<div class="phx-topic abstract-wrapper">Ocean carriers have so far been unable to stem the rate slide in the traditionally slow post-Golden Week period that followed an early peak season on the trade lane, but they are pulling hard on capacity management levers in a bid to balance supply and demand.</div>

Ocean carriers have so far been unable to stem the rate slide in the traditionally slow post-Golden Week period that followed an early peak season on the trade lane, but they are pulling hard on capacity management levers in a bid to balance supply and demand.

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<div class="phx-topic">Forwarders expect freefalling Asia-North Europe ocean spot rates to bottom out in October and then climb through the remainder of the year as carriers increase blank sailings and roll out rate hikes to target early Chinese New Year demand. In an advisory to customers this week, a Europe-based global forwarder said there is less volume currently on the Asia-Europe trade because some factories and shippers were holding cargo back in anticipation of rates falling further. But that will change. “November demand is expected to be strong because the blank sailings will limit capacity and the Chinese New Year peak will be earlier because of the longer transit times [around southern Africa],” the advisory noted. Lunar New Year will be earlier in 2025, falling on Jan. 29 compared with Feb. 10 this year. The head of ocean freight at a Germany-based forwarder who did not want to be identified agreed that rate levels were likely to rise through November with demand picking up from early in the month amid carriers withdrawing capacity. Carriers have so far been unable to stem the rate slide in the traditionally slow post-Golden Week period that followed an early peak season on Asia-Europe, but they are pulling hard on capacity management levers in a bid to balance supply and demand. “As a consequence of the decline in demand, Maersk is looking to balance the network accordingly,” the carrier told customers in an advisory this week. Data from visibility provider eeSea shows carriers are so far expected to blank 271,382 TEUs in October on Asia-Europe, representing 20% of available capacity on the trade. That’s up from 16.5% in September and 15.3% in August. November blanks were not yet available. Total Asia-North Europe capacity — comprising both available and blanked capacity — was 1.35 million TEUs in October, compared with just over 1 million TEUs during the same month last year, according to eeSea. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="874fb71b-dde8-4286-b65b-1bef7790a9f3"></dynamic-object></div>Carriers this year have kept idle capacity at low levels while adding significant numbers of new vessels. So far this year, capacity delivered in the “ultra-large” vessel segment of 14,501 TEUs and above is at is at 658,048 TEUs, according to Sea-web, a sister company of the Journal of Commerce within S&amp;P Global. On a global level, shipping association BIMCO has forecast cargo volume growth at 3% to 4% in both 2024 and 2025, which will be easily outstripped by fleet growth due to top 9.5% in 2024 and 4.9% in 2025. “In 2024, 478 container ships with a capacity of 3.1 million TEUs are scheduled for delivery, beating the 2023 record by 41%,” Niels Rasmussen, BIMCO’s chief shipping analyst, told the Journal of Commerce in a recent interview. <h3>Nov. 1 rate hikes </h3>The Asia-North Europe capacity cuts have yet to exert any upward pressure on rates during the traditionally slow post-Golden Week period in early October that followed an early peak season on Asia-Europe. Spot rates from Asia to North Europe have lost more than $5,500 since early July, when prices hit a 2024 high of $8,500 per FEU. The average rate this week was $2,900 per FEU, according to Platts, a sister company of the Journal of Commerce within S&amp;P Global. Several carriers have announced freight-all-kinds (FAK) rate levels from Nov. 1 in a move to capitalize on any rising demand and finish the year strongly. The increases are led by Mediterranean Shipping Co., which is setting its rate at $5,000 per FEU. Maersk has told customers there will be a rate increase from Nov. 4, but did not provide a figure. Hapag-Lloyd, however, is setting its rate at $2,500 per FEU, lower than the current market. Potentially aiding carrier attempts to raise rate levels will be weather-related congestion that has been disrupting ports at both ends of the Asia-North Europe trade. Kuehne + Nagel’s visibility platform SeaExplorer is reporting the current average waiting time at Hamburg is near 1.17 days, but yard utilization is at 102% with the German port limiting empty returns for all carriers. Labor shortages at night and on weekends are adding to delays. Across the English Channel in Felixstowe, SeaExplorer is reporting heavy disruption at the UK’s largest container hub and noted that operator Hutchison Ports has threatened to close its gates to empties if stock levels are not reduced below 5,000 TEUs. The recent typhoons Bebinca and Pulasan in Asia caused the bunching of vessels with the average waiting time in Shanghai over the past seven days at 2.61 days, according to SeaExplorer. Heavy berth congestion at the port’s Waigaoqiao terminals is causing three-day delays while the larger Yangshan terminals are facing waiting times of up to two days. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Forwarders expect freefalling Asia-North Europe ocean spot rates to bottom out in October and then climb through the remainder of the year as carriers increase blank sailings and roll out rate hikes to target early Chinese New Year demand. In an advisory to customers this week, a Europe-based global forwarder said there is less volume currently on the Asia-Europe trade because some factories and shippers were holding cargo back in anticipation of rates falling further. But that will change. “November demand is expected to be strong because the blank sailings will limit capacity and the Chinese New Year peak will be earlier because of the longer transit times [around southern Africa],” the advisory noted. Lunar New Year will be earlier in 2025, falling on Jan. 29 compared with Feb. 10 this year. The head of ocean freight at a Germany-based forwarder who did not want to be identified agreed that rate levels were likely to rise through November with demand picking up from early in the month amid carriers withdrawing capacity. Carriers have so far been unable to stem the rate slide in the traditionally slow post-Golden Week period that followed an early peak season on Asia-Europe, but they are pulling hard on capacity management levers in a bid to balance supply and demand. “As a consequence of the decline in demand, Maersk is looking to balance the network accordingly,” the carrier told customers in an advisory this week. Data from visibility provider eeSea shows carriers are so far expected to blank 271,382 TEUs in October on Asia-Europe, representing 20% of available capacity on the trade. That’s up from 16.5% in September and 15.3% in August. November blanks were not yet available. Total Asia-North Europe capacity — comprising both available and blanked capacity — was 1.35 million TEUs in October, compared with just over 1 million TEUs during the same month last year, according to eeSea. Carriers this year have kept idle capacity at low levels while adding significant numbers of new vessels. So far this year, capacity delivered in the “ultra-large” vessel segment of 14,501 TEUs and above is at is at 658,048 TEUs, according to Sea-web, a sister company of the Journal of Commerce within S&P Global. On a global level, shipping association BIMCO has forecast cargo volume growth at 3% to 4% in both 2024 and 2025, which will be easily outstripped by fleet growth due to top 9.5% in 2024 and 4.9% in 2025. “In 2024, 478 container ships with a capacity of 3.1 million TEUs are scheduled for delivery, beating the 2023 record by 41%,” Niels Rasmussen, BIMCO’s chief shipping analyst, told the Journal of Commerce in a recent interview. Nov. 1 rate hikes The Asia-North Europe capacity cuts have yet to exert any upward pressure on rates during the traditionally slow post-Golden Week period in early October that followed an early peak season on Asia-Europe. Spot rates from Asia to North Europe have lost more than $5,500 since early July, when prices hit a 2024 high of $8,500 per FEU. The average rate this week was $2,900 per FEU, according to Platts, a sister company of the Journal of Commerce within S&P Global. Several carriers have announced freight-all-kinds (FAK) rate levels from Nov. 1 in a move to capitalize on any rising demand and finish the year strongly. The increases are led by Mediterranean Shipping Co., which is setting its rate at $5,000 per FEU. Maersk has told customers there will be a rate increase from Nov. 4, but did not provide a figure. Hapag-Lloyd, however, is setting its rate at $2,500 per FEU, lower than the current market. Potentially aiding carrier attempts to raise rate levels will be weather-related congestion that has been disrupting ports at both ends of the Asia-North Europe trade. Kuehne + Nagel’s visibility platform SeaExplorer is reporting the current average waiting time at Hamburg is near 1.17 days, but yard utilization is at 102% with the German port limiting empty returns for all carriers. Labor shortages at night and on weekends are adding to delays. Across the English Channel in Felixstowe, SeaExplorer is reporting heavy disruption at the UK’s largest container hub and noted that operator Hutchison Ports has threatened to close its gates to empties if stock levels are not reduced below 5,000 TEUs. The recent typhoons Bebinca and Pulasan in Asia caused the bunching of vessels with the average waiting time in Shanghai over the past seven days at 2.61 days, according to SeaExplorer. Heavy berth congestion at the port’s Waigaoqiao terminals is causing three-day delays while the larger Yangshan terminals are facing waiting times of up to two days. Contact Greg Knowler at greg.knowler@spglobal.com .

Container Shipping News

Asia-Europe

Maritime

Asia-Europe carriers target pre-Lunar New Year demand with rate hikes, blank sailings

<div class="phx-topic abstract-wrapper">Rapid urbanization and strong economic growth are driving project cargo volumes in India, although heavier cargoes are becoming harder to handle due to port equipment and infrastructure limitations.</div>

Rapid urbanization and strong economic growth are driving project cargo volumes in India, although heavier cargoes are becoming harder to handle due to port equipment and infrastructure limitations.

<div class="phx-topic">India is on the cusp of a project cargo growth explosion as a sheaf of large-scale infrastructure projects kick off. But heavier cargoes and clearance complications could hold back growth, according to shippers in the region. Infrastructure projects for roads, rail, inland waterways, seaports and airports are supporting movement of project cargoes across the country, Dharmendra Gangrade, head of logistics management at Indian engineering, procurement and construction company and diversified conglomerate Larsen &amp; Toubro (L&amp;T), told the Journal of Commerce. However, heavier cargoes are becoming harder to handle due to port equipment and infrastructure limitations, while the myriad agencies tasked with granting clearances for interstate cargo transport complicate project cargo moves, Gangrade said. “Project cargo shippers continue to face challenges due to non-availability of assets driven by a huge demand-supply gap,” he said. Steel products, inbound and outbound, are also a major source of cargo for heavy-lift carriers and logistics service providers serving Indian ports, according to a Mumbai Port Trust executive who did not want to be identified. “Similarly, on the outbound leg, breakbulk tonnage now has a lot of finished steel volumes moving to Europe,” the source said. In addition, industry sources noted a buildup of purified terephthalic acid (PTA) bags, used for industrial packaging, landing at several Indian ports on breakbulk vessels, mostly from China, Vietnam and South Korea. The bags could signal a pending shift of PTA from containers to breakbulk modes due to higher freight costs. <h3>Ports struggle to keep up with demand </h3>Rapid urbanization in India amid healthy economic growth and a burgeoning middle class is driving growth in breakbulk and heavy freight, shippers said. But as general and project cargo demand soars, Indian ports are grappling with capacity pressures. Ports throughout India report long waits at anchor to secure berths, particularly at Kandla in the west and Kolkata in the east, where average delays range from seven to eight days. Kandla ranks second among major Indian ports for breakbulk tonnage, handling 381 ship calls in fiscal 2023–24, sources familiar with Indian port operations told the Journal of Commerce. While digitization of port and customs services has been an antidote to many paperwork-related strains, a seamless, hassle-free single window experience remains elusive. Sporadic system glitches and shortages in harbor pilotage services are further contributing to vessel turnaround delays, a cargo owner told the Journal of Commerce. <h3>Breakbulk positives outweigh negatives </h3>Nevertheless, industry sources remain bullish on the potential for India’s breakbulk and project cargo market. “The positives of the market far outweigh the negatives for non-container businesses,” the cargo owner said. Heavy cargo carriers serving India have multiple tailwinds as the economy expands, according to KK Krishnadas, head of non-container business at JM Baxi Group, a Mumbai-based project cargo logistics specialist. Carriers are benefiting from a more balanced flow of cargo, with backhaul volumes looking “prettier” than the long-time pattern of imports occupying center stage in round-trip charter fixtures, he said. “In the domestic market, we are witnessing major orders being pursued by Indian fabrication yards, with executions targeted for the third quarter of 2025,” Krishnadas told the Journal of Commerce. Krishnadas added that projects in the energy and chemicals sectors — including for petrochemicals and refining — were major contributors to the growing demand for project cargo trade. Expansion in renewable energy sectors — particularly wind and solar power — and the oil and gas, construction and manufacturing industries is further supporting India’s project cargo sector, according to Nikhil Kedar, commercial marketing representative in India for Cosco Shipping Specialized Carriers. “On the export front, Indian companies are engaging in overseas projects, particularly in Southeast Asia, the Middle East and Africa, increasing the need for heavy/project cargo movement,” Kedar said. Contact Bency Matthew at <a href="mailto:bencymathew@gmail.com">bencymathew@gmail.com</a>. </div>

India is on the cusp of a project cargo growth explosion as a sheaf of large-scale infrastructure projects kick off. But heavier cargoes and clearance complications could hold back growth, according to shippers in the region. Infrastructure projects for roads, rail, inland waterways, seaports and airports are supporting movement of project cargoes across the country, Dharmendra Gangrade, head of logistics management at Indian engineering, procurement and construction company and diversified conglomerate Larsen & Toubro (L&T), told the Journal of Commerce. However, heavier cargoes are becoming harder to handle due to port equipment and infrastructure limitations, while the myriad agencies tasked with granting clearances for interstate cargo transport complicate project cargo moves, Gangrade said. “Project cargo shippers continue to face challenges due to non-availability of assets driven by a huge demand-supply gap,” he said. Steel products, inbound and outbound, are also a major source of cargo for heavy-lift carriers and logistics service providers serving Indian ports, according to a Mumbai Port Trust executive who did not want to be identified. “Similarly, on the outbound leg, breakbulk tonnage now has a lot of finished steel volumes moving to Europe,” the source said. In addition, industry sources noted a buildup of purified terephthalic acid (PTA) bags, used for industrial packaging, landing at several Indian ports on breakbulk vessels, mostly from China, Vietnam and South Korea. The bags could signal a pending shift of PTA from containers to breakbulk modes due to higher freight costs. Ports struggle to keep up with demand Rapid urbanization in India amid healthy economic growth and a burgeoning middle class is driving growth in breakbulk and heavy freight, shippers said. But as general and project cargo demand soars, Indian ports are grappling with capacity pressures. Ports throughout India report long waits at anchor to secure berths, particularly at Kandla in the west and Kolkata in the east, where average delays range from seven to eight days. Kandla ranks second among major Indian ports for breakbulk tonnage, handling 381 ship calls in fiscal 2023–24, sources familiar with Indian port operations told the Journal of Commerce. While digitization of port and customs services has been an antidote to many paperwork-related strains, a seamless, hassle-free single window experience remains elusive. Sporadic system glitches and shortages in harbor pilotage services are further contributing to vessel turnaround delays, a cargo owner told the Journal of Commerce. Breakbulk positives outweigh negatives Nevertheless, industry sources remain bullish on the potential for India’s breakbulk and project cargo market. “The positives of the market far outweigh the negatives for non-container businesses,” the cargo owner said. Heavy cargo carriers serving India have multiple tailwinds as the economy expands, according to KK Krishnadas, head of non-container business at JM Baxi Group, a Mumbai-based project cargo logistics specialist. Carriers are benefiting from a more balanced flow of cargo, with backhaul volumes looking “prettier” than the long-time pattern of imports occupying center stage in round-trip charter fixtures, he said. “In the domestic market, we are witnessing major orders being pursued by Indian fabrication yards, with executions targeted for the third quarter of 2025,” Krishnadas told the Journal of Commerce. Krishnadas added that projects in the energy and chemicals sectors — including for petrochemicals and refining — were major contributors to the growing demand for project cargo trade. Expansion in renewable energy sectors — particularly wind and solar power — and the oil and gas, construction and manufacturing industries is further supporting India’s project cargo sector, according to Nikhil Kedar, commercial marketing representative in India for Cosco Shipping Specialized Carriers. “On the export front, Indian companies are engaging in overseas projects, particularly in Southeast Asia, the Middle East and Africa, increasing the need for heavy/project cargo movement,” Kedar said. Contact Bency Matthew at bencymathew@gmail.com .

Breakbulk News

Energy projects

Heavy-haul transport

Project cargo

India’s project cargo expansion tempered by clearance snags, equipment shortages

<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 .

Container lines

Marine terminals

Longshore labor

North American ports

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 .

North-American rail

Intermodal providers

Chicago cargo theft highlights larger challenges for intermodal container moves

<div class="phx-topic abstract-wrapper">The port reopened on Saturday after engineering firm Woolpert performed a survey to check for storm debris in shipping channels. </div>

The port reopened on Saturday after engineering firm Woolpert performed a survey to check for storm debris in shipping channels.

<div class="phx-topic">Port Tampa Bay has resumed vessel operations and reopened shipping channels after the gateway was <a href="https://www.joc.com/article/port-tampa-bay-effectively-shut-due-to-power-outage-in-aftermath-of-milton-5747209">forced to close for several days last week due to a loss of power caused by Hurricane Milton</a>. Vessel movement is restricted for now to one-way travel during daylight hours, the port said in an advisory on its website.The port reopened on Saturday after engineering firm Woolpert performed a survey to check for storm debris in shipping channels.“When a storm of this magnitude impacts a commerce-rich environment like Tampa, there is a high likelihood that it will drag debris into the navigation channels...,” Dave Neff, Woolpert’s vice president and maritime market director, said in a statement.The port on Saturday performed safety tests to ensure its facilities could discharge fuel after power was restored to all seven fuel terminals at the gateway on Friday.“Commercial vessel traffic is again being queued for a return to full operations at the port, meaning we are open for business,” said the port said in its advisory. “Some of the first vessels to return will be fuel tankers, cruise ships and vessels carrying perishable cargo.”Contact Laura Robb at <a href="mailto:laura.robb@spglobal.com">laura.robb@spglobal.com</a>.</div>

Port Tampa Bay has resumed vessel operations and reopened shipping channels after the gateway was forced to close for several days last week due to a loss of power caused by Hurricane Milton . Vessel movement is restricted for now to one-way travel during daylight hours, the port said in an advisory on its website. The port reopened on Saturday after engineering firm Woolpert performed a survey to check for storm debris in shipping channels. “When a storm of this magnitude impacts a commerce-rich environment like Tampa, there is a high likelihood that it will drag debris into the navigation channels...,” Dave Neff, Woolpert’s vice president and maritime market director, said in a statement. The port on Saturday performed safety tests to ensure its facilities could discharge fuel after power was restored to all seven fuel terminals at the gateway on Friday. “Commercial vessel traffic is again being queued for a return to full operations at the port, meaning we are open for business,” said the port said in its advisory. “Some of the first vessels to return will be fuel tankers, cruise ships and vessels carrying perishable cargo.” Contact Laura Robb at laura.robb@spglobal.com .

Port News

Port Tampa Bay reopens after power restored following hurricane closure

<div class="phx-topic abstract-wrapper">DP World’s group chairman and CEO had initially ordered the cancellation of Monday’s announcement after being angered by comments made last week by two UK government officials.</div>

DP World’s group chairman and CEO had initially ordered the cancellation of Monday’s announcement after being angered by comments made last week by two UK government officials.

<div class="phx-topic">DP World on Monday confirmed it would move forward with a $1.3 billion expansion of the London Gateway terminal, ending a weekend political dust-up and giving UK ports a much-needed post-Brexit investment. The project involves construction of the final two berths at the planned six-berth terminal plus a second rail terminal; work is expected to be completed by 2030, DP World said in a statement. An all-electric fourth terminal at London Gateway costing $460 million is due to become fully operational early next year, the port operator said. The expansion announced Monday will boost capacity of London Gateway, located on the River Thames estuary about 30 miles east of London, to make it Britain’s largest container port within five years. The terminal handled 2.9 million TEUs last year. Felixstowe, operated by Hong Kong’s Hutchison Port Holdings, is currently the UK’s busiest container port, handling more than 4 million TEUs a year. Sultan Ahmed bin Sulayem, DP World’s group chairman and CEO, had ordered the cancellation of Monday’s announcement and a review of the London Gateway expansion plans after being angered by comments made last week by two UK government officials about the March 2022 sacking of nearly 800 sea staff by DP World subsidiary P&amp;O Ferries. Bin Sulayem reversed his decision after a flurry of weekend phone calls between DP World and senior British government officials. He agreed to attend the government’s international investment summit in London on Monday. Putting the spat behind him, bin Sulayem said in Monday’s statement that the new terminal development “underlines DP World’s long-term commitment to the UK.” <h3>‘Early interest’ in maritime sector by new government </h3>DP World’s investment comes as the British Ports Association (BPA) said Britain’s new Labor government, which took office just over three months ago, has started to ease the logjam of port modernization projects held up by planning-related delays. This includes approving plans by port operator PD Teesport to expand the current Teesport site in northeast England to embrace new facilities focused on breakbulk cargo. The Port of Immingham’s $261 million roll-on/roll-off terminal proposed by Associated British Ports and Stena Line in eastern England has also been giving the green light by the government, it was announced at the investment summit Monday. “The new government has shown early interest in the maritime sector, which is positive,” Mark Simmonds, BPA’s policy and external affairs director, told the Journal of Commerce. Simmonds expects the government to produce a “refreshed” ports policy statement “in the next few months” that would include needed improvements to rail and road links as well as port expansion, updating the current document produced 12 years ago. Government moves to ease planning restrictions could also help accelerate port development projects, Simmonds said. That comes as the latest government figures show UK ports saw total cargo volumes drop 5% last year to 435 million metric tons, while container volumes were largely unchanged at 10.5 million TEUs. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

DP World on Monday confirmed it would move forward with a $1.3 billion expansion of the London Gateway terminal, ending a weekend political dust-up and giving UK ports a much-needed post-Brexit investment. The project involves construction of the final two berths at the planned six-berth terminal plus a second rail terminal; work is expected to be completed by 2030, DP World said in a statement. An all-electric fourth terminal at London Gateway costing $460 million is due to become fully operational early next year, the port operator said. The expansion announced Monday will boost capacity of London Gateway, located on the River Thames estuary about 30 miles east of London, to make it Britain’s largest container port within five years. The terminal handled 2.9 million TEUs last year. Felixstowe, operated by Hong Kong’s Hutchison Port Holdings, is currently the UK’s busiest container port, handling more than 4 million TEUs a year. Sultan Ahmed bin Sulayem, DP World’s group chairman and CEO, had ordered the cancellation of Monday’s announcement and a review of the London Gateway expansion plans after being angered by comments made last week by two UK government officials about the March 2022 sacking of nearly 800 sea staff by DP World subsidiary P&O Ferries. Bin Sulayem reversed his decision after a flurry of weekend phone calls between DP World and senior British government officials. He agreed to attend the government’s international investment summit in London on Monday. Putting the spat behind him, bin Sulayem said in Monday’s statement that the new terminal development “underlines DP World’s long-term commitment to the UK.” ‘Early interest’ in maritime sector by new government DP World’s investment comes as the British Ports Association (BPA) said Britain’s new Labor government, which took office just over three months ago, has started to ease the logjam of port modernization projects held up by planning-related delays. This includes approving plans by port operator PD Teesport to expand the current Teesport site in northeast England to embrace new facilities focused on breakbulk cargo. The Port of Immingham’s $261 million roll-on/roll-off terminal proposed by Associated British Ports and Stena Line in eastern England has also been giving the green light by the government, it was announced at the investment summit Monday. “The new government has shown early interest in the maritime sector, which is positive,” Mark Simmonds, BPA’s policy and external affairs director, told the Journal of Commerce. Simmonds expects the government to produce a “refreshed” ports policy statement “in the next few months” that would include needed improvements to rail and road links as well as port expansion, updating the current document produced 12 years ago. Government moves to ease planning restrictions could also help accelerate port development projects, Simmonds said. That comes as the latest government figures show UK ports saw total cargo volumes drop 5% last year to 435 million metric tons, while container volumes were largely unchanged at 10.5 million TEUs. Contact Keith Wallis at keithwallis@hotmail.com .

International ports

DP World reverses course, unveils expansion of London Gateway terminal

<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.

Trucking News

EU cannot afford to dither on heavy transport reform: ESTA chief

<div class="phx-topic abstract-wrapper"> Alone among the modes, the railroads are not able to say “no” to the demands of interior point intermodal (IPI), most recently seen in the surge of imports through the US Pacific Northwest and the congestion that followed, writes intermodal analyst Larry Gross. </div>

Alone among the modes, the railroads are not able to say “no” to the demands of interior point intermodal (IPI), most recently seen in the surge of imports through the US Pacific Northwest and the congestion that followed, writes intermodal analyst Larry Gross.

<div class="phx-topic">Container dwell times are up in the Pacific Northwest (PNW) and the undertone of grumbling regarding the railroads’ inability to meet market demands can be heard. But is it reasonable to expect the railroads to be able to react to such giant swings in the market? There’s no doubt <a href="https://www.joc.com/article/rail-container-dwells-in-seattle-tacoma-still-high-but-relief-in-sight-5721796">that imports continue to run strong</a>. Loaded inbound TEUs arriving in the ports of the United States and Western Canada were up more than 18% in July versus 2023. The fact that we are not seeing similar increases in domestic truck demand suggests that there are some special factors at work driving imports. Most likely we are seeing the compound effect of strong retail sales (much more important for imports than for trucking in general) magnified by the desire of importers to get their goods in place earlier than normal. This is a sensible reaction to congestion concerns, the potential US East Coast port strike at the end of September, and the looming threat of big tariff increases, depending on the results of the presidential election. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="77c5d7bd-d3ce-4657-bd57-1af4e55919d8"></dynamic-object></div>But that’s not all, because the share of that import surge that is arriving in the PNW saw a huge spike in June, rising to 5.3% of all inbound loaded TEUs versus an average share over the past 12 months of 4.3%. It has since settled back to average in July but that big bump is still working its way through the system. <h3>Driving the shift </h3>There are good reasons why importers turned to the PNW as a preferred option for freight out of Asia bound for the North American interior. Neighboring Western Canadian ports, normally a sizeable player for freight bound for the US Midwest, were hampered by the prospect of a rail strike on both Canadian National Railway and Canadian Pacific Kansas City (CPKC). While the situation <a href="https://www.joc.com/article/canadian-rail-workers-back-on-job-after-failed-challenge-to-binding-arbitration-5712234">has recently been settled by government intervention</a> (at least for the moment, pending the resolution of legal challenges to the arbitration requirement by the union), from a routing perspective, the next month or two are already baked in. Importers have made their decisions, and the freight is inbound to alternative ports versus Vancouver and Prince Rupert. Things will eventually normalize but not before the bulk of peak season has passed. Southern California is another routing option, but Los Angeles and Long Beach have had their own share of congestion already. What this all means is that there has been a huge upswing in IPI volume moving east out of the Northwest region, as shown by the two charts below. Over the past 6 months, monthly international container originations out of the region have increased by 60%, with July coming in 41% above the prior year. Twenty-thousand more ISO boxes flowed out of the region in July than did in January, roughly 100 more 200-unit trains or about four or five per working day. Based on these numbers, I would say that the railroads have performed quite impressively. <h3>Take it or take it </h3>Alone among the modes, the railroads are not in a position to say ‘no’ to the demands of IPI. No-one seems surprised when the steamship lines roll cargo from one vessel to another during periods of peak demand. Sometimes extra loaders are scheduled, when the ocean carrier deems it to be profitable, but there is certainly not the expectation that the liner companies will automatically ramp up their sailing schedule when demand warrants. Similarly, truckers only accept the loads that they have the capacity to handle. This is normal, expected behavior and the BCO response typically is to start working their way down the company’s list of preferred carriers to place the overflow. But that’s not how IPI works for the railroads. They don’t have the opportunity or ability to say no. The cargo arrives in the port and the expectation is that the railroad will forward it inland without delay, no matter how much volatility or variation in demand. If there is some good news in all this, it’s that it appears that the pressure may be easing. TEUs arriving in PNW ports dropped over 15% from June to July. This has yet to be reflected in the IPI originations but likely we will see some relief when the August figures come out. Further, to the extent that a good chunk of this surge represents up-streamed volume, we should see a more rapid fall-off in demand in the coming months than the normal seasonal drop. Contact Larry Gross at <a href="mailto:lgross@iintermodalindepth.com">lgross@intermodalindepth.com</a>. </div>

Container dwell times are up in the Pacific Northwest (PNW) and the undertone of grumbling regarding the railroads’ inability to meet market demands can be heard. But is it reasonable to expect the railroads to be able to react to such giant swings in the market? There’s no doubt that imports continue to run strong . Loaded inbound TEUs arriving in the ports of the United States and Western Canada were up more than 18% in July versus 2023. The fact that we are not seeing similar increases in domestic truck demand suggests that there are some special factors at work driving imports. Most likely we are seeing the compound effect of strong retail sales (much more important for imports than for trucking in general) magnified by the desire of importers to get their goods in place earlier than normal. This is a sensible reaction to congestion concerns, the potential US East Coast port strike at the end of September, and the looming threat of big tariff increases, depending on the results of the presidential election. But that’s not all, because the share of that import surge that is arriving in the PNW saw a huge spike in June, rising to 5.3% of all inbound loaded TEUs versus an average share over the past 12 months of 4.3%. It has since settled back to average in July but that big bump is still working its way through the system. Driving the shift There are good reasons why importers turned to the PNW as a preferred option for freight out of Asia bound for the North American interior. Neighboring Western Canadian ports, normally a sizeable player for freight bound for the US Midwest, were hampered by the prospect of a rail strike on both Canadian National Railway and Canadian Pacific Kansas City (CPKC). While the situation has recently been settled by government intervention (at least for the moment, pending the resolution of legal challenges to the arbitration requirement by the union), from a routing perspective, the next month or two are already baked in. Importers have made their decisions, and the freight is inbound to alternative ports versus Vancouver and Prince Rupert. Things will eventually normalize but not before the bulk of peak season has passed. Southern California is another routing option, but Los Angeles and Long Beach have had their own share of congestion already. What this all means is that there has been a huge upswing in IPI volume moving east out of the Northwest region, as shown by the two charts below. Over the past 6 months, monthly international container originations out of the region have increased by 60%, with July coming in 41% above the prior year. Twenty-thousand more ISO boxes flowed out of the region in July than did in January, roughly 100 more 200-unit trains or about four or five per working day. Based on these numbers, I would say that the railroads have performed quite impressively. Take it or take it Alone among the modes, the railroads are not in a position to say ‘no’ to the demands of IPI. No-one seems surprised when the steamship lines roll cargo from one vessel to another during periods of peak demand. Sometimes extra loaders are scheduled, when the ocean carrier deems it to be profitable, but there is certainly not the expectation that the liner companies will automatically ramp up their sailing schedule when demand warrants. Similarly, truckers only accept the loads that they have the capacity to handle. This is normal, expected behavior and the BCO response typically is to start working their way down the company’s list of preferred carriers to place the overflow. But that’s not how IPI works for the railroads. They don’t have the opportunity or ability to say no. The cargo arrives in the port and the expectation is that the railroad will forward it inland without delay, no matter how much volatility or variation in demand. If there is some good news in all this, it’s that it appears that the pressure may be easing. TEUs arriving in PNW ports dropped over 15% from June to July. This has yet to be reflected in the IPI originations but likely we will see some relief when the August figures come out. Further, to the extent that a good chunk of this surge represents up-streamed volume, we should see a more rapid fall-off in demand in the coming months than the normal seasonal drop. Contact Larry Gross at lgross@intermodalindepth.com .

Rails have limited recourse to PNW import surge: analyst

World

Asia

China

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 .

Trans-Pacific

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">If ports operated by ILA labor were for decades a dependable alternative to those reliant on the ILA’s perpetually disruptive West Coast counterpart, the ILWU, that assumption no longer holds true, writes Peter Tirschwell. </div>

If ports operated by ILA labor were for decades a dependable alternative to those reliant on the ILA’s perpetually disruptive West Coast counterpart, the ILWU, that assumption no longer holds true, writes Peter Tirschwell.

<div class="phx-topic">Over several months beginning last November when the International Longshoremen’s Association (ILA) first mentioned the possibility of a strike — an innocuous reference in an unrelated press release — a realization slowly dawned on shippers that a sea change was occurring on the US East and Gulf coasts. If ports operated by ILA labor were for decades a dependable alternative to those reliant on the ILA’s perpetually disruptive West Coast counterpart, the International Longshore and Warehouse Union (ILWU), that assumption no longer holds true. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5745032_0.1.jpg"></img></div>The assumption of labor peace, demonstrated over the course of 13 peaceful contract negotiations since 1977 (the year of the last coastwide strike), was one of the key factors — along with demographic shifts and the 2016 expansion of the Panama Canal — that lead importers of goods from Asia to divert significant volumes from the West Coast to ports along the East and Gulf coasts. As every West Coast contract negotiation since the late 1990s was met with disruption on the docks and delays to cargo, the consistently peaceful waterfront along the East and Gulf coasts served as a reminder to shippers that a viable alternative to the West Coast exists, and they took advantage. The diversions were so predictable during the most recent disruptive West Coast negotiations that the Pacific Maritime Association (PMA) called it out in June 2023 in response to “coordinated and disruptive work actions” by the ILWU as the contract was being negotiated. “The ILWU’s repeated disruptive work actions at strategic ports along the West Coast are increasingly causing companies to divert cargo to more customer-friendly and reliable locations along the Gulf and East coasts,” <a href="https://www.pmanet.org/wp-content/uploads/2023/06/PMA-Update-6.9.23.pdf">the PMA said</a>. <h3>The ground has shifted </h3>The message of labor peace on the East and Gulf coasts wasn’t just an impression; at industry conferences at Savannah, Charleston and other ports, ILA dockworkers took the mic when shippers were on stage, pledging support for their cargo and promising continued reliability. Such statements would never be heard on the West Coast. Now, even though the strike <a href="https://www.joc.com/article/ila-usmx-agree-on-new-wage-offer-and-contract-extension-that-reopens-ports-5741882">was suspended after three days</a> when employers increased their offer to a 62% wage increase over the term of a new six-year contract, shippers believe something more profound has changed. Just prior to the strike, Jonathan Gold, the vice president of Supply Chain and Customs Policy at the National Retail Federation, said even the threat of a work stoppage “will have an impact on the confidence that retailers have in labor stability at those ports.” “Retailers have diversified their supply chains over the years, and we expect some to re-evaluate their use of certain ports moving forward, especially for discretionary cargo,” Gold said. It wasn’t just the mounting concern about the possibility of a strike that left the impression of a changed labor landscape. The dispute over jurisdiction of crane driver and yard worker jobs at Southeast ports, which led the <a href="https://www.joc.com/article/zim-becomes-first-carrier-to-commit-to-reopened-leatherman-terminal-5735909">new Hugh K. Leatherman Terminal</a> in Charleston to be all but shut down three years after it opened in 2021, sent tremors that labor stability was no longer guaranteed. Contributing to the impression of shippers of an altered landscape on the East and Gulf coasts was how the contract negotiations played out this year, or more appropriately, didn’t. The ILA walked out of negotiations with the United States Maritime Alliance (USMX) in June and never returned to the table; even the terms of the tentative deal that ended the strike last week were mediated entirely through Biden administration officials, not face-to-face with the USMX. <h3>Permanent acrimony? </h3>For 40-plus years, the ILA and USMX resolved their issues at the bargaining table, forging a shared commitment to stability that was understood by shippers watching the relationship from the sidelines and making supply chain decisions accordingly. Thus, even for carrier executives with long experience in dealing with the ILA, the inability to return to the table despite repeated invitations — which ultimately led the USMX <a href="https://www.joc.com/article/usmx-tries-to-force-ila-back-to-contract-talks-with-nlrb-complaint-5736646">to file an unfair labor practice case with the National Labor Relations Board</a> — was wholly unfamiliar. Carriers being repeatedly demonized by union officials as “greedy” — among other adjectives — was also unfamiliar, further reinforcing the notion that the landscape had changed. Shippers are now wondering if the acrimony that has long characterized labor-management relations on the West Coast will become a permanent feature on the East and Gulf coasts as well. That possibility will be a contributing factor in internal corporate discussions over issues such as outsourcing. Certainly, the next contract negotiation will be watched much more carefully than it was in the past and likely will prompt diversions that would never have been needed in prior years. Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>. </div>

Over several months beginning last November when the International Longshoremen’s Association (ILA) first mentioned the possibility of a strike — an innocuous reference in an unrelated press release — a realization slowly dawned on shippers that a sea change was occurring on the US East and Gulf coasts. If ports operated by ILA labor were for decades a dependable alternative to those reliant on the ILA’s perpetually disruptive West Coast counterpart, the International Longshore and Warehouse Union (ILWU), that assumption no longer holds true. The assumption of labor peace, demonstrated over the course of 13 peaceful contract negotiations since 1977 (the year of the last coastwide strike), was one of the key factors — along with demographic shifts and the 2016 expansion of the Panama Canal — that lead importers of goods from Asia to divert significant volumes from the West Coast to ports along the East and Gulf coasts. As every West Coast contract negotiation since the late 1990s was met with disruption on the docks and delays to cargo, the consistently peaceful waterfront along the East and Gulf coasts served as a reminder to shippers that a viable alternative to the West Coast exists, and they took advantage. The diversions were so predictable during the most recent disruptive West Coast negotiations that the Pacific Maritime Association (PMA) called it out in June 2023 in response to “coordinated and disruptive work actions” by the ILWU as the contract was being negotiated. “The ILWU’s repeated disruptive work actions at strategic ports along the West Coast are increasingly causing companies to divert cargo to more customer-friendly and reliable locations along the Gulf and East coasts,” the PMA said . The ground has shifted The message of labor peace on the East and Gulf coasts wasn’t just an impression; at industry conferences at Savannah, Charleston and other ports, ILA dockworkers took the mic when shippers were on stage, pledging support for their cargo and promising continued reliability. Such statements would never be heard on the West Coast. Now, even though the strike was suspended after three days when employers increased their offer to a 62% wage increase over the term of a new six-year contract, shippers believe something more profound has changed. Just prior to the strike, Jonathan Gold, the vice president of Supply Chain and Customs Policy at the National Retail Federation, said even the threat of a work stoppage “will have an impact on the confidence that retailers have in labor stability at those ports.” “Retailers have diversified their supply chains over the years, and we expect some to re-evaluate their use of certain ports moving forward, especially for discretionary cargo,” Gold said. It wasn’t just the mounting concern about the possibility of a strike that left the impression of a changed labor landscape. The dispute over jurisdiction of crane driver and yard worker jobs at Southeast ports, which led the new Hugh K. Leatherman Terminal in Charleston to be all but shut down three years after it opened in 2021, sent tremors that labor stability was no longer guaranteed. Contributing to the impression of shippers of an altered landscape on the East and Gulf coasts was how the contract negotiations played out this year, or more appropriately, didn’t. The ILA walked out of negotiations with the United States Maritime Alliance (USMX) in June and never returned to the table; even the terms of the tentative deal that ended the strike last week were mediated entirely through Biden administration officials, not face-to-face with the USMX. Permanent acrimony? For 40-plus years, the ILA and USMX resolved their issues at the bargaining table, forging a shared commitment to stability that was understood by shippers watching the relationship from the sidelines and making supply chain decisions accordingly. Thus, even for carrier executives with long experience in dealing with the ILA, the inability to return to the table despite repeated invitations — which ultimately led the USMX to file an unfair labor practice case with the National Labor Relations Board — was wholly unfamiliar. Carriers being repeatedly demonized by union officials as “greedy” — among other adjectives — was also unfamiliar, further reinforcing the notion that the landscape had changed. Shippers are now wondering if the acrimony that has long characterized labor-management relations on the West Coast will become a permanent feature on the East and Gulf coasts as well. That possibility will be a contributing factor in internal corporate discussions over issues such as outsourcing. Certainly, the next contract negotiation will be watched much more carefully than it was in the past and likely will prompt diversions that would never have been needed in prior years. Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

Supply chain

Brief ILA strike alters once-placid labor landscape on East, Gulf coasts

<div class="phx-topic abstract-wrapper">Last week’s three-day longshore strike on the East and Gulf coasts is not expected to disrupt transportation supply chains ahead of the traditional beginning of the holiday shopping season, the National Retail Federation said.</div>

Last week’s three-day longshore strike on the East and Gulf coasts is not expected to disrupt transportation supply chains ahead of the traditional beginning of the holiday shopping season, the National Retail Federation said.

<div class="phx-topic">US retailers are forecasting a modest year-over-year increase in imports this month to close out the 2024 peak shipping season, with most of the holiday merchandise already having entered the country due to the frontloading of imports from Asia this summer. Furthermore, <a href="https://www.joc.com/article/despite-tentative-wage-deal-usmx-and-ila-have-bumpy-road-ahead-on-other-key-issues-5743997">the brief three-day strike by the International Longshoremen’s Association (ILA)</a> on the East and Gulf coasts is not expected to disrupt transportation supply chains ahead of the traditional beginning of the holiday shopping season, the National Retail Federation (NRF) said Tuesday. “It was a huge relief for retailers, their customers and the nation’s economy that the strike was short-lived,” Jonathan Gold, NRF’s vice president for supply chain and customs policy, said in the group’s latest Global Port Tracker (GPT). “It will take the affected ports a couple of weeks to recover, but we can rest assured that all ports across the country will be working hard to meet demand, and no impact on the holiday shopping season is expected,” Gold said. The GPT is published monthly by the NRF and Hackett Associates. The NRF is forecasting that 2024 retail sales, excluding automobile dealers, gasoline stations and restaurants, will grow between 2.5% and 3.5% over 2023. The latest GPT forecasts that US imports in October will be up 3.1% from October 2023. That is higher than the 1.3% increase it forecast in last month’s report. November imports are now expected to be up 0.9% year over year, down from the previous forecast of a 1.6% increase, while imports in December are projected to be up 0.2%, compared with the previous forecast of a 1.6% increase from December 2023. <h3>Action shifts to West Coast ports </h3>August saw the highest volume of US imports since the record set in May 2022 due to the frontloading of imports this summer. West Coast ports are expected to outperform East and Gulf coast ports in October as retailers ship their time-sensitive holiday merchandise in time for the Black Friday sales after Thanksgiving. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="4ed96169-fa34-4b46-81e8-b67860854e39"></dynamic-object></div>“The surge in imports over the past few months has clearly been the result of contingency imports by wholesalers, retailers and industrial companies in anticipation of the East and Gulf coast port strike, rather than a sudden increase in demand,” said Ben Hackett, founder of Hackett Associates. “We may see <a href="https://www.joc.com/article/southern-california-supply-chain-fluid-despite-surging-import-volumes-5730931">some short-term congestion on the West Coast</a>, but nothing significant, and <a href="https://www.joc.com/article/us-east-gulf-coast-ports-confident-of-smooth-post-strike-reopening-5742607">East Coast delays should be limited</a>,” Hackett added. GPT forecasts total imports in 2024 will be up 12.1% from 2023. Imports in January, meanwhile, are forecast to be up 0.8% from January 2024, compared with the previous forecast of a 0.3% decrease. In its first forecast for February, GPT says imports will be down 11.2% year over year as many factories in Asia will be closed for a week or two for the 2025 Lunar New Year holidays that begin on Jan. 29. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com ">bill.mongelluzzo@spglobal.com</a>.</div>

US retailers are forecasting a modest year-over-year increase in imports this month to close out the 2024 peak shipping season, with most of the holiday merchandise already having entered the country due to the frontloading of imports from Asia this summer. Furthermore, the brief three-day strike by the International Longshoremen’s Association (ILA) on the East and Gulf coasts is not expected to disrupt transportation supply chains ahead of the traditional beginning of the holiday shopping season, the National Retail Federation (NRF) said Tuesday. “It was a huge relief for retailers, their customers and the nation’s economy that the strike was short-lived,” Jonathan Gold, NRF’s vice president for supply chain and customs policy, said in the group’s latest Global Port Tracker (GPT). “It will take the affected ports a couple of weeks to recover, but we can rest assured that all ports across the country will be working hard to meet demand, and no impact on the holiday shopping season is expected,” Gold said. The GPT is published monthly by the NRF and Hackett Associates. The NRF is forecasting that 2024 retail sales, excluding automobile dealers, gasoline stations and restaurants, will grow between 2.5% and 3.5% over 2023. The latest GPT forecasts that US imports in October will be up 3.1% from October 2023. That is higher than the 1.3% increase it forecast in last month’s report. November imports are now expected to be up 0.9% year over year, down from the previous forecast of a 1.6% increase, while imports in December are projected to be up 0.2%, compared with the previous forecast of a 1.6% increase from December 2023. Action shifts to West Coast ports August saw the highest volume of US imports since the record set in May 2022 due to the frontloading of imports this summer. West Coast ports are expected to outperform East and Gulf coast ports in October as retailers ship their time-sensitive holiday merchandise in time for the Black Friday sales after Thanksgiving. “The surge in imports over the past few months has clearly been the result of contingency imports by wholesalers, retailers and industrial companies in anticipation of the East and Gulf coast port strike, rather than a sudden increase in demand,” said Ben Hackett, founder of Hackett Associates. “We may see some short-term congestion on the West Coast , but nothing significant, and East Coast delays should be limited ,” Hackett added. GPT forecasts total imports in 2024 will be up 12.1% from 2023. Imports in January, meanwhile, are forecast to be up 0.8% from January 2024, compared with the previous forecast of a 0.3% decrease. In its first forecast for February, GPT says imports will be down 11.2% year over year as many factories in Asia will be closed for a week or two for the 2025 Lunar New Year holidays that begin on Jan. 29. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .

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