<div class="phx-topic abstract-wrapper">The carrier’s CFO pointed to the rising ratio of US retail sales to inventories as a sign that retailers are still bringing in new inventory.</div>

The carrier’s CFO pointed to the rising ratio of US retail sales to inventories as a sign that retailers are still bringing in new inventory.

Feature image

<div class="phx-topic">US import volumes are expected to remain elevated into 2025 amid cargo frontloading driven by labor and tariff concerns, officials at Zim Integrated Shipping Services said Wednesday. Zim CFO Xavier Destriau, during the carrier’s third-quarter conference call, pointed to the rising ratio of US retail sales to inventories, a barometer of available product, as a sign that retailers are still bringing in new inventory, meaning there likely won’t be a sharp drop in volumes early next year. “We see that inventory levels as of today are not abnormal compared to normal inventory levels to be expected at this time of year,” he said. “The demand has been strong and resilient in the US, so we don’t feel too alarmed that there might be inventory buildup going on right now in the US that might bite us back in subsequent quarters into 2025.” The ratio of US retail inventories to sales climbed to 1.42 in September from 1.27 in August, according to US Census Bureau data. The 1.42 level, also observed in February 2023 and February 2021, is the highest since 1.69 in April 2020, the outset of the pandemic. Destriau pointed to implications of a second possible strike by the International Longshoremen’s Association (ILA), the fear of new US tariffs and general seasonality as possible accelerants for the growing inventories. Zim rode the market volatility to a strong performance in the third quarter, reporting its revenues jumped 117% year over year to $2.77 billion. Net income of $1.13 billion was up from a loss of $2.27 billion. Volumes moved by the carrier in the quarter increased 12% to 970,000 TEUs. Some of the profitability in the third quarter was a result of the carrier having more spot capacity on hand after taking a harder line on annual service contract pricing in early 2024 by shifting the typical 50% share of spot volumes up to about 65%, Destriau said. Contact Laura Robb at <a href="mailto:Laura.Robb@spglobal.com">laura.robb@spglobal.com</a>.  </div>

US import volumes are expected to remain elevated into 2025 amid cargo frontloading driven by labor and tariff concerns, officials at Zim Integrated Shipping Services said Wednesday. Zim CFO Xavier Destriau, during the carrier’s third-quarter conference call, pointed to the rising ratio of US retail sales to inventories, a barometer of available product, as a sign that retailers are still bringing in new inventory, meaning there likely won’t be a sharp drop in volumes early next year. “We see that inventory levels as of today are not abnormal compared to normal inventory levels to be expected at this time of year,” he said. “The demand has been strong and resilient in the US, so we don’t feel too alarmed that there might be inventory buildup going on right now in the US that might bite us back in subsequent quarters into 2025.” The ratio of US retail inventories to sales climbed to 1.42 in September from 1.27 in August, according to US Census Bureau data. The 1.42 level, also observed in February 2023 and February 2021, is the highest since 1.69 in April 2020, the outset of the pandemic. Destriau pointed to implications of a second possible strike by the International Longshoremen’s Association (ILA), the fear of new US tariffs and general seasonality as possible accelerants for the growing inventories. Zim rode the market volatility to a strong performance in the third quarter, reporting its revenues jumped 117% year over year to $2.77 billion. Net income of $1.13 billion was up from a loss of $2.27 billion. Volumes moved by the carrier in the quarter increased 12% to 970,000 TEUs. Some of the profitability in the third quarter was a result of the carrier having more spot capacity on hand after taking a harder line on annual service contract pricing in early 2024 by shifting the typical 50% share of spot volumes up to about 65%, Destriau said. Contact Laura Robb at laura.robb@spglobal.com . 

Maritime

Container Shipping News

Cargo push to continue amid mounting market pressures: Zim

<div class="phx-topic abstract-wrapper">Donald Trump has promised to stop US offshore wind projects on “day one” of his administration, but stakeholders say they are cautiously optimistic that momentum from existing projects and leases could help ease his resistance.</div>

Donald Trump has promised to stop US offshore wind projects on “day one” of his administration, but stakeholders say they are cautiously optimistic that momentum from existing projects and leases could help ease his resistance.

<div class="phx-topic">An inadequate domestic supply chain poses greater challenges to developing the US offshore wind sector than politics, a panel of offshore wind and marine transport leaders told attendees at the 2024 Marine Money finance forum in New Orleans. Although US President-elect Donald Trump has promised he would sign an executive order to stop offshore wind projects “on day one” of taking office, panelists said they were cautiously optimistic that momentum from existing projects and leases could help ease the incoming administration’s resistance to offshore wind development.“What I’m interested in is how do we build a domestic supply chain — ports, vessels, people, equipment — capable of doing this? Because this is cutting edge-stuff. And the scale of it is wild,” said Joel Whitman, president of Massachusetts-based services provider Foss Offshore Wind.President Joe Biden set an ambitious target for the US to deploy 30 gigawatts (GW) of offshore wind energy by 2030 — a plan widely considered lofty under any administration. Offshore wind projects are an important cargo source for multipurpose vessels (MPVs) and breakbulk cargo ports. “You’re never going to install at that magnitude,” Whitman said at the forum, held last week. “The number of turbines that have to go in the water can’t even come close to that.” Whitman pointed to coastal New England, where Foss Offshore Wind has been transporting cargo for the 64-turbine Vineyard Wind project. “In Massachusetts, we have two, maybe three of these 30-acre ports that are able to do this,” he said.Whitman said the sector needs a more robust supply chain and regional port facilities to support and move massive offshore wind turbines and equipment.“That’s not a two-year aspiration or even a four-year aspiration,” he said. “That’s a decades-in-the-making aspiration.” <h3>Business case for offshore wind</h3>Jamie Lescinski, the US offshore wind business development director for Dutch marine engineering and project firm Boskalis, said she is “cautiously optimistic” about the offshore wind market given the current pipeline of projects that have been approved through 2028, along with leases that have been auctioned off and are awaiting federal approvals. “Once you hit 2028, you then have more projects that need to be built simultaneously than the supply chain can handle,” she said. When asked what happens if permitting comes to a halt over the next four years, Lescinski said activity levels could drop off at the start of the next decade, noting “2030 is kind of the precipice.” Offshore wind developers stand to benefit from building a rapport with operators and other offshore energy stakeholders that have existing relationships with their state’s Congressional delegates, said Otto Candies III, chairman and CEO of Louisiana-based offshore vessel owner and operator Otto Candies.“I’d love to see developers sit down with the stakeholders and allow us to leverage those relationships into something that can strengthen the industry,” he said.Candies cited Louisiana vessel operators’ long-standing relationships with House Speaker Mike Johnson and Majority Leader Steve Scalise, both Republicans from Louisiana. “Certainly, I know that traditional oil and gas operators want to see that industry flourish,” he said. “It’s another source of business for us, and another way for us to invest some money.” The best-case scenario is a slowdown for the industry, whereas the worst-case scenario is that offshore wind development comes to a halt, said Michael Landry, director of New York-based Liberty Green Logistics. However, Landry said he is optimistic that there are enough projects under way to keep things moving. “We need to look at this as an American industry and leverage our expertise,” he said.The key, Whitman said, will be for the industry to focus on offshore wind as an avenue to US energy independence and job creation, rather than letting the sector’s development become an adversarial proposition for politicians. “I really believe that we are a hard capitalist society,” he said. “There is a lot of money to be made in this industry. The market demand is there.” Contact Autumn Cafiero Giusti at <a href="mailto:autumn@autumngiusti.com">autumn@autumngiusti.com</a>. </div>

An inadequate domestic supply chain poses greater challenges to developing the US offshore wind sector than politics, a panel of offshore wind and marine transport leaders told attendees at the 2024 Marine Money finance forum in New Orleans. Although US President-elect Donald Trump has promised he would sign an executive order to stop offshore wind projects “on day one” of taking office, panelists said they were cautiously optimistic that momentum from existing projects and leases could help ease the incoming administration’s resistance to offshore wind development. “What I’m interested in is how do we build a domestic supply chain — ports, vessels, people, equipment — capable of doing this? Because this is cutting edge-stuff. And the scale of it is wild,” said Joel Whitman, president of Massachusetts-based services provider Foss Offshore Wind. President Joe Biden set an ambitious target for the US to deploy 30 gigawatts (GW) of offshore wind energy by 2030 — a plan widely considered lofty under any administration. Offshore wind projects are an important cargo source for multipurpose vessels (MPVs) and breakbulk cargo ports. “You’re never going to install at that magnitude,” Whitman said at the forum, held last week. “The number of turbines that have to go in the water can’t even come close to that.” Whitman pointed to coastal New England, where Foss Offshore Wind has been transporting cargo for the 64-turbine Vineyard Wind project. “In Massachusetts, we have two, maybe three of these 30-acre ports that are able to do this,” he said. Whitman said the sector needs a more robust supply chain and regional port facilities to support and move massive offshore wind turbines and equipment. “That’s not a two-year aspiration or even a four-year aspiration,” he said. “That’s a decades-in-the-making aspiration.” Business case for offshore wind Jamie Lescinski, the US offshore wind business development director for Dutch marine engineering and project firm Boskalis, said she is “cautiously optimistic” about the offshore wind market given the current pipeline of projects that have been approved through 2028, along with leases that have been auctioned off and are awaiting federal approvals. “Once you hit 2028, you then have more projects that need to be built simultaneously than the supply chain can handle,” she said. When asked what happens if permitting comes to a halt over the next four years, Lescinski said activity levels could drop off at the start of the next decade, noting “2030 is kind of the precipice.” Offshore wind developers stand to benefit from building a rapport with operators and other offshore energy stakeholders that have existing relationships with their state’s Congressional delegates, said Otto Candies III, chairman and CEO of Louisiana-based offshore vessel owner and operator Otto Candies. “I’d love to see developers sit down with the stakeholders and allow us to leverage those relationships into something that can strengthen the industry,” he said. Candies cited Louisiana vessel operators’ long-standing relationships with House Speaker Mike Johnson and Majority Leader Steve Scalise, both Republicans from Louisiana. “Certainly, I know that traditional oil and gas operators want to see that industry flourish,” he said. “It’s another source of business for us, and another way for us to invest some money.” The best-case scenario is a slowdown for the industry, whereas the worst-case scenario is that offshore wind development comes to a halt, said Michael Landry, director of New York-based Liberty Green Logistics. However, Landry said he is optimistic that there are enough projects under way to keep things moving. “We need to look at this as an American industry and leverage our expertise,” he said. The key, Whitman said, will be for the industry to focus on offshore wind as an avenue to US energy independence and job creation, rather than letting the sector’s development become an adversarial proposition for politicians. “I really believe that we are a hard capitalist society,” he said. “There is a lot of money to be made in this industry. The market demand is there.” Contact Autumn Cafiero Giusti at autumn@autumngiusti.com .

Energy projects

Project cargo

Breakbulk News

Supply chain needs compete with political concerns for US offshore wind

<div class="phx-topic abstract-wrapper">Brokers would have to make transaction records, including shipper rates, available to trucking companies electronically and the requirements could supersede non-disclosure agreements, according to a proposed rule from the Federal Motor Carrier Safety Administration. </div>

Brokers would have to make transaction records, including shipper rates, available to trucking companies electronically and the requirements could supersede non-disclosure agreements, according to a proposed rule from the Federal Motor Carrier Safety Administration.

<div class="phx-topic">A regulation that would let US trucking companies access and review rates shippers pay to brokers is moving closer to the books, despite protests by logistics providers. The Federal Motor Carrier Safety Administration (FMCSA) released a proposed rule Wednesday that would amend freight broker recordkeeping requirements established by the Interstate Commerce Commission (ICC) in the 1940s and last amended in 1980. The proposed rule, four years in the making, could create conflict between brokers and shippers that insist on non-disclosure clauses in their contracts. Its potential impact on truckload spot rates is unclear, especially in a market still flush with capacity. “Some motor carriers believe that increased broker transparency would have a material effect on negotiated freight rates,” the FMCSA said in its proposed rulemaking, published in the <a href="https://www.govinfo.gov/content/pkg/FR-2024-11-20/pdf/2024-27115.pdf">Nov. 20 Federal Register</a>. “The agency believes that other market factors, rather than the availability of additional information through broker transparency, are likely dominant in setting freight rates.” The rulemaking would require brokers to keep electronic records of their freight transactions and make those records available to carriers and shippers electronically within 48 hours of a request. The FMCSA is also proposing standards for those transactional records, requiring them to contain all charges and payments connected to the shipment, including a description, amount and date, as well as any claims filed by shippers for damages or delays. The proposal did not outright ban clauses in carrier contracts with brokers waiving what the regulation defines as a “right to review” transaction data. Instead, it changes that carrier “right” to a broker “regulatory obligation” to provide the data. That may negate waivers imposed by brokers, and possibly non-disclosure agreements with shippers. “A regulated entity must adhere to the regulations and cannot disguise its regulatory obligations as contractual ones,” the FMCSA said in its proposal. <h3>A deep-rooted dispute </h3>The rulemaking is rooted in long-running disputes that owner-operators and small trucking firms have with freight brokers over broker margins and rates paid to carriers. In the first half of 2020, when spot rates plunged to as low as $1.32 per mile during the COVID-19 pandemic, many small truckers protested what they claimed was “price gouging” or profiteering by brokers. Those protests led to rulemaking petitions from the Owner-Operator Independent Drivers Association (OOIDA) and the Small Business in Transportation Coalition (SBTC). The FMCSA accepted those petitions and began work on the proposed rule. “We appreciate that FMCSA incorporated input from our petition, including a requirement to make records available electronically and emphasizing that brokers have a duty to comply with regulations,” OOIDA President Todd Spencer said in a statement. But the Transportation Intermediaries Association (TIA), representing brokers and third-party logistics providers, blasted the proposal, calling it “un-American.” “This rule has no place in today’s highly transparent marketplace,” TIA said in a statement. “Regulations like these threaten to erode the foundations of American capitalism, stifling innovation and efficiency.” <h3>Measuring profit margins </h3>It’s no secret that the rates shippers pay to brokers are higher than the rates brokers pay carriers. The difference between those rates is the broker’s gross profit margin. The Journal of Commerce average shipper paid spot rate in October was $2.19 per mile, including fuel surcharges. The DAT Freight &amp; Analytics average US dry van rate with fuel surcharges was $2.02 per mile in the same period — revealing a 17-cent difference. The proposed rule would allow carriers to examine that margin by transaction. If a carrier argues a broker’s margin on a particular load was too high, that carrier could ask for a higher rate for future loads, but the broker could also simply offer loads to another carrier. Brokers argue that the market sets rates. In 2020, as in 2024, there was more supply in the form of drivers and carriers than there was demand for freight, which depressed rates. The FMCSA did not rule out the possibility that motor carriers and shippers could use broker transparency information in rate negotiation with brokers, but will seek further comment on the issue. Comments on the proposal are due on Jan. 21, 2025. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

A regulation that would let US trucking companies access and review rates shippers pay to brokers is moving closer to the books, despite protests by logistics providers. The Federal Motor Carrier Safety Administration (FMCSA) released a proposed rule Wednesday that would amend freight broker recordkeeping requirements established by the Interstate Commerce Commission (ICC) in the 1940s and last amended in 1980. The proposed rule, four years in the making, could create conflict between brokers and shippers that insist on non-disclosure clauses in their contracts. Its potential impact on truckload spot rates is unclear, especially in a market still flush with capacity. “Some motor carriers believe that increased broker transparency would have a material effect on negotiated freight rates,” the FMCSA said in its proposed rulemaking, published in the Nov. 20 Federal Register . “The agency believes that other market factors, rather than the availability of additional information through broker transparency, are likely dominant in setting freight rates.” The rulemaking would require brokers to keep electronic records of their freight transactions and make those records available to carriers and shippers electronically within 48 hours of a request. The FMCSA is also proposing standards for those transactional records, requiring them to contain all charges and payments connected to the shipment, including a description, amount and date, as well as any claims filed by shippers for damages or delays. The proposal did not outright ban clauses in carrier contracts with brokers waiving what the regulation defines as a “right to review” transaction data. Instead, it changes that carrier “right” to a broker “regulatory obligation” to provide the data. That may negate waivers imposed by brokers, and possibly non-disclosure agreements with shippers. “A regulated entity must adhere to the regulations and cannot disguise its regulatory obligations as contractual ones,” the FMCSA said in its proposal. A deep-rooted dispute The rulemaking is rooted in long-running disputes that owner-operators and small trucking firms have with freight brokers over broker margins and rates paid to carriers. In the first half of 2020, when spot rates plunged to as low as $1.32 per mile during the COVID-19 pandemic, many small truckers protested what they claimed was “price gouging” or profiteering by brokers. Those protests led to rulemaking petitions from the Owner-Operator Independent Drivers Association (OOIDA) and the Small Business in Transportation Coalition (SBTC). The FMCSA accepted those petitions and began work on the proposed rule. “We appreciate that FMCSA incorporated input from our petition, including a requirement to make records available electronically and emphasizing that brokers have a duty to comply with regulations,” OOIDA President Todd Spencer said in a statement. But the Transportation Intermediaries Association (TIA), representing brokers and third-party logistics providers, blasted the proposal, calling it “un-American.” “This rule has no place in today’s highly transparent marketplace,” TIA said in a statement. “Regulations like these threaten to erode the foundations of American capitalism, stifling innovation and efficiency.” Measuring profit margins It’s no secret that the rates shippers pay to brokers are higher than the rates brokers pay carriers. The difference between those rates is the broker’s gross profit margin. The Journal of Commerce average shipper paid spot rate in October was $2.19 per mile, including fuel surcharges. The DAT Freight & Analytics average US dry van rate with fuel surcharges was $2.02 per mile in the same period — revealing a 17-cent difference. The proposed rule would allow carriers to examine that margin by transaction. If a carrier argues a broker’s margin on a particular load was too high, that carrier could ask for a higher rate for future loads, but the broker could also simply offer loads to another carrier. Brokers argue that the market sets rates. In 2020, as in 2024, there was more supply in the form of drivers and carriers than there was demand for freight, which depressed rates. The FMCSA did not rule out the possibility that motor carriers and shippers could use broker transparency information in rate negotiation with brokers, but will seek further comment on the issue. Comments on the proposal are due on Jan. 21, 2025. Contact William B. Cassidy at bill.cassidy@spglobal.com .

Transport, Trade and Regulation News

Truckload

Truck brokers

Surface

Regulator proposes tougher transparency requirements for US freight brokers

<div class="phx-topic abstract-wrapper">NVOs will enter 2025 hoping that their experience this year with carriers taking a get-tough approach to their business dealings was merely cyclical, a product of an unusual market following the Red Sea diversions and an early peak season.</div>

NVOs will enter 2025 hoping that their experience this year with carriers taking a get-tough approach to their business dealings was merely cyclical, a product of an unusual market following the Red Sea diversions and an early peak season.

<div class="phx-topic">Non-vessel-operating common carriers (NVOs) will look back on 2024 as a challenging year in two key respects: it was when carriers, seizing on an unexpectedly favorable market, got tough in demanding more spot cargo as a condition for granting contracts to NVOs’ customers, while putting further pressure on NVOs by closely monitoring their adherence to those contracts. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5821197_0.1.jpg"></img></div>“In 2024, ocean carriers began tightening their grip on the market,” analyst Jon Monroe wrote on Nov. 19. “They became more selective with NVOCC contracts, making ‘named account’ deals, [i.e.] contracts reserved for large, high-volume customers, harder to secure.” NVOs will go into 2025 hoping that experience was merely cyclical, a product of an unusual market following the Red Sea diversions and an early peak season. For beneficial cargo owners (BCOs), the idea that NVOs are coming under pressure from carriers is relevant in terms of NVOs’ ability to access vessel space. Indeed, some BCOs have recently raised concerns to the Journal of Commerce about the presence in their NVO contracts of clauses absolving the NVO if space can’t be procured. Unfortunately, there is no guarantee the market will weaken in the New Year even as a glut of capacity threatens to weigh on the market. Some NVOs contacted by the Journal of Commerce believe a softening is likely next year — and may already have begun. But others believe the stretch of good fortune for carriers — seen in a fully deployed fleet and still-elevated spot rates — hasn’t run its course and won’t until the Suez becomes a safe route again, whereupon capacity will pour back into the market. Maersk CEO Vincent Clerc suggested as such in a recent earnings call, <a href="https://www.joc.com/article/scrapping-slow-steaming-demand-will-limit-capacity-overhang-clerc-5785020">noting carriers have untapped levers to forestall overcapacity</a>. Maersk “highlighted that supply discipline in the form of slow steaming, blanked sailings and scrapping could emerge once the market returns to a normal level of profitability,” Parash Jain, HSBC Commercial Banking’s global head of transport and logistics research and a TPM25 speaker, wrote on Nov. 1. <h3>Carriers’ evolving positions on NVO cargo </h3>For NVOs, as long as carriers are in control such that spot rates end up higher than contract rates, carriers will demand more spot market cargo, also called freight-all-kinds (FAK), as the price for granting NVOs’ contract, or named account rates (NAC), for their BCO customers. “The ratio between nominated account rates and FAK rates varies among different carriers. However, we are observing an increasing demand for a more balanced approach as we approach 2025,” meaning carriers seeking a larger share of FAK cargo from NVOs, said Marc Meier, global head of ocean freight at Toll Global Forwarding. Others see an already softening market reflected in carriers’ evolving positions relative to NVO cargo. “Carriers have taken such a policy each year during annual negotiations on NAC rates to request for at least 50-50 on NAC/FAK bookings, but when space is tighter, some even ask for 4 to 1 (FAK to NAC) to even 5 to 1 as happened in June-July of this year,” said Christian Sur, executive vice president for ocean freight/contract logistics at Unique Logistics International. “We are back to more 1 to 1 or even a better ratio to receive NAC space.” Others see it similarly, given that new tonnage deliveries will add 11% to existing capacity by the end of 2024 and another 6% next year, growth only minimally reduced by scrapping at least so far, according to S&amp;P Global Market Intelligence. “NVOCCs could find themselves in a more favorable position in 2025 as the market shifts and carriers face increased competition to fill excess vessel capacity,” Monroe wrote on Nov. 19. “With the surge of available capacity in the ocean freight market, carriers are likely to adopt more flexible and reasonable terms for NVOCCs in order to maintain their vessel utilization.” <h3>Carriers monitoring NVOs’ use of NAC rates </h3>Carriers’ NVO policies this year forced some NVOs to be more aggressive in scrounging up FAK cargo, often from the smaller end of the shipper market that is too small to secure contract rates. But while market cyclicality might make carriers hungry for NVO cargo, what will likely not change so fast is carriers’ increasingly sophisticated monitoring of NVOs’ use of named account rates, especially when spot rates exceed contract rates. That monitoring has disrupted longstanding practice under which NVOs — when contract rates fall below spot rates — utilize named account rates to ship multiple shippers’ cargo, not just the shipper named in the account, thereby taking advantage of lower buy rates than were available on the open market. Not anymore, as carriers have developed technology and systems enabling them to closely monitor NVO named account volumes. When they see commodities or volumes shipped beyond what was agreed in an NAC contract, or the NVO not providing agreed-upon volumes in a given month, they intervene. In a soft market, carriers may pressure NVOs less but won’t stop monitoring the volumes. That is something unlikely to change irrespective of where the market goes. Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>. </div>

Non-vessel-operating common carriers (NVOs) will look back on 2024 as a challenging year in two key respects: it was when carriers, seizing on an unexpectedly favorable market, got tough in demanding more spot cargo as a condition for granting contracts to NVOs’ customers, while putting further pressure on NVOs by closely monitoring their adherence to those contracts. “In 2024, ocean carriers began tightening their grip on the market,” analyst Jon Monroe wrote on Nov. 19. “They became more selective with NVOCC contracts, making ‘named account’ deals, [i.e.] contracts reserved for large, high-volume customers, harder to secure.” NVOs will go into 2025 hoping that experience was merely cyclical, a product of an unusual market following the Red Sea diversions and an early peak season. For beneficial cargo owners (BCOs), the idea that NVOs are coming under pressure from carriers is relevant in terms of NVOs’ ability to access vessel space. Indeed, some BCOs have recently raised concerns to the Journal of Commerce about the presence in their NVO contracts of clauses absolving the NVO if space can’t be procured. Unfortunately, there is no guarantee the market will weaken in the New Year even as a glut of capacity threatens to weigh on the market. Some NVOs contacted by the Journal of Commerce believe a softening is likely next year — and may already have begun. But others believe the stretch of good fortune for carriers — seen in a fully deployed fleet and still-elevated spot rates — hasn’t run its course and won’t until the Suez becomes a safe route again, whereupon capacity will pour back into the market. Maersk CEO Vincent Clerc suggested as such in a recent earnings call, noting carriers have untapped levers to forestall overcapacity . Maersk “highlighted that supply discipline in the form of slow steaming, blanked sailings and scrapping could emerge once the market returns to a normal level of profitability,” Parash Jain, HSBC Commercial Banking’s global head of transport and logistics research and a TPM25 speaker, wrote on Nov. 1. Carriers’ evolving positions on NVO cargo For NVOs, as long as carriers are in control such that spot rates end up higher than contract rates, carriers will demand more spot market cargo, also called freight-all-kinds (FAK), as the price for granting NVOs’ contract, or named account rates (NAC), for their BCO customers. “The ratio between nominated account rates and FAK rates varies among different carriers. However, we are observing an increasing demand for a more balanced approach as we approach 2025,” meaning carriers seeking a larger share of FAK cargo from NVOs, said Marc Meier, global head of ocean freight at Toll Global Forwarding. Others see an already softening market reflected in carriers’ evolving positions relative to NVO cargo. “Carriers have taken such a policy each year during annual negotiations on NAC rates to request for at least 50-50 on NAC/FAK bookings, but when space is tighter, some even ask for 4 to 1 (FAK to NAC) to even 5 to 1 as happened in June-July of this year,” said Christian Sur, executive vice president for ocean freight/contract logistics at Unique Logistics International. “We are back to more 1 to 1 or even a better ratio to receive NAC space.” Others see it similarly, given that new tonnage deliveries will add 11% to existing capacity by the end of 2024 and another 6% next year, growth only minimally reduced by scrapping at least so far, according to S&P Global Market Intelligence. “NVOCCs could find themselves in a more favorable position in 2025 as the market shifts and carriers face increased competition to fill excess vessel capacity,” Monroe wrote on Nov. 19. “With the surge of available capacity in the ocean freight market, carriers are likely to adopt more flexible and reasonable terms for NVOCCs in order to maintain their vessel utilization.” Carriers monitoring NVOs’ use of NAC rates Carriers’ NVO policies this year forced some NVOs to be more aggressive in scrounging up FAK cargo, often from the smaller end of the shipper market that is too small to secure contract rates. But while market cyclicality might make carriers hungry for NVO cargo, what will likely not change so fast is carriers’ increasingly sophisticated monitoring of NVOs’ use of named account rates, especially when spot rates exceed contract rates. That monitoring has disrupted longstanding practice under which NVOs — when contract rates fall below spot rates — utilize named account rates to ship multiple shippers’ cargo, not just the shipper named in the account, thereby taking advantage of lower buy rates than were available on the open market. Not anymore, as carriers have developed technology and systems enabling them to closely monitor NVO named account volumes. When they see commodities or volumes shipped beyond what was agreed in an NAC contract, or the NVO not providing agreed-upon volumes in a given month, they intervene. In a soft market, carriers may pressure NVOs less but won’t stop monitoring the volumes. That is something unlikely to change irrespective of where the market goes. Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

Container lines

Forwarding

NVOs eager to get past carriers’ tight grip on unexpectedly favorable market

<div class="phx-topic abstract-wrapper">MPV operators are hopeful the incoming Trump administration will build on Biden’s support for nuclear power generation, which would boost cargo volumes.</div>

MPV operators are hopeful the incoming Trump administration will build on Biden’s support for nuclear power generation, which would boost cargo volumes.

<div class="phx-topic">A commitment to meeting climate goals even as energy demand escalates is supercharging the outlook for nuclear power as a clean and reliable energy source. A plan to triple the US’ current net nuclear power generation capacity of about 97 gigawatts (GW) by 2050, including building 200 GW of new net capacity, was announced by the Biden administration on Nov. 12. Capacity gains will come from new power plants, upgrades to existing reactors, and reactivated retired reactors. Nuclear projects are a promising source of future cargo for the heavy-lift and multipurpose vessel (MPV) sector.Nuclear power generation enjoys broad bipartisan support, according to the Nuclear Energy Institute, and the first Trump administration supported nuclear power. However, whether the new Trump administration will continue its support is hard to call, as Trump has expressed both support of small modular reactors (SMRs) and skepticism about the sector more broadly, according to power industry publication Utility Dive. While this ambiguity makes the immediate US outlook for the sector difficult to forecast, there is no doubt that new manufacturing, AI and high-performance computing data centers, which need reliable energy 24/7, have the potential to increase total power demand in the US by as much as 20% through 2034 alone, according to a September report from the Department of Energy’s (DOE’s) Office of Nuclear Energy.“Nuclear is one of the few options that can reliably deliver [clean energy] at this scale,” the report said.The data centers necessary to power AI gobble up enormous amounts of electrical power, much of which is currently generated by coal and oil, according to Mason Lester, principal research analyst at S&amp;P Global Commodity Insights. S&amp;P Global is the parent company of the Journal of Commerce.The DOE is providing substantial funding for extending and restarting existing nuclear operations and supporting the development of advanced nuclear or SMRs. Both developments would boost project cargo logistics demand.Managing transport related to refurbishing existing nuclear reactors is not unusual in project logistics, but it is likely to increase in importance as the emphasis shifts from retiring reactors to continuing or even restarting operations. The existing stock of reactors is aging, and many will need significant refurbishment during the 2030s if the goal is to extend their life to 80 years, Lester said.<h3>Heavy funding for SMR startups</h3>Technology giant Microsoft plans to eventually buy power from what is now a retired unit of Constellation Energy’s nuclear facility at Three Mile Island in Pennsylvania. Bringing the facility back to life could cost as much as $1.6 billion, according to Politico subsidiary E&amp;E News.In addition, government and private investors are pouring massive amounts of funding at SMR startups. Amazon, for example, is investing $500 million in several development projects, and the DOE has awarded advanced nuclear power developer TerraPower almost $2 billion for the Natrium SMR project. Bill Gates, a co-founder of TerraPower, has also invested some $1 billion in the company, according to reports from E&amp;E News. Four SMRs are currently in development at the Darlington site in Ontario, Canada, but will not be online until at least 2028, or “more likely 2030,” Lester said. These are test projects, with developers “tweaking as they go,” he explained.The eventual goal is to modularize SMRs, which require the same components as traditional nuclear reactors but on a smaller scale, Lester added.Whether this flush of nuclear enthusiasm will hold depends on whether SMRs can be built quickly and efficiently, Lester said.“There is a lot of money being thrown at nuclear design companies who have never built a reactor but have a design on paper,” he said. If pilot projects are successful, utilities and other power consumers will be deeply interested, “but it’s a matter of getting these first three or four going in North America.”Contact Janet Nodar at <a href="mailto:janet.nodar@spglobal.com">janet.nodar@spglobal.com</a>.</div>

A commitment to meeting climate goals even as energy demand escalates is supercharging the outlook for nuclear power as a clean and reliable energy source. A plan to triple the US’ current net nuclear power generation capacity of about 97 gigawatts (GW) by 2050, including building 200 GW of new net capacity, was announced by the Biden administration on Nov. 12. Capacity gains will come from new power plants, upgrades to existing reactors, and reactivated retired reactors. Nuclear projects are a promising source of future cargo for the heavy-lift and multipurpose vessel (MPV) sector. Nuclear power generation enjoys broad bipartisan support, according to the Nuclear Energy Institute, and the first Trump administration supported nuclear power. However, whether the new Trump administration will continue its support is hard to call, as Trump has expressed both support of small modular reactors (SMRs) and skepticism about the sector more broadly, according to power industry publication Utility Dive. While this ambiguity makes the immediate US outlook for the sector difficult to forecast, there is no doubt that new manufacturing, AI and high-performance computing data centers, which need reliable energy 24/7, have the potential to increase total power demand in the US by as much as 20% through 2034 alone, according to a September report from the Department of Energy’s (DOE’s) Office of Nuclear Energy. “Nuclear is one of the few options that can reliably deliver [clean energy] at this scale,” the report said. The data centers necessary to power AI gobble up enormous amounts of electrical power, much of which is currently generated by coal and oil, according to Mason Lester, principal research analyst at S&P Global Commodity Insights. S&P Global is the parent company of the Journal of Commerce. The DOE is providing substantial funding for extending and restarting existing nuclear operations and supporting the development of advanced nuclear or SMRs. Both developments would boost project cargo logistics demand. Managing transport related to refurbishing existing nuclear reactors is not unusual in project logistics, but it is likely to increase in importance as the emphasis shifts from retiring reactors to continuing or even restarting operations. The existing stock of reactors is aging, and many will need significant refurbishment during the 2030s if the goal is to extend their life to 80 years, Lester said. Heavy funding for SMR startups Technology giant Microsoft plans to eventually buy power from what is now a retired unit of Constellation Energy’s nuclear facility at Three Mile Island in Pennsylvania. Bringing the facility back to life could cost as much as $1.6 billion, according to Politico subsidiary E&E News. In addition, government and private investors are pouring massive amounts of funding at SMR startups. Amazon, for example, is investing $500 million in several development projects, and the DOE has awarded advanced nuclear power developer TerraPower almost $2 billion for the Natrium SMR project. Bill Gates, a co-founder of TerraPower, has also invested some $1 billion in the company, according to reports from E&E News. Four SMRs are currently in development at the Darlington site in Ontario, Canada, but will not be online until at least 2028, or “more likely 2030,” Lester said. These are test projects, with developers “tweaking as they go,” he explained. The eventual goal is to modularize SMRs, which require the same components as traditional nuclear reactors but on a smaller scale, Lester added. Whether this flush of nuclear enthusiasm will hold depends on whether SMRs can be built quickly and efficiently, Lester said. “There is a lot of money being thrown at nuclear design companies who have never built a reactor but have a design on paper,” he said. If pilot projects are successful, utilities and other power consumers will be deeply interested, “but it’s a matter of getting these first three or four going in North America.” Contact Janet Nodar at janet.nodar@spglobal.com .

Breakbulk carriers

Uncertain nuclear outlook in US clouds demand picture for MPV sector

<div class="phx-topic abstract-wrapper">GenLogs, founded by an ex-counterterrorism expert, is offering shippers and brokers a way to track lost trailers and trucks as cargo theft booms in the US. </div>

GenLogs, founded by an ex-counterterrorism expert, is offering shippers and brokers a way to track lost trailers and trucks as cargo theft booms in the US.

<div class="phx-topic">A software vendor in the US truckload industry that provides sales and compliance products to freight brokers and carriers on Wednesday said it is offering a free tracking service to combat cargo theft. The company, Virginia-based GenLogs, said shippers, brokers and carriers can use GenLogs’ growing network of roadside cameras to help locate a missing asset. The company’s core product is designed to help carriers and freight brokers improve their ability to source capacity, find shipper business and vet carriers. As part of the vetting process, the company helps customers manage carrier compliance. GenLogs CEO Ryan Joyce told the Journal of Commerce that the company is currently helping its customers recover approximately 25 assets per week. Those assets include trailers, flatbeds and even entire trucks. “It’s a low lift for us to add a new asset on our alert system,” he said of the new free service for non-customers. North American cargo theft rose nearly 50% year over year in the first half of 2024, according to Overhaul, a global supply chain risk management and intelligence firm. Shippers, carriers or brokers can access the service by sending an identifier — such as a trailer number — by email to GenLogs’ investigation team (<a href="mailto:investigations@genlogs.io">investigations@genlogs.io</a>) or through the company’s “Find My Asset” page on its website. GenLogs will investigate its last known location and set an alert to track it, Joyce said. “Our goal is to remove the bad actors from the industry so that all the good guys can flourish,” Joyce said. GenLogs operates a nationwide network of roadside sensors that passively collect data on every passing truck and equipment pairing. The static sensors, on the sides of interstates, filter out private vehicles and only collect data on vehicles, not drivers, Joyce added. He said the company plans to have its sensors established every one hundred miles on every interstate nationwide in 2025 so that every long-haul shipment is visible at least twice along its journey. Joyce, who had a career in government counterintelligence before founding GenLogs, said the company is taking a similar approach to root out cargo theft. “Our goal is not to merely disrupt criminal networks, but rather completely dismantle them,” he said. Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. </div>

A software vendor in the US truckload industry that provides sales and compliance products to freight brokers and carriers on Wednesday said it is offering a free tracking service to combat cargo theft. The company, Virginia-based GenLogs, said shippers, brokers and carriers can use GenLogs’ growing network of roadside cameras to help locate a missing asset. The company’s core product is designed to help carriers and freight brokers improve their ability to source capacity, find shipper business and vet carriers. As part of the vetting process, the company helps customers manage carrier compliance. GenLogs CEO Ryan Joyce told the Journal of Commerce that the company is currently helping its customers recover approximately 25 assets per week. Those assets include trailers, flatbeds and even entire trucks. “It’s a low lift for us to add a new asset on our alert system,” he said of the new free service for non-customers. North American cargo theft rose nearly 50% year over year in the first half of 2024, according to Overhaul, a global supply chain risk management and intelligence firm. Shippers, carriers or brokers can access the service by sending an identifier — such as a trailer number — by email to GenLogs’ investigation team ( investigations@genlogs.io ) or through the company’s “Find My Asset” page on its website. GenLogs will investigate its last known location and set an alert to track it, Joyce said. “Our goal is to remove the bad actors from the industry so that all the good guys can flourish,” Joyce said. GenLogs operates a nationwide network of roadside sensors that passively collect data on every passing truck and equipment pairing. The static sensors, on the sides of interstates, filter out private vehicles and only collect data on vehicles, not drivers, Joyce added. He said the company plans to have its sensors established every one hundred miles on every interstate nationwide in 2025 so that every long-haul shipment is visible at least twice along its journey. Joyce, who had a career in government counterintelligence before founding GenLogs, said the company is taking a similar approach to root out cargo theft. “Our goal is not to merely disrupt criminal networks, but rather completely dismantle them,” he said. Contact Eric Johnson at eric.johnson@spglobal.com .

Logistics Technology News

Startup technology vendor takes aim at cargo theft with free tracking service

<div class="phx-topic abstract-wrapper">The large fuel tanks needed for low-density alternative fuels could make them a non-starter for multipurpose vessels.</div>

The large fuel tanks needed for low-density alternative fuels could make them a non-starter for multipurpose vessels.

<div class="phx-topic">The “future fuel” dilemma is a 21st century conundrum for shipowners of every type of ship, but perhaps more so for the multipurpose (MPV) and heavy-lift fleet. With their heavy and outsized cargoes, finding room for the larger fuel tanks needed for low-density fuels is a real challenge, which makes emerging fuels hydrogen and ammonia a much tougher option for MPV newbuilds today. Green methanol has potential, but there are caveats to that choice, too. The market is coming to terms with the time it will take to scale up the production and distribution of green methanol. While supplies can and are being secured for some pioneering ship operators, it is likely to be much harder to procure green methanol supplies for tramping MPVs with their variable routings and port calls. However, some carriers are choosing methanol from the newbuild stage, having implemented a “ready” approach with plans to convert. These include AAL with a series of eight 32,000-deadweight ton (dwt) liner-type MPVs, three of which have been delivered; Griegstar and Gearbulk with eight ammonia/methanol-ready 82,300-dwt open-hatch general cargo newbuilds; Skarv with four 7,000-dwt ammonia/methanol-ready project cargo carriers; and SAL’s methanol-ready heavy-lift MPV Orca class. Biofuels offer a more immediate solution for MPV operators, especially for those operating in European Union waters, where from next year FuelEU Maritime regulations will heavily penalize vessels that cannot comply with the requirements for using alternative fuels with lower fossil carbon content. Many owners and operators in the sector have already tested different kinds of biofuels with various “drop-in” ratios. A steep increase in demand for biofuels is expected in the coming years. At DNV, we see benefits in the pooling mechanism allowed in the EU’s FuelEU Maritime regulation to encourage future fuel procurement at scale. This could serve the MPV sector well as an emissions-reduction strategy. This novel approach gives MPV shipowners the option to pool well-to-wake greenhouse gas fuel intensity (GFI) compliance across several ships from the same or different companies. This means that a non-compliant vessel could rely on others in a pool to achieve a compliant combined GFI. This cooperative approach could provide a pathway for MPV operators to secure the benefits of using low- or zero-carbon fuels. <h3>‘New nuclear’ a long-term possibility </h3>Nuclear propulsion as an alternative fuel for MPVs falls in a much longer-term window, in my view. Small modular reactors (SMRs) are still in the testing stage on land for power generation, and it will be many years before they will be ready for commercial use in shipping. Expect to see SMR testing for ultra-large container carriers well before MPVs are ready for new nuclear. The industry is looking closely at the possibilities, however, so at DNV, we have recently joined with companies and stakeholders in the maritime and nuclear sector to explore the technology as part of the new Nuclear Energy Maritime Organization (NEMO). Batteries, as part of hybrid propulsion solutions, are on the rise. We estimate that some 900 ships are operating with batteries systems — from a few fully electric vessels, mainly in operation on short-sea point-to point ferry trades, to varying degrees of hybridization where batteries are combined with generators or fuel cells. Batteries as part of hybrid solutions are a relatively mature technology. Combine this with energy efficiency improvements, improved battery and charging technology, and a decrease in costs, and the economics of hybridization are likely to continue to improve. No matter the fuels, a greener choice will mean higher costs for MPVs. This puts an even greater premium on reducing losses through energy efficiency. Operational and technical energy-efficiency measures we can deploy today can reduce fuel consumption by up to 16%. The business case for these technologies, including wind-assisted propulsion, waste heat recovery, and hybrid systems is very strong compared with the cost of alternative fuels. Carbon capture and storage is a potential — but niche — option for emissions reduction for MPVs, but again the room required on board to store the CO2 is the sticking point. This takes us back to the key limitation of MPVs when switching to lower-density fuels: a lack of onboard space. For now, the most likely solution is that the MPV sector will need to rely on biofuels, dual-fuel and future fuel-ready notations, perhaps with demand aggregation and GFI pooling as we move ahead on the path to zero. Contact Jost Bergmann at <a href="mailto:jost.bergmann@dnv.com">jost.bergmann@dnv.com</a>. DNV is a Norway-based classification society. </div>

The “future fuel” dilemma is a 21st century conundrum for shipowners of every type of ship, but perhaps more so for the multipurpose (MPV) and heavy-lift fleet. With their heavy and outsized cargoes, finding room for the larger fuel tanks needed for low-density fuels is a real challenge, which makes emerging fuels hydrogen and ammonia a much tougher option for MPV newbuilds today. Green methanol has potential, but there are caveats to that choice, too. The market is coming to terms with the time it will take to scale up the production and distribution of green methanol. While supplies can and are being secured for some pioneering ship operators, it is likely to be much harder to procure green methanol supplies for tramping MPVs with their variable routings and port calls. However, some carriers are choosing methanol from the newbuild stage, having implemented a “ready” approach with plans to convert. These include AAL with a series of eight 32,000-deadweight ton (dwt) liner-type MPVs, three of which have been delivered; Griegstar and Gearbulk with eight ammonia/methanol-ready 82,300-dwt open-hatch general cargo newbuilds; Skarv with four 7,000-dwt ammonia/methanol-ready project cargo carriers; and SAL’s methanol-ready heavy-lift MPV Orca class. Biofuels offer a more immediate solution for MPV operators, especially for those operating in European Union waters, where from next year FuelEU Maritime regulations will heavily penalize vessels that cannot comply with the requirements for using alternative fuels with lower fossil carbon content. Many owners and operators in the sector have already tested different kinds of biofuels with various “drop-in” ratios. A steep increase in demand for biofuels is expected in the coming years. At DNV, we see benefits in the pooling mechanism allowed in the EU’s FuelEU Maritime regulation to encourage future fuel procurement at scale. This could serve the MPV sector well as an emissions-reduction strategy. This novel approach gives MPV shipowners the option to pool well-to-wake greenhouse gas fuel intensity (GFI) compliance across several ships from the same or different companies. This means that a non-compliant vessel could rely on others in a pool to achieve a compliant combined GFI. This cooperative approach could provide a pathway for MPV operators to secure the benefits of using low- or zero-carbon fuels. ‘New nuclear’ a long-term possibility Nuclear propulsion as an alternative fuel for MPVs falls in a much longer-term window, in my view. Small modular reactors (SMRs) are still in the testing stage on land for power generation, and it will be many years before they will be ready for commercial use in shipping. Expect to see SMR testing for ultra-large container carriers well before MPVs are ready for new nuclear. The industry is looking closely at the possibilities, however, so at DNV, we have recently joined with companies and stakeholders in the maritime and nuclear sector to explore the technology as part of the new Nuclear Energy Maritime Organization (NEMO). Batteries, as part of hybrid propulsion solutions, are on the rise. We estimate that some 900 ships are operating with batteries systems — from a few fully electric vessels, mainly in operation on short-sea point-to point ferry trades, to varying degrees of hybridization where batteries are combined with generators or fuel cells. Batteries as part of hybrid solutions are a relatively mature technology. Combine this with energy efficiency improvements, improved battery and charging technology, and a decrease in costs, and the economics of hybridization are likely to continue to improve. No matter the fuels, a greener choice will mean higher costs for MPVs. This puts an even greater premium on reducing losses through energy efficiency. Operational and technical energy-efficiency measures we can deploy today can reduce fuel consumption by up to 16%. The business case for these technologies, including wind-assisted propulsion, waste heat recovery, and hybrid systems is very strong compared with the cost of alternative fuels. Carbon capture and storage is a potential — but niche — option for emissions reduction for MPVs, but again the room required on board to store the CO2 is the sticking point. This takes us back to the key limitation of MPVs when switching to lower-density fuels: a lack of onboard space. For now, the most likely solution is that the MPV sector will need to rely on biofuels, dual-fuel and future fuel-ready notations, perhaps with demand aggregation and GFI pooling as we move ahead on the path to zero. Contact Jost Bergmann at jost.bergmann@dnv.com . DNV is a Norway-based classification society.

Heavy-haul transport

MPV fuel challenge complicated by heavy and outsized cargoes

<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

Index

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 {name} {categoryY.formatNumber('#.0%')} 

The JOC Truckload Capacity Index (TCI) measures truck capacity at large, publicly traded trucking companies on a quarterly basis using end-of-quarter truck counts reported within their earnings statements. The index covers a group of full truckload carriers with combined annual revenue of more than $10 billion, using the group’s average truck count in the fourth quarter of 2006, prior to Great Recession of 2007–09, as its base (Q4 2006 = 100). Large truckload carriers represent a core sector of capacity for high-volume shippers.

Truckload capacity index (Journal of Commerce)

JOC Truckload Capacity Index Gateway

<div class="phx-topic abstract-wrapper">Forwarders and industry analysts forecast strong import volumes through the early Lunar New Year that begins Jan. 29 as importers of time-sensitive merchandise and manufacturing components route shipments through the country’s busiest gateway.</div>

Forwarders and industry analysts forecast strong import volumes through the early Lunar New Year that begins Jan. 29 as importers of time-sensitive merchandise and manufacturing components route shipments through the country’s busiest gateway.

<div class="phx-topic">Rail container dwell times at the ports of Los Angeles and Long Beach rose to their highest level in two years last month and will likely remain elevated through January amid higher-than-normal import volumes driven in part by cargo diversions from the US East and Gulf coasts. Rail-destined container dwell times in the largest US port complex increased to an average of 9.86 days in October, up from 9.25 days in September and 8.2 days in August, according to data from the Pacific Merchant Shipping Association (PMSA), which represents terminal operators and shipping lines on the West Coast. “I think dwell times will remain elongated until the rails get some relief on the volumes,” said Lawrence Gross, president and founder of Gross Transportation and a Journal of Commerce analyst. US imports from Asia moving through Los Angeles-Long Beach have been exceptionally strong since the earlier-than-usual peak season began in early summer. Asian imports in the gateway were up 30% in July through September compared with the same period last year, according to PIERS, a Journal of Commerce sister product within S&amp;P Global. “The continued upward trajectory in dwell times through October underscores both the complexity and adaptability of our supply chain as we manage increased cargo volumes and try to balance intermodal equipment availability with demand,” said Natasha Villa, external affairs manager for the PMSA. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="155dedc1-99f2-4adf-a449-1c9ab2510f95"></dynamic-object></div>Forwarders and industry analysts forecast strong import volumes through the early Lunar New Year that begins Jan. 29 as importers of time-sensitive merchandise and manufacturing components route shipments through Los Angeles-Long Beach. Importers are <a href="https://www.joc.com/article/ila-breaks-off-contract-talks-accuses-usmx-of-semi-automation-push-5810392">concerned about the possibility of another strike by the International Longshoremen’s Association (ILA)</a> when its extended contract expires on Jan. 15. Importers are also front-loading shipments in anticipation <a href="https://www.joc.com/article/hapag-lloyd-sees-possible-pre-lny-cargo-rush-amid-very-healthy-demand-5817691">of a large increase in tariffs under the new Trump administration</a>.<h3>Terminals, railroads say rail dwells have peaked </h3>Railroad and terminal operator sources, meanwhile, told the Journal of Commerce that while import volumes will remain higher than normal through January, imports through Southern California peaked last month. Terminal operators are now focusing on relieving the backlog of rail containers that built up in recent months. “It definitely plateaued in October and we’re chipping away at the backlog,” said Alan McCorkle, president of Yusen Terminals in Los Angeles. Rail container dwell times at Long Beach Container Terminal (LBCT) last week were down to about three days, said Anthony Otto, LBCT’s president. “We’re all caught up and things are headed in the right direction,” Otto said. Union Pacific Railroad said the past month has seen significant improvement in Southern California. “So much has changed since October. Today (Nov. 14), Union Pacific’s total LA-LB inventory count is down to its lowest level since mid-July 2024,” a UP spokesperson told the Journal of Commerce. “We have also made significant progress in working with individual port terminals to significantly reduce aged containers.” UP this year has experienced a higher jump in loaded railcars idling. Between January and August, the railroad averaged 68 loaded intermodal railcars idling per week, according to the US Surface Transportation Board (STB). The average grew to 139 in September and 199 in October, although it peaked at 241 in the second week of October. BNSF Railway averaged 221 railcars idling in January through August, 170 in September, and 237 in October, with the peak in the third week of October, according to the STB data. <h3>Shippers still experiencing delays </h3>The upbeat analysis of the terminals and railroads is of little solace to shippers who say they still struggle with delays at the marine terminals. An importer in the automotive sector said he has no recourse but to build a buffer for rail container dwell times into his Southern California supply chain. “We have been doing this for months,” said the importer, who did not want to be identified. “Big guys move quicker, the rest of us slower.” Steve Hughes, president and CEO of the consultancy HCS International, said Southern California is an important gateway for automotive industry imports due to its extensive intermodal rail connections to the eastern half of the US. For many importers, rerouting shipments to other ports is not an option. “If you’re looking for good rail connections, there are not many viable alternatives,” Hughes said, noting that other West Coast gateways such as Seattle-Tacoma and Vancouver are also experiencing rail container dwell issues. Mario Cordero, executive director of the Port of Long Beach, said he feels “very comfortable” about the ability of terminal operators in the port complex to handle the continued high import volumes projected through the Lunar New Year. Cordero noted that Long Beach in October had its busiest month ever in terms of total cargo volume. With Los Angeles this week scheduled to report a strong October, Cordero said the port complex is handling the record volumes without the backlog of 109 container ships it experienced in January 2022. “We [Long Beach] are at 70% of capacity,” he said. “We’re already receiving cargo diverted from the East Coast. If there’s a bump in cargo, we’ll handle it.” Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>.Ari Ashe, Senior Editor, contributed to this story </div>

Rail container dwell times at the ports of Los Angeles and Long Beach rose to their highest level in two years last month and will likely remain elevated through January amid higher-than-normal import volumes driven in part by cargo diversions from the US East and Gulf coasts. Rail-destined container dwell times in the largest US port complex increased to an average of 9.86 days in October, up from 9.25 days in September and 8.2 days in August, according to data from the Pacific Merchant Shipping Association (PMSA), which represents terminal operators and shipping lines on the West Coast. “I think dwell times will remain elongated until the rails get some relief on the volumes,” said Lawrence Gross, president and founder of Gross Transportation and a Journal of Commerce analyst. US imports from Asia moving through Los Angeles-Long Beach have been exceptionally strong since the earlier-than-usual peak season began in early summer. Asian imports in the gateway were up 30% in July through September compared with the same period last year, according to PIERS, a Journal of Commerce sister product within S&P Global. “The continued upward trajectory in dwell times through October underscores both the complexity and adaptability of our supply chain as we manage increased cargo volumes and try to balance intermodal equipment availability with demand,” said Natasha Villa, external affairs manager for the PMSA. Forwarders and industry analysts forecast strong import volumes through the early Lunar New Year that begins Jan. 29 as importers of time-sensitive merchandise and manufacturing components route shipments through Los Angeles-Long Beach. Importers are concerned about the possibility of another strike by the International Longshoremen’s Association (ILA) when its extended contract expires on Jan. 15. Importers are also front-loading shipments in anticipation of a large increase in tariffs under the new Trump administration . Terminals, railroads say rail dwells have peaked Railroad and terminal operator sources, meanwhile, told the Journal of Commerce that while import volumes will remain higher than normal through January, imports through Southern California peaked last month. Terminal operators are now focusing on relieving the backlog of rail containers that built up in recent months. “It definitely plateaued in October and we’re chipping away at the backlog,” said Alan McCorkle, president of Yusen Terminals in Los Angeles. Rail container dwell times at Long Beach Container Terminal (LBCT) last week were down to about three days, said Anthony Otto, LBCT’s president. “We’re all caught up and things are headed in the right direction,” Otto said. Union Pacific Railroad said the past month has seen significant improvement in Southern California. “So much has changed since October. Today (Nov. 14), Union Pacific’s total LA-LB inventory count is down to its lowest level since mid-July 2024,” a UP spokesperson told the Journal of Commerce. “We have also made significant progress in working with individual port terminals to significantly reduce aged containers.” UP this year has experienced a higher jump in loaded railcars idling. Between January and August, the railroad averaged 68 loaded intermodal railcars idling per week, according to the US Surface Transportation Board (STB). The average grew to 139 in September and 199 in October, although it peaked at 241 in the second week of October. BNSF Railway averaged 221 railcars idling in January through August, 170 in September, and 237 in October, with the peak in the third week of October, according to the STB data. Shippers still experiencing delays The upbeat analysis of the terminals and railroads is of little solace to shippers who say they still struggle with delays at the marine terminals. An importer in the automotive sector said he has no recourse but to build a buffer for rail container dwell times into his Southern California supply chain. “We have been doing this for months,” said the importer, who did not want to be identified. “Big guys move quicker, the rest of us slower.” Steve Hughes, president and CEO of the consultancy HCS International, said Southern California is an important gateway for automotive industry imports due to its extensive intermodal rail connections to the eastern half of the US. For many importers, rerouting shipments to other ports is not an option. “If you’re looking for good rail connections, there are not many viable alternatives,” Hughes said, noting that other West Coast gateways such as Seattle-Tacoma and Vancouver are also experiencing rail container dwell issues. Mario Cordero, executive director of the Port of Long Beach, said he feels “very comfortable” about the ability of terminal operators in the port complex to handle the continued high import volumes projected through the Lunar New Year. Cordero noted that Long Beach in October had its busiest month ever in terms of total cargo volume. With Los Angeles this week scheduled to report a strong October, Cordero said the port complex is handling the record volumes without the backlog of 109 container ships it experienced in January 2022. “We [Long Beach] are at 70% of capacity,” he said. “We’re already receiving cargo diverted from the East Coast. If there’s a bump in cargo, we’ll handle it.” Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .Ari Ashe, Senior Editor, contributed to this story

Port News

Trans-Pacific

North American ports

Marine terminals

Importers navigate two-year high rail container dwells in Los Angeles-Long Beach

<div class="phx-topic abstract-wrapper">The move comes as the DP World-operated hub is making large investments in berths and supporting infrastructure with a plan to grow its throughput and attract volumes from other UK ports, including top rival Felixstowe. </div>

The move comes as the DP World-operated hub is making large investments in berths and supporting infrastructure with a plan to grow its throughput and attract volumes from other UK ports, including top rival Felixstowe.

<div class="phx-topic">DP World’s London Gateway opened a £350 million ($442 million) all-electric fourth berth last week, the latest step in a six-berth plan to overtake Felixstowe as the UK’s largest container port in the next five years. But the title of largest UK port is not the only thing London Gateway plans to take from Felixstowe. In a review of the Gemini Cooperation’s port network published in a customer advisory Monday, members Maersk and Hapag-Lloyd said they have decided that vessels in the shared network will call at London Gateway instead of Felixstowe when the new alliance launches in February. “During this optimization process and our review of the Asia-Europe services, we have concluded that London Gateway is the most optimal port to serve our customers importing/exporting cargo to and from the UK,” Maersk noted in the advisory. Felixstowe, operated by Hong Kong’s Hutchison Port Holdings, handles more than 4 million TEUs a year, while 2.9 million TEUs crossed the London Gateway wharves last year. Felixstowe was originally meant to receive three of Gemini’s four Asia-North Europe loops, but Maersk said the new decision for the services to call at London Gateway was a strategic move to reduce network complexity with mostly single operator loops and fewer port calls per service, and was aimed at improving reliability, reach and speed for customers. “Due to this change, Felixstowe will not be a part of Maersk and Hapag-Lloyd’s shared Gemini network,” the carrier said. Maersk currently has four calls at Felixstowe outside its existing 2M Alliance with Mediterranean Shipping Co. that will not be affected by the launch of Gemini. The launch of the new 430-meter berth at London Gateway, which DP World said will increase handling capacity at the port by about 1 million TEUs annually, comes after $1.3 billion in fresh investment into its London Gateway operation was briefly threatened last month when the UK Transport Secretary criticized the March 2022 sacking of nearly 800 sea staff by DP World subsidiary P&amp;O Ferries. DP World group Chairman and CEO Sultan Ahmed bin Sulayem immediately canceled a scheduled announcement of the $1.3 billion investment and ordered a review of the London Gateway expansion plans. He later reversed his decision after a flurry of phone calls between DP World and senior British government officials. <h3>A pointed message </h3>In what appears to be a pointed message to the UK government, Ernst Schulze, DP World UK CEO for ports and terminals, placed a heavy emphasis on the scale of the investment being made into London Gateway. “We have already invested more than £2 billion ($2.5 billion) in the building of our modern and efficient facility at London Gateway in the last decade, connecting the UK with global supply chains and export markets,” he said. “This new berth, alongside our £1 billion [$1.3 billion] investment in the fifth and sixth berths, will further enable us to service the largest vessels in operation worldwide today, and the larger, future megaships currently under construction, while also advancing our goal to be net-zero by 2050,” Schulze noted, adding that the all-electric berth has also added 200 new permanent jobs to the port. London Gateway is located on the River Thames estuary about 30 miles east of London. The new berth will operate alongside the London Gateway Logistics Park, which has 9.25 million square feet of warehousing capacity, half of which is already developed, and multimodal connectivity to domestic and international road and rail networks. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

DP World’s London Gateway opened a £350 million ($442 million) all-electric fourth berth last week, the latest step in a six-berth plan to overtake Felixstowe as the UK’s largest container port in the next five years. But the title of largest UK port is not the only thing London Gateway plans to take from Felixstowe. In a review of the Gemini Cooperation’s port network published in a customer advisory Monday, members Maersk and Hapag-Lloyd said they have decided that vessels in the shared network will call at London Gateway instead of Felixstowe when the new alliance launches in February. “During this optimization process and our review of the Asia-Europe services, we have concluded that London Gateway is the most optimal port to serve our customers importing/exporting cargo to and from the UK,” Maersk noted in the advisory. Felixstowe, operated by Hong Kong’s Hutchison Port Holdings, handles more than 4 million TEUs a year, while 2.9 million TEUs crossed the London Gateway wharves last year. Felixstowe was originally meant to receive three of Gemini’s four Asia-North Europe loops, but Maersk said the new decision for the services to call at London Gateway was a strategic move to reduce network complexity with mostly single operator loops and fewer port calls per service, and was aimed at improving reliability, reach and speed for customers. “Due to this change, Felixstowe will not be a part of Maersk and Hapag-Lloyd’s shared Gemini network,” the carrier said. Maersk currently has four calls at Felixstowe outside its existing 2M Alliance with Mediterranean Shipping Co. that will not be affected by the launch of Gemini. The launch of the new 430-meter berth at London Gateway, which DP World said will increase handling capacity at the port by about 1 million TEUs annually, comes after $1.3 billion in fresh investment into its London Gateway operation was briefly threatened last month when the UK Transport Secretary criticized the March 2022 sacking of nearly 800 sea staff by DP World subsidiary P&O Ferries. DP World group Chairman and CEO Sultan Ahmed bin Sulayem immediately canceled a scheduled announcement of the $1.3 billion investment and ordered a review of the London Gateway expansion plans. He later reversed his decision after a flurry of phone calls between DP World and senior British government officials. A pointed message In what appears to be a pointed message to the UK government, Ernst Schulze, DP World UK CEO for ports and terminals, placed a heavy emphasis on the scale of the investment being made into London Gateway. “We have already invested more than £2 billion ($2.5 billion) in the building of our modern and efficient facility at London Gateway in the last decade, connecting the UK with global supply chains and export markets,” he said. “This new berth, alongside our £1 billion [$1.3 billion] investment in the fifth and sixth berths, will further enable us to service the largest vessels in operation worldwide today, and the larger, future megaships currently under construction, while also advancing our goal to be net-zero by 2050,” Schulze noted, adding that the all-electric berth has also added 200 new permanent jobs to the port. London Gateway is located on the River Thames estuary about 30 miles east of London. The new berth will operate alongside the London Gateway Logistics Park, which has 9.25 million square feet of warehousing capacity, half of which is already developed, and multimodal connectivity to domestic and international road and rail networks. Contact Greg Knowler at greg.knowler@spglobal.com .

International ports

Gemini says will use London Gateway for shared network vessel calls

<div class="phx-topic abstract-wrapper">The deal for privately-owned IMC Logistics gives NVO Kuehne+Nagel a significant advantage in selling door-to-door products to cargo owners.</div>

The deal for privately-owned IMC Logistics gives NVO Kuehne+Nagel a significant advantage in selling door-to-door products to cargo owners.

<div class="phx-topic">Kuehne+Nagel said Thursday it has acquired a majority stake in IMC Logistics, one of the largest ocean drayage providers in the US with terminals in almost every major port city and rail hub. Terms of the deal were not disclosed. The non-vessel-operating common carrier (NVO) will have a 51% stake in Tennessee-based IMC Logistics, formerly known as Intermodal Cos., giving K+N a significant advantage in selling door-to-door products to cargo owners. IMC handles about 2 million TEUs annually from US ports and rails and generated $800 million in revenue in 2023. “IMC’s range of capabilities significantly expands our service offering and allows us to develop even more attractive solutions for the value chains of our sea freight customers,” K+N CEO Stefan Paul said in a statement, adding the IMC brand will be retained. While ocean carriers own other US drayage providers, none are as large as IMC Cos., a family-owned company founded by current Chairman Mark George. Maersk acquired Performance Team in 2020 for $545 million. It has also owned Hudd Transportation-Damco Distribution for more than two decades. Mediterranean Shipping Co. acquired C&amp;K Holdings in 2022, including the C&amp;K Trucking drayage division. IMC is much larger than Hudd-Damco and C&amp;K Holdings. IMC owns 49 terminals in the US, covering nearly every major port city and rail hub, except in the Pacific Northwest and Florida, and owns five transloading facilities. For comparison, C&amp;K Holdings owns 20 terminals in the US, while Performance Team has eight locations. One of largest remaining privately-owned US drayage provider is RoadOne IntermodaLogistics, which is co-owned by the Kellaway family and two private equity firms. Other privately-owned providers with a large base of owner-operators include the Evans Network of Companies and STG Logistics.The K+N-IMC transaction is expected to close at the beginning of the first quarter of 2025. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com ">ari.ashe@spglobal.com</a></div>

Kuehne+Nagel said Thursday it has acquired a majority stake in IMC Logistics, one of the largest ocean drayage providers in the US with terminals in almost every major port city and rail hub. Terms of the deal were not disclosed. The non-vessel-operating common carrier (NVO) will have a 51% stake in Tennessee-based IMC Logistics, formerly known as Intermodal Cos., giving K+N a significant advantage in selling door-to-door products to cargo owners. IMC handles about 2 million TEUs annually from US ports and rails and generated $800 million in revenue in 2023. “IMC’s range of capabilities significantly expands our service offering and allows us to develop even more attractive solutions for the value chains of our sea freight customers,” K+N CEO Stefan Paul said in a statement, adding the IMC brand will be retained. While ocean carriers own other US drayage providers, none are as large as IMC Cos., a family-owned company founded by current Chairman Mark George. Maersk acquired Performance Team in 2020 for $545 million. It has also owned Hudd Transportation-Damco Distribution for more than two decades. Mediterranean Shipping Co. acquired C&K Holdings in 2022, including the C&K Trucking drayage division. IMC is much larger than Hudd-Damco and C&K Holdings. IMC owns 49 terminals in the US, covering nearly every major port city and rail hub, except in the Pacific Northwest and Florida, and owns five transloading facilities. For comparison, C&K Holdings owns 20 terminals in the US, while Performance Team has eight locations. One of largest remaining privately-owned US drayage provider is RoadOne IntermodaLogistics, which is co-owned by the Kellaway family and two private equity firms. Other privately-owned providers with a large base of owner-operators include the Evans Network of Companies and STG Logistics. The K+N-IMC transaction is expected to close at the beginning of the first quarter of 2025. Contact Ari Ashe at ari.ashe@spglobal.com

Drayage

K+N acquires majority stake in big US drayage provider

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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">Shippers, brokers and trucking executives at a Traffic Club of Chicago forum all said the long freight downturn isn’t finished — but are hopeful it’s nearing an end.</div>

Shippers, brokers and trucking executives at a Traffic Club of Chicago forum all said the long freight downturn isn’t finished — but are hopeful it’s nearing an end.

<div class="phx-topic">CHICAGO — The so-called freight recession may be close to its end, but it is still very much alive, shippers, brokers and trucking executives told the Traffic Club of Chicago this week. Logistics executives don’t expect the US freight market to flip and expand until 2025, perhaps closer to mid-year, driven by increased manufacturing output and home sales. “We are in a transitionary period in the market,” Ryan Hammett, director of market intelligence and insights at C.H. Robinson Worldwide, told the Traffic Club’s Transportation &amp; Logistics Customer Forum on Wednesday. “There are signs that things are changing, and we’re moving from a period of oversupply into a little bit more balance,” Hammett said, referring to <a href="https://www.joc.com/article/large-carrier-truckload-capacity-stabilizing-alongside-rates-5788958">truckload capacity</a>. But while supply in the form of trucks may be contracting, demand in the form of shipments hasn’t yet expanded significantly, Hammett and other speakers told the forum. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="dbbd4237-84d4-4708-a9bb-cde62ec92462"></dynamic-object></div>“There’s only a certain amount of freight out there,” said Mitch Morrin, North American outbound logistics lead for Owens Corning. “You can say the freight recession is over all you want, but if the freight doesn’t materialize in the marketplace, it’s not.” Morrin expressed concern that some trucking companies will push for rate increases based on premature claims the <a href="https://www.joc.com/article/mid-level-us-freight-recession-packs-larger-truck-rate-wallop-analyst-5225206">freight downcycle</a> that began in May 2022 is finished. “Are they going to talk expansion into existence? That’s going to be tough,” he said. <h3>Seasonality, regional growth </h3>There are “green shoots” that signal improvement in freight demand, other speakers said. Much of that improvement, however, has been seasonal and regional. “The experience right now between Southern California and the East Coast in terms of freight markets is drastically different,” Hammett said. “I think that we need to begin to expect regional tightness in certain places that you may not see across the rest of America. Regional tightness doesn’t mean a freight market shift.” In the Midwest, “We’re still very flat on our volumes, but what we have seen in the last three months is fewer companies are seeing drops in volume,” said Matt Hart, executive director of the Illinois Trucking Association. “We know volumes have stopped declining, but they’re still very flat,” he said. “They haven’t taken off.” Other economic indicators support claims that a freight recovery is not yet under way, although spot and contract truckload rates have begun rising. The Cass Freight Shipments Index dropped 1.7% in September from August before seasonal adjustment. The American Trucking Associations For-Hire Freight Tonnage Index was 6.4% below its non-seasonally adjusted August reading in September. Routing guide depth metrics from C.H. Robinson Worldwide have dropped in recent months after rising toward July, Hammett said, indicating that primary carriers in contract routing guides are still picking up their customers’ freight most of the time. “A change in a freight recession is not a flat line,” Hammett said. <h3>Manufacturing malaise </h3>Hammett also noted that US manufacturing capacity utilization has dropped from its most recent peak in May 2022, the start of the freight recession. The seasonally adjusted S&amp;P Global US Manufacturing Purchasing Managers’ Index (PMI) was 48.5 in October, up from 47.3 in September but below the 50 “no-change” mark for a fourth consecutive month. The Institute for Supply Management (ISM) PMI <a href="https://www.reuters.com/markets/us/us-manufacturing-drops-15-month-low-october-2024-11-01/">also remained in contraction</a>, at 46.5 in October. “Industrial production is not doing well,” said Hammett. “[But] an upside is the consumer is still healthy.” Hammett sees consumer spending on goods and services becoming more balanced. “To really say that the market is turned we’re going to have to see manufacturing come back, we have to see housing starts coming back,” said Vince Paperiello, senior vice president of intermodal at STG Logistics. For Paperiello, a key indicator that the freight recession is ending will be seeing intermodal containers “come down off the stacks” where they’ve piled up around the US over the past two years. “When you see that, we’ll be out of the freight recession,” he said. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

CHICAGO — The so-called freight recession may be close to its end, but it is still very much alive, shippers, brokers and trucking executives told the Traffic Club of Chicago this week. Logistics executives don’t expect the US freight market to flip and expand until 2025, perhaps closer to mid-year, driven by increased manufacturing output and home sales. “We are in a transitionary period in the market,” Ryan Hammett, director of market intelligence and insights at C.H. Robinson Worldwide, told the Traffic Club’s Transportation & Logistics Customer Forum on Wednesday. “There are signs that things are changing, and we’re moving from a period of oversupply into a little bit more balance,” Hammett said, referring to truckload capacity . But while supply in the form of trucks may be contracting, demand in the form of shipments hasn’t yet expanded significantly, Hammett and other speakers told the forum. “There’s only a certain amount of freight out there,” said Mitch Morrin, North American outbound logistics lead for Owens Corning. “You can say the freight recession is over all you want, but if the freight doesn’t materialize in the marketplace, it’s not.” Morrin expressed concern that some trucking companies will push for rate increases based on premature claims the freight downcycle that began in May 2022 is finished. “Are they going to talk expansion into existence? That’s going to be tough,” he said. Seasonality, regional growth There are “green shoots” that signal improvement in freight demand, other speakers said. Much of that improvement, however, has been seasonal and regional. “The experience right now between Southern California and the East Coast in terms of freight markets is drastically different,” Hammett said. “I think that we need to begin to expect regional tightness in certain places that you may not see across the rest of America. Regional tightness doesn’t mean a freight market shift.” In the Midwest, “We’re still very flat on our volumes, but what we have seen in the last three months is fewer companies are seeing drops in volume,” said Matt Hart, executive director of the Illinois Trucking Association. “We know volumes have stopped declining, but they’re still very flat,” he said. “They haven’t taken off.” Other economic indicators support claims that a freight recovery is not yet under way, although spot and contract truckload rates have begun rising. The Cass Freight Shipments Index dropped 1.7% in September from August before seasonal adjustment. The American Trucking Associations For-Hire Freight Tonnage Index was 6.4% below its non-seasonally adjusted August reading in September. Routing guide depth metrics from C.H. Robinson Worldwide have dropped in recent months after rising toward July, Hammett said, indicating that primary carriers in contract routing guides are still picking up their customers’ freight most of the time. “A change in a freight recession is not a flat line,” Hammett said. Manufacturing malaise Hammett also noted that US manufacturing capacity utilization has dropped from its most recent peak in May 2022, the start of the freight recession. The seasonally adjusted S&P Global US Manufacturing Purchasing Managers’ Index (PMI) was 48.5 in October, up from 47.3 in September but below the 50 “no-change” mark for a fourth consecutive month. The Institute for Supply Management (ISM) PMI also remained in contraction , at 46.5 in October. “Industrial production is not doing well,” said Hammett. “[But] an upside is the consumer is still healthy.” Hammett sees consumer spending on goods and services becoming more balanced. “To really say that the market is turned we’re going to have to see manufacturing come back, we have to see housing starts coming back,” said Vince Paperiello, senior vice president of intermodal at STG Logistics. For Paperiello, a key indicator that the freight recession is ending will be seeing intermodal containers “come down off the stacks” where they’ve piled up around the US over the past two years. “When you see that, we’ll be out of the freight recession,” he said. Contact William B. Cassidy at bill.cassidy@spglobal.com .

Trucking News

Rail News

Intermodal providers

Prolonged US freight ‘recession’ to drag into 2025: transportation executives

<div class="phx-topic abstract-wrapper">The union representing about 45,000 dockworkers at East and Gulf coast ports says employers want to eliminate jobs by implementing semi-automated technology at marine terminals. </div>

The union representing about 45,000 dockworkers at East and Gulf coast ports says employers want to eliminate jobs by implementing semi-automated technology at marine terminals.

<div class="phx-topic">The International Longshoremen’s Association (ILA) said Wednesday it has halted negotiations with maritime employers over a new master contract due to what it said was a management proposal for introducing semi-automated equipment that would eliminate longshore jobs. The technology at the heart of the dispute is said to be what’s already in use at New Jersey and Virginia marine terminals. The ILA said in a statement <a href="https://www.joc.com/article/ila-usmx-say-to-resume-talks-on-new-master-contract-in-november-5778794">it broke off talks with the United States Maritime Alliance (USMX) that were scheduled this week</a> due to the “continued pushing [of] automation and semi-automation language in its master contract proposal that will eliminate jobs.” The union and employers were scheduled to meet for four days this week in New Jersey, with the most recent round of talks having ended Tuesday afternoon. “The USMX introduced language in their proposal for semi-automated equipment to be used at ILA ports, which the union outright rejected,” the ILA said. “The ILA recognized this as a renewed attempt by USMX to eliminate ILA jobs with automation and broke off talks.”In a separate statement Wednesday, the USMX said that during the negotiations this week, it was “unable to make significant progress on our discussions that focused on a range of technology issues.”“Unfortunately, the ILA is insisting on an agreement that would move our industry backward by restricting future use of technology that has existed in some of our ports for nearly two decades — making it impossible to evolve to meet the nation’s supply chain demands,” the USMX said.The ILA, which represents about 45,000 dockworkers at ports along the US East and Gulf coasts, staged a three-day strike in early October. <a href="https://www.joc.com/article/ila-usmx-agree-on-new-wage-offer-and-contract-extension-that-reopens-ports-5741882">A tentative deal on wages ended the work stoppage</a>, and a temporary contract extension gave both sides until Jan. 15 to hammer out a final agreement once other bargaining items were settled. <h3>Use of RMGs at ports</h3>Neither side elaborated on the specific technology at issue. But a source familiar with the talks pointed to rail mounted gantry (RMG) cranes as the source of friction between the union and employers. RMGs are used to stack containers coming off ships for placement on truck chassis. The RMGs are operated by longshore workers remotely within offices, unlike other types of terminal equipment which require a human operator directly on the equipment. A longshore worker can also operate multiple RMGs at one time. The advantage of an RMG is that it allows more dense stacking of containers within a yard. Other terminal operations that use straddle carriers or rubber tire gantry cranes with an operator directly on the machine require more lanes on terminal property, reducing the available space for containers. RMGs have been in use at the Port of Virginia’s two main marine terminals since 2014. The former GCT Bayonne terminal at the Port of New York and New Jersey, now owned by CMA CGM, has also used RMGs since 2014 due to the yard’s small footprint.<a href="https://www.joc.com/article/nys-global-terminal-ila-in-arbitration-5219271">The ILA agreed to the previous implementations of RMG technology</a>. It’s unknown if a specific port or marine terminal wants to also implement RMG technology now, the source said, adding, however, that the USMX employers would like to have that option available. The ILA said Wednesday its rank-and-file members fully support breaking off talks and that the brief strike in October “should serve as proof how much they will sacrifice to fight for a fair and decent contract.” While both the ILA and USMX said they hope to resume negotiations soon, neither side said when that might happen. A source close to the maritime employers said they believe talks could resume in the next week or two. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

The International Longshoremen’s Association (ILA) said Wednesday it has halted negotiations with maritime employers over a new master contract due to what it said was a management proposal for introducing semi-automated equipment that would eliminate longshore jobs. The technology at the heart of the dispute is said to be what’s already in use at New Jersey and Virginia marine terminals. The ILA said in a statement it broke off talks with the United States Maritime Alliance (USMX) that were scheduled this week due to the “continued pushing [of] automation and semi-automation language in its master contract proposal that will eliminate jobs.” The union and employers were scheduled to meet for four days this week in New Jersey, with the most recent round of talks having ended Tuesday afternoon. “The USMX introduced language in their proposal for semi-automated equipment to be used at ILA ports, which the union outright rejected,” the ILA said. “The ILA recognized this as a renewed attempt by USMX to eliminate ILA jobs with automation and broke off talks.” In a separate statement Wednesday, the USMX said that during the negotiations this week, it was “unable to make significant progress on our discussions that focused on a range of technology issues.” “Unfortunately, the ILA is insisting on an agreement that would move our industry backward by restricting future use of technology that has existed in some of our ports for nearly two decades — making it impossible to evolve to meet the nation’s supply chain demands,” the USMX said. The ILA, which represents about 45,000 dockworkers at ports along the US East and Gulf coasts, staged a three-day strike in early October. A tentative deal on wages ended the work stoppage , and a temporary contract extension gave both sides until Jan. 15 to hammer out a final agreement once other bargaining items were settled. Use of RMGs at ports Neither side elaborated on the specific technology at issue. But a source familiar with the talks pointed to rail mounted gantry (RMG) cranes as the source of friction between the union and employers. RMGs are used to stack containers coming off ships for placement on truck chassis. The RMGs are operated by longshore workers remotely within offices, unlike other types of terminal equipment which require a human operator directly on the equipment. A longshore worker can also operate multiple RMGs at one time. The advantage of an RMG is that it allows more dense stacking of containers within a yard. Other terminal operations that use straddle carriers or rubber tire gantry cranes with an operator directly on the machine require more lanes on terminal property, reducing the available space for containers. RMGs have been in use at the Port of Virginia’s two main marine terminals since 2014. The former GCT Bayonne terminal at the Port of New York and New Jersey, now owned by CMA CGM, has also used RMGs since 2014 due to the yard’s small footprint. The ILA agreed to the previous implementations of RMG technology . It’s unknown if a specific port or marine terminal wants to also implement RMG technology now, the source said, adding, however, that the USMX employers would like to have that option available. The ILA said Wednesday its rank-and-file members fully support breaking off talks and that the brief strike in October “should serve as proof how much they will sacrifice to fight for a fair and decent contract.” While both the ILA and USMX said they hope to resume negotiations soon, neither side said when that might happen. A source close to the maritime employers said they believe talks could resume in the next week or two. Contact Michael Angell at michael.angell@spglobal.com .

Port infrastructure

Longshore labor

ILA breaks off contract talks, accuses USMX of semi-automation push

<div class="phx-topic abstract-wrapper">Dockworkers in British Columbia, as well as Montreal, say Labor Minister Steve MacKinnon’s order to accept binding arbitration goes against their rights under Canada’s constitution.</div>

Dockworkers in British Columbia, as well as Montreal, say Labor Minister Steve MacKinnon’s order to accept binding arbitration goes against their rights under Canada’s constitution.

<div class="phx-topic">Longshore foremen at British Columbia ports plan a legal challenge against a government order for them to return to work and submit to binding arbitration in contract talks with maritime employers, even as Canada’s busiest port plans to reopen Thursday. Meanwhile, Montreal’s dockworkers are also balking at a similar request, arguing such a demand from the government is unconstitutional. The International Longshore and Warehouse Union Local 514 said <a href="https://www.joc.com/article/bc-montreal-ports-set-to-reopen-under-orders-from-canadas-labor-chief-5792214">the order from Canadian Labor Minister Steve MacKinnon for binding arbitration</a> in contract talks between the union and the British Columbia Maritime Employers Association (BCMEA) was unconstitutional, as was his order to reopen ports. The union added that it plans to file a “charter challenge” against the Canada Industrial Relations Board’s (CIRB’s) constitutional power to make such an order. “We will fight this order in the courts,” Frank Morena, president of Local 514, said in a statement. “We will fight the arbitrated forced contract in the courts.” The labor minister’s orders aimed <a href="https://www.joc.com/article/port-lockouts-extend-from-bc-ports-to-montreal-5790073">to end a two-week closure of the ports of Vancouver and Prince Rupert</a> due to the <a href="https://www.joc.com/article/bc-container-ports-set-for-shutdown-after-foremen-begin-strike-5785499">BCMEA locking out members of Local 514 after they voted to strike</a>. MacKinnon’s order also applied to the Port of Montreal’s 1,200 dockworkers who have been in <a href="https://www.joc.com/article/montreal-dockworkers-target-mscs-terminals-for-strike-this-week-5781453">a series of rolling labor actions against maritime employers there since October</a>, culminating in management locking out longshore workers. Local 514 in British Columbia has been in protracted negotiations with the BCMEA over a new contract covering its 700 members since the expiration of the previous deal in March 2023. A separate dispute over the implementation of semi-automated rail mounted gantry cranes at Vancouver’s DP World Centerm terminal prompted the union to strike that facility, but the CIRB ruled that vote was illegal. Despite the union’s challenge, the BCMEA said port operations across the province are set to resume with the night shift on Thursday. As of Thursday, there were four container ships at the Port of Vancouver’s anchorage sites, with another seven dwelling just outside the port’s jurisdiction. While the number of ships waiting for a berth is relatively small, it’s unclear when Vancouver’s marine terminals will be able to clear up the backlog due to a more limited pool of longshore labor available during November and December.“With the resumption of work, coupled with an anticipated high volume of vessels and cargo, there will be extensive province-wide labor requirements across all port areas,” the BCMEA said in its statement. <h3>Direct appeal to CIRB </h3>Local 514’s charter challenge first involves a direct appeal to the CIRB about its ability to order a return to work. Even though it was maritime employers who locked out longshore foremen, the CIRB’s return-to-work order also covers any labor actions on the part of the union. If a direct appeal doesn’t work, then Local 514 can turn to Canada’s Supreme Court for a hearing on MacKinnon’s constitutional power to issue such an order. The union’s move is similar to what <a href="https://www.joc.com/article/canadas-labour-minister-orders-end-to-rail-work-stoppage-via-binding-arbitration-5709672">the Teamsters Canada Rail Conference (TCRC) tried when its members were locked out by Canadian National Railway and Canadian Pacific Kansas City back in August</a>. At that time, <a href="https://www.joc.com/article/canadian-rail-workers-back-on-job-after-failed-challenge-to-binding-arbitration-5712234">MacKinnon also ordered union members back to work and to accept binding arbitration</a>, allowing the railroads to resume operations. TCRC is also challenging the minister’s order in court. Separately, the Canadian Union of Public Employees CUPE) Local 375 in Montreal said in a Tuesday statement that it was “disappointed” by MacKinnon’s order, saying he was “trampling on their constitutionally protected rights” and that the government should not interfere in collective bargaining between labor and management. “There is no incentive for them to bargain in good faith because they know the federal government will back their side,” Candace Rennick, CUPE’s national secretary-treasurer, said in the statement. It was not immediately clear whether CUPE will also mount a similar legal challenge to MacKinnon’s order. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

Longshore foremen at British Columbia ports plan a legal challenge against a government order for them to return to work and submit to binding arbitration in contract talks with maritime employers, even as Canada’s busiest port plans to reopen Thursday. Meanwhile, Montreal’s dockworkers are also balking at a similar request, arguing such a demand from the government is unconstitutional. The International Longshore and Warehouse Union Local 514 said the order from Canadian Labor Minister Steve MacKinnon for binding arbitration in contract talks between the union and the British Columbia Maritime Employers Association (BCMEA) was unconstitutional, as was his order to reopen ports. The union added that it plans to file a “charter challenge” against the Canada Industrial Relations Board’s (CIRB’s) constitutional power to make such an order. “We will fight this order in the courts,” Frank Morena, president of Local 514, said in a statement. “We will fight the arbitrated forced contract in the courts.” The labor minister’s orders aimed to end a two-week closure of the ports of Vancouver and Prince Rupert due to the BCMEA locking out members of Local 514 after they voted to strike . MacKinnon’s order also applied to the Port of Montreal’s 1,200 dockworkers who have been in a series of rolling labor actions against maritime employers there since October , culminating in management locking out longshore workers. Local 514 in British Columbia has been in protracted negotiations with the BCMEA over a new contract covering its 700 members since the expiration of the previous deal in March 2023. A separate dispute over the implementation of semi-automated rail mounted gantry cranes at Vancouver’s DP World Centerm terminal prompted the union to strike that facility, but the CIRB ruled that vote was illegal. Despite the union’s challenge, the BCMEA said port operations across the province are set to resume with the night shift on Thursday. As of Thursday, there were four container ships at the Port of Vancouver’s anchorage sites, with another seven dwelling just outside the port’s jurisdiction. While the number of ships waiting for a berth is relatively small, it’s unclear when Vancouver’s marine terminals will be able to clear up the backlog due to a more limited pool of longshore labor available during November and December. “With the resumption of work, coupled with an anticipated high volume of vessels and cargo, there will be extensive province-wide labor requirements across all port areas,” the BCMEA said in its statement. Direct appeal to CIRB Local 514’s charter challenge first involves a direct appeal to the CIRB about its ability to order a return to work. Even though it was maritime employers who locked out longshore foremen, the CIRB’s return-to-work order also covers any labor actions on the part of the union. If a direct appeal doesn’t work, then Local 514 can turn to Canada’s Supreme Court for a hearing on MacKinnon’s constitutional power to issue such an order. The union’s move is similar to what the Teamsters Canada Rail Conference (TCRC) tried when its members were locked out by Canadian National Railway and Canadian Pacific Kansas City back in August . At that time, MacKinnon also ordered union members back to work and to accept binding arbitration , allowing the railroads to resume operations. TCRC is also challenging the minister’s order in court. Separately, the Canadian Union of Public Employees CUPE) Local 375 in Montreal said in a Tuesday statement that it was “disappointed” by MacKinnon’s order, saying he was “trampling on their constitutionally protected rights” and that the government should not interfere in collective bargaining between labor and management. “There is no incentive for them to bargain in good faith because they know the federal government will back their side,” Candace Rennick, CUPE’s national secretary-treasurer, said in the statement. It was not immediately clear whether CUPE will also mount a similar legal challenge to MacKinnon’s order. Contact Michael Angell at michael.angell@spglobal.com .

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