we are referring to is between parties that do not exchange monetary benefits or penalties via contracts,” Alvarenga said. “For all intents and purposes, the collaboration we refer to here is between complete strangers with no relationships.” The report cites more than a dozen systems that either generate, consume or rely on terminal visibility data — from transportation management systems catering to a range of entities to terminal operating systems, port community systems, automated gate systems and fleet and yard management software. The systems mentioned in the report do not include areas such as rail and intermodal systems, nor systems related to customs clearance. “This gap isn’t just a question of technology products,” Alvarenga said. “It’s about objectives alignment, monetary incentives, and the clear definition of visibility itself. Our research shows that a lack of visibility is a result from multiple factors related to data privacy and security concerns, organizational silos and systems not designed to work together, and lack of standardization of execution systems.” The report was based on a survey in which terminal operators represented 54.6% of participants and shippers and forwarders the other 45.4%, spread across all global regions. Contact Eric Johnson at eric.johnson@spglobal.com .

Logistics Technology News

Drayage

Shippers want more visibility data than terminals are providing: survey

<div class="phx-topic abstract-wrapper">When considering the outlook for intermodal, there are any number of factors that could drive results. But for now, it seems that the only inflection has been that of expectations — not volume.</div>

When considering the outlook for intermodal, there are any number of factors that could drive results. But for now, it seems that the only inflection has been that of expectations — not volume.

<div class="phx-topic">Netflix just released a new documentary, “Churchill at War.” Given its focus, it most likely omits Churchill’s observation that, “If you put two economists in a room, you get two opinions, unless one of them is Lord Keynes, in which case you get three opinions.” This Keynesian methodology has been characteristic of our industry for the past four years. We are now passing through the third consecutive second half in which freight demand was supposed to pick up. When considering the outlook for intermodal, there are any number of factors that could drive results. But for now, it seems that the only inflection has been that of expectations — not volume. North American intermodal has two main components: international and domestic. The former is waterborne trade into and out of North America. Inventory restocking (and a rush to avoid the unanticipated) has increased import flows. And while a great deal of import volume crosses over into the domestic sphere by transloading adjacent to the port of discharge, there has also been an increase in intact intermodal movement. Import volume is the straw that stirs intermodal’s drink. It depends on a number of factors. The most pressing is the economy: Will consumers continue to spend? And then trade politics: Will we degrade into a mutually destructive war of tit-for-tat tariffs that is reminiscent of the Smoot-Hawley tariffs that helped bring on the Great Depression? There are also other issues that drive these volumes. Will reshoring or nearshoring replace waterborne trade? While we are seeing some of this, it is not in the labor-intensive categories of footwear, clothing and household goods, which will continue to be manufactured overseas where labor costs are low. The other factor is homeownership. Many consumer purchases are tied to new homes, and with that market being depressed, so is the associated demand. East Coast labor concerns, though now settled, were accompanied by Canadian labor issues last year that increased volumes at US West Coast ports to the point where volumes resulted in gridlock conditions. Lessons from 2021 and 2022 seemed to have passed into collective amnesia. Unfortunately, there are so many disparate parties involved (ports, ocean carriers, marine terminal operators, railroads, beneficial cargo owners, truckers, etc.) that the only point of agreement is that it is someone else’s fault. To this cacophony, you can add the issues of regulation — environmental and otherwise. While the impact of the Chevron decision is not yet clear, the new administration has promised to reduce regulatory burdens, California retains its preeminence under the Clean Air Act — and other states are following their lead. It seems probable that we will see a continuation of federalism to stifle national initiatives. However, these will now be filed in San Francisco instead of Amarillo. The domestic intermodal market has seen some growth, although there is some question as to how railroad consolidation has impacted reporting participation. The most talked about opportunity has centered around expectations for trans-border traffic across North America. This is certainly a political wildcard.   <h3>Trade politics at the fore</h3>President Donald Trump has once again pledged that he could immediately increase American manufacturing by renegotiating a trade agreement with Mexico and Canada. However, the North American Free Trade Agreement (NAFTA) — which Trump called the “worst trade deal ever made” — was replaced by the US-Mexico-Canada Agreement (USMCA.) In his first term, Trump negotiated, signed, and called USMCA “the most modern, up-to-date, and balanced trade agreement in the history of our country.” It might be a great time to be a trade lawyer or customs house broker. Expect a number of pitched battles on the question of what is “manufacturing” and what is “assembly.” Domestic intermodal will continue to see different railroads pursue various market channels to grow volume. However, it remains to be seen if service can remain excellent when volumes increase, and whether intermodal rates can compete with gravity-defying truckload rates that have seemed to ignore all inflationary cost pressures. We may also see a renewed focus on oil prices. Our nation’s recent energy independence has been driven by fracking. However, fracking cannot compete if oil prices drop below $50 a barrel after “drill baby, drill.” In closing, I would listen to Margo Channing, Bette Davis’ character in “All About Eve.” “Fasten your seatbelts, it’s going to be a bumpy night.” Opportunities are great; however, the number of permutations is greater. Contact Ted Prince at <a href="mailto:ted@tricitiesintermodal.com">ted@tricitiesintermodal.com</a>.</div>

Netflix just released a new documentary, “Churchill at War.” Given its focus, it most likely omits Churchill’s observation that, “If you put two economists in a room, you get two opinions, unless one of them is Lord Keynes, in which case you get three opinions.” This Keynesian methodology has been characteristic of our industry for the past four years. We are now passing through the third consecutive second half in which freight demand was supposed to pick up. When considering the outlook for intermodal, there are any number of factors that could drive results. But for now, it seems that the only inflection has been that of expectations — not volume. North American intermodal has two main components: international and domestic. The former is waterborne trade into and out of North America. Inventory restocking (and a rush to avoid the unanticipated) has increased import flows. And while a great deal of import volume crosses over into the domestic sphere by transloading adjacent to the port of discharge, there has also been an increase in intact intermodal movement. Import volume is the straw that stirs intermodal’s drink. It depends on a number of factors. The most pressing is the economy: Will consumers continue to spend? And then trade politics: Will we degrade into a mutually destructive war of tit-for-tat tariffs that is reminiscent of the Smoot-Hawley tariffs that helped bring on the Great Depression? There are also other issues that drive these volumes. Will reshoring or nearshoring replace waterborne trade? While we are seeing some of this, it is not in the labor-intensive categories of footwear, clothing and household goods, which will continue to be manufactured overseas where labor costs are low. The other factor is homeownership. Many consumer purchases are tied to new homes, and with that market being depressed, so is the associated demand. East Coast labor concerns, though now settled, were accompanied by Canadian labor issues last year that increased volumes at US West Coast ports to the point where volumes resulted in gridlock conditions. Lessons from 2021 and 2022 seemed to have passed into collective amnesia. Unfortunately, there are so many disparate parties involved (ports, ocean carriers, marine terminal operators, railroads, beneficial cargo owners, truckers, etc.) that the only point of agreement is that it is someone else’s fault. To this cacophony, you can add the issues of regulation — environmental and otherwise. While the impact of the Chevron decision is not yet clear, the new administration has promised to reduce regulatory burdens, California retains its preeminence under the Clean Air Act — and other states are following their lead. It seems probable that we will see a continuation of federalism to stifle national initiatives. However, these will now be filed in San Francisco instead of Amarillo. The domestic intermodal market has seen some growth, although there is some question as to how railroad consolidation has impacted reporting participation. The most talked about opportunity has centered around expectations for trans-border traffic across North America. This is certainly a political wildcard.   Trade politics at the fore President Donald Trump has once again pledged that he could immediately increase American manufacturing by renegotiating a trade agreement with Mexico and Canada. However, the North American Free Trade Agreement (NAFTA) — which Trump called the “worst trade deal ever made” — was replaced by the US-Mexico-Canada Agreement (USMCA.) In his first term, Trump negotiated, signed, and called USMCA “the most modern, up-to-date, and balanced trade agreement in the history of our country.” It might be a great time to be a trade lawyer or customs house broker. Expect a number of pitched battles on the question of what is “manufacturing” and what is “assembly.” Domestic intermodal will continue to see different railroads pursue various market channels to grow volume. However, it remains to be seen if service can remain excellent when volumes increase, and whether intermodal rates can compete with gravity-defying truckload rates that have seemed to ignore all inflationary cost pressures. We may also see a renewed focus on oil prices. Our nation’s recent energy independence has been driven by fracking. However, fracking cannot compete if oil prices drop below $50 a barrel after “drill baby, drill.” In closing, I would listen to Margo Channing, Bette Davis’ character in “All About Eve.” “Fasten your seatbelts, it’s going to be a bumpy night.” Opportunities are great; however, the number of permutations is greater. Contact Ted Prince at ted@tricitiesintermodal.com .

North-American rail

Intermodal providers

Surface

North American intermodal market readies for ‘bumpy night’ in 2025

<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.

Transport, Trade and Regulation News

Protecting navigation and the Commerce Clause in 2025

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The Eternity Asia Index is a composite measure derived from Freight All Kinds (FAK) Tier 0 service contracts with major carriers operating on this trade lane. The EAX reports rates in USD per 40-foot container, weighted by volume capacity expressed in twenty-foot equivalent units (TEUs). This methodology ensures that the index reflects the actual market conditions and pricing dynamics within this specific shipping corridor. The volume capacity generally ranges weekly between 125,000 TEUs and 150,000 TEUs. [Eternity](https://eax.eiffmx.com/)

Asia to west coasts of Mexico and South America container spot rates (Eternity)

Eternity Index from Asia Ports to West Coast of Mexico and South America Ports Gateway

<div class="phx-topic abstract-wrapper">There has been a steady decline in average rate levels on the major trade lanes since December, and as the new alliances and MSC’s standalone network launch, there is no sign of an end to the slide.</div>

There has been a steady decline in average rate levels on the major trade lanes since December, and as the new alliances and MSC’s standalone network launch, there is no sign of an end to the slide.

<div class="phx-topic">Growing competition as ocean carriers adjust to the restructured alliances will likely place downward pressure on rates on the main east-west trades, according to Sea-Intelligence Maritime Analysis. There has already been a steady decline in average rate levels on the trans-Pacific and Asia-Europe trade lanes since December; as the new alliances and Mediterranean Shipping Co.’s standalone network are rolled out, there is no sign of an end to the slide. “There are clear shifts in the relative competitive power between the different players in the new alliances versus the situation we have been used to for the past eight years,” Sea-Intelligence noted in its latest Sunday Spotlight newsletter, adding that, for shippers, the downward pressure on rates would intensify. Ocean Alliance — comprised of Cosco Shipping, CMA, CGM, OOCL and Evergreen — holds the leading market share on three of the four main trade lanes out of Asia: Asia-US West Coast, Asia-US East Coast, and Asia-North Europe. MSC is the largest capacity provider on Asia-Mediterranean. Ocean Alliance will be the market leader on the Asia-North America West Coast trade with 35% of the planned capacity, while operating 37% of Asia-North America East Coast capacity and 35% on Asia-North Europe, Sea-Intelligence data shows. MSC will lead on Asia-Mediterranean with 30% of the capacity, although Ocean Alliance is just behind at 29%. The Gemini Cooperation between Maersk and Hapag-Lloyd is the smallest player on both the Asia-North America West Coast and East Coast trade lanes, just behind the Premier Alliance of Ocean Network Express (ONE), Yang Ming and HMM. <h3>Signs of a rate war </h3>As carriers reposition ships and take bookings for their new networks, Kathy Liu, vice president of global sales and marketing at Taiwan-based forwarder Dimerco Express Group, said there were increasing signs of a battle for market share emerging, at least on the Asia-Europe trade lane. “With demand slowing ... shipping lines need to fill their capacity, so there will for sure be a price war,” she told the Journal of Commerce. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="a52c973a-e22e-4c6b-a183-1b9968e08140"></dynamic-object></div>Average spot rates from North Asia to the US West Coast were at $3,700 per FEU Monday, down from $5,250/FEU at the beginning of January, according to Platts, a sister company of the Journal of Commerce within S&amp;P Global. Current Asia-US East Coast rates of $5,500/FEU were $2,200 lower than at the beginning of the year. It was a similar picture on Asia-North Europe, where the rate of $3,000/FEU this week was down from $5,000 in the first week of January, while the current Asia-Mediterranean rate of $4,300/FEU has slipped $1,000. There is little clarity into how rates will perform following the late January start to the Lunar New Year and widespread uncertainty into when carriers <a href="https://www.joc.com/article/carriers-eye-red-sea-transits-after-houthi-rebels-pledge-restraint-5925939">will resume shorter Suez Canal transits</a>. The base case from global bank HSBC is for Red Sea transits to resume from mid-2025, which it said implied 10.5% effective capacity growth in 2025 compared with 2.7% volume growth. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Growing competition as ocean carriers adjust to the restructured alliances will likely place downward pressure on rates on the main east-west trades, according to Sea-Intelligence Maritime Analysis. There has already been a steady decline in average rate levels on the trans-Pacific and Asia-Europe trade lanes since December; as the new alliances and Mediterranean Shipping Co.’s standalone network are rolled out, there is no sign of an end to the slide. “There are clear shifts in the relative competitive power between the different players in the new alliances versus the situation we have been used to for the past eight years,” Sea-Intelligence noted in its latest Sunday Spotlight newsletter, adding that, for shippers, the downward pressure on rates would intensify. Ocean Alliance — comprised of Cosco Shipping, CMA, CGM, OOCL and Evergreen — holds the leading market share on three of the four main trade lanes out of Asia: Asia-US West Coast, Asia-US East Coast, and Asia-North Europe. MSC is the largest capacity provider on Asia-Mediterranean. Ocean Alliance will be the market leader on the Asia-North America West Coast trade with 35% of the planned capacity, while operating 37% of Asia-North America East Coast capacity and 35% on Asia-North Europe, Sea-Intelligence data shows. MSC will lead on Asia-Mediterranean with 30% of the capacity, although Ocean Alliance is just behind at 29%. The Gemini Cooperation between Maersk and Hapag-Lloyd is the smallest player on both the Asia-North America West Coast and East Coast trade lanes, just behind the Premier Alliance of Ocean Network Express (ONE), Yang Ming and HMM. Signs of a rate war As carriers reposition ships and take bookings for their new networks, Kathy Liu, vice president of global sales and marketing at Taiwan-based forwarder Dimerco Express Group, said there were increasing signs of a battle for market share emerging, at least on the Asia-Europe trade lane. “With demand slowing ... shipping lines need to fill their capacity, so there will for sure be a price war,” she told the Journal of Commerce. Average spot rates from North Asia to the US West Coast were at $3,700 per FEU Monday, down from $5,250/FEU at the beginning of January, according to Platts, a sister company of the Journal of Commerce within S&P Global. Current Asia-US East Coast rates of $5,500/FEU were $2,200 lower than at the beginning of the year. It was a similar picture on Asia-North Europe, where the rate of $3,000/FEU this week was down from $5,000 in the first week of January, while the current Asia-Mediterranean rate of $4,300/FEU has slipped $1,000. There is little clarity into how rates will perform following the late January start to the Lunar New Year and widespread uncertainty into when carriers will resume shorter Suez Canal transits . The base case from global bank HSBC is for Red Sea transits to resume from mid-2025, which it said implied 10.5% effective capacity growth in 2025 compared with 2.7% volume growth. Contact Greg Knowler at greg.knowler@spglobal.com .

Spot rates falling as new ocean networks roll out: Sea-Intelligence

<div class="phx-topic abstract-wrapper">A slow shift away from one-way truckload toward dedicated is reshaping the top tier of truckload carriers, a transformation that may accelerate in a freight recovery. </div>

A slow shift away from one-way truckload toward dedicated is reshaping the top tier of truckload carriers, a transformation that may accelerate in a freight recovery.

<div class="phx-topic">Large US truckload carriers are increasingly focused on dedicated trucking because of the capacity needs of customers and a desire for more stable revenue and margins, with many companies moving greater numbers of trucks and drivers to dedicated divisions. That shift is a <a href="https://www.joc.com/article/us-shippers-expanding-private-truck-fleets-to-haul-more-of-their-own-freight-5712761">long-term trend</a>, accelerated by a freight downcycle that has lasted nearly three years. It also reflects shipper demand for more stable capacity and is tied to the expansion of <a href="https://www.joc.com/article/us-shippers-expanding-private-truck-fleets-to-haul-more-of-their-own-freight-5712761">shipper-owned private fleets</a> since the COVID-19 pandemic. The growth of dedicated services is leading to a significant rebalancing of the upper tier of the truckload market, which includes giant carriers such as Knight-Swift Transportation Holdings, J.B. Hunt Transport Services, Schneider National and Werner Enterprises. All of these trucking companies have made dedicated business — in which they provide guaranteed capacity to shippers in the form of an outsourced private fleet — a top priority heading into 2025. Dedicated is a key part of their broader diversification plans. Expecting an end to the so-called freight recession — although it is not certain — by the second half of the year, shippers tell the Journal of Commerce they are once again concerned about truck capacity, even though that capacity is abundant and demand slow in the first quarter. That creates opportunities for dedicated trucking providers. At Green Bay, Wisconsin-based Schneider National, 70% of its 12,700 tractors are now in dedicated service, a percentage bolstered by the $421 million acquisition of dedicated trucking company Cowan Systems, company officials told Wall Street analysts last Thursday. When Schneider became a publicly traded company in 2017, dedicated services represented only 33% of its fleet, which underscores the scope of the transformation. “Our dedicated business has demonstrated [a] resilient earnings profile over freight cycles and is an important part of our strategy to create enduring shareholder value,” Mark B. Rourke, president and CEO of Schneider, said during a fourth-quarter earnings call. In contrast, the traditional over-the-road (OTR) truckload business “continues to be challenged” and was not profitable in the last quarter, Rourke said. “The freight market is continuing its path towards recovery, and we are playing the long game.” <h3>Driven to diversify </h3>That game requires belt-tightening and diversification as carriers roll toward what they hope will be the end of a freight downturn that began in 2022. Truckload carriers have seen volatile pricing swings since the disruption caused by the COVID-19 pandemic in 2020. Dedicated business tends to have higher profit margins and longer-term contracts, encouraging an even greater shift when typical truckload margins are either in single digits or negative. At J.B. Hunt, for example, the average dedicated contract length is five years. The margin goal for dedicated at J.B. Hunt is 12% to 14%, company officials said. The carrier’s truckload division had an operating margin of about 4.7% in the fourth quarter, while its dedicated operating margin was 10.8%, according to quarterly earnings data. The higher margin is in the difference between dedicated and traditional truckload. “When we’re putting together a dedicated solution, it’s truly dedicated, it is a multiyear agreement,” James Filter, group vice president of transportation and logistics at Schneider, said during Schneider’s earnings call. “It’s structured so that it has teeth in it for both sides and is not something that is going to be replaced by lower-cost spot pricing.” Allocating more capital to dedicated trucking as well as to less-than-truckload (LTL) services is the strategy Phoenix-based Knight-Swift Transportation Holdings is pursuing to reduce its dependence on the volatile one-way, irregular-route truckload market. Knight-Swift’s truckload segment currently operates 15,800 irregular-route trucks and 6,400 dedicated trucks across its truckload subsidiaries, which include Knight and Swift Transportation as well as Barr-Nunn, Abilene Motor Express and U.S. Xpress. “We’re going to build our dedicated fleet,” CFO Andrew Hess said during a Jan. 22 earnings call. Knight-Swift looks to boost dedicated operations at U.S. Xpress, which it acquired in 2023 for $808 million. “We believe [dedicated] has an opportunity for growth,” Hess said. J.B. Hunt Transport Services President and CEO Shelley Simpson, in a Jan. 16 earnings call, called her company’s dedicated service “remarkably resilient” despite the freight downturn. J.B. Hunt puts the value of the overall dedicated trucking market at $90 billion. J.B. Hunt’s dedicated business did come under pressure as truckload spot rates dropped by double digits from 2022 through 2024. That pricing collapse gave some shippers an opportunity to shift more expensive dedicated business to the open market. “We certainly combated that challenge throughout the year,” Bradley W. Hicks, Hunt’s president of dedicated contract services, said during the earnings call. He expects pressure from “fleet losses” to continue through the early part of the second quarter. After that, however, Hicks sees a clearer road to growth ahead. “We see our retention rates on customers rebounding,” with more trucks in demand, he said. Schneider also expects rising demand will allow it to deploy more dedicated trucks in 2025. “We have line of sight to several hundred trucks of new business awards slated for start-up in the first half of 2025,” Rourke said. The CEO said Schneider has “trucks at the ready” for a few large startups that were delayed from 2024 into 2025. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

Large US truckload carriers are increasingly focused on dedicated trucking because of the capacity needs of customers and a desire for more stable revenue and margins, with many companies moving greater numbers of trucks and drivers to dedicated divisions. That shift is a long-term trend , accelerated by a freight downcycle that has lasted nearly three years. It also reflects shipper demand for more stable capacity and is tied to the expansion of shipper-owned private fleets since the COVID-19 pandemic. The growth of dedicated services is leading to a significant rebalancing of the upper tier of the truckload market, which includes giant carriers such as Knight-Swift Transportation Holdings, J.B. Hunt Transport Services, Schneider National and Werner Enterprises. All of these trucking companies have made dedicated business — in which they provide guaranteed capacity to shippers in the form of an outsourced private fleet — a top priority heading into 2025. Dedicated is a key part of their broader diversification plans. Expecting an end to the so-called freight recession — although it is not certain — by the second half of the year, shippers tell the Journal of Commerce they are once again concerned about truck capacity, even though that capacity is abundant and demand slow in the first quarter. That creates opportunities for dedicated trucking providers. At Green Bay, Wisconsin-based Schneider National, 70% of its 12,700 tractors are now in dedicated service, a percentage bolstered by the $421 million acquisition of dedicated trucking company Cowan Systems, company officials told Wall Street analysts last Thursday. When Schneider became a publicly traded company in 2017, dedicated services represented only 33% of its fleet, which underscores the scope of the transformation. “Our dedicated business has demonstrated [a] resilient earnings profile over freight cycles and is an important part of our strategy to create enduring shareholder value,” Mark B. Rourke, president and CEO of Schneider, said during a fourth-quarter earnings call. In contrast, the traditional over-the-road (OTR) truckload business “continues to be challenged” and was not profitable in the last quarter, Rourke said. “The freight market is continuing its path towards recovery, and we are playing the long game.” Driven to diversify That game requires belt-tightening and diversification as carriers roll toward what they hope will be the end of a freight downturn that began in 2022. Truckload carriers have seen volatile pricing swings since the disruption caused by the COVID-19 pandemic in 2020. Dedicated business tends to have higher profit margins and longer-term contracts, encouraging an even greater shift when typical truckload margins are either in single digits or negative. At J.B. Hunt, for example, the average dedicated contract length is five years. The margin goal for dedicated at J.B. Hunt is 12% to 14%, company officials said. The carrier’s truckload division had an operating margin of about 4.7% in the fourth quarter, while its dedicated operating margin was 10.8%, according to quarterly earnings data. The higher margin is in the difference between dedicated and traditional truckload. “When we’re putting together a dedicated solution, it’s truly dedicated, it is a multiyear agreement,” James Filter, group vice president of transportation and logistics at Schneider, said during Schneider’s earnings call. “It’s structured so that it has teeth in it for both sides and is not something that is going to be replaced by lower-cost spot pricing.” Allocating more capital to dedicated trucking as well as to less-than-truckload (LTL) services is the strategy Phoenix-based Knight-Swift Transportation Holdings is pursuing to reduce its dependence on the volatile one-way, irregular-route truckload market. Knight-Swift’s truckload segment currently operates 15,800 irregular-route trucks and 6,400 dedicated trucks across its truckload subsidiaries, which include Knight and Swift Transportation as well as Barr-Nunn, Abilene Motor Express and U.S. Xpress. “We’re going to build our dedicated fleet,” CFO Andrew Hess said during a Jan. 22 earnings call. Knight-Swift looks to boost dedicated operations at U.S. Xpress, which it acquired in 2023 for $808 million. “We believe [dedicated] has an opportunity for growth,” Hess said. J.B. Hunt Transport Services President and CEO Shelley Simpson, in a Jan. 16 earnings call, called her company’s dedicated service “remarkably resilient” despite the freight downturn. J.B. Hunt puts the value of the overall dedicated trucking market at $90 billion. J.B. Hunt’s dedicated business did come under pressure as truckload spot rates dropped by double digits from 2022 through 2024. That pricing collapse gave some shippers an opportunity to shift more expensive dedicated business to the open market. “We certainly combated that challenge throughout the year,” Bradley W. Hicks, Hunt’s president of dedicated contract services, said during the earnings call. He expects pressure from “fleet losses” to continue through the early part of the second quarter. After that, however, Hicks sees a clearer road to growth ahead. “We see our retention rates on customers rebounding,” with more trucks in demand, he said. Schneider also expects rising demand will allow it to deploy more dedicated trucks in 2025. “We have line of sight to several hundred trucks of new business awards slated for start-up in the first half of 2025,” Rourke said. The CEO said Schneider has “trucks at the ready” for a few large startups that were delayed from 2024 into 2025. Contact William B. Cassidy at bill.cassidy@spglobal.com .

Trucking News

Truckload

Large US truckload carriers shifting assets to expand dedicated services

<div class="phx-topic abstract-wrapper">Maersk and Hapag-Lloyd have made 90% schedule reliability a core promise of their new partnership, and the pledge will be under intense scrutiny by the carriers’ customers.</div>

Maersk and Hapag-Lloyd have made 90% schedule reliability a core promise of their new partnership, and the pledge will be under intense scrutiny by the carriers’ customers.

<div class="phx-topic">The first ships in Maersk and Hapag-Lloyd's new Gemini Cooperation set sail on Feb. 1, but it will be June before the hub-and-spoke network is fully phased in and all vessels are moving on Gemini schedules, the carriers said in separate statements Friday. About 340 vessels with combined capacity of 3.7 million TEUs will need to be phased in to the shared east-west network that will consist of 57 services — 29 main line services and 28 intraregional shuttle services. The oft-stated ambition of Gemini is to deliver a fast, flexible and interconnected ocean network with schedule reliability over 90% once fully phased in. On the eve of its launch, executives at both carriers were promoting the virtues of their hub-and-spoke network. “With its innovative design, we believe our customers will benefit from increased reliability, flexibility and more competitive products,” Johan Sigsgaard, chief product officer/ocean at Maersk, said in the carrier’s statement. “With our targeted schedule reliability, we will satisfy one of our customers’ most important needs even better and set a new quality standard in the industry,” Hapag-Lloyd CEO Rolf Habben Jansen said in the liner’s statement. “Thanks to our effective hub-and-spoke operating system, we can deploy larger vessels and thus simultaneously optimize speed, reduce idling times and thereby cut down on carbon emissions,” he added. “All of this saves our customers a lot of time and resources.” Still, Kathy Liu, vice president of global sales and marketing at Taiwan-based forwarder Dimerco Express Group, said although 90% reliability was “nice to have,” she did not believe it was a “must-have” for Dimerco’s ocean freight customers. “Customers are more concerned about end-to-end reliability, including port operations, rather than just hub-to-hub reliability,” Liu told the Journal of Commerce this week. “The type of products on ocean freight are normally not that urgently needed or require strict transit time, so from the customer side, we don’t see that sort of reliability as a must,” she added. “But for sure, if it can be achieved, it will be nice to have.” Carriers ‘may be able to pull off’ reliability pledge Shippers have expressed reservations at the extensive network of shuttles within the Gemini model, with the schedule reliability goal of 90% only covering the hub-to-hub transits. Platforms measuring on-time performance such as eeSea and Sea-Intelligence Maritime Analysis do not yet have accurate ways of measuring transshipment. However, Lars Jensen, CEO of Vespucci Maritime and a Journal of Commerce analyst, was upbeat over the on-time performance pledge <a href="https://www.linkedin.com/in/larsjensenvespuccimaritime/recent-activity/all/">in a LinkedIn post this week</a>. “The two Gemini Cooperation partners racked up the top-performing spot in seven out of 12 months in 2024 (according to Sea-Intelligence) — certainly at a low level just as everyone else, but this should be taken as an indication that they might indeed be able to pull off their announced plan to reach 90% reliability,” Jensen wrote. Gemini plans to solve the schedule reliability via its hub-and-spoke network, but Ocean Alliance, Premier Alliance and a standalone Mediterranean Shipping Co. (MSC) are sticking to traditional port-to-port services. The direct approach may be more familiar to shippers, but having many port calls will compound any delays experienced in a rotation, Sigsgaard told reporters in a Gemini webinar earlier this week. “The biggest correlating factor to delays is actually the number of stops,” he said. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

The first ships in Maersk and Hapag-Lloyd's new Gemini Cooperation set sail on Feb. 1, but it will be June before the hub-and-spoke network is fully phased in and all vessels are moving on Gemini schedules, the carriers said in separate statements Friday. About 340 vessels with combined capacity of 3.7 million TEUs will need to be phased in to the shared east-west network that will consist of 57 services — 29 main line services and 28 intraregional shuttle services. The oft-stated ambition of Gemini is to deliver a fast, flexible and interconnected ocean network with schedule reliability over 90% once fully phased in. On the eve of its launch, executives at both carriers were promoting the virtues of their hub-and-spoke network. “With its innovative design, we believe our customers will benefit from increased reliability, flexibility and more competitive products,” Johan Sigsgaard, chief product officer/ocean at Maersk, said in the carrier’s statement. “With our targeted schedule reliability, we will satisfy one of our customers’ most important needs even better and set a new quality standard in the industry,” Hapag-Lloyd CEO Rolf Habben Jansen said in the liner’s statement. “Thanks to our effective hub-and-spoke operating system, we can deploy larger vessels and thus simultaneously optimize speed, reduce idling times and thereby cut down on carbon emissions,” he added. “All of this saves our customers a lot of time and resources.” Still, Kathy Liu, vice president of global sales and marketing at Taiwan-based forwarder Dimerco Express Group, said although 90% reliability was “nice to have,” she did not believe it was a “must-have” for Dimerco’s ocean freight customers. “Customers are more concerned about end-to-end reliability, including port operations, rather than just hub-to-hub reliability,” Liu told the Journal of Commerce this week. “The type of products on ocean freight are normally not that urgently needed or require strict transit time, so from the customer side, we don’t see that sort of reliability as a must,” she added. “But for sure, if it can be achieved, it will be nice to have.” Carriers ‘may be able to pull off’ reliability pledge Shippers have expressed reservations at the extensive network of shuttles within the Gemini model, with the schedule reliability goal of 90% only covering the hub-to-hub transits. Platforms measuring on-time performance such as eeSea and Sea-Intelligence Maritime Analysis do not yet have accurate ways of measuring transshipment. However, Lars Jensen, CEO of Vespucci Maritime and a Journal of Commerce analyst, was upbeat over the on-time performance pledge in a LinkedIn post this week . “The two Gemini Cooperation partners racked up the top-performing spot in seven out of 12 months in 2024 (according to Sea-Intelligence) — certainly at a low level just as everyone else, but this should be taken as an indication that they might indeed be able to pull off their announced plan to reach 90% reliability,” Jensen wrote. Gemini plans to solve the schedule reliability via its hub-and-spoke network, but Ocean Alliance, Premier Alliance and a standalone Mediterranean Shipping Co. (MSC) are sticking to traditional port-to-port services. The direct approach may be more familiar to shippers, but having many port calls will compound any delays experienced in a rotation, Sigsgaard told reporters in a Gemini webinar earlier this week. “The biggest correlating factor to delays is actually the number of stops,” he said. Contact Greg Knowler at greg.knowler@spglobal.com .

Hub-and-spoke model in spotlight on eve of Gemini Cooperation launch

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

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Shippers save money, time with automated transportation bidding tools

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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Quarterly Intelligence

<div class="phx-topic abstract-wrapper">Sources tell the Journal of Commerce the union will convene a midweek meeting in Florida of its local wage scale committees across the 14 ports under its jurisdiction. </div>

Sources tell the Journal of Commerce the union will convene a midweek meeting in Florida of its local wage scale committees across the 14 ports under its jurisdiction.

<div class="phx-topic">The International Longshoremen’s Association (ILA) next week is expected to start a month-long process of selling its members on the new collective bargaining agreement with maritime employers. The process ends two years of fraught labor negotiations and now ensures six years of labor peace at US East and Gulf coast ports. Three sources familiar with the situation have told the Journal of Commerce the ILA will convene a midweek meeting in Florida of its local wage scale committees across the 14 ports under its jurisdiction. The meeting will be called to review terms of the six-year <a href="https://www.joc.com/article/ila-usmx-reach-tentative-deal-that-avoids-another-port-strike-5919519">agreement on a new master contract</a> after four days of talks in New Jersey. The wage scale committees will then present terms of the coastwide master contract, along with port-specific contracts, to local union members. A full vote by the roughly 45,000 registered ILA members at East and Gulf coast ports is expected to take place near the end of February, with March the first full pay period under the new agreement. The United States Maritime Alliance (USMX) board of directors reportedly approved the contract during a vote Wednesday, according to the sources. Both the ILA and USMX declined to comment on the ratification process. The ILA and USMX last October agreed to <a href="https://www.joc.com/article/us-east-gulf-coast-ports-confident-of-smooth-post-strike-reopening-5742607">a 62% wage increase over the contract’s six-year term</a>, ending a brief three-day port strike, the first along the East and Gulf coasts since 1977. The 62% increase, as measured against the top pay scale for longshore workers, represents an average $4 per-hour raise during each of the contract’s six years. The contract further ensures minimum staffing levels for ILA members when ports want to implement semi-automation technology such as <a href="https://www.joc.com/article/ila-targets-rail-mounted-gantry-cranes-amid-impasse-in-port-labor-talks-5874742">rail-mounted gantry cranes</a>, according to sources familiar with the talks. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>.</div>

The International Longshoremen’s Association (ILA) next week is expected to start a month-long process of selling its members on the new collective bargaining agreement with maritime employers. The process ends two years of fraught labor negotiations and now ensures six years of labor peace at US East and Gulf coast ports. Three sources familiar with the situation have told the Journal of Commerce the ILA will convene a midweek meeting in Florida of its local wage scale committees across the 14 ports under its jurisdiction. The meeting will be called to review terms of the six-year agreement on a new master contract after four days of talks in New Jersey. The wage scale committees will then present terms of the coastwide master contract, along with port-specific contracts, to local union members. A full vote by the roughly 45,000 registered ILA members at East and Gulf coast ports is expected to take place near the end of February, with March the first full pay period under the new agreement. The United States Maritime Alliance (USMX) board of directors reportedly approved the contract during a vote Wednesday, according to the sources. Both the ILA and USMX declined to comment on the ratification process. The ILA and USMX last October agreed to a 62% wage increase over the contract’s six-year term , ending a brief three-day port strike, the first along the East and Gulf coasts since 1977. The 62% increase, as measured against the top pay scale for longshore workers, represents an average $4 per-hour raise during each of the contract’s six years. The contract further ensures minimum staffing levels for ILA members when ports want to implement semi-automation technology such as rail-mounted gantry cranes , according to sources familiar with the talks. Contact Michael Angell at michael.angell@spglobal.com .

Longshore labor

ILA officials to meet next week as ratification of USMX deal looms

<div class="phx-topic abstract-wrapper">New freight classifications that will take effect this summer could raise costs for less-than-truckload shippers that don’t begin working with carriers now, speakers at the SMC3 conference said.</div>

New freight classifications that will take effect this summer could raise costs for less-than-truckload shippers that don’t begin working with carriers now, speakers at the SMC3 conference said.

<div class="phx-topic">The biggest revision of the less-than-truckload (LTL) freight classification system in the US in decades is under way, and shippers are increasingly concerned about the potential impact on their LTL pricing. “Customers are asking if this is a veiled attempt to raise rates,” Clete Cordero, vice president of pricing and traffic at Southeastern Freight Lines, said at the SMC3 Jump Start 25 conference in Atlanta this week. Cordero says no to that question, but shippers are right to be worried. “I think what’s really going to happen is a resetting of rates,” he said during a breakout session on the proposed changes to the National Motor Freight Classification (NMFC). “For at least the first year, there’s going to be a resetting.” Rates may go up or down depending on various factors for each individual shipper as classes change, Cordero said, and there’s no way now to fix a percentage to the changes. Shippers are pretty sure in most cases rates will rise — if they do nothing. “We have to really work with our distribution centers on dimensions [of palletized freight],” Mike Williams, director of global logistics at Copeland, a manufacturer of products that improve energy efficiency, said at the conference. “We’re not as prepared as we’d like to be, but we’ll get there,” Williams said. The National Motor Freight Traffic Association (NMFTA) which oversees the NMFC, on Thursday released a docket that contains more than 90 proposed changes to the classification system, calling it nothing less than a “reimagination of classification.” “A normal docket contains about 15 proposals,” Keith Peterson, director of operations at NMFTA, said at the SMC3 conference. The new docket, known as 2025-1, is <a href="https://nmfta.org/wp-content/media/2025/01/V8_2025-1-Under-Review_01.08.2025.xlsx">available to download</a> and will be discussed by NMFTA staff in webinars and public meetings. “We’re making a conscious effort to get out there and talk with shippers,” Peterson said. “The question I hear most often is, ‘Do I need to buy a dimensioner?’” The answer is “maybe.” Shippers will need to more accurately measure the dimensions and weight of every pallet, which for some will mean big changes to the procedures they use to build pallets and move freight. NMFTA will start reviewing feedback on the changes Feb. 25 and hold a public meeting on March 3 to discuss any changes made following feedback. The final changes will become effective July 19, according to NMFTA. When they do, they will affect practically everyone shipping LTL freight in the US. <h3>Simplify, simplify </h3>Almost everyone in trucking believes the NMFC is long overdue for an overhaul — if they believe it should be retained at all. The motor freight classification dates to 1936, and its roots go back to the days when railroads hauled less-than-carload freight. Trucking companies took most of that freight from railroads in the 1920s, and the classification system followed the freight. The NMFC is a distinctly American standard — outside the US, LTL freight is typically moved under dimension-weight pricing systems. The classification system doesn’t set rates, but it helps determine pricing. Classes are referenced in carrier tariffs and shipper contracts. The NMFC sorts products into 18 different classes and sub-classes ranging from 50 to 500. Lower freight classes tend to be tied to lower rates. The determining factors are density, handling, stowability and liability characteristics. After 89 years of expansion and revision, “it’s too complicated,” Joe Ohr, COO at NMFTA, said at the conference. “The NMFC needs to be simpler and easier to understand whether you’re a shipper, logistics provider or carrier.” The proposed changes will standardize the density scale for LTL freight. They will also create unique identifiers for freight with special handling, stowability or liability needs, and condense and modernize commodity listings. “You’re going to see us start bringing down the number of terms we use and making it simpler [to use the NMFC],” Peterson told SMC3. Two new density classes will be added — 50 and 55. “We will move items with no handling, stowability or liability issues to full density,” he said. More generic items will be combined in one listing, simplifying searches. One result should be less reclassification and repricing of freight as it moves from shippers through LTL networks. With most LTL carriers using dimensioning equipment to check the size and weight of shipments and their classification, shippers are finding that freight charges are being revised frequently, most often adding to their costs. <h3>Get started </h3>Speakers at the SMC3 conference said shippers need to start acting now to prepare for the classification changes. “We’ve opened our doors to our carriers and said come to our docks, look at our freight,” said Nick Waters, director of logistics at Masco, a home products manufacturer. LTL carriers often don’t know enough about the freight they’re handling, he said. “We’re sharing information on freight moving through our lanes with our carriers,” Waters said. “This isn’t brand new, but the carrier pricing models have become more complex, and they know what they’re handling.” Waters said Masco hasn’t seen big increases in LTL pricing, “but with the NMFC changes coming, it’s a thing we’ll have to keep an eye on.” Those changes won’t stop once the current proposals are either modified or approved. “This is an ongoing process,” Peterson said. “There’s going to be more to do here.” Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

The biggest revision of the less-than-truckload (LTL) freight classification system in the US in decades is under way, and shippers are increasingly concerned about the potential impact on their LTL pricing. “Customers are asking if this is a veiled attempt to raise rates,” Clete Cordero, vice president of pricing and traffic at Southeastern Freight Lines, said at the SMC3 Jump Start 25 conference in Atlanta this week. Cordero says no to that question, but shippers are right to be worried. “I think what’s really going to happen is a resetting of rates,” he said during a breakout session on the proposed changes to the National Motor Freight Classification (NMFC). “For at least the first year, there’s going to be a resetting.” Rates may go up or down depending on various factors for each individual shipper as classes change, Cordero said, and there’s no way now to fix a percentage to the changes. Shippers are pretty sure in most cases rates will rise — if they do nothing. “We have to really work with our distribution centers on dimensions [of palletized freight],” Mike Williams, director of global logistics at Copeland, a manufacturer of products that improve energy efficiency, said at the conference. “We’re not as prepared as we’d like to be, but we’ll get there,” Williams said. The National Motor Freight Traffic Association (NMFTA) which oversees the NMFC, on Thursday released a docket that contains more than 90 proposed changes to the classification system, calling it nothing less than a “reimagination of classification.” “A normal docket contains about 15 proposals,” Keith Peterson, director of operations at NMFTA, said at the SMC3 conference. The new docket, known as 2025-1, is available to download and will be discussed by NMFTA staff in webinars and public meetings. “We’re making a conscious effort to get out there and talk with shippers,” Peterson said. “The question I hear most often is, ‘Do I need to buy a dimensioner?’” The answer is “maybe.” Shippers will need to more accurately measure the dimensions and weight of every pallet, which for some will mean big changes to the procedures they use to build pallets and move freight. NMFTA will start reviewing feedback on the changes Feb. 25 and hold a public meeting on March 3 to discuss any changes made following feedback. The final changes will become effective July 19, according to NMFTA. When they do, they will affect practically everyone shipping LTL freight in the US. Simplify, simplify Almost everyone in trucking believes the NMFC is long overdue for an overhaul — if they believe it should be retained at all. The motor freight classification dates to 1936, and its roots go back to the days when railroads hauled less-than-carload freight. Trucking companies took most of that freight from railroads in the 1920s, and the classification system followed the freight. The NMFC is a distinctly American standard — outside the US, LTL freight is typically moved under dimension-weight pricing systems. The classification system doesn’t set rates, but it helps determine pricing. Classes are referenced in carrier tariffs and shipper contracts. The NMFC sorts products into 18 different classes and sub-classes ranging from 50 to 500. Lower freight classes tend to be tied to lower rates. The determining factors are density, handling, stowability and liability characteristics. After 89 years of expansion and revision, “it’s too complicated,” Joe Ohr, COO at NMFTA, said at the conference. “The NMFC needs to be simpler and easier to understand whether you’re a shipper, logistics provider or carrier.” The proposed changes will standardize the density scale for LTL freight. They will also create unique identifiers for freight with special handling, stowability or liability needs, and condense and modernize commodity listings. “You’re going to see us start bringing down the number of terms we use and making it simpler [to use the NMFC],” Peterson told SMC3. Two new density classes will be added — 50 and 55. “We will move items with no handling, stowability or liability issues to full density,” he said. More generic items will be combined in one listing, simplifying searches. One result should be less reclassification and repricing of freight as it moves from shippers through LTL networks. With most LTL carriers using dimensioning equipment to check the size and weight of shipments and their classification, shippers are finding that freight charges are being revised frequently, most often adding to their costs. Get started Speakers at the SMC3 conference said shippers need to start acting now to prepare for the classification changes. “We’ve opened our doors to our carriers and said come to our docks, look at our freight,” said Nick Waters, director of logistics at Masco, a home products manufacturer. LTL carriers often don’t know enough about the freight they’re handling, he said. “We’re sharing information on freight moving through our lanes with our carriers,” Waters said. “This isn’t brand new, but the carrier pricing models have become more complex, and they know what they’re handling.” Waters said Masco hasn’t seen big increases in LTL pricing, “but with the NMFC changes coming, it’s a thing we’ll have to keep an eye on.” Those changes won’t stop once the current proposals are either modified or approved. “This is an ongoing process,” Peterson said. “There’s going to be more to do here.” Contact William B. Cassidy at bill.cassidy@spglobal.com .

US shippers urged to prepare now for upcoming LTL class changes, rate ‘resetting’

<div class="phx-topic abstract-wrapper">DSV CEO Jens Lund said the size of the Schenker acquisition meant it could take up to two years before the companies were fully integrated into the world’s largest forwarder.</div>

DSV CEO Jens Lund said the size of the Schenker acquisition meant it could take up to two years before the companies were fully integrated into the world’s largest forwarder.

<div class="phx-topic">Regulatory approval from the US and European Commission (EC) stands in the way of DSV’s $16 billion acquisition of DB Schenker, but DSV CFO Michael Ebbe is confident the takeover will be finalized by the end of the second quarter. So far, approvals from 33 regulatory bodies have been received, with the US and EC two of the three jurisdictions that are still outstanding. All 36 must give the green light before the lengthy integration process of DSV’s largest acquisition to date can begin. “I don’t think that they get rewarded to do things fast, but we are in a very good dialogue with [the US and European Commission] and have frequent virtual and physical meetings to answer any questions,” Ebbe told analysts during an earnings call Tuesday following the release of the forwarder’s 2024 annual results. “They have many questions, but we answer them.” Solid growth in volumes and air and ocean revenue through the fourth quarter allowed Denmark-based DSV to end the year with group revenue rising almost 12% year over year to $23 billion. However, the ongoing normalizing of markets and cost pressures saw gross profit decline 1.2% to $5.9 billion and earnings before interest and taxes (EBIT) drop 8.4% to $2.2 billion. Net profit for the year was down 18% compared with the previous year at $1.4 billion. DSV said it captured market share in both the air and ocean trades — the growth is estimated at 3% to 4% for 2024 — as its air freight tonnage increased 7% to 1.4 million tons and ocean freight also grew 7% to 2.68 million TEUs. The forwarder expects its 2025 volume growth to be near 3%, in line with the global GDP forecast, despite the current macroeconomic and geopolitical uncertainties. Although DSV has targeted above-market growth in profit and volume, the global uncertainty was reflected in its financial expectations for 2025, with $300 million separating the upper and lower ends of its EBIT forecast of between $2.1 billion and $2.4 billion. <h3>Two-year integration process </h3>DB Schenker is the largest acquisition made by DSV, which also acquired UTi in 2015 for $1.35 billion, Panalpina in 2019 for $4.6 billion and Agility’s Global Integrated Logistics (GIL) in 2021 for $4.2 billion. DSV CEO Jens Lund said the size of the Schenker acquisition meant it could take up to two years before the two companies were fully integrated into the world’s largest forwarder. “Given the fact that Schenker is somewhat larger than the last acquisition of GIL, it will probably take more than 12 months this time because there’s more countries and more customers and more activity, but I don’t think it will take more than two years,” Lund said on the earnings call. The global forwarding market is so fragmented that the combined DSV-DB Schenker operation will still only have a market share of 6% to 7%. The top 20 forwarders have an estimated global market share of 30% to 40% combined, with the rest of the market consisting of multiple regional and local players. While DSV prepares for the DB Schenker integration, a more immediate concern for Lund is the restructuring of ocean networks that are disrupting major trade lanes, as well as threatened US tariffs and ongoing Red Sea diversions that are creating an increasingly uncertain outlook. The Gemini Cooperation, Premier Alliance and Mediterranean Shipping Co. with its standalone operation all launched their new networks on Feb. 1 and are jostling for business, Lund told analysts. “It’s a very competitive situation at this moment where everybody wants to make sure that in the new situation, they get the volume allocations they need,” he said. “They are <a href="https://www.joc.com/article/spot-rates-falling-as-new-ocean-networks-roll-out-sea-intelligence-5935891">competing to fill up their vessels</a> ... that’s been driving the [lower] rate levels.” <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="bf9f45a4-a69a-4ab8-9556-588dad0c74a8"></dynamic-object></div>Average spot rates from North Asia to the US West Coast were at $3,700 per FEU on Monday, down from $5,250/FEU at the beginning of January, according to Platts, a sister company of the Journal of Commerce within S&amp;P Global. Current Asia-US East Coast rates of $5,500/FEU were $2,200 lower than the beginning of the year. It was a similar picture on Asia-North Europe, where the rate of $3,000/FEU this week was down from $5,000 in the first week of January, while the current Asia-Mediterranean rate of $4,300/FEU has slipped $1,000. “It’s hard to predict where [the rate slide] ends,” Lund said. “Customers are contracting a little bit shorter because they don’t want to get caught out on a long-term arrangement.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Regulatory approval from the US and European Commission (EC) stands in the way of DSV’s $16 billion acquisition of DB Schenker, but DSV CFO Michael Ebbe is confident the takeover will be finalized by the end of the second quarter. So far, approvals from 33 regulatory bodies have been received, with the US and EC two of the three jurisdictions that are still outstanding. All 36 must give the green light before the lengthy integration process of DSV’s largest acquisition to date can begin. “I don’t think that they get rewarded to do things fast, but we are in a very good dialogue with [the US and European Commission] and have frequent virtual and physical meetings to answer any questions,” Ebbe told analysts during an earnings call Tuesday following the release of the forwarder’s 2024 annual results. “They have many questions, but we answer them.” Solid growth in volumes and air and ocean revenue through the fourth quarter allowed Denmark-based DSV to end the year with group revenue rising almost 12% year over year to $23 billion. However, the ongoing normalizing of markets and cost pressures saw gross profit decline 1.2% to $5.9 billion and earnings before interest and taxes (EBIT) drop 8.4% to $2.2 billion. Net profit for the year was down 18% compared with the previous year at $1.4 billion. DSV said it captured market share in both the air and ocean trades — the growth is estimated at 3% to 4% for 2024 — as its air freight tonnage increased 7% to 1.4 million tons and ocean freight also grew 7% to 2.68 million TEUs. The forwarder expects its 2025 volume growth to be near 3%, in line with the global GDP forecast, despite the current macroeconomic and geopolitical uncertainties. Although DSV has targeted above-market growth in profit and volume, the global uncertainty was reflected in its financial expectations for 2025, with $300 million separating the upper and lower ends of its EBIT forecast of between $2.1 billion and $2.4 billion. Two-year integration process DB Schenker is the largest acquisition made by DSV, which also acquired UTi in 2015 for $1.35 billion, Panalpina in 2019 for $4.6 billion and Agility’s Global Integrated Logistics (GIL) in 2021 for $4.2 billion. DSV CEO Jens Lund said the size of the Schenker acquisition meant it could take up to two years before the two companies were fully integrated into the world’s largest forwarder. “Given the fact that Schenker is somewhat larger than the last acquisition of GIL, it will probably take more than 12 months this time because there’s more countries and more customers and more activity, but I don’t think it will take more than two years,” Lund said on the earnings call. The global forwarding market is so fragmented that the combined DSV-DB Schenker operation will still only have a market share of 6% to 7%. The top 20 forwarders have an estimated global market share of 30% to 40% combined, with the rest of the market consisting of multiple regional and local players. While DSV prepares for the DB Schenker integration, a more immediate concern for Lund is the restructuring of ocean networks that are disrupting major trade lanes, as well as threatened US tariffs and ongoing Red Sea diversions that are creating an increasingly uncertain outlook. The Gemini Cooperation, Premier Alliance and Mediterranean Shipping Co. with its standalone operation all launched their new networks on Feb. 1 and are jostling for business, Lund told analysts. “It’s a very competitive situation at this moment where everybody wants to make sure that in the new situation, they get the volume allocations they need,” he said. “They are competing to fill up their vessels ... that’s been driving the [lower] rate levels.” Average spot rates from North Asia to the US West Coast were at $3,700 per FEU on Monday, down from $5,250/FEU at the beginning of January, according to Platts, a sister company of the Journal of Commerce within S&P Global. Current Asia-US East Coast rates of $5,500/FEU were $2,200 lower than the beginning of the year. It was a similar picture on Asia-North Europe, where the rate of $3,000/FEU this week was down from $5,000 in the first week of January, while the current Asia-Mediterranean rate of $4,300/FEU has slipped $1,000. “It’s hard to predict where [the rate slide] ends,” Lund said. “Customers are contracting a little bit shorter because they don’t want to get caught out on a long-term arrangement.” Contact Greg Knowler at greg.knowler@spglobal.com .

Supply chain

Forwarding

Approvals from Europe, US among last hurdles in DSV’s takeover of DB Schenker

<div class="phx-topic abstract-wrapper">Shipowners in the sector view the ambitious SHIPS for America legislation as unrealistic, with the domestic shipbuilding industry under-skilled and lacking the capacity needed to meaningfully contribute to the specialized MPV fleet.</div>

Shipowners in the sector view the ambitious SHIPS for America legislation as unrealistic, with the domestic shipbuilding industry under-skilled and lacking the capacity needed to meaningfully contribute to the specialized MPV fleet.

<div class="phx-topic">The lofty ambitions of the proposed <a href="https://www.joc.com/article/us-flag-vessel-owners-investors-tout-wave-of-support-for-expanding-fleet-5819921">SHIPS for America Act</a> could have ramifications for the global multipurpose vessel (MPV) fleet, but only if it manages to achieve the tall order of injecting new life into the US’ stagnating shipbuilding industry.<div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5935841_0.1.jpg"></img></div>The bipartisan act seeks to rebuild the US shipbuilding industry and make US-flagged vessels commercially competitive. At the same time, it aims to reduce the dominance of China on the US maritime fleet. That last goal might be the hardest to achieve, however. In 2024, China delivered 34% of all newbuildings to the global fleet, compared with 11% from Japan, 7% from South Korea and just 2% from the US, according to S&amp;P Global, parent company of the Journal of Commerce. A year earlier, China was the number one shipbuilder in the world, accounting for 50.7% of global shipbuilding in gross tons, whereas the US was ranked 15th with a market share of just 0.1%, according to the UNCTAD Review of Maritime Transport 2024. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="c2866ed5-af04-4a92-8187-96d99d694de3"></dynamic-object></div>Title IV of the SHIPS Act establishes the Strategic Commercial Fleet Program, with the goal of creating a fleet of 250 privately owned, US-built, US-flagged, US-crewed vessels that operate in international trade. One multipurpose ship owner told the Journal of Commerce that the capacity to build general cargo vessels and the timelines set out in the proposed bill are “not realistic.” The cost to build an MPV vessel in the US — if capacity and specialization were available, which they are not — is currently about four to five times the cost to build in Asia, particularly China. Additionally, costs to operate under the US flag are significantly more than under the popular open registry of Panama. Therefore, any MPV built and maintained under the parameters of the act would be considerably more expensive to operate. The legislation has an answer for that: The fleet program will provide annual support payments to cover that difference in capital and operating costs. MPVs would be included in the US fleet for seven years and therefore eligible for the payments, with the option to renew twice. However, this assumes a vessel lifespan of just 21 years, which, in MPV terms, is at least nine short of expected demolition.<h3>Notable omission of cargo preference</h3>There are also concerns among US-flag shipowners who spoke with the Journal of Commerce that, although the act talks about shipbuilding and ownership, there is little in it related to cargo preference. “Cargo preference” is the general term used to describe US laws, regulations and policies that require the use of US-flag vessels in the movement of cargo that is owned, procured, furnished or financed by the US government. For US Export Import Bank (EXIM) cargo, the percentage required is 100%; for civilian agency cargo, it is 50%. Increasing the cargo preference requirements may come further down the line, though, as the act aims to establish a commercial cargo preference, requiring that within 15 years, 10% of all cargo imported into the US from China will be imported on US-flag vessels. Title IV of the act also increases the percentage of US government cargo that must sail on US-flag vessels from 50% to 100%. But there is no mention of an increase in general cargo preference, crucial for MPVs. For the legislation to be successful, MPV shipowners have told the Journal of Commerce that there need to be guarantees on cargo running in parallel with the investment in shipbuilding — or shipowners will not sign on the dotted line. Yard capacity is another barrier to success. The two main yards that build commercial (as opposed to military) vessels are Philly and NASSCO. Philly Shipyard is headquartered in Oslo, Norway, with its operating subsidiary in Philadelphia. On the commercial side, it builds tankers and container ships. General Dynamics’ NASSCO has locations on both the US West and East coasts. It specializes in auxiliary and support ships for the US Navy. There are currently seven NASSCO-built heavy-lift semisubmersible vessels trading on behalf of the US government, with one more on the order book to be built at NASSCO, according to S&amp;P Global.However, these yards build very few, if any, general cargo ships and no specialized project carriers. Their order books are full for the tonnage that they do build, which include military, small container ships and tankers. This means that there is limited capacity before 2027–28. Substantial investment will be needed to create additional capacity. The legislation has caught the attention of the MPV sector, with Donald Trump’s “Make America Great Again” campaign prioritizing these types of protectionist measures. But to succeed, the SHIPS Act needs to force a shift change in an industry that currently lacks the capacity and the expertise to produce ocean-going vessels at scale. Contact Susan Oatway at <a href="mailto:susan.oatway@spglobal.com">susan.oatway@spglobal.com</a>.</div>

The lofty ambitions of the proposed SHIPS for America Act could have ramifications for the global multipurpose vessel (MPV) fleet, but only if it manages to achieve the tall order of injecting new life into the US’ stagnating shipbuilding industry. The bipartisan act seeks to rebuild the US shipbuilding industry and make US-flagged vessels commercially competitive. At the same time, it aims to reduce the dominance of China on the US maritime fleet. That last goal might be the hardest to achieve, however. In 2024, China delivered 34% of all newbuildings to the global fleet, compared with 11% from Japan, 7% from South Korea and just 2% from the US, according to S&P Global, parent company of the Journal of Commerce. A year earlier, China was the number one shipbuilder in the world, accounting for 50.7% of global shipbuilding in gross tons, whereas the US was ranked 15th with a market share of just 0.1%, according to the UNCTAD Review of Maritime Transport 2024. Title IV of the SHIPS Act establishes the Strategic Commercial Fleet Program, with the goal of creating a fleet of 250 privately owned, US-built, US-flagged, US-crewed vessels that operate in international trade. One multipurpose ship owner told the Journal of Commerce that the capacity to build general cargo vessels and the timelines set out in the proposed bill are “not realistic.” The cost to build an MPV vessel in the US — if capacity and specialization were available, which they are not — is currently about four to five times the cost to build in Asia, particularly China. Additionally, costs to operate under the US flag are significantly more than under the popular open registry of Panama. Therefore, any MPV built and maintained under the parameters of the act would be considerably more expensive to operate. The legislation has an answer for that: The fleet program will provide annual support payments to cover that difference in capital and operating costs. MPVs would be included in the US fleet for seven years and therefore eligible for the payments, with the option to renew twice. However, this assumes a vessel lifespan of just 21 years, which, in MPV terms, is at least nine short of expected demolition. Notable omission of cargo preference There are also concerns among US-flag shipowners who spoke with the Journal of Commerce that, although the act talks about shipbuilding and ownership, there is little in it related to cargo preference. “Cargo preference” is the general term used to describe US laws, regulations and policies that require the use of US-flag vessels in the movement of cargo that is owned, procured, furnished or financed by the US government. For US Export Import Bank (EXIM) cargo, the percentage required is 100%; for civilian agency cargo, it is 50%. Increasing the cargo preference requirements may come further down the line, though, as the act aims to establish a commercial cargo preference, requiring that within 15 years, 10% of all cargo imported into the US from China will be imported on US-flag vessels. Title IV of the act also increases the percentage of US government cargo that must sail on US-flag vessels from 50% to 100%. But there is no mention of an increase in general cargo preference, crucial for MPVs. For the legislation to be successful, MPV shipowners have told the Journal of Commerce that there need to be guarantees on cargo running in parallel with the investment in shipbuilding — or shipowners will not sign on the dotted line. Yard capacity is another barrier to success. The two main yards that build commercial (as opposed to military) vessels are Philly and NASSCO. Philly Shipyard is headquartered in Oslo, Norway, with its operating subsidiary in Philadelphia. On the commercial side, it builds tankers and container ships. General Dynamics’ NASSCO has locations on both the US West and East coasts. It specializes in auxiliary and support ships for the US Navy. There are currently seven NASSCO-built heavy-lift semisubmersible vessels trading on behalf of the US government, with one more on the order book to be built at NASSCO, according to S&P Global. However, these yards build very few, if any, general cargo ships and no specialized project carriers. Their order books are full for the tonnage that they do build, which include military, small container ships and tankers. This means that there is limited capacity before 2027–28. Substantial investment will be needed to create additional capacity. The legislation has caught the attention of the MPV sector, with Donald Trump’s “Make America Great Again” campaign prioritizing these types of protectionist measures. But to succeed, the SHIPS Act needs to force a shift change in an industry that currently lacks the capacity and the expertise to produce ocean-going vessels at scale. Contact Susan Oatway at susan.oatway@spglobal.com .

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