<div class="phx-topic abstract-wrapper">The expedited service will require terminals within the Northwest Seaport Alliance to load rail-bound trains within 48 hours of vessel arrival, significantly faster than the average dwell times of eight to 15 days experienced last year during a surge in container volumes.</div>

The expedited service will require terminals within the Northwest Seaport Alliance to load rail-bound trains within 48 hours of vessel arrival, significantly faster than the average dwell times of eight to 15 days experienced last year during a surge in container volumes.

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<div class="phx-topic">BNSF Railway will launch a faster international intermodal service linking the ports of Seattle and Tacoma to Chicago and points east with Norfolk Southern (NS), the two railroads announced along with the Northwest Seaport Alliance. Transit times from dock to Chicago will be reduced to six days from nine and include a streamlined handoff to a Norfolk Southern crew at Chicago for service on the same train to inland markets in the Midwest and Northeast. “This service product collaboration was an outcome of listening to our joint customers, who emphasized the desire to use more rail but would need to also reduce inventory carrying and total landed transportation costs out of their networks in 2025,” Jon Gabriel, BNSF’s group vice president of consumer products, said in a statement Wednesday. The faster service will require terminals within the Northwest Seaport Alliance to load rail-bound trains within 48 hours of vessel arrival, significantly faster than the average dwell times <a href="https://www.joc.com/article/tacoma-marine-terminals-grappling-with-heavy-import-rail-congestion-5706377">of eight to 15 days experienced last year</a> during a surge in container volumes. Between June and August 2024, the average rail dwell time at Tacoma’s Washington United and Husky terminals climbed to between eight and 10 days, according to data from Opentrac. When cargo was diverted to Seattle, average dwell times between the two ports stretched as long as 15 days in August and September. That backlog came during a spike in international intermodal volumes. About 100,000 import loads moved by rail from Seattle-Tacoma to Chicago on BNSF or Union Pacific trains in 2024, up from approximately 60,000 the previous year, according to Journal of Commerce estimates. It was the highest annual throughput since the pandemic-related freight surge in 2021. <h3>Hoping to cut inland delays </h3>The new service is also meant to reduce delays in Chicago. Rather than delivering trains to a BNSF terminal and relying on the Belt Railway of Chicago (BRC) to transfer containers to Norfolk Southern, as is typical for all Chicago interchanges, all traffic will be routed directly to Norfolk Southern’s Ashland Yard on the city’s south side. From there, the only step will be a change to an NS crew before continuing east with the same train. There will be no stop in a BNSF terminal, no haul between railroads by the BRC, and no building of a separate train inside an NS terminal. The process of western railroads separating blocks of containers, employing the BRC to haul them between terminals, and eastern railroads building new trains adds 24 to 48 hours to transit times. “By collaborating with BNSF and the Northwest Seaport Alliance, we’re offering a faster, more reliable rail option that helps shippers reduce transit time, cut costs, and streamline supply chains...,” Shawn Tureman, NS’ vice president of intermodal and automotive marketing, said in the statement. Nearly 50,000 imports to Seattle and Tacoma interchange between western and eastern US railroads annually, the majority bound for destinations such as Cleveland, Columbus and Detroit, according to Journal of Commerce estimates. Reducing transit times to those markets could help West Coast ports regain ground lost to East Coast gateways such as the Port of New York and New Jersey and the Port of Virginia, which together move an estimated 300,000 to 400,000 ocean containers annually to inland hubs in the Midwest. The collaboration comes as pressure builds to retain West Coast market share following the resolution of labor tensions on the East Coast that had resulted in some discretionary cargo being diverted to the West Coast. Shippers will now weigh the service improvements against their past experiences when deciding how to route freight inland in the months ahead. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>.</div>

BNSF Railway will launch a faster international intermodal service linking the ports of Seattle and Tacoma to Chicago and points east with Norfolk Southern (NS), the two railroads announced along with the Northwest Seaport Alliance. Transit times from dock to Chicago will be reduced to six days from nine and include a streamlined handoff to a Norfolk Southern crew at Chicago for service on the same train to inland markets in the Midwest and Northeast. “This service product collaboration was an outcome of listening to our joint customers, who emphasized the desire to use more rail but would need to also reduce inventory carrying and total landed transportation costs out of their networks in 2025,” Jon Gabriel, BNSF’s group vice president of consumer products, said in a statement Wednesday. The faster service will require terminals within the Northwest Seaport Alliance to load rail-bound trains within 48 hours of vessel arrival, significantly faster than the average dwell times of eight to 15 days experienced last year during a surge in container volumes. Between June and August 2024, the average rail dwell time at Tacoma’s Washington United and Husky terminals climbed to between eight and 10 days, according to data from Opentrac. When cargo was diverted to Seattle, average dwell times between the two ports stretched as long as 15 days in August and September. That backlog came during a spike in international intermodal volumes. About 100,000 import loads moved by rail from Seattle-Tacoma to Chicago on BNSF or Union Pacific trains in 2024, up from approximately 60,000 the previous year, according to Journal of Commerce estimates. It was the highest annual throughput since the pandemic-related freight surge in 2021. Hoping to cut inland delays The new service is also meant to reduce delays in Chicago. Rather than delivering trains to a BNSF terminal and relying on the Belt Railway of Chicago (BRC) to transfer containers to Norfolk Southern, as is typical for all Chicago interchanges, all traffic will be routed directly to Norfolk Southern’s Ashland Yard on the city’s south side. From there, the only step will be a change to an NS crew before continuing east with the same train. There will be no stop in a BNSF terminal, no haul between railroads by the BRC, and no building of a separate train inside an NS terminal. The process of western railroads separating blocks of containers, employing the BRC to haul them between terminals, and eastern railroads building new trains adds 24 to 48 hours to transit times. “By collaborating with BNSF and the Northwest Seaport Alliance, we’re offering a faster, more reliable rail option that helps shippers reduce transit time, cut costs, and streamline supply chains...,” Shawn Tureman, NS’ vice president of intermodal and automotive marketing, said in the statement. Nearly 50,000 imports to Seattle and Tacoma interchange between western and eastern US railroads annually, the majority bound for destinations such as Cleveland, Columbus and Detroit, according to Journal of Commerce estimates. Reducing transit times to those markets could help West Coast ports regain ground lost to East Coast gateways such as the Port of New York and New Jersey and the Port of Virginia, which together move an estimated 300,000 to 400,000 ocean containers annually to inland hubs in the Midwest. The collaboration comes as pressure builds to retain West Coast market share following the resolution of labor tensions on the East Coast that had resulted in some discretionary cargo being diverted to the West Coast. Shippers will now weigh the service improvements against their past experiences when deciding how to route freight inland in the months ahead. Contact Ari Ashe at ari.ashe@spglobal.com .

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BNSF-Norfolk Southern unveil faster inland service from Pacific Northwest

<div class="phx-topic abstract-wrapper">While the Gemini Cooperation is hitting its schedule reliability goals, Hapag-Lloyd’s chief executive said fully unwinding its former carrier alliance and dealing with terminal congestion in some locations are providing challenges. </div>

While the Gemini Cooperation is hitting its schedule reliability goals, Hapag-Lloyd’s chief executive said fully unwinding its former carrier alliance and dealing with terminal congestion in some locations are providing challenges.

<div class="phx-topic">The Gemini Cooperation alliance is looking to deploy more vessels in the coming weeks to reduce instances where US exporters have faced delays and cargo has been misdirected, Hapag-Lloyd Chief Executive Rolf Habben Jansen said Thursday. While the start of the new alliance has been mostly smooth, Gemini is also grappling with terminal congestion in Europe and the US, according to the CEO. During an online presentation Thursday, Habben Jansen said the entirety of Gemini’s hub-and-spoke services is now fully operational and the new alliance with Maersk has made 1,500 port calls since its February launch. Even so, Gemini has only been able to deploy 285 of the planned 340 vessels in its network. Once the additional vessels are deployed in the coming weeks, Habben Jansen said Gemini’s network should be able to provide consistent weekly capacity. During Gemini’s early stage, US exporters have faced instances of cargo being rolled to later voyages. Habben Jansen said the delays stem from having to fully phase out Hapag-Lloyd ships from its former THE Alliance services. “The US unfortunately has been harder hit than otherwise,” Habben Jansen said. “I do expect that to improve within the next few weeks.” In addition to the delays, the transition from THE Alliance to Gemini has seen some cargo being unloaded where it was not originally planned and now “we need to forward that to its final destination,” Habben Jansen said. “The issues around rollings and delays should get considerably less because of a lot of that was related to the phase-out and making sure that the ships coming out of the old cooperations still ended up back in the locations where they had to start in the new Gemini Cooperation,” he said. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="bc8c7bab-e415-4fea-861b-3926a4691794"></dynamic-object></div>Despite the issues with the rollout, Habben Jansen said Gemini has hit its reliability goals, with both Sea-Intelligence Maritime Analysis and eeSea showing the alliance is hitting its schedules about 90% of the time. The schedule reliability of other carriers and alliances is well below that level, and Habben Jansen does expect competitors to close the gap as they also work out kinks in their new networks. “We’ve definitely been off to a pretty good start,” he said. “I would say, as with any network transition of this scale, there are a number of operational challenges, and we’re trying to address those as swiftly as possible.” <h3>No Suez return in the offering </h3>The resumption of regular Suez Canal transits for container ships would boost capacity, but Habben Jansen said that return remains unclear due to the recent breakdown in the Gaza war ceasefire. The continued diversions around southern Africa mean voyage distances are up 18%, offsetting much of the 10% growth in the global fleet and creating a tightly balanced market. “Many of us expected, including me, that with the ceasefire that we saw in Gaza, that there might be a good chance that we are able to get back through Suez in the foreseeable future,” Habben Jansen said. “If we look at the events of the last four to six weeks, then that, unfortunately, looks increasingly unlikely. We'll have to continue sailing around the Cape for, most likely another couple of months, or until the end of the year.” Other than more ships, Gemini is also facing some terminal congestion at major hubs. Marine terminals at the Port of Antwerp are <a href="https://www.joc.com/article/new-alliance-vessel-plans-add-to-ongoing-port-congestion-in-europe-5963964">facing congestion due to the phase-in of new vessel alliances</a>, while one of Rotterdam’s main terminals is <a href="https://www.joc.com/article/solidarity-strike-call-by-dutch-port-union-gets-industry-attention-5948375">also clearing a backlog of inland cargo following labor action there</a>. In the US, the Port of New York and New Jersey has been dealing with <a href="https://www.joc.com/article/stakeholders-say-choked-ny-nj-marine-terminals-creating-delays-at-port-5942356">a backlog of empty containers</a> that have stymied truck transactions. But Habben Jansen said the inventory of Hapag-Lloyd empties has been “normalized and we will continue to keep an eye on that.” “We have a number of operational disruptions in selected terminals in North Europe, the East Coast of North America, and one or two terminals in Asia as well,” he said. As for other risks on the horizon, Habben Jansen said the impact of <a href="https://www.joc.com/article/ustrs-china-tonnage-tax-would-squeeze-smaller-trades-stakeholders-5967638">proposed port fees on Chinese ships</a> entering the US remains unclear as no official levy is in place yet. He hopes the Trump administration implements something less draconian, but he warned the proposed fees “would result in considerable additional cost that will need to be recovered.” As for <a href="https://www.joc.com/article/new-us-tariffs-forcing-shippers-to-recalculate-supply-chains-on-the-fly-5976471">the newly announced US import tariffs</a>, he said the tariffs implemented during the first Trump administration “did not have a material impact on cargo flows, even if sourcing locations changed.” “I think we are going to see something similar this time, but it’s too early to really conclude that,” Habben Jansen said. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

The Gemini Cooperation alliance is looking to deploy more vessels in the coming weeks to reduce instances where US exporters have faced delays and cargo has been misdirected, Hapag-Lloyd Chief Executive Rolf Habben Jansen said Thursday. While the start of the new alliance has been mostly smooth, Gemini is also grappling with terminal congestion in Europe and the US, according to the CEO. During an online presentation Thursday, Habben Jansen said the entirety of Gemini’s hub-and-spoke services is now fully operational and the new alliance with Maersk has made 1,500 port calls since its February launch. Even so, Gemini has only been able to deploy 285 of the planned 340 vessels in its network. Once the additional vessels are deployed in the coming weeks, Habben Jansen said Gemini’s network should be able to provide consistent weekly capacity. During Gemini’s early stage, US exporters have faced instances of cargo being rolled to later voyages. Habben Jansen said the delays stem from having to fully phase out Hapag-Lloyd ships from its former THE Alliance services. “The US unfortunately has been harder hit than otherwise,” Habben Jansen said. “I do expect that to improve within the next few weeks.” In addition to the delays, the transition from THE Alliance to Gemini has seen some cargo being unloaded where it was not originally planned and now “we need to forward that to its final destination,” Habben Jansen said. “The issues around rollings and delays should get considerably less because of a lot of that was related to the phase-out and making sure that the ships coming out of the old cooperations still ended up back in the locations where they had to start in the new Gemini Cooperation,” he said. Despite the issues with the rollout, Habben Jansen said Gemini has hit its reliability goals, with both Sea-Intelligence Maritime Analysis and eeSea showing the alliance is hitting its schedules about 90% of the time. The schedule reliability of other carriers and alliances is well below that level, and Habben Jansen does expect competitors to close the gap as they also work out kinks in their new networks. “We’ve definitely been off to a pretty good start,” he said. “I would say, as with any network transition of this scale, there are a number of operational challenges, and we’re trying to address those as swiftly as possible.” No Suez return in the offering The resumption of regular Suez Canal transits for container ships would boost capacity, but Habben Jansen said that return remains unclear due to the recent breakdown in the Gaza war ceasefire. The continued diversions around southern Africa mean voyage distances are up 18%, offsetting much of the 10% growth in the global fleet and creating a tightly balanced market. “Many of us expected, including me, that with the ceasefire that we saw in Gaza, that there might be a good chance that we are able to get back through Suez in the foreseeable future,” Habben Jansen said. “If we look at the events of the last four to six weeks, then that, unfortunately, looks increasingly unlikely. We'll have to continue sailing around the Cape for, most likely another couple of months, or until the end of the year.” Other than more ships, Gemini is also facing some terminal congestion at major hubs. Marine terminals at the Port of Antwerp are facing congestion due to the phase-in of new vessel alliances , while one of Rotterdam’s main terminals is also clearing a backlog of inland cargo following labor action there . In the US, the Port of New York and New Jersey has been dealing with a backlog of empty containers that have stymied truck transactions. But Habben Jansen said the inventory of Hapag-Lloyd empties has been “normalized and we will continue to keep an eye on that.” “We have a number of operational disruptions in selected terminals in North Europe, the East Coast of North America, and one or two terminals in Asia as well,” he said. As for other risks on the horizon, Habben Jansen said the impact of proposed port fees on Chinese ships entering the US remains unclear as no official levy is in place yet. He hopes the Trump administration implements something less draconian, but he warned the proposed fees “would result in considerable additional cost that will need to be recovered.” As for the newly announced US import tariffs , he said the tariffs implemented during the first Trump administration “did not have a material impact on cargo flows, even if sourcing locations changed.” “I think we are going to see something similar this time, but it’s too early to really conclude that,” Habben Jansen said. Contact Michael Angell at michael.angell@spglobal.com .

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Gemini will roll out more ships to stop cargo from rolling: Habben Jansen

<div class="phx-topic abstract-wrapper">Some US-based shippers are racing to beat the April 9 imposition of new tariffs on most goods, while others are holding back product in Asia on the chance the levies will be reduced by President Donald Trump, whose tariff implementation strategy in recent weeks has been marked by a large dose of impulsiveness.</div>

Some US-based shippers are racing to beat the April 9 imposition of new tariffs on most goods, while others are holding back product in Asia on the chance the levies will be reduced by President Donald Trump, whose tariff implementation strategy in recent weeks has been marked by a large dose of impulsiveness.

<div class="phx-topic">The broad and varied tariffs <a href="https://www.joc.com/article/trump-announces-10-across-the-board-tariffs-on-all-us-imports-5975639">announced this week by the Trump administration</a> that affect US imports from virtually every country around the globe have sent shippers scrambling, forcing a rethink of supply chain strategy within a market so cloaked in uncertainty that one stakeholder likened it to the early days of the COVID-19 pandemic. Some US-based shippers are, incredibly enough, racing to beat the April 9 imposition of new tariffs on most goods, while others are holding back product in Asia on the chance the levies will be reduced by US President Donald Trump, whose tariff implementation strategy in recent weeks has been marked by a large dose of impulsiveness. April 9 is the date country-specific tariffs take effect. Baseline 10% tariffs on countries that avoided the specific, so-called “reciprocal” rates are due to go into effect April 5. “It looks to me like we are witnessing a sudden global slowdown akin to COVID,” a forwarder who did not want to be identified told the Journal of Commerce. “It’s starting to look like the collective response will be to stop, kind of like what we saw when COVID started. The question is, for how long?” The source said some major customers are “deciding to store product in Asia and essentially cutting off the flow.” “They are looking at using air or other modes but in more of a ‘batch’ sequencing versus the normal flow models,” the forwarder said. Another forwarder who also did not want to be identified said shippers are using a range of tools ahead of the tariff increases. “Customers are shifting volume from [full containerload] to [less-than-containerload] to get goods here before April 9,” the source said. “Some are booking air to get ahead of the tariffs. Some are pulling back orders. Some vendors are pulling back on DDP [delivery duty paid] shipments to renegotiate on price. Some want to change the Incoterms to change the responsible party for duties.” DDP occurs when the seller is responsible for paying duties. The forwarder added that some customers that were eyeing an exit from China to other sourcing locations in Asia are now rethinking those plans. That’s because those alternative sourcing locations have been nailed with new tariffs, too, most notably Vietnam at 46%. Robert Khachatryan, CEO of Los Angeles-based forwarder FreightRight, said he isn’t seeing a rush to expedite bookings that would not have ordinarily moved this week. “Clients that have bookings in place are pushing to make sure they depart as planned,” Khachatryan said. “However, there are no new orders rushing in.” <h3>‘Structural change’ to supply chains </h3>The Trump tariff plan, which was far more extensive than observers expected, is forcing a wholesale reconsideration of individual supply chains. “With the new tariffs and the <a href="https://www.joc.com/article/air-cargo-braces-for-impact-as-us-restores-duties-on-chinese-e-commerce-5976399">end of the de minimis exemption</a>, many importers are being forced to rethink how they manage cost, visibility, and compliance across their supply chains,” said Jim McCullen, chief technology officer at Century Supply Chain Solutions. “What we’re seeing is that this moment isn’t just about logistics, it’s about risk management, planning, and structural change.” In some ways, the race for vessel capacity has been on since before Trump took office for the second time. Aggregate import volumes into the ports of Los Angeles and Long Beach in January and February exceeded even the peak COVID-19 years of 2021 and 2022, and were even 24% higher than pre-pandemic January–February volumes in 2019 when frontloading occurred to beat Trump’s initial tranche of 25% tariffs on Chinese imports. The new tariffs are designed to reinvigorate the US manufacturing sector, Trump said during a White House event Wednesday. But they come amid a slowing manufacturing sector in North America that showed weakness in part because of the long-threatened tariffs. US factory output fell in March, according to Purchasing Managers’ Index survey data compiled by S&amp;P Global, parent company of the Journal of Commerce. Respondents attributed the slowdown to falling demand and the waning impact from the cargo frontloading that occurred earlier in the year as importers moved to beat the imposition of tariffs “Manufacturing output fell across North America in March at one of the steepest rates seen over the past two years ... with broad-based production loses in the US, Canada and Mexico,” Chris Williamson, chief business economist at S&amp;P Global Market Intelligence, wrote in a research note Thursday. “Prices paid for inputs also rose sharply. US factory input cost inflation, in fact, exceeded that seen in all 33 economies surveyed by S&amp;P Global for the first time since 2008.” <h3>Consumer goods in crosshairs </h3>Early research into which commodity categories might be most impacted by the tariffs highlights the effect on finished consumer goods from high-tariff nations. “Notable examples include toys and video games [average duty rate increase of 30.4%], computer parts [29.6%], clothing [28.3%, with some as high as 36.9%] and smartphones [27%],” Chris Rogers, head of supply chain research at S&amp;P Global Market Intelligence, wrote in an analysis Thursday. “Many of the products that are excluded from these new duties will face their own tariff reviews and may end up with duties of around 25%, including copper, lumber, pharmaceuticals and semiconductors, after the reviews are completed in a few months.” The hit would be $458 billion to US importers’ costs in a full year, based on 2024 import levels, Rogers added. “The full impact on supply chains will also be a function of how other governments react — for example, the EU and mainland China have been more hawkish — and how firms choose to incorporate the new tariffs into their pricing and sourcing strategies,” he wrote. “Given the wide-ranging nature of the duties and focus on consumer goods, price increases may be a main strategy followed.” UBS, meanwhile, said it expects the tariffs announced Wednesday, in addition to previously announced 25% tariffs on all imported automobiles, to drive pressure on international trade volumes and weaken domestic freight activity. In a research note Thursday, the bank said it estimates that 33% of rail and 25% of truck ton miles in the US are directly tied to international trade. Whether US Customs and Border Protection (CBP) has the capacity and sufficient technology infrastructure in place to enforce the new tariffs is another open question. Some forwarders said the agency can handle the changes, while others were doubtful given disruptions caused by previous tariff implementations. “Customs is almost guaranteed not to be ready,” Khachatryan said. “Even with the previous, less sweeping tariffs, CBP was woefully unprepared. Aluminum tariffs alone took over a week to work properly in different [automated brokerage interface] systems, with many shipments stuck in storage at airline terminals. Guidance for customs brokers is even slower to come. Something of this magnitude will almost certainly be a lot more disruptive, not least because of all the overlapping tariffs and confusing exclusions.” More broadly, the tariffs could well lead to choppier decision-making for logistics operations personnel, with decisions on whether to import goods or hold them back determined by Trump’s seemingly day-to-day policy changes. “This will be a good example of honing skills to strategically manage based on daily information versus quarterly cycles, and I doubt many will be able to do this,” a forwarder said. Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. </div>

The broad and varied tariffs announced this week by the Trump administration that affect US imports from virtually every country around the globe have sent shippers scrambling, forcing a rethink of supply chain strategy within a market so cloaked in uncertainty that one stakeholder likened it to the early days of the COVID-19 pandemic. Some US-based shippers are, incredibly enough, racing to beat the April 9 imposition of new tariffs on most goods, while others are holding back product in Asia on the chance the levies will be reduced by US President Donald Trump, whose tariff implementation strategy in recent weeks has been marked by a large dose of impulsiveness. April 9 is the date country-specific tariffs take effect. Baseline 10% tariffs on countries that avoided the specific, so-called “reciprocal” rates are due to go into effect April 5. “It looks to me like we are witnessing a sudden global slowdown akin to COVID,” a forwarder who did not want to be identified told the Journal of Commerce. “It’s starting to look like the collective response will be to stop, kind of like what we saw when COVID started. The question is, for how long?” The source said some major customers are “deciding to store product in Asia and essentially cutting off the flow.” “They are looking at using air or other modes but in more of a ‘batch’ sequencing versus the normal flow models,” the forwarder said. Another forwarder who also did not want to be identified said shippers are using a range of tools ahead of the tariff increases. “Customers are shifting volume from [full containerload] to [less-than-containerload] to get goods here before April 9,” the source said. “Some are booking air to get ahead of the tariffs. Some are pulling back orders. Some vendors are pulling back on DDP [delivery duty paid] shipments to renegotiate on price. Some want to change the Incoterms to change the responsible party for duties.” DDP occurs when the seller is responsible for paying duties. The forwarder added that some customers that were eyeing an exit from China to other sourcing locations in Asia are now rethinking those plans. That’s because those alternative sourcing locations have been nailed with new tariffs, too, most notably Vietnam at 46%. Robert Khachatryan, CEO of Los Angeles-based forwarder FreightRight, said he isn’t seeing a rush to expedite bookings that would not have ordinarily moved this week. “Clients that have bookings in place are pushing to make sure they depart as planned,” Khachatryan said. “However, there are no new orders rushing in.” ‘Structural change’ to supply chains The Trump tariff plan, which was far more extensive than observers expected, is forcing a wholesale reconsideration of individual supply chains. “With the new tariffs and the end of the de minimis exemption , many importers are being forced to rethink how they manage cost, visibility, and compliance across their supply chains,” said Jim McCullen, chief technology officer at Century Supply Chain Solutions. “What we’re seeing is that this moment isn’t just about logistics, it’s about risk management, planning, and structural change.” In some ways, the race for vessel capacity has been on since before Trump took office for the second time. Aggregate import volumes into the ports of Los Angeles and Long Beach in January and February exceeded even the peak COVID-19 years of 2021 and 2022, and were even 24% higher than pre-pandemic January–February volumes in 2019 when frontloading occurred to beat Trump’s initial tranche of 25% tariffs on Chinese imports. The new tariffs are designed to reinvigorate the US manufacturing sector, Trump said during a White House event Wednesday. But they come amid a slowing manufacturing sector in North America that showed weakness in part because of the long-threatened tariffs. US factory output fell in March, according to Purchasing Managers’ Index survey data compiled by S&P Global, parent company of the Journal of Commerce. Respondents attributed the slowdown to falling demand and the waning impact from the cargo frontloading that occurred earlier in the year as importers moved to beat the imposition of tariffs “Manufacturing output fell across North America in March at one of the steepest rates seen over the past two years ... with broad-based production loses in the US, Canada and Mexico,” Chris Williamson, chief business economist at S&P Global Market Intelligence, wrote in a research note Thursday. “Prices paid for inputs also rose sharply. US factory input cost inflation, in fact, exceeded that seen in all 33 economies surveyed by S&P Global for the first time since 2008.” Consumer goods in crosshairs Early research into which commodity categories might be most impacted by the tariffs highlights the effect on finished consumer goods from high-tariff nations. “Notable examples include toys and video games [average duty rate increase of 30.4%], computer parts [29.6%], clothing [28.3%, with some as high as 36.9%] and smartphones [27%],” Chris Rogers, head of supply chain research at S&P Global Market Intelligence, wrote in an analysis Thursday. “Many of the products that are excluded from these new duties will face their own tariff reviews and may end up with duties of around 25%, including copper, lumber, pharmaceuticals and semiconductors, after the reviews are completed in a few months.” The hit would be $458 billion to US importers’ costs in a full year, based on 2024 import levels, Rogers added. “The full impact on supply chains will also be a function of how other governments react — for example, the EU and mainland China have been more hawkish — and how firms choose to incorporate the new tariffs into their pricing and sourcing strategies,” he wrote. “Given the wide-ranging nature of the duties and focus on consumer goods, price increases may be a main strategy followed.” UBS, meanwhile, said it expects the tariffs announced Wednesday, in addition to previously announced 25% tariffs on all imported automobiles, to drive pressure on international trade volumes and weaken domestic freight activity. In a research note Thursday, the bank said it estimates that 33% of rail and 25% of truck ton miles in the US are directly tied to international trade. Whether US Customs and Border Protection (CBP) has the capacity and sufficient technology infrastructure in place to enforce the new tariffs is another open question. Some forwarders said the agency can handle the changes, while others were doubtful given disruptions caused by previous tariff implementations. “Customs is almost guaranteed not to be ready,” Khachatryan said. “Even with the previous, less sweeping tariffs, CBP was woefully unprepared. Aluminum tariffs alone took over a week to work properly in different [automated brokerage interface] systems, with many shipments stuck in storage at airline terminals. Guidance for customs brokers is even slower to come. Something of this magnitude will almost certainly be a lot more disruptive, not least because of all the overlapping tariffs and confusing exclusions.” More broadly, the tariffs could well lead to choppier decision-making for logistics operations personnel, with decisions on whether to import goods or hold them back determined by Trump’s seemingly day-to-day policy changes. “This will be a good example of honing skills to strategically manage based on daily information versus quarterly cycles, and I doubt many will be able to do this,” a forwarder said. Contact Eric Johnson at eric.johnson@spglobal.com .

Forwarding

Transport, Trade and Regulation News

New US tariffs forcing shippers to recalculate supply chains on the fly

<div class="phx-topic abstract-wrapper">But any shipper celebrations over potentially lower rates in a cooling market will be tempered by concerns about border congestion as US customs will now be tasked with processing millions of de minimis imports every day.</div>

But any shipper celebrations over potentially lower rates in a cooling market will be tempered by concerns about border congestion as US customs will now be tasked with processing millions of de minimis imports every day.

<div class="phx-topic">The Trump administration will eliminate duty-free treatment for low-value US imports from China and Hong Kong starting May 2 in a move that will be welcomed by shippers of general air cargo that have been punished by tight capacity and high rates for the past 18 months. But any shipper celebrations over potentially lower rates will be tempered by concerns over border congestion at US airports due to the dramatic increase in shipments needing to be processed by US Customs and Border Protection (CBP). The executive order signed by Donald Trump Wednesday is aimed at “deceptive shipping practices by Chinese-based shippers, many of whom hide illicit substances, including synthetic opioids, in low-value packages to exploit the de minimis exemption.” All postal items valued at or under $800 previously qualifying for the US’ so-called “de minimis” exemption will become subject to a duty rate of either 30% of their value or $25 per item, increasing to $50 per item after June 1. Almost one billion US de minimis shipments last year were from China. “The executive order mentioned the Secretary of Commerce announcement that ‘adequate systems are in place to collect tariff revenue,’ [but] it is hard to imagine that such capacity was built so quickly,” Ram Ben Tzion, CEO of risk management firm Publican, said in a statement Thursday. When the Trump administration removed low-value products from de minimis exemptions in February, the two million daily air cargo shipments from China caused the system to immediately back up. The exemption was quickly restored until CBP devised an appropriate inspection and duty collection system, which the US Department of Commerce says is now in place. <h3>End in sight for never-ending peak season </h3>A never-ending peak season driven by booming e-commerce demand on the Asia-North America trade lane — much of that cargo enjoying the de minimis exemption — increased volume by double-digit percentages last year, with the packages filling dozens of daily freighter flights out of China. But the massive demand also pushed rates to levels not seen since the pandemic, hurting general air cargo shippers and those forced into the air when ocean carriers began diverting around southern Africa following the Red Sea attacks on commercial shipping that began in late 2023. Spot rates on the China-North America route have averaged $5.40 per kilogram for the past 18 months, almost double the average for pre-pandemic 2019. Should the duties charged on low-value imports from China drag down demand for e-commerce in the US, a significant amount of freighter capacity will be released back into the market and bring down spot rates. But those duties will also impact the air cargo transport models adopted by the Chinese online marketplaces. “This will disrupt and possibly eliminate many of the e-commerce giants’ ability to do business, as well as many logistics operators who provide services and capacity,” Tzion said. The main Chinese e-commerce platforms — Temu, Shein and Tik Tok — contract space directly with airlines, bypassing the global forwarders that mostly handle relatively small e-commerce volume. But they also have already established huge distribution centers in the US and Europe as they shift from an air cargo-focused approach to a more traditional fulfilment model using mostly ocean shipping. Cross-border e-commerce has evolved as the major driver for global air cargo demand growth in recent years. China-US e-commerce shipments alone account for nearly half of the cargo capacity on the eastbound corridor and about 6% of global air freight demand, rate benchmarking platform Xeneta noted in a statement Thursday on the US de minimis announcement. <h3>Difficult to plan in ‘crazy environment’ </h3>Holger Ketz, global head of network and carrier management at Swiss logistics giant Kuehne + Nagel, told the Journal of Commerce in a recent interview that although the forwarder has low single-digit e-commerce business, “we are still operating in the same market.” “If suddenly there is no demand from e-commerce customers anymore, it will have an impact on our own operated fleet because with falling demand our yield will go down,” Ketz said. That was a point made by Niall van de Wouw, Xeneta’s chief air freight officer, in the company’s statement. “It’s a crazy environment, left and right,” he said, adding that the market anxiety and uncertainty was not good for any players in the air cargo supply chain — producers, consumers, airlines or forwarders. “No one is benefiting from this situation because it’s impossible to plan effectively against a moving target,” van de Wouw noted. “Clearly, everyone will be waiting to see how the removal of the de minimis threshold and all the global tariffs already announced and those still to come will impact trade, as well as how quickly there will be less demand and, consequently, less air freight.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com.">greg.knowler@spglobal.com</a>.</div>

The Trump administration will eliminate duty-free treatment for low-value US imports from China and Hong Kong starting May 2 in a move that will be welcomed by shippers of general air cargo that have been punished by tight capacity and high rates for the past 18 months. But any shipper celebrations over potentially lower rates will be tempered by concerns over border congestion at US airports due to the dramatic increase in shipments needing to be processed by US Customs and Border Protection (CBP). The executive order signed by Donald Trump Wednesday is aimed at “deceptive shipping practices by Chinese-based shippers, many of whom hide illicit substances, including synthetic opioids, in low-value packages to exploit the de minimis exemption.” All postal items valued at or under $800 previously qualifying for the US’ so-called “de minimis” exemption will become subject to a duty rate of either 30% of their value or $25 per item, increasing to $50 per item after June 1. Almost one billion US de minimis shipments last year were from China. “The executive order mentioned the Secretary of Commerce announcement that ‘adequate systems are in place to collect tariff revenue,’ [but] it is hard to imagine that such capacity was built so quickly,” Ram Ben Tzion, CEO of risk management firm Publican, said in a statement Thursday. When the Trump administration removed low-value products from de minimis exemptions in February, the two million daily air cargo shipments from China caused the system to immediately back up. The exemption was quickly restored until CBP devised an appropriate inspection and duty collection system, which the US Department of Commerce says is now in place. End in sight for never-ending peak season A never-ending peak season driven by booming e-commerce demand on the Asia-North America trade lane — much of that cargo enjoying the de minimis exemption — increased volume by double-digit percentages last year, with the packages filling dozens of daily freighter flights out of China. But the massive demand also pushed rates to levels not seen since the pandemic, hurting general air cargo shippers and those forced into the air when ocean carriers began diverting around southern Africa following the Red Sea attacks on commercial shipping that began in late 2023. Spot rates on the China-North America route have averaged $5.40 per kilogram for the past 18 months, almost double the average for pre-pandemic 2019. Should the duties charged on low-value imports from China drag down demand for e-commerce in the US, a significant amount of freighter capacity will be released back into the market and bring down spot rates. But those duties will also impact the air cargo transport models adopted by the Chinese online marketplaces. “This will disrupt and possibly eliminate many of the e-commerce giants’ ability to do business, as well as many logistics operators who provide services and capacity,” Tzion said. The main Chinese e-commerce platforms — Temu, Shein and Tik Tok — contract space directly with airlines, bypassing the global forwarders that mostly handle relatively small e-commerce volume. But they also have already established huge distribution centers in the US and Europe as they shift from an air cargo-focused approach to a more traditional fulfilment model using mostly ocean shipping. Cross-border e-commerce has evolved as the major driver for global air cargo demand growth in recent years. China-US e-commerce shipments alone account for nearly half of the cargo capacity on the eastbound corridor and about 6% of global air freight demand, rate benchmarking platform Xeneta noted in a statement Thursday on the US de minimis announcement. Difficult to plan in ‘crazy environment’ Holger Ketz, global head of network and carrier management at Swiss logistics giant Kuehne + Nagel, told the Journal of Commerce in a recent interview that although the forwarder has low single-digit e-commerce business, “we are still operating in the same market.” “If suddenly there is no demand from e-commerce customers anymore, it will have an impact on our own operated fleet because with falling demand our yield will go down,” Ketz said. That was a point made by Niall van de Wouw, Xeneta’s chief air freight officer, in the company’s statement. “It’s a crazy environment, left and right,” he said, adding that the market anxiety and uncertainty was not good for any players in the air cargo supply chain — producers, consumers, airlines or forwarders. “No one is benefiting from this situation because it’s impossible to plan effectively against a moving target,” van de Wouw noted. “Clearly, everyone will be waiting to see how the removal of the de minimis threshold and all the global tariffs already announced and those still to come will impact trade, as well as how quickly there will be less demand and, consequently, less air freight.” Contact Greg Knowler at greg.knowler@spglobal.com .

Air Cargo Forwarder News

Air Cargo Carriers News

Air Cargo

Air cargo braces for impact as US restores duties on Chinese e-commerce

<div class="phx-topic abstract-wrapper">There is a seasonal element to the second quarter increase in capacity deployed on the trade, but the reluctance by ocean carriers to withdraw capacity comes amid increasing signs of a price war.</div>

There is a seasonal element to the second quarter increase in capacity deployed on the trade, but the reluctance by ocean carriers to withdraw capacity comes amid increasing signs of a price war.

<div class="phx-topic">Ocean carriers on the Asia-North Europe trade lane are reducing the number of blank sailings in April and May while significantly adding capacity despite a spot market that continues to slide. Data from visibility provider eeSea shows carriers will blank sailings totaling 79,664 TEUs in capacity during April, almost half of the 151,549 TEUs that were withdrawn in March. At the same time, the deployed capacity is expected to surge 26% to 1.08 million TEUs. In May, the blanked capacity will be reduced still further to just 34,680 TEUs, while deployed capacity will rise to 1.12 million TEUs, the eeSea data shows. Although there is a seasonal element to the second-quarter increase in capacity deployed on the trade, as well as the reshuffling of carrier alliances employing more vessels, the reluctance by ocean carriers to withdraw capacity comes amid increasing signs of a price war. Average spot rates on Asia-North Europe have fallen 55% since the beginning of the year to $2,127 per FEU, according to rate benchmarking platform Xeneta. Alan Murphy, CEO of Sea-Intelligence Maritime Analysis, said the decline in spot rates was “significantly more negative than what can be explained by just seasonality.” “This could be the result of an aggressive commercial price war between shipping lines, potentially due to the switchover to the new alliances, a weakening of the supply-demand balance, or a combination of both,” Murphy noted in this week’s Sunday Spotlight newsletter. Sea-Intelligence data showed the year-over-year capacity growth on Asia-Europe in the eight weeks prior to Lunar New Year was 9%, while in the following eight weeks capacity grew 27%. “It is clear that ... highly significant capacity growth is a key parameter in explaining the current spot rate weakness,” Murphy said. <h3>Carriers fighting for market share </h3>Stefan Verberckmoes, senior shipping analyst at Alphaliner, said the alliance reshuffle was seeing ocean carriers moving ships to new assignments as old services were phased out and new networks established. “The alliance reshuffle also explains the rate decline, as some carriers are fighting for market share to fill their ships by lowering spot freight rates,” Verberckmoes told the Journal of Commerce Thursday. Niels Rasmussen, chief shipping analyst at BIMCO, described Chinese exports as having “the worst first-quarter development of the past 20 years.” He noted in a container shipping brief Wednesday that the China Container Freight Index (CCFI), which measures both contract and spot prices out of China, was down 28% since the beginning of January due to a record decline in the spot market. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="b695a38f-ee99-4040-88ed-961c1bf85058"></dynamic-object></div>Spot rates measured by the Shanghai Containerized Freight Index (SCFI) have fallen 46% since the beginning of the year, the largest first-quarter drop since the SCFI began in late 2009. “Since 2006, the CCFI has on average only fallen 2% during the first quarter and has only declined more than 10% four times,” Rasmussen said. “The second-worst year was 2023 when average rates fell 24% between the start and end of the first quarter.” However, Xeneta’s Chief Analyst Peter Sand said the falling rates should be seen in context, with the 55% drop in Xeneta’s average Asia-North Europe spot rate coming off a significantly elevated $5,200/FEU rate in late December. “The current spot rates are 75% above the mid-November 2023 level and carriers are very profitable right now,” Sand told the Journal of Commerce Thursday. “Spot rates are heading for a little jump in a few days ... carriers are gaining confidence as they seem to have successfully arrested the three months of decline.” <h3>Strong underlying demand — for now </h3>The head of ocean freight at a global forwarder based in Europe agreed that rates were likely to rise in April with what appears to be strong underlying demand. “It seems like demand is there because some carriers are even not accepting further bookings from China to Europe, but it is hard to see if it is temporary or will be sustained,” the source said, warning that if demand fell away, “carriers will react quickly and implement ad-hoc blank sailings.” In a market update released Thursday, Maersk CCO Karsten Kildahl said Europe was facing ongoing challenges, including trade policy uncertainty, high energy prices and competitive pressures. “However, the region has very quickly made a paradigm shift, with Germany’s substantial investment plan in infrastructure and defense capabilities,” Kildahl noted. “This will provide a much-needed stimulus to the Euro area.” More worrying for carriers is that rates have fallen even as the rerouting of ships around the Cape of Good Hope continues to absorb 10% to 12% of the available global fleet capacity, a clear indication of the excess tonnage looming over the industry. “As container shipping fleet capacity is expected to grow 5.4% during 2025, freight rates can be expected to remain lower than in 2024,” Rasmussen noted. But he added that should volume growth slow and ships return to normal routings via the Red Sea and Suez Canal, “2019 [rate] levels may soon be within sight.” Data from Xeneta shows that on April 2, 2019, the average spot rate from China to North Europe was $1,185/FEU. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Ocean carriers on the Asia-North Europe trade lane are reducing the number of blank sailings in April and May while significantly adding capacity despite a spot market that continues to slide. Data from visibility provider eeSea shows carriers will blank sailings totaling 79,664 TEUs in capacity during April, almost half of the 151,549 TEUs that were withdrawn in March. At the same time, the deployed capacity is expected to surge 26% to 1.08 million TEUs. In May, the blanked capacity will be reduced still further to just 34,680 TEUs, while deployed capacity will rise to 1.12 million TEUs, the eeSea data shows. Although there is a seasonal element to the second-quarter increase in capacity deployed on the trade, as well as the reshuffling of carrier alliances employing more vessels, the reluctance by ocean carriers to withdraw capacity comes amid increasing signs of a price war. Average spot rates on Asia-North Europe have fallen 55% since the beginning of the year to $2,127 per FEU, according to rate benchmarking platform Xeneta. Alan Murphy, CEO of Sea-Intelligence Maritime Analysis, said the decline in spot rates was “significantly more negative than what can be explained by just seasonality.” “This could be the result of an aggressive commercial price war between shipping lines, potentially due to the switchover to the new alliances, a weakening of the supply-demand balance, or a combination of both,” Murphy noted in this week’s Sunday Spotlight newsletter. Sea-Intelligence data showed the year-over-year capacity growth on Asia-Europe in the eight weeks prior to Lunar New Year was 9%, while in the following eight weeks capacity grew 27%. “It is clear that ... highly significant capacity growth is a key parameter in explaining the current spot rate weakness,” Murphy said. Carriers fighting for market share Stefan Verberckmoes, senior shipping analyst at Alphaliner, said the alliance reshuffle was seeing ocean carriers moving ships to new assignments as old services were phased out and new networks established. “The alliance reshuffle also explains the rate decline, as some carriers are fighting for market share to fill their ships by lowering spot freight rates,” Verberckmoes told the Journal of Commerce Thursday. Niels Rasmussen, chief shipping analyst at BIMCO, described Chinese exports as having “the worst first-quarter development of the past 20 years.” He noted in a container shipping brief Wednesday that the China Container Freight Index (CCFI), which measures both contract and spot prices out of China, was down 28% since the beginning of January due to a record decline in the spot market. Spot rates measured by the Shanghai Containerized Freight Index (SCFI) have fallen 46% since the beginning of the year, the largest first-quarter drop since the SCFI began in late 2009. “Since 2006, the CCFI has on average only fallen 2% during the first quarter and has only declined more than 10% four times,” Rasmussen said. “The second-worst year was 2023 when average rates fell 24% between the start and end of the first quarter.” However, Xeneta’s Chief Analyst Peter Sand said the falling rates should be seen in context, with the 55% drop in Xeneta’s average Asia-North Europe spot rate coming off a significantly elevated $5,200/FEU rate in late December. “The current spot rates are 75% above the mid-November 2023 level and carriers are very profitable right now,” Sand told the Journal of Commerce Thursday. “Spot rates are heading for a little jump in a few days ... carriers are gaining confidence as they seem to have successfully arrested the three months of decline.” Strong underlying demand — for now The head of ocean freight at a global forwarder based in Europe agreed that rates were likely to rise in April with what appears to be strong underlying demand. “It seems like demand is there because some carriers are even not accepting further bookings from China to Europe, but it is hard to see if it is temporary or will be sustained,” the source said, warning that if demand fell away, “carriers will react quickly and implement ad-hoc blank sailings.” In a market update released Thursday, Maersk CCO Karsten Kildahl said Europe was facing ongoing challenges, including trade policy uncertainty, high energy prices and competitive pressures. “However, the region has very quickly made a paradigm shift, with Germany’s substantial investment plan in infrastructure and defense capabilities,” Kildahl noted. “This will provide a much-needed stimulus to the Euro area.” More worrying for carriers is that rates have fallen even as the rerouting of ships around the Cape of Good Hope continues to absorb 10% to 12% of the available global fleet capacity, a clear indication of the excess tonnage looming over the industry. “As container shipping fleet capacity is expected to grow 5.4% during 2025, freight rates can be expected to remain lower than in 2024,” Rasmussen noted. But he added that should volume growth slow and ships return to normal routings via the Red Sea and Suez Canal, “2019 [rate] levels may soon be within sight.” Data from Xeneta shows that on April 2, 2019, the average spot rate from China to North Europe was $1,185/FEU. Contact Greg Knowler at greg.knowler@spglobal.com .

Container Shipping News

Asia-Europe

Maritime

Asia-Europe carriers hold back on blanks despite rate weakness

<div class="phx-topic abstract-wrapper">But countries believed by the White House as having an unfair advantage over the US on trade will be hit with higher levies, including China, South Korea and European Union nations. </div>

But countries believed by the White House as having an unfair advantage over the US on trade will be hit with higher levies, including China, South Korea and European Union nations.

<div class="phx-topic">President Donald Trump on Wednesday said the US will assess a minimum 10% tariff on all imports into the US, although countries the Trump administration views as having an unfair trade imbalance with the US will be hit with much higher levies. The so-called “reciprocal” tariffs that Trump unveiled Wednesday will be equivalent to half of what the US calculates each individual country imposes, through tariffs and non-tariff barriers, on US exports. The tariffs vary by country and will go into effect in two stages between April 5 and April 9. Products from countries hit with the baseline 10% tariff will be impacted from April 5, while products from individual countries with specific reciprocal tariffs will be affected from April 9. Imports from China, for example, will be set at 34%, the European Union at 20% and Vietnam at 46%. Other tariff levels announced Wednesday are 26% on goods from India, 25% on South Korea and 36% on Thailand. Most South American nations will see a 10% tariff on their exports to the US. Canada and Mexico have <a href="https://www.joc.com/article/disrupted-cross-border-freight-shipping-braces-for-us-tariffs-5974787">already been hit with 25% tariffs that went into effect Wednesday.</a>“We will be charging them approximately half of what they are and have been charging us,” Trump said during an event at the White House. The president also confirmed that all automobile imports will be subject to 25% tariffs. Trump’s announcement ends weeks of speculation about the administration’s actions to support its stated goal of reinvigorating the US manufacturing sector by imposing barriers on international trade. But the endless speculation has caused chaos in the global marketplace, hit the stock market hard and caused banks and economists to lower their expectations for US growth this year. Because tariffs are taxes that will ultimately be passed on to US shoppers, consumer confidence readings have taken a hit. Trump said he expects to receive calls from heads of state about how to reduce their tariffs and other market barriers — such as state subsidies or currency manipulation — in the coming days as countries seek to reduce the impact of the reciprocal tariffs. Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. </div>

President Donald Trump on Wednesday said the US will assess a minimum 10% tariff on all imports into the US, although countries the Trump administration views as having an unfair trade imbalance with the US will be hit with much higher levies. The so-called “reciprocal” tariffs that Trump unveiled Wednesday will be equivalent to half of what the US calculates each individual country imposes, through tariffs and non-tariff barriers, on US exports. The tariffs vary by country and will go into effect in two stages between April 5 and April 9. Products from countries hit with the baseline 10% tariff will be impacted from April 5, while products from individual countries with specific reciprocal tariffs will be affected from April 9. Imports from China, for example, will be set at 34%, the European Union at 20% and Vietnam at 46%. Other tariff levels announced Wednesday are 26% on goods from India, 25% on South Korea and 36% on Thailand. Most South American nations will see a 10% tariff on their exports to the US. Canada and Mexico have already been hit with 25% tariffs that went into effect Wednesday. “We will be charging them approximately half of what they are and have been charging us,” Trump said during an event at the White House. The president also confirmed that all automobile imports will be subject to 25% tariffs. Trump’s announcement ends weeks of speculation about the administration’s actions to support its stated goal of reinvigorating the US manufacturing sector by imposing barriers on international trade. But the endless speculation has caused chaos in the global marketplace, hit the stock market hard and caused banks and economists to lower their expectations for US growth this year. Because tariffs are taxes that will ultimately be passed on to US shoppers, consumer confidence readings have taken a hit. Trump said he expects to receive calls from heads of state about how to reduce their tariffs and other market barriers — such as state subsidies or currency manipulation — in the coming days as countries seek to reduce the impact of the reciprocal tariffs. Contact Eric Johnson at eric.johnson@spglobal.com .

Trump announces 10% across-the-board tariffs on all US imports

<div class="phx-topic abstract-wrapper">There is widespread recognition that the industry has been caught in the jaws of a historically unprecedented freight recession — rate deflation accompanied by cost inflation — and if carriers are to return to historical levels of profitability, there is a need for rate and volume increases to deliver top-line growth. </div>

There is widespread recognition that the industry has been caught in the jaws of a historically unprecedented freight recession — rate deflation accompanied by cost inflation — and if carriers are to return to historical levels of profitability, there is a need for rate and volume increases to deliver top-line growth.

<div class="phx-topic">The surface freight transportation industry is now pinning its hope on economic recovery — for the third straight year — on an expected recovery in the second half of the year. The industry consensus calls for incremental improvement in truckload rates driven by gradual improvement in sector fundamentals throughout the year. Nevertheless, the most recent results of many public truckload stocks have been sobering. Although some carriers observed some “green shoots” during peak season, post-election gains have been given back — and then some. Multiples are below historic norms, and fleet sizes continue to contract — despite several years of shrinkage. There is widespread recognition that the industry has been caught in the jaws of a historically unprecedented freight recession caused by rate deflation accompanied by cost inflation. If carriers are to return to historical levels of profitability, there is a need for rate and volume increases to deliver top-line growth. To analyze this dichotomy, I utilized “An Analysis of the Operational Cost of Trucking: 2024 Update.” Prepared by the American Transportation Research Institute (ATRI), this annual report casts a wide net in respondent type, size and operating model; provides historical context for almost the past 20 years and is remarkably transparent when compared with other self-anointed experts. The first chart explains this difference by looking at two distinct metrics: driver cost per hour and fuel cost per mile. Fuel costs have deviated wildly over this period, whereas driver cost has been steadily increasing. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="b372d175-2a73-40b7-83a0-f350f63093d1"></dynamic-object></div>Nevertheless, in an environment where trucking costs are on an inexorable inflationary arc, how have rates remained so depressed? I believe that the issue is that the trucking market is less “free” since the COVID-19 pandemic. A free market exists when supply and demand (through “voluntary exchange”) determine economic outcomes. Buyers and sellers are free to trade goods and services free of governmental intervention or market dominance by one side: monopoly, oligopoly or monopsony. A free market also requires the freedom of firms to enter that market because there are no barriers of entry. Since deregulation, the truckload market has had this freedom. However, market freedom also permits firms to freely depart from the market without any barriers to exit. This has not necessarily been the case since the pandemic. At the smallest increment of production, an individual with a commercial driver’s license could acquire a tractor and trailer, obtain insurance, register with the government and be in business. If the business did not work out, the individual could hand the keys to the equipment lender and be on with their life. COVID changed these dynamics. Equipment was wildly expensive and lenders required more security than just the underlying asset. New entrants needed to pledge their homes or life savings. When the market turned, there was no exit possible because they were “upside down.” The asset was worth less than they paid for it. These owner-operators are now forced into an untenable situation. Having no exit, their only choice is to keep driving until the market changes. Because survival — not profitability — is the goal, their floor price is what I call “direct cash costs.” In the ATRI model, this is fuel, insurance, permits/licenses and tolls. Costs such as equipment payments, maintenance and repair and tires are deferred until the end. I call them “episodic cash.” Driver wages and benefits are notional. The second chart shows how these costs have tracked the past 10 years. I have also included traditional truckload and intermodal. The former has no episodic cash. Maintenance is maintained, and equipment cost is deferred by parking equipment. Non-asset intermodal is all “direct cash” because all components are purchased. Bimodal intermodal providers are not shown, but they would be between traditional truckload and non-asset intermodal. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="7c8a9981-9386-4062-844d-cd07eb8ea529"></dynamic-object></div>The second chart also explains the freight recession. The traditional economies of scale enjoyed by large truckload carriers over owner-operators are meaningless when costs are not “apples to apples.” The same applies to intermodal’s competitive advantage. The intermodal line may be a little high; however, we have not seen a widespread willingness of railroads to cut their rates. This situation is not The Flying Dutchman, a phantom ship doomed to sail forever. Eventually, the equipment will be retired, and “normal” market conditions will return. Until then, this market situation is likely to maintain. Contact Ted Prince at <a href="mailto:ted@tricitiesintermodal.com">ted@tricitiesintermodal.com</a>.</div>

The surface freight transportation industry is now pinning its hope on economic recovery — for the third straight year — on an expected recovery in the second half of the year. The industry consensus calls for incremental improvement in truckload rates driven by gradual improvement in sector fundamentals throughout the year. Nevertheless, the most recent results of many public truckload stocks have been sobering. Although some carriers observed some “green shoots” during peak season, post-election gains have been given back — and then some. Multiples are below historic norms, and fleet sizes continue to contract — despite several years of shrinkage. There is widespread recognition that the industry has been caught in the jaws of a historically unprecedented freight recession caused by rate deflation accompanied by cost inflation. If carriers are to return to historical levels of profitability, there is a need for rate and volume increases to deliver top-line growth. To analyze this dichotomy, I utilized “An Analysis of the Operational Cost of Trucking: 2024 Update.” Prepared by the American Transportation Research Institute (ATRI), this annual report casts a wide net in respondent type, size and operating model; provides historical context for almost the past 20 years and is remarkably transparent when compared with other self-anointed experts. The first chart explains this difference by looking at two distinct metrics: driver cost per hour and fuel cost per mile. Fuel costs have deviated wildly over this period, whereas driver cost has been steadily increasing. Nevertheless, in an environment where trucking costs are on an inexorable inflationary arc, how have rates remained so depressed? I believe that the issue is that the trucking market is less “free” since the COVID-19 pandemic. A free market exists when supply and demand (through “voluntary exchange”) determine economic outcomes. Buyers and sellers are free to trade goods and services free of governmental intervention or market dominance by one side: monopoly, oligopoly or monopsony. A free market also requires the freedom of firms to enter that market because there are no barriers of entry. Since deregulation, the truckload market has had this freedom. However, market freedom also permits firms to freely depart from the market without any barriers to exit. This has not necessarily been the case since the pandemic. At the smallest increment of production, an individual with a commercial driver’s license could acquire a tractor and trailer, obtain insurance, register with the government and be in business. If the business did not work out, the individual could hand the keys to the equipment lender and be on with their life. COVID changed these dynamics. Equipment was wildly expensive and lenders required more security than just the underlying asset. New entrants needed to pledge their homes or life savings. When the market turned, there was no exit possible because they were “upside down.” The asset was worth less than they paid for it. These owner-operators are now forced into an untenable situation. Having no exit, their only choice is to keep driving until the market changes. Because survival — not profitability — is the goal, their floor price is what I call “direct cash costs.” In the ATRI model, this is fuel, insurance, permits/licenses and tolls. Costs such as equipment payments, maintenance and repair and tires are deferred until the end. I call them “episodic cash.” Driver wages and benefits are notional. The second chart shows how these costs have tracked the past 10 years. I have also included traditional truckload and intermodal. The former has no episodic cash. Maintenance is maintained, and equipment cost is deferred by parking equipment. Non-asset intermodal is all “direct cash” because all components are purchased. Bimodal intermodal providers are not shown, but they would be between traditional truckload and non-asset intermodal. The second chart also explains the freight recession. The traditional economies of scale enjoyed by large truckload carriers over owner-operators are meaningless when costs are not “apples to apples.” The same applies to intermodal’s competitive advantage. The intermodal line may be a little high; however, we have not seen a widespread willingness of railroads to cut their rates. This situation is not The Flying Dutchman, a phantom ship doomed to sail forever. Eventually, the equipment will be retired, and “normal” market conditions will return. Until then, this market situation is likely to maintain. Contact Ted Prince at ted@tricitiesintermodal.com .

Surface industry faces obstacles on way to hoped-for H2 recovery

<div class="phx-topic abstract-wrapper">No matter what changes occur, a FedEx Freight spinoff as a standalone LTL carrier will be good for the entire industry, writes Satish Jindel.</div>

No matter what changes occur, a FedEx Freight spinoff as a standalone LTL carrier will be good for the entire industry, writes Satish Jindel.

<div class="phx-topic">On June 25, 2024, during an earnings call, FedEx leaders announced that the company’s board had authorized management to explore options for a sale or spinoff of FedEx Freight, and that a decision would be announced by the end of the year. On Dec. 19, <a href="https://www.joc.com/article/fedex-freight-spinoff-is-latest-move-to-reshape-us-ltl-market-5909683">the leadership announced that a spinoff</a> was the best option and would be completed over 18 months. Why tell the shareholders and the less-than-truckload (LTL) market of this move if it is not happening for many months? Now, competitors and shippers can prepare for the various changes that could result from the FedEx Freight spinoff. Competing carriers and shippers should benefit from FedEx’s Priority and Economy services getting merged for a number of reasons. While the parcel market supports express and ground services, the FedEx Express volume has been shrinking for many years, with FedEx Ground now representing over 80% of total parcel volume. So, if there is a rationale to merge the Express and Ground parcel networks, FedEx Freight’s Priority and Economy services should also be merged. The premium for the Priority service price is so small that it does not make up for the various costs related to offering two services. If the two services were so appealing and financially rewarding, other LTL carriers would have done the same. Yet after 12 years, no other LTL carrier has followed suit. Many LTL carriers with just one service are generating operating margins better than 14.5% of FedEx Freight. As the LTL industry speeds up the transit times on high-volume lanes, the gap between Priority and Economy services will shrink. <h3>Greater role for technology </h3>While the parent company wants to spin it off as FedEx Freight, expect the new board to rename it American Freightways. With relief from intercompany charges of $528 million during fiscal year 2024 paid to FedEx Corporation for marketing, sales, technology and billing support, the spinoff will save FedEx Freight a few hundred million dollars by handling those corporate support functions itself. If it uses that money to go for greater market share with pricing initiatives, it could be good news for shippers. Shippers should get ready for a greater role of technology. With the National Motor Freight Traffic Association finally adopting dimensional pricing, there will be a greater need by shippers and carriers to capture shipment dimensions. This change should ensure more accurate billing and reduce the cost for auditing all freight bills for proper classification. With shippers being required to pay greater attention to the dimensions of the pallets, they can expect FedEx Freight support to improve their palletizing just as FedEx helps parcel customers improve their packaging. Because there are practically no appointment deliveries in the parcel business, expect FedEx Freight to embrace opportunities with AI to reduce the number of appointment deliveries, which should help shippers avoid charges for such service. We can also expect FedEx Freight to take greater interest in participating in LTL industry conferences and contributing its shipment data to SMC3’s national LTL database. No matter which of these changes occur, a FedEx Freight spinoff as a standalone LTL carrier will be good for the entire industry. And for those wondering why FedEx needs 18 months to spin off Freight, just imagine the pressure on the board and leadership that may find that investors are valuing its LTL business at a higher market cap than its parcel business, which is generating just a 5.5% margin compared with 14.5% for LTL business. Contact Satish Jindel at <a href="mailto:info@shipmatrix.com">info@shipmatrix.com</a>. </div>

On June 25, 2024, during an earnings call, FedEx leaders announced that the company’s board had authorized management to explore options for a sale or spinoff of FedEx Freight, and that a decision would be announced by the end of the year. On Dec. 19, the leadership announced that a spinoff was the best option and would be completed over 18 months. Why tell the shareholders and the less-than-truckload (LTL) market of this move if it is not happening for many months? Now, competitors and shippers can prepare for the various changes that could result from the FedEx Freight spinoff. Competing carriers and shippers should benefit from FedEx’s Priority and Economy services getting merged for a number of reasons. While the parcel market supports express and ground services, the FedEx Express volume has been shrinking for many years, with FedEx Ground now representing over 80% of total parcel volume. So, if there is a rationale to merge the Express and Ground parcel networks, FedEx Freight’s Priority and Economy services should also be merged. The premium for the Priority service price is so small that it does not make up for the various costs related to offering two services. If the two services were so appealing and financially rewarding, other LTL carriers would have done the same. Yet after 12 years, no other LTL carrier has followed suit. Many LTL carriers with just one service are generating operating margins better than 14.5% of FedEx Freight. As the LTL industry speeds up the transit times on high-volume lanes, the gap between Priority and Economy services will shrink. Greater role for technology While the parent company wants to spin it off as FedEx Freight, expect the new board to rename it American Freightways. With relief from intercompany charges of $528 million during fiscal year 2024 paid to FedEx Corporation for marketing, sales, technology and billing support, the spinoff will save FedEx Freight a few hundred million dollars by handling those corporate support functions itself. If it uses that money to go for greater market share with pricing initiatives, it could be good news for shippers. Shippers should get ready for a greater role of technology. With the National Motor Freight Traffic Association finally adopting dimensional pricing, there will be a greater need by shippers and carriers to capture shipment dimensions. This change should ensure more accurate billing and reduce the cost for auditing all freight bills for proper classification. With shippers being required to pay greater attention to the dimensions of the pallets, they can expect FedEx Freight support to improve their palletizing just as FedEx helps parcel customers improve their packaging. Because there are practically no appointment deliveries in the parcel business, expect FedEx Freight to embrace opportunities with AI to reduce the number of appointment deliveries, which should help shippers avoid charges for such service. We can also expect FedEx Freight to take greater interest in participating in LTL industry conferences and contributing its shipment data to SMC3’s national LTL database. No matter which of these changes occur, a FedEx Freight spinoff as a standalone LTL carrier will be good for the entire industry. And for those wondering why FedEx needs 18 months to spin off Freight, just imagine the pressure on the board and leadership that may find that investors are valuing its LTL business at a higher market cap than its parcel business, which is generating just a 5.5% margin compared with 14.5% for LTL business. Contact Satish Jindel at info@shipmatrix.com .

How the LTL market could evolve as the FedEx Freight spinoff plays out

Trans-Pacific spot rates slide to 15-month low in March

4-7 Container SR_TP Platts Asia-US spot rates

<div class="phx-topic abstract-wrapper">A total of 68 sailings globally are expected to be canceled during April, according to maritime consultancy Drewry, with about half of the cancellations in trans-Pacific services.</div>

A total of 68 sailings globally are expected to be canceled during April, according to maritime consultancy Drewry, with about half of the cancellations in trans-Pacific services.

<div class="phx-topic">Ocean carriers plan to blank more sailings through much of April as freight rates hit new lows for 2025 and more ships are expected to hit the water in the coming months. The withdrawal of capacity also comes as ocean carriers look to finalize annual service contracts with shippers. A total of 68 sailings globally are expected to be canceled during April, according to maritime consultancy Drewry, with about half of the cancellations in trans-Pacific services. The blankings are occurring across a variety of weekly services to major US ports. Mediterranean Shipping Co. last week said it would blank six voyages between Asia and the US, with most of the cancellations for sailings originally scheduled for the second half of April. MSC said it would cancel late-April voyages scheduled to the US West Coast on both its Orient service from northern China and its Pearl service from Vietnam and southern China. MSC will also cancel a weekly sailing on its Empire and America services to the US East Coast and another sailing on its Lone Star Express service to the US Gulf Coast. Schedules from other carriers also show more capacity being withdrawn in the coming weeks. Ocean Network Express’ (ONE’s) export schedule for Shanghai shows the Premier Alliance will have no vessels for mid-April sailings on both its EC1 service to the US East Coast and the EC2 service calling the Port of Manzanillo in Mexico and the US Southeast. ONE also canceled a mid-April sailing on its MS2 service between Asia and the US West Coast and a sailing originally scheduled this week on its PN3 service to the ports of Vancouver and Tacoma. Ocean Alliance member Cosco Shipping also appears to be removing trans-Pacific capacity in the short term. It has no weekly voyage scheduled in the second week of April for its Manhattan Bridge service to the US East Coast. The carrier’s Bohai and Hibiscus Express services to the US West Coast also do not have vessels scheduled for the same week. <h3>Blanks come with trans-Pacific spot rates at fresh lows </h3>Joseph Firrincieli, a New York-based sales manager for forwarder OEC Group, told the Journal of Commerce that the blanked sailings are part of the typical tactic ocean carriers use in an attempt to firm up rates as they look to finalize annual service contracts with shippers by May 1. The raft of blank sailings comes as trans-Pacific spot rates sit at 15-month lows. Platts, a sister company of the Journal of Commerce within S&amp;P Global, pegged rates from North Asia to the West Coast at $1,600 per FEU as of Monday, with rates to the East Coast at $2,600 per FEU. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e7a65aab-9aac-4f07-9b74-1793746c01ef"></dynamic-object></div>“The reason for the increase in blanked sailings is to create an artificial supply and demand imbalance to justify increasing the floating rates,” Firrincieli said. The blanked sailings also come amid expectations of more ships hitting the water in the coming months. Trans-Pacific container capacity to the US West Coast is expected to increase 19% from March to April, according to data provider eeSea, going from 1.159 million TEUs to 1.379 million TEUs. By May, trans-Pacific capacity is expected to hit 1.426 million TEUs. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="1c1d9578-c129-4d4e-a136-e220473bd136"></dynamic-object></div>With the newbuilds being delivered, Firrincieli said ocean carriers may need to blank even more sailings in the coming weeks to bolster rates. While shippers don’t appear to be impacted by the blank sailings yet, he said the threat of tariffs and the potential that shippers will try to frontload imports to avoid them means that there is a risk that container capacity will be limited during late spring. “Right now, there is a lull in the market,” Firrincieli said. “But if the blankings persist into June or July, then shippers may find it more difficult to find space.” Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

Ocean carriers plan to blank more sailings through much of April as freight rates hit new lows for 2025 and more ships are expected to hit the water in the coming months. The withdrawal of capacity also comes as ocean carriers look to finalize annual service contracts with shippers. A total of 68 sailings globally are expected to be canceled during April, according to maritime consultancy Drewry, with about half of the cancellations in trans-Pacific services. The blankings are occurring across a variety of weekly services to major US ports. Mediterranean Shipping Co. last week said it would blank six voyages between Asia and the US, with most of the cancellations for sailings originally scheduled for the second half of April. MSC said it would cancel late-April voyages scheduled to the US West Coast on both its Orient service from northern China and its Pearl service from Vietnam and southern China. MSC will also cancel a weekly sailing on its Empire and America services to the US East Coast and another sailing on its Lone Star Express service to the US Gulf Coast. Schedules from other carriers also show more capacity being withdrawn in the coming weeks. Ocean Network Express’ (ONE’s) export schedule for Shanghai shows the Premier Alliance will have no vessels for mid-April sailings on both its EC1 service to the US East Coast and the EC2 service calling the Port of Manzanillo in Mexico and the US Southeast. ONE also canceled a mid-April sailing on its MS2 service between Asia and the US West Coast and a sailing originally scheduled this week on its PN3 service to the ports of Vancouver and Tacoma. Ocean Alliance member Cosco Shipping also appears to be removing trans-Pacific capacity in the short term. It has no weekly voyage scheduled in the second week of April for its Manhattan Bridge service to the US East Coast. The carrier’s Bohai and Hibiscus Express services to the US West Coast also do not have vessels scheduled for the same week. Blanks come with trans-Pacific spot rates at fresh lows Joseph Firrincieli, a New York-based sales manager for forwarder OEC Group, told the Journal of Commerce that the blanked sailings are part of the typical tactic ocean carriers use in an attempt to firm up rates as they look to finalize annual service contracts with shippers by May 1. The raft of blank sailings comes as trans-Pacific spot rates sit at 15-month lows. Platts, a sister company of the Journal of Commerce within S&P Global, pegged rates from North Asia to the West Coast at $1,600 per FEU as of Monday, with rates to the East Coast at $2,600 per FEU. “The reason for the increase in blanked sailings is to create an artificial supply and demand imbalance to justify increasing the floating rates,” Firrincieli said. The blanked sailings also come amid expectations of more ships hitting the water in the coming months. Trans-Pacific container capacity to the US West Coast is expected to increase 19% from March to April, according to data provider eeSea, going from 1.159 million TEUs to 1.379 million TEUs. By May, trans-Pacific capacity is expected to hit 1.426 million TEUs. With the newbuilds being delivered, Firrincieli said ocean carriers may need to blank even more sailings in the coming weeks to bolster rates. While shippers don’t appear to be impacted by the blank sailings yet, he said the threat of tariffs and the potential that shippers will try to frontload imports to avoid them means that there is a risk that container capacity will be limited during late spring. “Right now, there is a lull in the market,” Firrincieli said. “But if the blankings persist into June or July, then shippers may find it more difficult to find space.” Contact Michael Angell at michael.angell@spglobal.com .

Trans-Pacific

April blank sailings ramp up amid push to finalize long-term contracts

<div class="phx-topic abstract-wrapper">The move comes as Hutchison is facing increasing pressure from the Chinese government over the $22.8 billion sale of its ports business outside of China to BlackRock and TiL, especially the Panama ports.</div>

The move comes as Hutchison is facing increasing pressure from the Chinese government over the $22.8 billion sale of its ports business outside of China to BlackRock and TiL, especially the Panama ports.

<div class="phx-topic">Hong Kong-based CK Hutchison will miss next week’s target date to sign a deal selling its Panama Ports Company (PPC) to a consortium of BlackRock and Mediterranean Shipping Co. subsidiary Terminal Investment Limited (TiL). While the signing will not happen by the initial April 2 target date, the sale that has been shrouded in geopolitical intrigue has not been canceled, Hong Kong newspaper South China Morning Post reported Friday, quoting a source close to Hutchison. No new target date has been announced. The apparent delay comes as Hutchison is facing increasing pressure from the Chinese government over <a href="https://www.joc.com/article/hutchison-inks-228-billion-deal-to-sell-majority-of-port-holdings-to-blackrock-til-5955819">the $22.8 billion sale of its ports business outside of China to BlackRock and TiL</a>, especially the PPC-owned ports, Cristobal and Balboa, at either ends of the Panama Canal. On Friday, China’s State Administration for Market Regulation confirmed its second Anti-Monopoly Department will review the transaction “to protect fair competition in the market and safeguard the public interest.” The regulator gave no timeline for the probe in a notice published on its website. China has also reportedly told state-owned companies to halt new deals with CK Hutchison and other businesses linked to its founder, Hong Kong billionaire Li Ka-shing and his family, pending a review of their China operations, Bloomberg News reported Thursday. Only new ventures are covered by the moratorium, while existing operations are unaffected, Bloomberg said. Sale documentation for PPC was expected to be signed on or before April 2, Hutchison said in its March 4 announcement that it had reached an agreement “in principle” to sell PPC and its overseas ports network outside of China to BlackRock/TiL. The ports-telecoms-retail conglomerate had packaged PPC and its other global ports, excluding its China and Hong Kong terminals, into two separate contracts to enable a quicker sale of PPC and its two Panama ports. Hutchison has a 145-day exclusive negotiating period with BlackRock/TiL to sign final sale documents for both PPC and the other ports, which in total comprise 199 berths in 43 ports spread over 23 countries. The deal was announced amid growing ire within the new Trump administration over alleged Chinese influence in the operation of the Panama Canal. Beijing has not officially commented on the deal, saying it is a commercial transaction, but it has indicated its displeasure in other ways. That includes posting several critical commentaries on government websites, the most recent one on Wednesday, published by a Hong Kong-based pro-Beijing newspaper. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>.</div>

Hong Kong-based CK Hutchison will miss next week’s target date to sign a deal selling its Panama Ports Company (PPC) to a consortium of BlackRock and Mediterranean Shipping Co. subsidiary Terminal Investment Limited (TiL). While the signing will not happen by the initial April 2 target date, the sale that has been shrouded in geopolitical intrigue has not been canceled, Hong Kong newspaper South China Morning Post reported Friday, quoting a source close to Hutchison. No new target date has been announced. The apparent delay comes as Hutchison is facing increasing pressure from the Chinese government over the $22.8 billion sale of its ports business outside of China to BlackRock and TiL , especially the PPC-owned ports, Cristobal and Balboa, at either ends of the Panama Canal. On Friday, China’s State Administration for Market Regulation confirmed its second Anti-Monopoly Department will review the transaction “to protect fair competition in the market and safeguard the public interest.” The regulator gave no timeline for the probe in a notice published on its website. China has also reportedly told state-owned companies to halt new deals with CK Hutchison and other businesses linked to its founder, Hong Kong billionaire Li Ka-shing and his family, pending a review of their China operations, Bloomberg News reported Thursday. Only new ventures are covered by the moratorium, while existing operations are unaffected, Bloomberg said. Sale documentation for PPC was expected to be signed on or before April 2, Hutchison said in its March 4 announcement that it had reached an agreement “in principle” to sell PPC and its overseas ports network outside of China to BlackRock/TiL. The ports-telecoms-retail conglomerate had packaged PPC and its other global ports, excluding its China and Hong Kong terminals, into two separate contracts to enable a quicker sale of PPC and its two Panama ports. Hutchison has a 145-day exclusive negotiating period with BlackRock/TiL to sign final sale documents for both PPC and the other ports, which in total comprise 199 berths in 43 ports spread over 23 countries. The deal was announced amid growing ire within the new Trump administration over alleged Chinese influence in the operation of the Panama Canal. Beijing has not officially commented on the deal, saying it is a commercial transaction, but it has indicated its displeasure in other ways. That includes posting several critical commentaries on government websites, the most recent one on Wednesday, published by a Hong Kong-based pro-Beijing newspaper. Contact Keith Wallis at keithwallis@hotmail.com .

Port News

Hutchison to delay Panama ports deal signing amid growing Beijing pressure

<div class="phx-topic abstract-wrapper">In creating the threat of a clearly significant penalty, the US Trade Representative essentially forced observers to not merely give a thumbs up or down to the proposal, but to offer alternative solutions. </div>

In creating the threat of a clearly significant penalty, the US Trade Representative essentially forced observers to not merely give a thumbs up or down to the proposal, but to offer alternative solutions.

<div class="phx-topic">Hearings this week held by the US Trade Representative (USTR) over the potential levying of fees on Chinese-built and -operated ships calling at US ports certainly struck a nerve in the maritime industry. The Section 301 investigation, officially known as “China’s Targeting of the Maritime, Logistics, and Shipbuilding Sectors for Dominance,” prompted 520 comments submitted to the USTR by the March 24 deadline. More than 60 individuals gave testimony over two days of hearings. Perhaps the process was designed to elicit the heavy response the USTR received. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5971718_0.1.jpg"></img></div>By proposing fees of up to $1.5 million per US port call by Chinese tonnage, the industry had no option but to take notice. Some providing comments and testimony noted that the imposition of such fees would create an existential threat to their ability to serve US trades or specific ports, or, in some cases, to operate at all. In creating the threat of a clearly significant penalty, the USTR essentially forced those commenting to not merely give a thumbs up or down to the proposal, but to give alternative solutions based on the assumption that the Trump administration wanted something to be done to stimulate US shipbuilding. <h3>‘Think creatively’ </h3>“This essentially turned into a big brainstorming session,” Lauren Beagen, a trade attorney and former counsel at the US Federal Maritime Commission, told the Journal of Commerce this week. Beagen said the hearings forced the industry to think about ways that would allow the Trump administration to progress in its goals toward revitalizing the shipbuilding industry and US merchant fleet that likely wouldn’t have happened if the proposed penalties weren’t severe. “If the USTR just held a public hearing about how trade policies were impacting our shipbuilding industry, no one would have come,” she said. “This made everyone pay attention, and it also forced them to think creatively. How else would you have gotten the entire industry together to brainstorm like this.” To wit, a number of comments submitted to the USTR said the proposed fees were unworkable, but also had alternative suggestions to help invigorate US shipbuilding. The National Association of Waterfront Employers (NAWE), for instance, urged the USTR to consider a per-sailing fee, rather than a fee per port call, to prevent ocean carriers from consolidating port calls and hurting economic interests at US secondary and tertiary ports. <h3>Phased approach </h3>The Duluth Seaway Authority suggested the USTR phase in the port call fees and adopt a tiered approach to assessing the fees based on vessel and cargo types and the economic impact to the region. Similarly, the Port of New York and New Jersey said a phased approach to enforcing the fees would not penalize carriers for vessel and terminal investments that in some cases were made more than a decade ago. Container shipping analyst John McCown said in comments to the USTR that all fees collected in a prospective tariff program should go to a trust fund purely to support the US maritime sector. McCown estimated, using 2024 figures, that $58.9 billion would be collected annually in port fees, which represents 3.8% of the $1.5 trillion in imported goods moved via ocean, according to figures from UN Trade and Development (UNCTAD). “The good news/bad news is that the high value of container cargo puts that sector in the best position to absorb such large fees,” McCown wrote. And as an alternative to port call fees, he floated the idea of assessing per-container fees on boxes moving on Chinese-built ships that would be approximately equivalent to the amount China subsidizes its container line operators and shipbuilding industries. While that proposal, amounting to a fee of up to $60 per container, would generate far less revenue than the port call option, it would have a negligible impact on carrier networks and shippers’ supply chains, McCown argued. The broad effect of the port call fee proposal has been a call to arms across maritime and cargo interests to take seriously the administration’s efforts to reinvigorate US shipbuilding and operations in a way that would have been absent minus the threat of economic pain. Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. </div>

Hearings this week held by the US Trade Representative (USTR) over the potential levying of fees on Chinese-built and -operated ships calling at US ports certainly struck a nerve in the maritime industry. The Section 301 investigation, officially known as “China’s Targeting of the Maritime, Logistics, and Shipbuilding Sectors for Dominance,” prompted 520 comments submitted to the USTR by the March 24 deadline. More than 60 individuals gave testimony over two days of hearings. Perhaps the process was designed to elicit the heavy response the USTR received. By proposing fees of up to $1.5 million per US port call by Chinese tonnage, the industry had no option but to take notice. Some providing comments and testimony noted that the imposition of such fees would create an existential threat to their ability to serve US trades or specific ports, or, in some cases, to operate at all. In creating the threat of a clearly significant penalty, the USTR essentially forced those commenting to not merely give a thumbs up or down to the proposal, but to give alternative solutions based on the assumption that the Trump administration wanted something to be done to stimulate US shipbuilding. ‘Think creatively’ “This essentially turned into a big brainstorming session,” Lauren Beagen, a trade attorney and former counsel at the US Federal Maritime Commission, told the Journal of Commerce this week. Beagen said the hearings forced the industry to think about ways that would allow the Trump administration to progress in its goals toward revitalizing the shipbuilding industry and US merchant fleet that likely wouldn’t have happened if the proposed penalties weren’t severe. “If the USTR just held a public hearing about how trade policies were impacting our shipbuilding industry, no one would have come,” she said. “This made everyone pay attention, and it also forced them to think creatively. How else would you have gotten the entire industry together to brainstorm like this.” To wit, a number of comments submitted to the USTR said the proposed fees were unworkable, but also had alternative suggestions to help invigorate US shipbuilding. The National Association of Waterfront Employers (NAWE), for instance, urged the USTR to consider a per-sailing fee, rather than a fee per port call, to prevent ocean carriers from consolidating port calls and hurting economic interests at US secondary and tertiary ports. Phased approach The Duluth Seaway Authority suggested the USTR phase in the port call fees and adopt a tiered approach to assessing the fees based on vessel and cargo types and the economic impact to the region. Similarly, the Port of New York and New Jersey said a phased approach to enforcing the fees would not penalize carriers for vessel and terminal investments that in some cases were made more than a decade ago. Container shipping analyst John McCown said in comments to the USTR that all fees collected in a prospective tariff program should go to a trust fund purely to support the US maritime sector. McCown estimated, using 2024 figures, that $58.9 billion would be collected annually in port fees, which represents 3.8% of the $1.5 trillion in imported goods moved via ocean, according to figures from UN Trade and Development (UNCTAD). “The good news/bad news is that the high value of container cargo puts that sector in the best position to absorb such large fees,” McCown wrote. And as an alternative to port call fees, he floated the idea of assessing per-container fees on boxes moving on Chinese-built ships that would be approximately equivalent to the amount China subsidizes its container line operators and shipbuilding industries. While that proposal, amounting to a fee of up to $60 per container, would generate far less revenue than the port call option, it would have a negligible impact on carrier networks and shippers’ supply chains, McCown argued. The broad effect of the port call fee proposal has been a call to arms across maritime and cargo interests to take seriously the administration’s efforts to reinvigorate US shipbuilding and operations in a way that would have been absent minus the threat of economic pain. Contact Eric Johnson at eric.johnson@spglobal.com .

Trans-Atlantic

Plan to tax Chinese ships turned maritime malaise into ‘brainstorming session’

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The world of LTL is slow to embrace change. Business anachronisms permeate current supply chain processes. These vestiges of the way things used to work define the LTL freight transportation procurement process of many modern shippers.David Knuth, logistics specialist at IEWC, a global supplier of cable and wire based in Wisconsin, is happy to have modernized the RFP process, automating the entire LTL bidding procedure with Bid$ense, SMC³’s automated truckload and LTL freight transportation sourcing solution. But when prompted, he can still recall what once was.In his previous job, a large part of his duties were consumed by creating an intermodal bid package for carriers. In a spreadsheet, Knuth detailed the company’s volumes lane by lane, taking care to delete any errant keystrokes or misleading data. He would then email out the information to each carrier, taking time to respond to detailed technical questions about the spreadsheet data. Finally, he had to compile all the results, create an algorithm that would compare the carriers on each lane, and award the business.“It was a huge undertaking. It took about four months to do,” Knuth said of the old process. “It was almost a full-time job for that part of the year, every year.”In his new job at IEWC, he sat down with Bid$ense on day one and was amazed at the capabilities. Knuth had never before used a bid tool. SMC³’s latest versions of Bid$ense automate the process even further, taking truckload and LTL RFPs entirely online. The tool draws on RFP best-practices protocols to streamline the bidding communication process, enabling bidding carriers to respond accurately and promptly to shipper requests. The solution also does all the distribution work automatically, electronically submitting shipper bid data to carriers based on their actual service capabilities and performance records. Carriers are alerted with timely prompts for RFP deliverables, so shippers aren’t waiting by the phone for responses.Another benefit of automating the process is the data-cleansing assistance. When Knuth sent spreadsheets to carriers, data errors might cloud the bidding process; he might have to resend data or simply accept a price that did not truly reflect the costs of doing business. Data cleansing is incredibly beneficial, he said.The spreadsheet technique also made bidding analysis an onerous task. Since Bid$ense automates and streamlines the entire RFP process, intensive examination is now simple. SMC³ knows that each bid has more than one best outcome. With uniform responses from each carrier, shippers can quickly rank results and create an unlimited quantity of what-if scenarios to make the optimal procurement decision.Jesse Burnett of Central Garden &amp; Pet experiences many of the same benefits. Founded in 1980, Central Garden &amp; Pet has spent the last three decades growing from a small garden supply company to a provider of a range of products from dog chews and bird seed to soil supplements and natural insecticides. For much of its life, the company shipped these disparate goods via LTL and truckload carriers to retailers throughout the country, relying on each business unit to negotiate directly with their freight transportation providers. This arrangement worked fairly well for a small company, but as Central Garden &amp; Pet expanded, leadership decided to consolidate decision making.Burnett helped centralize the transportation decision making in 2015 with SMC³’s Bid$ense. Before Bid$ense, every business unit operated independently as far as negotiating with carriers.“There were a lot of different things just floating around,” he said. “We didn’t have master agreements in place; no national pricing at all. The pricing from carriers was just all over the place, depending on where you were.”The transformations he saw with Bid$ense were immediate. Burnett has been using the tool about every other year since its implementation at the company. Central Garden and Pet’s $19.6 million 2019 LTL bid saved the company just more than 9 percent when compared to its historical average. For Burnett, though, bid automation extends far beyond savings.“We knew that we weren’t getting the best pricing offer from our carriers just because nothing was centralized,” he continued. “We knew that if we combined everything from all these business units and paired it with one corporate offering, then it would drive some cost benefit with it.”When the company initially decided to centralize bid procurement, executives researched a number of different methodologies and technologies. In the end, though, Burnett found that Bid$ense was both widespread and well known, and that his carrier partners already knew how to use the application. Burnett also highlighted the data-cleansing process as a major benefit, saying the rigorous process ensures that carriers always return the best price.“It definitely has helped drive savings,” he said. “Any time you go out there and you drive that competitiveness with the carriers and they know they’re in a bid environment, it seems to sharpen their pencils.”Transportation procurement is an integral part of the modern supply chain. With Bid$ense, shippers can develop a strategic implementation plan that saves them time and money, but also helps them create strong relationships with their carrier partners. These carriers appreciate the solution’s data-cleansing process; when carriers receive a complete shipment history and future volume forecast, they don’t have to guess on pricing. Carriers that receive more data from shippers get a complete picture of that shipper’s freight, allowing them to accurately plan instead of simply preparing for the worst-case scenario. Clean data presented through an automated system can lead to both bigger shipment savings and a lasting partnership between carrier and customer.Whether customers are looking to streamline over-the-road transportation bidding by automating the RFP process or create an entirely new, centralized sourcing process, Bid$ense has the analytical horsepower to get the job done.SMC³ 2020 Customer Case Study

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Shippers save money, time with automated transportation bidding tools

If there’s one immutable truth in the world of logistics, it’s this: LTL is an inherently complex form of transportation. Tariffs, rates, DIM weights, transit times — it’s enough to confuse even seasoned logistics professionals. The solution to this knowledge gap has historically been on-the-job training or university supply chain education, but for a variety of reasons there is now a pressing need for third-party, remote LTL training that prepares logistics workers for transportation success. Global Scope Can Overlook Local Intricacies In the past, professionals looking to move into a supply chain career learned about the basics of supply chain from universities. However, many of these college supply chain programs are now global in scope, focusing on worldwide supply chain management instead of the intricacies of specialized domestic transportation. And even these programs, which used to be widespread, are becoming less common. LTL is not an industry of broad-brush strokes; supply chain professionals really need a pointillistic understanding of the logistics of LTL in order to excel in the industry. Accelerating Need for Dedicated LTL Education This lack of specified training put the onus on employers to prepare new hires with the LTL knowledge needed to do their jobs. Dedicated LTL study is a necessity, not a luxury. At the same time, changes in LTL and the broader supply chain world are accelerating. The reliance on e-commerce has ballooned since the start of the pandemic, and last-mile LTL shipments and related e-commerce strains on the supply chain won’t diminish once social distancing abates. That genie isn’t going back into the bottle. So supply chain employers need logistics workers that are fully versed in all aspects of the industry, ready to solve unique shipping and delivery problems based on their extensive supply chain knowledge But why care about LTL? It’s been reported that some shippers in today’s world are no longer concerned with what mode is used to ship their goods. A Multimodal Approach Ensures On-Time Delivery This mode agnosticism means supply chain stakeholders have to be well versed in all modes of transportation. As unforeseen weather events and other disruptions, such as protests, become more common, savvy logistics employees will need to be armed with familiarity of all modes, not just the most popular, to ensure that freight is delivered on time, without damage, and in the most financially expedient way possible. Offerings like SMC³’s LTL online education courses cover a wide range of topics from LTL basics and operations to more advanced concepts like pricing analytics and transportation law. The company also has plans to continually refresh content, adding new expert presenters and taking the feedback of students to make the courses even better as time goes on. Learn more about&nbsp;<a href="https://logisticstrainingcenter.com/smc3-courses/" rel="noreferrer" class="joc_admin__link">SMC³’s LTL Online Education program</a>&nbsp;and view the 2021 hybrid schedule, featuring live industry experts,&nbsp;<a href="https://www.smc3.com/onlinelearning2021/" rel="noreferrer" class="joc_admin__link">here.</a>

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Filling the Supply Chain Education Gap with LTL Education Courses

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Quarterly Intelligence

<div class="phx-topic abstract-wrapper">Shippers, carriers and forwarders say uncertainty around consumer demand, tariffs and geopolitical disruptions has produced a wider range of service contract rates this year.</div>

Shippers, carriers and forwarders say uncertainty around consumer demand, tariffs and geopolitical disruptions has produced a wider range of service contract rates this year.

<div class="phx-topic">The largest US retailers are signing their 2025–26 service contracts in the eastbound trans-Pacific at rates that are about 15% to 20% higher than they signed for last year, with midsize importers likely to finalize deals in the coming few weeks at slightly higher rates. Three carriers, seven non-vessel-operating common carriers (NVOs) and two industry consultants told the Journal of Commerce those major retailers have signed service contracts over the past week. The rates in those contracts, which essentially set the floor for negotiations with midsize and smaller shippers, range from $1,600 to $1,800 per FEU from Asia to the US West Coast, and about $1,000 per FEU higher than that to the East Coast. Most trans-Pacific service contracts will run from May 1 through April 30, 2026. Last year, the largest big box retailers signed service contracts in the range of <a href="https://www.joc.com/article/top-us-retailers-set-asia-service-contract-floor-significantly-higher-than-2023-24-5225383">$1,400 to $1,450 per FEU to the West Coast</a> and about $1,000 per FEU higher to the East Coast. However, within weeks of those agreements being signed, spot rates <a href="https://www.joc.com/article/container-market-turn-could-keep-capacity-tight-until-october-5214010">popped to levels not seen since the COVID-19 pandemic</a> due to surging demand and frontloading of imports prior to the expiration of the dockworker contract on the East and Gulf coasts. Several midsize importers — those shipping 30,000 to 40,000 containers per year — are in their second round of negotiations and are expected to sign for rates that are about $100 to $150 per FEU higher than what the largest retailers will pay. “Most of those contracts are done or nearly done,” a carrier executive who asked not to be identified told the Journal of Commerce Wednesday. He expects midsize retailers and other importers to secure contract rates in the range of $1,700 to $1,900 per FEU, up from <a href="https://www.joc.com/article/importers-try-to-push-cargo-to-contract-rates-as-trans-pac-spot-market-surges-5244311">$1,500 to $1,700 per FEU last year</a>. NVOs said their negotiations are likewise on schedule, with the first round nearing completion. They expect to wrap up their contracts later in April. “They’re coming down from the $2,500 initial offer,” said Chistian Sur, executive vice president of ocean freight at Unique Logistics International. “We haven’t gotten below $2,000 yet.” <h3>A wider range of rates </h3>Shippers and carriers say that due to uncertainties in the global trade environment, including the <a href="https://www.joc.com/article/escalating-tariffs-will-cause-profound-trade-pattern-changes-cosco-5967662">Trump administration’s tariffs</a>, the possibility of a <a href="https://www.joc.com/article/ustrs-china-tonnage-tax-would-squeeze-smaller-trades-stakeholders-5967638">tax on US port calls by Chinese-operated and -built ships</a>, <a href="https://www.joc.com/article/houthi-militants-threaten-to-restart-attacks-on-red-sea-shipping-5959250">continued disruptions in the Red Sea</a> and <a href="https://www.joc.com/article/tpm25-carriers-shippers-face-year-of-turmoil-and-uncertainty-5957721">questions over consumer demand</a> in the second half of the year, the range of service contract rates is greater this year than in past years. “The market is really unsettled,” said Benton Kauffman, head of trans-Pacific air and sea logistics at the forwarder DSV Transport Logistics. “Rates are all over the place,” said James Caradonna, executive vice president at forwarder Spedag Americas. Some large importers who held out too long in the 2024–25 contract negotiations and then could not secure sufficient space when US imports from Asia surged by double-digit percentages agreed to rates on the higher end of the spectrum this time around, he noted. The carrier executive said he believes most large customers are trying to spread out their minimum quantity commitments (MQCs) among multiple carriers, which is likely one of the main reasons behind the wider range of pricing this year. However, some shippers have resisted signing at higher rates this year because they believe the market will continue to soften in the second half, Caradonna said. Average spot rates from Asia to the US West Coast fell to $1,600 per FEU this week, down 69.5% from the first week of January and 48.7% year over year, according to Platts, sister company of the Journal of Commerce within S&amp;P Global. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="4dfb665f-cef9-423e-ba98-aecdd9291d5c"></dynamic-object></div>Other midsize importers are hesitant to make their MQCs right now due to demand uncertainty and confidence that the vessel space will be there when they need it, said Kurt McEloy, executive vice president at the forwarder Kerry Apex. “It’s hard for them to nail down their MQCs, so some midsize importers will wait until well into April,” McElroy said. Stephen Nothdurft, vice president of North American sales at forwarder MOL Consolidation Service, said his clients likewise are not concerned about capacity constraints. “Space is widely available,” he said. “There are some blanks, but it’s hard to tell what is [due to] capacity management and what is downstream from service changes early this year.” A midsize importer of home furnishings who asked not to be identified said he is operating under a “normal” timeline of wrapping up the first round of negotiations in March and signing the contract in April. Several NVOs said carriers are also bringing different strategies to contract negotiations this year because of <a href="https://www.joc.com/article/carrier-alliance-shifting-causes-february-dip-in-trans-pacific-vessel-capacity-5937603">changes in the carrier alliances</a> that took effect in February, with some pricing more aggressively in an effort to build market share. The threat by the US Trade Representative (USTR) to levy charges as high as $1.5 million per port call by vessels built in China has some carriers that rely heavily on Chinese-built vessels concerned that customers will reduce their MQCs with them this year, so those lines are also quoting lower prices in order to retain business, NVOs said. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>. Contact Laura Robb at <a href="mailto:laura.robb@spglobal.com">laura.robb@spglobal.com</a>. </div>

The largest US retailers are signing their 2025–26 service contracts in the eastbound trans-Pacific at rates that are about 15% to 20% higher than they signed for last year, with midsize importers likely to finalize deals in the coming few weeks at slightly higher rates. Three carriers, seven non-vessel-operating common carriers (NVOs) and two industry consultants told the Journal of Commerce those major retailers have signed service contracts over the past week. The rates in those contracts, which essentially set the floor for negotiations with midsize and smaller shippers, range from $1,600 to $1,800 per FEU from Asia to the US West Coast, and about $1,000 per FEU higher than that to the East Coast. Most trans-Pacific service contracts will run from May 1 through April 30, 2026. Last year, the largest big box retailers signed service contracts in the range of $1,400 to $1,450 per FEU to the West Coast and about $1,000 per FEU higher to the East Coast. However, within weeks of those agreements being signed, spot rates popped to levels not seen since the COVID-19 pandemic due to surging demand and frontloading of imports prior to the expiration of the dockworker contract on the East and Gulf coasts. Several midsize importers — those shipping 30,000 to 40,000 containers per year — are in their second round of negotiations and are expected to sign for rates that are about $100 to $150 per FEU higher than what the largest retailers will pay. “Most of those contracts are done or nearly done,” a carrier executive who asked not to be identified told the Journal of Commerce Wednesday. He expects midsize retailers and other importers to secure contract rates in the range of $1,700 to $1,900 per FEU, up from $1,500 to $1,700 per FEU last year . NVOs said their negotiations are likewise on schedule, with the first round nearing completion. They expect to wrap up their contracts later in April. “They’re coming down from the $2,500 initial offer,” said Chistian Sur, executive vice president of ocean freight at Unique Logistics International. “We haven’t gotten below $2,000 yet.” A wider range of rates Shippers and carriers say that due to uncertainties in the global trade environment, including the Trump administration’s tariffs , the possibility of a tax on US port calls by Chinese-operated and -built ships , continued disruptions in the Red Sea and questions over consumer demand in the second half of the year, the range of service contract rates is greater this year than in past years. “The market is really unsettled,” said Benton Kauffman, head of trans-Pacific air and sea logistics at the forwarder DSV Transport Logistics. “Rates are all over the place,” said James Caradonna, executive vice president at forwarder Spedag Americas. Some large importers who held out too long in the 2024–25 contract negotiations and then could not secure sufficient space when US imports from Asia surged by double-digit percentages agreed to rates on the higher end of the spectrum this time around, he noted. The carrier executive said he believes most large customers are trying to spread out their minimum quantity commitments (MQCs) among multiple carriers, which is likely one of the main reasons behind the wider range of pricing this year. However, some shippers have resisted signing at higher rates this year because they believe the market will continue to soften in the second half, Caradonna said. Average spot rates from Asia to the US West Coast fell to $1,600 per FEU this week, down 69.5% from the first week of January and 48.7% year over year, according to Platts, sister company of the Journal of Commerce within S&P Global. Other midsize importers are hesitant to make their MQCs right now due to demand uncertainty and confidence that the vessel space will be there when they need it, said Kurt McEloy, executive vice president at the forwarder Kerry Apex. “It’s hard for them to nail down their MQCs, so some midsize importers will wait until well into April,” McElroy said. Stephen Nothdurft, vice president of North American sales at forwarder MOL Consolidation Service, said his clients likewise are not concerned about capacity constraints. “Space is widely available,” he said. “There are some blanks, but it’s hard to tell what is [due to] capacity management and what is downstream from service changes early this year.” A midsize importer of home furnishings who asked not to be identified said he is operating under a “normal” timeline of wrapping up the first round of negotiations in March and signing the contract in April. Several NVOs said carriers are also bringing different strategies to contract negotiations this year because of changes in the carrier alliances that took effect in February, with some pricing more aggressively in an effort to build market share. The threat by the US Trade Representative (USTR) to levy charges as high as $1.5 million per port call by vessels built in China has some carriers that rely heavily on Chinese-built vessels concerned that customers will reduce their MQCs with them this year, so those lines are also quoting lower prices in order to retain business, NVOs said. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com . Contact Laura Robb at laura.robb@spglobal.com .

Largest US importers finalizing contracts in ‘unsettled’ trans-Pacific

<div class="phx-topic abstract-wrapper">The deal comes as the world’s largest container shipping company looks to establish a bigger foothold in surface transportation. </div>

The deal comes as the world’s largest container shipping company looks to establish a bigger foothold in surface transportation.

<div class="phx-topic">A subsidiary of Mediterranean Shipping Co. has agreed in principle to acquire a majority ownership stake in intermodal logistics provider COFC Logistics, one of the most popular options for shippers looking to transport 53-foot domestic containers on BNSF Railway. Medlog USA, the MSC subsidiary, is expected to close the deal next week. It will keep the existing COFC Logistics management team in place, including CEO Garry Old. Terms of the deal were not disclosed. COFC hauls more than 100,000 intermodal shipments per year and grosses between $100 million and $500 million in revenue annually, according to Journal of Commerce estimates. Old, who will remain in his position for the next five years and retain a minority ownership stake in COFC, told the Journal of Commerce that shippers and intermodal marketing companies (IMCs) using COFC will not see any changes, adding that the company’s exclusive partnership with BNSF will remain intact. “The name is still the same, our email addresses, our logos, our brand will not change in any way,” Old said. “Our customers won’t notice any differences.” The deal comes as MSC attempts to get deeper into surface transportation in various countries and follows Medlog acquiring UK-based rail and road logistics provider Maritime Transport last September. Medlog made its first major splash in the US in 2022 when it acquired C&amp;K Holdings, which hauls ocean and domestic containers and owns terminals in nearly all US port cities, as well as rail ramps. Ohio-based COFC owns about 8,000 containers catering to customers who want to diversify their rail freight between BNSF and Union Pacific Railroad. Shippers who aren’t large enough to get the attention of leading IMC J.B. Hunt Transport Services will use brokers that team with COFC Logistics, although even large shippers use COFC to have multiple paths to access BNSF’s intermodal network. Medlog will infuse capital into COFC, which has faced the reality of intermodal contract rates falling from pandemic-level highs while operating costs keep rising. “We are restructuring some debt,” said Old. [The deal] improves our financial position.” Old said while asset-based and non-asset intermodal providers are struggling due to unsustainable rates, shippers don’t always tender the volumes they agree to, known as bid compliance. “Our industry needs to be better with BCO [beneficial cargo owner] compliance,” he said. “If the BCO is awarding 10,000 loads and it ends up being 1,000 loads, that’s a problem. That’s where the frustration sets in.” Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>.</div>

A subsidiary of Mediterranean Shipping Co. has agreed in principle to acquire a majority ownership stake in intermodal logistics provider COFC Logistics, one of the most popular options for shippers looking to transport 53-foot domestic containers on BNSF Railway. Medlog USA, the MSC subsidiary, is expected to close the deal next week. It will keep the existing COFC Logistics management team in place, including CEO Garry Old. Terms of the deal were not disclosed. COFC hauls more than 100,000 intermodal shipments per year and grosses between $100 million and $500 million in revenue annually, according to Journal of Commerce estimates. Old, who will remain in his position for the next five years and retain a minority ownership stake in COFC, told the Journal of Commerce that shippers and intermodal marketing companies (IMCs) using COFC will not see any changes, adding that the company’s exclusive partnership with BNSF will remain intact. “The name is still the same, our email addresses, our logos, our brand will not change in any way,” Old said. “Our customers won’t notice any differences.” The deal comes as MSC attempts to get deeper into surface transportation in various countries and follows Medlog acquiring UK-based rail and road logistics provider Maritime Transport last September. Medlog made its first major splash in the US in 2022 when it acquired C&K Holdings, which hauls ocean and domestic containers and owns terminals in nearly all US port cities, as well as rail ramps. Ohio-based COFC owns about 8,000 containers catering to customers who want to diversify their rail freight between BNSF and Union Pacific Railroad. Shippers who aren’t large enough to get the attention of leading IMC J.B. Hunt Transport Services will use brokers that team with COFC Logistics, although even large shippers use COFC to have multiple paths to access BNSF’s intermodal network. Medlog will infuse capital into COFC, which has faced the reality of intermodal contract rates falling from pandemic-level highs while operating costs keep rising. “We are restructuring some debt,” said Old. [The deal] improves our financial position.” Old said while asset-based and non-asset intermodal providers are struggling due to unsustainable rates, shippers don’t always tender the volumes they agree to, known as bid compliance. “Our industry needs to be better with BCO [beneficial cargo owner] compliance,” he said. “If the BCO is awarding 10,000 loads and it ends up being 1,000 loads, that’s a problem. That’s where the frustration sets in.” Contact Ari Ashe at ari.ashe@spglobal.com .

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