<div class="phx-topic abstract-wrapper">Wallenius Wilhelmsen, the world’s largest car carrier operator, said its vessels make between 300 and 350 voyages a year to the US, potentially generating annual voyage fees of about $300 million.</div>

Wallenius Wilhelmsen, the world’s largest car carrier operator, said its vessels make between 300 and 350 voyages a year to the US, potentially generating annual voyage fees of about $300 million.

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<div class="phx-topic">Car carriers face bills into the hundreds of millions to meet the cost of the United States Trade Representative’s (USTR’s) proposal to impose levies on non-US-built ships entering the US beginning Oct. 16, shipping executives said. Wallenius Wilhelmsen, the world’s largest car carrier operator with 128 ships, said its vessels make between 300 and 350 voyages a year to the US, potentially generating annual voyage fees of about $300 million, it said last week. Rival Norwegian operator Höegh Autoliners estimated its own potential voyage fee exposure at between $60 million and $70 million a year. Other roll-on/roll-off (ro/ro) operators facing hefty voyage fee bills include Japan’s three largest carriers — NYK Line, MOL and “K” Line — according to port call data from maritime consultancy Esgian, as well as Glovis, which is affiliated with South Korea’s Hyundai Motor Group, Unlike other sectors, including container shipping and multipurpose vessels, where voyage fees only target China-built or -operated vessels, Lasse Kristoffersen, Wallenius Wilhelmsen CEO, said an anomaly in the USTR proposal meant that all foreign-built ro/ro vessels are liable for voyage fees. He expected the voyage fees to be passed on to the carrier’s customers, similar to the way charges related to the European Union’s emissions trading scheme are paid by shippers. Under current plans, the USTR proposal will levy voyage fees of $150 per car equivalent unit on car carriers from mid-October. Speaking during a first-quarter results presentation on April 25, Höegh Autoliners CEO Andreas Enger estimated it would cost carriers between $1 million and $1.35 million per voyage for each non-US built ro/ro vessel entering US waters. <h3>Addressing ‘unintended’ consequences </h3>Commenting on what he thought was an unintended decision by the USTR, Wilhelmsen’s Kristoffersen told a first quarter analysts briefing May 8 the company is in contact with “the US government to see how that can be adjusted.” Wallenius has strong links with the US government through its US-flag ro/ro subsidiary American Roll-on Roll-off Carrier (ARC), which handles military and diplomatic-related shipments of equipment, vehicles and household belongings. Total revenues from its government business were $107 million in the first quarter, down 3% quarter over quarter. Enger said Höegh Autoliners would also talk to US authorities about the way voyage fees are charged. He said the carrier also plans to talk to customers over the next six months before voyage fees are implemented to mitigate the impact. If these are unsuccessful, “we can take the full hit if necessary,” Enger said during the results briefing. He and Kristoffersen said while voyage fees and tariffs on vehicle imports to the US could significantly impact the vehicle carrier trade, there have been limited repercussions on the companies so far. Kristoffersen said the 25% tariff imposed on US vehicle imports from April 3 will add thousands of dollars to the $48,500 price of an average car. But he pointed out that of 16.2 million cars sold in the US last year, about 8.8 million were US-built. Consequently, there is “no way the US can replace imported volumes with domestic volumes,” he said. Kristoffersen said S&amp;P Global estimated US vehicle tariffs would reduce imports by 300,000 vehicles this year to 3.4 million, with a further 15% reduction next year to 3.2 million from a pre-tariff forecast of 3.8 million vehicles. S&amp;P Global is the parent company of the Journal of Commerce. <h3>Underlying strength in volumes </h3>Despite the threat of US tariffs, Wilhelmsen and Höegh are continuing to see strong cargo volumes, buoyed by forward multi-year cargo transportation contracts, which, for Höegh, accounted for 82% of capacity in the first quarter. While “tariffs have increased market uncertainty” Wilhelmsen “was sold out in shipping” in the first quarter, although there was “weaker activity in logistics,” Kristoffersen said during the results briefing. Höegh CFO Espen Stubberud agreed, saying the carrier “was absolutely sold out from Asia” with more cargo than it could carry in the first quarter, although there were lower volumes on the Atlantic. Stubberud said Höegh chartered two car carriers, one in January and the other in April, for nine to 12 months to meet the short-term need for extra capacity while taking advantage of lower vessel charter rates. Rates fell to about $40,000 to $60,000 per day depending on the size of ship in the first quarter from a peak of $90,000-$115,000 per day in January 2024, data from shipbroker Clarksons showed. But high-and-heavy volumes are continuing to flounder partly due to a lack of spot capacity and lackluster global demand for heavy equipment, including construction and mining equipment. Wilhelmsen’s Kristoffersen said the carrier’s high-and-heavy volumes were down 36% year over year in the first quarter without giving actual figures. Wilhelmsen and Höegh do not see any pickup in high-and-heavy volumes until the end of this year or next year, they said. Both carriers posted strong results in the first quarter, which Wilhelmsen’s Kristoffersen expected to continue for the rest of this year. Wilhelmsen saw net profit increase 22% to $246 million in the first quarter, while revenues climbed 3% to $1.3 billion. Höegh reported first-quarter net profit of $155 million, up 35% from the first quarter last year, although the result was buoyed by a $41 million gain from the sale of the ro/ro vessel Höegh New York. Total revenues edged up slightly to $329 million. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

Car carriers face bills into the hundreds of millions to meet the cost of the United States Trade Representative’s (USTR’s) proposal to impose levies on non-US-built ships entering the US beginning Oct. 16, shipping executives said. Wallenius Wilhelmsen, the world’s largest car carrier operator with 128 ships, said its vessels make between 300 and 350 voyages a year to the US, potentially generating annual voyage fees of about $300 million, it said last week. Rival Norwegian operator Höegh Autoliners estimated its own potential voyage fee exposure at between $60 million and $70 million a year. Other roll-on/roll-off (ro/ro) operators facing hefty voyage fee bills include Japan’s three largest carriers — NYK Line, MOL and “K” Line — according to port call data from maritime consultancy Esgian, as well as Glovis, which is affiliated with South Korea’s Hyundai Motor Group, Unlike other sectors, including container shipping and multipurpose vessels, where voyage fees only target China-built or -operated vessels, Lasse Kristoffersen, Wallenius Wilhelmsen CEO, said an anomaly in the USTR proposal meant that all foreign-built ro/ro vessels are liable for voyage fees. He expected the voyage fees to be passed on to the carrier’s customers, similar to the way charges related to the European Union’s emissions trading scheme are paid by shippers. Under current plans, the USTR proposal will levy voyage fees of $150 per car equivalent unit on car carriers from mid-October. Speaking during a first-quarter results presentation on April 25, Höegh Autoliners CEO Andreas Enger estimated it would cost carriers between $1 million and $1.35 million per voyage for each non-US built ro/ro vessel entering US waters. Addressing ‘unintended’ consequences Commenting on what he thought was an unintended decision by the USTR, Wilhelmsen’s Kristoffersen told a first quarter analysts briefing May 8 the company is in contact with “the US government to see how that can be adjusted.” Wallenius has strong links with the US government through its US-flag ro/ro subsidiary American Roll-on Roll-off Carrier (ARC), which handles military and diplomatic-related shipments of equipment, vehicles and household belongings. Total revenues from its government business were $107 million in the first quarter, down 3% quarter over quarter. Enger said Höegh Autoliners would also talk to US authorities about the way voyage fees are charged. He said the carrier also plans to talk to customers over the next six months before voyage fees are implemented to mitigate the impact. If these are unsuccessful, “we can take the full hit if necessary,” Enger said during the results briefing. He and Kristoffersen said while voyage fees and tariffs on vehicle imports to the US could significantly impact the vehicle carrier trade, there have been limited repercussions on the companies so far. Kristoffersen said the 25% tariff imposed on US vehicle imports from April 3 will add thousands of dollars to the $48,500 price of an average car. But he pointed out that of 16.2 million cars sold in the US last year, about 8.8 million were US-built. Consequently, there is “no way the US can replace imported volumes with domestic volumes,” he said. Kristoffersen said S&P Global estimated US vehicle tariffs would reduce imports by 300,000 vehicles this year to 3.4 million, with a further 15% reduction next year to 3.2 million from a pre-tariff forecast of 3.8 million vehicles. S&P Global is the parent company of the Journal of Commerce. Underlying strength in volumes Despite the threat of US tariffs, Wilhelmsen and Höegh are continuing to see strong cargo volumes, buoyed by forward multi-year cargo transportation contracts, which, for Höegh, accounted for 82% of capacity in the first quarter. While “tariffs have increased market uncertainty” Wilhelmsen “was sold out in shipping” in the first quarter, although there was “weaker activity in logistics,” Kristoffersen said during the results briefing. Höegh CFO Espen Stubberud agreed, saying the carrier “was absolutely sold out from Asia” with more cargo than it could carry in the first quarter, although there were lower volumes on the Atlantic. Stubberud said Höegh chartered two car carriers, one in January and the other in April, for nine to 12 months to meet the short-term need for extra capacity while taking advantage of lower vessel charter rates. Rates fell to about $40,000 to $60,000 per day depending on the size of ship in the first quarter from a peak of $90,000-$115,000 per day in January 2024, data from shipbroker Clarksons showed. But high-and-heavy volumes are continuing to flounder partly due to a lack of spot capacity and lackluster global demand for heavy equipment, including construction and mining equipment. Wilhelmsen’s Kristoffersen said the carrier’s high-and-heavy volumes were down 36% year over year in the first quarter without giving actual figures. Wilhelmsen and Höegh do not see any pickup in high-and-heavy volumes until the end of this year or next year, they said. Both carriers posted strong results in the first quarter, which Wilhelmsen’s Kristoffersen expected to continue for the rest of this year. Wilhelmsen saw net profit increase 22% to $246 million in the first quarter, while revenues climbed 3% to $1.3 billion. Höegh reported first-quarter net profit of $155 million, up 35% from the first quarter last year, although the result was buoyed by a $41 million gain from the sale of the ro/ro vessel Höegh New York. Total revenues edged up slightly to $329 million. Contact Keith Wallis at keithwallis@hotmail.com .

Maritime

Breakbulk News

Ro/ro cargo

Multimillion-dollar price tag awaits car carriers as US ship fees loom

<div class="phx-topic abstract-wrapper">The investment will increase the Port of Caucedo’s capacity by 24% while expanding an adjacent Free Trade Zone, the terminal operator said. </div>

The investment will increase the Port of Caucedo’s capacity by 24% while expanding an adjacent Free Trade Zone, the terminal operator said.

<div class="phx-topic">Marine terminal operator DP World is investing $760 million to increase cargo capacity at the Port of Caucedo in the Dominican Republic by 24% and significantly expand the port’s adjacent Free Trade Zone (FTZ). Under a memorandum of understanding announced Friday, DP World will invest $380 million for new port equipment, cranes, surveillance systems and other infrastructure upgrades. The other half of the funds will go toward FTZ infrastructure such as buildings, roads and utilities, the terminal operator said in a statement. The investment will increase Caucedo’s capacity to 3.1 million TEUs from 2.5 million TEUs. “By boosting capacity and enabling nearshoring opportunities, we will transform Caucedo into the most advanced logistics hub in the Caribbean, not only strengthening supply chain resilience across the Americas but also creating a powerful engine for economic growth and job creation in the Dominican Republic,” said Sultan Ahmed bin Sulayem, DP World’s chairman and group CEO. The multi-phase expansion will unlock 225 hectares of development-ready land for the port’s FTZ and is expected to attract $3.9 billion in foreign investment, DP World said, adding the investment will position the Dominican Republic as a rising nearshoring and trade hub for the Americas. Contact Laura Robb at <a href="mailto:Laura.Robb@spglobal.com">laura.robb@spglobal.com</a>. </div>

Marine terminal operator DP World is investing $760 million to increase cargo capacity at the Port of Caucedo in the Dominican Republic by 24% and significantly expand the port’s adjacent Free Trade Zone (FTZ). Under a memorandum of understanding announced Friday, DP World will invest $380 million for new port equipment, cranes, surveillance systems and other infrastructure upgrades. The other half of the funds will go toward FTZ infrastructure such as buildings, roads and utilities, the terminal operator said in a statement. The investment will increase Caucedo’s capacity to 3.1 million TEUs from 2.5 million TEUs. “By boosting capacity and enabling nearshoring opportunities, we will transform Caucedo into the most advanced logistics hub in the Caribbean, not only strengthening supply chain resilience across the Americas but also creating a powerful engine for economic growth and job creation in the Dominican Republic,” said Sultan Ahmed bin Sulayem, DP World’s chairman and group CEO. The multi-phase expansion will unlock 225 hectares of development-ready land for the port’s FTZ and is expected to attract $3.9 billion in foreign investment, DP World said, adding the investment will position the Dominican Republic as a rising nearshoring and trade hub for the Americas. Contact Laura Robb at laura.robb@spglobal.com . 

Supply chain

Port News

Port infrastructure

International ports

DP World plans $760 million investment in the Dominican Republic

<div class="phx-topic abstract-wrapper">Much of the volume that has been locked up over the past month will come flooding back into the market after Washington and Beijing agreed to significantly slash their respective tariffs for 90 days. </div>

Much of the volume that has been locked up over the past month will come flooding back into the market after Washington and Beijing agreed to significantly slash their respective tariffs for 90 days.

<div class="phx-topic">The eastbound trans-Pacific will likely face insufficient ocean capacity to handle a surge of unlocked shipments from China to the US following the preliminary trade deal announced Monday, resulting in higher spot rates, surcharges and shortages of vessel space and equipment in the coming weeks, forwarders warned. “It’s clear it will be a mad rush to get capacity,” Jason Cook, managing director at Ardent Global Logistics, said. “Customers were already prebooking Friday and [early Monday]. Every day will count this week towards getting the booking plan and anticipated allocations with carriers.” Nerijus Poskus, Flexport’s head of ocean procurement, said: “I think we’re going to have a very significant peak season.” With just over a month having elapsed since the Trump administration slapped 145% tariffs on Beijing, a significant backlog of goods has built up in China, reflected in volumes dropping about 30% in recent weeks, according to Hapag-Lloyd and others. “For the first three weeks of May, 34% of capacity in the trans-Pacific has been taken out through blank sailings and service removals,” Poskus said. Now, much of that volume will come flooding back into the market with the US and China agreeing during weekend talks in Geneva to slash their respective tariffs for 90 days while negotiations continue. The 145% US tariffs will be cut to 30%, while China’s reciprocal 125% tariff on US goods will be lowered to 10%. Those levels are clearly low enough to unleash much of the pent-up demand building over the past month. Indeed, container bookings for imports from China appear to have been strengthening even before the tariff announcement. Bookings jumped 29% last week compared with the week prior, according to maritime visibility provider Vizion and data and analytics company Dun &amp; Bradstreet “Currently, ships are sailing 85% to 90% full, yet there is a huge backlog and that backlog at some point needs to be shipped,” Poskus said. “So if demand increases more than 10% — and it will — and if carriers put back 10% of capacity, we are at 100%. In other words, full. No space. And carriers have to add capacity such as extra loaders in order for importers to have space.” A space crunch will rapidly develop on the trans-Pacific, as the ships needed to replenish capacity aren’t immediately available, Poskus said. “The issue is a lot of these ships have been deployed on other trade lanes — intra-Asia, Asia to Latin America, etc. They are not just sitting and waiting, so shifting back capacity to the [trans-Pacific] will be not as easy as it seems and will take time,” he said. “There is maybe a ship or two that can be deployed back right away but as for the market as a whole, it will take more than four weeks for any meaningful capacity to be injected back into the TP [trans-Pacific].” Ocean rapidly withdrew capacity and redeployed it to multiple other trade lanes including Asia-Europe, DHL Global Forwarding told customers in its most recent Ocean Freight Market Update. The forwarder warned of “significant equipment and capacity constraints that could lead to increasing rates” in the aftermath of a deal between the US and China. Patrick Fay, CEO and co-founder of forwarder BOC International, said China bookings began surging on Sunday when the US signaled that a deal had been reached even before the specifics on tariff cuts were disclosed. “It is going to take a while to get these blank sailings canceled,” he said. “It will be very tight the next three weeks.” <h3>Port capacity could be overwhelmed </h3>Even before Monday’s announcement, others agreed that a volume surge would develop quickly after any trade deal reached between China and the US. “If a de-escalation was to happen, it is not unlikely that there would be a catch-up effect where, at some point, the situation resolves itself, and then you see a much stronger demand coming out of China,” Maersk CEO Vincent Clerc said on the company’s May 8 earning call. And any surge will potentially overwhelm US port capacity given that, as carrier executives told the recent Georgia Foreign Trade Conference, the system has no greater ability to absorb surge volumes than it did back in 2020. “Right now ... volumes are down [30%-40%] and if that goes up, the sheer surge will test the system and disruption cannot be avoided,” said Charles van der Steene, president of Maersk North America. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e7a65aab-9aac-4f07-9b74-1793746c01ef"></dynamic-object></div>Other issues will further complicate the post-deal market, empty containers among them, Poskus said. “Carriers have repositioned a lot of empty containers to SE Asia, dropping the empties in Vietnam versus China or not taking them back at all yet,” he said. “That means for at least some carriers in some locations, not the whole market, but ... certain places will start to face empty equipment shortages. “As carriers cancel or reduce capacity, that means empties are not able to be returned to Asia at the same pace as when they were brought into the US a few months earlier,” Poskus added. The result will likely be a classic squeeze lasting several weeks, reminiscent of the aftermath of the post-financial crisis restocking surge the market experienced in early 2010. Spot rates, which currently are hovering near $2,400 to the US West Coast, could surge to multiple times that, while peak season surcharges (PSSs) will be likely be quickly imposed on fixed rate contracts. “If space gets very tight, premium products will be the easiest way to secure additional capacity,” Poskus said. “If your volume is 20 containers a week and you need 25, for the five extra you may need to pay spot market prices plus, possibly, a premium.” Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>. </div>

The eastbound trans-Pacific will likely face insufficient ocean capacity to handle a surge of unlocked shipments from China to the US following the preliminary trade deal announced Monday, resulting in higher spot rates, surcharges and shortages of vessel space and equipment in the coming weeks, forwarders warned. “It’s clear it will be a mad rush to get capacity,” Jason Cook, managing director at Ardent Global Logistics, said. “Customers were already prebooking Friday and [early Monday]. Every day will count this week towards getting the booking plan and anticipated allocations with carriers.” Nerijus Poskus, Flexport’s head of ocean procurement, said: “I think we’re going to have a very significant peak season.” With just over a month having elapsed since the Trump administration slapped 145% tariffs on Beijing, a significant backlog of goods has built up in China, reflected in volumes dropping about 30% in recent weeks, according to Hapag-Lloyd and others. “For the first three weeks of May, 34% of capacity in the trans-Pacific has been taken out through blank sailings and service removals,” Poskus said. Now, much of that volume will come flooding back into the market with the US and China agreeing during weekend talks in Geneva to slash their respective tariffs for 90 days while negotiations continue. The 145% US tariffs will be cut to 30%, while China’s reciprocal 125% tariff on US goods will be lowered to 10%. Those levels are clearly low enough to unleash much of the pent-up demand building over the past month. Indeed, container bookings for imports from China appear to have been strengthening even before the tariff announcement. Bookings jumped 29% last week compared with the week prior, according to maritime visibility provider Vizion and data and analytics company Dun & Bradstreet “Currently, ships are sailing 85% to 90% full, yet there is a huge backlog and that backlog at some point needs to be shipped,” Poskus said. “So if demand increases more than 10% — and it will — and if carriers put back 10% of capacity, we are at 100%. In other words, full. No space. And carriers have to add capacity such as extra loaders in order for importers to have space.” A space crunch will rapidly develop on the trans-Pacific, as the ships needed to replenish capacity aren’t immediately available, Poskus said. “The issue is a lot of these ships have been deployed on other trade lanes — intra-Asia, Asia to Latin America, etc. They are not just sitting and waiting, so shifting back capacity to the [trans-Pacific] will be not as easy as it seems and will take time,” he said. “There is maybe a ship or two that can be deployed back right away but as for the market as a whole, it will take more than four weeks for any meaningful capacity to be injected back into the TP [trans-Pacific].” Ocean rapidly withdrew capacity and redeployed it to multiple other trade lanes including Asia-Europe, DHL Global Forwarding told customers in its most recent Ocean Freight Market Update. The forwarder warned of “significant equipment and capacity constraints that could lead to increasing rates” in the aftermath of a deal between the US and China. Patrick Fay, CEO and co-founder of forwarder BOC International, said China bookings began surging on Sunday when the US signaled that a deal had been reached even before the specifics on tariff cuts were disclosed. “It is going to take a while to get these blank sailings canceled,” he said. “It will be very tight the next three weeks.” Port capacity could be overwhelmed Even before Monday’s announcement, others agreed that a volume surge would develop quickly after any trade deal reached between China and the US. “If a de-escalation was to happen, it is not unlikely that there would be a catch-up effect where, at some point, the situation resolves itself, and then you see a much stronger demand coming out of China,” Maersk CEO Vincent Clerc said on the company’s May 8 earning call. And any surge will potentially overwhelm US port capacity given that, as carrier executives told the recent Georgia Foreign Trade Conference, the system has no greater ability to absorb surge volumes than it did back in 2020. “Right now ... volumes are down [30%-40%] and if that goes up, the sheer surge will test the system and disruption cannot be avoided,” said Charles van der Steene, president of Maersk North America. Other issues will further complicate the post-deal market, empty containers among them, Poskus said. “Carriers have repositioned a lot of empty containers to SE Asia, dropping the empties in Vietnam versus China or not taking them back at all yet,” he said. “That means for at least some carriers in some locations, not the whole market, but ... certain places will start to face empty equipment shortages. “As carriers cancel or reduce capacity, that means empties are not able to be returned to Asia at the same pace as when they were brought into the US a few months earlier,” Poskus added. The result will likely be a classic squeeze lasting several weeks, reminiscent of the aftermath of the post-financial crisis restocking surge the market experienced in early 2010. Spot rates, which currently are hovering near $2,400 to the US West Coast, could surge to multiple times that, while peak season surcharges (PSSs) will be likely be quickly imposed on fixed rate contracts. “If space gets very tight, premium products will be the easiest way to secure additional capacity,” Poskus said. “If your volume is 20 containers a week and you need 25, for the five extra you may need to pay spot market prices plus, possibly, a premium.” Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

Transport, Trade and Regulation News

Container Shipping News

Capacity crunch beckons on eastbound trans-Pacific after US-China deal

<div class="phx-topic abstract-wrapper">Despite a ceasefire announced over the weekend between India and Pakistan, the combined impact of the recent tensions and enhanced port security protocols has left container supply chains out of India’s west coast corridor in a state of flux.</div>

Despite a ceasefire announced over the weekend between India and Pakistan, the combined impact of the recent tensions and enhanced port security protocols has left container supply chains out of India’s west coast corridor in a state of flux.

<div class="phx-topic">The military conflict between India and Pakistan that sent shudders through maritime stakeholders across South Asia last week is seeing a thaw, at least for now, following a tentative ceasefire announced by both sides over the weekend. But the combined <a href="https://www.joc.com/article/indias-ban-on-pakistan-cargo-raises-disruption-risk-5997588">impact of recent tensions and enhanced port security protocols</a> has left container supply chains out of India’s hotly sought-after west coast corridor in a state of flux. Mundra Port, the country’s busiest freight handler, is working to fix operational chaos after it was forced to suspend vessel dockings multiple times due to the high security risk environment that involved electrical blackouts during night hours over the past week. “Mundra terminals are now berthing vessels on a first-in, first-out basis instead of on fixed window slots,” an operations executive at a European carrier who didn’t want to be identified told the Journal of Commerce. “The residual port congestion is expected to take some days to get any better.” Mundra port owner Adani Ports (APSEZ), in a trade notice on Friday, urged its terminal users to plan for anticipated delays, adding it was “evaluating the situation under the guidance of civil administration.” Additionally, Mundra’s busiest container terminal, Adani International Container Terminal (AICTPL), a joint venture between APSEZ and Mediterranean Shipping Co., had a scheduled 12-hour suspension of inter-terminal container (ITT) movements on Friday for gate infrastructure upgrades, amplifying supply chain woes. ITT operations are typically critical to transshipment cargo handling, which MSC has significantly expanded out of Mundra for its regional trade interests. <h3>Bypassing Mundra </h3>Sensing long berthing delays, major carriers on Indian trades are already bypassing Mundra to keep their schedules in line. Maersk has told customers it will skip Mundra on its MECL service between West India and North America until further notice. The weekly MECL in February included a stop at Mundra in a service shakeup to boost Indian loading capacity. Local shipping sources told the Journal of Commerce the carrier will instead roll MECL Indian export bookings over to its Mawingu Express service for relays over to Salalah Port in Oman, a key Maersk hub for the region. MECL India imports will be rerouted to APM Terminals Pipavav, another West India gateway, using the capacity on its Mawingu and/or FI3 Northeast Asia trade services. Other known current week westbound sailings skipping Mundra calls include the Houston Express and Baltimore Express, both operated by Hapag-Lloyd on the India-Europe trade (IOS) as part of the Gemini Cooperation network, known as the ME1 for Maersk. Meanwhile, <a href="https://www.joc.com/article/cma-cgm-levies-emergency-surcharges-on-pakistani-trade-amid-india-tensions-6001112">more carriers have hit Pakistan shippers with contingency surcharges</a> to recoup extra costs. Hapag-Lloyd will levy an add-on of $500 per container on Pakistani exports to Europe and Africa, and $300 per box on the reverse leg, beginning May 21. Contact Bency Mathew at <a href="mailto:bencyvmathew@gmail.com">bencyvmathew@gmail.com</a>. </div>

The military conflict between India and Pakistan that sent shudders through maritime stakeholders across South Asia last week is seeing a thaw, at least for now, following a tentative ceasefire announced by both sides over the weekend. But the combined impact of recent tensions and enhanced port security protocols has left container supply chains out of India’s hotly sought-after west coast corridor in a state of flux. Mundra Port, the country’s busiest freight handler, is working to fix operational chaos after it was forced to suspend vessel dockings multiple times due to the high security risk environment that involved electrical blackouts during night hours over the past week. “Mundra terminals are now berthing vessels on a first-in, first-out basis instead of on fixed window slots,” an operations executive at a European carrier who didn’t want to be identified told the Journal of Commerce. “The residual port congestion is expected to take some days to get any better.” Mundra port owner Adani Ports (APSEZ), in a trade notice on Friday, urged its terminal users to plan for anticipated delays, adding it was “evaluating the situation under the guidance of civil administration.” Additionally, Mundra’s busiest container terminal, Adani International Container Terminal (AICTPL), a joint venture between APSEZ and Mediterranean Shipping Co., had a scheduled 12-hour suspension of inter-terminal container (ITT) movements on Friday for gate infrastructure upgrades, amplifying supply chain woes. ITT operations are typically critical to transshipment cargo handling, which MSC has significantly expanded out of Mundra for its regional trade interests. Bypassing Mundra Sensing long berthing delays, major carriers on Indian trades are already bypassing Mundra to keep their schedules in line. Maersk has told customers it will skip Mundra on its MECL service between West India and North America until further notice. The weekly MECL in February included a stop at Mundra in a service shakeup to boost Indian loading capacity. Local shipping sources told the Journal of Commerce the carrier will instead roll MECL Indian export bookings over to its Mawingu Express service for relays over to Salalah Port in Oman, a key Maersk hub for the region. MECL India imports will be rerouted to APM Terminals Pipavav, another West India gateway, using the capacity on its Mawingu and/or FI3 Northeast Asia trade services. Other known current week westbound sailings skipping Mundra calls include the Houston Express and Baltimore Express, both operated by Hapag-Lloyd on the India-Europe trade (IOS) as part of the Gemini Cooperation network, known as the ME1 for Maersk. Meanwhile, more carriers have hit Pakistan shippers with contingency surcharges to recoup extra costs. Hapag-Lloyd will levy an add-on of $500 per container on Pakistani exports to Europe and Africa, and $300 per box on the reverse leg, beginning May 21. Contact Bency Mathew at bencyvmathew@gmail.com .

Asia-Europe

West India container trade facing delays, vessel skips after regional tensions

<div class="phx-topic abstract-wrapper">A request for industry comment on trucking regulations that could be modified or ended generated 896 responses in one month, with electronic logging devices and hours of service rules at the top of the list.</div>

A request for industry comment on trucking regulations that could be modified or ended generated 896 responses in one month, with electronic logging devices and hours of service rules at the top of the list.

<div class="phx-topic">If the Trump administration wants to deregulate trucking, it will find no lack of suggestions where to start. Comments on a Department of Transportation (DOT) request for information on rules that could or should be modified or replaced drew 896 comments in one month from industry organizations, state transportation officials, businesses and individuals. The comment period closed this week, and the list of regulations the respondents want amended or eliminated is long. Many of those responding were independent truckers. In particular, they targeted proposed mandates that would require speed limiting devices on truck engines and automatic emergency brakes (AEB) in heavy trucks, truck driver hours of service (HOS) rules, the electronic logging device (ELD) mandate and more. Those proposals and rules have been controversial since their inception. The current HOS rules and the ELD mandate were issued during the first Trump administration. It may be easier for regulators to drop or postpone pending regulations, such as a proposed requirement that trucks be equipped with speed limiters, than to rewrite existing rules such as the ELD mandate and HOS regulations. Many of the requests regarding those rules echo debates with prior administrations. Proposals that would mandate speed limiters were issued in 2016 under the Obama administration and then under the Biden White House in 2022. That last proposal remains active but has not advanced to a final rulemaking. The ELD mandate, implemented in late 2017, reshaped trucking, making it much more difficult to evade HOS limits. Many comments from truck drivers simply suggested some variant of ending the use of electronic logs and going back to paper logs. The request for information and the flood of responses are part of the Trump administration’s effort to identify and cut rules it considers unconstitutional, unlawful, unauthorized and unnecessarily burdensome. But respondents also called for new regulation that would help deter cargo crime and fraud. The National Association of Small Trucking Companies (NASTC) called for a permanent freight fraud enforcement task force with the DOT Office of the Inspector General. “This task force should be solely tasked with enforcing laws against fraud in transportation by investigating incidents and developing cases to bring to the Department of Justice,” the NASTC said in its comments. The organization also wants the Federal Motor Carrier Safety Administration to “diligently maintain” its National Consumer Complaint Database to fight fraud cases. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

If the Trump administration wants to deregulate trucking, it will find no lack of suggestions where to start. Comments on a Department of Transportation (DOT) request for information on rules that could or should be modified or replaced drew 896 comments in one month from industry organizations, state transportation officials, businesses and individuals. The comment period closed this week, and the list of regulations the respondents want amended or eliminated is long. Many of those responding were independent truckers. In particular, they targeted proposed mandates that would require speed limiting devices on truck engines and automatic emergency brakes (AEB) in heavy trucks, truck driver hours of service (HOS) rules, the electronic logging device (ELD) mandate and more. Those proposals and rules have been controversial since their inception. The current HOS rules and the ELD mandate were issued during the first Trump administration. It may be easier for regulators to drop or postpone pending regulations, such as a proposed requirement that trucks be equipped with speed limiters, than to rewrite existing rules such as the ELD mandate and HOS regulations. Many of the requests regarding those rules echo debates with prior administrations. Proposals that would mandate speed limiters were issued in 2016 under the Obama administration and then under the Biden White House in 2022. That last proposal remains active but has not advanced to a final rulemaking. The ELD mandate, implemented in late 2017, reshaped trucking, making it much more difficult to evade HOS limits. Many comments from truck drivers simply suggested some variant of ending the use of electronic logs and going back to paper logs. The request for information and the flood of responses are part of the Trump administration’s effort to identify and cut rules it considers unconstitutional, unlawful, unauthorized and unnecessarily burdensome. But respondents also called for new regulation that would help deter cargo crime and fraud. The National Association of Small Trucking Companies (NASTC) called for a permanent freight fraud enforcement task force with the DOT Office of the Inspector General. “This task force should be solely tasked with enforcing laws against fraud in transportation by investigating incidents and developing cases to bring to the Department of Justice,” the NASTC said in its comments. The organization also wants the Federal Motor Carrier Safety Administration to “diligently maintain” its National Consumer Complaint Database to fight fraud cases. Contact William B. Cassidy at bill.cassidy@spglobal.com .

Trucking News

Truckload

Surface

Truckers send Trump administration long list of rules to rewrite or kill

<div class="phx-topic abstract-wrapper">The US’ second-largest intermodal carrier has not yet felt the effects of US tariffs on China but notes the delay in impact between the ports and the rails could take a few weeks.</div>

The US’ second-largest intermodal carrier has not yet felt the effects of US tariffs on China but notes the delay in impact between the ports and the rails could take a few weeks.

<div class="phx-topic">Hub Group, the US’ second-largest intermodal carrier, is warning that a drop in domestic intermodal volumes linked to US tariffs on China could emerge on the West Coast between mid-May and the end of June. Approximately a quarter of Hub Group’s West Coast business is tied to US imports, and about 30% of that originates in China, the company said during its first-quarter earnings call Thursday evening. The intermodal carrier laid out three potential outcomes based on how shippers respond to the evolving trade environment. “At the high end of the range is a short West Coast slowdown of China imports and strong bounce back of demand in the West Coast leading to a surge of volume in the back half of the year,” Hub Group CEO Phil Yeager said on the call. “The low end of the range would be an extended slowdown in China imports or the weakening of consumer spending.” Yeager said the more likely occurrence is a middle-ground scenario in which intermodal volumes decline modestly in the second half of the year without peak season surcharges. Last year, some shippers faced <a href="https://www.joc.com/article/up-joins-peers-in-assessing-peak-season-surcharges-for-southern-california-5709819">peak surcharges</a> when they exceeded their contractual allotments out of Southern California. A year of flat rates Hub Group’s intermodal volume rose 8% year over year in the first quarter, but revenue per load dropped 12%. One likely reason for the revenue decline is that Hub Group has taken a more aggressive pricing position than competitor Schneider National, according to several shippers the Journal of Commerce has spoken with. Another factor is the mix of freight. While Hub Group’s local East Coast volume rose 13% year over year, its transcontinental freight originating on the West Coast declined 1%. Shorter hauls on the East Coast naturally generate less revenue per load than longer intermodal routes from Southern California to inland markets such as Atlanta, Chicago, Dallas, or Memphis. Hub Group said intermodal contract rates remained flat, echoing the data in the Journal of Commerce’s <a href="https://www.joc.com/resources/special-reports/intermodal-savings-index">Intermodal Savings Index</a>. Hub Group does not anticipate any changes through the end of the year. “In the initial onset of bid season, carriers were trying to push truckload rates up … what we’ve seen now in the second portion is more truckload competition [due to geopolitical trade tensions],” Yeager said. “In the second quarter, 38% of our business is getting bid out. I would say it’s been a little bit more aggressive, which is leading us to say we think flattish on pricing for the full year.” Yeager also said Hub Group does not plan to purchase additional containers in 2025; as much as 25% of the company’s containers are currently stacked and out of service. While the company does not disclose its total fleet size, independent estimates suggest Hub Group has idled about 10,000 containers nationwide. Those estimates come from Jason Hilsenbeck, the founder of drayage platform Loadmatch.com, which tracks domestic container fleet sizes across the US. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>.</div>

Hub Group, the US’ second-largest intermodal carrier, is warning that a drop in domestic intermodal volumes linked to US tariffs on China could emerge on the West Coast between mid-May and the end of June. Approximately a quarter of Hub Group’s West Coast business is tied to US imports, and about 30% of that originates in China, the company said during its first-quarter earnings call Thursday evening. The intermodal carrier laid out three potential outcomes based on how shippers respond to the evolving trade environment. “At the high end of the range is a short West Coast slowdown of China imports and strong bounce back of demand in the West Coast leading to a surge of volume in the back half of the year,” Hub Group CEO Phil Yeager said on the call. “The low end of the range would be an extended slowdown in China imports or the weakening of consumer spending.” Yeager said the more likely occurrence is a middle-ground scenario in which intermodal volumes decline modestly in the second half of the year without peak season surcharges. Last year, some shippers faced peak surcharges when they exceeded their contractual allotments out of Southern California. A year of flat rates Hub Group’s intermodal volume rose 8% year over year in the first quarter, but revenue per load dropped 12%. One likely reason for the revenue decline is that Hub Group has taken a more aggressive pricing position than competitor Schneider National, according to several shippers the Journal of Commerce has spoken with. Another factor is the mix of freight. While Hub Group’s local East Coast volume rose 13% year over year, its transcontinental freight originating on the West Coast declined 1%. Shorter hauls on the East Coast naturally generate less revenue per load than longer intermodal routes from Southern California to inland markets such as Atlanta, Chicago, Dallas, or Memphis. Hub Group said intermodal contract rates remained flat, echoing the data in the Journal of Commerce’s Intermodal Savings Index . Hub Group does not anticipate any changes through the end of the year. “In the initial onset of bid season, carriers were trying to push truckload rates up … what we’ve seen now in the second portion is more truckload competition [due to geopolitical trade tensions],” Yeager said. “In the second quarter, 38% of our business is getting bid out. I would say it’s been a little bit more aggressive, which is leading us to say we think flattish on pricing for the full year.” Yeager also said Hub Group does not plan to purchase additional containers in 2025; as much as 25% of the company’s containers are currently stacked and out of service. While the company does not disclose its total fleet size, independent estimates suggest Hub Group has idled about 10,000 containers nationwide. Those estimates come from Jason Hilsenbeck, the founder of drayage platform Loadmatch.com, which tracks domestic container fleet sizes across the US. Contact Ari Ashe at ari.ashe@spglobal.com .

North-American rail

Intermodal providers

Drop in USWC domestic intermodal volumes could come soon: Hub Group

<div class="phx-topic abstract-wrapper">The Trump administration’s tariff policy is yet another milestone that has shaken the US economy over the past 60 years, writes Ted Prince. </div>

The Trump administration’s tariff policy is yet another milestone that has shaken the US economy over the past 60 years, writes Ted Prince.

<div class="phx-topic">Since the announcement of reciprocal tariffs on so-called “Liberation Day” last month, we have been bombarded by conflicting predictions of the possible benefits and disasters that may befall our country, our economy and our industry. What I find interesting is that the history of the past 60 years seems to have been forgotten. While there are many important dates, I will focus on four. <h3>Yanqui go home! </h3>I would start in April 1965, when President Lyndon Johnson deployed the Marines and 82nd Airborne to the Dominican Republic to quell a civil war that broke out after a military junta. While the intervention was intended to protect US nationals, mission creep led to the deployment of over 22,000 American troops. While the invasion successfully reinstalled a conservative government, it increased distrust of the US. At the same time, companies such as Hewlett Packard were rolling out a continuous pipeline of electronic innovations. Their intention was to near-shore manufacturing in Latin America; however, the prevalence of “Yanqui Go Home!” made them look elsewhere. Japan and then the “Four Tigers” (Singapore, Hong Kong, Taiwan and South Korea) became the factory sites instead. The Vietnam War had become the first containerized war, and plentiful equipment was available to load back to the US. While electronics required factories, much of the manufacturing was cottage industries. For example, importers of blue jeans were buying from hundreds of small vendors. Ocean carrier consolidators would send pickup trucks into the New Territories to pick up loose articles of clothing (some which no doubt had been made in China) for consolidation at their facilities adjacent to the Kwai Tsing container terminals. <h3>Voluntary restraint </h3>In May 1981, with the American auto industry mired in recession, Japanese car makers agreed to “voluntary export restraint,” which limited exports of passenger cars to the US. However, at the same time, they implemented a strategy of “transplants,” whereby cars were assembled in the US. Some might consider this an example of “reshoring;” however, it is not that simple. Initially, the plants were built in Japan, then disassembled, shipped to the US, and reassembled. Most of the parts (CKD: cars knocked down) came from Japan, so actual US content — other than labor — was minimal. Over time, suppliers proliferated along Interstates 65 and 75 to support these plants. However, many of these were also Japanese transplants. Some were joint ventures with US partners, but many were just US subsidiaries of Japanese manufacturers. Barry Bluestone and Bennett Harrison described this phenomenon in their 1982 work, “The Deindustrialization of America: Plant Closings, Community Abandonment, and the Dismantling of Basic Industry.” They pointed out the irony that the Japanese were successfully investing in US industrial sectors that scarcely a decade ago were said to be declining, uncompetitive, and suffering from deindustrialization. <h3>The Plaza Accord </h3>The Plaza Accord in September 1985 effectively devalued the dollar against other major currencies. Initially, the US trade deficit worsened, as imports rose in price with a devalued dollar. However, the devaluation made US exports cheaper for its trading partners to purchase, which grew the market in goods and services — which are unaccounted for in the current administration’s calculation. <h3>China and the WTO </h3>Finally, in 2001, China joined the World Trade Organization (WTO). What followed was a massive dislocation in trade as China built world-class factories and world-class ports to ship goods throughout the world. Some of those factories have since relocated to nations with cheaper labor. However, a whole ecosystem of suppliers has grown up that supports the manufacturing and assembly of sophisticated products. China’s development took over 30 years. It was no shortcut. It was also the result of extensive industrial policy similar to what Japan and the Four Tigers had done previously. Most importantly, these policies did not deviate for decades and supported a long-term strategy whereby investment could be made with confidence. Our current politics are such that it is impossible to invest in today’s doctrine because it may no longer be applicable by the time the factory opens in three to eight years. In the past 30 years, trade has increased dramatically as a share of gross domestic product (GDP). However, while most economists believe that this has been good for the economy, the general public’s outlook is less sanguine. In large part, this is because trade’s impacts can vary widely: localized changes in jobs (both gains and losses) and reduced prices of goods and services. Freight is inextricably linked to trade. It has transformed our industry. We will no doubt have a ringside seat to the policy that is evolving. Contact Ted Prince at <a href="mailto:ted@tricitiesintermodal.com">ted@tricitiesintermodal.com</a>. </div>

Since the announcement of reciprocal tariffs on so-called “Liberation Day” last month, we have been bombarded by conflicting predictions of the possible benefits and disasters that may befall our country, our economy and our industry. What I find interesting is that the history of the past 60 years seems to have been forgotten. While there are many important dates, I will focus on four. Yanqui go home! I would start in April 1965, when President Lyndon Johnson deployed the Marines and 82nd Airborne to the Dominican Republic to quell a civil war that broke out after a military junta. While the intervention was intended to protect US nationals, mission creep led to the deployment of over 22,000 American troops. While the invasion successfully reinstalled a conservative government, it increased distrust of the US. At the same time, companies such as Hewlett Packard were rolling out a continuous pipeline of electronic innovations. Their intention was to near-shore manufacturing in Latin America; however, the prevalence of “Yanqui Go Home!” made them look elsewhere. Japan and then the “Four Tigers” (Singapore, Hong Kong, Taiwan and South Korea) became the factory sites instead. The Vietnam War had become the first containerized war, and plentiful equipment was available to load back to the US. While electronics required factories, much of the manufacturing was cottage industries. For example, importers of blue jeans were buying from hundreds of small vendors. Ocean carrier consolidators would send pickup trucks into the New Territories to pick up loose articles of clothing (some which no doubt had been made in China) for consolidation at their facilities adjacent to the Kwai Tsing container terminals. Voluntary restraint In May 1981, with the American auto industry mired in recession, Japanese car makers agreed to “voluntary export restraint,” which limited exports of passenger cars to the US. However, at the same time, they implemented a strategy of “transplants,” whereby cars were assembled in the US. Some might consider this an example of “reshoring;” however, it is not that simple. Initially, the plants were built in Japan, then disassembled, shipped to the US, and reassembled. Most of the parts (CKD: cars knocked down) came from Japan, so actual US content — other than labor — was minimal. Over time, suppliers proliferated along Interstates 65 and 75 to support these plants. However, many of these were also Japanese transplants. Some were joint ventures with US partners, but many were just US subsidiaries of Japanese manufacturers. Barry Bluestone and Bennett Harrison described this phenomenon in their 1982 work, “The Deindustrialization of America: Plant Closings, Community Abandonment, and the Dismantling of Basic Industry.” They pointed out the irony that the Japanese were successfully investing in US industrial sectors that scarcely a decade ago were said to be declining, uncompetitive, and suffering from deindustrialization. The Plaza Accord The Plaza Accord in September 1985 effectively devalued the dollar against other major currencies. Initially, the US trade deficit worsened, as imports rose in price with a devalued dollar. However, the devaluation made US exports cheaper for its trading partners to purchase, which grew the market in goods and services — which are unaccounted for in the current administration’s calculation. China and the WTO Finally, in 2001, China joined the World Trade Organization (WTO). What followed was a massive dislocation in trade as China built world-class factories and world-class ports to ship goods throughout the world. Some of those factories have since relocated to nations with cheaper labor. However, a whole ecosystem of suppliers has grown up that supports the manufacturing and assembly of sophisticated products. China’s development took over 30 years. It was no shortcut. It was also the result of extensive industrial policy similar to what Japan and the Four Tigers had done previously. Most importantly, these policies did not deviate for decades and supported a long-term strategy whereby investment could be made with confidence. Our current politics are such that it is impossible to invest in today’s doctrine because it may no longer be applicable by the time the factory opens in three to eight years. In the past 30 years, trade has increased dramatically as a share of gross domestic product (GDP). However, while most economists believe that this has been good for the economy, the general public’s outlook is less sanguine. In large part, this is because trade’s impacts can vary widely: localized changes in jobs (both gains and losses) and reduced prices of goods and services. Freight is inextricably linked to trade. It has transformed our industry. We will no doubt have a ringside seat to the policy that is evolving. Contact Ted Prince at ted@tricitiesintermodal.com .

A history lesson while we watch current US trade policy unfold

<div class="phx-topic abstract-wrapper">The new global trade environment has significantly increased supply chain challenges, notably the arbitrary nature of the implementation of US tariffs.</div>

The new global trade environment has significantly increased supply chain challenges, notably the arbitrary nature of the implementation of US tariffs.

<div class="phx-topic">This commentary is not specifically about tariffs, or about capacity shortages or surpluses or what to expect if your shipment happens to be transferred to a Chinese vessel or service — whatever that means today. Instead, it considers a related question: How do supply chain practitioners balance demand and supply planning in the current environment of uncertainty? To start, let’s assume you are a medium-size importer into the US from any Asian country subject to tariffs nominally above 20%. At this stage, you have called on the more recent lessons from the first term of Donald Trump and from the COVID-19 pandemic. These will include, but are not limited to, some form of cost-sharing of the increase, somewhere between you absorbing it all to the supplier wearing the whole lot. If you are buying in US dollars, then your supplier is already suffering and will have less room to maneuver. To counter this, a temporary option could be to switch to buying in your supplier’s local currency. This will have some appeal to your supplier as they are possibly overweight in the dollar and have actual costs in local currency. A lot will depend on your view of the trajectory of the dollar. However, two notes of caution: You will still have transaction costs when converting from the US dollar to the local currency, and depending on the country you source from, you may face capital controls if you need to get money back. Furthermore, changing back and forth in currencies has administrative risks with potential payment delays and errors. No doubt there will be a suggestion of suppliers providing lower-than-correct value invoices and some form of offline reconciliation. But doing the right thing in the face of malevolence has its longer-term reward. And besides, the penalties do not merit the risk. <h3>‘Roulette game’ </h3>You will have reduced your destination-side inventory to the degree of ensuring safety stocks. If you managed to get ahead of the tariff increases, you will be sitting on volume that requires warehousing. But as you have avoided tariffs to some degree, this will maintain your competitiveness — despite the increased warehousing and inventory working capital cost — assuming your competitors source from outside the US However, the new environment has significantly increased challenges. First, the rate at which tariff levels are changing makes supply planning a roulette game. This is primarily due to the arbitrary nature of their implementation, unlike previous changes that gave some degree of leeway for orders already in process and/or on the water. Equally challenging is the rollercoaster nature of the degree of tariff moves both up and down. Finally, the tactical response <a href="https://www.joc.com/article/scaled-back-ustr-port-tariff-to-hit-chinese-carriers-hardest-5987549">to avoid Chinese-built, -owned, and -operated ships</a> will be a nightmare for all logisticians. This is particularly important because carrier and vessel choice is largely transactional at an operational level based on guidance from sourcing, so the likelihood of an error costing thousands is high. Where does that leave beneficial cargo owners (BCOs) in deciding which tactics to adopt? Frankly, for the foreseeable future, you will need to choose your poison. The somewhat binary options of manufacturing and storing at origin have appeal, particularly if the <a href="https://www.joc.com/article/air-cargo-volumes-fall-on-trans-pacific-as-us-de-minimis-changes-loom-5993599">removal of de minimis</a> has a projected impact of freeing up air freight space, allowing cheaper (but not cheap) delivery for urgent orders. Alternatively, having the right stocks in place at the right time will do much for customer relations and, intuitively, result in less likelihood of discounting. The downside will be increased costs that will depend on the cost of the tariff versus your sale price. This will mean you either absorb the increase, thus reducing margins and profitability, or try to pass it on to consumers. The final kicker to this issue is consumer demand. With quite consistent indicators from many sources — Goldman Sachs, the International Monetary Fund, the University of Michigan and others— indicating at best a slowdown in all economies, the likelihood of stagflation emerging in the US, or at best/worst the return of inflation, is actually your greatest risk. Because if consumers truly defer consumption expecting lower prices through price reduction and/or discounting to stimulate demand (stagflation), or cannot afford to spend or increase credit card debt (inflation), then these two factors will cause greater headaches than your deliberations on supply planning. John McCauley, formerly a long-standing vice president of transportation and logistics at Cargill, now consults for shippers. Contact him at <a href="mailto:john-mccauley1@outlook.com">john-mccauley1@outlook.com</a>.</div>

This commentary is not specifically about tariffs, or about capacity shortages or surpluses or what to expect if your shipment happens to be transferred to a Chinese vessel or service — whatever that means today. Instead, it considers a related question: How do supply chain practitioners balance demand and supply planning in the current environment of uncertainty? To start, let’s assume you are a medium-size importer into the US from any Asian country subject to tariffs nominally above 20%. At this stage, you have called on the more recent lessons from the first term of Donald Trump and from the COVID-19 pandemic. These will include, but are not limited to, some form of cost-sharing of the increase, somewhere between you absorbing it all to the supplier wearing the whole lot. If you are buying in US dollars, then your supplier is already suffering and will have less room to maneuver. To counter this, a temporary option could be to switch to buying in your supplier’s local currency. This will have some appeal to your supplier as they are possibly overweight in the dollar and have actual costs in local currency. A lot will depend on your view of the trajectory of the dollar. However, two notes of caution: You will still have transaction costs when converting from the US dollar to the local currency, and depending on the country you source from, you may face capital controls if you need to get money back. Furthermore, changing back and forth in currencies has administrative risks with potential payment delays and errors. No doubt there will be a suggestion of suppliers providing lower-than-correct value invoices and some form of offline reconciliation. But doing the right thing in the face of malevolence has its longer-term reward. And besides, the penalties do not merit the risk. ‘Roulette game’ You will have reduced your destination-side inventory to the degree of ensuring safety stocks. If you managed to get ahead of the tariff increases, you will be sitting on volume that requires warehousing. But as you have avoided tariffs to some degree, this will maintain your competitiveness — despite the increased warehousing and inventory working capital cost — assuming your competitors source from outside the US However, the new environment has significantly increased challenges. First, the rate at which tariff levels are changing makes supply planning a roulette game. This is primarily due to the arbitrary nature of their implementation, unlike previous changes that gave some degree of leeway for orders already in process and/or on the water. Equally challenging is the rollercoaster nature of the degree of tariff moves both up and down. Finally, the tactical response to avoid Chinese-built, -owned, and -operated ships will be a nightmare for all logisticians. This is particularly important because carrier and vessel choice is largely transactional at an operational level based on guidance from sourcing, so the likelihood of an error costing thousands is high. Where does that leave beneficial cargo owners (BCOs) in deciding which tactics to adopt? Frankly, for the foreseeable future, you will need to choose your poison. The somewhat binary options of manufacturing and storing at origin have appeal, particularly if the removal of de minimis has a projected impact of freeing up air freight space, allowing cheaper (but not cheap) delivery for urgent orders. Alternatively, having the right stocks in place at the right time will do much for customer relations and, intuitively, result in less likelihood of discounting. The downside will be increased costs that will depend on the cost of the tariff versus your sale price. This will mean you either absorb the increase, thus reducing margins and profitability, or try to pass it on to consumers. The final kicker to this issue is consumer demand. With quite consistent indicators from many sources — Goldman Sachs, the International Monetary Fund, the University of Michigan and others— indicating at best a slowdown in all economies, the likelihood of stagflation emerging in the US, or at best/worst the return of inflation, is actually your greatest risk. Because if consumers truly defer consumption expecting lower prices through price reduction and/or discounting to stimulate demand (stagflation), or cannot afford to spend or increase credit card debt (inflation), then these two factors will cause greater headaches than your deliberations on supply planning. John McCauley, formerly a long-standing vice president of transportation and logistics at Cargill, now consults for shippers. Contact him at john-mccauley1@outlook.com .

Navigating the current supply chain is a matter of choosing your poison

S&P Global Platts editors engaging with market participants to assess the current value of freight-all-kinds (FAK) rates on major container trades produce container spot rates. The rates include bunker adjustment factors, general rate increases and emergency rare restoration. They also include low-sulfur fuel, equipment imbalance and repositioning surcharges. The rates exclude terminal handling, port security, overweight container, delivery, and detention and demurrage charges. [Platts](https://www.spglobal.com/commodityinsights)

Southeast Asia to US West and East Coast container spot rates (Platts)

Southeast Asia to US East and West Coasts Weekly Gateway

<div class="phx-topic abstract-wrapper">Importers in the US are rewiring their supply chains and drawing extra inventory from Canada, Mexico and domestically in a “wait and see” response to the trans-Pacific trade war, according to Vincent Clerc.</div>

Importers in the US are rewiring their supply chains and drawing extra inventory from Canada, Mexico and domestically in a “wait and see” response to the trans-Pacific trade war, according to Vincent Clerc.

<div class="phx-topic">US retailers are in a race to find inventory from alternative sources to China, with Maersk CEO Vincent Clerc warning Thursday they may have until summer to fill stocks or risk seeing shortages “across the board.” Volume from China to the US has fallen 30% to 40% since the Trump administration’s imposition of 145% tariffs on most Chinese imports on April 9, Clerc told analysts on the carrier’s first-quarter earnings call. “Everybody is rewiring their supply chains and looking at bringing in extra inventory based on the SKUs [stock keeping units] that they’re most concerned with,” Clerc said, as shippers waited to see whether there would be any easing of tariffs on China. “Right now, the race is about trying to get your hands on as much inventory as possible,” he added. “They’re drawing on the inventories they have in Canada. They’re drawing on inventories they have in Mexico, and on distributors and other vendors inside the US to see how long they can hoard those goods.” Clerc said in the industrials and automotive sectors, and in commodities such as rare earth and semiconductors, the import decline was “going to bite soon.” “There are certain commodities where you can’t substitute imports freely, both in terms of SKUs but also in terms of quantities, because the capacity there was in China is not readily available elsewhere to support the US market,” he said. While empty shelves in big box retailers in the US were not “right around the corner,” Clerc said if inventory could not be found before the summer “it’s going to start to hurt quite a lot across the board.” Maersk is not as exposed as other carriers to the trans-Pacific disruption. The dramatic drop in US imports from China had little effect on its first-quarter result, with China-US trade comprising only 5% of the carrier’s total volume. Maersk reported a strong start to the year with revenue in the first quarter rising 7.8% year over year to $13.3 billion and earnings before interest, taxes, depreciation and amortization (EBITDA) up 70% at $2.7 billion. Earnings before interest and taxes (EBIT) of $1.25 billion were six times higher than the year-ago period, as was a net profit of $1.2 billion. The carrier’s volume in the first quarter grew just 0.1% year over year at 2.9 million FEUs, but it was a decline of 6.5% compared with the last quarter of 2024. Its average rates followed a similar trajectory, rising 2.5% year over year to $2,427 per FEU but down 8.7% quarter over quarter. <h3>Geopolitics drags down global volume forecast </h3>Maersk left its full-year EBIT forecast of zero to $3 billion unchanged. But the increasing macroeconomic and geopolitical uncertainty saw the carrier leave open the possibility of negative growth in global container volumes, revising its forecast to a range between -1% and 4%. Its previous forecast was for 4% market growth in volumes. Clerc explained the reasoning behind the revised volume growth, saying the supply-side risks from new tonnage being delivered combined with a return to Red Sea transits have faded this year. Although significant amounts of capacity were still entering the market, there was little chance of carriers returning to the Red Sea this year despite <a href="https://www.joc.com/article/apparent-houthi-ceasefire-raises-container-shipping-overcapacity-risk-5999930">an apparent ceasefire with the Houthis announced earlier this week</a> by US President Donald Trump. On the demand side, Clerc pointed to the erratic nature of the US tariffs that were creating new levels of uncertainty. “For me, 145% tariffs on China were not really in the base case that we had ... and some of these other tariffs that have been set on pause for 90 days were also higher than what most people expected,” he said. The Trump administration a month ago announced a 90-day pause for countries open to negotiations, leaving a 10% across-the-board baseline tariff in place during the negotiating period. Some positive trade momentum has begun to emerge. The White House announced a trade deal between the US and the UK Thursday, although no details were provided, and representatives from the US and China are set to meet for trade talks in Switzerland this weekend. “If this resolves itself quickly with a lot of trade deals within the 90 days, and maybe a de-escalation with China, you will see the demand side bounce back to somewhere around 4% for the year,” Clerc said. But if the tariffs became entrenched, it would lead to lower global demand and increase the risk of recession in the US, he added. “Because ultimately, given the lack of alternatives to China, both in terms of scale and breadth, this will have to be passed on to consumers,” Clerc said. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

US retailers are in a race to find inventory from alternative sources to China, with Maersk CEO Vincent Clerc warning Thursday they may have until summer to fill stocks or risk seeing shortages “across the board.” Volume from China to the US has fallen 30% to 40% since the Trump administration’s imposition of 145% tariffs on most Chinese imports on April 9, Clerc told analysts on the carrier’s first-quarter earnings call. “Everybody is rewiring their supply chains and looking at bringing in extra inventory based on the SKUs [stock keeping units] that they’re most concerned with,” Clerc said, as shippers waited to see whether there would be any easing of tariffs on China. “Right now, the race is about trying to get your hands on as much inventory as possible,” he added. “They’re drawing on the inventories they have in Canada. They’re drawing on inventories they have in Mexico, and on distributors and other vendors inside the US to see how long they can hoard those goods.” Clerc said in the industrials and automotive sectors, and in commodities such as rare earth and semiconductors, the import decline was “going to bite soon.” “There are certain commodities where you can’t substitute imports freely, both in terms of SKUs but also in terms of quantities, because the capacity there was in China is not readily available elsewhere to support the US market,” he said. While empty shelves in big box retailers in the US were not “right around the corner,” Clerc said if inventory could not be found before the summer “it’s going to start to hurt quite a lot across the board.” Maersk is not as exposed as other carriers to the trans-Pacific disruption. The dramatic drop in US imports from China had little effect on its first-quarter result, with China-US trade comprising only 5% of the carrier’s total volume. Maersk reported a strong start to the year with revenue in the first quarter rising 7.8% year over year to $13.3 billion and earnings before interest, taxes, depreciation and amortization (EBITDA) up 70% at $2.7 billion. Earnings before interest and taxes (EBIT) of $1.25 billion were six times higher than the year-ago period, as was a net profit of $1.2 billion. The carrier’s volume in the first quarter grew just 0.1% year over year at 2.9 million FEUs, but it was a decline of 6.5% compared with the last quarter of 2024. Its average rates followed a similar trajectory, rising 2.5% year over year to $2,427 per FEU but down 8.7% quarter over quarter. Geopolitics drags down global volume forecast Maersk left its full-year EBIT forecast of zero to $3 billion unchanged. But the increasing macroeconomic and geopolitical uncertainty saw the carrier leave open the possibility of negative growth in global container volumes, revising its forecast to a range between -1% and 4%. Its previous forecast was for 4% market growth in volumes. Clerc explained the reasoning behind the revised volume growth, saying the supply-side risks from new tonnage being delivered combined with a return to Red Sea transits have faded this year. Although significant amounts of capacity were still entering the market, there was little chance of carriers returning to the Red Sea this year despite an apparent ceasefire with the Houthis announced earlier this week by US President Donald Trump. On the demand side, Clerc pointed to the erratic nature of the US tariffs that were creating new levels of uncertainty. “For me, 145% tariffs on China were not really in the base case that we had ... and some of these other tariffs that have been set on pause for 90 days were also higher than what most people expected,” he said. The Trump administration a month ago announced a 90-day pause for countries open to negotiations, leaving a 10% across-the-board baseline tariff in place during the negotiating period. Some positive trade momentum has begun to emerge. The White House announced a trade deal between the US and the UK Thursday, although no details were provided, and representatives from the US and China are set to meet for trade talks in Switzerland this weekend. “If this resolves itself quickly with a lot of trade deals within the 90 days, and maybe a de-escalation with China, you will see the demand side bounce back to somewhere around 4% for the year,” Clerc said. But if the tariffs became entrenched, it would lead to lower global demand and increase the risk of recession in the US, he added. “Because ultimately, given the lack of alternatives to China, both in terms of scale and breadth, this will have to be passed on to consumers,” Clerc said. Contact Greg Knowler at greg.knowler@spglobal.com .

Container lines

Trans-Pacific

US in race to replenish China stocks to avoid summer shortages: Maersk CEO

<div class="phx-topic abstract-wrapper">The world’s largest shipping company said Wednesday the service suspensions and network changes were “in response to the recent changes in demand for cargo transport from Asia to the US.”</div>

The world’s largest shipping company said Wednesday the service suspensions and network changes were “in response to the recent changes in demand for cargo transport from Asia to the US.”

<div class="phx-topic">Mediterranean Shipping Co. has halted two services from China to the US and revamped other container services to the East and Gulf coasts as the Trump administration’s tariffs against Beijing continue to weaken freight demand. The world’s largest shipping company said in an advisory Wednesday the service suspensions and network changes were “in response to the recent changes in demand for cargo transport from Asia to the US.” Following the Trump administration’s imposition of 145% tariffs on most Chinese imports, ocean carriers reported seeing container volumes drop by one-third. Hapag-Lloyd and US-based Matson both said volumes out of China dropped 30% after April 9 when the new China tariffs went into effect. The affected MSC services are all part of <a href="https://www.joc.com/article/network-realignment-shines-light-on-hub-focused-product-vs-direct-calls-5783930">the carrier’s 2025 network following the dissolution of the 2M Alliance with Maersk</a>. In place of Maersk, <a href="https://www.joc.com/article/zim-msc-ink-cooperation-deal-on-services-linking-asia-europe-and-med-5223119">Zim Integrated Shipping Services has signed on to share vessel space and charter slots</a> on some of MSC’s Asia-US routes. The suspensions include the Empire service, which calls three of China’s largest ports and the East Coast ports of New York and New Jersey, Norfolk and Baltimore. The service provided 11,500 TEUs in weekly capacity, according to a report from Hong Kong-based logistics provider Honour Lane Shipping.MSC will also suspend the Pelican service from the Chinese ports of Xiamen and Yantian, along with Vietnam’s Vung Tau and South Korea’s Busan, and calling the Gulf Coast ports of Houston, Mobile and Tampa. Honour Lane said the Pelican service provides weekly capacity ranging between 6,500 and 8,500 TEUs. <h3>Boost SE Asia coverage</h3>The two service suspensions coincide with other interim changes by MSC taking effect this week on four other services that will increase port coverage of Southeast Asia and fill in coverage gaps. The America service from Asia to the US East Coast will stop calling China’s Yantian port, MSC said, while adding a westbound call at Vietnam’s Haiphong port and an eastbound call at the Port of Colombo in Sri Lanka. The service will also add East Coast calls at the ports of Savannah and Jacksonville, while dropping a call to Norfolk. The Amberjack service from China to the US Southeast will drop a call at China’s Nansha port but keep calling other major Chinese ports. Likewise, the Amberjack’s US rotation will now make its first two calls at the ports of New York-New Jersey and Baltimore and drop service to the Port of Wilmington, North Carolina. MSC’s Emerald service will add an outbound call at Taiwan’s Kaohsiung port. The service’s US leg will stop calling Jacksonville and Baltimore but add calls to Norfolk and Boston. The Lone Star service from Asia to the Gulf Coast will add a call at China’s Yantian port, along with adding calls to Singapore and Vung Tau. The service’s US rotation will drop a call at the Port of New Orleans. The MSC suspensions, among the first big ones to hit the East and Gulf coasts, follow similar steps for West Coast services that are also heavily exposed to Chinese freight. Alphaliner reported Tuesday that MSC also suspended its Orient service to Long Beach, while OOCL suspended its Pacific South China Express service to Long Beach.Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

Mediterranean Shipping Co. has halted two services from China to the US and revamped other container services to the East and Gulf coasts as the Trump administration’s tariffs against Beijing continue to weaken freight demand. The world’s largest shipping company said in an advisory Wednesday the service suspensions and network changes were “in response to the recent changes in demand for cargo transport from Asia to the US.” Following the Trump administration’s imposition of 145% tariffs on most Chinese imports, ocean carriers reported seeing container volumes drop by one-third. Hapag-Lloyd and US-based Matson both said volumes out of China dropped 30% after April 9 when the new China tariffs went into effect. The affected MSC services are all part of the carrier’s 2025 network following the dissolution of the 2M Alliance with Maersk . In place of Maersk, Zim Integrated Shipping Services has signed on to share vessel space and charter slots on some of MSC’s Asia-US routes. The suspensions include the Empire service, which calls three of China’s largest ports and the East Coast ports of New York and New Jersey, Norfolk and Baltimore. The service provided 11,500 TEUs in weekly capacity, according to a report from Hong Kong-based logistics provider Honour Lane Shipping. MSC will also suspend the Pelican service from the Chinese ports of Xiamen and Yantian, along with Vietnam’s Vung Tau and South Korea’s Busan, and calling the Gulf Coast ports of Houston, Mobile and Tampa. Honour Lane said the Pelican service provides weekly capacity ranging between 6,500 and 8,500 TEUs. Boost SE Asia coverage The two service suspensions coincide with other interim changes by MSC taking effect this week on four other services that will increase port coverage of Southeast Asia and fill in coverage gaps. The America service from Asia to the US East Coast will stop calling China’s Yantian port, MSC said, while adding a westbound call at Vietnam’s Haiphong port and an eastbound call at the Port of Colombo in Sri Lanka. The service will also add East Coast calls at the ports of Savannah and Jacksonville, while dropping a call to Norfolk. The Amberjack service from China to the US Southeast will drop a call at China’s Nansha port but keep calling other major Chinese ports. Likewise, the Amberjack’s US rotation will now make its first two calls at the ports of New York-New Jersey and Baltimore and drop service to the Port of Wilmington, North Carolina. MSC’s Emerald service will add an outbound call at Taiwan’s Kaohsiung port. The service’s US leg will stop calling Jacksonville and Baltimore but add calls to Norfolk and Boston. The Lone Star service from Asia to the Gulf Coast will add a call at China’s Yantian port, along with adding calls to Singapore and Vung Tau. The service’s US rotation will drop a call at the Port of New Orleans. The MSC suspensions, among the first big ones to hit the East and Gulf coasts, follow similar steps for West Coast services that are also heavily exposed to Chinese freight. Alphaliner reported Tuesday that MSC also suspended its Orient service to Long Beach, while OOCL suspended its Pacific South China Express service to Long Beach. Contact Michael Angell at michael.angell@spglobal.com .

North American ports

MSC suspends two US services, rejigs others as tariffs hit Chinese imports

<div class="phx-topic abstract-wrapper">A slip in a key sentiment index reveals the MPV sector’s vulnerability to general market uncertainty, but operators remain optimistic that the cargo pipeline is still robust. </div>

A slip in a key sentiment index reveals the MPV sector’s vulnerability to general market uncertainty, but operators remain optimistic that the cargo pipeline is still robust.

<div class="phx-topic">A sense of unease has settled over the project cargo sector as softening multipurpose freight rates and a climate of near-term market uncertainty prevail, stakeholders say. The benchmark indicator for the multipurpose vessel (MPV) sector, the One World Shipbrokers’ Market Sentiment Index (MSI) that was published Tuesday, reflects the headwinds facing the industry, dropping from 54.3 in the previous edition to 53.3 points. Still, the figure remains above the crucial 50-point mark, which delineates generally positive versus negative sentiment. Friday &amp; Co shipbroker Justin Archard, creator of the One World Shipbrokers’ MSI, noted that at the time of polling for the latest index, the announcement of a highly punitive US tariff regime had just been made, followed quickly by a moratorium on many of those tariffs after significant convulsions in equity and bond markets. Archard said that “nothing stops investment and growth like uncertainty and much of the business world is now sitting on its hands waiting for the situation to play out.” <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="f0797b66-fe22-4f8b-aeed-cca72e834834"></dynamic-object></div>Operators are observing that shipping committed cargo remains a priority, while shipments that can be delayed are being postponed. Michael Morland, project cargo director for the Atlantic at G2 Ocean, told the Journal of Commerce that new projects are facing difficulties in obtaining final investment decisions due to the shifting economic climate, particularly for industrial projects and commodities. Morland added that doubts about future project cargo volumes are “increasing risk and making importers hesitant.” Felix Schoeller, director at AAL Shipping, told the Journal of Commerce that “many stakeholders are adopting a wait-and-see approach to current investment decisions … any shift in trade patterns will take time to materialize — if at all.” Schoeller expects the current situation to calm in the coming months, providing a clearer picture of policies and tariffs, which will allow for a better assessment of market development. Lars Bonnesen, managing director of Germany’s United Heavy Lift (UHL), described the current market as “a bit of a rollercoaster, and it’s quite difficult to prepare for the future with any certainty.” Data from Esgian, the Norwegian shipbroker and maritime consultancy, showed UHL and G2 Ocean were among the MPV operators heavily focused on the US market. Some 68% of UHL’s ocean sailings last year were on US trade lanes, while for G2 Ocean, 51% of sailings were between the US and the East Coast of South America, according to an Esgian analysis of route data from last year published in its February market report. <h3>Underlying fundamentals still strong </h3>Despite the pervasive uncertainty, the MPV fleet remains largely fully employed, with both freight and time charter levels at healthy and sustainable levels. While the sale and purchase market for MPVs is currently experiencing difficulties due to valuation gaps between buyers and sellers, quality tonnage is achieving strong rates on the commercial charter market, offering owners a viable alternative to selling. Looking ahead, MPV operators and owners still anticipate the MSI to be higher in a year’s time, although confidence in the future market environment has waned over the last three MSI editions. Bonnesen mirrored the confidence about longer-term prospects. “I’m not overly concerned about the current situation,” he said. “All in all, I feel quite confident. On top of that, our order books are pretty full for the next three to four years.” A notable MSI development highlighted by Archard is the unprecedented convergence of regional sentiment. Sentiment in the Americas is described as being in “relative freefall,” while Asian carriers maintain a more positive longer-term outlook. The One World Shipbrokers’ Market Sentiment Index (MSI) averages the responses from an anonymous group of 20 to 30 MPV owners and operators to a set of breakbulk shipping-related questions. A reading of 50 is neutral, indicating a static market, while scores below 50 show pessimism or wariness and scores above 50 indicate optimism. Contact Carly Fields at <a href="mailto:carly.fields@spglobal.com">carly.fields@spglobal.com</a>. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>.</div>

A sense of unease has settled over the project cargo sector as softening multipurpose freight rates and a climate of near-term market uncertainty prevail, stakeholders say. The benchmark indicator for the multipurpose vessel (MPV) sector, the One World Shipbrokers’ Market Sentiment Index (MSI) that was published Tuesday, reflects the headwinds facing the industry, dropping from 54.3 in the previous edition to 53.3 points. Still, the figure remains above the crucial 50-point mark, which delineates generally positive versus negative sentiment. Friday & Co shipbroker Justin Archard, creator of the One World Shipbrokers’ MSI, noted that at the time of polling for the latest index, the announcement of a highly punitive US tariff regime had just been made, followed quickly by a moratorium on many of those tariffs after significant convulsions in equity and bond markets. Archard said that “nothing stops investment and growth like uncertainty and much of the business world is now sitting on its hands waiting for the situation to play out.” Operators are observing that shipping committed cargo remains a priority, while shipments that can be delayed are being postponed. Michael Morland, project cargo director for the Atlantic at G2 Ocean, told the Journal of Commerce that new projects are facing difficulties in obtaining final investment decisions due to the shifting economic climate, particularly for industrial projects and commodities. Morland added that doubts about future project cargo volumes are “increasing risk and making importers hesitant.” Felix Schoeller, director at AAL Shipping, told the Journal of Commerce that “many stakeholders are adopting a wait-and-see approach to current investment decisions … any shift in trade patterns will take time to materialize — if at all.” Schoeller expects the current situation to calm in the coming months, providing a clearer picture of policies and tariffs, which will allow for a better assessment of market development. Lars Bonnesen, managing director of Germany’s United Heavy Lift (UHL), described the current market as “a bit of a rollercoaster, and it’s quite difficult to prepare for the future with any certainty.” Data from Esgian, the Norwegian shipbroker and maritime consultancy, showed UHL and G2 Ocean were among the MPV operators heavily focused on the US market. Some 68% of UHL’s ocean sailings last year were on US trade lanes, while for G2 Ocean, 51% of sailings were between the US and the East Coast of South America, according to an Esgian analysis of route data from last year published in its February market report. Underlying fundamentals still strong Despite the pervasive uncertainty, the MPV fleet remains largely fully employed, with both freight and time charter levels at healthy and sustainable levels. While the sale and purchase market for MPVs is currently experiencing difficulties due to valuation gaps between buyers and sellers, quality tonnage is achieving strong rates on the commercial charter market, offering owners a viable alternative to selling. Looking ahead, MPV operators and owners still anticipate the MSI to be higher in a year’s time, although confidence in the future market environment has waned over the last three MSI editions. Bonnesen mirrored the confidence about longer-term prospects. “I’m not overly concerned about the current situation,” he said. “All in all, I feel quite confident. On top of that, our order books are pretty full for the next three to four years.” A notable MSI development highlighted by Archard is the unprecedented convergence of regional sentiment. Sentiment in the Americas is described as being in “relative freefall,” while Asian carriers maintain a more positive longer-term outlook. The One World Shipbrokers’ Market Sentiment Index (MSI) averages the responses from an anonymous group of 20 to 30 MPV owners and operators to a set of breakbulk shipping-related questions. A reading of 50 is neutral, indicating a static market, while scores below 50 show pessimism or wariness and scores above 50 indicate optimism. Contact Carly Fields at carly.fields@spglobal.com . Contact Keith Wallis at keithwallis@hotmail.com .

Breakbulk carriers

Heavy-haul transport

Project cargo

Market ‘unease’ catches up with MPVs amid tariffs, economic uncertainty

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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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An in-depth analysis of transport trends in the multipurpose and heavy-lift fleet segment

Breakbulk Report - Rectangle Box

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<div class="phx-topic abstract-wrapper">With a “reintroduced” ground freight shipping option, UPS hopes to tempt LTL shippers seeking alternatives to LTL rates that are up 12% on average from mid-2023. </div>

With a “reintroduced” ground freight shipping option, UPS hopes to tempt LTL shippers seeking alternatives to LTL rates that are up 12% on average from mid-2023.

<div class="phx-topic">UPS no longer owns a less-than-truckload (LTL) subsidiary, but that doesn’t mean it’s lost all interest in LTL freight. The largest US package carrier has “reintroduced” UPS Ground with Freight Pricing, a service option that targets shipments weighing more than 150 pounds typically hauled by LTL carriers as part of a palletized shipment. “This positions us to be the only small package carrier that offers parcel-like pricing for less-than-truckload shipments, which is a true differentiator,” Carol B. Tomé, UPS CEO, said in a first-quarter earnings call last Tuesday. UPS’ major small package competitor, FedEx, owns its own LTL carrier, although it plans to spin off FedEx Freight in 2026. The service is being revived by UPS at a time when LTL shipping costs are rising, with the US long-distance LTL producer price index (PPI) up 5.5% year over year in March and 6% on average in the first quarter. Overall, the selling prices the PPI represents have climbed 12.1% since Yellow, once one of the largest LTL carriers, collapsed in July 2023. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="397d0614-9019-449a-8ca0-64a882efbfbf"></dynamic-object></div>As LTL prices rise, shippers show more interest in alternative modes and shipping options. “We see customers choosing other options in certain instances when we’re taking rate increases,” Matthew J. Batteh, CFO of LTL carrier Saia, said in an earnings call last week. “Customers always challenge the pricing increases that we propose.” With excess truckload capacity available and truckload rates still climbing out of the trough they entered in 2023, some shippers have tried to consolidate LTL shipments into truckloads. But parcel and package shippers have long vied for LTL freight through hundredweight programs and other options similar to ground freight pricing. “They’re bringing back LPL or less-than-pallet load, which they used to have before they bought the LTL business [UPS Freight, sold in 2021],” said Satish Jindel, president of research firm SJ Consulting Group, which covers both LTL and parcel business. “They’re looking for shipments that are higher revenue per parcel.” UPS believes it can move those shipments at a better rate for shippers than an LTL carrier. Boxes, shrink-wrapped together on a pallet, are at the core of LTL volumes, Jindel said. “Shipments under 250 pounds represent 25% of total LTL volumes, and under 500 pounds 45% of the total. Those shipments could be sitting ducks for UPS, depending on how they go after them. They don’t want the pallets, just the nice brown boxes.” UPS sold UPS Freight, now TForce Freight, to <a href="https://www.joc.com/article/ups-freight-sold-to-canadas-tfi-for-800-million-5250895">TFI International for $800 million</a>. Under the 2021 sale agreement, TFI agreed to continue to utilize UPS’ domestic package network to fulfill shipments for five years. <h3>UPS, Amazon shifting freight </h3>UPS is also looking to bolster US domestic package volume, which fell 3.5% year over year in the first quarter. Ground package volume dropped 2.5% in the quarter, while volumes moving through its deferred service fell 17.3% from a year ago. That countered a 7.1% increase in international package volume, pulling UPS’ total volume down 1.9%. Some of the decline came from UPS’ reduced reliance on Amazon, which UPS calls a “glide-down” in volume. The company said it would close 73 facilities and <a href="https://www.reuters.com/markets/us/ups-reports-fall-first-quarter-revenue-2025-04-29/">cut 20,000 jobs</a> as part of that reduction. UPS plans to reduce its Amazon volume by 50% by 2026, largely by dropping unprofitable shipments from Amazon fulfillment centers. “The Amazon volume we plan to keep is profitable and it is healthy volume,” Tomé said. UPS first announced the revival of the ground freight pricing offering in early April, alongside UPS Ground Saver, a business-to-consumer shipping option that offers a slower, economy version of UPS ground package service for less urgent packages. Coincidentally, the announcement came the same day Amazon launched its foray <a href="https://www.joc.com/article/amazon-ltl-offering-is-no-threat-to-standalone-carriers-odfl-5990215">into the LTL business</a>. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>. Journal of Commerce Research Analyst Cathy Morrow Roberson contributed to this report. </div>

UPS no longer owns a less-than-truckload (LTL) subsidiary, but that doesn’t mean it’s lost all interest in LTL freight. The largest US package carrier has “reintroduced” UPS Ground with Freight Pricing, a service option that targets shipments weighing more than 150 pounds typically hauled by LTL carriers as part of a palletized shipment. “This positions us to be the only small package carrier that offers parcel-like pricing for less-than-truckload shipments, which is a true differentiator,” Carol B. Tomé, UPS CEO, said in a first-quarter earnings call last Tuesday. UPS’ major small package competitor, FedEx, owns its own LTL carrier, although it plans to spin off FedEx Freight in 2026. The service is being revived by UPS at a time when LTL shipping costs are rising, with the US long-distance LTL producer price index (PPI) up 5.5% year over year in March and 6% on average in the first quarter. Overall, the selling prices the PPI represents have climbed 12.1% since Yellow, once one of the largest LTL carriers, collapsed in July 2023. As LTL prices rise, shippers show more interest in alternative modes and shipping options. “We see customers choosing other options in certain instances when we’re taking rate increases,” Matthew J. Batteh, CFO of LTL carrier Saia, said in an earnings call last week. “Customers always challenge the pricing increases that we propose.” With excess truckload capacity available and truckload rates still climbing out of the trough they entered in 2023, some shippers have tried to consolidate LTL shipments into truckloads. But parcel and package shippers have long vied for LTL freight through hundredweight programs and other options similar to ground freight pricing. “They’re bringing back LPL or less-than-pallet load, which they used to have before they bought the LTL business [UPS Freight, sold in 2021],” said Satish Jindel, president of research firm SJ Consulting Group, which covers both LTL and parcel business. “They’re looking for shipments that are higher revenue per parcel.” UPS believes it can move those shipments at a better rate for shippers than an LTL carrier. Boxes, shrink-wrapped together on a pallet, are at the core of LTL volumes, Jindel said. “Shipments under 250 pounds represent 25% of total LTL volumes, and under 500 pounds 45% of the total. Those shipments could be sitting ducks for UPS, depending on how they go after them. They don’t want the pallets, just the nice brown boxes.” UPS sold UPS Freight, now TForce Freight, to TFI International for $800 million . Under the 2021 sale agreement, TFI agreed to continue to utilize UPS’ domestic package network to fulfill shipments for five years. UPS, Amazon shifting freight UPS is also looking to bolster US domestic package volume, which fell 3.5% year over year in the first quarter. Ground package volume dropped 2.5% in the quarter, while volumes moving through its deferred service fell 17.3% from a year ago. That countered a 7.1% increase in international package volume, pulling UPS’ total volume down 1.9%. Some of the decline came from UPS’ reduced reliance on Amazon, which UPS calls a “glide-down” in volume. The company said it would close 73 facilities and cut 20,000 jobs as part of that reduction. UPS plans to reduce its Amazon volume by 50% by 2026, largely by dropping unprofitable shipments from Amazon fulfillment centers. “The Amazon volume we plan to keep is profitable and it is healthy volume,” Tomé said. UPS first announced the revival of the ground freight pricing offering in early April, alongside UPS Ground Saver, a business-to-consumer shipping option that offers a slower, economy version of UPS ground package service for less urgent packages. Coincidentally, the announcement came the same day Amazon launched its foray into the LTL business . Contact William B. Cassidy at bill.cassidy@spglobal.com . Journal of Commerce Research Analyst Cathy Morrow Roberson contributed to this report.

UPS seeks reentry into LTL space as LTL costs climb higher

<div class="phx-topic abstract-wrapper">The freeing up of vessel capacity that has been diverted around southern Africa for the past 18 months could inject as much as 2 million TEUs of functional capacity into the global container shipping market. </div>

The freeing up of vessel capacity that has been diverted around southern Africa for the past 18 months could inject as much as 2 million TEUs of functional capacity into the global container shipping market.

<div class="phx-topic">US President Donald Trump on Tuesday said Houthi militants operating from Yemen have agreed to stop their 18-month-long series of attacks on commercial shipping in the Red Sea. If true, the apparent ceasefire would raise the prospects of major ocean carriers returning to Suez Canal transits this year, something that would result in significant vessel overcapacity in the container shipping market.While not a formal deal, Trump said the Houthis have agreed to stop their missile and drone attacks on vessels that began in late 2023 as part of what the militants said was a show of solidarity for Gaza amid the Israel-Hamas war.The Houthis have not confirmed that a deal with the US has been made. US bombings of militant positions in Yemen have intensified in the last two months. “They don’t want to fight anymore. They just don’t want to fight. We will honor that, and we will stop the bombings,” Trump said at the White House. “They have capitulated, but more importantly we will take their word. They say they won’t be blowing up ships anymore.” Approximately 1 million to 2 million TEUs of capacity would become available if the container shipping industry returned to Suez Canal transits and no longer needed to use the lengthy diversion around southern Africa, according to Maersk estimates. An estimated 10% of global capacity has been absorbed by the longer transits, according to shipping association BIMCO. The container shipping order book is currently just over 7 million TEUs, representing 25% of the existing fleet, according to Sea-web, a sister company of the Journal of Commerce within S&amp;P Global, with the supply-demand imbalance expected to be particularly acute over the next two years. An Israel-Hamas ceasefire and the Houthis’ pledge to not attack commercial vessels was announced in January but didn’t provide enough certainty to most container lines to restart their Suez Canal sailings. Small Asian container lines along with CMA CGM have transited the Red Sea amid Houthi threats, yet it is unclear whether the apparent de-escalation announced by Trump will change the risk calculations of carriers that include crew safety and insurance costs. The Houthis – who on Wednesday said it was the US who “backed down,” not them, according to various news reports – warned they will continue to target Israel. Zim Integrated Shipping Services, based in Israel, has been specifically targeted by Houthi militants. A return to a safe shipping environment in the region would also be a boon to Gulf-based ocean shippers, reopening a direct east-west route rather than forcing cargo owners to transship via feeder vessels or even tap overland trucking. Contact Mark Szakonyi at <a href="mark.szakonyi@spglobal.com.">mark.szakonyi@spglobal.com</a>.</div>

US President Donald Trump on Tuesday said Houthi militants operating from Yemen have agreed to stop their 18-month-long series of attacks on commercial shipping in the Red Sea. If true, the apparent ceasefire would raise the prospects of major ocean carriers returning to Suez Canal transits this year, something that would result in significant vessel overcapacity in the container shipping market. While not a formal deal, Trump said the Houthis have agreed to stop their missile and drone attacks on vessels that began in late 2023 as part of what the militants said was a show of solidarity for Gaza amid the Israel-Hamas war. The Houthis have not confirmed that a deal with the US has been made. US bombings of militant positions in Yemen have intensified in the last two months. “They don’t want to fight anymore. They just don’t want to fight. We will honor that, and we will stop the bombings,” Trump said at the White House. “They have capitulated, but more importantly we will take their word. They say they won’t be blowing up ships anymore.” Approximately 1 million to 2 million TEUs of capacity would become available if the container shipping industry returned to Suez Canal transits and no longer needed to use the lengthy diversion around southern Africa, according to Maersk estimates. An estimated 10% of global capacity has been absorbed by the longer transits, according to shipping association BIMCO. The container shipping order book is currently just over 7 million TEUs, representing 25% of the existing fleet, according to Sea-web, a sister company of the Journal of Commerce within S&P Global, with the supply-demand imbalance expected to be particularly acute over the next two years. An Israel-Hamas ceasefire and the Houthis’ pledge to not attack commercial vessels was announced in January but didn’t provide enough certainty to most container lines to restart their Suez Canal sailings. Small Asian container lines along with CMA CGM have transited the Red Sea amid Houthi threats, yet it is unclear whether the apparent de-escalation announced by Trump will change the risk calculations of carriers that include crew safety and insurance costs. The Houthis – who on Wednesday said it was the US who “backed down,” not them, according to various news reports – warned they will continue to target Israel. Zim Integrated Shipping Services, based in Israel, has been specifically targeted by Houthi militants. A return to a safe shipping environment in the region would also be a boon to Gulf-based ocean shippers, reopening a direct east-west route rather than forcing cargo owners to transship via feeder vessels or even tap overland trucking. Contact Mark Szakonyi at mark.szakonyi@spglobal.com .