<div class="phx-topic abstract-wrapper">Truck driver pay is beginning to rise as truckload freight demand picks up.</div>

Truck driver pay is beginning to rise as truckload freight demand picks up.

<div>As US economic activity and <a>freight demand</a> begin to rise more steadily, truck driver pay is increasing, too, not in leaps and bounds perhaps, but in increments.Motor carriers were fairly quiet about pay increases for most of 2016, largely because freight demand was low. As the US economy picks up its pace, expanding 3.2 percent in the third quarter, according to the latest estimate, driver pay is starting to rise again.Crete Carrier and Shaffer Trucking, truckload companies owned by Nebraska-based Crete Carrier Corp., this week said they would hike their pay per practical mile by 1 cent, effective Jan. 1....

As US economic activity and freight demand begin to rise more steadily, truck driver pay is increasing, too, not in leaps and bounds perhaps, but in increments. Motor carriers were fairly quiet about pay increases for most of 2016, largely because freight demand was low. As the US economy picks up its pace, expanding 3.2 percent in the third quarter, according to the latest estimate, driver pay is starting to rise again. Crete Carrier and Shaffer Trucking, truckload companies owned by Nebraska-based Crete Carrier Corp., this week said they would hike their pay per practical mile by 1 cent, effective Jan. 1. Arkansas-based USA Truck said it would boost performance bonuses by as much as 5 cents per mile and also increase detention and short-haul pay. These aren’t the double-digit increases of 2014, but they’ll be welcomed by many drivers as heralding better pay and wages in 2017. Crete said the pay raise reflects higher demand from shippers. During the past four months, miles logged by its drivers have been increasing month-to-month and year-over-year. “This pay increase is just one way we are investing in our most valuable resource,” says Tonn Ostergard, president and CEO of Crete Carrier. “Our drivers are our most valuable resource. They work hard every day safely serving our customers, and that dedication is appreciated.” With more than $1 billion in revenue in 2015, Crete is the ninth-largest truckload operator in the US ranked by revenue, according to SJ Consulting Group. The company has more than 5,000 truck drivers across its divisions, which include Crete, Shaffer and Hunt Transportation. USA Truck, a $508 million company, has about 1,600 company drivers, according to financial reports. “We are improving the pay scale for detention and short haul, as a way of protecting our drivers from loss of income during unexpected downtime,” said Martin Tewari, president of Trucking Operations. But USA Truck is looking at more than pay. “Our driver team members will now enjoy free access to XM Satellite Radio in all units, paid for by USA Truck,” he said. Tewari said USA Truck evaluates its pay each quarter to ensure driver needs are being met relative “to overall market conditions” for trucking. “Our goal is to provide USA Truck drivers with the best overall experience and the best compensation package available,” he said. USA Truck in October hiked pay for owner-operators to between $1.02 and $1.35 per mile. Driver pay rose substantially in 2014 and 2015, as higher freight demand tightened available capacity, pushing up truckload rates and exacerbating a long-term driver shortage blamed in part on low pay. Many large truckload carriers, including Swift Transportation and US Xpress Enterprises , raised driver pay by double-digits as trucking doubled down on hiring. Those substantial truckload pay hikes did push up trucking pay overall, though not by double-digits. US Bureau of Labor Statistics data show the average annual truck driver wage rose 2.4 percent in 2014, compared with a 1.7 percent increase in the overall average US wage. That was the first time trucking wages rose faster on average than US wages since 2005. In 2016, pay hikes more often targeted at specific types of drivers companies want to hire — such as solo long-haul drivers or owner-operators or hazardous materials drivers — or rewarded drivers for maintaining an accident-free record. Now carriers seem to be rounding out other parts of the “pay package,” such as pay for time spent waiting to load or unload. USA Truck and Crete are focused on the overall “package,” as Tewari said, offered drivers. That means benefits such as health and retirement plans, as well as newer equipment. Contact William B. Cassidy at bill.cassidy@ihsmarkit.com and follow him on Twitter: @wbcassidy_joc

Trucking labor

US truck driver pay rising, in steps, as market improves

<div class="phx-topic abstract-wrapper">The National Retail Federation now says it expects a downward shift in the second quarter as importers face challenges from tariffs and elevated inventories in the wake of significant cargo frontloading.</div>

The National Retail Federation now says it expects a downward shift in the second quarter as importers face challenges from tariffs and elevated inventories in the wake of significant cargo frontloading.

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<div class="phx-topic">US retailers have downgraded their import projections for the second quarter amid the tariff chaos playing out between the Trump administration and key trading partners. The National Retail Federation (NRF) and Hackett Associates, publishers of the monthly Global Port Tracker (GPT), now say they expect a downward shift in the spring as retailers face challenges from tariffs and elevated inventories in the wake of significant cargo frontloading. “Retailers are continuing to bring as much merchandise into the country ahead of rising tariffs as possible,” Jonathan Gold, NRF vice president for supply chain and customs policy, said in the GPT. While March import projections remained unchanged, the latest GPT released this week has lowered import expectations for April, May, June and July compared with projections made just last month. The new GPT forecasts April volumes at 2.18 million TEUs, up 5.7% over the year but down from February’s projection of 8.2% year-over-year growth. While May’s import projections call for 2.8% growth to 2.14 million TEUs, that is down from the 5.4% year-over-year gain expected last month. June’s volume projections slipped to 2.07 million TEUs, down 3.2% over the year and a larger drop than the initial 0.6% decline predicted last month. It would be the first year-over-year import drop for any month since September 2023. And in its first forecast for July, the GPT projects import levels of 1.99 million TEUs, down 13.9% year over year. President Donald Trump’s recent doubling of tariffs on Chinese goods from 10% to 20% raises significant concerns for the shipping industry, particularly as reciprocal tariffs loom on the horizon, the NRF said. While the on-again, off-again tariffs on goods from Canada and Mexico are expected to have minimal direct impact on port volumes because most goods from those countries are transported via truck or rail, the uncertainty surrounding tariffs is prompting some retailers to adjust their supply chain strategies, the NRF said. Hackett Associates founder Ben Hackett noted that <a href="https://www.joc.com/article/proposed-us-tax-on-chinese-ship-calls-could-pressure-intermodal-networks-5960849">the possible implementation of new fees</a> on Chinese tonnage docking at US ports could further complicate the situation, potentially leading to increased costs for both cargo owners and consumers. Contact Laura Robb at <a href="mailto:Laura.Robb@spglobal.com">laura.robb@spglobal.com</a>.  </div>

US retailers have downgraded their import projections for the second quarter amid the tariff chaos playing out between the Trump administration and key trading partners. The National Retail Federation (NRF) and Hackett Associates, publishers of the monthly Global Port Tracker (GPT), now say they expect a downward shift in the spring as retailers face challenges from tariffs and elevated inventories in the wake of significant cargo frontloading. “Retailers are continuing to bring as much merchandise into the country ahead of rising tariffs as possible,” Jonathan Gold, NRF vice president for supply chain and customs policy, said in the GPT. While March import projections remained unchanged, the latest GPT released this week has lowered import expectations for April, May, June and July compared with projections made just last month. The new GPT forecasts April volumes at 2.18 million TEUs, up 5.7% over the year but down from February’s projection of 8.2% year-over-year growth. While May’s import projections call for 2.8% growth to 2.14 million TEUs, that is down from the 5.4% year-over-year gain expected last month. June’s volume projections slipped to 2.07 million TEUs, down 3.2% over the year and a larger drop than the initial 0.6% decline predicted last month. It would be the first year-over-year import drop for any month since September 2023. And in its first forecast for July, the GPT projects import levels of 1.99 million TEUs, down 13.9% year over year. President Donald Trump’s recent doubling of tariffs on Chinese goods from 10% to 20% raises significant concerns for the shipping industry, particularly as reciprocal tariffs loom on the horizon, the NRF said. While the on-again, off-again tariffs on goods from Canada and Mexico are expected to have minimal direct impact on port volumes because most goods from those countries are transported via truck or rail, the uncertainty surrounding tariffs is prompting some retailers to adjust their supply chain strategies, the NRF said. Hackett Associates founder Ben Hackett noted that the possible implementation of new fees on Chinese tonnage docking at US ports could further complicate the situation, potentially leading to increased costs for both cargo owners and consumers. Contact Laura Robb at laura.robb@spglobal.com . 

Maritime

Trans-Atlantic

Forwarding

North American ports

Container Shipping News

Tariff uncertainty prompts US retailers to downgrade spring import forecast

<div class="phx-topic abstract-wrapper">Zim’s decision to keep more capacity available for spot rather than contract business on the trans-Pacific allowed it to capitalize on the expanded deployment of capacity on the trade. </div>

Zim’s decision to keep more capacity available for spot rather than contract business on the trans-Pacific allowed it to capitalize on the expanded deployment of capacity on the trade.

<div class="phx-topic">Zim Integrated Shipping Services had its most profitable year ever in 2024, excluding the pandemic period, due to its ability to expand its market share on the trans-Pacific. But the carrier warned that the highest level of uncertainty in recent memory now hangs over the trade. Zim CEO Xavier Destriau on Wednesday said US import volumes from Asia have been weaker than usual in the slack period after Lunar New Year. The decline in container spot rates, as measured by various indices, has been sharper than usual during the traditional slack period, suggesting lower utilization on US-bound vessels. US tariffs on China and retaliatory measures on US exporters are weighing on the market, Destriau said, while a proposed <a href="https://www.joc.com/article/tpm25-port-tax-on-chinese-ships-will-make-some-routes-unviable-mscs-toft-5954640">US port tax on Chinese tonnage</a> is adding to the uncertainty around volume growth that Zim expects to remain strong through the first half of the year. The container shipping industry “has always been characterized by volatility because we are subject to so many external drivers that we cannot control so we have to feel okay with the uncertainty and volatility,” Destriau told the Journal of Commerce. “Looking into 2025, there is so much uncertainty still and some clarification needed as to what will be the ultimate end game” from the Trump administration. Zim on Wednesday reported net income of $2.15 billion for the full year compared with a $2.7 billion loss in 2023, while revenue jumped 63% to $8.4 billion. For the fourth quarter, net income of $563 million was up from a $147 million loss a year ago on revenues of $2.17 billion that were up 80%. Volumes handled by the carrier jumped 14% for the full year and 25% in the fourth quarter, beating the mid-single-digit industry average. Zim’s decision to keep more capacity open for spot rather than contract business on the trans-Pacific allowed it to capitalize on the expanded deployment of capacity, while it lowered operating costs due to newer vessels powered by liquefied natural gas (LNG). The carrier accounts for just 2% to 2.5% of global capacity but handled 5.6% of laden imports from Asia last year as its laden volumes on the trans-Pacific rose 37% compared with 2023, according to PIERS, a sister company of the Journal of Commerce within S&amp;P Global. Zim said its total trans-Pacific volumes rose 27% last year from 2023. The carrier took delivery of 29 container vessels last year, putting pressure on Zim to maximize utilization. It shifted capacity from intra-Asia trades to the trans-Pacific, which benefited from strong import frontloading and a capacity crunch last spring. <h3>Tougher 2025 ahead </h3>Zim expects global container rates to be lower this year than last, largely due to some 2 million TEUs of capacity that will be delivered in 2025. The average freight rate charged by Zim last year jumped nearly 57% from 2023 to $1,888 per FEU. Zim, which has been specifically targeted by Houthi rebels due to the carrier’s Israeli origin, doesn’t <a href="https://www.joc.com/article/houthi-militants-threaten-to-restart-attacks-on-red-sea-shipping-5959250">expect the Red Sea to reopen</a> until the second half at the earliest, “meaning we expect a better first half of 2025 while rerouting continues to absorb significant capacity,” Destriau told investors. Zim can mitigate any potential overcapacity by slowing the speeds of vessels, idling capacity and scrapping older ships; the global scrapping rate last year was less than 1%, according to maritime analyst Alphaliner. Having completed its fleet renewal program in 2024, Zim expects to deploy approximately the same amount of capacity this year. Zim in 2024 expanded its container fleet to 128 ships, equating to total capacity of 784,000 TEUs. How Zim deploys capacity on the trans-Pacific may change depending on the US Trade Representative’s (USTR’s) proposal to tax Chinese tonnage deployed on US trades. Zim’s fleet includes vessels built in China and South Korea. To reduce the costs of calling US ports under a scenario where the USTR proposal is implemented, Zim might be forced to drop its last call at Boston on an Asia service connecting with Norfolk, Baltimore and New York, Destriau said. “We might want to limit the amount of calls and move more cargo into less ports and then we would need to rearrange” transport via land options, he said, adding that Zim would need to find ways to recover the additional operating costs from customers. Contact Mark Szakonyi at <a href="mark.szakonyi@spglobal.com.">mark.szakonyi@spglobal.com</a>. </div>

Zim Integrated Shipping Services had its most profitable year ever in 2024, excluding the pandemic period, due to its ability to expand its market share on the trans-Pacific. But the carrier warned that the highest level of uncertainty in recent memory now hangs over the trade. Zim CEO Xavier Destriau on Wednesday said US import volumes from Asia have been weaker than usual in the slack period after Lunar New Year. The decline in container spot rates, as measured by various indices, has been sharper than usual during the traditional slack period, suggesting lower utilization on US-bound vessels. US tariffs on China and retaliatory measures on US exporters are weighing on the market, Destriau said, while a proposed US port tax on Chinese tonnage is adding to the uncertainty around volume growth that Zim expects to remain strong through the first half of the year. The container shipping industry “has always been characterized by volatility because we are subject to so many external drivers that we cannot control so we have to feel okay with the uncertainty and volatility,” Destriau told the Journal of Commerce. “Looking into 2025, there is so much uncertainty still and some clarification needed as to what will be the ultimate end game” from the Trump administration. Zim on Wednesday reported net income of $2.15 billion for the full year compared with a $2.7 billion loss in 2023, while revenue jumped 63% to $8.4 billion. For the fourth quarter, net income of $563 million was up from a $147 million loss a year ago on revenues of $2.17 billion that were up 80%. Volumes handled by the carrier jumped 14% for the full year and 25% in the fourth quarter, beating the mid-single-digit industry average. Zim’s decision to keep more capacity open for spot rather than contract business on the trans-Pacific allowed it to capitalize on the expanded deployment of capacity, while it lowered operating costs due to newer vessels powered by liquefied natural gas (LNG). The carrier accounts for just 2% to 2.5% of global capacity but handled 5.6% of laden imports from Asia last year as its laden volumes on the trans-Pacific rose 37% compared with 2023, according to PIERS, a sister company of the Journal of Commerce within S&P Global. Zim said its total trans-Pacific volumes rose 27% last year from 2023. The carrier took delivery of 29 container vessels last year, putting pressure on Zim to maximize utilization. It shifted capacity from intra-Asia trades to the trans-Pacific, which benefited from strong import frontloading and a capacity crunch last spring. Tougher 2025 ahead Zim expects global container rates to be lower this year than last, largely due to some 2 million TEUs of capacity that will be delivered in 2025. The average freight rate charged by Zim last year jumped nearly 57% from 2023 to $1,888 per FEU. Zim, which has been specifically targeted by Houthi rebels due to the carrier’s Israeli origin, doesn’t expect the Red Sea to reopen until the second half at the earliest, “meaning we expect a better first half of 2025 while rerouting continues to absorb significant capacity,” Destriau told investors. Zim can mitigate any potential overcapacity by slowing the speeds of vessels, idling capacity and scrapping older ships; the global scrapping rate last year was less than 1%, according to maritime analyst Alphaliner. Having completed its fleet renewal program in 2024, Zim expects to deploy approximately the same amount of capacity this year. Zim in 2024 expanded its container fleet to 128 ships, equating to total capacity of 784,000 TEUs. How Zim deploys capacity on the trans-Pacific may change depending on the US Trade Representative’s (USTR’s) proposal to tax Chinese tonnage deployed on US trades. Zim’s fleet includes vessels built in China and South Korea. To reduce the costs of calling US ports under a scenario where the USTR proposal is implemented, Zim might be forced to drop its last call at Boston on an Asia service connecting with Norfolk, Baltimore and New York, Destriau said. “We might want to limit the amount of calls and move more cargo into less ports and then we would need to rearrange” transport via land options, he said, adding that Zim would need to find ways to recover the additional operating costs from customers. Contact Mark Szakonyi at mark.szakonyi@spglobal.com .

Port News

Container lines

Trans-Pacific

Tariffs, USTR uncertainty cloud Zim’s outlook after banner 2024

<div class="phx-topic abstract-wrapper">The ability to shift capacity to alternative growth markets combined with a diversified cargo mix will insulate the airline from US moves to target e-commerce imports from China, according to its chairman.</div>

The ability to shift capacity to alternative growth markets combined with a diversified cargo mix will insulate the airline from US moves to target e-commerce imports from China, according to its chairman.

<div class="phx-topic">Heavy investment in diversifying its air cargo mix combined with growing volume from Southeast Asia as companies boost China-plus-one manufacturing strategies will cushion Cathay Pacific from an impending US clampdown on low-value e-commerce imports, according to chairman Patrick Healy. Announcing the Hong Kong-based airline’s annual results Wednesday, Healy highlighted the growing turbulence in global markets that was impacting the air freight business, particularly on the trans-Pacific. “Clearly, when it comes to international trade, we don’t like uncertainty and we don’t like friction, and what we’re seeing a lot of these days in the geopolitical environment is both friction and uncertainty,” he told reporters. “But we have a resilient cargo operation, and we have a lot of opportunity to shift our mix and to diversify to a variety of different sources and markets,” Healy added. Strong e-commerce demand last year filled all available air freight capacity out of China and kept the industry in peak season mode. Most of the e-commerce volume is produced in South China and exported via Hong Kong International Airport that in 2024 saw air cargo exports grow 18.9% year over year to 3.6 million tons. Healy said cargo “was absolutely central to the solid financial results last year.” Cathay Pacific cargo volume grew 11% year over year in 2024 to 1.5 million tons and contributed HK$24 billion ($2.96 billion) to the group’s revenue, a year-over-year increase of 8.4%. <h3>Bull run may be over </h3>But the e-commerce bull run appears to be coming to an end. Mounting uncertainty over the impact of <a href="https://www.joc.com/article/europe-joins-us-in-call-for-end-to-e-commerce-de-minimis-exemption-5943108">a US clampdown on low-value products</a> under the “de minimis” threshold is already <a href="https://www.joc.com/article/air-cargo-rates-tumble-as-market-adjusts-to-looming-de-minimis-changes-5959227">dragging down rates on the trans-Pacific</a>. De minimis regulations in the US allow one shipment of less than $800 in value to move between a single shipper and single consignee per day, duty free. China accounted for two-thirds of the US’ 1.36 billion de minimis imports last year. When the Trump administration removed low-value products from de minimis exemptions in February, the system immediately backed up, forcing the exemption of low-value imports to be restored while US Customs and Border Patrol devises an appropriate inspection and duty collection system. The International Air Cargo Association (Tiaca) is not expecting such a system to be in place before mid-year. <h3>Matching a shift in demand </h3>Lavinia Lau, chief commercial and customer officer at Cathay Pacific, said during the results announcement that coming changes to e-commerce will influence the carrier’s cargo operations, but overall demand is expected to remain robust, with flexibility built into the business. “If we see demand from a certain country or origin changing, we can quickly shift flights to other parts of the world,” Lau told reporters. “We are seeing more China-plus-one strategies and [manufacturers] expanding bases in Southeast Asia, Vietnam and India, for example. “Because we have very strong cargo and passenger flight networks in those places, it allows us to quickly make changes to cargo flows,” she added. Cathay Pacific has also been diversifying its cargo mix and expanding handling capabilities in the perishables and other time-sensitive sectors that will offset any winding down of e-commerce demand. “Through all these investments, it allows us to diversify our risk and reliance on a single type of cargo,” Lau said. “Our team is watching the market very closely, talking to shippers and forwarders so that we can detect changes in the overall cargo demand and respond quickly.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Heavy investment in diversifying its air cargo mix combined with growing volume from Southeast Asia as companies boost China-plus-one manufacturing strategies will cushion Cathay Pacific from an impending US clampdown on low-value e-commerce imports, according to chairman Patrick Healy. Announcing the Hong Kong-based airline’s annual results Wednesday, Healy highlighted the growing turbulence in global markets that was impacting the air freight business, particularly on the trans-Pacific. “Clearly, when it comes to international trade, we don’t like uncertainty and we don’t like friction, and what we’re seeing a lot of these days in the geopolitical environment is both friction and uncertainty,” he told reporters. “But we have a resilient cargo operation, and we have a lot of opportunity to shift our mix and to diversify to a variety of different sources and markets,” Healy added. Strong e-commerce demand last year filled all available air freight capacity out of China and kept the industry in peak season mode. Most of the e-commerce volume is produced in South China and exported via Hong Kong International Airport that in 2024 saw air cargo exports grow 18.9% year over year to 3.6 million tons. Healy said cargo “was absolutely central to the solid financial results last year.” Cathay Pacific cargo volume grew 11% year over year in 2024 to 1.5 million tons and contributed HK$24 billion ($2.96 billion) to the group’s revenue, a year-over-year increase of 8.4%. Bull run may be over But the e-commerce bull run appears to be coming to an end. Mounting uncertainty over the impact of a US clampdown on low-value products under the “de minimis” threshold is already dragging down rates on the trans-Pacific . De minimis regulations in the US allow one shipment of less than $800 in value to move between a single shipper and single consignee per day, duty free. China accounted for two-thirds of the US’ 1.36 billion de minimis imports last year. When the Trump administration removed low-value products from de minimis exemptions in February, the system immediately backed up, forcing the exemption of low-value imports to be restored while US Customs and Border Patrol devises an appropriate inspection and duty collection system. The International Air Cargo Association (Tiaca) is not expecting such a system to be in place before mid-year. Matching a shift in demand Lavinia Lau, chief commercial and customer officer at Cathay Pacific, said during the results announcement that coming changes to e-commerce will influence the carrier’s cargo operations, but overall demand is expected to remain robust, with flexibility built into the business. “If we see demand from a certain country or origin changing, we can quickly shift flights to other parts of the world,” Lau told reporters. “We are seeing more China-plus-one strategies and [manufacturers] expanding bases in Southeast Asia, Vietnam and India, for example. “Because we have very strong cargo and passenger flight networks in those places, it allows us to quickly make changes to cargo flows,” she added. Cathay Pacific has also been diversifying its cargo mix and expanding handling capabilities in the perishables and other time-sensitive sectors that will offset any winding down of e-commerce demand. “Through all these investments, it allows us to diversify our risk and reliance on a single type of cargo,” Lau said. “Our team is watching the market very closely, talking to shippers and forwarders so that we can detect changes in the overall cargo demand and respond quickly.” Contact Greg Knowler at greg.knowler@spglobal.com .

Air Cargo

Air Cargo Forwarder News

Air Cargo Carriers News

‘Resilient’ Cathay Pacific ready to offset any e-commerce decline: chairman

<div class="phx-topic abstract-wrapper">While the 15-month-old Red Sea crisis is ever present, ocean carriers and their customers are also now navigating the vagaries of the trade policies and proposals of the Trump administration.</div>

While the 15-month-old Red Sea crisis is ever present, ocean carriers and their customers are also now navigating the vagaries of the trade policies and proposals of the Trump administration.

<div class="phx-topic">There appears to be no end to the alarmist headlines regarding the impact on container shipping from the rapidly changing political decisions taken by the new US administration as well as wider geopolitical challenges. Perhaps it is time to add another perspective into the mix. Let us get a few things straight first. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5961471_0.1.jpg"></img></div>The Red Sea crisis continues to have a major impact on the container shipping sector. The diversions around southern Africa are what continues to keep container vessel capacity in short supply. The amount of idle container vessels has been well below 1% since February 2024 and the latest data for February 2025 shows an idle ratio of 0.6%. This is the same low level of idle capacity we saw during the height of the pandemic disruptions and implies that there is effectively no material excess capacity available. This is the foundation for freight rates remaining at a relatively elevated level despite recent declines. But it should similarly be noted that despite the Red Sea crisis, the supply chain adapted to the new situation and freight kept moving, with 2024 being yet another record year in terms of total TEUs shipped. Another fact to keep in mind is that during the worst of the pandemic disruptions, we saw spot rates increase to levels far beyond anything seen previously. Even the Red Sea crisis in 2024 did not bring rates anywhere near the peak of 2021–22. It should be kept in mind that despite those extremely elevated rates, freight continued to move at record levels, and none of this led to the onset of a major financial downturn. We can argue the degree to which high rates during the pandemic contributed to the inflation that is still a key issue, especially in the US, but it did not bring the economy to a standstill. This brings us to the challenges of 2025. The Red Sea crisis appears likely to continue for the medium term, which also lays the foundation for a strong peak season in 2025 — unless demand is negatively impacted by recession or inventory corrections, or a combination thereof. But with new capacity continuing to be delivered, the pressure on the supply/demand balance in 2025 will be less than in 2024, and hence clearly a manageable situation. The rapid changes in tariffs driven by the new US administration creates major uncertainties for shippers. But this is mainly a monetary uncertainty in terms of how much landed costs are going to be, and in the case of exporters, how competitive they will be. The tariff challenges do not translate into any specific operational bottlenecks in terms of vessel or equipment capacity — although concerns could be raised as to whether customs clearance in the US might become a bottleneck. So, yes, US importers and exporters may well see significant challenges related to the tariffs, but these challenges are not caused by the container shipping supply chain. If anything, the flexibility of the container shipping networks will likely lead to a fairly swift and efficient change in network coverage should a more stable tariff environment emerge that allows shippers to shift to better sourcing and/or routing of cargo. <h3>Risk of rising costs, port congestion from USTR proposal </h3>And finally, there is the issue of USTR 301 — <a href="https://www.joc.com/article/us-port-tax-would-scramble-ocean-services-raise-shipper-costs-drewry-5952046">the proposal by the United States Trade Representative to hit Chinese-made and -operated vessels</a> with fees of $1 million to $1.5 million per US port call. Various estimates place the annual cost of this between $20 billion and $30 billion if implemented with no changes. My own estimate presently is about $24 billion. A ripple effect will be that carriers are likely to reduce their port coverage in the US, favoring larger ports and deselecting some of the smaller ports. This was <a href="https://www.joc.com/article/tpm25-port-tax-on-chinese-ships-will-make-some-routes-unviable-mscs-toft-5954640">confirmed by Mediterranean Shipping Co. CEO Soren Toft at TPM25 last week</a>. Carriers will also likely attempt to route more cargo via Canadian and Mexican ports, as well as reduce the number of services while phasing in larger vessels. That, in turn, will create congestion issues in the ports. Does this constitute a calamity for the supply chain? It depends on the individual assessment of what a “calamity” is. But if we draw on the lessons from the last five years, while it will not stop the flow of cargo, it will raise costs for US importers and exporters. The estimate of the total costs of USTR 301 amounts to an average of approximately $1,000 per FEU for all US import and export containers. This will likely be substantially more on the import cargo and less on the export cargo. Seen in the context of the freight rate spikes endured by shippers affected first by the pandemic and then by the Red Sea crisis, an increase of $1,000 per FEU or more has indeed been handled before. But, of course, not without cost to the shippers. Still, the more troubling aspect of USTR 301 is the risk of creating more port congestion. The real driver behind the price spikes in 2021–22 and 2024 was capacity shortage. Port congestion effectively removes capacity from the market, and presently there is no excess capacity. The $1,000-per-FEU impact of USTR 301 might pale in comparison with the freight rate increases that could follow congestion-linked network changes. Contact Lars Jensen at <a href="https://www.joc.com/article/lars.jensen@vespucci-maritime.com">lars.jensen@vespucci-maritime.com</a>.</div>

There appears to be no end to the alarmist headlines regarding the impact on container shipping from the rapidly changing political decisions taken by the new US administration as well as wider geopolitical challenges. Perhaps it is time to add another perspective into the mix. Let us get a few things straight first. The Red Sea crisis continues to have a major impact on the container shipping sector. The diversions around southern Africa are what continues to keep container vessel capacity in short supply. The amount of idle container vessels has been well below 1% since February 2024 and the latest data for February 2025 shows an idle ratio of 0.6%. This is the same low level of idle capacity we saw during the height of the pandemic disruptions and implies that there is effectively no material excess capacity available. This is the foundation for freight rates remaining at a relatively elevated level despite recent declines. But it should similarly be noted that despite the Red Sea crisis, the supply chain adapted to the new situation and freight kept moving, with 2024 being yet another record year in terms of total TEUs shipped. Another fact to keep in mind is that during the worst of the pandemic disruptions, we saw spot rates increase to levels far beyond anything seen previously. Even the Red Sea crisis in 2024 did not bring rates anywhere near the peak of 2021–22. It should be kept in mind that despite those extremely elevated rates, freight continued to move at record levels, and none of this led to the onset of a major financial downturn. We can argue the degree to which high rates during the pandemic contributed to the inflation that is still a key issue, especially in the US, but it did not bring the economy to a standstill. This brings us to the challenges of 2025. The Red Sea crisis appears likely to continue for the medium term, which also lays the foundation for a strong peak season in 2025 — unless demand is negatively impacted by recession or inventory corrections, or a combination thereof. But with new capacity continuing to be delivered, the pressure on the supply/demand balance in 2025 will be less than in 2024, and hence clearly a manageable situation. The rapid changes in tariffs driven by the new US administration creates major uncertainties for shippers. But this is mainly a monetary uncertainty in terms of how much landed costs are going to be, and in the case of exporters, how competitive they will be. The tariff challenges do not translate into any specific operational bottlenecks in terms of vessel or equipment capacity — although concerns could be raised as to whether customs clearance in the US might become a bottleneck. So, yes, US importers and exporters may well see significant challenges related to the tariffs, but these challenges are not caused by the container shipping supply chain. If anything, the flexibility of the container shipping networks will likely lead to a fairly swift and efficient change in network coverage should a more stable tariff environment emerge that allows shippers to shift to better sourcing and/or routing of cargo. Risk of rising costs, port congestion from USTR proposal And finally, there is the issue of USTR 301 — the proposal by the United States Trade Representative to hit Chinese-made and -operated vessels with fees of $1 million to $1.5 million per US port call. Various estimates place the annual cost of this between $20 billion and $30 billion if implemented with no changes. My own estimate presently is about $24 billion. A ripple effect will be that carriers are likely to reduce their port coverage in the US, favoring larger ports and deselecting some of the smaller ports. This was confirmed by Mediterranean Shipping Co. CEO Soren Toft at TPM25 last week . Carriers will also likely attempt to route more cargo via Canadian and Mexican ports, as well as reduce the number of services while phasing in larger vessels. That, in turn, will create congestion issues in the ports. Does this constitute a calamity for the supply chain? It depends on the individual assessment of what a “calamity” is. But if we draw on the lessons from the last five years, while it will not stop the flow of cargo, it will raise costs for US importers and exporters. The estimate of the total costs of USTR 301 amounts to an average of approximately $1,000 per FEU for all US import and export containers. This will likely be substantially more on the import cargo and less on the export cargo. Seen in the context of the freight rate spikes endured by shippers affected first by the pandemic and then by the Red Sea crisis, an increase of $1,000 per FEU or more has indeed been handled before. But, of course, not without cost to the shippers. Still, the more troubling aspect of USTR 301 is the risk of creating more port congestion. The real driver behind the price spikes in 2021–22 and 2024 was capacity shortage. Port congestion effectively removes capacity from the market, and presently there is no excess capacity. The $1,000-per-FEU impact of USTR 301 might pale in comparison with the freight rate increases that could follow congestion-linked network changes. Contact Lars Jensen at lars.jensen@vespucci-maritime.com .

Container shipping facing a mix of challenges both old and new

<div class="phx-topic abstract-wrapper">After raising rates in anticipation of higher volumes, several top carriers have now dropped spot booking rates from West India to North Europe by between $300 and $500 per container, according to freight forwarder sources in Mumbai.</div>

After raising rates in anticipation of higher volumes, several top carriers have now dropped spot booking rates from West India to North Europe by between $300 and $500 per container, according to freight forwarder sources in Mumbai.

<div class="phx-topic">Container lines with larger trade stakes on the India-Europe route are reporting lower vessel space demand, prompting them to implement spot rate adjustments on a sailing-by-sailing or weekly basis. After raising rates in anticipation of higher volumes, several top carriers have now dropped spot booking rates from West India to North Europe by between $300 and $500 per container, according to freight forwarder sources in Mumbai. Forwarder sources have noted two plausible reasons for the cargo pressure: a slower-than-expected seasonal grape export market that typically runs between February and April and an additional capacity injection from “opportunistic” regional operators. For Indian-grown grape exports, Maersk and Hapag-Lloyd, now partners in the Gemini Cooperation, are predominant. Sensing the headwinds, both carriers have adjusted their rates downward week over week, forcing others to follow suit. “The grape season hasn’t been as buoyant as expected,” a sales executive at Maersk (India) who didn’t want to be identified told the Journal of Commerce. “The market is heavily oversupplied.” Some recent vessels on the premier India/Europe networks, particularly the ME1/IOS under Gemini, have sailed short of full loading allocations despite a shipment push linked to fiscal year-end closing export flows. “The trade outlook seems to be weakening,” a second carrier source said. “As things stand, it’s unlikely to get any better in the near term.” <h3>New capacity enters the market </h3>Forwarders put updated Nhava Sheva-London Gateway/Felixstowe spot pricing by carrier for upcoming March sailings at: Maersk — $1,579 per TEU and $1,749 per FEU; CMA CGM — $1,862 and $2,010; and Hapag-Lloyd — $1,812 and $1,919. Capacity continues to enter the Indian market. Last week, Maersk began its revamped MECL string connecting West India and North America with the Maersk Atlanta docking at Mundra Port, a third Indian port call the carrier added to enhance loading capacity. Meanwhile, India’s goods export trade by value slipped 2.5% in January year over year, new data shows. “This [export] drop is attributable to the volatility in commodity and metal prices, as well as ongoing trade disruptions such as the [US] tariff war and currency fluctuations,” Ashwani Kumar, president of the Federation of Indian Export Organizations (FIEO), said in a statement. “This calls for a focused approach to export diversification, targeting new markets and products, and for the continuation of trade facilitation measures and export incentives.” Contact Bency Mathew at <a href="https://www.joc.com/article/bencyvmathew@gmail.com">bencyvmathew@gmail.com</a>.</div>

Container lines with larger trade stakes on the India-Europe route are reporting lower vessel space demand, prompting them to implement spot rate adjustments on a sailing-by-sailing or weekly basis. After raising rates in anticipation of higher volumes, several top carriers have now dropped spot booking rates from West India to North Europe by between $300 and $500 per container, according to freight forwarder sources in Mumbai. Forwarder sources have noted two plausible reasons for the cargo pressure: a slower-than-expected seasonal grape export market that typically runs between February and April and an additional capacity injection from “opportunistic” regional operators. For Indian-grown grape exports, Maersk and Hapag-Lloyd, now partners in the Gemini Cooperation, are predominant. Sensing the headwinds, both carriers have adjusted their rates downward week over week, forcing others to follow suit. “The grape season hasn’t been as buoyant as expected,” a sales executive at Maersk (India) who didn’t want to be identified told the Journal of Commerce. “The market is heavily oversupplied.” Some recent vessels on the premier India/Europe networks, particularly the ME1/IOS under Gemini, have sailed short of full loading allocations despite a shipment push linked to fiscal year-end closing export flows. “The trade outlook seems to be weakening,” a second carrier source said. “As things stand, it’s unlikely to get any better in the near term.” New capacity enters the market Forwarders put updated Nhava Sheva-London Gateway/Felixstowe spot pricing by carrier for upcoming March sailings at: Maersk — $1,579 per TEU and $1,749 per FEU; CMA CGM — $1,862 and $2,010; and Hapag-Lloyd — $1,812 and $1,919. Capacity continues to enter the Indian market. Last week, Maersk began its revamped MECL string connecting West India and North America with the Maersk Atlanta docking at Mundra Port, a third Indian port call the carrier added to enhance loading capacity. Meanwhile, India’s goods export trade by value slipped 2.5% in January year over year, new data shows. “This [export] drop is attributable to the volatility in commodity and metal prices, as well as ongoing trade disruptions such as the [US] tariff war and currency fluctuations,” Ashwani Kumar, president of the Federation of Indian Export Organizations (FIEO), said in a statement. “This calls for a focused approach to export diversification, targeting new markets and products, and for the continuation of trade facilitation measures and export incentives.” Contact Bency Mathew at bencyvmathew@gmail.com .

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India-Europe liners abruptly drop rates amid weakening cargo prospects

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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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