<div class="phx-topic abstract-wrapper">Despite its brevity, shippers can expect to see ongoing impacts on tonnage supply on some trade lanes from the Oct. 1-3 strike, Lars Jensen told the South Carolina International Trade Conference.</div>

Despite its brevity, shippers can expect to see ongoing impacts on tonnage supply on some trade lanes from the Oct. 1-3 strike, Lars Jensen told the South Carolina International Trade Conference.

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<div class="phx-topic">The three-day strike by dockworkers at East and Gulf coast ports earlier this month will bring a delayed reduction in capacity on some trade lanes and could affect cargo frontloading ahead of another potential work stoppage in January, container shipping analyst Lars Jensen said Thursday.Despite its brevity, shippers can expect to see ongoing impacts on tonnage supply on some trade lanes from the <a href="https://www.joc.com/article/ila-usmx-agree-on-new-wage-offer-and-contract-extension-that-reopens-ports-5741882">Oct. 1-3 strike</a>, Jensen, CEO of Vespucci Maritime and a Journal of Commerce analyst, told the South Carolina International Trade Conference. “A three-day strike doesn’t sound like much but that doesn’t mean it’s over,” Jensen said. “The regular cost from just a three-day strike is going to be with us at least until the middle of November. Some of the ripple effects are only just now beginning to show themselves.”Two weeks after the stoppage, ships on the trans-Atlantic backhaul trade are delayed for their arrivals to Europe, impacting export capacity, Jensen said. After three to four weeks, Latin America exports will be affected, with Asia exports impacted after five to six weeks, he said.“These are simply dominoes that have fallen,” Jensen said. “Every time we have a problem somewhere in the world, this percolates through the system for months.” Carriers have expressed similar concerns related to equipment availability and schedule impacts.“The strike and [the] slow steaming around the Cape of Good Hope requires such an investment in assets so you have enough containers to get back to handle both sides of the ocean,” Stuart Sandlin, president of Hapag Lloyd/North America said during the South Carolina conference. “These disruptions really throw a kink in that supply chain ... That, for us as a carrier, is the worst scenario. Now, I have my ship, my $320 million asset, but there’s nothing to load because I don’t have the containers there.”Jensen, <a href="https://www.joc.com/article/strike-bullet-dodged-for-now-but-raises-questions-of-market-resilience-analyst-5745208">in a recent Journal of Commerce commentary</a>, previously identified mid-November as a tipping point — when the operational effects from the October strike could begin to fade at the same time supply chain concerns renew ahead of the Jan. 15 deadline for the International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) to reach a formal deal on a new master contract.If that contract isn’t agreed on soon, Jensen predicts another surge of cargo to the US ahead of the next potential labor disruption, further straining available capacity. The surge would be exacerbated if Donald Trump wins the November presidential election, bringing with it a threat of potential tariffs that would further drive volumes before Trump would take office in January.”Again, working backwards, that would mean a surge in export cargo out of Asia,” Jensen said. “Just like when we had an early peak season [in the US] in the summer, we’re going to have an early peak season ahead of [Lunar New Year.]”Contact Laura Robb at <a href="mailto:Laura.Robb@spglobal.com">laura.robb@spglobal.com</a>. </div>

The three-day strike by dockworkers at East and Gulf coast ports earlier this month will bring a delayed reduction in capacity on some trade lanes and could affect cargo frontloading ahead of another potential work stoppage in January, container shipping analyst Lars Jensen said Thursday. Despite its brevity, shippers can expect to see ongoing impacts on tonnage supply on some trade lanes from the Oct. 1-3 strike , Jensen, CEO of Vespucci Maritime and a Journal of Commerce analyst, told the South Carolina International Trade Conference. “A three-day strike doesn’t sound like much but that doesn’t mean it’s over,” Jensen said. “The regular cost from just a three-day strike is going to be with us at least until the middle of November. Some of the ripple effects are only just now beginning to show themselves.” Two weeks after the stoppage, ships on the trans-Atlantic backhaul trade are delayed for their arrivals to Europe, impacting export capacity, Jensen said. After three to four weeks, Latin America exports will be affected, with Asia exports impacted after five to six weeks, he said. “These are simply dominoes that have fallen,” Jensen said. “Every time we have a problem somewhere in the world, this percolates through the system for months.” Carriers have expressed similar concerns related to equipment availability and schedule impacts. “The strike and [the] slow steaming around the Cape of Good Hope requires such an investment in assets so you have enough containers to get back to handle both sides of the ocean,” Stuart Sandlin, president of Hapag Lloyd/North America said during the South Carolina conference. “These disruptions really throw a kink in that supply chain ... That, for us as a carrier, is the worst scenario. Now, I have my ship, my $320 million asset, but there’s nothing to load because I don’t have the containers there.” Jensen, in a recent Journal of Commerce commentary , previously identified mid-November as a tipping point — when the operational effects from the October strike could begin to fade at the same time supply chain concerns renew ahead of the Jan. 15 deadline for the International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) to reach a formal deal on a new master contract. If that contract isn’t agreed on soon, Jensen predicts another surge of cargo to the US ahead of the next potential labor disruption, further straining available capacity. The surge would be exacerbated if Donald Trump wins the November presidential election, bringing with it a threat of potential tariffs that would further drive volumes before Trump would take office in January. ”Again, working backwards, that would mean a surge in export cargo out of Asia,” Jensen said. “Just like when we had an early peak season [in the US] in the summer, we’re going to have an early peak season ahead of [Lunar New Year.]” Contact Laura Robb at laura.robb@spglobal.com .

Maritime

Supply chain

Container Shipping News

Port News

Ripple effects playing out globally from ILA strike: analyst

<div class="phx-topic abstract-wrapper">The Class I railroads are acquiring separate sections of a rail line in Alabama and Mississippi, allowing them to launch a new joint intermodal service between Mexico and the Southeast US. </div>

The Class I railroads are acquiring separate sections of a rail line in Alabama and Mississippi, allowing them to launch a new joint intermodal service between Mexico and the Southeast US.

<div class="phx-topic">Canadian Pacific Kansas City (CPKC) and CSX Transportation will roll out a new joint intermodal service connecting Mexico with the Southeastern US by the end of this year after US regulators approved their separate acquisitions of two sections of a regional rail line running through Alabama and Mississippi. The Surface Transportation Board (STB) said Thursday it approved CSX’s purchase of almost 94 miles of rail from the Meridian &amp; Bigbee Railroad (MNBR) that runs between Burkeville and Myrtlewood in Alabama. Separately, STB gave the green light for CPKC to acquire from MNBR about 50 miles of rail line between Myrtlewood and Meridian, Mississippi. The approvals clear the way for trains to run between Mexico and CSX’s Fairburn terminal in Atlanta, with further connections across the Southeast. “Applicants state that they intend to create a ‘premium train service,’ with direct interchange with CSX at Myrtlewood, that would provide a new competitive routing option for intermodal, automotive, and other shippers,” STB wrote in its decision. “The transaction would result in more efficient rail service and increase the competitive options available to shippers. These reductions in route miles could put new markets within reach for shippers.” Jonathan Wahba, CPKC’s senior vice president of sales and marketing, told attendees at the Journal of Commerce’s Inland Distribution Conference (Inland24) on Oct. 2 that if final approvals were granted within a few weeks, then service would launch before the end of the year. Initially, the train service between Mexico and Atlanta will take six to seven days, Wahba said, acknowledging that it lags truckload services, which take three to four days. “We’ve got some track work that needs to be done on the Meridian &amp; Bigbee tracks, but once that’s taken care of in Q1, we’ll be looking to be single-truck competitive on transits,” Wahba said at the event. He declined to discuss pricing while transit times remain longer than trucking alternatives. The Journal of Commerce Intermodal Savings Index shows truckload rates are equal to or cheaper than rail on many lanes between Texas and Southern states such as Florida or Georgia. Trucks also avoid the potential delays that can occur when two railroads interchange freight. The CPKC-CSX route will compete with a Union Pacific route connecting to the Southeast through Memphis with CSX and Norfolk Southern Railway that was launched in October 2023. Intermodal <a href="https://www.joc.com/article/intermodal-underperforming-in-booming-mexico-us-market-5743845">volume between Mexico and the US</a> has underperformed the larger intermodal market, although that has largely been attributed to a weak market for auto shipments. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>.</div>

Canadian Pacific Kansas City (CPKC) and CSX Transportation will roll out a new joint intermodal service connecting Mexico with the Southeastern US by the end of this year after US regulators approved their separate acquisitions of two sections of a regional rail line running through Alabama and Mississippi. The Surface Transportation Board (STB) said Thursday it approved CSX’s purchase of almost 94 miles of rail from the Meridian & Bigbee Railroad (MNBR) that runs between Burkeville and Myrtlewood in Alabama. Separately, STB gave the green light for CPKC to acquire from MNBR about 50 miles of rail line between Myrtlewood and Meridian, Mississippi. The approvals clear the way for trains to run between Mexico and CSX’s Fairburn terminal in Atlanta, with further connections across the Southeast. “Applicants state that they intend to create a ‘premium train service,’ with direct interchange with CSX at Myrtlewood, that would provide a new competitive routing option for intermodal, automotive, and other shippers,” STB wrote in its decision. “The transaction would result in more efficient rail service and increase the competitive options available to shippers. These reductions in route miles could put new markets within reach for shippers.” Jonathan Wahba, CPKC’s senior vice president of sales and marketing, told attendees at the Journal of Commerce’s Inland Distribution Conference (Inland24) on Oct. 2 that if final approvals were granted within a few weeks, then service would launch before the end of the year. Initially, the train service between Mexico and Atlanta will take six to seven days, Wahba said, acknowledging that it lags truckload services, which take three to four days. “We’ve got some track work that needs to be done on the Meridian & Bigbee tracks, but once that’s taken care of in Q1, we’ll be looking to be single-truck competitive on transits,” Wahba said at the event. He declined to discuss pricing while transit times remain longer than trucking alternatives. The Journal of Commerce Intermodal Savings Index shows truckload rates are equal to or cheaper than rail on many lanes between Texas and Southern states such as Florida or Georgia. Trucks also avoid the potential delays that can occur when two railroads interchange freight. The CPKC-CSX route will compete with a Union Pacific route connecting to the Southeast through Memphis with CSX and Norfolk Southern Railway that was launched in October 2023. Intermodal volume between Mexico and the US has underperformed the larger intermodal market, although that has largely been attributed to a weak market for auto shipments. Contact Ari Ashe at ari.ashe@spglobal.com .

Rail News

North-American rail

Intermodal providers

Surface

STB approves CPKC, CSX acquisitions of regional rail line in southern US

<div class="phx-topic abstract-wrapper">The group, comprising ONE, HMM and Yang Ming, said the changes apply to two trans-Pacific services and an Asia-Mediterranean service.</div>

The group, comprising ONE, HMM and Yang Ming, said the changes apply to two trans-Pacific services and an Asia-Mediterranean service.

<div class="phx-topic">The Premier Alliance is upgrading a raft of its proposed <a href="https://www.joc.com/article/msc-strikes-asia-europe-slot-share-with-former-thea-members-5723585">services just weeks after announcing its trade network</a> ahead of its February 2025 launch. The group, comprising Ocean Network Express (ONE), HMM and Yang Ming Marine Transport, said the changes apply to two trans-Pacific services and an Asia-Mediterranean service. The Premier partnership will replace THE <a href="https://www.joc.com/article/maersk-rules-out-suez-canal-routings-for-gemini-launch-5746470">Alliance when Hapag-Lloyd leaves to join Maersk in the Gemini Cooperation</a>. The biggest change to the original Premier network is its decision to split the Pacific North 3 loop linking Asia with the Pacific Northwest into two distinct services, PN3 and PN4. “This enhancement aims to provide faster transit times and improve schedule integrity and reliability,” ONE said in a customer advisory on Wednesday. The alterations reduce the number of eastbound port calls to four for each service compared with six calls in the original PN3 schedule. “Separation into two services will improve the transit times from the Chinese ports, especially from Qingdao,” Lars Jensen, CEO of Vespucci Maritime and a Journal of Commerce analyst, said <a href="https://www.linkedin.com/posts/larsjensenvespuccimaritime_it-appears-that-premier-alliance-is-already-activity-7252620905783169025-Ge3p/?utm_source=share&amp;utm_medium=member_ios">in a LinkedIn post</a> Thursday. The revised PN3 rotation is Qingdao, Busan, Vancouver, Tacoma, Busan and Qingdao with a 15-day transit between Qingdao and Vancouver and 11 days from Busan to Vancouver. The rotation of the new PN4 service is Ningbo, Shanghai, Vancouver, Tacoma and Ningbo with 16 days from Ningbo to Vancouver and a 12-day journey between Shanghai and Vancouver. The other significant change is on Premier’s Asia-Mediterranean network, where it is adding a Mediterranean 5 (MD5) service, ONE said in a separate advisory Wednesday. The rotation comprises Barcelona, Singapore and Shanghai for both Suez Canal and Cape of Good Hope routings. ONE said the service will enhance direct coverage from the Mediterranean to Asia, “providing customers with improved connectivity and efficiency.” “What is curious here is that they are only promoting the backhaul connection, also in their published service map,” Jensen wrote in his LinkedIn post. “This appears to augment the MS2 service where the headhaul features a rotation where Singapore and Shanghai are connected into the Mediterranean with Barcelona as the first call, making the MS2 rather less useful for the backhaul trade.” The final upgrade is Premier’s move to add Jacksonville to its trans-Pacific East Coast North America 2 (EC2) service. The revised rotation is Xiamen, Yantian, Ningbo, Shanghai, Busan, Manzanillo (Panama), Savannah, Charleston, Jacksonville, Manzanillo, Busan and Xiamen. <h3>Yang Ming services </h3>Separately, Yang Ming said it would launch two Europe- and Mediterranean-focused services in January independent of the Premier Alliance in a move to offer a “more comprehensive and faster service to meet growing demand in Europe.” The Taiwanese carrier said its North Europe-Aegean Express (NEA) service will utilize four vessels connecting the Aegean on a 28-day fixed rotation that will comprise London Gateway, Antwerp, Rotterdam, Piraeus and the Turkish ports of Istanbul, Gebze, Gemlik and Aliaga before circling back to Piraeus and London Gateway. Yang Ming’s North Europe-Levant Express (NEL) service will also see the deployment of four ships on a fixed 28-day rotation that will be London Gateway, Rotterdam, Hamburg, Antwerp, El-Dekheila (Egypt), Damietta (Egypt), Mersin (Turkey) and London Gateway. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

The Premier Alliance is upgrading a raft of its proposed services just weeks after announcing its trade network ahead of its February 2025 launch. The group, comprising Ocean Network Express (ONE), HMM and Yang Ming Marine Transport, said the changes apply to two trans-Pacific services and an Asia-Mediterranean service. The Premier partnership will replace THE Alliance when Hapag-Lloyd leaves to join Maersk in the Gemini Cooperation . The biggest change to the original Premier network is its decision to split the Pacific North 3 loop linking Asia with the Pacific Northwest into two distinct services, PN3 and PN4. “This enhancement aims to provide faster transit times and improve schedule integrity and reliability,” ONE said in a customer advisory on Wednesday. The alterations reduce the number of eastbound port calls to four for each service compared with six calls in the original PN3 schedule. “Separation into two services will improve the transit times from the Chinese ports, especially from Qingdao,” Lars Jensen, CEO of Vespucci Maritime and a Journal of Commerce analyst, said in a LinkedIn post Thursday. The revised PN3 rotation is Qingdao, Busan, Vancouver, Tacoma, Busan and Qingdao with a 15-day transit between Qingdao and Vancouver and 11 days from Busan to Vancouver. The rotation of the new PN4 service is Ningbo, Shanghai, Vancouver, Tacoma and Ningbo with 16 days from Ningbo to Vancouver and a 12-day journey between Shanghai and Vancouver. The other significant change is on Premier’s Asia-Mediterranean network, where it is adding a Mediterranean 5 (MD5) service, ONE said in a separate advisory Wednesday. The rotation comprises Barcelona, Singapore and Shanghai for both Suez Canal and Cape of Good Hope routings. ONE said the service will enhance direct coverage from the Mediterranean to Asia, “providing customers with improved connectivity and efficiency.” “What is curious here is that they are only promoting the backhaul connection, also in their published service map,” Jensen wrote in his LinkedIn post. “This appears to augment the MS2 service where the headhaul features a rotation where Singapore and Shanghai are connected into the Mediterranean with Barcelona as the first call, making the MS2 rather less useful for the backhaul trade.” The final upgrade is Premier’s move to add Jacksonville to its trans-Pacific East Coast North America 2 (EC2) service. The revised rotation is Xiamen, Yantian, Ningbo, Shanghai, Busan, Manzanillo (Panama), Savannah, Charleston, Jacksonville, Manzanillo, Busan and Xiamen. Yang Ming services Separately, Yang Ming said it would launch two Europe- and Mediterranean-focused services in January independent of the Premier Alliance in a move to offer a “more comprehensive and faster service to meet growing demand in Europe.” The Taiwanese carrier said its North Europe-Aegean Express (NEA) service will utilize four vessels connecting the Aegean on a 28-day fixed rotation that will comprise London Gateway, Antwerp, Rotterdam, Piraeus and the Turkish ports of Istanbul, Gebze, Gemlik and Aliaga before circling back to Piraeus and London Gateway. Yang Ming’s North Europe-Levant Express (NEL) service will also see the deployment of four ships on a fixed 28-day rotation that will be London Gateway, Rotterdam, Hamburg, Antwerp, El-Dekheila (Egypt), Damietta (Egypt), Mersin (Turkey) and London Gateway. Contact Keith Wallis at keithwallis@hotmail.com .

Container lines

Trans-Atlantic

North American ports

International ports

Premier Alliance enhances network ahead of February launch

<div class="phx-topic abstract-wrapper">The port’s main container terminals are among the facilities affected by the overtime strike that Montreal’s dockworkers have deployed as part of contentious contract negotiations. </div>

The port’s main container terminals are among the facilities affected by the overtime strike that Montreal’s dockworkers have deployed as part of contentious contract negotiations.

<div class="phx-topic">The Port of Montreal is warning shippers about the risk of delays and a growing container backlog due to <a href="https://www.joc.com/article/montreal-dockworkers-to-refuse-overtime-in-latest-salvo-against-port-employers-5745362">dockworkers refusing overtime work</a>. The port’s warning comes as Canada’s labor minister suggested a further cooling off period in hopes that a new mediator will help resolve the long standoff between Montreal’s longshore union and maritime employers. The Montreal Port Authority (MPA) said the refusal by Local 375 of the Canadian Union of Public Employees (CUPE) to work overtime “could result in processing delays and a backlog of containers waiting to be handled” at the port. The port said in a statement Wednesday the delays would hit Montreal’s four main terminals for international container services, along with other related facilities. The port said that up to 10 vessels expected to arrive at the port could face delays due to the overtime strike. Liquid bulk, grain handling and short-sea container service remain unaffected. “The Montreal Port Authority remains concerned about the impact of pressure tactics on the logistics chain and on the supply of goods and commodities for businesses and the public,” the MPA said. “Our teams are actively working to minimize the impact of disruptions and ensure the smooth running of port activities.” Local 375’s overtime strike stems from the latest hurdle in contract negotiations between the union and the Maritime Employers Association (MEA) over work scheduling. Along with the overtime strike, <a href="https://www.joc.com/article/port-of-montreal-to-face-three-day-strike-against-two-terminals-next-week-5737483">Montreal dockworkers hit two of Montreal’s busiest container terminals with a three-day work stoppage</a> two weeks ago. The union’s 1,200 members at Montreal have been without a contract since the end of 2023 despite federal mediators overseeing those talks since December. The MEA said Wednesday that in a recent meeting with employers and the union, Canada’s Labor Minister Steve MacKinnon proposed that a “special mediator” be appointed, “so the parties can resume negotiations, without any pressure tactic from either party, for a period of 90 days.” The MEA said it was considering MacKinnon’s proposal, with a response from employers and the union expected by Friday. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

The Port of Montreal is warning shippers about the risk of delays and a growing container backlog due to dockworkers refusing overtime work . The port’s warning comes as Canada’s labor minister suggested a further cooling off period in hopes that a new mediator will help resolve the long standoff between Montreal’s longshore union and maritime employers. The Montreal Port Authority (MPA) said the refusal by Local 375 of the Canadian Union of Public Employees (CUPE) to work overtime “could result in processing delays and a backlog of containers waiting to be handled” at the port. The port said in a statement Wednesday the delays would hit Montreal’s four main terminals for international container services, along with other related facilities. The port said that up to 10 vessels expected to arrive at the port could face delays due to the overtime strike. Liquid bulk, grain handling and short-sea container service remain unaffected. “The Montreal Port Authority remains concerned about the impact of pressure tactics on the logistics chain and on the supply of goods and commodities for businesses and the public,” the MPA said. “Our teams are actively working to minimize the impact of disruptions and ensure the smooth running of port activities.” Local 375’s overtime strike stems from the latest hurdle in contract negotiations between the union and the Maritime Employers Association (MEA) over work scheduling. Along with the overtime strike, Montreal dockworkers hit two of Montreal’s busiest container terminals with a three-day work stoppage two weeks ago. The union’s 1,200 members at Montreal have been without a contract since the end of 2023 despite federal mediators overseeing those talks since December. The MEA said Wednesday that in a recent meeting with employers and the union, Canada’s Labor Minister Steve MacKinnon proposed that a “special mediator” be appointed, “so the parties can resume negotiations, without any pressure tactic from either party, for a period of 90 days.” The MEA said it was considering MacKinnon’s proposal, with a response from employers and the union expected by Friday. Contact Michael Angell at michael.angell@spglobal.com .

Marine terminals

Longshore labor

Montreal says congestion risk grows as dockworkers refuse overtime

<div class="phx-topic abstract-wrapper">Forwarders say their containers are sitting at some terminals for 10 days or longer before they can be retrieved, although some relief in import volumes and dwell times is expected next month.</div>

Forwarders say their containers are sitting at some terminals for 10 days or longer before they can be retrieved, although some relief in import volumes and dwell times is expected next month.

<div class="phx-topic">Rail container dwell times in the ports of Los Angeles and Long Beach surged to a two-year high in September as the largest US port complex handled record one-month volumes of imports from Asia, driven in part by retailers diverting cargo from East and Gulf coast ports ahead of the longshore strike there. And while dwell times for containers leaving the LA-LB complex by truck hit their highest level since October 2023, terminal operators say the average of 3.21 days is not contributing to congestion. The Los Angeles-Long Beach port complex in September handled 874,730 TEUs of imports from Asia, besting the previous one-month record of 873,196 TEUs in May 2022 during the post-COVID import boom, according to PIERS, a sister company of the Journal of Commerce within S&amp;P Global. The record imports in September sent rail container dwell times in LA-LB soaring to an average of 9.25 days, up from 8.2 days in August and the highest dwells since 14.2 days in October 2022, according to the Pacific Merchant Shipping Association (PMSA), which represents terminal operators and shipping lines on the West Coast. “The situation is bad and it’s getting worse,” said Stephen A. Nothdurft, vice president of sales/North America at the forwarder MOL Consolidation Service (MCS). “As always, it’s a terminal-by-terminal situation.” <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="155dedc1-99f2-4adf-a449-1c9ab2510f95"></dynamic-object></div>Forwarders say their containers are sitting at some LA-LB terminals for 10 days or longer before they can be retrieved. “We’ve had about three times our normal inventory on dock for about six weeks now,” said Alan McCorkle, president of Yusen Terminals in Los Angeles. With two weeks remaining in the peak shipping season, terminal operators expect imports will soften in the normally slow month of November. US imports from Asia hit 1.76 million TEUs in July, the highest since May 2022. That figure has gradually decreased — 1.74 million TEUs in August and 1.72 million TEUs in September — but continues to hover near two-year highs nonetheless. Carriers have <a href="https://www.joc.com/article/carriers-to-deploy-extra-loaders-to-los-angeles-long-beach-amid-import-surge-5714861">deployed 28 extra-loader vessels in September and October</a>, in addition to their normal weekly services, to handle the huge import volumes in the eastbound trans-Pacific headed to Los Angeles-Long Beach. But each port said just two extra-loaders are currently scheduled to call at their terminals in November, a sign that import volumes — and rail dwells — will decline. <h3>Terminals deploy different operating procedures </h3>Some terminals have been able to weather the elevated rail container dwells without experiencing significant congestion. “Our [on-dock] inventory is 40% higher than we would like, but our [rail] dwells are still about four days,” said Anthony Otto, president of Long Beach Container Terminal (LBCT). LBCT is a fully automated container terminal and normally has among the lowest rail container dwells and truck turn times in the port complex. McCorkle said that when Yusen’s on-dock inventory surged last month, the terminal activated its near-dock temporary storage yard so inbound containers could be moved from the terminal as soon as they were discharged from the vessels. “This has helped tremendously. There has been some backup, but we’ve kept our terminal fluid,” he said. The rail and truck container dwell times as tracked by PMSA vary widely from terminal to terminal based on their individual operating plans, the configuration of their on-dock railyards and the number of railcars positioned at their facilities. Noel Hacegaba, COO at the Port of Long Beach, said the average rail container dwell at the port’s six container terminals was seven days. While that was up from four days in July, it was about two days less than PMSA’s average dwell time for the LA-LB gateway. Overall operations at Long Beach’s six container terminals remain fluid, he said. “We are busy, but not congested,” Hacegaba said. “We are at 73% capacity and still have room to handle additional volume.” <h3>Imports, rail container dwells expected to peak soon </h3>Imports are projected to peak in Los Angeles at 125,882 TEUs during the week of Oct. 20 before dropping to 111,713 TEUs the next week, while Long Beach’s imports are expected to fall from 102,756 TEUs next week to 87,780 TEUs in the week of Oct. 27, according to data from the ports. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="217f56e4-413e-45e2-9df5-fc12cc20fc70"></dynamic-object></div>November is normally a slow month in the eastbound trans-Pacific because most of the holiday merchandise arrives at the ports by late October so retailers can stock their shelves in time for the Black Friday sales on the day after Thanksgiving. While that should be the case again this year, Los Angeles-Long Beach could capture a higher share of total US imports from Asia if the contract negotiations between the International Longshoremen’s Association (ILA) and East and Gulf coast employers drag on next month and through December. The ILA ended its three-day strike on Oct. 3 with a tentative agreement on wages and agreed to extend the deadline for reaching a new coastwide contract until Jan. 15 <a href="https://www.joc.com/article/despite-tentative-wage-deal-usmx-and-ila-have-bumpy-road-ahead-on-other-key-issues-5743997">so the two sides could negotiate other key issues</a>. Retailers with time-sensitive spring merchandise will likely continue to ship through Southern California until a final contract is reached, forwarders said. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com ">bill.mongelluzzo@spglobal.com</a>.Contact Laura Robb at <a href="mailto:laura.robb@spglobal.com">laura.robb@spglobal.com</a>.</div>

Rail container dwell times in the ports of Los Angeles and Long Beach surged to a two-year high in September as the largest US port complex handled record one-month volumes of imports from Asia, driven in part by retailers diverting cargo from East and Gulf coast ports ahead of the longshore strike there. And while dwell times for containers leaving the LA-LB complex by truck hit their highest level since October 2023, terminal operators say the average of 3.21 days is not contributing to congestion. The Los Angeles-Long Beach port complex in September handled 874,730 TEUs of imports from Asia, besting the previous one-month record of 873,196 TEUs in May 2022 during the post-COVID import boom, according to PIERS, a sister company of the Journal of Commerce within S&P Global. The record imports in September sent rail container dwell times in LA-LB soaring to an average of 9.25 days, up from 8.2 days in August and the highest dwells since 14.2 days in October 2022, according to the Pacific Merchant Shipping Association (PMSA), which represents terminal operators and shipping lines on the West Coast. “The situation is bad and it’s getting worse,” said Stephen A. Nothdurft, vice president of sales/North America at the forwarder MOL Consolidation Service (MCS). “As always, it’s a terminal-by-terminal situation.” Forwarders say their containers are sitting at some LA-LB terminals for 10 days or longer before they can be retrieved. “We’ve had about three times our normal inventory on dock for about six weeks now,” said Alan McCorkle, president of Yusen Terminals in Los Angeles. With two weeks remaining in the peak shipping season, terminal operators expect imports will soften in the normally slow month of November. US imports from Asia hit 1.76 million TEUs in July, the highest since May 2022. That figure has gradually decreased — 1.74 million TEUs in August and 1.72 million TEUs in September — but continues to hover near two-year highs nonetheless. Carriers have deployed 28 extra-loader vessels in September and October , in addition to their normal weekly services, to handle the huge import volumes in the eastbound trans-Pacific headed to Los Angeles-Long Beach. But each port said just two extra-loaders are currently scheduled to call at their terminals in November, a sign that import volumes — and rail dwells — will decline. Terminals deploy different operating procedures Some terminals have been able to weather the elevated rail container dwells without experiencing significant congestion. “Our [on-dock] inventory is 40% higher than we would like, but our [rail] dwells are still about four days,” said Anthony Otto, president of Long Beach Container Terminal (LBCT). LBCT is a fully automated container terminal and normally has among the lowest rail container dwells and truck turn times in the port complex. McCorkle said that when Yusen’s on-dock inventory surged last month, the terminal activated its near-dock temporary storage yard so inbound containers could be moved from the terminal as soon as they were discharged from the vessels. “This has helped tremendously. There has been some backup, but we’ve kept our terminal fluid,” he said. The rail and truck container dwell times as tracked by PMSA vary widely from terminal to terminal based on their individual operating plans, the configuration of their on-dock railyards and the number of railcars positioned at their facilities. Noel Hacegaba, COO at the Port of Long Beach, said the average rail container dwell at the port’s six container terminals was seven days. While that was up from four days in July, it was about two days less than PMSA’s average dwell time for the LA-LB gateway. Overall operations at Long Beach’s six container terminals remain fluid, he said. “We are busy, but not congested,” Hacegaba said. “We are at 73% capacity and still have room to handle additional volume.” Imports, rail container dwells expected to peak soon Imports are projected to peak in Los Angeles at 125,882 TEUs during the week of Oct. 20 before dropping to 111,713 TEUs the next week, while Long Beach’s imports are expected to fall from 102,756 TEUs next week to 87,780 TEUs in the week of Oct. 27, according to data from the ports. November is normally a slow month in the eastbound trans-Pacific because most of the holiday merchandise arrives at the ports by late October so retailers can stock their shelves in time for the Black Friday sales on the day after Thanksgiving. While that should be the case again this year, Los Angeles-Long Beach could capture a higher share of total US imports from Asia if the contract negotiations between the International Longshoremen’s Association (ILA) and East and Gulf coast employers drag on next month and through December. The ILA ended its three-day strike on Oct. 3 with a tentative agreement on wages and agreed to extend the deadline for reaching a new coastwide contract until Jan. 15 so the two sides could negotiate other key issues . Retailers with time-sensitive spring merchandise will likely continue to ship through Southern California until a final contract is reached, forwarders said. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .Contact Laura Robb at laura.robb@spglobal.com .

Trans-Pacific

LA-LB rail dwells spike to two-year high amid record imports in September

<div class="phx-topic abstract-wrapper">Barbara Melvin says 2024 hit Charleston in unexpected ways, but the full reopening of the Leatherman terminal was a major achievement for the port’s future expansion.</div>

Barbara Melvin says 2024 hit Charleston in unexpected ways, but the full reopening of the Leatherman terminal was a major achievement for the port’s future expansion.

<div class="phx-topic">Three years after it was effectively shuttered upon launch, the now-reopened Hugh K. Leatherman marine terminal is set to kick off a wave of future capacity expansion at the Port of Charleston, with plans for a second berth and further bolstering of Charleston’s strong franchise in short-haul intermodal, according to the port’s chief. South Carolina Ports Authority (SC Ports) Chief Executive Barbara Melvin unveiled the Leatherman berth addition at a “State of the Port” address Wednesday at Charleston’s Columbus Street multi-purpose terminal. She outlined how Charleston, which has just over 3 million TEUs of container capacity currently, plans to more than triple that capacity by 2040. “With expansions and modernization set for our three container terminals, we are on the cusp of having 10 million TEUs in Charleston harbor,” Melvin said in her prepared remarks. “Companies can be confident that if they put capital in the ground and commit to this region, we have the infrastructure and capacity to grow along with them.” Melvin’s keynote comes after Charleston faced some challenges in 2024. <a href="https://www.joc.com/article/update-charleston-working-through-lingering-vessel-backlog-5214170">The renovation of a toe wall at its Wando Welch terminal</a> that began in May closed one of its three berths, resulting in <a href="https://www.joc.com/article/charleston-pausing-berth-project-to-ease-vessel-backlog-5192268">a mid-summer backlog of up to 20 container ships</a> outside of the port and knocking out about one-third of Wando’s 2.4 million TEUs in capacity. The toe wall construction is scheduled to be completed in November. The planned outage of the Wando berth followed <a href="https://www.joc.com/article/sc-ports-resumes-most-operations-but-recovery-just-beginning-5221622">an unplanned outage at its terminal gates that closed it and Charleston’s inland ports to truck traffic</a>, resulting in another two-day backlog of containers. <h3>Says ILA invested in Leatherman success </h3>In addition to those short-term issues, Charleston overcame a more long-term challenge about how to reopen its Leatherman terminal to container service following the long-running dispute with the International Longshoremen’s Association (ILA) over work jurisdiction for lift equipment jobs at Leatherman, which originally went to non-union, state workers. ILA members, meanwhile, handled horizontal yard moves, along with clerical, gate and maintenance jobs. Following <a href="https://www.joc.com/article/supreme-court-declines-to-hear-sc-ports-appeal-of-leatherman-ruling-5200331">the US Supreme Court’s decision not to hear Charleston’s appeal</a> of lower court rulings that supported the ILA’s right to sue ocean carriers that call Leatherman, the port announced that <a href="https://www.joc.com/article/sc-ports-strikes-deal-with-ila-to-fully-open-leatherman-marine-terminal-5192280">it would hire ILA members to operate cranes and other lift equipment at the terminal</a>. Leatherman’s 22 crane operators, some of whom are former state employees, are all ILA members now, while at the Wando terminal, state workers still handle the crane and other lift jobs. The switchover to hiring ILA members has meant slightly higher administrative costs for SC Ports, which just implemented a $13.39 per container fee across all its terminals to “offset the change in the labor cost model structure,” per the new tariff. In an interview prior to her keynote, Melvin told the Journal of Commerce that SC Ports will continue to bill ocean carriers directly for vertical container moves, while Charleston Stevedoring, the third-party container handler at the port, will charge for all other terminal services. Melvin said the ILA crane operators, which were trained by SC Ports, will follow similar work rules and processes as the Wando terminal, meaning that ocean carriers and shippers should see similar performance. Hiring ILA crane operators “was a solution dictated by the courts, but we wanted to offer the same product at Leatherman as we do at Wando,” she said, adding that future crane jobs at Wando and other facilities will be open to ILA members. “The Leatherman terminal solution was one of the biggest challenges as a port director, but the most rewarding as I watched those ships go into the facility,” Melvin said. Despite the long-running antipathy over control of the crane jobs, Melvin said the local ILA is just as invested in seeing Leatherman succeed as the port is. “We have a different workforce there at Leatherman, but we are not providing a different product,” she said. “You don’t hear people talking about [whether] they’re a member of the ILA or a state employee. They say they work at the Port of Charleston.” Leatherman, which reopened shortly before the brief longshore strike earlier this month and welcomed its first new weekly container service from Zim Integrated Shipping Services, currently has just one 1,400-foot berth allowing it to handle 700,000 TEUs annually. Even as it just reopened, SC Ports said it is opening bids to construct a second, 1,600-foot berth that will approximately double the terminal’s current capacity by 2028. A third expansion that would bring Leatherman’s capacity to 2.4 million TEUs could be ready by 2033. <h3>Near-dock rail coming in 2025 </h3>While still ramping up its volumes, Leatherman will also serve as the main ocean terminal feeding freight into the Navy Base Intermodal Facility, the adjacent near-dock rail facility connected to Leatherman via a service road. The facility’s six rail-mounted gantry cranes are set to be delivered early in 2025, with the rail yard’s 35,000 feet of processing tracks to be opened in July 2025. “That’s a pretty exciting thing for a port that did not have on-dock or near-dock rail,” Melvin said. “It was really one of the last major disadvantages for us as a top 10 port [in the US].” The Navy Base facility will feed intermodal volumes directly into SC Ports’ inland ports of Greer and Dillon, which Melvin said “were shining stars” in terms of growth and cargo volumes in 2024, rising about 12% this year. About a quarter of the cargo moving through Charleston moves via rail, primarily to the two inland ports, which serve a variety of manufacturers and distributors within the state. Greer itself will also see an expansion that will add 9,000 feet of track, allowing it to handle a 50% increase in container volumes. “Both inland ports showed significant growth, but Greer is really knocking it out of the park,” Melvin said. “It sits in the breadbasket of our state’s manufacturing and distribution, close to many metropolitan regions and only a day away from more than 100 million people.” Further in the future, SC Ports is also working toward the additional development of the North Charleston marine terminal with <a href="https://www.joc.com/article/sc-ports-lands-deal-seeks-to-make-north-charleston-ready-for-bigger-ships-5244603">the purchase this year of an additional 132 acres of land for the planned 400-acre facility</a>. North Charleston, which can handle 500,000 TEUs per year currently, is draft-restricted due to a bridge that spans Charleston’s Cooper River. The South Carolina Department of Transportation has said that it will raise the bridge. Once SC Ports secures funding for dredging the Cooper River to a 54-foot depth and the terminal is expanded, North Charleston will add 5 million TEUs of capacity by 2040, Melvin said. “We’re very lucky to have the support of our state, and we’re going to continue to deliver the infrastructure necessary for not only our ocean carrier customers to have fluid calls here, but our importers and exporters to be able to access their markets,” she said. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

Three years after it was effectively shuttered upon launch, the now-reopened Hugh K. Leatherman marine terminal is set to kick off a wave of future capacity expansion at the Port of Charleston, with plans for a second berth and further bolstering of Charleston’s strong franchise in short-haul intermodal, according to the port’s chief. South Carolina Ports Authority (SC Ports) Chief Executive Barbara Melvin unveiled the Leatherman berth addition at a “State of the Port” address Wednesday at Charleston’s Columbus Street multi-purpose terminal. She outlined how Charleston, which has just over 3 million TEUs of container capacity currently, plans to more than triple that capacity by 2040. “With expansions and modernization set for our three container terminals, we are on the cusp of having 10 million TEUs in Charleston harbor,” Melvin said in her prepared remarks. “Companies can be confident that if they put capital in the ground and commit to this region, we have the infrastructure and capacity to grow along with them.” Melvin’s keynote comes after Charleston faced some challenges in 2024. The renovation of a toe wall at its Wando Welch terminal that began in May closed one of its three berths, resulting in a mid-summer backlog of up to 20 container ships outside of the port and knocking out about one-third of Wando’s 2.4 million TEUs in capacity. The toe wall construction is scheduled to be completed in November. The planned outage of the Wando berth followed an unplanned outage at its terminal gates that closed it and Charleston’s inland ports to truck traffic , resulting in another two-day backlog of containers. Says ILA invested in Leatherman success In addition to those short-term issues, Charleston overcame a more long-term challenge about how to reopen its Leatherman terminal to container service following the long-running dispute with the International Longshoremen’s Association (ILA) over work jurisdiction for lift equipment jobs at Leatherman, which originally went to non-union, state workers. ILA members, meanwhile, handled horizontal yard moves, along with clerical, gate and maintenance jobs. Following the US Supreme Court’s decision not to hear Charleston’s appeal of lower court rulings that supported the ILA’s right to sue ocean carriers that call Leatherman, the port announced that it would hire ILA members to operate cranes and other lift equipment at the terminal . Leatherman’s 22 crane operators, some of whom are former state employees, are all ILA members now, while at the Wando terminal, state workers still handle the crane and other lift jobs. The switchover to hiring ILA members has meant slightly higher administrative costs for SC Ports, which just implemented a $13.39 per container fee across all its terminals to “offset the change in the labor cost model structure,” per the new tariff. In an interview prior to her keynote, Melvin told the Journal of Commerce that SC Ports will continue to bill ocean carriers directly for vertical container moves, while Charleston Stevedoring, the third-party container handler at the port, will charge for all other terminal services. Melvin said the ILA crane operators, which were trained by SC Ports, will follow similar work rules and processes as the Wando terminal, meaning that ocean carriers and shippers should see similar performance. Hiring ILA crane operators “was a solution dictated by the courts, but we wanted to offer the same product at Leatherman as we do at Wando,” she said, adding that future crane jobs at Wando and other facilities will be open to ILA members. “The Leatherman terminal solution was one of the biggest challenges as a port director, but the most rewarding as I watched those ships go into the facility,” Melvin said. Despite the long-running antipathy over control of the crane jobs, Melvin said the local ILA is just as invested in seeing Leatherman succeed as the port is. “We have a different workforce there at Leatherman, but we are not providing a different product,” she said. “You don’t hear people talking about [whether] they’re a member of the ILA or a state employee. They say they work at the Port of Charleston.” Leatherman, which reopened shortly before the brief longshore strike earlier this month and welcomed its first new weekly container service from Zim Integrated Shipping Services, currently has just one 1,400-foot berth allowing it to handle 700,000 TEUs annually. Even as it just reopened, SC Ports said it is opening bids to construct a second, 1,600-foot berth that will approximately double the terminal’s current capacity by 2028. A third expansion that would bring Leatherman’s capacity to 2.4 million TEUs could be ready by 2033. Near-dock rail coming in 2025 While still ramping up its volumes, Leatherman will also serve as the main ocean terminal feeding freight into the Navy Base Intermodal Facility, the adjacent near-dock rail facility connected to Leatherman via a service road. The facility’s six rail-mounted gantry cranes are set to be delivered early in 2025, with the rail yard’s 35,000 feet of processing tracks to be opened in July 2025. “That’s a pretty exciting thing for a port that did not have on-dock or near-dock rail,” Melvin said. “It was really one of the last major disadvantages for us as a top 10 port [in the US].” The Navy Base facility will feed intermodal volumes directly into SC Ports’ inland ports of Greer and Dillon, which Melvin said “were shining stars” in terms of growth and cargo volumes in 2024, rising about 12% this year. About a quarter of the cargo moving through Charleston moves via rail, primarily to the two inland ports, which serve a variety of manufacturers and distributors within the state. Greer itself will also see an expansion that will add 9,000 feet of track, allowing it to handle a 50% increase in container volumes. “Both inland ports showed significant growth, but Greer is really knocking it out of the park,” Melvin said. “It sits in the breadbasket of our state’s manufacturing and distribution, close to many metropolitan regions and only a day away from more than 100 million people.” Further in the future, SC Ports is also working toward the additional development of the North Charleston marine terminal with the purchase this year of an additional 132 acres of land for the planned 400-acre facility . North Charleston, which can handle 500,000 TEUs per year currently, is draft-restricted due to a bridge that spans Charleston’s Cooper River. The South Carolina Department of Transportation has said that it will raise the bridge. Once SC Ports secures funding for dredging the Cooper River to a 54-foot depth and the terminal is expanded, North Charleston will add 5 million TEUs of capacity by 2040, Melvin said. “We’re very lucky to have the support of our state, and we’re going to continue to deliver the infrastructure necessary for not only our ocean carrier customers to have fluid calls here, but our importers and exporters to be able to access their markets,” she said. Contact Michael Angell at michael.angell@spglobal.com .

SC Ports’ chief outlines plans for Charleston to hit 10 million TEU mark

<div class="phx-topic abstract-wrapper">Today, there are armies of the modern-day equivalent of longshoremen who, instead of moving heavy bags of sugar using steel hooks, are keying and rekeying the same data between various systems.</div>

Today, there are armies of the modern-day equivalent of longshoremen who, instead of moving heavy bags of sugar using steel hooks, are keying and rekeying the same data between various systems.

<div class="phx-topic">On April 26, 1956, 58 containers were transported from the Port of Newark to the Port of Houston on Ideal-X’s maiden voyage. Upon its arrival, 58 trucks were waiting to pick up the cargo and bring the containers to their respective destinations. With this unremarkable journey, Malcom McLean unwittingly ushered in a new era for global trade that would end up contributing to significant growth of that trade and in the process lifted many developing countries out of poverty. Although containers were used before, it was McLean’s vision of using them for intermodal transportation that was truly disruptive. The net results over the last 70 years are remarkable. Containerization substantially reduced the cost and time of shipping. Just-in-time supply chains led to the reduction in inventories held by companies, which in turn reduced their working capital needs. As a result, businesses are conducting trade with far-flung suppliers and coordinating an ever-more intricate web of partners. Yet today we are seeing clouds gathering that threaten the status quo. The world is grappling with increased volatility, exemplified by events such as the Red Sea crisis and the COVID-19 pandemic. Geopolitical tensions are contributing toward a systematic reconfiguration of existing trade networks. Meanwhile, the change in consumer spending patterns amid the rise of cross-border e-commerce requires an ever-more-responsive supply chain. The increased complexity requires companies to become more resilient either through the use of new technologies or by building more slack in the system through redundancy at a far greater cost. Over the years, local and global digital solution providers have emerged to tackle this problem. Yet they typically address only limited geographies or narrow verticals within the supply chain. One of the main challenges standing in the way is the difficulty to exchange data across many heterogenous systems across the world. Paradoxically in this modern age, it is often easier to move goods internationally than to move data seamlessly across the supply chain. Today, there are armies of the modern-day equivalent of longshoremen who, instead of moving heavy bags of sugar using steel hooks, are keying and rekeying the same data between various systems. Rather than recording each item of the cargo on a tally sheet, they are trading Excel sheets and PDFs over email in an attempt to string together the disparate islands of data that exist along the supply chain. This begs the question: What would the late McLean do if confronted with such a sad state of affairs? I believe he would recognize the electronic Bill of Lading (eBL) as the digital equivalent of a physical container. eBL as a “data container” could simplify the process of exchanging data along the supply chain because it offers three new digital abilities. First, eBL as a digital single source of truth of a shipment: The eBL could become a universal “data container” for all data related to the shipment throughout its international journey. This includes data such as certificate of origin, packing list and commercial invoices, as well as visibility information. Second, eBL as a digital tool to control data access rights of a shipment: The eBL could control what each party in the supply chain can and cannot see. With clear access rights, the data for a single shipment can be shared securely through a unique “data container,” with the right parties accessing their needed data. Banks might need to see the invoice and packing list but may not need to have the visibility data. Finally, eBL as a digital up-to-date timeline of events related to a shipment: The eBL could enable instant financial settlements without the need for a third party to play the role of escrow since the payment flow can be directly matched with the digital transfer of rights as captured within the digital timeline of the “data container.” With this unique combination of eBL’s digital properties, supply chain data can be easily stitched together for any shipment. This allows the best solution providers for each use case to be bundled together, offering bespoke end-to-end solutions that meet each customer’s needs regardless of their geographies or verticals. The outcome is accurate and timely insights, empowering supply chain professionals to focus on handling disruptions instead of being glorified data janitors. McLean didn’t set out with some grandiose mission, but with a simple goal to offer cheaper means of transportation. But as the industry embraced containers, the world witnessed an entire economic revolution. Today, in our simple quest for resiliency, we have similarly stumbled upon the “data container” to enable the seamless exchange of data. Let’s work together as an industry to figure out how best to put eBLs to use. Who knows where we might end up? Contact Bertrand Chen at <a href="mailto:bertrand@gsbn.trade">bertrand@gsbn.trade</a>. </div>

On April 26, 1956, 58 containers were transported from the Port of Newark to the Port of Houston on Ideal-X’s maiden voyage. Upon its arrival, 58 trucks were waiting to pick up the cargo and bring the containers to their respective destinations. With this unremarkable journey, Malcom McLean unwittingly ushered in a new era for global trade that would end up contributing to significant growth of that trade and in the process lifted many developing countries out of poverty. Although containers were used before, it was McLean’s vision of using them for intermodal transportation that was truly disruptive. The net results over the last 70 years are remarkable. Containerization substantially reduced the cost and time of shipping. Just-in-time supply chains led to the reduction in inventories held by companies, which in turn reduced their working capital needs. As a result, businesses are conducting trade with far-flung suppliers and coordinating an ever-more intricate web of partners. Yet today we are seeing clouds gathering that threaten the status quo. The world is grappling with increased volatility, exemplified by events such as the Red Sea crisis and the COVID-19 pandemic. Geopolitical tensions are contributing toward a systematic reconfiguration of existing trade networks. Meanwhile, the change in consumer spending patterns amid the rise of cross-border e-commerce requires an ever-more-responsive supply chain. The increased complexity requires companies to become more resilient either through the use of new technologies or by building more slack in the system through redundancy at a far greater cost. Over the years, local and global digital solution providers have emerged to tackle this problem. Yet they typically address only limited geographies or narrow verticals within the supply chain. One of the main challenges standing in the way is the difficulty to exchange data across many heterogenous systems across the world. Paradoxically in this modern age, it is often easier to move goods internationally than to move data seamlessly across the supply chain. Today, there are armies of the modern-day equivalent of longshoremen who, instead of moving heavy bags of sugar using steel hooks, are keying and rekeying the same data between various systems. Rather than recording each item of the cargo on a tally sheet, they are trading Excel sheets and PDFs over email in an attempt to string together the disparate islands of data that exist along the supply chain. This begs the question: What would the late McLean do if confronted with such a sad state of affairs? I believe he would recognize the electronic Bill of Lading (eBL) as the digital equivalent of a physical container. eBL as a “data container” could simplify the process of exchanging data along the supply chain because it offers three new digital abilities. First, eBL as a digital single source of truth of a shipment: The eBL could become a universal “data container” for all data related to the shipment throughout its international journey. This includes data such as certificate of origin, packing list and commercial invoices, as well as visibility information. Second, eBL as a digital tool to control data access rights of a shipment: The eBL could control what each party in the supply chain can and cannot see. With clear access rights, the data for a single shipment can be shared securely through a unique “data container,” with the right parties accessing their needed data. Banks might need to see the invoice and packing list but may not need to have the visibility data. Finally, eBL as a digital up-to-date timeline of events related to a shipment: The eBL could enable instant financial settlements without the need for a third party to play the role of escrow since the payment flow can be directly matched with the digital transfer of rights as captured within the digital timeline of the “data container.” With this unique combination of eBL’s digital properties, supply chain data can be easily stitched together for any shipment. This allows the best solution providers for each use case to be bundled together, offering bespoke end-to-end solutions that meet each customer’s needs regardless of their geographies or verticals. The outcome is accurate and timely insights, empowering supply chain professionals to focus on handling disruptions instead of being glorified data janitors. McLean didn’t set out with some grandiose mission, but with a simple goal to offer cheaper means of transportation. But as the industry embraced containers, the world witnessed an entire economic revolution. Today, in our simple quest for resiliency, we have similarly stumbled upon the “data container” to enable the seamless exchange of data. Let’s work together as an industry to figure out how best to put eBLs to use. Who knows where we might end up? Contact Bertrand Chen at bertrand@gsbn.trade .

Logistics Technology News

Develop ‘data container’ for seamless data exchange throughout supply chain

<div class="phx-topic abstract-wrapper">Post-election uncertainties in Europe have shined a light on complex problems hampering heavy transport across the EU, writes Ton Klijn, director of the European Association of Abnormal Road Transport and Mobile Cranes (ESTA). </div>

Post-election uncertainties in Europe have shined a light on complex problems hampering heavy transport across the EU, writes Ton Klijn, director of the European Association of Abnormal Road Transport and Mobile Cranes (ESTA).

<div class="phx-topic">Long-called-for reforms of the EU’s fragmented and dysfunctional heavy transport industry regulations appeared to be finally coming to fruition earlier this summer, but now these reforms are up in the air. As Europe struggles to boost its economies and respond to global economic challenges, the need for fundamental reform of the rules and regulations governing heavy and abnormal freight transportation has never been greater. Unusable roads and bridges combined with unnecessary, often protectionist, local regulations make the business of moving heavy cargo in Europe less efficient and less safe. Unfortunately, the arrival of new officials and politicians following the elections in June have upset hopes for revisions to the dry-sounding regulation Weights and Dimensions Directive 96/53/EC, intended to standardize heavy-duty transport. These revisions would have addressed the chronic dysfunctions plaguing engineered and heavy-haul transport in Europe, just as similar issues constrict heavy transport in the US. We at ESTA, Europe’s association for the abnormal — i.e., heavy-haul — road transport and mobile crane rental industry, hope that the reform process has just slowed and not stalled. The heavy transport industry may be small in economic terms, but it packs a big punch, and we want to remind our political leaders of that fact. To keep the pressure for reformation on, ESTA published our first ever transport manifesto for change in early September. Our priorities are the harmonization of rules for abnormal road transport, securing access to safe and secure parking spaces, the adoption of sector-specific rules and elimination of country-specific barriers, and the establishment of abnormal load corridors. Regularizing regulations Heavy-transport vehicles are already required to comply with certain rules on weights and dimensions to ensure safety; prevent damage to roads, bridges and tunnels; and ensure fair competition. EU member states should not be able to prevent vehicles that comply with these limits from performing international transport operations within their territories. But in practice — as anyone working in heavy transport knows all too well — heavy and abnormal transport operators and their clients face a plethora of petty, unnecessary and bureaucratic restrictions across the EU. These restrictions differ not just between countries but often between districts, and these local and arbitrary rules often are enforced for what can only be described as protectionist reasons. How can it be sensible, for example, that the rules for marking and lighting abnormal transports are different in every EU country? Why is a side marking board required to be 50 x 50 centimeters in one country but 42.5 x 42.5 centimeters just over the neighboring border? In a similar vein, some regional German authorities say that a permit is invalid if a load weighs 5% less or is 15 centimeters smaller than in the documentation. You read that correctly: these regulations apply when loads are lighter or smaller than expected, despite smaller, lighter loads posing no additional threat to weak roads and bridges, nor to traffic and buildings along the route. Such regulations lack any semblance of common sense. Abnormal road transport operators are regularly confronted with country-specific measures that do not improve safety and hamper the competitiveness and efficiency of the heavy-haul sector. These measures include differing national rules on “angles morts” — blind spots for truck drivers — language requirements for drivers, licensing of drivers of abnormal transport vehicle combinations, marking of escort vehicles and training of the escort vehicle drivers, as well as country-specific provisions on insurance and bank guarantees. These and similar measures should be evaluated at the European level and, where necessary, harmonized or abolished. Heavy transport corridors needed A crucial issue that is not covered by Weights and Dimensions Directive 96/53/EC but desperately needs to be addressed is Europe’s endemic failure to invest sufficiently in infrastructure, especially in the maintenance of roads and bridges. This is severely impacting a wide range of industries. For example, delivering offshore wind turbines from factory to port is often a hugely expensive, unnecessarily time-consuming and complex process that frequently requires navigating detours to avoid weak bridges. ESTA has long called for the establishment of Europe-wide heavy transport corridors on which scarce funds could be focused. This is, interestingly, an idea that NATO has also been discreetly lobbying for, presumably so its heavy military and other equipment could be easily moved in times of need. In a fast-changing and volatile world, the next five years will be crucial, not just for ESTA and our members but for Europe’s wider economy. We need the single market to function. At present, this is more fiction than reality. Apart from infrastructure investment, the measures we are calling for — and those listed in the revised directive — require little in the way of funds. What we need above all is clear, long-term thinking and the political will to effect change. Ton Klijn is director of the European Association of Abnormal Road Transport and Mobile Cranes (ESTA). Contact him at <a href="mailto:director@estaeurope.eu">director@estaeurope.eu.</a></div>

Long-called-for reforms of the EU’s fragmented and dysfunctional heavy transport industry regulations appeared to be finally coming to fruition earlier this summer, but now these reforms are up in the air. As Europe struggles to boost its economies and respond to global economic challenges, the need for fundamental reform of the rules and regulations governing heavy and abnormal freight transportation has never been greater. Unusable roads and bridges combined with unnecessary, often protectionist, local regulations make the business of moving heavy cargo in Europe less efficient and less safe. Unfortunately, the arrival of new officials and politicians following the elections in June have upset hopes for revisions to the dry-sounding regulation Weights and Dimensions Directive 96/53/EC, intended to standardize heavy-duty transport. These revisions would have addressed the chronic dysfunctions plaguing engineered and heavy-haul transport in Europe, just as similar issues constrict heavy transport in the US. We at ESTA, Europe’s association for the abnormal — i.e., heavy-haul — road transport and mobile crane rental industry, hope that the reform process has just slowed and not stalled. The heavy transport industry may be small in economic terms, but it packs a big punch, and we want to remind our political leaders of that fact. To keep the pressure for reformation on, ESTA published our first ever transport manifesto for change in early September. Our priorities are the harmonization of rules for abnormal road transport, securing access to safe and secure parking spaces, the adoption of sector-specific rules and elimination of country-specific barriers, and the establishment of abnormal load corridors. Regularizing regulations Heavy-transport vehicles are already required to comply with certain rules on weights and dimensions to ensure safety; prevent damage to roads, bridges and tunnels; and ensure fair competition. EU member states should not be able to prevent vehicles that comply with these limits from performing international transport operations within their territories. But in practice — as anyone working in heavy transport knows all too well — heavy and abnormal transport operators and their clients face a plethora of petty, unnecessary and bureaucratic restrictions across the EU. These restrictions differ not just between countries but often between districts, and these local and arbitrary rules often are enforced for what can only be described as protectionist reasons. How can it be sensible, for example, that the rules for marking and lighting abnormal transports are different in every EU country? Why is a side marking board required to be 50 x 50 centimeters in one country but 42.5 x 42.5 centimeters just over the neighboring border? In a similar vein, some regional German authorities say that a permit is invalid if a load weighs 5% less or is 15 centimeters smaller than in the documentation. You read that correctly: these regulations apply when loads are lighter or smaller than expected, despite smaller, lighter loads posing no additional threat to weak roads and bridges, nor to traffic and buildings along the route. Such regulations lack any semblance of common sense. Abnormal road transport operators are regularly confronted with country-specific measures that do not improve safety and hamper the competitiveness and efficiency of the heavy-haul sector. These measures include differing national rules on “angles morts” — blind spots for truck drivers — language requirements for drivers, licensing of drivers of abnormal transport vehicle combinations, marking of escort vehicles and training of the escort vehicle drivers, as well as country-specific provisions on insurance and bank guarantees. These and similar measures should be evaluated at the European level and, where necessary, harmonized or abolished. Heavy transport corridors needed A crucial issue that is not covered by Weights and Dimensions Directive 96/53/EC but desperately needs to be addressed is Europe’s endemic failure to invest sufficiently in infrastructure, especially in the maintenance of roads and bridges. This is severely impacting a wide range of industries. For example, delivering offshore wind turbines from factory to port is often a hugely expensive, unnecessarily time-consuming and complex process that frequently requires navigating detours to avoid weak bridges. ESTA has long called for the establishment of Europe-wide heavy transport corridors on which scarce funds could be focused. This is, interestingly, an idea that NATO has also been discreetly lobbying for, presumably so its heavy military and other equipment could be easily moved in times of need. In a fast-changing and volatile world, the next five years will be crucial, not just for ESTA and our members but for Europe’s wider economy. We need the single market to function. At present, this is more fiction than reality. Apart from infrastructure investment, the measures we are calling for — and those listed in the revised directive — require little in the way of funds. What we need above all is clear, long-term thinking and the political will to effect change. Ton Klijn is director of the European Association of Abnormal Road Transport and Mobile Cranes (ESTA). Contact him at director@estaeurope.eu.

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Datasets are compiled from questionnaire responses from a survey panel of senior purchasing executives (or similar) of about 400 companies.  For each variable, the index is the sum of the percentage of “higher” responses and half the percentage of “no change” responses. The indices vary between 0 and 100, with a reading above 50 indicating an overall increase compared to the previous month, and below 50 an overall decrease. The China PMI is done in conjunction with Caixin. [S&P Global](https://ihsmarkit.com/products/pmi.html)

World, US, Asia, China, EU manufacturing PMIs (S&P Global)

World, US, Asia China, EU US PMI Manufacturing (PMI) by S&P Global Gateway

<div class="phx-topic abstract-wrapper">Carriers began pulling the charges shortly after the end of the strike was announced last week, while pressure to do so came even earlier from Transportation Secretary Pete Buttigieg.</div>

Carriers began pulling the charges shortly after the end of the strike was announced last week, while pressure to do so came even earlier from Transportation Secretary Pete Buttigieg.

<div class="phx-topic">Ocean carriers have dropped ad hoc surcharges that were linked to last week’s short-lived longshore strike along the US East and Gulf coasts, adding downward pressure to freight rates that have fallen sharply in recent weeks. “The strike fees are dead,” one forwarder told the Journal of Commerce. Carriers began pulling the charges shortly after <a href="https://www.joc.com/article/ila-usmx-agree-on-new-wage-offer-and-contract-extension-that-reopens-ports-5741882">the end of the strike was announced on Oct. 3</a>. Pressure to do so came even earlier when Transportation Secretary Pete Buttigieg suggested that carriers withdraw any surcharges, saying that “no one should exploit a disruption for profit.” Liners began implementing surcharges on containers whose movement would be disrupted by the International Longshoremen’s Association (ILA) strike. Some of the fees were hefty — Ocean Network Express (ONE), for example, announced a “congestion” surcharge of up to $2,000 per FEU. ONE, CMA CGM and OOCL are among carriers who have withdrawn the surcharges. “The strike-related surcharges were cancelled relatively quickly considering the port operation situation at ports was better than initially expected,” said a carrier source. Added a second freight forwarder: “Contract holders are receiving cancellations of the surcharges. We had most of ours sent late last week and on Monday.” <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e7a65aab-9aac-4f07-9b74-1793746c01ef"></dynamic-object></div>Spot rates for Asia to the East Coast were pegged at $4,300 per FEU this week, according to Platts, a sister company of the Journal of Commerce within S&amp;P Global. That’s down from $7,350 per FEU on Sept. 6. Ex-Asia cargo into the West Coast was assessed at $4,200 per FEU — marking the narrowest differential with the East Coast ever observed on the Platts index. For the second half of October, some sources have reported observing offers on the two lanes at total parity. Contact Laura Robb at <a href="mailto:laura.robb@spglobal.com">laura.robb@spglobal.com</a>. </div>

Ocean carriers have dropped ad hoc surcharges that were linked to last week’s short-lived longshore strike along the US East and Gulf coasts, adding downward pressure to freight rates that have fallen sharply in recent weeks. “The strike fees are dead,” one forwarder told the Journal of Commerce. Carriers began pulling the charges shortly after the end of the strike was announced on Oct. 3 . Pressure to do so came even earlier when Transportation Secretary Pete Buttigieg suggested that carriers withdraw any surcharges, saying that “no one should exploit a disruption for profit.” Liners began implementing surcharges on containers whose movement would be disrupted by the International Longshoremen’s Association (ILA) strike. Some of the fees were hefty — Ocean Network Express (ONE), for example, announced a “congestion” surcharge of up to $2,000 per FEU. ONE, CMA CGM and OOCL are among carriers who have withdrawn the surcharges. “The strike-related surcharges were cancelled relatively quickly considering the port operation situation at ports was better than initially expected,” said a carrier source. Added a second freight forwarder: “Contract holders are receiving cancellations of the surcharges. We had most of ours sent late last week and on Monday.” Spot rates for Asia to the East Coast were pegged at $4,300 per FEU this week, according to Platts, a sister company of the Journal of Commerce within S&P Global. That’s down from $7,350 per FEU on Sept. 6. Ex-Asia cargo into the West Coast was assessed at $4,200 per FEU — marking the narrowest differential with the East Coast ever observed on the Platts index. For the second half of October, some sources have reported observing offers on the two lanes at total parity. Contact Laura Robb at laura.robb@spglobal.com .

Strike surcharges disappear as spot rates for US West, East coasts near parity

<div class="phx-topic abstract-wrapper">Some have speculated that specific issues were raised that persuaded at least some of the carrier group CEOs to direct their representatives on the USMX to boost their offer of a pay increase.</div>

Some have speculated that specific issues were raised that persuaded at least some of the carrier group CEOs to direct their representatives on the USMX to boost their offer of a pay increase.

<div class="phx-topic"><div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5747257_0.1.jpg"></img></div>If the Biden administration did indeed force the tentative contract deal ending last week’s longshore strike, how exactly did it happen? In other words, what did the White House chief of staff tell ocean carrier group CEOs on a conference call at 5:30 a.m. Washington time on Oct. 3 that within hours resulted in a substantial increase in the wage offer made to the International Longshoremen’s Association (ILA), <a href="https://www.joc.com/article/ila-usmx-agree-on-new-wage-offer-and-contract-extension-that-reopens-ports-5741882">ending the strike after three days</a>?Some have speculated that specific issues were raised that persuaded at least some of the group CEOs to direct their representatives on the United States Maritime Alliance (USMX) to boost their offer of a pay increase from 50% to 62% over the course of a new six-year contract. The White House has leverage to deploy, such as being able to increase scrutiny of or even reject foreign acquisitions of US marine terminals. The Department of Justice for decades has made no secret of its dislike of ocean shipping alliances, including the remnants of antitrust immunity, chiding any vote by the Federal Maritime Commission (FMC) that allows massive vessel-sharing agreements to take effect rather than seeking a federal injunction to block them. <h3>Relief for White House, Harris campaign </h3>Whatever was said on the call was enough to get the wage increase offer high enough for the ILA to call off its strike and, to the relief of the White House and Kamala Harris, take the issue off the table as a liability for Democrats in the presidential campaign. <a href="https://www.washingtonpost.com/business/2024/10/04/biden-white-house-harris-port-strike/">The Washington Post reported</a> that White House chief of staff Jeff Zients delivered a “stark ultimatum” to the carriers, saying he planned to inform President Joe Biden that a deal had been reached, even though the carriers had agreed to “no such thing.” In doing so, he placed the ball squarely in the carriers’ court to either go along with the “deal” Biden would soon announce to end the strike or to publicly contradict him. The latter was not an option. It would have put the carriers in the risky and ultimately impossible position of being an active player in the election just over a month before the vote. Refusing to give the ILA the raise it wanted to end the strike, with the result that the stoppage continued and economic damage piled up while Biden and the Harris campaign took the blame, could possibly, depending on how the cards fell, have resulted in the carriers themselves being blamed for determining the outcome of the election. That is the last thing a group of non-US based ocean carriers, who have few political friends in the US to begin with, would want. A senior carrier source said container lines would not want to be seen as meddling in any way in US politics. Taking the logic further, with Democrats making the case that the election of Donald Trump could spell the end of democracy in the US, getting anywhere near such a radioactive issue — if Trump prevailing was indeed the outcome — would be to step into dangerous territory indeed. Carriers wanted no part of it. <h3>Carriers live to fight another day </h3>In the end, they had no choice but to accept their fate by giving the union an historic wage increase and living to fight another day. That day could come soon enough; carriers have called the deal “provisional” pending resolution of other issues including automation, royalties and job jurisdiction that will still need to be negotiated ahead of the new Jan. 15 deadline. But the ILA at the very least got most of the increase it was seeking, validating a political strategy set into motion months ago by the union, which walked away from negotiations in June and never returned. Biden, in announcing the reopening of the ports, said “collective bargaining works.” But in reality, at no time since June — up to and including the moment the deal to end the strike was announced — did USMX and the ILA meet face to face despite repeated attempts by the USMX to do so. The ILA calculated correctly that Biden, an overtly pro-labor president, would never invoke the Taft-Hartley Act to force the union back to the table, which would have gone against his values and history and alienated organized labor in the heat of the presidential campaign. They also reasoned, correctly, that Biden and his team would bring intense pressure to bear on ocean carriers by conveniently assigning blame to them for any strike-related port congestion and inflation, as had been done during the pandemic. In the end of round one — pending resolution of the other issues — the winners were the union, the White House and the Harris campaign. The price will be paid by carriers and, to the extent they can pass the higher costs along, US importers and exporters. “I want to thank you for what you did for my union to help us achieve record wage success in negotiations [with the USMX],” ILA President Harold Daggett wrote to Biden on Oct. 7. “The ILA is grateful for your words and deeds.” Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>. </div>

If the Biden administration did indeed force the tentative contract deal ending last week’s longshore strike, how exactly did it happen? In other words, what did the White House chief of staff tell ocean carrier group CEOs on a conference call at 5:30 a.m. Washington time on Oct. 3 that within hours resulted in a substantial increase in the wage offer made to the International Longshoremen’s Association (ILA), ending the strike after three days ? Some have speculated that specific issues were raised that persuaded at least some of the group CEOs to direct their representatives on the United States Maritime Alliance (USMX) to boost their offer of a pay increase from 50% to 62% over the course of a new six-year contract. The White House has leverage to deploy, such as being able to increase scrutiny of or even reject foreign acquisitions of US marine terminals. The Department of Justice for decades has made no secret of its dislike of ocean shipping alliances, including the remnants of antitrust immunity, chiding any vote by the Federal Maritime Commission (FMC) that allows massive vessel-sharing agreements to take effect rather than seeking a federal injunction to block them. Relief for White House, Harris campaign Whatever was said on the call was enough to get the wage increase offer high enough for the ILA to call off its strike and, to the relief of the White House and Kamala Harris, take the issue off the table as a liability for Democrats in the presidential campaign. The Washington Post reported that White House chief of staff Jeff Zients delivered a “stark ultimatum” to the carriers, saying he planned to inform President Joe Biden that a deal had been reached, even though the carriers had agreed to “no such thing.” In doing so, he placed the ball squarely in the carriers’ court to either go along with the “deal” Biden would soon announce to end the strike or to publicly contradict him. The latter was not an option. It would have put the carriers in the risky and ultimately impossible position of being an active player in the election just over a month before the vote. Refusing to give the ILA the raise it wanted to end the strike, with the result that the stoppage continued and economic damage piled up while Biden and the Harris campaign took the blame, could possibly, depending on how the cards fell, have resulted in the carriers themselves being blamed for determining the outcome of the election. That is the last thing a group of non-US based ocean carriers, who have few political friends in the US to begin with, would want. A senior carrier source said container lines would not want to be seen as meddling in any way in US politics. Taking the logic further, with Democrats making the case that the election of Donald Trump could spell the end of democracy in the US, getting anywhere near such a radioactive issue — if Trump prevailing was indeed the outcome — would be to step into dangerous territory indeed. Carriers wanted no part of it. Carriers live to fight another day In the end, they had no choice but to accept their fate by giving the union an historic wage increase and living to fight another day. That day could come soon enough; carriers have called the deal “provisional” pending resolution of other issues including automation, royalties and job jurisdiction that will still need to be negotiated ahead of the new Jan. 15 deadline. But the ILA at the very least got most of the increase it was seeking, validating a political strategy set into motion months ago by the union, which walked away from negotiations in June and never returned. Biden, in announcing the reopening of the ports, said “collective bargaining works.” But in reality, at no time since June — up to and including the moment the deal to end the strike was announced — did USMX and the ILA meet face to face despite repeated attempts by the USMX to do so. The ILA calculated correctly that Biden, an overtly pro-labor president, would never invoke the Taft-Hartley Act to force the union back to the table, which would have gone against his values and history and alienated organized labor in the heat of the presidential campaign. They also reasoned, correctly, that Biden and his team would bring intense pressure to bear on ocean carriers by conveniently assigning blame to them for any strike-related port congestion and inflation, as had been done during the pandemic. In the end of round one — pending resolution of the other issues — the winners were the union, the White House and the Harris campaign. The price will be paid by carriers and, to the extent they can pass the higher costs along, US importers and exporters. “I want to thank you for what you did for my union to help us achieve record wage success in negotiations [with the USMX],” ILA President Harold Daggett wrote to Biden on Oct. 7. “The ILA is grateful for your words and deeds.” Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

Behind-the-scenes White House arm twisting got ILA wage deal done

<div class="phx-topic abstract-wrapper">The huge import volumes that moved across US docks in August are also muting the post-Golden Week bounce that normally occurs in mid-October when retailers ship their high-value holiday merchandise through the West Coast.</div>

The huge import volumes that moved across US docks in August are also muting the post-Golden Week bounce that normally occurs in mid-October when retailers ship their high-value holiday merchandise through the West Coast.

<div class="phx-topic">Asia-to-US freight rates at the tail end of the peak shipping season are falling faster than is typical for this time of year given the heavy frontloading that occurred months earlier that is also expected to result in weaker-than-normal imports from Asia in November, forwarders tell the Journal of Commerce. Retailers <a href="https://www.joc.com/article/near-record-surge-possible-for-us-imports-in-august-retail-group-5703194">frontloaded holiday season imports in August</a> to ensure they arrived before the <a href="https://www.joc.com/article/despite-tentative-wage-deal-usmx-and-ila-have-bumpy-road-ahead-on-other-key-issues-5743997">strike by East and Gulf coast dockworkers on Oct. 1</a>, which lasted for three days. The huge import volumes that moved across US docks in August are also muting the post-Golden Week bounce that normally occurs in mid-October when retailers ship their high-value holiday merchandise through the West Coast. “The degree of frontloading in 2024 may have been more than some analysts realized,” Paul Bingham, director of transportation consulting for S&amp;P Global Market Intelligence said. “That might account for softness in import demand now and through the rest of the year.” It might also account for rates that have fallen 49% to the East Coast and 25% to the West Coast since Aug. 30, according to Platts, a Journal of Commerce sister company within S&amp;P Global. The East Coast spot rate as of Oct. 7 was $4,300 per FEU, Platts data showed, with the West Coast rate at $4,200. The near parity of rates is unusual because the East Coast typically carries a nearly $1,000 per FEU premium to the West Coast rate. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e7a65aab-9aac-4f07-9b74-1793746c01ef"></dynamic-object></div><h3>Doubts about upcoming GRI </h3>Sources, meanwhile, say at least two trans-Pacific carriers have announced a $600 per FEU general rate increase (GRI) to the West Coast effective Oct. 15, but there is widespread skepticism that the GRI will hold because imports are expected to diminish next month. “[Carriers] are trying to push the market in a direction where it doesn’t make sense to go, based on what we’re seeing in demand,” said Benton Kauffman, senior vice president/head of trans-Pacific air and sea for US logistics at DSV Global Transport and Logistics. Furthermore, while they’re trying to raise rates, most carriers are offering special ad hoc “bullet” rates that undercut the posted spot and freight-all-kinds (FAK) rates. “While the carriers are trying to keep the rates up, they’re cutting deals at the same time,” Jon Monroe, who serves as an adviser to non-vessel-operating common carriers (NVOs), told the Journal of Commerce. Carriers since late spring have been <a href="https://www.joc.com/article/capacity-boost-on-trans-pacific-pushes-carriers-to-compete-for-cargo-5711329">offering bullet rates that are hundreds of dollars lower than the listed spot/FAK rates</a>, especially to the West Coast, where space on vessels is plentiful because carriers this year have <a href="https://www.joc.com/article/some-carriers-seek-to-reopen-202425-fixed-rate-contracts-in-trans-pac-nvos-5727340">launched or reinstated 10 services</a>. It makes sense that carriers are attempting to keep their FAK rates from sinking lower because not all NVOs qualify for the bullet rates either because of the port pairs involved or because they lack the volume carriers are looking for, Monroe said. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="4ed96169-fa34-4b46-81e8-b67860854e39"></dynamic-object></div>Forwarders and logistics consultants say West Coast volumes should remain elevated through the end of the month before dropping into November. “October is still strong,” said Sanjay Tejwani, CEO of 365 Logistics. “A lot of volume was [diverted] to the West Coast, so they’re still enjoying a strong October.” <h3>Peak season surcharges heading lower? </h3>In addition to FAK rates sinking lower in November, peak season surcharges (PSSs), which are applied to NVOs’ fixed rates — also known as named account (NAC) rates — are expected to be under pressure next month. Most carriers on May 1 implemented a $2,000 per FEU PSS on forwarders’ NAC rates, and those charges have generally held. Some carriers are telling forwarders they are willing to lower the PSSs effective Nov. 1, said Christian Sur, executive vice president for ocean freight contract logistics at the NVO Unique Logistics International. “They may come down to $1,200 to $1,500 after Oct. 31,” Sur said. The combined NAC plus PSS rate of about $3,000 per FEU will still be lower than the listed FAK rate of about $4,200 per FEU to the West Coast, Sur said. “By and large, November and the first half of December will be pretty quiet,” said James Caradonna, executive vice president of the forwarder M&amp;R Spedag Group. The Lunar New Year holidays, when many factories in Asia close for a week or two, will begin on Jan. 29, so imports of spring merchandise are expected to begin moving in mid-December. Forwarders anticipate a traditional pre-Lunar New Year spike in imports to both coasts, unless the tentative contract between the ILA and employers on the East and Gulf coasts <a href="https://www.joc.com/article/despite-tentative-wage-deal-usmx-and-ila-have-bumpy-road-ahead-on-other-key-issues-5743997">shows signs of fraying as the Jan. 15 deadline to finalize the agreement approaches</a>. If tangible signs of progress in the negotiations are not being shown by about mid-December, retailers could begin to route discretionary cargo through the West Coast, said Rachel Shames, vice president of pricing and procurement at the forwarder CV International. “The ILA deadline is the only wildcard,” Shames said. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>.Contact Laura Robb at <a href="mailto:laura.robb@spglobal.com">laura.robb@spglobal.com</a>. </div>

Asia-to-US freight rates at the tail end of the peak shipping season are falling faster than is typical for this time of year given the heavy frontloading that occurred months earlier that is also expected to result in weaker-than-normal imports from Asia in November, forwarders tell the Journal of Commerce. Retailers frontloaded holiday season imports in August to ensure they arrived before the strike by East and Gulf coast dockworkers on Oct. 1 , which lasted for three days. The huge import volumes that moved across US docks in August are also muting the post-Golden Week bounce that normally occurs in mid-October when retailers ship their high-value holiday merchandise through the West Coast. “The degree of frontloading in 2024 may have been more than some analysts realized,” Paul Bingham, director of transportation consulting for S&P Global Market Intelligence said. “That might account for softness in import demand now and through the rest of the year.” It might also account for rates that have fallen 49% to the East Coast and 25% to the West Coast since Aug. 30, according to Platts, a Journal of Commerce sister company within S&P Global. The East Coast spot rate as of Oct. 7 was $4,300 per FEU, Platts data showed, with the West Coast rate at $4,200. The near parity of rates is unusual because the East Coast typically carries a nearly $1,000 per FEU premium to the West Coast rate. Doubts about upcoming GRI Sources, meanwhile, say at least two trans-Pacific carriers have announced a $600 per FEU general rate increase (GRI) to the West Coast effective Oct. 15, but there is widespread skepticism that the GRI will hold because imports are expected to diminish next month. “[Carriers] are trying to push the market in a direction where it doesn’t make sense to go, based on what we’re seeing in demand,” said Benton Kauffman, senior vice president/head of trans-Pacific air and sea for US logistics at DSV Global Transport and Logistics. Furthermore, while they’re trying to raise rates, most carriers are offering special ad hoc “bullet” rates that undercut the posted spot and freight-all-kinds (FAK) rates. “While the carriers are trying to keep the rates up, they’re cutting deals at the same time,” Jon Monroe, who serves as an adviser to non-vessel-operating common carriers (NVOs), told the Journal of Commerce. Carriers since late spring have been offering bullet rates that are hundreds of dollars lower than the listed spot/FAK rates , especially to the West Coast, where space on vessels is plentiful because carriers this year have launched or reinstated 10 services . It makes sense that carriers are attempting to keep their FAK rates from sinking lower because not all NVOs qualify for the bullet rates either because of the port pairs involved or because they lack the volume carriers are looking for, Monroe said. Forwarders and logistics consultants say West Coast volumes should remain elevated through the end of the month before dropping into November. “October is still strong,” said Sanjay Tejwani, CEO of 365 Logistics. “A lot of volume was [diverted] to the West Coast, so they’re still enjoying a strong October.” Peak season surcharges heading lower? In addition to FAK rates sinking lower in November, peak season surcharges (PSSs), which are applied to NVOs’ fixed rates — also known as named account (NAC) rates — are expected to be under pressure next month. Most carriers on May 1 implemented a $2,000 per FEU PSS on forwarders’ NAC rates, and those charges have generally held. Some carriers are telling forwarders they are willing to lower the PSSs effective Nov. 1, said Christian Sur, executive vice president for ocean freight contract logistics at the NVO Unique Logistics International. “They may come down to $1,200 to $1,500 after Oct. 31,” Sur said. The combined NAC plus PSS rate of about $3,000 per FEU will still be lower than the listed FAK rate of about $4,200 per FEU to the West Coast, Sur said. “By and large, November and the first half of December will be pretty quiet,” said James Caradonna, executive vice president of the forwarder M&R Spedag Group. The Lunar New Year holidays, when many factories in Asia close for a week or two, will begin on Jan. 29, so imports of spring merchandise are expected to begin moving in mid-December. Forwarders anticipate a traditional pre-Lunar New Year spike in imports to both coasts, unless the tentative contract between the ILA and employers on the East and Gulf coasts shows signs of fraying as the Jan. 15 deadline to finalize the agreement approaches . If tangible signs of progress in the negotiations are not being shown by about mid-December, retailers could begin to route discretionary cargo through the West Coast, said Rachel Shames, vice president of pricing and procurement at the forwarder CV International. “The ILA deadline is the only wildcard,” Shames said. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .Contact Laura Robb at laura.robb@spglobal.com .

Heavy frontloading sets up US-Asia trade for falling rates, imports

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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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<div class="phx-topic abstract-wrapper">While longshore wages will not increase until a formal contract is signed, the container shipping industry is starting to tally up the billions in new costs that will come with the almost 62% wage hike, according to a Journal of Commerce analysis</div>

While longshore wages will not increase until a formal contract is signed, the container shipping industry is starting to tally up the billions in new costs that will come with the almost 62% wage hike, according to a Journal of Commerce analysis

<div class="phx-topic">The tentative wage deal agreed to between longshore workers and maritime employers along the US East and Gulf coasts could create as much as $5 billion in new waterfront labor costs over the six-year life of the next contract, according to estimates compiled by the Journal of Commerce. While a high number itself — other estimates put it much higher — marine terminal operators hope the wage deal will spur greater productivity and efficiency that will help pay for the increased costs. The agreement struck Oct. 3 between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) will provide dockworkers with a 61.5% increase in the top wage scale over six years, the ILA said in a statement. That was enough to get <a href="https://www.joc.com/article/ila-usmx-agree-on-new-wage-offer-and-contract-extension-that-reopens-ports-5741882">the ILA to agree to a contract extension that reopened East and Gulf coast ports after a three-day strike at the start of October</a>. The wage increase comes in tiers of $6 per hour in the first year, $5 in the second year, $4 in the third year and $3 per hour over the balance of the contract. The salary hike, though, remains contingent upon both sides negotiating a final master contract by Jan. 15 that covers other thorny issues, including work jurisdiction, automation and coastwide benefits. Neither side has publicly said what the wage deal would cost the industry overall, and the actual costs depend on many unknowns such as actual hours worked and container volumes handled. But a Journal of Commerce analysis based on the current growth rate in work hours at East and Gulf coast ports and cumulative hourly raises per year shows $4.95 billion in additional labor costs through 2030. The estimate assumes work hours at the ports under the ILA master contract grow at an annual average of 4.3% over the next six years, the same rate of growth in coastwide longshore work hours seen since 2013, according to data from the USMX. That assumption would put total work hours at 64.4 million by 2030, up from 47.8 million in 2023. In the first year of the deal, overall wages could increase by $312 million. The cumulative raise in the second year would bring wages up another $572 million. The third and fourth years add another $781 million and $937 million, respectively, while over $1 billion in additional labor costs could come in each of the contract’s final two years. The estimate also assumes that the wage increases are paid as straight-time, rather than as overtime hours. Overtime pay can be a significant part of longshore worker income. While the container shipping industry will bear most of the costs, cruise ship and roll-on/ roll-off carrier segments will also pay for the higher wages. This method is about as good as any for estimating an unknown cost, according to Jason Miller, professor of Supply Chain Management at Michigan State University and a Journal of Commerce contributor. Miller’s own approximate estimate considers the cost of moving a marine container, with that amount assumed to be evenly split between labor costs and other operating and capital expenses. If lift fees are between $400 and $500 per container, Miller said a 61.5% rise in wages amounts to anywhere between a $125 to $150 increase in per-container lift costs. If East and Gulf coast import volumes hover near 13 million TEUs per year, approximately 7 million containers through 2030, that translates to anywhere between $5.2 billion and $6.3 billion in added labor costs, Miller said. “It seems like a reasonable number and why the ocean carriers would have been willing to agree to the wage increase,” he said. “How much revenue are carriers getting each year for 13 million TEUs of imports each year? “Think about the value of the goods that will be coming through the East and Gulf coasts,” Miller added. “That number is getting into the trillions. The ILA wage deal is a relatively small share of that.” <h3>‘Burundi-size’ cost? </h3>But an executive with the terminal subsidiary of a European-based ocean carrier told the Journal of Commerce that the cost of the wage deal also needs to be measured against the cost of export and empty container moves, for which there is little to no revenue. East and Gulf coast ports are on track to handle about 19 million containers in total, full and empty, in 2024, according to the ocean carrier’s data. The new wage deal will increase its terminal unit’s labor costs by $170 per container. Assuming a nearly similar increase across other terminal operators, the wage deal would cost the container shipping industry $3.2 billion per year in additional labor costs — or more than $19 billion over the life of the new contract — a cost the executive said will be borne directly by US consumers. “The extra cost that US consumers will pay exceeds the entire GDP of a country like Burundi that has a population of 13 million inhabitants,” the executive said. “Somebody is paying for the empties as well and it is not the carriers,” the source added. “The trade imbalance, and the resulting amount of empties, gets all priced in into what is being paid for the full import and export boxes.” The USMX does not release figures on what it paid longshore workers. However, based on the dues contribution rate reported by the ILA in its most recent annual report to the US Department of Labor, its members were paid $2.9 billion in wages during 2023. The ILA said in a statement about the tentative agreement that the 61.5% wage increase “is unprecedented and serves as a testament to the union’s commitment to securing fair compensation for its members.” The wage deal comes as ocean carriers are expected to continue reporting multi-billion-dollar profits. Among publicly traded ocean carriers, combined net income is expected to reach $16.8 billion in 2024, according to S&amp;P Global consensus analyst estimates. <h3>New wages add to lift costs </h3>The ILA’s wage increases will flow through the industry via annual rate adjustments to the container lift agreements that ocean carriers have with marine terminals, a US-based terminal executive told the Journal of Commerce. Ocean carrier members of the USMX cover 70% of the ILA’s annual wage increases, while marine terminals and stevedores are responsible for the remainder. So the $6 per hour wage hike in the first year of the tentative agreement, which represents a 15% increase, means ocean carriers face a 10.7% increase from their share, plus an annual increase indexed to overall inflation, in container lift rates. The terminal executive said US terminal lift rates generally hover near $300 per container, while higher-cost regions such as the Northeast have lift costs at approximately $400 per container. Labor costs charged by US marine terminals can account for up to 60% of their revenue, the highest share of such costs globally. Whether terminal automation would temper costs remains unclear, the executive added, due to high upfront costs of automation technology and the uncertainty around its payback. The most successful automated and semi-automated terminals were originally designed from the ground up specifically for those operations, meaning that it’s difficult to bolt on automation technology to an existing operation. The hope with the new wage deal is that it will be accompanied by efficiency gains to move more boxes per hour, the executive said, noting that <a href="https://www.joc.com/article/chinas-ports-still-lead-performance-rankings-while-indias-move-higher-cppi-5213974">US container ports generally rank very low versus their overseas peers in terms of efficiency</a>. “Look at Europe where the longshoremen are unionized and many of the terminals are automated, but are much more productive,” the executive said. “When there is efficiency, it helps our ability to offset the wage increases. We’ll pay the higher wages but want to get something out of it in terms of productivity, not just increasing man-hours. Otherwise, this is just further inflationary pressure.” Another US-based terminal executive said the total cost of the wage deal should be juxtaposed against the size of the investment needed to automate US terminals. The source said the higher wages are a necessary investment in maintaining stable longshore workforces along the East and Gulf coasts, but those workers still need to hit benchmarks seen at other global ports. “How can vessel services keep their schedules when there’s 35 moves per hour at Southeast Asia ports and 19 moves per hour at US ports?” the executive asked. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>.</div>

The tentative wage deal agreed to between longshore workers and maritime employers along the US East and Gulf coasts could create as much as $5 billion in new waterfront labor costs over the six-year life of the next contract, according to estimates compiled by the Journal of Commerce. While a high number itself — other estimates put it much higher — marine terminal operators hope the wage deal will spur greater productivity and efficiency that will help pay for the increased costs. The agreement struck Oct. 3 between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) will provide dockworkers with a 61.5% increase in the top wage scale over six years, the ILA said in a statement. That was enough to get the ILA to agree to a contract extension that reopened East and Gulf coast ports after a three-day strike at the start of October . The wage increase comes in tiers of $6 per hour in the first year, $5 in the second year, $4 in the third year and $3 per hour over the balance of the contract. The salary hike, though, remains contingent upon both sides negotiating a final master contract by Jan. 15 that covers other thorny issues, including work jurisdiction, automation and coastwide benefits. Neither side has publicly said what the wage deal would cost the industry overall, and the actual costs depend on many unknowns such as actual hours worked and container volumes handled. But a Journal of Commerce analysis based on the current growth rate in work hours at East and Gulf coast ports and cumulative hourly raises per year shows $4.95 billion in additional labor costs through 2030. The estimate assumes work hours at the ports under the ILA master contract grow at an annual average of 4.3% over the next six years, the same rate of growth in coastwide longshore work hours seen since 2013, according to data from the USMX. That assumption would put total work hours at 64.4 million by 2030, up from 47.8 million in 2023. In the first year of the deal, overall wages could increase by $312 million. The cumulative raise in the second year would bring wages up another $572 million. The third and fourth years add another $781 million and $937 million, respectively, while over $1 billion in additional labor costs could come in each of the contract’s final two years. The estimate also assumes that the wage increases are paid as straight-time, rather than as overtime hours. Overtime pay can be a significant part of longshore worker income. While the container shipping industry will bear most of the costs, cruise ship and roll-on/ roll-off carrier segments will also pay for the higher wages. This method is about as good as any for estimating an unknown cost, according to Jason Miller, professor of Supply Chain Management at Michigan State University and a Journal of Commerce contributor. Miller’s own approximate estimate considers the cost of moving a marine container, with that amount assumed to be evenly split between labor costs and other operating and capital expenses. If lift fees are between $400 and $500 per container, Miller said a 61.5% rise in wages amounts to anywhere between a $125 to $150 increase in per-container lift costs. If East and Gulf coast import volumes hover near 13 million TEUs per year, approximately 7 million containers through 2030, that translates to anywhere between $5.2 billion and $6.3 billion in added labor costs, Miller said. “It seems like a reasonable number and why the ocean carriers would have been willing to agree to the wage increase,” he said. “How much revenue are carriers getting each year for 13 million TEUs of imports each year? “Think about the value of the goods that will be coming through the East and Gulf coasts,” Miller added. “That number is getting into the trillions. The ILA wage deal is a relatively small share of that.” ‘Burundi-size’ cost? But an executive with the terminal subsidiary of a European-based ocean carrier told the Journal of Commerce that the cost of the wage deal also needs to be measured against the cost of export and empty container moves, for which there is little to no revenue. East and Gulf coast ports are on track to handle about 19 million containers in total, full and empty, in 2024, according to the ocean carrier’s data. The new wage deal will increase its terminal unit’s labor costs by $170 per container. Assuming a nearly similar increase across other terminal operators, the wage deal would cost the container shipping industry $3.2 billion per year in additional labor costs — or more than $19 billion over the life of the new contract — a cost the executive said will be borne directly by US consumers. “The extra cost that US consumers will pay exceeds the entire GDP of a country like Burundi that has a population of 13 million inhabitants,” the executive said. “Somebody is paying for the empties as well and it is not the carriers,” the source added. “The trade imbalance, and the resulting amount of empties, gets all priced in into what is being paid for the full import and export boxes.” The USMX does not release figures on what it paid longshore workers. However, based on the dues contribution rate reported by the ILA in its most recent annual report to the US Department of Labor, its members were paid $2.9 billion in wages during 2023. The ILA said in a statement about the tentative agreement that the 61.5% wage increase “is unprecedented and serves as a testament to the union’s commitment to securing fair compensation for its members.” The wage deal comes as ocean carriers are expected to continue reporting multi-billion-dollar profits. Among publicly traded ocean carriers, combined net income is expected to reach $16.8 billion in 2024, according to S&P Global consensus analyst estimates. New wages add to lift costs The ILA’s wage increases will flow through the industry via annual rate adjustments to the container lift agreements that ocean carriers have with marine terminals, a US-based terminal executive told the Journal of Commerce. Ocean carrier members of the USMX cover 70% of the ILA’s annual wage increases, while marine terminals and stevedores are responsible for the remainder. So the $6 per hour wage hike in the first year of the tentative agreement, which represents a 15% increase, means ocean carriers face a 10.7% increase from their share, plus an annual increase indexed to overall inflation, in container lift rates. The terminal executive said US terminal lift rates generally hover near $300 per container, while higher-cost regions such as the Northeast have lift costs at approximately $400 per container. Labor costs charged by US marine terminals can account for up to 60% of their revenue, the highest share of such costs globally. Whether terminal automation would temper costs remains unclear, the executive added, due to high upfront costs of automation technology and the uncertainty around its payback. The most successful automated and semi-automated terminals were originally designed from the ground up specifically for those operations, meaning that it’s difficult to bolt on automation technology to an existing operation. The hope with the new wage deal is that it will be accompanied by efficiency gains to move more boxes per hour, the executive said, noting that US container ports generally rank very low versus their overseas peers in terms of efficiency . “Look at Europe where the longshoremen are unionized and many of the terminals are automated, but are much more productive,” the executive said. “When there is efficiency, it helps our ability to offset the wage increases. We’ll pay the higher wages but want to get something out of it in terms of productivity, not just increasing man-hours. Otherwise, this is just further inflationary pressure.” Another US-based terminal executive said the total cost of the wage deal should be juxtaposed against the size of the investment needed to automate US terminals. The source said the higher wages are a necessary investment in maintaining stable longshore workforces along the East and Gulf coasts, but those workers still need to hit benchmarks seen at other global ports. “How can vessel services keep their schedules when there’s 35 moves per hour at Southeast Asia ports and 19 moves per hour at US ports?” the executive asked. Contact Michael Angell at michael.angell@spglobal.com .

Longshore wage deal at East, Gulf ports to add at least $5 billion in labor costs

<div class="phx-topic abstract-wrapper">A source with knowledge of Friday’s incident said the UP train was being interchanged to Norfolk Southern Railway, although it’s unclear why the train was stationary in a residential area.</div>

A source with knowledge of Friday’s incident said the UP train was being interchanged to Norfolk Southern Railway, although it’s unclear why the train was stationary in a residential area.

<div class="phx-topic">The theft of cargo from a Union Pacific (UP) train on the west side of Chicago on Friday highlights several challenges combating such crime, including how to handle interchanges between two Class I railroads in a major city. The incident, <a href="https://abc7chicago.com/post/chicago-crime-stolen-merchandise-sale-social-media-after-thieves-loot-freight-train-south-austin-residents-say/15422283/?ex_cid=TA_WLS_TW&amp;taid=670bd5e798f9f60001d38860&amp;utm_campaign=trueAnthem%3A+Trending+Content&amp;utm_medium=trueAnthem&amp;utm_source=twitter">which was caught on video</a>, also raises the question of whether the suspects received <a href="https://www.joc.com/article/us-rail-cargo-crime-on-the-rise-as-thieves-methods-gain-sophistication-5219201">inside information</a> because they hit only a handful of Hub Group boxes and rail-owned containers labelled “EMP” with electronics inside. Video shows the thieves ignoring dozens of other containers. UP said the train was in the middle of an interchange. A source with knowledge of the incident said the UP train was being interchanged to Norfolk Southern Railway, although it is unclear whether the Belt Railway of Chicago — a short-line railroad responsible for interchanges in the city — oversaw the transfer or why the train was stationary in a residential area. When a train is involved in an interchange, it is only supposed to do so in a secure yard or terminal. Chicago police announced six people were taken into custody, but only two individuals have been charged so far with misdemeanors. Some of the stolen merchandise was recovered. The targeting of specific cargo is different than what occurred to UP <a href="https://www.up.com/aboutup/community/inside_track/la-cargo-threats-aggressive-response-220116.htm">in Los Angeles</a> in 2021 and early 2022 when thieves ransacked containers and then littered the tracks with cargo they left behind. <h3>Threat is hard to stop </h3>Chicago and Memphis are major US junction points where North American Class I railroads from the eastern and western US and Canada all meet. The security of cargo being interchanged is also a major problem in Memphis, according to Memphis Police Sgt. Jason Moore, who spoke on the topic of cargo theft earlier this month at the Journal of Commerce’s <a href="https://www.joc.com/article/rail-industry-split-on-how-to-best-combat-cargo-theft-5742577">Inland Distribution Conference</a> (Inland24) in Chicago. “Up until recently, there have been times when an intermodal train in Memphis may sit for 36 hours or 48 hours and by the time the train is moving again, a bunch of cargo is gone,” Moore said at Inland24. “Where the trains are sitting are not always in the safest of locations in either city [Chicago or Memphis] and while the railroad police try their best, all our agencies are short on officers so it’s hard to cover all intermodal trains, especially those several thousand feet long.” Friday’s incident highlights another problem besides the insider threat and challenges of interchanging containers between railroads: law enforcement having its hands tied when it comes to punishment for those convicted of cargo theft Authorities point out that if merchandise is stolen from a foreign trade zone (FTZ), those arrested can be charged with federal crimes, including felonies that could result in 10 years in prison. But incidents such as the one in Chicago, which did not occur in an FTZ, result in only fines or short-term stints in jail. “Right now, we’re having these conversations [about punishment] on a per-incident basis, a per-container basis, and that’s not aggregating in a sufficient way for federal prosecutors to understand the economic damage or the true victims of these crimes,” Will Johnson, chief special agent with BNSF Police, the law enforcement division of BNSF Railway, said during Inland24. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>. </div>

The theft of cargo from a Union Pacific (UP) train on the west side of Chicago on Friday highlights several challenges combating such crime, including how to handle interchanges between two Class I railroads in a major city. The incident, which was caught on video , also raises the question of whether the suspects received inside information because they hit only a handful of Hub Group boxes and rail-owned containers labelled “EMP” with electronics inside. Video shows the thieves ignoring dozens of other containers. UP said the train was in the middle of an interchange. A source with knowledge of the incident said the UP train was being interchanged to Norfolk Southern Railway, although it is unclear whether the Belt Railway of Chicago — a short-line railroad responsible for interchanges in the city — oversaw the transfer or why the train was stationary in a residential area. When a train is involved in an interchange, it is only supposed to do so in a secure yard or terminal. Chicago police announced six people were taken into custody, but only two individuals have been charged so far with misdemeanors. Some of the stolen merchandise was recovered. The targeting of specific cargo is different than what occurred to UP in Los Angeles in 2021 and early 2022 when thieves ransacked containers and then littered the tracks with cargo they left behind. Threat is hard to stop Chicago and Memphis are major US junction points where North American Class I railroads from the eastern and western US and Canada all meet. The security of cargo being interchanged is also a major problem in Memphis, according to Memphis Police Sgt. Jason Moore, who spoke on the topic of cargo theft earlier this month at the Journal of Commerce’s Inland Distribution Conference (Inland24) in Chicago. “Up until recently, there have been times when an intermodal train in Memphis may sit for 36 hours or 48 hours and by the time the train is moving again, a bunch of cargo is gone,” Moore said at Inland24. “Where the trains are sitting are not always in the safest of locations in either city [Chicago or Memphis] and while the railroad police try their best, all our agencies are short on officers so it’s hard to cover all intermodal trains, especially those several thousand feet long.” Friday’s incident highlights another problem besides the insider threat and challenges of interchanging containers between railroads: law enforcement having its hands tied when it comes to punishment for those convicted of cargo theft Authorities point out that if merchandise is stolen from a foreign trade zone (FTZ), those arrested can be charged with federal crimes, including felonies that could result in 10 years in prison. But incidents such as the one in Chicago, which did not occur in an FTZ, result in only fines or short-term stints in jail. “Right now, we’re having these conversations [about punishment] on a per-incident basis, a per-container basis, and that’s not aggregating in a sufficient way for federal prosecutors to understand the economic damage or the true victims of these crimes,” Will Johnson, chief special agent with BNSF Police, the law enforcement division of BNSF Railway, said during Inland24. Contact Ari Ashe at ari.ashe@spglobal.com .

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