<div class="phx-topic abstract-wrapper">A container line, a port, and a retailer are all involved in blockchain pilots to the viability of digitizing the complex communications trail and improving visibility.</div>

A container line, a port, and a retailer are all involved in blockchain pilots to the viability of digitizing the complex communications trail and improving visibility.

<div>The Madrid Maersk prepares to come alongside at Deurganckdok in the Port of Antwerp.The distributed ledger technology known as blockchain is being tested in a series of individual pilot projects as various sectors of the supply chain study the viability of digitizing the complex communications trail and improving efficiency and visibility.Maersk Line and IBM <a>were the first to team up</a> and in March began to study how to deploy the blockchain system, but since then, pilot projects have begun at the Europe gateway port of Antwerp and at China’s largest retailer, JD.com. JD.com has been testing a blockchain program with...

The Madrid Maersk prepares to come alongside at Deurganckdok in the Port of Antwerp. The distributed ledger technology known as blockchain is being tested in a series of individual pilot projects as various sectors of the supply chain study the viability of digitizing the complex communications trail and improving efficiency and visibility.Maersk Line and IBM were the first to team up and in March began to study how to deploy the blockchain system, but since then, pilot projects have begun at the Europe gateway port of Antwerp and at China’s largest retailer, JD.com. JD.com has been testing a blockchain program with some of its vendors to track and trace their products and raise visibility. The program is being tested within the JD Tracing and Anti-Counterfeit Alliance that comprises a group of 27 brands, including Mars, Nestle, Evian, and Huggies, that have worked with JD.com to improved the traceability of their products.Yongli Yu, president of supply chain research and development for JD.com, said in the pilot project the retailer partnered with Inner Mongolia-based beef and dairy company Kerchin to create a list of criteria to trace all beef sold on JD.com.“We generated serial numbers for every cow slaughtered at the very beginning of this supply chain, which enabled us to track where any cow was raised, all vital information, and how resulting beef was handled, checked for quality, and transported, up to the point it reaches customers,” he said.Product safety scandals in China have eroded consumer confidence, especially in food sourced in the mainland. With Chinese consumers increasing their spending power, they are looking for quality, trusted brand names and imported products.“The truth is, even trusted brands and imported products can offer more visibility into their supply chains to give consumers more of the peace of mind they want. We imagine doing this for many products, far beyond food. Products like wine, baby care, or even luxury and fashion products, for which Chinese consumers are constantly concerned about authenticity,” Yu said.Rolling out a successful blockchain program across its business will be a herculean task for JD.com as its supply chains span multiple countries across multiple continents and involve many vendors and logistics providers.Over at Antwerp, the port found that getting a container from point A to point B often involved more than 30 different parties, with an average of 200 interactions between them. Given that many of the interactions were carried out by e-mail, phone and even by fax, paperwork accounts for up to half of the cost of container transport.“We aim to do something about this,” says Nico Wauters, CEO of blockchain start-up T-Mining that has developed a solution for the port. Using blockchain technology, processes that involve several parties — carriers, terminals, forwarders, hauliers, drivers, shippers etc. — are securely digitized without any central middleman being involved.A pilot project is currently running in the port of Antwerp with a limited number of parties. “We want to test whether it all works smoothly in practice,” said Wauters. “Together with PSA, MSC, a forwarder and a transporter, we ensure secure handling of the first containers on our blockchain platform.”The plan is to be able to have the first paying customers at Antwerp by the end of 2017.Maersk Line said it successfully tested blockchain technology earlier this year to manage documents on a trial shipment between North Europe and the East Coast of North America, but it is unclear how close the carrier is to actually deploying the technology.It also remains to be see what effect the devastating cyberattack on Maersk will have on the line’s aggressive moves to digitize shipping processes and the products and services offered to customers.Contact Greg Knowler at greg.knowler@ihsmarkit.com and follow him on Twitter: @greg_knowler .

Logistics Technology News

Blockchain pilots move the tech closer to adoption

<div class="phx-topic abstract-wrapper">Ports in the UK are already seeing rising operational delays as a string of storms moves in from the Atlantic and major ports in Europe issue high wind warnings. </div>

Ports in the UK are already seeing rising operational delays as a string of storms moves in from the Atlantic and major ports in Europe issue high wind warnings.

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<div class="phx-topic">Ocean carriers are warning of schedule disruptions in North Europe as extreme weather hits the English Channel and Bay of Biscay, with UK ports already heavily disrupted by a string of storms. The seven-day average vessel waiting time at the UK’s largest port of Felixstowe is around four days, while delays at Southampton port are up to 4.25 days, according to Kuehne + Nagel’s supply chain visibility tool SeaExplorer. The extreme weather will move across the English Channel to mainland Europe with multiple high wind warnings in Hamburg, Antwerp, Rotterdam, Le Havre and Dunkirk in addition to Felixstowe and Southampton. “The passage of several storms from the Atlantic into European waters in recent and upcoming days will see disruptions across the port landscape in North Europe,” CMA CGM told customers in an advisory Wednesday. “High winds and a large swell will see passages across the Bay of Biscay disrupted until Friday,” the advisory noted. Maersk issued a similar warning, noting that vessel movement and port operations will be “severely impacted” and might cause delays to South Africa-bound vessels and vessels sailing north to Rotterdam and London. Winter storms regularly affect ocean shipping at both ends of the Asia-Europe trade lane, with <a href="https://www.joc.com/article/shippers-carriers-face-wave-of-port-congestion-vessel-delays-in-asia-europe-5913827">a series of typhoons late last year shutting ports in China</a> and creating significant delays. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Ocean carriers are warning of schedule disruptions in North Europe as extreme weather hits the English Channel and Bay of Biscay, with UK ports already heavily disrupted by a string of storms. The seven-day average vessel waiting time at the UK’s largest port of Felixstowe is around four days, while delays at Southampton port are up to 4.25 days, according to Kuehne + Nagel’s supply chain visibility tool SeaExplorer. The extreme weather will move across the English Channel to mainland Europe with multiple high wind warnings in Hamburg, Antwerp, Rotterdam, Le Havre and Dunkirk in addition to Felixstowe and Southampton. “The passage of several storms from the Atlantic into European waters in recent and upcoming days will see disruptions across the port landscape in North Europe,” CMA CGM told customers in an advisory Wednesday. “High winds and a large swell will see passages across the Bay of Biscay disrupted until Friday,” the advisory noted. Maersk issued a similar warning, noting that vessel movement and port operations will be “severely impacted” and might cause delays to South Africa-bound vessels and vessels sailing north to Rotterdam and London. Winter storms regularly affect ocean shipping at both ends of the Asia-Europe trade lane, with a series of typhoons late last year shutting ports in China and creating significant delays. Contact Greg Knowler at greg.knowler@spglobal.com .

Container Shipping News

Trans-Atlantic

Asia-Europe

International ports

Maritime

Ocean carriers warn of disruption as storms bear down on Europe

<div class="phx-topic abstract-wrapper">The effort coincides with UP’s plans to open a new terminal in Kansas City, Kan., in the third quarter of this year that would alleviate pressure on the railroad’s existing terminal across the border in Missouri.</div>

The effort coincides with UP’s plans to open a new terminal in Kansas City, Kan., in the third quarter of this year that would alleviate pressure on the railroad’s existing terminal across the border in Missouri.

<div class="phx-topic">Union Pacific Railroad (UP) is making an aggressive push during the annual bid season to attract customers shipping freight between Los Angeles and the Kansas City market, a route traditionally dominated by competitor BNSF Railway and the trucking sector. The effort coincides with UP’s plans to open a new terminal in Kansas City, Kan., in the third quarter of this year. The facility, which would be located in the Armourdale neighborhood near Interstate 70, is expected to alleviate pressure on UP’s existing Neff Yard, a smaller terminal across the Missouri River in Kansas City, Mo. Reed Janousek, UP’s assistant vice president of intermodal sales, said the investment is based on data showing population in the Kansas City metro area is growing faster than the US overall. And UP, he said, is aiming to convert truckload freight to rail, not necessarily target BNSF. “Our consistent message to beneficial cargo owners has been we are now ready to make some noise on domestic intermodal on this lane,” Janousek told the Journal of Commerce on Tuesday. “The beauty of Armourdale is it allows us to double our current Kansas City capacity compared with today. We won’t push it to that maximum immediately, but it’ll provide an incremental boost on day one. If we need to double the capacity, we have the capability.” Kansas City has been a hot topic with UP’s channel partners — companies that sell the railroad’s intermodal service to shippers. “That’s been a big topic of conversation. They've been asking us a lot about Kansas City,” said one non-asset intermodal executive who did not want to be identified. “They want any Kansas City opportunity we can give them. It’s a big point of emphasis for them.” <h3>Intermodal saves money, but it’s a tough fight </h3>To boost its Los Angeles-Kansas City business, UP must address several hurdles regarding price and service. According to the Journal of Commerce Intermodal Savings Index, shippers can easily save more than $1,000 per container on the route by opting for intermodal rail. On average, shippers saved nearly $1,400 per container under an intermodal contract, excluding accessorial fees and assuming short-haul local drayage at origin and destination. For a shipper moving 20 loads per week, that could yield more than $1 million in annual savings. However, BNSF’s existing investment in its Logistics Park Kansas City terminal gives it a pricing advantage. J.B. Hunt Transport Services, the largest US intermodal carrier and a BNSF partner, wields significant leverage due to its extensive container fleet, which rivals the combined pool of Hub Group, Schneider National and railroad-owned containers. Additionally, most of UP’s channel partners can also access BNSF through COFC Logistics, a wholesaler with 10,000 to 15,000 containers. UP also faces pricing challenges from the $20 per container <a href="https://www.up.com/customers/announcements/premium/allpremium/PR2024-119.html">Alameda Corridor User Fee</a> because shipments originate or terminate at the Intermodal Container Transfer Facility (ICTF) in Long Beach. <h3>Need better transit times, consistency </h3>Beyond cost, UP must also address transit times and service reliability. A second non-asset intermodal executive said UP’s service between Los Angeles and Kansas City/St. Louis was “horrific” at times last summer. Inconsistent transit times complicate the planning of drayage trips to deliver the cargo in the Kansas City area. Transit times are also a concern. BNSF trains take about 72 hours from Los Angeles to Kansas City and 65 hours on the return trip, with 90% of trains arriving on time, according to data from one BNSF partner. By contrast, UP trains are about 96 hours from west to east on the lane and 74 hours east to west, according to Janousek. “Historically, Kansas City is a stop on the way from LA to Chicago or a stop on the way from Chicago back to LA,” Janousek said. “We’re now looking at Kansas City to say, ‘hey, this is its own market,’ and making the necessary changes to ensure trains have capacity and run on schedule.” In the near term, UP trains on the route will continue to run through ICTF Long Beach. However, as UP’s terminal capacity is expanded in San Bernardino’s Inland Empire, it’s possible that traffic may shift to that area. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a></div>

Union Pacific Railroad (UP) is making an aggressive push during the annual bid season to attract customers shipping freight between Los Angeles and the Kansas City market, a route traditionally dominated by competitor BNSF Railway and the trucking sector. The effort coincides with UP’s plans to open a new terminal in Kansas City, Kan., in the third quarter of this year. The facility, which would be located in the Armourdale neighborhood near Interstate 70, is expected to alleviate pressure on UP’s existing Neff Yard, a smaller terminal across the Missouri River in Kansas City, Mo. Reed Janousek, UP’s assistant vice president of intermodal sales, said the investment is based on data showing population in the Kansas City metro area is growing faster than the US overall. And UP, he said, is aiming to convert truckload freight to rail, not necessarily target BNSF. “Our consistent message to beneficial cargo owners has been we are now ready to make some noise on domestic intermodal on this lane,” Janousek told the Journal of Commerce on Tuesday. “The beauty of Armourdale is it allows us to double our current Kansas City capacity compared with today. We won’t push it to that maximum immediately, but it’ll provide an incremental boost on day one. If we need to double the capacity, we have the capability.” Kansas City has been a hot topic with UP’s channel partners — companies that sell the railroad’s intermodal service to shippers. “That’s been a big topic of conversation. They've been asking us a lot about Kansas City,” said one non-asset intermodal executive who did not want to be identified. “They want any Kansas City opportunity we can give them. It’s a big point of emphasis for them.” Intermodal saves money, but it’s a tough fight To boost its Los Angeles-Kansas City business, UP must address several hurdles regarding price and service. According to the Journal of Commerce Intermodal Savings Index, shippers can easily save more than $1,000 per container on the route by opting for intermodal rail. On average, shippers saved nearly $1,400 per container under an intermodal contract, excluding accessorial fees and assuming short-haul local drayage at origin and destination. For a shipper moving 20 loads per week, that could yield more than $1 million in annual savings. However, BNSF’s existing investment in its Logistics Park Kansas City terminal gives it a pricing advantage. J.B. Hunt Transport Services, the largest US intermodal carrier and a BNSF partner, wields significant leverage due to its extensive container fleet, which rivals the combined pool of Hub Group, Schneider National and railroad-owned containers. Additionally, most of UP’s channel partners can also access BNSF through COFC Logistics, a wholesaler with 10,000 to 15,000 containers. UP also faces pricing challenges from the $20 per container Alameda Corridor User Fee because shipments originate or terminate at the Intermodal Container Transfer Facility (ICTF) in Long Beach. Need better transit times, consistency Beyond cost, UP must also address transit times and service reliability. A second non-asset intermodal executive said UP’s service between Los Angeles and Kansas City/St. Louis was “horrific” at times last summer. Inconsistent transit times complicate the planning of drayage trips to deliver the cargo in the Kansas City area. Transit times are also a concern. BNSF trains take about 72 hours from Los Angeles to Kansas City and 65 hours on the return trip, with 90% of trains arriving on time, according to data from one BNSF partner. By contrast, UP trains are about 96 hours from west to east on the lane and 74 hours east to west, according to Janousek. “Historically, Kansas City is a stop on the way from LA to Chicago or a stop on the way from Chicago back to LA,” Janousek said. “We’re now looking at Kansas City to say, ‘hey, this is its own market,’ and making the necessary changes to ensure trains have capacity and run on schedule.” In the near term, UP trains on the route will continue to run through ICTF Long Beach. However, as UP’s terminal capacity is expanded in San Bernardino’s Inland Empire, it’s possible that traffic may shift to that area. Contact Ari Ashe at ari.ashe@spglobal.com

North-American rail

Intermodal providers

Union Pacific makes push to grab more Los Angeles-to-Kansas City freight

<div class="phx-topic abstract-wrapper">EPCs say that tariffs enforced after project costs are finalized not only impact the bottom line but in some cases destroy the viability of a project, hitting volumes in the breakbulk trade.</div>

EPCs say that tariffs enforced after project costs are finalized not only impact the bottom line but in some cases destroy the viability of a project, hitting volumes in the breakbulk trade.

<div class="phx-topic">The uncertainty around the Trump administration’s tariff policy is playing havoc with the project cargo sector, with shippers warning of disruption down the line for projects already committed. Engineering, procurement and construction (EPC) companies speaking to the Journal of Commerce say that tariffs that are enforced after project costs are finalized not only impact the bottom line, but in some cases destroy the viability of a project, hitting volumes in the breakbulk trade. On his first day in office, President Donald Trump gave numerous directives to the heads of government agencies charged with shaping US trade policy. While new tariffs were not announced, a Presidential Memorandum defining an “America First Trade Policy” published Jan. 20 laid the groundwork for wide-ranging tariffs that will impact the global trade landscape. EPCs work many years in advance and lock in prices for products and provisions well ahead of project delivery. “We have suppliers in Mexico, Canada and all over so it is definitely affecting our choices and our selection, Geanean Ordonez, project logistics manager/procurement at EPC Technip Energies, said on a Journal of Commerce webcast on Jan 23. She added that the enforcement of tariffs will “definitely affect how we purchase in the future.” The real difficulty comes for projects that are ongoing with purchase orders already in place, Ordonez said. “Then, all of a sudden, there are additional tariffs for the countries that we’ve selected,” she said. <h3>Preparing for ‘ramifications’</h3>The initial focus for the Trump administration’s tariff interest are Mexico, Canada and China. Trump has threatened 25% tariffs on Canada and Mexico from Feb. 1, with higher amounts on imports from China. But that could just be the start of issues from the project cargo sector.“We have to think about retaliatory tariffs,” John Hark, director of Bertling Logistics and adjunct professor at Texas A&amp;M Galveston, said on the webcast.“We need to be prepared now in case these tariffs are enacted and start thinking about what the ramifications are,” he said.Hark also pointed to the threat associated with the renegotiation of trade agreements, such as the US-Mexico-Canada Agreement (USMCA), passed in Trump’s first term to replace the longstanding North American Free Trade Agreement (NAFTA). During his campaign last year, Trump said he would invoke the renegotiation clause of USMCA if elected.Notwithstanding the outcome of the US’s trade policy investigation, Hark said that projects would not switch to America builds overnight. Likewise, “tariffs are probably coming, but it’s not as sudden and immediate as we expected.”“It's plan for the worst, hope for the best,” Andrew Young, corporate logistics manager at Bechtel, said on the webcast. While he acknowledged some of the tariff talk is “bluster,” from a project perspective shippers have got to “chase down everything” to see how that affects their supply chains. “We know tariffs are complex, depending on your market, your equipment and where your suppliers are based,” Young said. “But 25% for products from Mexico and Canada from Feb. 1, 10% rest of the world? That’s something that we've really got to scrutinize.” Contact Carly Fields at <a href="mailto:carly.fields@spglobal.com">carly.fields@spglobal.com.</a></div>

The uncertainty around the Trump administration’s tariff policy is playing havoc with the project cargo sector, with shippers warning of disruption down the line for projects already committed. Engineering, procurement and construction (EPC) companies speaking to the Journal of Commerce say that tariffs that are enforced after project costs are finalized not only impact the bottom line, but in some cases destroy the viability of a project, hitting volumes in the breakbulk trade. On his first day in office, President Donald Trump gave numerous directives to the heads of government agencies charged with shaping US trade policy. While new tariffs were not announced, a Presidential Memorandum defining an “America First Trade Policy” published Jan. 20 laid the groundwork for wide-ranging tariffs that will impact the global trade landscape. EPCs work many years in advance and lock in prices for products and provisions well ahead of project delivery. “We have suppliers in Mexico, Canada and all over so it is definitely affecting our choices and our selection, Geanean Ordonez, project logistics manager/procurement at EPC Technip Energies, said on a Journal of Commerce webcast on Jan 23. She added that the enforcement of tariffs will “definitely affect how we purchase in the future.” The real difficulty comes for projects that are ongoing with purchase orders already in place, Ordonez said. “Then, all of a sudden, there are additional tariffs for the countries that we’ve selected,” she said. Preparing for ‘ramifications’ The initial focus for the Trump administration’s tariff interest are Mexico, Canada and China. Trump has threatened 25% tariffs on Canada and Mexico from Feb. 1, with higher amounts on imports from China. But that could just be the start of issues from the project cargo sector. “We have to think about retaliatory tariffs,” John Hark, director of Bertling Logistics and adjunct professor at Texas A&M Galveston, said on the webcast. “We need to be prepared now in case these tariffs are enacted and start thinking about what the ramifications are,” he said. Hark also pointed to the threat associated with the renegotiation of trade agreements, such as the US-Mexico-Canada Agreement (USMCA), passed in Trump’s first term to replace the longstanding North American Free Trade Agreement (NAFTA). During his campaign last year, Trump said he would invoke the renegotiation clause of USMCA if elected. Notwithstanding the outcome of the US’s trade policy investigation, Hark said that projects would not switch to America builds overnight. Likewise, “tariffs are probably coming, but it’s not as sudden and immediate as we expected.” “It's plan for the worst, hope for the best,” Andrew Young, corporate logistics manager at Bechtel, said on the webcast. While he acknowledged some of the tariff talk is “bluster,” from a project perspective shippers have got to “chase down everything” to see how that affects their supply chains. “We know tariffs are complex, depending on your market, your equipment and where your suppliers are based,” Young said. “But 25% for products from Mexico and Canada from Feb. 1, 10% rest of the world? That’s something that we've really got to scrutinize.” Contact Carly Fields at carly.fields@spglobal.com.

Energy projects

Project cargo

Breakbulk News

Specter of US trade tariffs puts EPC companies on war footing

<div class="phx-topic abstract-wrapper">Speakers at SMC3’s JumpStart 25 conference see advance signals of better demand growth for freight in 2025, but the pace and extent of that growth are still uncertain.</div>

Speakers at SMC3’s JumpStart 25 conference see advance signals of better demand growth for freight in 2025, but the pace and extent of that growth are still uncertain.

<div class="phx-topic">ATLANTA -- Expectations of stronger-than-expected growth in less-than-truckload (LTL) demand are rising at the SMC3 Jumpstart 25 Conference here this week. Improvements in manufacturing, lower inventories and steady consumer demand are three factors that may point to a recovery of some LTL demand ahead of the second half of the year. Higher wage growth and lower inflation are two more. ”The market is preparing for the reactivation of supply chains,” Keith Prather, managing director of Armada Corporate Intelligence, told more than 700 LTL, technology, logistics and shipping executives at the conference. ”Only about 14% of logistics managers believe they’re overstocked,” Prather said, pointing to Armada’s analysis of inventory-to-sales ratios across 19 industrial sectors. “We’ve gotten rid of the inventory overhang [in place since 2023].” <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="cd968123-cff3-4f3e-9378-b32ca42d1310"></dynamic-object></div>That brings the freight cycle back into alignment with the demand cycle, Prather said during SMC3’s first annual State of Logistics Report. “If we continue to see low demand, we’ll still see low lift, but we’ll feel like the environment is getting better more quickly,” he said. <h3>Optimistic ‘vibes’ </h3>Others at the conference, from LTL executives to their customers and logistics partners, welcomed the suggestion that market conditions are improving. But their optimism remains tentative, with their expectations ready to adapt to changing circumstances. “I spend a lot of time with customers and their vibe is more optimistic [than last year],” Mario Harik, CEO of LTL provider XPO, said. But a “vibe” alone doesn’t mean freight shows up at an XPO dock. “We’ll see what the year has in store,” Harik said. A home products shipper at the conference also said he sees no immediate sign that the market is about to turn. “A lot of people are betting on the second half of the year,” said Nick Waters, director of logistics for Masco Corporation. That’s a bet shared with many economists and forecasters who expect that <a href="http://go.microsoft.com/fwlink/p/?LinkId=255141">the second quarter</a> is the earliest point when an inflection in freight demand could appear. The strength of spring retail demand and home sales are two factors Masco is watching closely. In the first quarter, truckload and LTL capacity are readily available. “If the economy turns, you’ll have to really watch capacity, but we’re not seeing that now,” Waters said. Some of the optimism in the market is based on the <a href="https://www.joc.com/article/prolonged-us-freight-recession-to-drag-into-2025-transportation-executives-5818486">length of the freight downcycle</a>, which began almost three years ago. “We’re overdue for a rebound,” said Jason Seidl, managing director for industrials, airfreight and surface transportation at investment firm TD Cowen. “Some of the most recent readings in the industrial data are encouraging, and we’re tracking that.” <h3>Advance signals </h3>Those readings include the S&amp;P Global Flash Purchasing Managers Index (PMI), which on Friday showed the US Manufacturing PMI rising from 49.4 in December to 50.1 in January. The Flash Manufacturing Output index rose from 47.7 to 50.2 in the same period. The flash index represents about 85% of the full monthly survey respondents. US manufacturers reported the first, albeit modest, rise in new orders in seven months, reflecting improved domestic demand and a softening rate of loss of export orders, according to S&amp;P Global, the parent company of the Journal of Commerce. Factory production rose marginally, the first increase in six months, with new orders also reviving after six months of decline. Inventories in January fell at their fastest rate in 17 months, S&amp;P Global said. That’s a drag on the PMI, but potentially good news for trucking companies as the drop was attributed to greater use of materials in production. “If the S&amp;P Global flash report holds until the final PMI report for January, that’s an expansion signal,” said Prather. “I hope the signals hold.” <h3>Riding the ‘K’ </h3>US wages are another signal on Prather’s dashboard. Average hourly wages for all private-sector employees rose 4.6% year over year in December, after a 4.1% annualized increase in November, according to the US Bureau of Labor Statistics (BLS). The US Consumer Price Index, a measure of overall inflation, was up 2.9% year over year in December, after a 2.7% annualized increase in November. The growing gap between wages and inflation is putting more spending money in consumer pockets, especially lower wage consumers most impacted by inflation since 2022. US households with less than $75,000 in annual income on average form the lower arm of what Prather calls a “K-shaped” recovery from the 2020 recession and the inflation that followed. The upper leg of the K represents households with more than $75,000 in annual income. Lower-income households “fared worse under inflation,” Prather said. “They’ve been able to go into a Walmart or Target for groceries, but they’re not buying discretionary items.” If inflation continues to fall – a big if – and wages rise, the spending potential of those households will be “activated” in a way they haven’t been since 2021, he said. <h3>Checking exuberance </h3>But there are still many reasons to temper optimism with caution. Carriers and others at the conference agreed the so-called freight recession isn’t over yet, and both LTL and truckload demand remain soft. Even severe winter storms in January and a compressed holiday season haven’t led to a truck capacity crunch or a surge in national average truckload spot rates. “We’re still trying to shed truckload capacity that was taken on during the pandemic,” said Seidl. But he said truckload carriers are beginning to see rate hikes in the 2% to 3% range in annual contracts, compared with negative numbers the past two years. “There was a little more truckload project business in the fourth quarter,” Seidl said. “Was it great? No, but it was better than 2023, when there was none.” The prospect of Trump administration tariffs as early as Feb. 1 on Mexico and Canada also create uncertainty, though Prather pointed out that more than 18,000 goods were excluded from tariffs imposed by Trump during his first administration. Prather also noted that real US spending on manufacturing facilities has increased strongly since the pandemic, rising to about $235 billion in 2024. The pre-pandemic average was about $85 billion from 2005 through 2022, according to the BLS. Much of that spending has been on computers and electronics, including semiconductor chips. “People need to be patient,” Prather said. “It can take a few years before these plants begin to turn out goods. But some may start late in 2025 or next year.” Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a></div>

ATLANTA -- Expectations of stronger-than-expected growth in less-than-truckload (LTL) demand are rising at the SMC3 Jumpstart 25 Conference here this week. Improvements in manufacturing, lower inventories and steady consumer demand are three factors that may point to a recovery of some LTL demand ahead of the second half of the year. Higher wage growth and lower inflation are two more. ”The market is preparing for the reactivation of supply chains,” Keith Prather, managing director of Armada Corporate Intelligence, told more than 700 LTL, technology, logistics and shipping executives at the conference. ”Only about 14% of logistics managers believe they’re overstocked,” Prather said, pointing to Armada’s analysis of inventory-to-sales ratios across 19 industrial sectors. “We’ve gotten rid of the inventory overhang [in place since 2023].” That brings the freight cycle back into alignment with the demand cycle, Prather said during SMC3’s first annual State of Logistics Report. “If we continue to see low demand, we’ll still see low lift, but we’ll feel like the environment is getting better more quickly,” he said. Optimistic ‘vibes’ Others at the conference, from LTL executives to their customers and logistics partners, welcomed the suggestion that market conditions are improving. But their optimism remains tentative, with their expectations ready to adapt to changing circumstances. “I spend a lot of time with customers and their vibe is more optimistic [than last year],” Mario Harik, CEO of LTL provider XPO, said. But a “vibe” alone doesn’t mean freight shows up at an XPO dock. “We’ll see what the year has in store,” Harik said. A home products shipper at the conference also said he sees no immediate sign that the market is about to turn. “A lot of people are betting on the second half of the year,” said Nick Waters, director of logistics for Masco Corporation. That’s a bet shared with many economists and forecasters who expect that the second quarter is the earliest point when an inflection in freight demand could appear. The strength of spring retail demand and home sales are two factors Masco is watching closely. In the first quarter, truckload and LTL capacity are readily available. “If the economy turns, you’ll have to really watch capacity, but we’re not seeing that now,” Waters said. Some of the optimism in the market is based on the length of the freight downcycle , which began almost three years ago. “We’re overdue for a rebound,” said Jason Seidl, managing director for industrials, airfreight and surface transportation at investment firm TD Cowen. “Some of the most recent readings in the industrial data are encouraging, and we’re tracking that.” Advance signals Those readings include the S&P Global Flash Purchasing Managers Index (PMI), which on Friday showed the US Manufacturing PMI rising from 49.4 in December to 50.1 in January. The Flash Manufacturing Output index rose from 47.7 to 50.2 in the same period. The flash index represents about 85% of the full monthly survey respondents. US manufacturers reported the first, albeit modest, rise in new orders in seven months, reflecting improved domestic demand and a softening rate of loss of export orders, according to S&P Global, the parent company of the Journal of Commerce. Factory production rose marginally, the first increase in six months, with new orders also reviving after six months of decline. Inventories in January fell at their fastest rate in 17 months, S&P Global said. That’s a drag on the PMI, but potentially good news for trucking companies as the drop was attributed to greater use of materials in production. “If the S&P Global flash report holds until the final PMI report for January, that’s an expansion signal,” said Prather. “I hope the signals hold.” Riding the ‘K’ US wages are another signal on Prather’s dashboard. Average hourly wages for all private-sector employees rose 4.6% year over year in December, after a 4.1% annualized increase in November, according to the US Bureau of Labor Statistics (BLS). The US Consumer Price Index, a measure of overall inflation, was up 2.9% year over year in December, after a 2.7% annualized increase in November. The growing gap between wages and inflation is putting more spending money in consumer pockets, especially lower wage consumers most impacted by inflation since 2022. US households with less than $75,000 in annual income on average form the lower arm of what Prather calls a “K-shaped” recovery from the 2020 recession and the inflation that followed. The upper leg of the K represents households with more than $75,000 in annual income. Lower-income households “fared worse under inflation,” Prather said. “They’ve been able to go into a Walmart or Target for groceries, but they’re not buying discretionary items.” If inflation continues to fall – a big if – and wages rise, the spending potential of those households will be “activated” in a way they haven’t been since 2021, he said. Checking exuberance But there are still many reasons to temper optimism with caution. Carriers and others at the conference agreed the so-called freight recession isn’t over yet, and both LTL and truckload demand remain soft. Even severe winter storms in January and a compressed holiday season haven’t led to a truck capacity crunch or a surge in national average truckload spot rates. “We’re still trying to shed truckload capacity that was taken on during the pandemic,” said Seidl. But he said truckload carriers are beginning to see rate hikes in the 2% to 3% range in annual contracts, compared with negative numbers the past two years. “There was a little more truckload project business in the fourth quarter,” Seidl said. “Was it great? No, but it was better than 2023, when there was none.” The prospect of Trump administration tariffs as early as Feb. 1 on Mexico and Canada also create uncertainty, though Prather pointed out that more than 18,000 goods were excluded from tariffs imposed by Trump during his first administration. Prather also noted that real US spending on manufacturing facilities has increased strongly since the pandemic, rising to about $235 billion in 2024. The pre-pandemic average was about $85 billion from 2005 through 2022, according to the BLS. Much of that spending has been on computers and electronics, including semiconductor chips. “People need to be patient,” Prather said. “It can take a few years before these plants begin to turn out goods. But some may start late in 2025 or next year.” Contact William B. Cassidy at bill.cassidy@spglobal.com

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‘Green shoots’ in US economy fuel optimism, but not exuberance, among LTL carriers

<div class="phx-topic abstract-wrapper">The comments by Louis Sola during a Senate hearing come amid rising US scrutiny of Chinese influence over the crucial waterway. </div>

The comments by Louis Sola during a Senate hearing come amid rising US scrutiny of Chinese influence over the crucial waterway.

<div class="phx-topic">The new head of the US Federal Maritime Commission (FMC) on Tuesday told a Senate hearing he questions whether a Hong Kong-based terminal operator that runs ports on both ends of the Panama Canal was contributing revenue to the Panamanian government as other terminal operators do. The comments by FMC Chairman Louis Sola come amid <a href="https://www.joc.com/article/bolder-trump-injects-new-volatility-into-container-shipping-5927954">rising US scrutiny of Chinese influence</a> over the canal. While the Panama Canal Authority (ACP) “has done a fantastic job” running the canal in the 25 years since the US handed over control of the critical waterway — contributing $28 billion to Panamanian government coffers during that time — Sola said the two ports at Balboa and Cristobal that are operated by Hutchison Port Holdings haven’t provided revenue to the government. “What I don’t understand is why Panama would allow those two ports to operate [and] put [other canal operations] into jeopardy,” said Sola, who was tapped by Donald Trump on Jan. 20 to serve as FMC chair. “I don’t believe we’re on a level playing field.” The Panamanian government, in response to Trump’s recent ire about China’s presence at the canal, launched an audit of Hutchison offices in Panama last week. Hutchison wasn’t immediately available to respond to Sola’s comments. Sola told the Senate hearing, which was called specifically to examine the canal’s operations and the impact on US national security, that the two Hutchison ports have justified not contributing to the Panamanian government by claiming they’re not making money. But Sola — having worked himself on the development of the SSA Marine-operated terminal in Colon, Panama — questioned how the Hutchison ports could not be making money after 20 years in operation. SSA has a smaller terminal on the Atlantic side of the canal. Sola stressed he was confident the ACP could continue to efficiently operate the canal’s locks, and said the authority’s independence must be defended. “Any effort by other interests in Panama to diminish the independence or professionalism of the authority must be stopped,” he said. Sola noted the Panamanian government has a history of corruption, pointing to the state flagging of sanctioned vessels by Panama. <h3>FMC will monitor tolls, transit slot auction</h3>Sola told the Senate Committee on Commerce, Science and Transportation that the FMC would continue to monitor toll pricing implemented by the ACP and how it auctions off transit slots during drought restrictions. Deeming China’s influence on the Panama Canal “a national security risk,” Committee Chair Sen. Ted Cruz (R-Texas) said the waterway’s profits regularly exceed $3 billion annually at the expense of US taxpayers. He criticized the canal for raising its tolls in 2023 while imposing drought restrictions. “Chinese companies are building a bridge across the canal — at a slow pace so as to take nearly a decade — and control container ports at either end,” Cruz said. “The partially completed bridge gives China the ability to block the canal without warning, and the ports give China ready observation posts to time that action.” The treaty underpinning the handover of canal control to Panama allows for the US to reclaim it by force if the neutrality of the waterway is threatened, according to Eugene Kontorovich, a George Mason University professor and fellow at the conservative think tank Heritage Foundation. Such a move would require Congressional authorization, depending on the circumstances, Kontorovich told the committee. Contact Mark Szakonyi at <a href="mark.szakonyi@spglobal.com">mark.szakonyi@spglobal.com</a>.</div>

The new head of the US Federal Maritime Commission (FMC) on Tuesday told a Senate hearing he questions whether a Hong Kong-based terminal operator that runs ports on both ends of the Panama Canal was contributing revenue to the Panamanian government as other terminal operators do. The comments by FMC Chairman Louis Sola come amid rising US scrutiny of Chinese influence over the canal. While the Panama Canal Authority (ACP) “has done a fantastic job” running the canal in the 25 years since the US handed over control of the critical waterway — contributing $28 billion to Panamanian government coffers during that time — Sola said the two ports at Balboa and Cristobal that are operated by Hutchison Port Holdings haven’t provided revenue to the government. “What I don’t understand is why Panama would allow those two ports to operate [and] put [other canal operations] into jeopardy,” said Sola, who was tapped by Donald Trump on Jan. 20 to serve as FMC chair. “I don’t believe we’re on a level playing field.” The Panamanian government, in response to Trump’s recent ire about China’s presence at the canal, launched an audit of Hutchison offices in Panama last week. Hutchison wasn’t immediately available to respond to Sola’s comments. Sola told the Senate hearing, which was called specifically to examine the canal’s operations and the impact on US national security, that the two Hutchison ports have justified not contributing to the Panamanian government by claiming they’re not making money. But Sola — having worked himself on the development of the SSA Marine-operated terminal in Colon, Panama — questioned how the Hutchison ports could not be making money after 20 years in operation. SSA has a smaller terminal on the Atlantic side of the canal. Sola stressed he was confident the ACP could continue to efficiently operate the canal’s locks, and said the authority’s independence must be defended. “Any effort by other interests in Panama to diminish the independence or professionalism of the authority must be stopped,” he said. Sola noted the Panamanian government has a history of corruption, pointing to the state flagging of sanctioned vessels by Panama. FMC will monitor tolls, transit slot auction Sola told the Senate Committee on Commerce, Science and Transportation that the FMC would continue to monitor toll pricing implemented by the ACP and how it auctions off transit slots during drought restrictions. Deeming China’s influence on the Panama Canal “a national security risk,” Committee Chair Sen. Ted Cruz (R-Texas) said the waterway’s profits regularly exceed $3 billion annually at the expense of US taxpayers. He criticized the canal for raising its tolls in 2023 while imposing drought restrictions. “Chinese companies are building a bridge across the canal — at a slow pace so as to take nearly a decade — and control container ports at either end,” Cruz said. “The partially completed bridge gives China the ability to block the canal without warning, and the ports give China ready observation posts to time that action.” The treaty underpinning the handover of canal control to Panama allows for the US to reclaim it by force if the neutrality of the waterway is threatened, according to Eugene Kontorovich, a George Mason University professor and fellow at the conservative think tank Heritage Foundation. Such a move would require Congressional authorization, depending on the circumstances, Kontorovich told the committee. Contact Mark Szakonyi at mark.szakonyi@spglobal.com .

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FMC chair questions ‘level playing field’ in Panama Canal operations

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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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