<div class="phx-topic abstract-wrapper">The grouping of the world’s largest container lines into four large alliances covering all east-west trades has had an unexpected result: Shippers no longer view alliances as potential vehicles for rate collusion, and, in fact, have come to appreciate their ability to prop up smaller lines that are finding it increasingly difficult to compete against the three largest carriers.</div>

The grouping of the world’s largest container lines into four large alliances covering all east-west trades has had an unexpected result: Shippers no longer view alliances as potential vehicles for rate collusion, and, in fact, have come to appreciate their ability to prop up smaller lines that are finding it increasingly difficult to compete against the three largest carriers.

<div>WASHINGTON — The grouping of the world’s largest container lines into four large alliances covering all east-west trades has had an unexpected result: Shippers no longer view alliances as potential vehicles for rate collusion, and, in fact, have come to appreciate their ability to prop up smaller lines that are finding it increasingly difficult to compete against the three largest carriers.The shift shows that as the largest carriers, particularly Maersk Line and CMA-CGM, which report results publicly, pull away from the larger group of mid-tier carriers in profitability, there is growing concern that if smaller carriers start failing a nightmare...

WASHINGTON — The grouping of the world’s largest container lines into four large alliances covering all east-west trades has had an unexpected result: Shippers no longer view alliances as potential vehicles for rate collusion, and, in fact, have come to appreciate their ability to prop up smaller lines that are finding it increasingly difficult to compete against the three largest carriers. The shift shows that as the largest carriers, particularly Maersk Line and CMA-CGM, which report results publicly, pull away from the larger group of mid-tier carriers in profitability, there is growing concern that if smaller carriers start failing a nightmare scenario could ensue for shippers. If small players are driven out of the market, a small number of mega-carriers could achieve the power to exert price leadership in the market. Shippers’ softening view of alliances is a sharp change from their initial reaction to Maersk, Mediterranean Shipping Co. and CMA CGM’s proposed vessel sharing alliance in June 2013. In public many shippers voiced lukewarm support but grumbled behind closed doors. Chinese regulators blocked the alliance, known as the P3 Network, a year ago, but others followed in its wake. Shippers “were right to raise a yellow flag when these alliances were cobbled together and proposed. They had the appearance of game-changers,” said Bruce Carlton, president and CEO of the National Industrial Transportation League, the largest U.S. shipper organization. “With some time to observe actual performance, there’s less to be afraid of than we once thought.” The level of scrutiny that maritime regulators gave the proposed shipping alliance also assured shippers that the major vessel-sharing agreements wouldn’t be rubber-stamped, said Chris Welsh, secretary general of the U.K.-based Global Shippers’ Forum, the world’s largest group of ocean container shippers. “The FMC took unprecedented steps in the planned monitoring of the P3 ( the proposed and defunct alliance of Maersk, MSC and CMA CGM ),” he said. “The range of demands they were going to make on carriers in terms of rates and capacity indicated they were going to look at it seriously.” Global maritime regulators aren’t letting down their guard. Following a June meeting in Brussels, the U.S. Federal Maritime Commission, the European Commission's Directorate-General for Competition and the Chinese Ministry of Transport pledged to work together more to keep a sharper eye on the alliances. The regulators concluded they haven’t hurt competition, FMC Chairman Mario Cordero said. The three regulatory groups, which met for the first time in December 2013, plan to meet again in a year FMC Commissioner Richard Lidinsky said the meeting sent a strong message to alliance members that they aren’t above the scrutiny of governments and “we are watching you.” He was the sole FMC commissioner to vote against allowing the P3 Network and the 2M , the tie-up of Maersk and MSC that followed Beijing’s momentous veto of the P3. Following the decision of Maersk and MSC to pursue their own alliance, CMA CGM quickly struck up an alliance with United Arab Shipping Co. and China Shipping, known as Ocean Three . Even before the P3 was struck down, the G6 alliance — APL, Hapag-Lloyd, Hyundai Merchant Marine, MOL, NYK and OOCL — had already expanded into the Asia-U.S. West Coast and trans-Atlantic routes, thanks to the blessing of the FMC. In late 2014, the CKYHE Alliance got the go-ahead from the FMC to further integrate its newest member, Evergreen Line, into its alliance covering the trans-Pacific and trans-Atlantic lanes. The other members are Cosco, "K" Line, Yang Ming and Hanjin Shipping. When the dust cleared, 19 of the 20 largest global carriers were part of an alliance encompassing the three major east-west trade lanes, the trans-Atlantic, the trans-Pacific and Asia-Europe--unprecedented coverage for the alliance system. Zim Integrated Shipping Services CEO Rafi Danieli told JOC.com in April that he wasn’t worried the company was the only major carrier not in an alliance, saying partnerships with and joint ventures were sufficient. Through the alliances, carriers gain access to the economies of scale achieved through large ships, share the increasingly larger vessels being deployed, allowing them to fill capacity and avoid losses accrued by operating less-than-full ships. In essence, the four mega-alliances compete with each other and their respective fellow members, as the pacts are operational, while forbidding joint marketing and sales, Welsh said. Slot-sharing is hardly new, but the degree of integration used by alliances, and their reach certainly is — they make up roughly 90 percent of container capacity on major lanes. “Is that a preferable scenario to greater acquisitions and mergers in the market that would reduce competition? Yes,” Welsh told JOC.com The alliances don’t appear to have brought about shipper’s greatest fear of rate collusions, either. Maritime regulators haven’t stepped in to break up the VSAs. In his report to Federal Maritime Commissioners on June 24, Bob Blair of FMC’s Bureau of Trade Analysis said his review of the 2M alliance has “raised no red flags” of anticompetitive behavior by Maersk and MSC. It would be difficult for 2M and other alliances to collude rates or limit capacity on trade lanes, Blair said. The FMC has considered the possibility of alliances setting rates or capacity strategies through their membership in discussion groups, namely the Transpacific Stabilization Agreement, an agreement involving 15 of the largest carriers on the trade lane. But the likelihood of these “special circumstances” dampening competition is unlikely BTA said, considering the complexity of coordination with so many carriers would be difficult to create, run or hide from regulators. Although regulators haven’t found any indication of alliance rate setting, shipper suspicion of broader carrier misbehavior lingers. The European Union in November 2013 said it was investigating whether 14 carriers had colluded on rates on European lanes after it raided their offices roughly two years prior. But no charges have come down and regulators haven’t said anything since. More recently, China fined 21 carriers in the China-Japan trade a total of $684,000 for quoting customers rates below levels filed with the Shanghai Shipping Exchange. But those suspecting alliance members are colluding on prices would have a hard time finding evidence in market rates. Spot rates on the major three trade lanes are modest at best, as in the case of the trans-Atlantic , sluggish in trans-Pacific and edging below the cost of service in the Asia-Europe lane . There’s little evidence that contract rates are much different. One-third of trans-Pacific shippers surveyed by JOC.com earlier this year said contract rates for 2015-2016 were virtually unchanged from the prior year. Twenty-one percent of shippers said rates rose 1 to 3 percent, while one-third said rates increased more than 3 percent, according to the survey of more than 100 shippers. “I haven’t had complaints about shipping rates in very long time. If they are colluding on prices, they are doing a horrible job about it,” said Carlton, who said he doesn’t think carriers are price-fixing. What shippers have been complaining about is poor service reliability , which may be caused partly by shipping alliances, and getting inferior service from an alliance partner of their preferred carrier. In defense of massive vessel-sharing agreements, carriers said they would improve service by offering more port pairings and reducing the number of dropped sailings. There are few signs of this, and the boggled roll-out of the G6 shows that in some cases service has suffered from alliances, as Blair suggested during his presentation to FMC commissioners. He said 2M didn’t have the same negative impact on service. Alliance services also sometimes require the calling on multiple marine terminals within a single port, adding more touches and contributing to congestion. Considering how many factors contribute to congestion, including volume surges from mega-ships , chassis dislocation and labor slowdowns, it’s hard to determine just how much alliances are a factor, said Welsh, of GSF. Still, he wants alliance members to benchmark their performance on major trade lanes and share the information with regulators as a backstop against carriers abusing VSAs to allow service to deteriorate. GSF’s call for carriers to pull out of rate-setting conferences that are allowed in some trade lanes outside the U.S. and Europe, and from U.S.-sanctioned discussion agreements, is unlikely to be heeded. The shipping alliances are still in their infancy, and kinks are still getting worked out, potentially leading to better service, Welsh said. Carriers are struggling to fuse operations that have different corporate cultures and operating histories, Carlton said. “Getting it to fit for two land-based companies can take years,” he said. Alliances “are much more complicated.” Whether or not the service improves, alliances’ ability to help keep medium and small carriers in the game comes with a catch for shippers. They embolden those carriers to order larger vessels, which unless demand grows steadily, will exacerbate the overhang of capacity and keep rates volatile. Additionally, if marine terminals, railroads and carriers can’t find a better way to handle the unloading and loading of cargo from mega-ships then congestion will worsen. The price of increased competition doesn’t come cheap. Contact Mark Szakonyi at mark.szakonyi@ihs.com and follow him on Twitter: @szakonyi_joc .

Transport, Trade and Regulation News

Container lines

Shippers view carrier alliances as bulwarks for competition

<div class="phx-topic abstract-wrapper">Eighteen Republican members of Congress said the remedies laid out as part of the US’ investigation into China’s maritime dominance are unworkable for farmers, notably a port tax on Chinese vessels and the requirement that an increasing volume of US exports be shipped on US-flagged vessels. </div>

Eighteen Republican members of Congress said the remedies laid out as part of the US’ investigation into China’s maritime dominance are unworkable for farmers, notably a port tax on Chinese vessels and the requirement that an increasing volume of US exports be shipped on US-flagged vessels.

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<div class="phx-topic">A group of 18 farm state Republican members of Congress is warning that a wide-ranging proposal by the US Trade Representative (USTR) to reinvigorate the US shipbuilding industry would instead damage domestic agriculture interests by adding hundreds of millions of dollars to transportation costs and reducing export volumes. In a letter Thursday to USTR Jamieson Greer, the members of Congress said the remedies laid out as part of the US’ so-called <a href="https://www.joc.com/article/plan-to-tax-chinese-ships-turned-maritime-malaise-into-brainstorming-session-5971753">Section 301 investigation</a> into China’s maritime dominance are unworkable for farmers, notably a port tax on Chinese vessels and the requirement that an increasing volume of US exports be shipped on US-flagged vessels. The letter was signed by representatives from Georgia, Iowa, Illinois, Minnesota, Missouri, Nebraska, North Dakota, Oregon, Pennsylvania, South Dakota and Washington and is notable in that it represents a large group of Republican House members coming out against a proposal from the Trump administration. Representatives said they feared how ocean carriers using Chinese-made or -operated vessels would respond to being charged as much as $1.5 million per US port call. “While China is the target of USTR’s proposed port fee, ocean carriers will inevitably shift the expense onto their American customers,” the letter read. “We are concerned this proposed action will have disproportionate harm on American farmers and ranchers.” Ag interests also stand to see their transportation costs for bulk exports increase between $372 million and $930 million because the existing US fleet and the USTR’s seven-year phase-in to require more exports on US-flagged vessels “is not adequate to accommodate the needs of the domestic agriculture industry,” the representatives wrote. The letter, which noted the US agriculture industry exports 20% of its total production, said containerized exporters will “face extreme risks” from the USTR proposal, adding the plan would reduce bulk export volumes while doubling the cost of exports. “Agricultural goods are the first to be left behind and the last to resume trade when disruptions in the maritime industry occur,” the letter read. “These actions will collectively undermine the competitiveness of US agriculture in the global marketplace.” Having the support of rural America tends to draw the attention of officials in Washington, Peter Friedmann, executive director of the Agriculture Transportation Coalition (AgTC), said at the Journal of Commerce’s TPM25 conference in March. “Members of Congress want to see [their] constituents — the ones who live and or work in their district [or] state — to see what they have to say,” Friedmann said. “Not some trade association. They listen to me when I bring [a] pistachio farmer with me ... real people, real constituents.” Contact Laura Robb at <a href="mailto:laura.robb@spglobal.com">laura.robb@spglobal.com</a>. </div>

A group of 18 farm state Republican members of Congress is warning that a wide-ranging proposal by the US Trade Representative (USTR) to reinvigorate the US shipbuilding industry would instead damage domestic agriculture interests by adding hundreds of millions of dollars to transportation costs and reducing export volumes. In a letter Thursday to USTR Jamieson Greer, the members of Congress said the remedies laid out as part of the US’ so-called Section 301 investigation into China’s maritime dominance are unworkable for farmers, notably a port tax on Chinese vessels and the requirement that an increasing volume of US exports be shipped on US-flagged vessels. The letter was signed by representatives from Georgia, Iowa, Illinois, Minnesota, Missouri, Nebraska, North Dakota, Oregon, Pennsylvania, South Dakota and Washington and is notable in that it represents a large group of Republican House members coming out against a proposal from the Trump administration. Representatives said they feared how ocean carriers using Chinese-made or -operated vessels would respond to being charged as much as $1.5 million per US port call. “While China is the target of USTR’s proposed port fee, ocean carriers will inevitably shift the expense onto their American customers,” the letter read. “We are concerned this proposed action will have disproportionate harm on American farmers and ranchers.” Ag interests also stand to see their transportation costs for bulk exports increase between $372 million and $930 million because the existing US fleet and the USTR’s seven-year phase-in to require more exports on US-flagged vessels “is not adequate to accommodate the needs of the domestic agriculture industry,” the representatives wrote. The letter, which noted the US agriculture industry exports 20% of its total production, said containerized exporters will “face extreme risks” from the USTR proposal, adding the plan would reduce bulk export volumes while doubling the cost of exports. “Agricultural goods are the first to be left behind and the last to resume trade when disruptions in the maritime industry occur,” the letter read. “These actions will collectively undermine the competitiveness of US agriculture in the global marketplace.” Having the support of rural America tends to draw the attention of officials in Washington, Peter Friedmann, executive director of the Agriculture Transportation Coalition (AgTC), said at the Journal of Commerce’s TPM25 conference in March. “Members of Congress want to see [their] constituents — the ones who live and or work in their district [or] state — to see what they have to say,” Friedmann said. “Not some trade association. They listen to me when I bring [a] pistachio farmer with me ... real people, real constituents.” Contact Laura Robb at laura.robb@spglobal.com .

Container Shipping News

Trans-Pacific

North American ports

Maritime

Farm state House members say USTR proposal offers big risks to US ag interests

<div class="phx-topic abstract-wrapper">The partnership will see SMC3 provide less-than-truckload rating, booking and tracking data into Turvo’s transportation management system, which primarily serves US freight brokers and third-party logistics providers.</div>

The partnership will see SMC3 provide less-than-truckload rating, booking and tracking data into Turvo’s transportation management system, which primarily serves US freight brokers and third-party logistics providers.

<div class="phx-topic">Freight broker-focused transportation management system (TMS) provider Turvo is partnering with SMC3 to integrate less-than-truckload (LTL) management tools into its software as demand for LTL applications grows. The partnership, unveiled Thursday, will see Turvo customers get access to SMC3’s rating, booking, tracking and document retrieval application programming interfaces (APIs), which the TMS provider said will eliminate manual steps currently used to execute those processes. SMC3 is a widely-used platform for LTL rate benchmarking through its CzarLite, RateWare XL and BatchMark XL products while also providing data around LTL transit times and bidding. Turvo, acquired in 2022 by cold chain conglomerate Lineage Logistics, provides TMS products to brokers, shippers and carriers, but with a specialty in serving the brokerage and third-party logistics (3PL) markets. Its customers include Ryder, PortX Logistics and PortCity. SMC3 joins a list of more than three dozen existing Turvo partners, although most cater to the truckload or drayage markets. “The collaboration between Turvo and SMC3 will strengthen our LTL operations by enhancing visibility, improving efficiency and enabling more responsive service,” Kate Leatherbury, director of LTL at 3PL Gebrüder Weiss North America, said in a statement. “Having access to real-time contract, volume and dynamic pricing within our TMS will significantly improve our ability to deliver a seamless experience to both carriers and customers.” Brokers that have previously focused wholly or mostly on truckload are keying in on areas to expand into LTL even as the LTL market goes through a period of largely static demand. LTL carriers are positioning themselves, through the acquisition of regional carriers and expansion of terminal networks, to <a href="https://www.joc.com/article/us-ltl-getting-in-position-for-higher-freight-demand-when-it-comes-5968547">take advantage of renewed growth in LTL</a> when it comes. LTL-focused brokers also see themselves as being in a good position to help shippers adjust to the <a href="https://www.joc.com/article/us-shippers-urged-to-prepare-now-for-upcoming-ltl-class-changes-rate-resetting-5933927">ongoing revision of the LTL freight classification system</a>. Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. </div>

Freight broker-focused transportation management system (TMS) provider Turvo is partnering with SMC3 to integrate less-than-truckload (LTL) management tools into its software as demand for LTL applications grows. The partnership, unveiled Thursday, will see Turvo customers get access to SMC3’s rating, booking, tracking and document retrieval application programming interfaces (APIs), which the TMS provider said will eliminate manual steps currently used to execute those processes. SMC3 is a widely-used platform for LTL rate benchmarking through its CzarLite, RateWare XL and BatchMark XL products while also providing data around LTL transit times and bidding. Turvo, acquired in 2022 by cold chain conglomerate Lineage Logistics, provides TMS products to brokers, shippers and carriers, but with a specialty in serving the brokerage and third-party logistics (3PL) markets. Its customers include Ryder, PortX Logistics and PortCity. SMC3 joins a list of more than three dozen existing Turvo partners, although most cater to the truckload or drayage markets. “The collaboration between Turvo and SMC3 will strengthen our LTL operations by enhancing visibility, improving efficiency and enabling more responsive service,” Kate Leatherbury, director of LTL at 3PL Gebrüder Weiss North America, said in a statement. “Having access to real-time contract, volume and dynamic pricing within our TMS will significantly improve our ability to deliver a seamless experience to both carriers and customers.” Brokers that have previously focused wholly or mostly on truckload are keying in on areas to expand into LTL even as the LTL market goes through a period of largely static demand. LTL carriers are positioning themselves, through the acquisition of regional carriers and expansion of terminal networks, to take advantage of renewed growth in LTL when it comes. LTL-focused brokers also see themselves as being in a good position to help shippers adjust to the ongoing revision of the LTL freight classification system . Contact Eric Johnson at eric.johnson@spglobal.com .

Truck brokers

Logistics Technology News

TMS provider Turvo turns to SMC3 to enable LTL ambitions

<div class="phx-topic abstract-wrapper">A general rate increase implemented by carriers in the eastbound trans-Pacific on April 1 has largely stuck, giving shippers less leverage in attempting to lower contract rates for 2025–26 service year.</div>

A general rate increase implemented by carriers in the eastbound trans-Pacific on April 1 has largely stuck, giving shippers less leverage in attempting to lower contract rates for 2025–26 service year.

<div class="phx-topic">Just weeks after signing 2025–26 service contracts with trans-Pacific ocean carriers at $1,600 to $1,800 per FEU for West Coast imports, big-box retailers are attempting to knock those numbers down as they look to assign their remaining cargo to liners they have yet to ink deals with. That final push, which will play out in the coming weeks, may face some headwinds, however. That’s because a general rate increase (GRI) implemented by carriers on April 1 has largely stuck, giving shippers less leverage in attempting to lower contract rates for next service year. The largest big-box retailers <a href="https://www.joc.com/article/largest-us-importers-finalizing-contracts-in-unsettled-trans-pacific-5971122">in recent weeks signed annual service contracts</a> with their core carriers in the range of $1,600 to $1,800 per FEU from Asia to the West Coast and about $2,600 to $2,800 per FEU to the East Coast. Those rates are about 15% to 20% higher than what they signed for in their existing 2024–25 contracts. Most contracts will run from May 1 through April 30, 2026. The Journal of Commerce spoke with 10 forwarders, three carriers and two consultants for this story. Large retailers ship with multiple carriers, and they are reportedly negotiating with their remaining core carriers for lower rates. However, most carriers on Tuesday implemented GRIs of up to $1,000 per FEU on spot rates. “It’s pretty much across the board for almost all carriers,” Kurt McElroy, executive vice president at the forwarder Kerry Apex, said of the GRIs. Platts, a sister company of the Journal of Commerce within S&amp;P Global, pegged spot rates to the West Coast at $2,275 per FEU as of Thursday, up 42% week over week. The East Coast rate was exactly $1,000 higher at $3,275/FEU, up 26%. Carriers attempt to leverage rising spot rates into higher contract rates as they finalize contract negotiations with customers. <h3>GRIs providing support for carriers </h3>When contract negotiations in the eastbound trans-Pacific began earlier this year, carriers said they were aiming for rates of <a href="https://www.joc.com/article/trans-pacific-carriers-reaching-higher-in-early-202526-contract-talks-5952701">$2,000 per FEU to the West Coast and $3,000 to the East Coast</a> with their largest customers. By setting the floor at those rates, carriers would then attempt to sign the second tier of customers for a couple of hundred dollars per FEU higher. But with spot rates in decline until late March, carriers were forced to accept levels about $200 to $400 under their expectations. Now, with a mostly successfully GRI to provide support, they are making a final push to reverse the momentum and get close to their original goal, Ben Coleman, president of the forwarder Teampower Logistics, said. “They started with $2,000 [to the West Coast], then early signings dropped that to $1,600-$1,800, and now they’re trying to claw back to $2,000,” Coleman said. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e7a65aab-9aac-4f07-9b74-1793746c01ef"></dynamic-object></div>An industry consultant who formerly served as a logistics manager with national retailers said it is not unusual for larger importers to attempt to secure lower contract rates from each carrier they deal with until all their volume has been committed. “They will try to get the best rates they can,” the source said. “Maybe they can get it done with some contracts, but not all.” A carrier executive echoed that point, but noted retailers could end up being shut out by some lines. “The more you try to push down rates, the riskier it will be to get space,” the executive said. “Still, some are still trying to leverage their volumes.” A forwarder said even though the April 1 GRI may not be as fully effective as carriers would like, they appear resolved to reach their initial goals for service contract rates. “We are moving forward with our contract discussions, and benchmarks, at least for named accounts, remaining at $2,000 [for the West Coast] and $3,000 [for the East Coast], respectively,” the source said. Some carriers this week launched a second round of negotiations with non-vessel-operating common carriers (NVOs), which will put additional pressure on importers to wrap up their contract negotiations, a second forwarder said. He estimates that most NVO contracts will settle near $2,000 per FEU to the West Coast. Some importers had resisted finalizing their contracts until the Trump administration announced its tariff policy, but with <a href="https://www.joc.com/article/trump-announces-10-across-the-board-tariffs-on-all-us-imports-5975639">Wednesday’s announcement</a>, those retailers and other importers with fall merchandise to book are likely to finalize their contracts and step up their bookings, forwarders said. With spot rates higher, bookings in Asia picking up and importers looking beyond the tariffs to finalize their fall and holiday merchandise needs, shippers realize they can’t wait much longer to wrap up their contract negotiations, one forwarder said. “There’s been a different dynamic the last 72 hours,” the source said. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>.Contact Laura Robb at <a href="mailto:laura.robb@spglobal.com">laura.robb@spglobal.com</a>.</div>

Just weeks after signing 2025–26 service contracts with trans-Pacific ocean carriers at $1,600 to $1,800 per FEU for West Coast imports, big-box retailers are attempting to knock those numbers down as they look to assign their remaining cargo to liners they have yet to ink deals with. That final push, which will play out in the coming weeks, may face some headwinds, however. That’s because a general rate increase (GRI) implemented by carriers on April 1 has largely stuck, giving shippers less leverage in attempting to lower contract rates for next service year. The largest big-box retailers in recent weeks signed annual service contracts with their core carriers in the range of $1,600 to $1,800 per FEU from Asia to the West Coast and about $2,600 to $2,800 per FEU to the East Coast. Those rates are about 15% to 20% higher than what they signed for in their existing 2024–25 contracts. Most contracts will run from May 1 through April 30, 2026. The Journal of Commerce spoke with 10 forwarders, three carriers and two consultants for this story. Large retailers ship with multiple carriers, and they are reportedly negotiating with their remaining core carriers for lower rates. However, most carriers on Tuesday implemented GRIs of up to $1,000 per FEU on spot rates. “It’s pretty much across the board for almost all carriers,” Kurt McElroy, executive vice president at the forwarder Kerry Apex, said of the GRIs. Platts, a sister company of the Journal of Commerce within S&P Global, pegged spot rates to the West Coast at $2,275 per FEU as of Thursday, up 42% week over week. The East Coast rate was exactly $1,000 higher at $3,275/FEU, up 26%. Carriers attempt to leverage rising spot rates into higher contract rates as they finalize contract negotiations with customers. GRIs providing support for carriers When contract negotiations in the eastbound trans-Pacific began earlier this year, carriers said they were aiming for rates of $2,000 per FEU to the West Coast and $3,000 to the East Coast with their largest customers. By setting the floor at those rates, carriers would then attempt to sign the second tier of customers for a couple of hundred dollars per FEU higher. But with spot rates in decline until late March, carriers were forced to accept levels about $200 to $400 under their expectations. Now, with a mostly successfully GRI to provide support, they are making a final push to reverse the momentum and get close to their original goal, Ben Coleman, president of the forwarder Teampower Logistics, said. “They started with $2,000 [to the West Coast], then early signings dropped that to $1,600-$1,800, and now they’re trying to claw back to $2,000,” Coleman said. An industry consultant who formerly served as a logistics manager with national retailers said it is not unusual for larger importers to attempt to secure lower contract rates from each carrier they deal with until all their volume has been committed. “They will try to get the best rates they can,” the source said. “Maybe they can get it done with some contracts, but not all.” A carrier executive echoed that point, but noted retailers could end up being shut out by some lines. “The more you try to push down rates, the riskier it will be to get space,” the executive said. “Still, some are still trying to leverage their volumes.” A forwarder said even though the April 1 GRI may not be as fully effective as carriers would like, they appear resolved to reach their initial goals for service contract rates. “We are moving forward with our contract discussions, and benchmarks, at least for named accounts, remaining at $2,000 [for the West Coast] and $3,000 [for the East Coast], respectively,” the source said. Some carriers this week launched a second round of negotiations with non-vessel-operating common carriers (NVOs), which will put additional pressure on importers to wrap up their contract negotiations, a second forwarder said. He estimates that most NVO contracts will settle near $2,000 per FEU to the West Coast. Some importers had resisted finalizing their contracts until the Trump administration announced its tariff policy, but with Wednesday’s announcement , those retailers and other importers with fall merchandise to book are likely to finalize their contracts and step up their bookings, forwarders said. With spot rates higher, bookings in Asia picking up and importers looking beyond the tariffs to finalize their fall and holiday merchandise needs, shippers realize they can’t wait much longer to wrap up their contract negotiations, one forwarder said. “There’s been a different dynamic the last 72 hours,” the source said. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .Contact Laura Robb at laura.robb@spglobal.com .

Forwarding

Trans-Pac GRI offers resistance to retailers’ push for lower contract rates

<div class="phx-topic abstract-wrapper">The deal will merge “K” Lines’ traditional logistics activities in ocean and air freight with Kamigumi’s niche business in project cargo logistics.</div>

The deal will merge “K” Lines’ traditional logistics activities in ocean and air freight with Kamigumi’s niche business in project cargo logistics.

<div class="phx-topic">Japanese carrier “K” Line will expand its international and domestic logistics business with the launch this week of a joint venture with Japanese forwarding company Kamigumi that is expected to target contract and project cargo logistics. That came after “K” Line transferred ownership of its “K” Line Logistics into a new holding company, KLKG Logistics Holdings. “K” Line subsequently transferred 47% of its shares in KLKG Logistics to Kamigumi. “Through this capital alliance, we aim to achieve further growth in domestic and overseas markets by [strengthening] contract logistics and providing high-quality and more diverse logistics services to customers,” “K” Line said in a statement announcing the venture. Keiji Kubo, “K” Line managing executive officer for the product logistics division, said the entry into new project cargo-related logistics businesses, such as offshore wind power, will also offer opportunities. The deal will merge “K” Lines’ traditional logistics activities in ocean and air freight with Kamigumi’s niche business in project cargo logistics, which includes handling spent nuclear fuel and transporting industrial equipment such as power transformers and wind power components. “K” Line Logistics had revenues of about $300 million last year, while Kamigumi is expected to post revenues of approximately $1.9 billion when it reports full-year earnings in May. “K” Line Logistics is mainly focused on Asia and Australia with warehousing and cold storage in China, Vietnam, Thailand, Indonesia, the Philippines, India and the United Arab Emirates, with freight forwarding across the region. It also operates cross-board trucking between Thailand and four neighboring countries including Malaysia, Myanmar and Laos. Operations in the Americas and Europe, which include offices in the US, Mexico, France, Germany and the Netherlands, mainly provide freight forwarding and customs brokerage. Kamigumi mainly operates in Southeast Asia, China and Mexico. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>.</div>

Japanese carrier “K” Line will expand its international and domestic logistics business with the launch this week of a joint venture with Japanese forwarding company Kamigumi that is expected to target contract and project cargo logistics. That came after “K” Line transferred ownership of its “K” Line Logistics into a new holding company, KLKG Logistics Holdings. “K” Line subsequently transferred 47% of its shares in KLKG Logistics to Kamigumi. “Through this capital alliance, we aim to achieve further growth in domestic and overseas markets by [strengthening] contract logistics and providing high-quality and more diverse logistics services to customers,” “K” Line said in a statement announcing the venture. Keiji Kubo, “K” Line managing executive officer for the product logistics division, said the entry into new project cargo-related logistics businesses, such as offshore wind power, will also offer opportunities. The deal will merge “K” Lines’ traditional logistics activities in ocean and air freight with Kamigumi’s niche business in project cargo logistics, which includes handling spent nuclear fuel and transporting industrial equipment such as power transformers and wind power components. “K” Line Logistics had revenues of about $300 million last year, while Kamigumi is expected to post revenues of approximately $1.9 billion when it reports full-year earnings in May. “K” Line Logistics is mainly focused on Asia and Australia with warehousing and cold storage in China, Vietnam, Thailand, Indonesia, the Philippines, India and the United Arab Emirates, with freight forwarding across the region. It also operates cross-board trucking between Thailand and four neighboring countries including Malaysia, Myanmar and Laos. Operations in the Americas and Europe, which include offices in the US, Mexico, France, Germany and the Netherlands, mainly provide freight forwarding and customs brokerage. Kamigumi mainly operates in Southeast Asia, China and Mexico. Contact Keith Wallis at keithwallis@hotmail.com .

Supply chain

‘K’ Line to expand logistics operations in joint venture with Kamigumi

<div class="phx-topic abstract-wrapper">For Singapore-based PSA, the investment cements a beachhead in a West India market primed to benefit from Asian trade diversification and burgeoning consumer demand.</div>

For Singapore-based PSA, the investment cements a beachhead in a West India market primed to benefit from Asian trade diversification and burgeoning consumer demand.

<div class="phx-topic">PSA International has kicked off operations at its 2.4 million-TEU Phase II terminal at India’s Nhava Sheva Port (JNPA), albeit at a limited scale ahead of an official full-fledged launch scheduled for April 15. The expansion doubles the size of PSA Mumbai, also known as Bharat Mumbai Container Terminals (BMCT), which opened its Phase I terminal of the same size in early 2018. Each stage of the overall project, on a 30-year concession involving a total $1 billion investment, has been designed with three berths with a quay of 1,000 meters able to accommodate 16,000- to 18,000-TEU vessels. The original terminal is already operating at 90% utilization, having seen fiscal year 2024–25 volumes spike 12% year over year to 2.3 million TEUs on 1,077 container ship visits, up from 863 calls a year earlier, data shows. As ocean services in and out of West India steadily expand, more volume consolidation toward the PSA facility is imminent as other terminals in the port complex, especially APM Terminals’ Gateway Terminals India (GTI), have little spare capacity. With a combined 4.8 million TEUs in annual capacity, BMCT is poised to emerge as India’s largest standalone terminal. It currently hosts about 30 weekly sailings, which include ship calls up to 15,000 TEUs, largely from Mediterranean Shipping Co. For Singapore-based PSA, the Nhava Sheva investment gives it a “beachhead” to cement itself in a market primed to benefit from Asian trade diversification and burgeoning consumer demand. Its Indian operations include a 1.4 million-TEU facility at Chennai Port, but that faces serious regional growth challenges. At the same time, with vessels often arriving out-of-window due to the Red Sea-linked diversions and carriers increasingly deploying “ultra-large” tonnage that typically involves significantly higher container exchanges per call, Nhava Sheva has been wrestling with severe pressure inland, a concern that could exacerbate as volumes build. To ease landside bottlenecks in the harbor, a second highway extension project has just been approved by the government at a cost of some $525 million, but a definite timeline is yet unknown for its completion. Contact Bency Mathew at <a href="bencyvmathew@gmail.com.">bencyvmathew@gmail.com</a>.</div>

PSA International has kicked off operations at its 2.4 million-TEU Phase II terminal at India’s Nhava Sheva Port (JNPA), albeit at a limited scale ahead of an official full-fledged launch scheduled for April 15. The expansion doubles the size of PSA Mumbai, also known as Bharat Mumbai Container Terminals (BMCT), which opened its Phase I terminal of the same size in early 2018. Each stage of the overall project, on a 30-year concession involving a total $1 billion investment, has been designed with three berths with a quay of 1,000 meters able to accommodate 16,000- to 18,000-TEU vessels. The original terminal is already operating at 90% utilization, having seen fiscal year 2024–25 volumes spike 12% year over year to 2.3 million TEUs on 1,077 container ship visits, up from 863 calls a year earlier, data shows. As ocean services in and out of West India steadily expand, more volume consolidation toward the PSA facility is imminent as other terminals in the port complex, especially APM Terminals’ Gateway Terminals India (GTI), have little spare capacity. With a combined 4.8 million TEUs in annual capacity, BMCT is poised to emerge as India’s largest standalone terminal. It currently hosts about 30 weekly sailings, which include ship calls up to 15,000 TEUs, largely from Mediterranean Shipping Co. For Singapore-based PSA, the Nhava Sheva investment gives it a “beachhead” to cement itself in a market primed to benefit from Asian trade diversification and burgeoning consumer demand. Its Indian operations include a 1.4 million-TEU facility at Chennai Port, but that faces serious regional growth challenges. At the same time, with vessels often arriving out-of-window due to the Red Sea-linked diversions and carriers increasingly deploying “ultra-large” tonnage that typically involves significantly higher container exchanges per call, Nhava Sheva has been wrestling with severe pressure inland, a concern that could exacerbate as volumes build. To ease landside bottlenecks in the harbor, a second highway extension project has just been approved by the government at a cost of some $525 million, but a definite timeline is yet unknown for its completion. Contact Bency Mathew at bencyvmathew@gmail.com .

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PSA expansion project doubles capacity at India’s Nhava Sheva terminal

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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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Filling the Supply Chain Education Gap with LTL Education Courses

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