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<div class="phx-topic abstract-wrapper">Cross-border supply chains need to become more integrated and efficient to increase capacity on both sides of a constricted border, logistics executives say. </div>

Cross-border supply chains need to become more integrated and efficient to increase capacity on both sides of a constricted border, logistics executives say.

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<div class="phx-topic">Rapid growth in US-Mexico trade is forcing a maturation of cross-border supply chain networks that logistics executives say will be critical as freight volumes rise. New warehouses and logistics facilities are opening almost weekly at freight crossings such as Laredo and El Paso, Texas. But those facilities are only the tip of the spear. Behind them lie complicated communication and transportation lines linking those nodes that form cross-border supply chains. Those networks take more work to build than the nodes themselves. And the strength of those networks is becoming more critical. The networks taking shape today are more diverse, transparent and intermodal than those in place before the COVID-19 pandemic, shippers and their logistics partners say. Shippers that once relied on one or two border crossings now must consider multiple lanes and crossings as well as greater use of intermodal rail and other modes. Despite the number of new logistics centers and warehouses going up, the number of border crossings is finite and difficult to expand. That makes more efficient networks, powered by technology, key to creating the capacity needed to keep up with trade. From January through September, the value of US trade with Mexico reached $632.3 billion, 36.5% higher than the same period in 2019, according to US Census Bureau data. The number of northbound trucks entering the US from Mexico is rising, too, climbing 18.1% in the first nine months of 2024 compared with the same period in 2019, according to data from the US Bureau of Transportation Statistics. There are only 21 truck border crossings along the US-Mexico border. Efforts are underway to expand the number of lanes at some crossings, but construction takes time. “Building and expanding networks drives scalability,” said Mike Burkhart, vice president for Mexico and Canada business at third-party logistics company C.H. Robinson Worldwide. And scalability is needed to keep up with increased cross-border freight demand. “However, it’s also important to build contingences in the event that a portion of your network changes,” Burkhart told the Journal of Commerce. Border crossings can be shut down or become congested quickly thanks to inspections or <a href="https://www.joc.com/article/mexican-systems-failures-disrupting-cross-border-trade-with-us-5222387">customs systems failures</a>. <h3>New partnerships</h3>More action is taking place outside the warehouse walls. Global freight forwarder Gebrüder Weiss, for example, is partnering with Cargado, an invite-only <a href="https://www.joc.com/article/new-cross-border-trucking-platform-aims-to-enable-brokers-5731985">cross-border load board</a>. Its goal is to make cross-border shipping more interconnected and transparent. A major difference between 2024 and the pre-pandemic era is the availability of better visibility tools, said Joe Aguirre, director of southern border solutions for Gebrüder Weiss in El Paso. “We need to know if and when we might need another 300 trucks,” Aguirre said. Cargado will help provide that visibility and greater access to truckload capacity. The need for greater supply-chain visibility extends beyond the US-Mexico border, said Aguirre. “If it takes a vessel five days longer to reach a port than scheduled, that can dramatically affect a customer’s production at factories in Mexico,” he said. When container ships backed up in Long Beach and Los Angeles during the pandemic due to high volumes, Gebrüder Weiss diverted some cargo to the Mexican port of Manzanillo. “We went from 95 days from Shanghai to El Paso to 35 days from Shanghai to Juárez,” Aguirre said. Agile and fast systems are needed to affect that type of switch. “You need experience, not just within the four walls of the warehouse, but from the data perspective as well,” he said. Hub Group and Mexican drayage carrier Transportes Easo last <a href="https://www.joc.com/article/hub-group-boosts-cross-border-business-in-jv-with-mexican-dray-carrier-5745355">month formed a joint venture to share resources</a> on cross-border intermodal moves. And less-than-truckload (LTL) carrier Southeastern Freight Lines added a new lane to Las Cruces, New Mexico, part of the Borderplex region that includes El Paso and Ciudad Juárez. All these developments underscore the desire and need to extend and strengthen cross-border transportation networks as the volumes moving through border crossings such as Laredo, El Paso, Otay Mesa and many smaller ports of entry continue to grow. “This is a challenge now and it will become even more complicated over the next few years,” Jesus Ojeda, executive vice president for Mexico business at Uber Freight, told the Journal of Commerce. Uber Freight manages 2,000 cross-border US-Mexico shipments daily. The logistics provider is gaining more cross-border business from existing customers in a variety of industries. That shipper base has increased its cross-border activity with Uber Freight by 77% this year, the company said, and Ojeda doesn’t see that trend slowing. “Our customers are experiencing increasing volumes, and they’re trying to push more materials out from their facilities, more shipments, so they can produce more,” he said. <h3>Efficiency adds capacity </h3>Short of building more bridges and warehouses, the quickest way to gain needed capacity is by increasing efficiency in cross-border moves and end-to-end supply chains. “Efficiency, meaning expedient processes and systems, is going to be crucial in the development of these supply chains,” Gabriel Guajardo, director for the southern US border at Echo Global Logistics, told the Journal of Commerce. “Either you become more efficient to create capacity, or you just have to get more equipment,” Guajardo said. “The ability to use technology to quickly release equipment, avoiding delays, is going to be very important as we continue to grow.” That means implementing existing technology such as yard management systems (YMSs) and transportation management systems (TMSs) to create metrics and measure efficiency. “A streamlined process is going to be very attractive” to carriers and shippers, Guajardo said. At some point, streamlining may mean moving freight faster to locations beyond the border. Laredo is the flashpoint for logistics construction, but logistics development activity stretches from border crossings to hubs such as Dallas, Phoenix and beyond. “Is there a way to establish an Inland Empire of sorts in Texas?” Holly Pearce, director of North American Logistics for Otis Elevator Company, said at the Journal of Commerce Inland Distribution Conference (Inland24) last month, referring to the Southern California warehouse hub. Pearce, who in previous jobs has managed cross-border supply to maquila factories in Mexico, said expediting pre-cleared tractor-trailers from Mexico to foreign trade zones in Texas may be a partial solution to the congestion/capacity problem at the border. ”As shippers, we need to commit to this,” she said. “We need to say ‘yes, we’re in. We’re going to put our roots down as well.’” US-Mexico trade “is only going to get bigger, and unless we have investment in infrastructure, it’s just going to be chaos,” Pearce said. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

Rapid growth in US-Mexico trade is forcing a maturation of cross-border supply chain networks that logistics executives say will be critical as freight volumes rise. New warehouses and logistics facilities are opening almost weekly at freight crossings such as Laredo and El Paso, Texas. But those facilities are only the tip of the spear. Behind them lie complicated communication and transportation lines linking those nodes that form cross-border supply chains. Those networks take more work to build than the nodes themselves. And the strength of those networks is becoming more critical. The networks taking shape today are more diverse, transparent and intermodal than those in place before the COVID-19 pandemic, shippers and their logistics partners say. Shippers that once relied on one or two border crossings now must consider multiple lanes and crossings as well as greater use of intermodal rail and other modes. Despite the number of new logistics centers and warehouses going up, the number of border crossings is finite and difficult to expand. That makes more efficient networks, powered by technology, key to creating the capacity needed to keep up with trade. From January through September, the value of US trade with Mexico reached $632.3 billion, 36.5% higher than the same period in 2019, according to US Census Bureau data. The number of northbound trucks entering the US from Mexico is rising, too, climbing 18.1% in the first nine months of 2024 compared with the same period in 2019, according to data from the US Bureau of Transportation Statistics. There are only 21 truck border crossings along the US-Mexico border. Efforts are underway to expand the number of lanes at some crossings, but construction takes time. “Building and expanding networks drives scalability,” said Mike Burkhart, vice president for Mexico and Canada business at third-party logistics company C.H. Robinson Worldwide. And scalability is needed to keep up with increased cross-border freight demand. “However, it’s also important to build contingences in the event that a portion of your network changes,” Burkhart told the Journal of Commerce. Border crossings can be shut down or become congested quickly thanks to inspections or customs systems failures . New partnerships More action is taking place outside the warehouse walls. Global freight forwarder Gebrüder Weiss, for example, is partnering with Cargado, an invite-only cross-border load board . Its goal is to make cross-border shipping more interconnected and transparent. A major difference between 2024 and the pre-pandemic era is the availability of better visibility tools, said Joe Aguirre, director of southern border solutions for Gebrüder Weiss in El Paso. “We need to know if and when we might need another 300 trucks,” Aguirre said. Cargado will help provide that visibility and greater access to truckload capacity. The need for greater supply-chain visibility extends beyond the US-Mexico border, said Aguirre. “If it takes a vessel five days longer to reach a port than scheduled, that can dramatically affect a customer’s production at factories in Mexico,” he said. When container ships backed up in Long Beach and Los Angeles during the pandemic due to high volumes, Gebrüder Weiss diverted some cargo to the Mexican port of Manzanillo. “We went from 95 days from Shanghai to El Paso to 35 days from Shanghai to Juárez,” Aguirre said. Agile and fast systems are needed to affect that type of switch. “You need experience, not just within the four walls of the warehouse, but from the data perspective as well,” he said. Hub Group and Mexican drayage carrier Transportes Easo last month formed a joint venture to share resources on cross-border intermodal moves. And less-than-truckload (LTL) carrier Southeastern Freight Lines added a new lane to Las Cruces, New Mexico, part of the Borderplex region that includes El Paso and Ciudad Juárez. All these developments underscore the desire and need to extend and strengthen cross-border transportation networks as the volumes moving through border crossings such as Laredo, El Paso, Otay Mesa and many smaller ports of entry continue to grow. “This is a challenge now and it will become even more complicated over the next few years,” Jesus Ojeda, executive vice president for Mexico business at Uber Freight, told the Journal of Commerce. Uber Freight manages 2,000 cross-border US-Mexico shipments daily. The logistics provider is gaining more cross-border business from existing customers in a variety of industries. That shipper base has increased its cross-border activity with Uber Freight by 77% this year, the company said, and Ojeda doesn’t see that trend slowing. “Our customers are experiencing increasing volumes, and they’re trying to push more materials out from their facilities, more shipments, so they can produce more,” he said. Efficiency adds capacity Short of building more bridges and warehouses, the quickest way to gain needed capacity is by increasing efficiency in cross-border moves and end-to-end supply chains. “Efficiency, meaning expedient processes and systems, is going to be crucial in the development of these supply chains,” Gabriel Guajardo, director for the southern US border at Echo Global Logistics, told the Journal of Commerce. “Either you become more efficient to create capacity, or you just have to get more equipment,” Guajardo said. “The ability to use technology to quickly release equipment, avoiding delays, is going to be very important as we continue to grow.” That means implementing existing technology such as yard management systems (YMSs) and transportation management systems (TMSs) to create metrics and measure efficiency. “A streamlined process is going to be very attractive” to carriers and shippers, Guajardo said. At some point, streamlining may mean moving freight faster to locations beyond the border. Laredo is the flashpoint for logistics construction, but logistics development activity stretches from border crossings to hubs such as Dallas, Phoenix and beyond. “Is there a way to establish an Inland Empire of sorts in Texas?” Holly Pearce, director of North American Logistics for Otis Elevator Company, said at the Journal of Commerce Inland Distribution Conference (Inland24) last month, referring to the Southern California warehouse hub. Pearce, who in previous jobs has managed cross-border supply to maquila factories in Mexico, said expediting pre-cleared tractor-trailers from Mexico to foreign trade zones in Texas may be a partial solution to the congestion/capacity problem at the border. ”As shippers, we need to commit to this,” she said. “We need to say ‘yes, we’re in. We’re going to put our roots down as well.’” US-Mexico trade “is only going to get bigger, and unless we have investment in infrastructure, it’s just going to be chaos,” Pearce said. Contact William B. Cassidy at bill.cassidy@spglobal.com .

More efficient cross-border networks needed as US-Mexico trade rises

<div class="phx-topic abstract-wrapper">The carrier has been restrained with its order book up to now, but the order for 312,000 TEUs of capacity comes as pressure to meet 2030 interim decarbonization targets intensifies.</div>

The carrier has been restrained with its order book up to now, but the order for 312,000 TEUs of capacity comes as pressure to meet 2030 interim decarbonization targets intensifies.

<div class="phx-topic">Hapag-Lloyd has placed a $4 billion order for 24 new dual-fuel ships capable of running on liquefied natural gas (LNG) that will be used to both expand existing services and replace older tonnage. The 312,000 TEUs in capacity — comprising 12 ships of 16,800 TEUs and 12 of 9,200 TEUs — will be delivered between 2027 and 2029 and are part of the carrier’s preparations for a multi-fuel future. Hapag-Lloyd has five ships being retrofitted for methanol propulsion. “This investment is one of the largest in the recent history of Hapag-Lloyd, and it represents a significant milestone for our company as it pursues the goals of its Strategy 2030, such as to grow while also modernizing and decarbonizing our fleet,” CEO Rolf Habben Jansen said in a statement Wednesday. The vessels will be equipped with low-emission, high-pressure LNG dual-fuel engines that can operate on biomethane, reducing CO2-equivalent emissions by up to 95% compared with conventional propulsion systems, and will also be able to convert to ammonia. By 2030, Hapag-Lloyd aims to reduce the absolute greenhouse gas emissions of fleet operations by about one-third compared with 2022 on its way to a net-zero fleet operation by 2045. The carrier said the goal would be achieved by investing in modern efficient newbuildings, slow steaming, fleet modernization and the use of new propulsion technologies and alternative fuels, “which will allow customers to benefit from multiple green transport options at the same time.” <h3>Alternative fuel availability driving orders </h3>Almost 80% of the ship orders made so far this year are for vessels capable of sailing on methanol or LNG, according to Sea-web, a sister company of the Journal of Commerce within S&amp;P Global. Methanol ships comprise 21.1% of the order book, LNG 33.3% and traditional bunker fuels 45.6%. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="1a054077-7728-4ffd-abb8-b7aff17c3235"></dynamic-object></div>Pressure is growing on carriers to meet the International Maritime Organization’s (IMO’s) interim goal of ensuring that zero- or near-zero-emission fuels make up 5% to 10% of all shipping fuels by 2030. The 5% target is considered the critical mass at which the infrastructure, supply chains and technology that support zero-emission fuels mature and enable exponential growth. The availability of alternatives to fossil fuels to meet the IMO’s targets is having <a href="https://www.joc.com/article/lack-of-clarity-over-clean-energy-supply-driving-dual-fuel-ship-orders-5747200">a greater impact on the ship-ordering process</a>, with carriers wary of locking themselves into an unviable fuel pathway. The need to keep fuel options open was illustrated in <a href="https://www.joc.com/article/maersks-lng-order-hedges-bet-on-green-fuel-technology-ceo-5703200">a recent Maersk order for dual-fuel vessels totaling 800,000 TEUs</a> capable of sailing on methanol as well as LNG, a deviation from its deep dive into methanol. The carrier has this year taken delivery of seven dual-fuel, methanol-capable 16,592-TEU ships from an 18-vessel order. CMA CGM has so far invested $18 billion in orders for 131 vessels capable of sailing on both fossil fuels and low- or zero-carbon alternatives such as biomethane, biomethanol and synthetic fuels. Most of the vessels will be operational by 2028. Several carriers have <a href="https://www.joc.com/article/maersk-secures-long-term-methanol-supply-in-china-production-deal-5781961">made deals with fuel producers</a> to develop production facilities and fuel supply chains and lock in supply for the new ships as they come online. <h3>Flood of new ships coming online </h3>The new ship orders are throwing a spotlight on the expanding order book and the flood of new ships that are steadily coming online. Orders have been made for a total of 7.6 million TEUs in capacity, or 25% of the total in-service fleet, while 410 ships with a capacity of 2.5 million TEUs have been delivered in the first 10 months of the year, according to Neils Rasmussen, chief shipping analyst at BIMCO. The container fleet now consists of 6,699 ships with a capacity of 30.4 million TEUs. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="a8d0b28a-aa44-473b-941a-d2f6b4f6cafd"></dynamic-object></div>Rasmussen said in a market update this week that another 500,000 TEUs are scheduled to be delivered during the last two months of 2024, driving deliveries for the year close to 3 million TEUs. Over the next four years, an average of 1.7 million TEUs are scheduled to be delivered each year, with 300,000 TEUs already planned for delivery in 2029. “Despite the rapid expansion of the fleet, owners continue to add orders for new ships,” Rasmussen said, but he added that actual fleet growth would depend on future recycling. “After a few years of very low recycling, 3.4 million TEUs will be more than 20 years old next year and prime candidates for recycling in the coming years,” he said. “If they are all recycled during the next five years, fleet growth from the current order book can be limited to 14% [the lower figure in a 14% to 19% range].” That point was also made by Maersk CEO Vincent Clerc last week during the carrier’s third-quarter earnings call and by Alphaliner in a recent newsletter. Clerc said <a href="https://www.joc.com/article/scrapping-slow-steaming-demand-will-limit-capacity-overhang-clerc-5785020">scrapping would help to limit the excess capacity</a>, a comment borne out by the analyst who noted that the top 10 operators could use 44% of their combined order book just to replace the oldest ships in service rather than for growth. Mediterranean Shipping Co. has the industry’s largest order book that, at 2 million TEUs, is almost the size of Hapag-Lloyd’s in-service fleet, but Alphaliner said 60% of the capacity on order could be used to replace MSC’s aging vessels. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Hapag-Lloyd has placed a $4 billion order for 24 new dual-fuel ships capable of running on liquefied natural gas (LNG) that will be used to both expand existing services and replace older tonnage. The 312,000 TEUs in capacity — comprising 12 ships of 16,800 TEUs and 12 of 9,200 TEUs — will be delivered between 2027 and 2029 and are part of the carrier’s preparations for a multi-fuel future. Hapag-Lloyd has five ships being retrofitted for methanol propulsion. “This investment is one of the largest in the recent history of Hapag-Lloyd, and it represents a significant milestone for our company as it pursues the goals of its Strategy 2030, such as to grow while also modernizing and decarbonizing our fleet,” CEO Rolf Habben Jansen said in a statement Wednesday. The vessels will be equipped with low-emission, high-pressure LNG dual-fuel engines that can operate on biomethane, reducing CO2-equivalent emissions by up to 95% compared with conventional propulsion systems, and will also be able to convert to ammonia. By 2030, Hapag-Lloyd aims to reduce the absolute greenhouse gas emissions of fleet operations by about one-third compared with 2022 on its way to a net-zero fleet operation by 2045. The carrier said the goal would be achieved by investing in modern efficient newbuildings, slow steaming, fleet modernization and the use of new propulsion technologies and alternative fuels, “which will allow customers to benefit from multiple green transport options at the same time.” Alternative fuel availability driving orders Almost 80% of the ship orders made so far this year are for vessels capable of sailing on methanol or LNG, according to Sea-web, a sister company of the Journal of Commerce within S&P Global. Methanol ships comprise 21.1% of the order book, LNG 33.3% and traditional bunker fuels 45.6%. Pressure is growing on carriers to meet the International Maritime Organization’s (IMO’s) interim goal of ensuring that zero- or near-zero-emission fuels make up 5% to 10% of all shipping fuels by 2030. The 5% target is considered the critical mass at which the infrastructure, supply chains and technology that support zero-emission fuels mature and enable exponential growth. The availability of alternatives to fossil fuels to meet the IMO’s targets is having a greater impact on the ship-ordering process , with carriers wary of locking themselves into an unviable fuel pathway. The need to keep fuel options open was illustrated in a recent Maersk order for dual-fuel vessels totaling 800,000 TEUs capable of sailing on methanol as well as LNG, a deviation from its deep dive into methanol. The carrier has this year taken delivery of seven dual-fuel, methanol-capable 16,592-TEU ships from an 18-vessel order. CMA CGM has so far invested $18 billion in orders for 131 vessels capable of sailing on both fossil fuels and low- or zero-carbon alternatives such as biomethane, biomethanol and synthetic fuels. Most of the vessels will be operational by 2028. Several carriers have made deals with fuel producers to develop production facilities and fuel supply chains and lock in supply for the new ships as they come online. Flood of new ships coming online The new ship orders are throwing a spotlight on the expanding order book and the flood of new ships that are steadily coming online. Orders have been made for a total of 7.6 million TEUs in capacity, or 25% of the total in-service fleet, while 410 ships with a capacity of 2.5 million TEUs have been delivered in the first 10 months of the year, according to Neils Rasmussen, chief shipping analyst at BIMCO. The container fleet now consists of 6,699 ships with a capacity of 30.4 million TEUs. Rasmussen said in a market update this week that another 500,000 TEUs are scheduled to be delivered during the last two months of 2024, driving deliveries for the year close to 3 million TEUs. Over the next four years, an average of 1.7 million TEUs are scheduled to be delivered each year, with 300,000 TEUs already planned for delivery in 2029. “Despite the rapid expansion of the fleet, owners continue to add orders for new ships,” Rasmussen said, but he added that actual fleet growth would depend on future recycling. “After a few years of very low recycling, 3.4 million TEUs will be more than 20 years old next year and prime candidates for recycling in the coming years,” he said. “If they are all recycled during the next five years, fleet growth from the current order book can be limited to 14% [the lower figure in a 14% to 19% range].” That point was also made by Maersk CEO Vincent Clerc last week during the carrier’s third-quarter earnings call and by Alphaliner in a recent newsletter. Clerc said scrapping would help to limit the excess capacity , a comment borne out by the analyst who noted that the top 10 operators could use 44% of their combined order book just to replace the oldest ships in service rather than for growth. Mediterranean Shipping Co. has the industry’s largest order book that, at 2 million TEUs, is almost the size of Hapag-Lloyd’s in-service fleet, but Alphaliner said 60% of the capacity on order could be used to replace MSC’s aging vessels. Contact Greg Knowler at greg.knowler@spglobal.com .

Hapag-Lloyd makes $4 billion move down LNG path with 24-ship dual-fuel order

<div class="phx-topic abstract-wrapper">Volume and rates on the Asian export corridors to the US and Europe have been high all year and online shopping promotions in November are further stoking the market.</div>

Volume and rates on the Asian export corridors to the US and Europe have been high all year and online shopping promotions in November are further stoking the market.

<div class="phx-topic">Average air cargo rates from China to North America and Europe have hit their highest levels this year as peak season demand and cargo flows in preparation for November’s e-commerce online promotions begin to gear up. The rate from Shanghai to North America this week reached $6.79 per kilogram, up 7% from last week and 30% higher year over year, according to the Baltic Air Index (BAI). Shanghai-North Europe rates hit $4.85/kg, up 9% on the week and a year-over-year increase of 18%. “Alongside e-commerce growth, the launch of new electronic goods and products has driven prices upward,” Kathy Liu, vice president of global sales and marketing at Taiwan-based forwarder Dimerco Express Group, said in a market update this week. ”The traditional peak season began in mid-October, immediately following China’s Golden Week holiday,” she added. “November is anticipated to be the peak month of 2024, particularly for shipments destined for the US and Europe.” Liu noted that air freight capacity within intra-Asia routes was extremely limited as airlines allocated a greater portion of first-leg allotments to long-haul shipments that carried higher revenue potential. Air cargo on the main Asian routes to North America and Europe has effectively been in peak season mode all year with the volume dominated by China’s e-commerce exports. Global air cargo recorded double-digit year-over-year demand growth in all 10 months through October and is on track to finish the year up approximately 14% year over year, according to rate benchmarking platform Xeneta. “This puts air cargo demand safely on course to report double-digit growth in 2024, and not even zero growth in November or December is going to disrupt this,” Niall van de Wouw, Xeneta’s chief air cargo officer, wrote in a market update this week. <h3>Regulatory clampdown on ‘de minimis’ goods </h3>While the year will end on a high for the air freight industry, there is growing pressure on regulators in the US to clamp down on Chinese imports and reduce the generous $800 “de minimis” value threshold under which goods do not have to pay a duty. The e-commerce platforms in the past 18 months have factored this into their business models that almost exclusively use air cargo for shipments to the US, but the regulatory pressure is likely to be turned up under the new Trump administration. “The Biden administration proposed excluding large swaths of Chinese imports from de minimis eligibility,” Judah Levine, head of research at freight marketplace Freightos, said in a report this week. “If Trump moves forward with something similar, it could be a major challenge to the surge of Chinese goods arriving by air via platforms like Shein and Temu.” If there is a clampdown, it will not only be the Chinese e-commerce platforms that come into the regulatory crosshairs. A report from stock market data provider AltIndex released Wednesday shows that most products sold by Amazon are made in China. ”Statistics show that 71% of the products that wholesalers and retailers sell on Amazon are produced in China, or 2.4 times more than in the United States, illustrating China’s importance for Amazon’s business,” AltIndex said. Amazon has a 40% share of total e-commerce sales in its home US market, with products made in the US accounting for 30% of the company’s total goods sold and India third at 14%, according to industry data. On the trans-Atlantic, Europe to North America saw a month-over-month volume increase of 11% in October, according to Xeneta. Backhaul volume rose 10% sequentially in October as shippers and forwarders took precautionary measures to lessen the impact of the <a href="https://www.joc.com/article/ripple-effects-playing-out-globally-from-ila-strike-analyst-5751171">three-day strike by dockworkers</a> at US East Coast and Gulf Coast ports. Air cargo rates from North Europe to North America have remained elevated all year and are currently at $1.84/kg, unchanged from the same week last year, according to the BAI. Xeneta expects the rise in trans-Atlantic air freight rates to continue with airlines’ winter schedules, leading to reduced cargo capacity from the end of October. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Average air cargo rates from China to North America and Europe have hit their highest levels this year as peak season demand and cargo flows in preparation for November’s e-commerce online promotions begin to gear up. The rate from Shanghai to North America this week reached $6.79 per kilogram, up 7% from last week and 30% higher year over year, according to the Baltic Air Index (BAI). Shanghai-North Europe rates hit $4.85/kg, up 9% on the week and a year-over-year increase of 18%. “Alongside e-commerce growth, the launch of new electronic goods and products has driven prices upward,” Kathy Liu, vice president of global sales and marketing at Taiwan-based forwarder Dimerco Express Group, said in a market update this week. ”The traditional peak season began in mid-October, immediately following China’s Golden Week holiday,” she added. “November is anticipated to be the peak month of 2024, particularly for shipments destined for the US and Europe.” Liu noted that air freight capacity within intra-Asia routes was extremely limited as airlines allocated a greater portion of first-leg allotments to long-haul shipments that carried higher revenue potential. Air cargo on the main Asian routes to North America and Europe has effectively been in peak season mode all year with the volume dominated by China’s e-commerce exports. Global air cargo recorded double-digit year-over-year demand growth in all 10 months through October and is on track to finish the year up approximately 14% year over year, according to rate benchmarking platform Xeneta. “This puts air cargo demand safely on course to report double-digit growth in 2024, and not even zero growth in November or December is going to disrupt this,” Niall van de Wouw, Xeneta’s chief air cargo officer, wrote in a market update this week. Regulatory clampdown on ‘de minimis’ goods While the year will end on a high for the air freight industry, there is growing pressure on regulators in the US to clamp down on Chinese imports and reduce the generous $800 “de minimis” value threshold under which goods do not have to pay a duty. The e-commerce platforms in the past 18 months have factored this into their business models that almost exclusively use air cargo for shipments to the US, but the regulatory pressure is likely to be turned up under the new Trump administration. “The Biden administration proposed excluding large swaths of Chinese imports from de minimis eligibility,” Judah Levine, head of research at freight marketplace Freightos, said in a report this week. “If Trump moves forward with something similar, it could be a major challenge to the surge of Chinese goods arriving by air via platforms like Shein and Temu.” If there is a clampdown, it will not only be the Chinese e-commerce platforms that come into the regulatory crosshairs. A report from stock market data provider AltIndex released Wednesday shows that most products sold by Amazon are made in China. ”Statistics show that 71% of the products that wholesalers and retailers sell on Amazon are produced in China, or 2.4 times more than in the United States, illustrating China’s importance for Amazon’s business,” AltIndex said. Amazon has a 40% share of total e-commerce sales in its home US market, with products made in the US accounting for 30% of the company’s total goods sold and India third at 14%, according to industry data. On the trans-Atlantic, Europe to North America saw a month-over-month volume increase of 11% in October, according to Xeneta. Backhaul volume rose 10% sequentially in October as shippers and forwarders took precautionary measures to lessen the impact of the three-day strike by dockworkers at US East Coast and Gulf Coast ports. Air cargo rates from North Europe to North America have remained elevated all year and are currently at $1.84/kg, unchanged from the same week last year, according to the BAI. Xeneta expects the rise in trans-Atlantic air freight rates to continue with airlines’ winter schedules, leading to reduced cargo capacity from the end of October. Contact Greg Knowler at greg.knowler@spglobal.com .

Air cargo peak season elevates as Chinese export rates hit 2024 high

<div class="phx-topic abstract-wrapper">Advisors to beneficial cargo owners say mitigating future supply chain disruptions requires BCOs to proactively engage with ocean carriers and forwarders, seeking to build partnerships even if past experience suggests they end in disappointment.</div>

Advisors to beneficial cargo owners say mitigating future supply chain disruptions requires BCOs to proactively engage with ocean carriers and forwarders, seeking to build partnerships even if past experience suggests they end in disappointment.

<div class="phx-topic">More than a year after global health agencies declared an end to the COVID-19 pandemic and nearly three years after the peak of the supply chain impact, the scars in the ocean container world have barely begun to heal. And given that market turbulence looks set to continue with a second Trump presidency, that healing may not have an opportunity for months or years to come. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5787232_0.1.jpg"></img></div>Advisors to beneficial cargo owners (BCOs) say mitigating future disruption requires BCOs to proactively engage with ocean carriers and forwarders, seeking to build partnerships even if past experience suggests they end in disappointment. Yet, those advisors say, many BCOs remain stuck in a mindset of wanting to “get back what was taken from them” during the pandemic when rates soared to historic highs. Yet despite whatever evidence may exist of external causes of the COVID-19 supply chain crisis, some shippers, echoing politicians up to and including President Joe Biden, continue to hold a grudge against carriers to the point that they are unwilling to engage in the relationship-building that advisors say is critical to managing ocean supply chains through an era of disruption. And that environment only looks set to continue assuming president-elect Trump makes good on threats to wage trade wars and given the possibility <a href="https://www.joc.com/article/ila-usmx-say-to-resume-talks-on-new-master-contract-in-november-5778794">of further East Coast labor disruption in January</a>. “The strained relationship between BCOs and ocean carriers post-pandemic has been significant, primarily due to repeated disruptions and lack of transparency throughout 2020–2022,” former Walmart logistics executive and current consultant Kevin Parkerson told the Journal of Commerce. “During this period, many BCOs felt they were deprioritized as ocean carriers reallocated capacity to secure spot rates that soared due to demand and port congestion,” Parkerson said. “This experience created a level of distrust that BCOs have struggled to overcome, as they now view carrier partnerships with caution and sometimes skepticism.” <h3>‘Revenge’ factor </h3>In the aftermath of historically high rates combined with historically poor service, and with the experience being repeated on a smaller scale in 2024, being willing to engage with carriers is proving a tall order for many BCOs. Even when logistics teams themselves understand the value of engaging, they lack support from internal colleagues with long memories and festering resentments. Such is the magnitude of grievance that BCOs’ aim is not just to drive rates back down to pre-pandemic levels, but to “take revenge” in seeking to recover money perceived to be unjustly taken from them during the pandemic. “For the last couple of years, everyone kind of had 2024 and now 2025 on the calendar as a recovery year. In other words, the time period when you can recover or get back what you feel like was taken from you, in the days of the tens of thousands of dollar rate levels,” Parkerson said. “And unfortunately, a lot of that is still the sentiment.” The process would be made easier if carriers themselves wanted to engage with customers, but even that seems to have broken down. Some carriers do wish to engage with certain customers, a trend that may pick up steam next year if the market softens under the strain of overcapacity. For their part, carriers — or at least some of them — seemed to have moved on from a prior mindset of seeking to work closely with customers. With a focus on blank sailings and a possible resurgence of slow-steaming next year to manage capacity — actions that benefit carriers at the expense of their customers — evidence of a partnership, such as quarterly business review meetings, has gone by the wayside. Carriers, meanwhile, have their own long memories of being beaten down on rates by shippers.<h3>The need to build relationships </h3>But BCO advisors say that however difficult or counterintuitive it may be for shippers to engage with carriers, protecting their interests and extracting maximum value out of the containerized supply chain demands it. “I strongly advocate for building solid relationships with carriers and logistics service providers,” Parkerson said. “Cultivating strong, collaborative relationships with your carriers and LSPs can help mitigate some of the impacts of disruptions. While it may not eliminate challenges entirely, it can certainly soften the effects.” Others agree. In a <a href="https://www.joc.com/article/bco-partnerships-with-carriers-often-fail-but-are-still-critical-5780305">recent Journal of Commerce commentary</a>, former Newell Brands logistics leader Kristian Ording described an effort to improve volume forecasts provided by carriers, only to see the relationship get undermined under the strain of tight capacity. “As capacity tightened, unfortunately many of the carriers resorted to not confirming forecasts until the last minute, and in some cases either not confirming at all or accepting less bookings than forecast [and at times even (less) than allocated],” he wrote. Nevertheless, Ording said, he would still not give up on trying to strengthen partnerships with carriers when other opportunities arose. “Despite sometimes disappointing outcomes even following the best of intentions, it is still worth the effort for beneficial cargo owners to take the steps toward building partnerships with carriers and forwarders that can withstand the ever more frequent swings in the market,” he wrote. “I hope shippers keep this in mind as we all gear up for the 2025 contracting cycle.” Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>. </div>

More than a year after global health agencies declared an end to the COVID-19 pandemic and nearly three years after the peak of the supply chain impact, the scars in the ocean container world have barely begun to heal. And given that market turbulence looks set to continue with a second Trump presidency, that healing may not have an opportunity for months or years to come. Advisors to beneficial cargo owners (BCOs) say mitigating future disruption requires BCOs to proactively engage with ocean carriers and forwarders, seeking to build partnerships even if past experience suggests they end in disappointment. Yet, those advisors say, many BCOs remain stuck in a mindset of wanting to “get back what was taken from them” during the pandemic when rates soared to historic highs. Yet despite whatever evidence may exist of external causes of the COVID-19 supply chain crisis, some shippers, echoing politicians up to and including President Joe Biden, continue to hold a grudge against carriers to the point that they are unwilling to engage in the relationship-building that advisors say is critical to managing ocean supply chains through an era of disruption. And that environment only looks set to continue assuming president-elect Trump makes good on threats to wage trade wars and given the possibility of further East Coast labor disruption in January . “The strained relationship between BCOs and ocean carriers post-pandemic has been significant, primarily due to repeated disruptions and lack of transparency throughout 2020–2022,” former Walmart logistics executive and current consultant Kevin Parkerson told the Journal of Commerce. “During this period, many BCOs felt they were deprioritized as ocean carriers reallocated capacity to secure spot rates that soared due to demand and port congestion,” Parkerson said. “This experience created a level of distrust that BCOs have struggled to overcome, as they now view carrier partnerships with caution and sometimes skepticism.” ‘Revenge’ factor In the aftermath of historically high rates combined with historically poor service, and with the experience being repeated on a smaller scale in 2024, being willing to engage with carriers is proving a tall order for many BCOs. Even when logistics teams themselves understand the value of engaging, they lack support from internal colleagues with long memories and festering resentments. Such is the magnitude of grievance that BCOs’ aim is not just to drive rates back down to pre-pandemic levels, but to “take revenge” in seeking to recover money perceived to be unjustly taken from them during the pandemic. “For the last couple of years, everyone kind of had 2024 and now 2025 on the calendar as a recovery year. In other words, the time period when you can recover or get back what you feel like was taken from you, in the days of the tens of thousands of dollar rate levels,” Parkerson said. “And unfortunately, a lot of that is still the sentiment.” The process would be made easier if carriers themselves wanted to engage with customers, but even that seems to have broken down. Some carriers do wish to engage with certain customers, a trend that may pick up steam next year if the market softens under the strain of overcapacity. For their part, carriers — or at least some of them — seemed to have moved on from a prior mindset of seeking to work closely with customers. With a focus on blank sailings and a possible resurgence of slow-steaming next year to manage capacity — actions that benefit carriers at the expense of their customers — evidence of a partnership, such as quarterly business review meetings, has gone by the wayside. Carriers, meanwhile, have their own long memories of being beaten down on rates by shippers. The need to build relationships But BCO advisors say that however difficult or counterintuitive it may be for shippers to engage with carriers, protecting their interests and extracting maximum value out of the containerized supply chain demands it. “I strongly advocate for building solid relationships with carriers and logistics service providers,” Parkerson said. “Cultivating strong, collaborative relationships with your carriers and LSPs can help mitigate some of the impacts of disruptions. While it may not eliminate challenges entirely, it can certainly soften the effects.” Others agree. In a recent Journal of Commerce commentary , former Newell Brands logistics leader Kristian Ording described an effort to improve volume forecasts provided by carriers, only to see the relationship get undermined under the strain of tight capacity. “As capacity tightened, unfortunately many of the carriers resorted to not confirming forecasts until the last minute, and in some cases either not confirming at all or accepting less bookings than forecast [and at times even (less) than allocated],” he wrote. Nevertheless, Ording said, he would still not give up on trying to strengthen partnerships with carriers when other opportunities arose. “Despite sometimes disappointing outcomes even following the best of intentions, it is still worth the effort for beneficial cargo owners to take the steps toward building partnerships with carriers and forwarders that can withstand the ever more frequent swings in the market,” he wrote. “I hope shippers keep this in mind as we all gear up for the 2025 contracting cycle.” Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

BCOs should forsake ‘revenge’ to build ‘collaborative’ relationships with carriers

<div class="phx-topic abstract-wrapper">The work stoppage along Canada’s West Coast has also shut down rail operations, with CN suspending westbound rail service to British Columbia ports and CPKC halting acceptance of export and empty containers for the province. </div>

The work stoppage along Canada’s West Coast has also shut down rail operations, with CN suspending westbound rail service to British Columbia ports and CPKC halting acceptance of export and empty containers for the province.

<div class="phx-topic">A growing number of container ships on Tuesday were waiting out the labor lockout at British Columbia ports in hopes of a speedy resolution. Meanwhile, on the other side of the country, the strike at marine terminals in Montreal is halting all rail service at that port. Maersk said in an advisory that two ships in its TP1 service, the 6,350-TEU Marcos V and the 8,714-TEU San Felipe, are currently at anchorage at the ports of Vancouver and Prince Rupert, respectively. A third ship, the 5,085-TEU Seattle Express, is still expected to call Vancouver’s Fraser Surrey terminal this week, with any change in its rotation contingent upon the duration of the port’s closure. Container terminals at Vancouver and Prince Rupert were effectively shuttered after <a href="https://www.joc.com/article/bc-container-ports-ready-to-lock-out-longshore-foremen-after-strike-vote-5784004">the British Columbia Maritime Employers Association locked out members of the International Longshore and Warehouse Union Local 514</a> following a strike vote by its members. The strike by longshore foremen began Monday morning. The two sides remain at odds over terms of a new contract as well as <a href="https://www.joc.com/article/ilwu-canada-illegal-strike-ruling-averts-vancouver-shutdown-5192250">the implementation of new technology at DP World’s Vancouver terminal</a>. The prior contract expired in March 2023. Management is still onsite at Vancouver terminals monitoring refrigerated containers, according to a person familiar with the issue, but truck gates and berth operations are halted. Vancouver is Canada’s largest container terminal. The 12,726-TEU YM Target remains at berth at Vancouver’s Deltaport, with initial plans to wait out the work stoppage, the source added. Three other container ships are at anchorage outside of Vancouver, while the 4,250-TEU Cosco Auckland remains at berth at Prince Rupert. The backlog of ships, though, may grow. The Vancouver Fraser Port Authority said Tuesday that seven container ships have requested an anchorage at the port. While trying to maintain vessel schedules, Maersk is offering shippers relief from any charges associated with the work stoppage. It has suspended demurrage and export container detention across British Columbia ports, but Maersk said it is “still maintaining certain conditions for import detention.” The carrier said it will also open off-dock empty return locations for containers. The work stoppage along Canada’s West Coast has also shut down rail operations. Canadian National Railway (CN) suspended westbound rail service to British Columbia ports, with Canadian Pacific-Kansas City (CPKC) also stopping acceptance of export and empty containers for British Columbia. <h3>CN suspends Montreal service </h3>The shutdown of Canada’s West Coast ports comes as longshore workers affiliated with <a href="https://www.joc.com/article/montreal-warns-of-vessel-diversions-as-strike-against-msc-terminals-begins-5783311">the Canadian Union of Public Employees Local 375 stage an indefinite strike against two marine terminals operated by Termont in Montreal</a>. The Termont strike is also forcing CN to suspend all rail service in and out of Montreal, including at the Racine and Cast terminals operated by Montreal Gateway Terminals, which are not affected by the strike, Hapag-Lloyd said in an advisory Tuesday. The suspension also includes interchange services with CSX Transportation and Norfolk Southern in the Ohio Valley. “This action is due to operational constraints and uncertainty arising from the ongoing renewal of the Montreal longshoremen collective agreement,” Hapag-Lloyd said. “As a result, CN will suspend and remove all capacity at their inland terminals for exports destined for Cast and Racine until further notice.” Separately, Montreal’s Maritime Employers Association (MEA) started suspending salary guarantees for striking longshore workers Tuesday, saying it was necessary to “reduce the cumulative financial impact of repeated strikes and lower volumes at the Port of Montreal.” Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>.</div>

A growing number of container ships on Tuesday were waiting out the labor lockout at British Columbia ports in hopes of a speedy resolution. Meanwhile, on the other side of the country, the strike at marine terminals in Montreal is halting all rail service at that port. Maersk said in an advisory that two ships in its TP1 service, the 6,350-TEU Marcos V and the 8,714-TEU San Felipe, are currently at anchorage at the ports of Vancouver and Prince Rupert, respectively. A third ship, the 5,085-TEU Seattle Express, is still expected to call Vancouver’s Fraser Surrey terminal this week, with any change in its rotation contingent upon the duration of the port’s closure. Container terminals at Vancouver and Prince Rupert were effectively shuttered after the British Columbia Maritime Employers Association locked out members of the International Longshore and Warehouse Union Local 514 following a strike vote by its members. The strike by longshore foremen began Monday morning. The two sides remain at odds over terms of a new contract as well as the implementation of new technology at DP World’s Vancouver terminal . The prior contract expired in March 2023. Management is still onsite at Vancouver terminals monitoring refrigerated containers, according to a person familiar with the issue, but truck gates and berth operations are halted. Vancouver is Canada’s largest container terminal. The 12,726-TEU YM Target remains at berth at Vancouver’s Deltaport, with initial plans to wait out the work stoppage, the source added. Three other container ships are at anchorage outside of Vancouver, while the 4,250-TEU Cosco Auckland remains at berth at Prince Rupert. The backlog of ships, though, may grow. The Vancouver Fraser Port Authority said Tuesday that seven container ships have requested an anchorage at the port. While trying to maintain vessel schedules, Maersk is offering shippers relief from any charges associated with the work stoppage. It has suspended demurrage and export container detention across British Columbia ports, but Maersk said it is “still maintaining certain conditions for import detention.” The carrier said it will also open off-dock empty return locations for containers. The work stoppage along Canada’s West Coast has also shut down rail operations. Canadian National Railway (CN) suspended westbound rail service to British Columbia ports, with Canadian Pacific-Kansas City (CPKC) also stopping acceptance of export and empty containers for British Columbia. CN suspends Montreal service The shutdown of Canada’s West Coast ports comes as longshore workers affiliated with the Canadian Union of Public Employees Local 375 stage an indefinite strike against two marine terminals operated by Termont in Montreal . The Termont strike is also forcing CN to suspend all rail service in and out of Montreal, including at the Racine and Cast terminals operated by Montreal Gateway Terminals, which are not affected by the strike, Hapag-Lloyd said in an advisory Tuesday. The suspension also includes interchange services with CSX Transportation and Norfolk Southern in the Ohio Valley. “This action is due to operational constraints and uncertainty arising from the ongoing renewal of the Montreal longshoremen collective agreement,” Hapag-Lloyd said. “As a result, CN will suspend and remove all capacity at their inland terminals for exports destined for Cast and Racine until further notice.” Separately, Montreal’s Maritime Employers Association (MEA) started suspending salary guarantees for striking longshore workers Tuesday, saying it was necessary to “reduce the cumulative financial impact of repeated strikes and lower volumes at the Port of Montreal.” Contact Michael Angell at michael.angell@spglobal.com .

Ships waiting out BC port closures in hopes of quick deal with longshore union

<div class="phx-topic abstract-wrapper">The major Chinese ports of Shanghai and Ningbo are currently experiencing delays of two to three days due to the lingering impacts of the storm that hit the region late last week.</div>

The major Chinese ports of Shanghai and Ningbo are currently experiencing delays of two to three days due to the lingering impacts of the storm that hit the region late last week.

<div class="phx-topic">Container shipping services in the East China Sea are facing ongoing disruption amid port congestion and vessel delays from the impact of Typhoon Kong-rey, which hit Taiwan late last week before moving northward to affect eastern China and Japan. Kaohsiung, Taiwan’s busiest container port, is experiencing berthing delays of up to two days after the port was closed as the storm, Taiwan’s fiercest typhoon in almost 30 years, traversed the southern part of the island on Oct. 31 and Nov. 1. Ships docking at Taiwan’s container ports, including Taipei and Keelung, are still facing waits of between two and three days, shipping executives said. The major Chinese ports of Shanghai and Ningbo are currently experiencing delays of a similar length due to the lingering impact of the typhoon. Terminals in both cities suspended operations Friday afternoon ahead of the storm’s arrival, with cargo handling gradually resuming later in the weekend, port officials said. Kuehne + Nagel said congestion at Shanghai is gradually easing, while bad weather, including dense fog, is also affecting operations at Qingdao, the forwarder said. Carrier Ocean Network Express (ONE) said Kong-rey is delaying vessels deployed on various trades, including its Japan-Thailand-Vietnam and Taiwan-Philippines shuttle services. ONE’s vessel schedules show the storm added four days to the normal eight-day transit between Yokohama and Laem Chabang in Thailand for the 2,858-TEU ACX Crystal operating its JTV service. There was an additional one-day delay to Cai Map port near Ho Chi Minh City in Vietnam due to port congestion. The 1,096-TEU Contship Era, operating ONE’s TWP2 shuttle service, was delayed five days in Kaohsiung and only departed the port Tuesday for Cebu in the Philippines. ONE said Tuesday that ships operating Asia-Europe services are still affected by delays caused by typhoons Bebinca and Pulasan, which hit Asia in September. The two storms are partly responsible for lengthening transit times by about 10 to 13 days. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com.</a></div>

Container shipping services in the East China Sea are facing ongoing disruption amid port congestion and vessel delays from the impact of Typhoon Kong-rey, which hit Taiwan late last week before moving northward to affect eastern China and Japan. Kaohsiung, Taiwan’s busiest container port, is experiencing berthing delays of up to two days after the port was closed as the storm, Taiwan’s fiercest typhoon in almost 30 years, traversed the southern part of the island on Oct. 31 and Nov. 1. Ships docking at Taiwan’s container ports, including Taipei and Keelung, are still facing waits of between two and three days, shipping executives said. The major Chinese ports of Shanghai and Ningbo are currently experiencing delays of a similar length due to the lingering impact of the typhoon. Terminals in both cities suspended operations Friday afternoon ahead of the storm’s arrival, with cargo handling gradually resuming later in the weekend, port officials said. Kuehne + Nagel said congestion at Shanghai is gradually easing, while bad weather, including dense fog, is also affecting operations at Qingdao, the forwarder said. Carrier Ocean Network Express (ONE) said Kong-rey is delaying vessels deployed on various trades, including its Japan-Thailand-Vietnam and Taiwan-Philippines shuttle services. ONE’s vessel schedules show the storm added four days to the normal eight-day transit between Yokohama and Laem Chabang in Thailand for the 2,858-TEU ACX Crystal operating its JTV service. There was an additional one-day delay to Cai Map port near Ho Chi Minh City in Vietnam due to port congestion. The 1,096-TEU Contship Era, operating ONE’s TWP2 shuttle service, was delayed five days in Kaohsiung and only departed the port Tuesday for Cebu in the Philippines. ONE said Tuesday that ships operating Asia-Europe services are still affected by delays caused by typhoons Bebinca and Pulasan, which hit Asia in September. The two storms are partly responsible for lengthening transit times by about 10 to 13 days. Contact Keith Wallis at keithwallis@hotmail.com.

East China Sea container traffic facing delays, port congestion after typhoon

<div class="phx-topic abstract-wrapper">Beneficial cargo owners have numerous market factors and risks to weigh when formulating a strategy for negotiating next year’s service contracts, writes John McCauley.</div>

Beneficial cargo owners have numerous market factors and risks to weigh when formulating a strategy for negotiating next year’s service contracts, writes John McCauley.

<div class="phx-topic">Beneficial cargo owners (BCOs) will need to consider multiple macro factors — both immediate and long term — as they approach negotiations on their annual service contracts with ocean carriers. First, is the possibility of the end of militant attacks in the Red Sea and Gulf of Aden. Any resumption of sailings through the Suez Canal will happen, at best, by mid-year. It is also necessary to factor in a three- to six-month delay in carrier schedule and shipper/consignee supply chain adjustments from any cessation of hostilities. My view is to plan for no resumption of Red Sea transits in 2025. The second factor is whether seasonality will continue at historical levels or we will see some smoothing of demand and volume similar to that which we saw in 2024 and partly in 2023. Those BCOs that can smooth demand, having fought the internal battle to minimize transportation risk, have largely done so to the degree possible allowing for increased warehousing and higher working capital from increased inventory. Therefore, I expect in 2025 that there will be some improvement in volume smoothing, but nothing game changing. Thirdly will be the supply situation. Much has been made of the new tonnage coming into service, and indeed without Suez transits there would be overcapacity on the Asia-Europe trade. However, the new capacity will be asynchronous with demand, particularly in the trans-Pacific. Another significant issue on the supply side is the sheer scale and size of Mediterranean Shipping Co., which now operates about 20% of global container capacity. Their impact will be at least twofold: for any BCO with reasonable volume, purely on berth capacity and schedule alone, you will likely need to use them. But more importantly, they were the traditional price makers when they were on par with others in capacity terms and part of vessel-sharing agreements/consortia and were often the earliest movers in the market. Will that continue given their market share and agile and adventurous commercial actions? Not so easy when you are a solo player. Finally, do not expect any improvement in service levels beyond (at my best estimate) 60% to 65% globally. While I am healthily skeptical and highly hopeful that Gemini Cooperation delivers on its service level target of 90%, this will not kick in until first shipments start arriving in at least the second quarter of 2025. <h3>Options for BCOs </h3>So, where does all this leave BCOs trying to make sense of who to contract with and at what levels in 2025? The likelihood is that we are in balance in a buyer’s market with two caveats: it all depends on your relation and value to the carriers and the current levels you are paying versus spot and forward freight agreement (FFA) projections for the third and fourth quarters of 2025. If you choose to commit for a full year, indeed in the current and near-term environment, the likelihood of carriers wanting to contract for less than one year without a significant risk premium is very low. This leaves several options, any of which may suit your business or not. You can go long this year, committing all your volume to a range of carriers, but being sure to include standalone liners and one from each of the main alliances. Pretty traditional, but at least this locks you in. The quid pro quo for this commitment must be next to zero surcharges through the life of the contract. This will mitigate short-term shocks during the contract duration. The more adventurous option will be some form of index linked for a portion of the volume, accepting the risk of fluctuation. This also means you must lock in your critical lanes and product lines. Again, keep an eye on surcharges. The most aggressive option would be a mix of contracts for key volumes/lanes with a proportion on the spot market. Your level of conviction of supply-side easing and a Suez reopening needs to be very high, and even in those scenarios coming together, carriers will still blank sailings and even lay up capacity, so the reward may be elusive. With no constraints, I would lock in my key lanes and buy FFAs to hedge up to 50% of the upside risk. In summary, not an easy year (are they ever?) with the potential for rates to increase, but more likely to fall, particularly for trades outside North America. For the trans-Atlantic and north/south lanes, expect little change while I remain convinced the surge in US imports will be unsustainable. The outcome and impact of the US presidential election is a further wild card not included in the factors above! John McCauley, formerly a long-standing vice president of transportation and logistics at Cargill, now consults for shippers. Contact him at <a href="mailto:john-mccauley1@outlook.com">john-mccauley1@outlook.com</a>. </div>

Beneficial cargo owners (BCOs) will need to consider multiple macro factors — both immediate and long term — as they approach negotiations on their annual service contracts with ocean carriers. First, is the possibility of the end of militant attacks in the Red Sea and Gulf of Aden. Any resumption of sailings through the Suez Canal will happen, at best, by mid-year. It is also necessary to factor in a three- to six-month delay in carrier schedule and shipper/consignee supply chain adjustments from any cessation of hostilities. My view is to plan for no resumption of Red Sea transits in 2025. The second factor is whether seasonality will continue at historical levels or we will see some smoothing of demand and volume similar to that which we saw in 2024 and partly in 2023. Those BCOs that can smooth demand, having fought the internal battle to minimize transportation risk, have largely done so to the degree possible allowing for increased warehousing and higher working capital from increased inventory. Therefore, I expect in 2025 that there will be some improvement in volume smoothing, but nothing game changing. Thirdly will be the supply situation. Much has been made of the new tonnage coming into service, and indeed without Suez transits there would be overcapacity on the Asia-Europe trade. However, the new capacity will be asynchronous with demand, particularly in the trans-Pacific. Another significant issue on the supply side is the sheer scale and size of Mediterranean Shipping Co., which now operates about 20% of global container capacity. Their impact will be at least twofold: for any BCO with reasonable volume, purely on berth capacity and schedule alone, you will likely need to use them. But more importantly, they were the traditional price makers when they were on par with others in capacity terms and part of vessel-sharing agreements/consortia and were often the earliest movers in the market. Will that continue given their market share and agile and adventurous commercial actions? Not so easy when you are a solo player. Finally, do not expect any improvement in service levels beyond (at my best estimate) 60% to 65% globally. While I am healthily skeptical and highly hopeful that Gemini Cooperation delivers on its service level target of 90%, this will not kick in until first shipments start arriving in at least the second quarter of 2025. Options for BCOs So, where does all this leave BCOs trying to make sense of who to contract with and at what levels in 2025? The likelihood is that we are in balance in a buyer’s market with two caveats: it all depends on your relation and value to the carriers and the current levels you are paying versus spot and forward freight agreement (FFA) projections for the third and fourth quarters of 2025. If you choose to commit for a full year, indeed in the current and near-term environment, the likelihood of carriers wanting to contract for less than one year without a significant risk premium is very low. This leaves several options, any of which may suit your business or not. You can go long this year, committing all your volume to a range of carriers, but being sure to include standalone liners and one from each of the main alliances. Pretty traditional, but at least this locks you in. The quid pro quo for this commitment must be next to zero surcharges through the life of the contract. This will mitigate short-term shocks during the contract duration. The more adventurous option will be some form of index linked for a portion of the volume, accepting the risk of fluctuation. This also means you must lock in your critical lanes and product lines. Again, keep an eye on surcharges. The most aggressive option would be a mix of contracts for key volumes/lanes with a proportion on the spot market. Your level of conviction of supply-side easing and a Suez reopening needs to be very high, and even in those scenarios coming together, carriers will still blank sailings and even lay up capacity, so the reward may be elusive. With no constraints, I would lock in my key lanes and buy FFAs to hedge up to 50% of the upside risk. In summary, not an easy year (are they ever?) with the potential for rates to increase, but more likely to fall, particularly for trades outside North America. For the trans-Atlantic and north/south lanes, expect little change while I remain convinced the surge in US imports will be unsustainable. The outcome and impact of the US presidential election is a further wild card not included in the factors above! John McCauley, formerly a long-standing vice president of transportation and logistics at Cargill, now consults for shippers. Contact him at john-mccauley1@outlook.com .

BCOs should approach new service contracts with broad market view

<div class="phx-topic abstract-wrapper">Whether Kamala Harris or Donald Trump wins, the result will likely mean an accelerated supply chain shift out of China, but to different degrees, writes the supply chain director for industrial packaging firm Procon Pacific. </div>

Whether Kamala Harris or Donald Trump wins, the result will likely mean an accelerated supply chain shift out of China, but to different degrees, writes the supply chain director for industrial packaging firm Procon Pacific.

<div class="phx-topic">Regardless of who wins the US presidential election, it is likely that import tariffs against China will increase. If former president and Republican nominee Donald Trump wins, he has threatened to raise tariffs to over 60%, whereas the Democratic nominee, Vice President Kamala Harris, would most likely maintain existing elevated tariff levels against China and target goods and products deemed sensitive to security. Either result will likely mean an even faster supply chain shift out of China, but to different degrees. The global supply chain shift out of China had been under way prior to former president Trump’s 2018 Section 301 tariff increases. Prior to then, the root cause of the shift away from China was primarily due to increased labor and overhead costs in China. The typical factory worker in China 15 years ago was making $300 per month, whereas today, that wage is up to $1,200 per month, based on my experience surveying suppliers. It is therefore no longer economically viable to make labor-intensive products such as sneakers, industrial textiles or lower-end apparel in China. China has already moved up the value chain (as did South Korea, Singapore, Hong Kong and Taiwan 20 years ago, and Japan 30 years ago). The top five containerized product categories from India are auto parts, pharmaceuticals, furniture, home textiles and garments, and industrial packing, according to data from US Customs and Border Protection. As these are not strategic goods, it would be unlikely we would see a Harris administration targeting these categories. It is no coincidence that these were the same product categories China had initially dominated in the late 1980s. These categories are driven by labor cost. <h3>Obstacles exist </h3>With increased US tariffs against China manufactured goods, India has the potential to dominate the shift away from a reliance on China. With a labor force of well over 500 million and a typical factory worker making less than $300 per month, India is highly cost competitive. India also benefits from low-cost oil imports from both Russia and Iran. There is, however, still a lot of maturing necessary to deal with the demands of a typical US importer. The last US round of China tariffs resulted in more of a shift to Vietnam, Mexico and even Thailand and Indonesia, but less to India, said John D. Van Fleet, who specializes in corporate globalization at Shanghai Jiao Tong University. India’s social-cultural barriers ranging from gender parity and literacy to religion and the caste system often act to restrain its growth potential. The gap between customer service in China versus India is also wide. The difficulty of doing business in India could damper its ability to compete with Vietnam or Thailand in absorbing the production shift away from China. An American importer absolutely must have their own staff in-country to qualify vendors, control samples, expedite orders and perform quality inspections, many tasks that are somewhat taken for granted in China these days. Under a Harris administration, a more likely starting point for most American companies would not be a wholesale shift out of China, but rather a “China Plus One” strategy. Continue to manufacture the mass-produced economies-of-scale, semi-automated products in China but shift the more labor-intensive production to India. Much of the machinery, raw material and semi-finished components could be procured in China but assembled or processed in India. A Harris administration would most likely be a continuation of Joe Biden’s security-focused approach, with more dual-use and potentially sensitive products (chips, semiconductors, and drones) being encouraged to be made in India, as opposed to China. Over time, as companies build up staffing and knowledge of how to work with India suppliers, more production and eventual capital investment will take place. Under a Trump administration, the time frame for shifting production from China to India would accelerate dramatically. There would be more of a mad scramble for American companies to quickly set up buying offices and/or factories in India before their competitors do. Using an example of a cotton T-shirt, which today is made in China for $10, an import duty raised to 60% would add an additional $3.65 to the landed cost. Meanwhile, with its lower labor rates, the same cotton T-shirt made in India would likely cost only about $6 and would not be subject to the elevated import duty. The math is straightforward and offers enough of an incentive for the American buyer to quickly shift production. While clothing is an obvious example, mobile phones, electronics, more sophisticated automobile parts and industrial goods would quickly follow suit. The lack of ease of doing business in India could quickly improve by capital, management and systems investments on both the buyer and seller sides. Daniel Krassenstein, supply chain director for industrial packaging firm Procon Pacific, can be reached at <a href="mailto:daniel.krassenstein@outlook.com">daniel.krassenstein@outlook.com</a>. </div>

Regardless of who wins the US presidential election, it is likely that import tariffs against China will increase. If former president and Republican nominee Donald Trump wins, he has threatened to raise tariffs to over 60%, whereas the Democratic nominee, Vice President Kamala Harris, would most likely maintain existing elevated tariff levels against China and target goods and products deemed sensitive to security. Either result will likely mean an even faster supply chain shift out of China, but to different degrees. The global supply chain shift out of China had been under way prior to former president Trump’s 2018 Section 301 tariff increases. Prior to then, the root cause of the shift away from China was primarily due to increased labor and overhead costs in China. The typical factory worker in China 15 years ago was making $300 per month, whereas today, that wage is up to $1,200 per month, based on my experience surveying suppliers. It is therefore no longer economically viable to make labor-intensive products such as sneakers, industrial textiles or lower-end apparel in China. China has already moved up the value chain (as did South Korea, Singapore, Hong Kong and Taiwan 20 years ago, and Japan 30 years ago). The top five containerized product categories from India are auto parts, pharmaceuticals, furniture, home textiles and garments, and industrial packing, according to data from US Customs and Border Protection. As these are not strategic goods, it would be unlikely we would see a Harris administration targeting these categories. It is no coincidence that these were the same product categories China had initially dominated in the late 1980s. These categories are driven by labor cost. Obstacles exist With increased US tariffs against China manufactured goods, India has the potential to dominate the shift away from a reliance on China. With a labor force of well over 500 million and a typical factory worker making less than $300 per month, India is highly cost competitive. India also benefits from low-cost oil imports from both Russia and Iran. There is, however, still a lot of maturing necessary to deal with the demands of a typical US importer. The last US round of China tariffs resulted in more of a shift to Vietnam, Mexico and even Thailand and Indonesia, but less to India, said John D. Van Fleet, who specializes in corporate globalization at Shanghai Jiao Tong University. India’s social-cultural barriers ranging from gender parity and literacy to religion and the caste system often act to restrain its growth potential. The gap between customer service in China versus India is also wide. The difficulty of doing business in India could damper its ability to compete with Vietnam or Thailand in absorbing the production shift away from China. An American importer absolutely must have their own staff in-country to qualify vendors, control samples, expedite orders and perform quality inspections, many tasks that are somewhat taken for granted in China these days. Under a Harris administration, a more likely starting point for most American companies would not be a wholesale shift out of China, but rather a “China Plus One” strategy. Continue to manufacture the mass-produced economies-of-scale, semi-automated products in China but shift the more labor-intensive production to India. Much of the machinery, raw material and semi-finished components could be procured in China but assembled or processed in India. A Harris administration would most likely be a continuation of Joe Biden’s security-focused approach, with more dual-use and potentially sensitive products (chips, semiconductors, and drones) being encouraged to be made in India, as opposed to China. Over time, as companies build up staffing and knowledge of how to work with India suppliers, more production and eventual capital investment will take place. Under a Trump administration, the time frame for shifting production from China to India would accelerate dramatically. There would be more of a mad scramble for American companies to quickly set up buying offices and/or factories in India before their competitors do. Using an example of a cotton T-shirt, which today is made in China for $10, an import duty raised to 60% would add an additional $3.65 to the landed cost. Meanwhile, with its lower labor rates, the same cotton T-shirt made in India would likely cost only about $6 and would not be subject to the elevated import duty. The math is straightforward and offers enough of an incentive for the American buyer to quickly shift production. While clothing is an obvious example, mobile phones, electronics, more sophisticated automobile parts and industrial goods would quickly follow suit. The lack of ease of doing business in India could quickly improve by capital, management and systems investments on both the buyer and seller sides. Daniel Krassenstein, supply chain director for industrial packaging firm Procon Pacific, can be reached at daniel.krassenstein@outlook.com .

India sourcing to benefit from US elections no matter the outcome

2022

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2023

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2024

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The Class I railroads report weekly US rail service performance including intermodal train speeds to the US Surface Transportation Board. Totals are rolling four-week average of BNSF Railway, Canadian National, Canadian Pacific, CSX Transportation, Kansas City Southern, Norfolk Southern Railway, and Union Pacific Railroad. [STB](https://www.stb.gov/reports-data/rail-service-data/)

US intermodal train speeds (STB)

STB Train Speeds US Railroads Gateway

<div class="phx-topic abstract-wrapper">CMA CGM and Maersk are reshuffling their Mexico-Central America services beginning this month in response to chronic port congestion and berthing delays at key ports in the region.</div>

CMA CGM and Maersk are reshuffling their Mexico-Central America services beginning this month in response to chronic port congestion and berthing delays at key ports in the region.

<div class="phx-topic">Ocean carriers are experiencing extensive delays at ports in Mexico and Central America, which is leading several liners to revamp services or implement contingency plans to maintain reliability. The problems are being partly caused by strong trade volumes, especially from Mexico, carriers and forwarders say. Severe delays at Acajutla in El Salvador and Corinto in Nicaragua have led CMA CGM to implement a port congestion surcharge of $1,000 per container from Dec. 1 on shipments to and from the two countries, the carrier said in a customer advisory Tuesday. The surcharge on all types of cargo will remain until March 31, 2025. Meanwhile, CMA CGM and Maersk confirmed they are reshuffling their Mexico-Central America services from this month in response to chronic port congestion and berthing delays at key ports in the region. The French carrier is revamping its Asia-Mexico and West Coast South America (WCSA) services “to restore schedule reliability and ensure competitive transit times,” it said in an advisory last week. “Due to significant congestion in Mexico’s major ports, delays have been steadily increasing since mid-2024.” As a result, Manzanillo and Lazaro Cardenas will be dropped from CMA CGM’s Asia Central South America 1 (ACSA1) service, which will instead focus on West Coast South America ports and Ensenada, Mexico. The new rotation is Ningbo-Shanghai-Busan-Ensenada-Buenaventura (Colombia)-Callao-Posorja (Ecuador)-Yokohama, with a 21-day transit from Ningbo to Ensenada. The first vessel deployed on the new rotation will be the APL Turkey departing Ningbo on Nov. 21. CMA CGM will add Manzanillo and Lazaro Cardenas to its Asia-Mexico Express (M2X) service, while halting calls at Ensenada. The carrier said the revamped M2X rotation will concentrate “exclusively on Mexico’s main ports, improving direct transit times to and from Mexico.” The new M2X rotation is Shekou (Shenzhen)-Ningbo-Shanghai-Qingdao-Tianjin-Busan-Manzanillo-Lazaro Cardenas, with a 32-day voyage from Shekou to Manzanillo. The first vessel operating the revised rotation is the CMA CGM Alexander von Humbolt, departing Shekou on Nov. 16. Maersk said it is reshuffling its West Coast Central America services in response to “current market conditions, including heavy port congestion and extended berth waiting times.” The carrier said it will restrict Central American calls to Balboa (Panama), Corinto, and Puerto Quetzal (Guatemala) on its WCCA1 loop, while adding a WCCA3 service calling at Balboa, Lazaro Cadenas and Acajutla. The first vessel operating the updated WCCA1 service is expected to depart Balboa on Nov. 17, while the first WCCA3 vessel is set to leave Balboa on Nov. 24, Maersk said in a customer advisory. <h3>Hapag-Lloyd, ONE highlight delays </h3>Other carriers, including Hapag-Lloyd and Ocean Network Express (ONE), said their services are also being impacted by port disruption. “We are observing delays at ports in Mexico, Panama, and Cartagena [Colombia], primarily due to high yard utilization, which is affecting cargo movement and vessel schedules,” a ONE spokesperson told the Journal of Commerce. “We are actively monitoring the situation and exploring alternative solutions to ensure cargo reaches its destination as efficiently as possible while maintaining operational flexibility.” Echoing those comments, a Hapag-Lloyd spokesperson told the Journal of Commerce, “Ports in the Caribbean hubs are very congested and our services are heavily impacted by this.” Hapag-Lloyd highlighted issues at Mexico’s Manzanillo, which it said was partially working and experiencing heavy yard utilization, which meant there was low yard and vessel productivity. Just two ships each were berthed at Manzanillo, Lazaro Cardenas, Christobal and Balboa, with six in Cartagena, according to AIS Live, a sister product of the Journal of Commerce within S&amp;P Global. Freight forwarder Kuehne + Nagel highlighted ports where operations are being heavily disrupted, with wait times of up to three days at Manzanillo, four days at Christobal and seven days at Acajutla. Kuehne + Nagel’s visibility platform SeaExplorer noted that at Christobal, container yard occupancy is exceeding 95%, which has “slowed operations to 30 movements per hour, below the optimal 50,” which has caused worsening dwell times. Delays at Acajutla are being exacerbated by repairs to two berths, SeaExplorer said. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

Ocean carriers are experiencing extensive delays at ports in Mexico and Central America, which is leading several liners to revamp services or implement contingency plans to maintain reliability. The problems are being partly caused by strong trade volumes, especially from Mexico, carriers and forwarders say. Severe delays at Acajutla in El Salvador and Corinto in Nicaragua have led CMA CGM to implement a port congestion surcharge of $1,000 per container from Dec. 1 on shipments to and from the two countries, the carrier said in a customer advisory Tuesday. The surcharge on all types of cargo will remain until March 31, 2025. Meanwhile, CMA CGM and Maersk confirmed they are reshuffling their Mexico-Central America services from this month in response to chronic port congestion and berthing delays at key ports in the region. The French carrier is revamping its Asia-Mexico and West Coast South America (WCSA) services “to restore schedule reliability and ensure competitive transit times,” it said in an advisory last week. “Due to significant congestion in Mexico’s major ports, delays have been steadily increasing since mid-2024.” As a result, Manzanillo and Lazaro Cardenas will be dropped from CMA CGM’s Asia Central South America 1 (ACSA1) service, which will instead focus on West Coast South America ports and Ensenada, Mexico. The new rotation is Ningbo-Shanghai-Busan-Ensenada-Buenaventura (Colombia)-Callao-Posorja (Ecuador)-Yokohama, with a 21-day transit from Ningbo to Ensenada. The first vessel deployed on the new rotation will be the APL Turkey departing Ningbo on Nov. 21. CMA CGM will add Manzanillo and Lazaro Cardenas to its Asia-Mexico Express (M2X) service, while halting calls at Ensenada. The carrier said the revamped M2X rotation will concentrate “exclusively on Mexico’s main ports, improving direct transit times to and from Mexico.” The new M2X rotation is Shekou (Shenzhen)-Ningbo-Shanghai-Qingdao-Tianjin-Busan-Manzanillo-Lazaro Cardenas, with a 32-day voyage from Shekou to Manzanillo. The first vessel operating the revised rotation is the CMA CGM Alexander von Humbolt, departing Shekou on Nov. 16. Maersk said it is reshuffling its West Coast Central America services in response to “current market conditions, including heavy port congestion and extended berth waiting times.” The carrier said it will restrict Central American calls to Balboa (Panama), Corinto, and Puerto Quetzal (Guatemala) on its WCCA1 loop, while adding a WCCA3 service calling at Balboa, Lazaro Cadenas and Acajutla. The first vessel operating the updated WCCA1 service is expected to depart Balboa on Nov. 17, while the first WCCA3 vessel is set to leave Balboa on Nov. 24, Maersk said in a customer advisory. Hapag-Lloyd, ONE highlight delays Other carriers, including Hapag-Lloyd and Ocean Network Express (ONE), said their services are also being impacted by port disruption. “We are observing delays at ports in Mexico, Panama, and Cartagena [Colombia], primarily due to high yard utilization, which is affecting cargo movement and vessel schedules,” a ONE spokesperson told the Journal of Commerce. “We are actively monitoring the situation and exploring alternative solutions to ensure cargo reaches its destination as efficiently as possible while maintaining operational flexibility.” Echoing those comments, a Hapag-Lloyd spokesperson told the Journal of Commerce, “Ports in the Caribbean hubs are very congested and our services are heavily impacted by this.” Hapag-Lloyd highlighted issues at Mexico’s Manzanillo, which it said was partially working and experiencing heavy yard utilization, which meant there was low yard and vessel productivity. Just two ships each were berthed at Manzanillo, Lazaro Cardenas, Christobal and Balboa, with six in Cartagena, according to AIS Live, a sister product of the Journal of Commerce within S&P Global. Freight forwarder Kuehne + Nagel highlighted ports where operations are being heavily disrupted, with wait times of up to three days at Manzanillo, four days at Christobal and seven days at Acajutla. Kuehne + Nagel’s visibility platform SeaExplorer noted that at Christobal, container yard occupancy is exceeding 95%, which has “slowed operations to 30 movements per hour, below the optimal 50,” which has caused worsening dwell times. Delays at Acajutla are being exacerbated by repairs to two berths, SeaExplorer said. Contact Keith Wallis at keithwallis@hotmail.com .

Carriers revamp services amid port congestion in Mexico, Central America

<div class="phx-topic abstract-wrapper">The new network will have a grace period for about three months as the first full port rotations are completed but must then quickly prove it can raise on-time performance to the promised levels, says Maersk’s CEO.</div>

The new network will have a grace period for about three months as the first full port rotations are completed but must then quickly prove it can raise on-time performance to the promised levels, says Maersk’s CEO.

<div class="phx-topic">Gemini Cooperation will have a 13-week window from Feb. 1 to get the new network up and running before partners Maersk and Hapag-Lloyd come under pressure to prove they can deliver on the promised 90% schedule reliability, according to Maersk CEO Vincent Clerc. Clerc told analysts during <a href="https://www.joc.com/article/maersks-existing-fleet-size-sufficient-to-handle-short-term-demand-growth-ceo-5782669">Maersk’s third-quarter earnings</a> call Thursday he was expecting “an orderly transition” as the carrier moves over to Gemini from the 2M Alliance with Mediterranean Shipping Co. and as Hapag-Lloyd exits THE Alliance. But it will take about three months for the new network to stabilize, the CEO noted. “The longest service we have is a 13-week rotation, so it will take about 13 weeks until the last ship and the full cycle of the service is working on the same network, so from February for three months we will live in a hybrid world,” he said. Once the network is stabilized, Clerc said Gemini will need to quickly demonstrate that it is capable of dramatically improving reliability across its network. “The focus is on quality and the common agreement [with partner Hapag-Lloyd] is that doing it right the first time with high quality is going to be cheaper than operating a network with 50% reliability,” he said. “Our first target is to deliver the proof points to customers. Initially we need to have a successful transition into Gemini. We need to deliver the quality in terms of production cost and production quality that we have promised,” Clerc added. “At some point we will see how much value that creates for customers and how we can participate in that.” <h3>No need to discount or price aggressively </h3>During the startup period, Clerc acknowledged that customers signing with Gemini would not accept higher rate levels based simply on a promise of 90% reliability. But he insisted that the carrier would not have to offer discounts to attract customers to the new network. ”In a market that is as volatile as it is today, with the many disruptions that there are, I don’t think that customers will be willing to pay more for higher reliability without having seen what they’re getting,” Clerc said. ”But I see no reason why, when we’re selling a higher quality and higher reliability, we would have to discount or price more aggressively in order to sign up customers,” he added. February will also see the launch of the Premier Alliance, formerly known as THE Alliance, and <a href="https://www.joc.com/article/mscs-global-scale-enables-standalone-network-coverage-5726563">MSC striking off on its own</a> when the 2M Alliance ends. While MSC and the other alliances will focus on providing direct port-to-port services, Gemini will structure its port calls around <a href="https://www.joc.com/article/lofty-reliability-goals-for-gemini-alliance-hang-on-key-service-assumptions-5214653">a “hub-and-spoke” network</a> where Maersk and Hapag-Lloyd control the terminals and the shuttles that will provide onward transport to destination. It is this large transshipment element within the Gemini network that has raised shipper skepticism over the promise of 90% on-time performance, because it typically adds transit time and delays and because, historically, the on-time performance of carriers has been far below that level. Global schedule reliability from January to September this year has been stuck between 50% and 55%, with the average delays for vessels at 5.37 days, according to Sea-Intelligence Maritime Analysis. Maersk’s schedule reliability in September, the most recent data available, was at 55.5% while Hapag-Lloyd had 48.7%. Clerc said teams from Maersk and Hapag-Lloyd conducted exhaustive tests over the past couple of years to determine the efficiency of a hub-and-spoke network before arriving at the 90% reliability figure. “We did not go out with that number lightly,” he said. “The core issue now is to scale this up and then we’ll have to see if there is anything that has not been tested ... but we feel confident we have tested all we could think of in terms of resilience of the product.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Gemini Cooperation will have a 13-week window from Feb. 1 to get the new network up and running before partners Maersk and Hapag-Lloyd come under pressure to prove they can deliver on the promised 90% schedule reliability, according to Maersk CEO Vincent Clerc. Clerc told analysts during Maersk’s third-quarter earnings call Thursday he was expecting “an orderly transition” as the carrier moves over to Gemini from the 2M Alliance with Mediterranean Shipping Co. and as Hapag-Lloyd exits THE Alliance. But it will take about three months for the new network to stabilize, the CEO noted. “The longest service we have is a 13-week rotation, so it will take about 13 weeks until the last ship and the full cycle of the service is working on the same network, so from February for three months we will live in a hybrid world,” he said. Once the network is stabilized, Clerc said Gemini will need to quickly demonstrate that it is capable of dramatically improving reliability across its network. “The focus is on quality and the common agreement [with partner Hapag-Lloyd] is that doing it right the first time with high quality is going to be cheaper than operating a network with 50% reliability,” he said. “Our first target is to deliver the proof points to customers. Initially we need to have a successful transition into Gemini. We need to deliver the quality in terms of production cost and production quality that we have promised,” Clerc added. “At some point we will see how much value that creates for customers and how we can participate in that.” No need to discount or price aggressively During the startup period, Clerc acknowledged that customers signing with Gemini would not accept higher rate levels based simply on a promise of 90% reliability. But he insisted that the carrier would not have to offer discounts to attract customers to the new network. ”In a market that is as volatile as it is today, with the many disruptions that there are, I don’t think that customers will be willing to pay more for higher reliability without having seen what they’re getting,” Clerc said. ”But I see no reason why, when we’re selling a higher quality and higher reliability, we would have to discount or price more aggressively in order to sign up customers,” he added. February will also see the launch of the Premier Alliance, formerly known as THE Alliance, and MSC striking off on its own when the 2M Alliance ends. While MSC and the other alliances will focus on providing direct port-to-port services, Gemini will structure its port calls around a “hub-and-spoke” network where Maersk and Hapag-Lloyd control the terminals and the shuttles that will provide onward transport to destination. It is this large transshipment element within the Gemini network that has raised shipper skepticism over the promise of 90% on-time performance, because it typically adds transit time and delays and because, historically, the on-time performance of carriers has been far below that level. Global schedule reliability from January to September this year has been stuck between 50% and 55%, with the average delays for vessels at 5.37 days, according to Sea-Intelligence Maritime Analysis. Maersk’s schedule reliability in September, the most recent data available, was at 55.5% while Hapag-Lloyd had 48.7%. Clerc said teams from Maersk and Hapag-Lloyd conducted exhaustive tests over the past couple of years to determine the efficiency of a hub-and-spoke network before arriving at the 90% reliability figure. “We did not go out with that number lightly,” he said. “The core issue now is to scale this up and then we’ll have to see if there is anything that has not been tested ... but we feel confident we have tested all we could think of in terms of resilience of the product.” Contact Greg Knowler at greg.knowler@spglobal.com .

Gemini faces 13-week phase-in before 90% reliability promise is tested: Clerc

<div class="phx-topic abstract-wrapper">There is no way to predict when carriers will return to the shorter route between Asia and Europe, and cargo owners want to factor that uncertainty into their long-term rate agreements for 2025.</div>

There is no way to predict when carriers will return to the shorter route between Asia and Europe, and cargo owners want to factor that uncertainty into their long-term rate agreements for 2025.

<div class="phx-topic">The Red Sea will be top of the talking points list for Asia-Europe shippers as they prepare to enter 2025 contract talks with ocean carriers anxious to avoid a repeat of the chronic space constraints and soaring rates experienced through this year’s peak season. While the diversions around the Cape of Good Hope are now firmly established within container shipping supply chains, a hoped-for return to Red Sea/Suez Canal transits at some point next year is likely to cause rates to fall fast as vessel capacity outstrips demand. Asia-Europe shippers are factoring this eventuality into their 2025 contracts, Antonios Rigalos, managing partner at beneficial cargo owner (BCO) network CrossStaff, told the Journal of Commerce this week. “It can be assumed that the situation in the Red Sea will not be solved soon, and it is anticipated carriers will avoid Suez Canal transits for at least the next six months, or even longer next year,” Rigalos said. “This is an unknown for the industry, and the uncertainty we faced this year continues and will be carried over also to 2025,” he added. CrossStaff negotiates contracts with carriers on behalf of its network of BCOs. Rigalos said members want stability in their supply chains through 2025 that they could plan around. “We will apply the same logic as we did at the end of last year in our current agreements that have flexible terms,” he said. “In that way we will be prepared in case the Red Sea reopens and rates fall, while at the same time making sure our terms and conditions are good enough to secure the required space and equipment.” Many European importers begin their annual contract talks with carriers in the fourth quarter of each year, with the fixed-rate deals typically running from January through December. <h3>Avoiding ‘all-baked-in’ rates </h3>Peter Sand, chief analyst at rate benchmarking platform Xeneta, said the Red Sea would be the center of attention for shippers wanting to avoid an all-baked-in rate next year that would need to be renegotiated time and again should rates fall as carriers make a partial or complete return to the shorter route via the Suez Canal. “Every shipper now looking to negotiate long-term rates for 2025 will seek to separate the effect of Red Sea transits resuming from the base rate because that way it will be easier for them to get rid of any surcharges that have been related to the Red Sea,” Sand told the Journal of Commerce. When the Red Sea will be safe for commercial shipping remains anyone’s guess, but Parash Jain, global head of transport and logistics research at HSBC, said the bank’s base case had Red Sea disruptions unwinding in the second half of next year, leading to shipping capacity being released back into the market. Attacks on commercial shipping by Houthi militants operating from southern Yemen have essentially made the Red Sea and Gulf of Aden a no-go zone for vessels since late last year. “Effective capacity growth should exceed 10% in 2025 compared to nominal fleet growth of about 7.6%, while we expect demand growth to moderate to 2.7%,” Jain said in a market update this week. HSBC has forecast that should there be a return to the Red Sea, excess capacity in the market will see the Shanghai Container Freight Index (SCFI) decline 40% year over year in 2025 and fall a further 33% in 2026, although cost inflation will keep rates higher than pre-pandemic levels. <h3>Sharp increase in spot market </h3>As shippers prepare to sit down with carriers and negotiate their long-term rates, they will have noticed a sharp increase in average spot prices on the Asia to North Europe and Mediterranean trade lanes. The rates are rising ahead of carriers rolling out freight-all-kinds (FAK) increases on Nov. 1 that may stick as the market heads for a “mini peak season” ahead of an early Lunar New Year holiday in late January. North Asia to North Europe rates reached $4,100 per FEU this week, up 21% from last week and 230% higher than the same week last year, according to Platts, a sister company of the Journal of Commerce within S&amp;P Global. Asia-Mediterranean average rates this week were also at $4,100/FEU, up 15% over last week and 166% year over year. With longer voyages extending transit times for European goods imported from Asia combining with a Lunar New Year almost two weeks earlier than last year, the recent rally in rates may continue through the fourth quarter. Blank sailings are another factor influencing rate levels as carriers pull capacity management levers to keep prices elevated. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="874fb71b-dde8-4286-b65b-1bef7790a9f3"></dynamic-object></div>Data from visibility provider eeSea shows carriers are so far expected to blank 118,545 TEUs in November on Asia-Europe, representing 10% of available capacity on the trade. That’s about the same as October but a significant jump from 4.5% blanked in September. Total Asia-North Europe capacity — comprising both available and blanked capacity — is expected to be 1.21 million TEUs in November compared with just over 1 million TEUs during the same month last year, according to eeSea. “Some carriers have announced blanked sailings in November as demand lags, but the usual Lunar New Year volume and rate rebound may start earlier than usual as the holiday begins in late January instead of early February this year,” Judah Levine, head of research at Freightos, noted in a market update this week, adding that shippers may start increasing orders early to accommodate longer sailing times. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

The Red Sea will be top of the talking points list for Asia-Europe shippers as they prepare to enter 2025 contract talks with ocean carriers anxious to avoid a repeat of the chronic space constraints and soaring rates experienced through this year’s peak season. While the diversions around the Cape of Good Hope are now firmly established within container shipping supply chains, a hoped-for return to Red Sea/Suez Canal transits at some point next year is likely to cause rates to fall fast as vessel capacity outstrips demand. Asia-Europe shippers are factoring this eventuality into their 2025 contracts, Antonios Rigalos, managing partner at beneficial cargo owner (BCO) network CrossStaff, told the Journal of Commerce this week. “It can be assumed that the situation in the Red Sea will not be solved soon, and it is anticipated carriers will avoid Suez Canal transits for at least the next six months, or even longer next year,” Rigalos said. “This is an unknown for the industry, and the uncertainty we faced this year continues and will be carried over also to 2025,” he added. CrossStaff negotiates contracts with carriers on behalf of its network of BCOs. Rigalos said members want stability in their supply chains through 2025 that they could plan around. “We will apply the same logic as we did at the end of last year in our current agreements that have flexible terms,” he said. “In that way we will be prepared in case the Red Sea reopens and rates fall, while at the same time making sure our terms and conditions are good enough to secure the required space and equipment.” Many European importers begin their annual contract talks with carriers in the fourth quarter of each year, with the fixed-rate deals typically running from January through December. Avoiding ‘all-baked-in’ rates Peter Sand, chief analyst at rate benchmarking platform Xeneta, said the Red Sea would be the center of attention for shippers wanting to avoid an all-baked-in rate next year that would need to be renegotiated time and again should rates fall as carriers make a partial or complete return to the shorter route via the Suez Canal. “Every shipper now looking to negotiate long-term rates for 2025 will seek to separate the effect of Red Sea transits resuming from the base rate because that way it will be easier for them to get rid of any surcharges that have been related to the Red Sea,” Sand told the Journal of Commerce. When the Red Sea will be safe for commercial shipping remains anyone’s guess, but Parash Jain, global head of transport and logistics research at HSBC, said the bank’s base case had Red Sea disruptions unwinding in the second half of next year, leading to shipping capacity being released back into the market. Attacks on commercial shipping by Houthi militants operating from southern Yemen have essentially made the Red Sea and Gulf of Aden a no-go zone for vessels since late last year. “Effective capacity growth should exceed 10% in 2025 compared to nominal fleet growth of about 7.6%, while we expect demand growth to moderate to 2.7%,” Jain said in a market update this week. HSBC has forecast that should there be a return to the Red Sea, excess capacity in the market will see the Shanghai Container Freight Index (SCFI) decline 40% year over year in 2025 and fall a further 33% in 2026, although cost inflation will keep rates higher than pre-pandemic levels. Sharp increase in spot market As shippers prepare to sit down with carriers and negotiate their long-term rates, they will have noticed a sharp increase in average spot prices on the Asia to North Europe and Mediterranean trade lanes. The rates are rising ahead of carriers rolling out freight-all-kinds (FAK) increases on Nov. 1 that may stick as the market heads for a “mini peak season” ahead of an early Lunar New Year holiday in late January. North Asia to North Europe rates reached $4,100 per FEU this week, up 21% from last week and 230% higher than the same week last year, according to Platts, a sister company of the Journal of Commerce within S&P Global. Asia-Mediterranean average rates this week were also at $4,100/FEU, up 15% over last week and 166% year over year. With longer voyages extending transit times for European goods imported from Asia combining with a Lunar New Year almost two weeks earlier than last year, the recent rally in rates may continue through the fourth quarter. Blank sailings are another factor influencing rate levels as carriers pull capacity management levers to keep prices elevated. Data from visibility provider eeSea shows carriers are so far expected to blank 118,545 TEUs in November on Asia-Europe, representing 10% of available capacity on the trade. That’s about the same as October but a significant jump from 4.5% blanked in September. Total Asia-North Europe capacity — comprising both available and blanked capacity — is expected to be 1.21 million TEUs in November compared with just over 1 million TEUs during the same month last year, according to eeSea. “Some carriers have announced blanked sailings in November as demand lags, but the usual Lunar New Year volume and rate rebound may start earlier than usual as the holiday begins in late January instead of early February this year,” Judah Levine, head of research at Freightos, noted in a market update this week, adding that shippers may start increasing orders early to accommodate longer sailing times. Contact Greg Knowler at greg.knowler@spglobal.com .

Asia-Europe shippers sail into contract talks with Red Sea top of agenda

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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

SSA Marine Mexico has made significant strides in modernizing its infrastructure at the Port of Manzanillo, investing $15 million to enhance operational efficiency and sustainability at its facilities. This move is part of the company's broader strategy to remain at the forefront of the shipping and logistics industry. •	Strengthening Sustainability with Advanced Technology <figure class="joc_admin__inline-image-position-left joc_admin__inline-image-size-medium" data-figure-size="medium" data-figure-position="left"><img src="/content-assets/1730488295264_Cranes%20arrival%20to%20TEC%20I.png" alt="Cranes arrival to TEC I" class="joc_admin__inline-image-inherit"></figure> In July, SSA Marine Mexico added seven state-of-the-art E-RTG (Electric Rubber-Tired Gantry) cranes to its fleet, valued at $14 million. These advanced cranes were distributed across its two terminals: four cranes were assigned to the Multipurpose Terminal, and three to the Specialized Container Terminal I. What sets these cranes apart is their dual-operation capability, allowing them to function either on electric power or diesel fuel. This innovation plays a critical role in reducing the environmental impact of operations, contributing to a 7% increase in energy efficiency. This efficiency improvement is equivalent to eliminating nearly 4,000 tons of CO2 emissions annually, underscoring SSA Marine Mexico's commitment to sustainability. Through this acquisition, SSA Marine Mexico not only enhances its cargo-handling capabilities but also reinforces its leadership in integrating cutting-edge, eco-friendly technology in the maritime industry. The company continues to push the boundaries of efficiency and sustainability, ensuring long-term value for both its customers and the environment. •	Upgraded Facilities to Meet Growing Demand <figure class="joc_admin__inline-image-position-left joc_admin__inline-image-size-medium" data-figure-size="medium" data-figure-position="left"><img src="/content-assets/1730488350634_Multipurpose%20terminal.png" alt="Multipurpose Terminal" class="joc_admin__inline-image-inherit"></figure> In addition to the new cranes, SSA Marine Mexico has completed crucial modernization and repair work across its Multipurpose Terminal and Specialized Facility at the Port of Manzanillo. This $1 million investment targeted critical infrastructure enhancements, focusing on both structural integrity and operational functionality. Key improvements included leveling approximately 12,000 square meters in the dock area, along with the removal of outdated concrete curbs and asphalt layers. The upgraded space now features high-resistance pavers designed to optimize water drainage and prevent pooling, ensuring safer and more efficient operations. Moreover, the Specialized Facility saw significant upgrades, including the leveling of key warehouse areas to facilitate smoother cargo handling processes. These infrastructure improvements directly enhance the handling of TEUS (Twenty-foot Equivalent Unit containers), further demonstrating SSA Marine Mexico's unwavering commitment to continuous modernization, operational safety, and efficiency. With these initiatives, SSA Marine Mexico is well-positioned to meet the growing demands of the global shipping industry while setting new standards in sustainable port operations. LINK:<a href="https://www.ssamarine.mx/ssa-ing/index" rel="noreferrer" class="joc_admin__link"> https://www.ssamarine.mx/ssa-ing/index</a>

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SSA Marine Mexico Modernizes Facilities with $15 Million Investment 

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">Those companies are combining to get the terminals, talent and technology they need to compete as larger carriers increasingly seek business in their markets. </div>

Those companies are combining to get the terminals, talent and technology they need to compete as larger carriers increasingly seek business in their markets.

<div class="phx-topic">Merger and acquisition activity in the already highly-consolidated US less-than-truckload (LTL) market is picking up speed — not from the top down, but from the bottom up. That could mean new options for shippers trying to find the right home for their LTL freight in a market that has been in flux since <a href="https://www.joc.com/article/us-ltl-sector-growth-efficiencies-still-fueled-by-loss-of-yellow-5715785">Yellow collapsed in July 2023</a>. While large companies such as TFI International and Knight-Swift Transportation Holdings are <a href="https://www.joc.com/article/interest-in-us-ltl-ma-activity-seen-rising-as-2025-approaches-5772881">talking about LTL acquisitions</a>, small carriers are expanding by acquisition, too. “I think if you’re not growing, you’re sinking,” Mike Moran, president of Moran Transportation, told the Journal of Commerce this week. “If you don’t maintain a certain size and a certain growth rate, you’ll have a hard time competing in this market.” Chicago-based Moran Transportation on Tuesday said it was buying RMX Freight Systems, another small LTL provider, expanding its coverage area, terminals and workforce. Terms of the deal were not disclosed, but it adds three states to Moran’s service map, bringing its total number of terminals to 12 and its truck fleet to 675 vehicles. Moran will now have coverage from points in the Dakotas and Missouri in the West to Ohio and points in Kentucky and West Virginia in the East. The Moran-RMX combination is the latest in a string of acquisitions quietly reshaping the lower tier of LTL providers as defined by revenue, further consolidating the sector. Smaller carriers were among the fastest-growing LTL companies in 2023, and acquisitions propelled that growth. CrossCountry Freight Solutions, for example, was ranked 40th among US LTL carriers in 2020, but in <a href="https://www.joc.com/article/journal-of-commerce-rankings-ltl-sector-revenue-drops-despite-yellow-distortion-5199865">2024 rose to 25th place</a> in the Journal of Commerce/SJ Consulting Group rankings thanks to several acquisitions. More recently, DC Logistics acquired the US freight business of GLS, the Netherlands-based parcel carrier, including its LTL assets known as <a href="https://gls-group.com/GROUP/en/GLS-Group-Announces-Strategic-Sale-of-US-Freight-Division-to-DC-Logistics/">Mountain Valley Express</a>. Jack Cooper has expressed interest in purchasing LTL provider <a href="https://www.joc.com/article/standard-forwarding-deal-would-speed-consolidation-among-small-ltl-carriers-5719767">Standard Forwarding</a> from DHL. These companies are combining to get the terminals, talent and technology they need to compete as larger carriers increasingly seek business in regional markets, said Satish Jindel, president of transportation research firm SJ Consulting Group. “As a small carrier, it’s increasingly difficult to have all of the ‘three Ts’ — terminals, talent and technology,” Jindel said. “There are more of these small acquisitions coming.” <h3>Shrinking LTL pool for shippers </h3>Moran believes smaller carriers are part of a value proposition for shippers that is increasingly under threat. “The largest LTL carriers command a sizable chunk of the market,” he said. “I tell my customers that when the big carriers are the last ones left standing, you will pay whatever they want.” And large carriers are <a href="https://www.joc.com/article/us-ltl-carriers-raising-rates-as-shippers-keep-wary-eye-on-2025-5782152">pressing for rate hikes</a> in 2025. The 40 largest LTL carriers account for 91.8% of total LTL sector revenue of $56.6 billion, according to the Journal of Commerce/SJ Consulting Group rankings. Already, pressure is growing on the smallest LTL carriers to “join or die,” according to Jindel. “Shippers are reducing the number of carriers they work with, and if you have only three or four states in your service area, it’s going to be harder to compete,” he said. Still, that doesn’t mean smaller carriers are the cheaper alternative. “We target customers who demand high-quality service in our market, but we won’t haul for free,” Moran said. “There’s definitely a market for commoditized carriers, but that’s not our world.” With about $50 million in annual revenue this year, Moran Transportation is too small to be ranked among the Journal of Commerce/SJ Consulting Group list of Top 40 LTL carriers, but the company may get there. Moran said he had looked at six to eight potential acquisitions before deciding on RMX. “We’re in acquisition mode,” Moran said. “We’re looking and talking and trying to find the next acquisition to build density in our network and to grow where we want to grow.” Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

Merger and acquisition activity in the already highly-consolidated US less-than-truckload (LTL) market is picking up speed — not from the top down, but from the bottom up. That could mean new options for shippers trying to find the right home for their LTL freight in a market that has been in flux since Yellow collapsed in July 2023 . While large companies such as TFI International and Knight-Swift Transportation Holdings are talking about LTL acquisitions , small carriers are expanding by acquisition, too. “I think if you’re not growing, you’re sinking,” Mike Moran, president of Moran Transportation, told the Journal of Commerce this week. “If you don’t maintain a certain size and a certain growth rate, you’ll have a hard time competing in this market.” Chicago-based Moran Transportation on Tuesday said it was buying RMX Freight Systems, another small LTL provider, expanding its coverage area, terminals and workforce. Terms of the deal were not disclosed, but it adds three states to Moran’s service map, bringing its total number of terminals to 12 and its truck fleet to 675 vehicles. Moran will now have coverage from points in the Dakotas and Missouri in the West to Ohio and points in Kentucky and West Virginia in the East. The Moran-RMX combination is the latest in a string of acquisitions quietly reshaping the lower tier of LTL providers as defined by revenue, further consolidating the sector. Smaller carriers were among the fastest-growing LTL companies in 2023, and acquisitions propelled that growth. CrossCountry Freight Solutions, for example, was ranked 40th among US LTL carriers in 2020, but in 2024 rose to 25th place in the Journal of Commerce/SJ Consulting Group rankings thanks to several acquisitions. More recently, DC Logistics acquired the US freight business of GLS, the Netherlands-based parcel carrier, including its LTL assets known as Mountain Valley Express . Jack Cooper has expressed interest in purchasing LTL provider Standard Forwarding from DHL. These companies are combining to get the terminals, talent and technology they need to compete as larger carriers increasingly seek business in regional markets, said Satish Jindel, president of transportation research firm SJ Consulting Group. “As a small carrier, it’s increasingly difficult to have all of the ‘three Ts’ — terminals, talent and technology,” Jindel said. “There are more of these small acquisitions coming.” Shrinking LTL pool for shippers Moran believes smaller carriers are part of a value proposition for shippers that is increasingly under threat. “The largest LTL carriers command a sizable chunk of the market,” he said. “I tell my customers that when the big carriers are the last ones left standing, you will pay whatever they want.” And large carriers are pressing for rate hikes in 2025. The 40 largest LTL carriers account for 91.8% of total LTL sector revenue of $56.6 billion, according to the Journal of Commerce/SJ Consulting Group rankings. Already, pressure is growing on the smallest LTL carriers to “join or die,” according to Jindel. “Shippers are reducing the number of carriers they work with, and if you have only three or four states in your service area, it’s going to be harder to compete,” he said. Still, that doesn’t mean smaller carriers are the cheaper alternative. “We target customers who demand high-quality service in our market, but we won’t haul for free,” Moran said. “There’s definitely a market for commoditized carriers, but that’s not our world.” With about $50 million in annual revenue this year, Moran Transportation is too small to be ranked among the Journal of Commerce/SJ Consulting Group list of Top 40 LTL carriers, but the company may get there. Moran said he had looked at six to eight potential acquisitions before deciding on RMX. “We’re in acquisition mode,” Moran said. “We’re looking and talking and trying to find the next acquisition to build density in our network and to grow where we want to grow.” Contact William B. Cassidy at bill.cassidy@spglobal.com .

Smaller US LTL carriers increasingly merging in ‘sink or swim’ market

<div class="phx-topic abstract-wrapper">Less-than-truckload volumes may be down as much as 15% from 2021, but carriers are pushing for rate hikes in single-digit percentages as they plan expansion. </div>

Less-than-truckload volumes may be down as much as 15% from 2021, but carriers are pushing for rate hikes in single-digit percentages as they plan expansion.

<div class="phx-topic">US freight demand may be soft, but less-than-truckload (LTL) carriers are defying a two-year freight slump and increasing contractual pricing heading into 2025. Several large publicly-owned LTL providers have reported third-quarter contract renewal rates rising by anywhere from low single-digit to high single-digit percentages. That’s surprising in a market where LTL shipments overall are down and excess capacity at large carriers is heading toward 30%. LTL carriers also continue to invest in terminals, opening facilities bought from Yellow <a href="https://www.joc.com/article/yellow-puts-remaining-112-ltl-terminals-on-the-block-5737425">as they plan for long-term expansion</a>. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="458dda45-1e1c-4de2-9960-9b02e4cb2804"></dynamic-object></div>LTL’s pricing surge still stems from the July 2023 collapse of Yellow, at the time the third-largest US LTL provider, which cut into overall capacity in the sector. LTL carriers also have kept pricing discipline, eschewing discounts. Those carriers that have tried lower pricing face tough margin pressure from rising operating costs. An LTL shipper that did not want to be identified said carriers are still very selective when it comes to the freight they haul, despite overall soft demand. LTL providers are more strictly monitoring shipment dimensions and refusing lower margin freight, the source said. <h3>Single-digit rate hikes </h3>Long-haul LTL carriers Saia and XPO both reported contract rates rising in the high single-digit range year over year in the third quarter, with Saia fixing its average gain at 7.9%. That’s also the amount of the 2025 general rate increase Saia announced this week. Old Dominion Freight Line (ODFL), the second-largest US LTL provider, said it expects LTL yield excluding surcharges, a measure that often substitutes for rates, to rise by approximately 4% in the fourth quarter.Excluding fuel, ODFL’s yield, or revenue per hundredweight, rose 4.6% in the third quarter from a year ago. “We expect to continue to get increases,” CFO Adam Satterfield told Wall Street analysts last week. Overall, LTL tonnage is down about 15% from a peak in the second quarter of 2021, according to ODFL. However, the US LTL producer price index (PPI), a measure of all-inclusive LTL selling prices, is up 6.6% from its latest trough in April 2023 and 5.2% from Yellow’s collapse. The ongoing LTL pricing gains also suggest that US shippers are concerned about securing adequate capacity ahead of stronger freight demand. “When freight starts coming back, we’ll have the cycle for all cycles in LTL in terms of volume and yield and not having enough capacity,” XPO CEO Mario Harik told the Journal of Commerce Wednesday. <h3>Waiting for a new tide </h3>ODFL, XPO and Saia expect a gradual increase in LTL freight demand as lower interest rates generate more freight across manufacturing and retail sectors. “The tide is finally coming back in,” Satterfield told Wall Street analysts. He referred to LTL freight that had shifted to the truckload market in the past two years, where rates are considerably lower. After Yellow collapsed, “I think people were just trying to find a home for freight,” Satterfield said. “So now we’re seeing an influx of business coming back, and once we renormalize, we’d expect that we’ll be able to pick up quite a bit of freight,” he said. ODFL’s daily shipment count dropped 3.4% year over year in the third quarter to 47,967 shipments a day on average, the company said. For the first nine months of 2024, the average daily shipment count was flat year over year at 47,781 shipments. Average daily volume at XPO fell 3.2% in the quarter to 51,921 shipments, while the volume count rose 1.9% year over year in the past nine months, to 52,281 shipments. Saia increased its daily volume by 8.5% from the year-ago quarter to 37,200 shipments. The carrier raised its revenue 8.6% to $841 million, a new third-quarter record for the company. Saia, now the seventh-largest LTL carrier ranked by revenue, has grown at a rapid rate over the past year, picking up business from Yellow and purchasing 28 terminals from the bankrupt company. Its volume growth began to slow after the anniversary of Yellow’s exit, but growth continues. Shipments per day at Saia are up about 4% in October to date after rising 8.6% year over year in September, Saia CFO Matthew Batteh said during an earnings call last week. “Freight moves around a little bit when you take the rate increase at times,” Batteh said. “With the macro backdrop where it is, there are customers that may go find other options. And we’re willing to let that walk. We’re not going to go chase that.” Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

US freight demand may be soft, but less-than-truckload (LTL) carriers are defying a two-year freight slump and increasing contractual pricing heading into 2025. Several large publicly-owned LTL providers have reported third-quarter contract renewal rates rising by anywhere from low single-digit to high single-digit percentages. That’s surprising in a market where LTL shipments overall are down and excess capacity at large carriers is heading toward 30%. LTL carriers also continue to invest in terminals, opening facilities bought from Yellow as they plan for long-term expansion . LTL’s pricing surge still stems from the July 2023 collapse of Yellow, at the time the third-largest US LTL provider, which cut into overall capacity in the sector. LTL carriers also have kept pricing discipline, eschewing discounts. Those carriers that have tried lower pricing face tough margin pressure from rising operating costs. An LTL shipper that did not want to be identified said carriers are still very selective when it comes to the freight they haul, despite overall soft demand. LTL providers are more strictly monitoring shipment dimensions and refusing lower margin freight, the source said. Single-digit rate hikes Long-haul LTL carriers Saia and XPO both reported contract rates rising in the high single-digit range year over year in the third quarter, with Saia fixing its average gain at 7.9%. That’s also the amount of the 2025 general rate increase Saia announced this week. Old Dominion Freight Line (ODFL), the second-largest US LTL provider, said it expects LTL yield excluding surcharges, a measure that often substitutes for rates, to rise by approximately 4% in the fourth quarter. Excluding fuel, ODFL’s yield, or revenue per hundredweight, rose 4.6% in the third quarter from a year ago. “We expect to continue to get increases,” CFO Adam Satterfield told Wall Street analysts last week. Overall, LTL tonnage is down about 15% from a peak in the second quarter of 2021, according to ODFL. However, the US LTL producer price index (PPI), a measure of all-inclusive LTL selling prices, is up 6.6% from its latest trough in April 2023 and 5.2% from Yellow’s collapse. The ongoing LTL pricing gains also suggest that US shippers are concerned about securing adequate capacity ahead of stronger freight demand. “When freight starts coming back, we’ll have the cycle for all cycles in LTL in terms of volume and yield and not having enough capacity,” XPO CEO Mario Harik told the Journal of Commerce Wednesday. Waiting for a new tide ODFL, XPO and Saia expect a gradual increase in LTL freight demand as lower interest rates generate more freight across manufacturing and retail sectors. “The tide is finally coming back in,” Satterfield told Wall Street analysts. He referred to LTL freight that had shifted to the truckload market in the past two years, where rates are considerably lower. After Yellow collapsed, “I think people were just trying to find a home for freight,” Satterfield said. “So now we’re seeing an influx of business coming back, and once we renormalize, we’d expect that we’ll be able to pick up quite a bit of freight,” he said. ODFL’s daily shipment count dropped 3.4% year over year in the third quarter to 47,967 shipments a day on average, the company said. For the first nine months of 2024, the average daily shipment count was flat year over year at 47,781 shipments. Average daily volume at XPO fell 3.2% in the quarter to 51,921 shipments, while the volume count rose 1.9% year over year in the past nine months, to 52,281 shipments. Saia increased its daily volume by 8.5% from the year-ago quarter to 37,200 shipments. The carrier raised its revenue 8.6% to $841 million, a new third-quarter record for the company. Saia, now the seventh-largest LTL carrier ranked by revenue, has grown at a rapid rate over the past year, picking up business from Yellow and purchasing 28 terminals from the bankrupt company. Its volume growth began to slow after the anniversary of Yellow’s exit, but growth continues. Shipments per day at Saia are up about 4% in October to date after rising 8.6% year over year in September, Saia CFO Matthew Batteh said during an earnings call last week. “Freight moves around a little bit when you take the rate increase at times,” Batteh said. “With the macro backdrop where it is, there are customers that may go find other options. And we’re willing to let that walk. We’re not going to go chase that.” Contact William B. Cassidy at bill.cassidy@spglobal.com .

US LTL carriers raising rates as shippers keep wary eye on 2025

<div class="phx-topic abstract-wrapper">Vancouver, Canada’s busiest container port, faces the possibility of a shutdown unless maritime employers and longshore foremen reach a new contract before a Monday deadline. </div>

Vancouver, Canada’s busiest container port, faces the possibility of a shutdown unless maritime employers and longshore foremen reach a new contract before a Monday deadline.

<div class="phx-topic">British Columbia’s maritime employers said Friday they are prepared to lock out longshore foremen by Monday after their union provided a notice to strike, a move that would shut down container operations at Canada’s busiest port The British Columbia Maritime Employers Association (BCMEA) said in a statement it had received a 72-hour notice of a strike from the International Longshore and Warehouse Union 514, representing about 730 longshore foremen throughout the province. In response, the BCMEA said it would “take defensive action in the form of a coastwide lockout” of Local 514 members. “This coastwide lockout will shut down all cargo operations of BCMEA member companies across the province,” the statement said, adding that cruise and grain vessels will still be worked. “We did not arrive at this decision lightly,” BCMEA said. “This regretful action follows thorough consideration of ILWU Local 514’s continued intransigence and their provocative decision to proceed with another strike notice, despite being found to have been bargaining in bad faith on three occasions.” Weekend talks to avert a strike have not been scheduled. The potential for the Port of Vancouver, Canada’s largest container port, to shut down comes as the country already faces container capacity constraints on its East Coast. Longshoremen have <a href="https://www.joc.com/article/montreal-warns-of-vessel-diversions-as-strike-against-msc-terminals-begins-5783311">stopped working at two container terminals at the Port of Montreal</a>, knocking about half of the capacity offline at Canada’s second-busiest container gateway. The Canada Industrial Relations Board (CIRB) last week ruled that <a href="https://www.joc.com/article/bc-longshore-foremen-bargained-in-bad-faith-canada-labor-board-5773465">Local 514 bargained in bad faith when it held a strike vote targeting just Vancouver’s DP World Centerm facility</a>. Union foremen have been upset about the potential for <a href="https://www.joc.com/article/dp-worlds-centerm-project-heart-employer-union-dispute-vancouver_20240517.html">staffing changes due to the introduction of semi-automated cranes at the facility</a>. A coastwide lockout or strike would also shut down DP World’s Fairview container terminal in Prince Rupert and the GCT Deltaport and Vanterm terminals in Vancouver, effectively shuttering 5 million TEUs of terminal capacity along North America’s West Coast. Four container ships are scheduled to arrive at the Port of Vancouver during the coming week, according to Sea-web, a sister product of the Journal of Commerce within S&amp;P Global. Another three are scheduled to call Prince Rupert. Should a lockout or strike occur at Vancouver and Prince Rupert, it could put more pressure on the ports of Seattle and Tacoma, which have been <a href="https://www.joc.com/article/pnw-ports-say-ready-for-strike-linked-cargo-diversions-from-east-gulf-coasts-5736661">digging out from higher-than-anticipated volumes from cargo diversions linked to the brief longshore strike along the US East and Gulf coasts</a>. Local 514 has been working without a collective bargaining agreement since March 2023. The BCMEA said it met this week with Local 514 for talks overseen by government mediators. The employer’s group said that its “balanced and competitive final offer” to longshore foremen of a 19.2% raise over four years would bring median wages to C$293,617 per year. “It will provide all forepersons with significant gains in wages and benefits without concession requests from employers,” the BCMEA said. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

British Columbia’s maritime employers said Friday they are prepared to lock out longshore foremen by Monday after their union provided a notice to strike, a move that would shut down container operations at Canada’s busiest port The British Columbia Maritime Employers Association (BCMEA) said in a statement it had received a 72-hour notice of a strike from the International Longshore and Warehouse Union 514, representing about 730 longshore foremen throughout the province. In response, the BCMEA said it would “take defensive action in the form of a coastwide lockout” of Local 514 members. “This coastwide lockout will shut down all cargo operations of BCMEA member companies across the province,” the statement said, adding that cruise and grain vessels will still be worked. “We did not arrive at this decision lightly,” BCMEA said. “This regretful action follows thorough consideration of ILWU Local 514’s continued intransigence and their provocative decision to proceed with another strike notice, despite being found to have been bargaining in bad faith on three occasions.” Weekend talks to avert a strike have not been scheduled. The potential for the Port of Vancouver, Canada’s largest container port, to shut down comes as the country already faces container capacity constraints on its East Coast. Longshoremen have stopped working at two container terminals at the Port of Montreal , knocking about half of the capacity offline at Canada’s second-busiest container gateway. The Canada Industrial Relations Board (CIRB) last week ruled that Local 514 bargained in bad faith when it held a strike vote targeting just Vancouver’s DP World Centerm facility . Union foremen have been upset about the potential for staffing changes due to the introduction of semi-automated cranes at the facility . A coastwide lockout or strike would also shut down DP World’s Fairview container terminal in Prince Rupert and the GCT Deltaport and Vanterm terminals in Vancouver, effectively shuttering 5 million TEUs of terminal capacity along North America’s West Coast. Four container ships are scheduled to arrive at the Port of Vancouver during the coming week, according to Sea-web, a sister product of the Journal of Commerce within S&P Global. Another three are scheduled to call Prince Rupert. Should a lockout or strike occur at Vancouver and Prince Rupert, it could put more pressure on the ports of Seattle and Tacoma, which have been digging out from higher-than-anticipated volumes from cargo diversions linked to the brief longshore strike along the US East and Gulf coasts . Local 514 has been working without a collective bargaining agreement since March 2023. The BCMEA said it met this week with Local 514 for talks overseen by government mediators. The employer’s group said that its “balanced and competitive final offer” to longshore foremen of a 19.2% raise over four years would bring median wages to C$293,617 per year. “It will provide all forepersons with significant gains in wages and benefits without concession requests from employers,” the BCMEA said. Contact Michael Angell at michael.angell@spglobal.com .

BC container ports ready to lock out longshore foremen after strike vote

<div class="phx-topic abstract-wrapper">Import demand from Asia, which typically tapers ahead of Black Friday sales, is holding steady, fueled by resilient retail sales, tariff concerns and the mid-January expiration of the tentative ILA labor agreement.</div>

Import demand from Asia, which typically tapers ahead of Black Friday sales, is holding steady, fueled by resilient retail sales, tariff concerns and the mid-January expiration of the tentative ILA labor agreement.

<div class="phx-topic">An extended peak season on the eastbound trans-Pacific is manifesting in unusual strength for imports from Asia, coming as carriers signal atypically low blank sailings for November and seek higher rates. Import demand from Asia, which typically tapers ahead of Black Friday sales, is holding steady, fueled by resilient retail sales, tariff concerns and the mid-January expiration of the tentative labor agreement at US East and Gulf coast ports. About 5.4% of the total capacity into the West Coast is forecast as of now to be blanked in November, according to data from maritime intelligence firm eeSea. The figure is about 8.1% on the East Coast. That’s down from the 11.5% blanked capacity observed in November of 2023 for ex-Asia imports into both regions. Next month’s blanks are down sharply from 16% to the West Coast and 21% to the East Coast in October, according to the eeSea data. “What we are seeing is a fairly robust November,” a carrier executive who did not want to be identified told the Journal of Commerce Wednesday. “For four weeks out, bookings look strong.” <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="1c1d9578-c129-4d4e-a136-e220473bd136"></dynamic-object></div>And that is keeping rates afloat and far higher than where they were a year ago. The spot/freight-all-kinds (FAK) rate from Asia to the West Coast as of Oct. 28 was $4,200 per FEU, up 133% year over year, according to Platts, a sister company of the Journal of Commerce within S&amp;P Global. The East Coast rate of $4,300 per FEU is up 87% from October 2023. Despite the elevated rates, carriers are notifying forwarders of general rate increases (GRIs) of about $500 to $600 per FEU they will attempt to pass on from Nov. 1. Normally, spot and FAK rates drop in the final two months of the year after holiday merchandise has been shipped from Asia. Peak season demand and vessel load factors have been strong this summer and fall. US imports from Asia in September totaled 1.72 million TEUs, up 16.7% year over year and hovering near a two-year high, according to PIERS, a sister product of the Journal of Commerce within S&amp;P Global. Forwarders and carriers say import volumes have remained robust in October. “I think carriers are surprised at how full they were in October,” said Rachel Shames, vice president of pricing and procurement at the forwarder CV International. The National Retail Federation’s Global Port Tracker has <a href="https://www.joc.com/article/us-retailers-expect-modest-import-bump-in-october-to-close-out-peak-season-5745363">forecast a year-over-year increase of 3.1% in US imports in October</a>. “Ships are full, especially to the West Coast,” said a second US-based carrier executive. <h3>Several factors driving trans-Pac demand </h3>Forwarders attribute the strong volumes to the frontloading of shipments to East and Gulf coast ports ahead of a possible second strike by the International Longshoremen’s Association (ILA) <a href="https://www.joc.com/article/ila-usmx-say-to-resume-talks-on-new-master-contract-in-november-5778794">when its extended contract expires on Jan. 15</a>. Retailers are also concerned about a possible <a href="https://www.joc.com/article/potential-trump-tariffs-would-reset-business-strategy-for-us-importers-analyst-5765307">spike in tariffs on imports from China</a>, depending on the outcome of Tuesday’s US presidential election. The frontloading of spring merchandise before an early Lunar New Year in Asia on Jan. 29 is also keeping imports strong. “There’s a triple convergence of events,” said James Caradonna, executive vice president at the forwarder M&amp;R Spedag Group. Caradonna said some retailers are content to bring merchandise into their warehouses early and pay the storage fees rather than risk having their freight caught up in supply chain bottlenecks. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e7a65aab-9aac-4f07-9b74-1793746c01ef"></dynamic-object></div>The combination of strong demand and the modest blank sailings from Asian load ports is keeping vessel space tight. “There’s definitely some tightening,” said Kurt McElroy, executive vice president of the forwarder Kerry Apex. “[Customers] are booking two to three weeks in advance, especially from South China.” <h3>‘Erosion’ in peak season surcharges </h3>Forwarders and carriers told the Journal of Commerce that because vessel space is likely to remain tight through November and into December, peak season surcharges (PSSs), which are applied to fixed-rate contracts known as named-account (NAC) rates, are likely to remain in play even though the eastbound trans-Pacific is technically not in the traditional peak season. However, the $2,000 PSS that many forwarders have been paying since May 1 is softening. The first carrier executive said PSSs effective Nov. 1 are in the market at about $1,800 per FEU, with other carriers charging $1,000 to $1,200 per FEU. “We’ve seen erosion,” the source said. “[Customers] are putting a lot of pressure on us.” On the other hand, while some carriers are opening up more vessel space for named-account bookings, not all forwarders are getting as much of the lower-priced space as they would like, said Christian Sur, executive vice president for ocean freight contract logistics at the forwarder Unique Logistics International. 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>

An extended peak season on the eastbound trans-Pacific is manifesting in unusual strength for imports from Asia, coming as carriers signal atypically low blank sailings for November and seek higher rates. Import demand from Asia, which typically tapers ahead of Black Friday sales, is holding steady, fueled by resilient retail sales, tariff concerns and the mid-January expiration of the tentative labor agreement at US East and Gulf coast ports. About 5.4% of the total capacity into the West Coast is forecast as of now to be blanked in November, according to data from maritime intelligence firm eeSea. The figure is about 8.1% on the East Coast. That’s down from the 11.5% blanked capacity observed in November of 2023 for ex-Asia imports into both regions. Next month’s blanks are down sharply from 16% to the West Coast and 21% to the East Coast in October, according to the eeSea data. “What we are seeing is a fairly robust November,” a carrier executive who did not want to be identified told the Journal of Commerce Wednesday. “For four weeks out, bookings look strong.” And that is keeping rates afloat and far higher than where they were a year ago. The spot/freight-all-kinds (FAK) rate from Asia to the West Coast as of Oct. 28 was $4,200 per FEU, up 133% year over year, according to Platts, a sister company of the Journal of Commerce within S&P Global. The East Coast rate of $4,300 per FEU is up 87% from October 2023. Despite the elevated rates, carriers are notifying forwarders of general rate increases (GRIs) of about $500 to $600 per FEU they will attempt to pass on from Nov. 1. Normally, spot and FAK rates drop in the final two months of the year after holiday merchandise has been shipped from Asia. Peak season demand and vessel load factors have been strong this summer and fall. US imports from Asia in September totaled 1.72 million TEUs, up 16.7% year over year and hovering near a two-year high, according to PIERS, a sister product of the Journal of Commerce within S&P Global. Forwarders and carriers say import volumes have remained robust in October. “I think carriers are surprised at how full they were in October,” said Rachel Shames, vice president of pricing and procurement at the forwarder CV International. The National Retail Federation’s Global Port Tracker has forecast a year-over-year increase of 3.1% in US imports in October . “Ships are full, especially to the West Coast,” said a second US-based carrier executive. Several factors driving trans-Pac demand Forwarders attribute the strong volumes to the frontloading of shipments to East and Gulf coast ports ahead of a possible second strike by the International Longshoremen’s Association (ILA) when its extended contract expires on Jan. 15 . Retailers are also concerned about a possible spike in tariffs on imports from China , depending on the outcome of Tuesday’s US presidential election. The frontloading of spring merchandise before an early Lunar New Year in Asia on Jan. 29 is also keeping imports strong. “There’s a triple convergence of events,” said James Caradonna, executive vice president at the forwarder M&R Spedag Group. Caradonna said some retailers are content to bring merchandise into their warehouses early and pay the storage fees rather than risk having their freight caught up in supply chain bottlenecks. The combination of strong demand and the modest blank sailings from Asian load ports is keeping vessel space tight. “There’s definitely some tightening,” said Kurt McElroy, executive vice president of the forwarder Kerry Apex. “[Customers] are booking two to three weeks in advance, especially from South China.” ‘Erosion’ in peak season surcharges Forwarders and carriers told the Journal of Commerce that because vessel space is likely to remain tight through November and into December, peak season surcharges (PSSs), which are applied to fixed-rate contracts known as named-account (NAC) rates, are likely to remain in play even though the eastbound trans-Pacific is technically not in the traditional peak season. However, the $2,000 PSS that many forwarders have been paying since May 1 is softening. The first carrier executive said PSSs effective Nov. 1 are in the market at about $1,800 per FEU, with other carriers charging $1,000 to $1,200 per FEU. “We’ve seen erosion,” the source said. “[Customers] are putting a lot of pressure on us.” On the other hand, while some carriers are opening up more vessel space for named-account bookings, not all forwarders are getting as much of the lower-priced space as they would like, said Christian Sur, executive vice president for ocean freight contract logistics at the forwarder Unique Logistics International. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .Contact Laura Robb at laura.robb@spglobal.com .

Strong imports, low blanks extend peak season on eastbound trans-Pacific

<div class="phx-topic abstract-wrapper">Maritime employers say they will commence a lockout of the longshore foremen after their union began a threatened strike Monday morning, a move that will force marine terminals in the province to close.</div>

Maritime employers say they will commence a lockout of the longshore foremen after their union began a threatened strike Monday morning, a move that will force marine terminals in the province to close.

<div class="phx-topic">British Columbia’s container ports are set for an indefinite shut down this week as maritime employers planned to lock out longshore foremen after they began a strike Monday. While the lockout would not technically affect other longshore workers, uncertainty about the job actions taken by the foremen’s union will force marine terminals to shutter. The British Columbia Maritime Employers Association (BCMEA) said in a statement Monday that the International Longshore and Warehouse Union (ILWU) 514, representing about 730 longshore foremen, <a href="https://www.joc.com/article/bc-container-ports-ready-to-lock-out-longshore-foremen-after-strike-vote-5784004">began its strike Monday morning at ports across the province</a>. In response, the BCMEA said it would begin a lockout of Local 514 members with Monday’s evening shift and “continuing until further notice.” Canadian labor law requires that employers see strike activity commence before issuing a formal lockout notice. That strike activity could take the form of an actual picket, a refusal to work an overtime shift, or similar job actions. Canada’s Labor Minister Steve MacKinnon said in a statement Saturday that while federal mediators are available, “it is the responsibility of the parties to reach an agreement.” The Vancouver Fraser Port Authority said that it expects disruptions at the Port of Vancouver beginning Monday. Vancouver is Canada’s largest container port. The vessel impact appears limited so far as only one ship, the 12,726-TEU YM Target, is currently at berth in Vancouver, according to Sea-web a sister product of the Journal of Commerce within S&amp;P Global. The 4,250-TEU Cosco Auckland is currently at berth at the Port of Prince Rupert, which would also be affected by a work stoppage. No container ships are sitting at Vancouver’s anchorages due to inclement weather in the region. At least seven container ships are scheduled to call Vancouver through mid-November, Sea-web data shows. Three are expected to call Prince Rupert. Canadian Pacific-Kansas City railroad said in a schedule update Monday that it’s no longer accepting export cargo for Vancouver due to the strike. <h3>Union ‘extremely angry’ about lockout </h3>Local 514 said in a statement last week that its members are “extremely angry” that the BCMEA planned to lock out its members. The union said its members were only planning to refuse overtime work or <a href="https://www.joc.com/article/ilwu-canada-illegal-strike-ruling-averts-vancouver-shutdown-5192250">to implement new technology</a> at the port, rather than a full-blown walkout. The union alleged the lockout is an “attempt to force the federal government to intervene in the dispute.” But the BCMEA said in a Saturday statement that the lockout was a necessary precaution. Canadian labor law allows unions to change from one type of job action to another, creating a risk for a full-blown walkout, BCMEA said. Due to the heavy reliance on overtime shifts for cargo handling, a refusal to work overtime would severely disrupt port operations anyway, and terminals won’t request longshore labor without union supervision. “Once a union commences strike action, the Canada Labor Code has no restrictions on the union subsequently changing the nature of its strike,” the BCMEA said in Saturday’s statement. “For example, a strike may start as an overtime ban and escalate — in minutes, hours or days — to a full-scale strike action without notice, where all workers walk off the job. This potential creates tremendous uncertainty and significant operational and safety challenges for operators.” Local 514 has been working without a collective bargaining agreement since March 2023. The BCMEA is offering longshore foremen a 19.2% raise over four years, <a href="https://www.joc.com/article/ilwu-canada-contract-ratification-ensures-bc-port-peace-5220992">similar to the pay raise accepted by other ILWU longshore workers in Canada</a>. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

British Columbia’s container ports are set for an indefinite shut down this week as maritime employers planned to lock out longshore foremen after they began a strike Monday. While the lockout would not technically affect other longshore workers, uncertainty about the job actions taken by the foremen’s union will force marine terminals to shutter. The British Columbia Maritime Employers Association (BCMEA) said in a statement Monday that the International Longshore and Warehouse Union (ILWU) 514, representing about 730 longshore foremen, began its strike Monday morning at ports across the province . In response, the BCMEA said it would begin a lockout of Local 514 members with Monday’s evening shift and “continuing until further notice.” Canadian labor law requires that employers see strike activity commence before issuing a formal lockout notice. That strike activity could take the form of an actual picket, a refusal to work an overtime shift, or similar job actions. Canada’s Labor Minister Steve MacKinnon said in a statement Saturday that while federal mediators are available, “it is the responsibility of the parties to reach an agreement.” The Vancouver Fraser Port Authority said that it expects disruptions at the Port of Vancouver beginning Monday. Vancouver is Canada’s largest container port. The vessel impact appears limited so far as only one ship, the 12,726-TEU YM Target, is currently at berth in Vancouver, according to Sea-web a sister product of the Journal of Commerce within S&P Global. The 4,250-TEU Cosco Auckland is currently at berth at the Port of Prince Rupert, which would also be affected by a work stoppage. No container ships are sitting at Vancouver’s anchorages due to inclement weather in the region. At least seven container ships are scheduled to call Vancouver through mid-November, Sea-web data shows. Three are expected to call Prince Rupert. Canadian Pacific-Kansas City railroad said in a schedule update Monday that it’s no longer accepting export cargo for Vancouver due to the strike. Union ‘extremely angry’ about lockout Local 514 said in a statement last week that its members are “extremely angry” that the BCMEA planned to lock out its members. The union said its members were only planning to refuse overtime work or to implement new technology at the port, rather than a full-blown walkout. The union alleged the lockout is an “attempt to force the federal government to intervene in the dispute.” But the BCMEA said in a Saturday statement that the lockout was a necessary precaution. Canadian labor law allows unions to change from one type of job action to another, creating a risk for a full-blown walkout, BCMEA said. Due to the heavy reliance on overtime shifts for cargo handling, a refusal to work overtime would severely disrupt port operations anyway, and terminals won’t request longshore labor without union supervision. “Once a union commences strike action, the Canada Labor Code has no restrictions on the union subsequently changing the nature of its strike,” the BCMEA said in Saturday’s statement. “For example, a strike may start as an overtime ban and escalate — in minutes, hours or days — to a full-scale strike action without notice, where all workers walk off the job. This potential creates tremendous uncertainty and significant operational and safety challenges for operators.” Local 514 has been working without a collective bargaining agreement since March 2023. The BCMEA is offering longshore foremen a 19.2% raise over four years, similar to the pay raise accepted by other ILWU longshore workers in Canada . Contact Michael Angell at michael.angell@spglobal.com .

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