<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.

Feature image

<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 .

Transport, Trade and Regulation News

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

<div class="phx-topic abstract-wrapper">The change to a more freight-all-kinds strategy comes as ongoing contracts for the 2024–25 service year bundled with penalty clauses have proved to be problematic for keeping customer relationships intact.</div>

The change to a more freight-all-kinds strategy comes as ongoing contracts for the 2024–25 service year bundled with penalty clauses have proved to be problematic for keeping customer relationships intact.

<div class="phx-topic">Ocean carriers active on the India-US East Coast trade lane seem to be “reformatting” their traditional service contract arrangements for the 2025–26 season as the market environment remains increasingly cloudy, industry sources say. Multiple sources, especially non-vessel-operating common carriers (NVOs), who spoke with the Journal of Commerce noted that some liners are not keen to negotiate fixed-rate long-term deals as they anticipate cases of shipper underperformance or failure to honor commitments in the current volatile market. The strategy change comes as ongoing contracts for the 2024–25 service year bundled with penalty clauses have proved to be problematic for keeping customer relationships intact. “The indications as of now are that [carriers] want to avoid a recurrence of too many customer complaints about penalty notices and potential legal risks,” an NVO executive who didn’t want to be identified told the Journal of Commerce. “Customers usually push for penalty waivers regardless of the terms and conditions they have agreed to.” <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="56199e2b-5df4-468f-a149-b18ae7c32e51"></dynamic-object></div>One carrier holding off on negotiating or signing long-term contracts is Hapag-Lloyd, sources say. The German liner was previously offering a fixed-price type of contract with validity ranging from six to 18 months. “Hapag-Lloyd instead is now seeking to work on a freight-all-kinds [FAK] pricing basis with all customers,” an NVO source said. Hapag-Lloyd is the top India-US East Coast carrier, offering the fastest transit from West India to North America. The carrier accounts for almost 25% of the market, anecdotal industry data indicates. There are some tentative signals that a few other competing carriers will selectively consider an FAK pricing strategy to ward off likely bad blood with customers as long-term relationships remain more critical than ever amid the dual headwinds of significant overcapacity and muted demand growth. But other forwarder sources hold a view that carriers can’t afford to lose contract customers, which they say could impact their space allocation math. “Liners need some base cargo through contracts to plan their commercial strategies,” a forwarder executive said. “It’s true that contracts with penalty clauses or floating charges have been a complex matter, with defaults reported, mostly with small and mid-size volume shippers.” Sources also noted that contract clients, both beneficial cargo owners and NVOs, typically contribute approximately 50% of carrier volumes on the trade lane. <h3>‘Rate war’</h3>Riding on enhanced India-USEC weekly capacity, Maersk is said to be advancing contract negotiations and has already concluded deals with several leading forwarders and/or BCOs, sources say. Meanwhile, most carriers on the trade lane have canceled early-April rate increase plans and extended recent spot rates through the first half of the month, a lack of bargaining position they in large part blame on Asian carriers working on slot rights, particularly Cosco Shipping and its subsidiary OOCL. “What we are witnessing now can best be described as a rate war between European and Asian carriers,” Joy Varghese, managing director of Mumbai-based forwarder Cargocare Group, told the Journal of Commerce. “As a result, mega carriers are increasingly weaponizing blank sailings or port skips to tighten the market.” Platts, a sister company of the Journal of Commerce within S&amp;P Global, pegged India-USEC spot rates at $1,700 per FEU as of April 1, down 8% from last week. Contact Bency Mathew at <a href="https://www.joc.com/article/bencymathew@gmail.com">bencyvmathew@gmail.com</a>.</div>

Ocean carriers active on the India-US East Coast trade lane seem to be “reformatting” their traditional service contract arrangements for the 2025–26 season as the market environment remains increasingly cloudy, industry sources say. Multiple sources, especially non-vessel-operating common carriers (NVOs), who spoke with the Journal of Commerce noted that some liners are not keen to negotiate fixed-rate long-term deals as they anticipate cases of shipper underperformance or failure to honor commitments in the current volatile market. The strategy change comes as ongoing contracts for the 2024–25 service year bundled with penalty clauses have proved to be problematic for keeping customer relationships intact. “The indications as of now are that [carriers] want to avoid a recurrence of too many customer complaints about penalty notices and potential legal risks,” an NVO executive who didn’t want to be identified told the Journal of Commerce. “Customers usually push for penalty waivers regardless of the terms and conditions they have agreed to.” One carrier holding off on negotiating or signing long-term contracts is Hapag-Lloyd, sources say. The German liner was previously offering a fixed-price type of contract with validity ranging from six to 18 months. “Hapag-Lloyd instead is now seeking to work on a freight-all-kinds [FAK] pricing basis with all customers,” an NVO source said. Hapag-Lloyd is the top India-US East Coast carrier, offering the fastest transit from West India to North America. The carrier accounts for almost 25% of the market, anecdotal industry data indicates. There are some tentative signals that a few other competing carriers will selectively consider an FAK pricing strategy to ward off likely bad blood with customers as long-term relationships remain more critical than ever amid the dual headwinds of significant overcapacity and muted demand growth. But other forwarder sources hold a view that carriers can’t afford to lose contract customers, which they say could impact their space allocation math. “Liners need some base cargo through contracts to plan their commercial strategies,” a forwarder executive said. “It’s true that contracts with penalty clauses or floating charges have been a complex matter, with defaults reported, mostly with small and mid-size volume shippers.” Sources also noted that contract clients, both beneficial cargo owners and NVOs, typically contribute approximately 50% of carrier volumes on the trade lane. ‘Rate war’ Riding on enhanced India-USEC weekly capacity, Maersk is said to be advancing contract negotiations and has already concluded deals with several leading forwarders and/or BCOs, sources say. Meanwhile, most carriers on the trade lane have canceled early-April rate increase plans and extended recent spot rates through the first half of the month, a lack of bargaining position they in large part blame on Asian carriers working on slot rights, particularly Cosco Shipping and its subsidiary OOCL. “What we are witnessing now can best be described as a rate war between European and Asian carriers,” Joy Varghese, managing director of Mumbai-based forwarder Cargocare Group, told the Journal of Commerce. “As a result, mega carriers are increasingly weaponizing blank sailings or port skips to tighten the market.” Platts, a sister company of the Journal of Commerce within S&P Global, pegged India-USEC spot rates at $1,700 per FEU as of April 1, down 8% from last week. Contact Bency Mathew at bencyvmathew@gmail.com .

Container Shipping News

Port News

Container lines

Maritime

India-US liners tweak 2025–26 contract plans amid shipper performance fears: NVOs

<div class="phx-topic abstract-wrapper">The terminal operator says buying the railroad that connects ports on the canal’s Pacific and Atlantic sides fits into its overall strategy of offering more services to shippers. </div>

The terminal operator says buying the railroad that connects ports on the canal’s Pacific and Atlantic sides fits into its overall strategy of offering more services to shippers.

<div class="phx-topic">APM Terminals has acquired the short-line railroad serving the Panama Canal as the marine terminal operator looks to expand its reach into transshipment and intermodal services. APM said Wednesday it struck a deal for the Panama Canal Railway Company (PCRC) with its joint owners Canadian Pacific Kansas City and Illinois-based conglomerate Lanco Group, along with the latter’s terminal equipment division Mi-Jack. Terms of the acquisition were not disclosed. APM said the PCRC had revenue of $77 million last year with an operating profit of $36 million. In 2024, PCRC handled 400,000 containers. The PCRC is a 47-mile, single-track railway that shuttles freight between the Port of Colon on the canal’s Atlantic side and the Port of Balboa on the Pacific side. Kansas City Southern and Mi-Jack have operated the PCRC under a concession from Panama since 1998. APM Chief Executive Keith Svendsen said in a statement announcing the deal that PCRC is “aligned to our core services of intermodal container movement [and] will provide a significant opportunity for us to offer a broader range of services to the global shipping customers we serve.” APM said the PCRC will complement the terminal operator’s existing service offerings. While APM doesn’t have any terminals in Panama, it does operate terminals in Costa Rica and Guatemala. APM parent Maersk operates a fulfillment center at the Panama Pacifico logistics park near the country’s capitol. Maersk is relying on efficient transshipping to provide high schedule reliability for its Gemini Cooperation alliance with Hapag-Lloyd. Under its original owners, the PCRC aimed to offer transshipment options between Colon and Balboa for vessels serving north-south trades. PCRC also handles cargo offloaded due to <a href="https://www.joc.com/article/near-normal-water-levels-allowing-more-ship-transits-through-panama-canal-5192222">draft restrictions on the canal</a> or navigational purposes. The acquisition comes as the Panama Canal Authority (ACP) looks at options to ensure the canal’s long-term viability. Last year, ACP said it was looking into the construction of a new road network to serve as a land bridge between the canal’s two sides. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com ">michael.angell@spglobal.com</a>. </div>

APM Terminals has acquired the short-line railroad serving the Panama Canal as the marine terminal operator looks to expand its reach into transshipment and intermodal services. APM said Wednesday it struck a deal for the Panama Canal Railway Company (PCRC) with its joint owners Canadian Pacific Kansas City and Illinois-based conglomerate Lanco Group, along with the latter’s terminal equipment division Mi-Jack. Terms of the acquisition were not disclosed. APM said the PCRC had revenue of $77 million last year with an operating profit of $36 million. In 2024, PCRC handled 400,000 containers. The PCRC is a 47-mile, single-track railway that shuttles freight between the Port of Colon on the canal’s Atlantic side and the Port of Balboa on the Pacific side. Kansas City Southern and Mi-Jack have operated the PCRC under a concession from Panama since 1998. APM Chief Executive Keith Svendsen said in a statement announcing the deal that PCRC is “aligned to our core services of intermodal container movement [and] will provide a significant opportunity for us to offer a broader range of services to the global shipping customers we serve.” APM said the PCRC will complement the terminal operator’s existing service offerings. While APM doesn’t have any terminals in Panama, it does operate terminals in Costa Rica and Guatemala. APM parent Maersk operates a fulfillment center at the Panama Pacifico logistics park near the country’s capitol. Maersk is relying on efficient transshipping to provide high schedule reliability for its Gemini Cooperation alliance with Hapag-Lloyd. Under its original owners, the PCRC aimed to offer transshipment options between Colon and Balboa for vessels serving north-south trades. PCRC also handles cargo offloaded due to draft restrictions on the canal or navigational purposes. The acquisition comes as the Panama Canal Authority (ACP) looks at options to ensure the canal’s long-term viability. Last year, ACP said it was looking into the construction of a new road network to serve as a land bridge between the canal’s two sides. Contact Michael Angell at michael.angell@spglobal.com .

Marine terminals

International ports

International rail

Intermodal providers

APM acquires first railroad asset with deal for Panama Canal’s short line

<div class="phx-topic abstract-wrapper">Price and volume increases are being seen across trans-Pacific and trans-Atlantic trade lanes, but there is little clarity on whether underlying demand is enough to prop up spot rates once the tariffs have been implemented. </div>

Price and volume increases are being seen across trans-Pacific and trans-Atlantic trade lanes, but there is little clarity on whether underlying demand is enough to prop up spot rates once the tariffs have been implemented.

<div class="phx-topic">Air cargo rates on the trans-Pacific and trans-Atlantic were up again this week as shippers took to the air ahead of the April 2 rollout of US import tariffs on China and Europe. While there is little clarity on whether underlying demand is enough to prop up spot rates once the tariffs have been implemented, airlines and forwarders are benefiting from an unseasonal jump in rates and volume. The average Shanghai-North America rate of $5.40 per kilogram on Monday was up slightly on the previous week, the second consecutive week the price has topped $5/kg, according to the Baltic Air Index (BAI). Rates on other key lanes out of Asia to the US were also up, with large sequential weekly gains from Vietnam and India. North Europe to North America rates were up 2.5% from last week at $2.89/kg, with the index of outbound routes from Frankfurt increasing 8.3%. Outbound London rates were up 15.5% week over week, BAI data showed. Much of the air freight demand on the westbound trans-Atlantic routes is being driven by the automotive sector that is <a href="https://www.joc.com/article/trans-atlantic-air-cargo-demand-surges-ahead-of-us-tariffs-5965691">facing stiff tariffs on vehicles exported to the US</a>. “Demand remains high due to restocking efforts in the US,” Loic Gay, global air freight leader at CEVA Logistics, told the Journal of Commerce. “Flights are expected to operate at full capacity and air freight rates will likely remain elevated, especially for main deck cargo space.” While rates rose on the US-bound routes, it was the Asia-Europe trade lane where the largest price gains were seen, according to rate benchmarking platform Xeneta. Data from Xeneta shows spot rates sold by airlines to forwarders on Asia-Europe rose 11% year over year this week to $4.28/kg. The first three weeks of March saw double-digit year-over-year growth in air cargo volume on the Asia-to-Europe trade, according to an update this week by Xeneta air freight analyst Wenwen Zhang. “This growing demand from Northeast Asia to Europe is driven largely by robust e-commerce volume and sits well above the levels seen 12 months ago in both chargeable weight per shipment and shipment count,” Zhang noted. <h3>Signs of future demand emerging </h3>There are encouraging signs of future air freight demand indicated by the Purchasing Managers Indexes (PMIs) produced by S&amp;P Global, parent company of the Journal of Commerce. China’s manufacturing sector expanded at a faster rate in March with factory output growth accelerating on the back of a sustained rise in new orders. New export sales notably increased at the quickest pace in nearly a year, the Caixin China General Manufacturing PMI found. The Eurozone PMI also showed a slight improvement in manufacturing activity, with Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, taking a glass-half-full view in his analysis of the PMI survey results. “Things are looking up,” de la Rubia wrote. “The PMI has increased for the third month in a row ... a significant part of this movement may have to do with the frontloading of orders from the US ahead of the tariffs, which means some backlash is to be expected in the coming months. “However, given the geopolitical developments, there is also increasing speculation that the defense sector will expand significantly over the next few years, with direct and indirect positive effects on the industry.” <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="a9cf3dff-bcf4-43fd-82e7-9db527bd4aee"></dynamic-object></div>The uncertainty was playing out in the contracting of air cargo space. While the main online marketplaces contract space directly with airlines, forwarders handle the general air cargo business of shippers. Zhang said just under 45% of Asia-Europe westbound volumes were being bought by forwarders on the spot market, an increase from last year that demonstrates a level of caution. “If there was confidence of significant upward pressure to come, you may expect a higher percentage of seasonal agreements as freight forwarders look to lock in lower rates with airlines so they can then sell to shippers at a higher price down the line,” she noted. <h3>Flexible contracts are key </h3>The key to navigating the unsettled air cargo market is having the flexibility to handle rapidly changing conditions, said Martin Habisreitinger, COO for airfreight at Hellmann Worldwide Logistics. “We are closely monitoring the evolving global landscape and its impact on demand volatility, particularly driven by trade wars and geopolitical challenges,” Habisreitinger told the Journal of Commerce. “To navigate this uncertainty and ensure continuity for our customers, we are actively working on flexible agreements with airlines and partners,” he added. “These agreements allow us to adapt to fluctuating demand and remain agile in our service offerings.” Habisreitinger said Hellmann was also diversifying routing options to mitigate the impact of capacity constraints on some trade lanes. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Air cargo rates on the trans-Pacific and trans-Atlantic were up again this week as shippers took to the air ahead of the April 2 rollout of US import tariffs on China and Europe. While there is little clarity on whether underlying demand is enough to prop up spot rates once the tariffs have been implemented, airlines and forwarders are benefiting from an unseasonal jump in rates and volume. The average Shanghai-North America rate of $5.40 per kilogram on Monday was up slightly on the previous week, the second consecutive week the price has topped $5/kg, according to the Baltic Air Index (BAI). Rates on other key lanes out of Asia to the US were also up, with large sequential weekly gains from Vietnam and India. North Europe to North America rates were up 2.5% from last week at $2.89/kg, with the index of outbound routes from Frankfurt increasing 8.3%. Outbound London rates were up 15.5% week over week, BAI data showed. Much of the air freight demand on the westbound trans-Atlantic routes is being driven by the automotive sector that is facing stiff tariffs on vehicles exported to the US . “Demand remains high due to restocking efforts in the US,” Loic Gay, global air freight leader at CEVA Logistics, told the Journal of Commerce. “Flights are expected to operate at full capacity and air freight rates will likely remain elevated, especially for main deck cargo space.” While rates rose on the US-bound routes, it was the Asia-Europe trade lane where the largest price gains were seen, according to rate benchmarking platform Xeneta. Data from Xeneta shows spot rates sold by airlines to forwarders on Asia-Europe rose 11% year over year this week to $4.28/kg. The first three weeks of March saw double-digit year-over-year growth in air cargo volume on the Asia-to-Europe trade, according to an update this week by Xeneta air freight analyst Wenwen Zhang. “This growing demand from Northeast Asia to Europe is driven largely by robust e-commerce volume and sits well above the levels seen 12 months ago in both chargeable weight per shipment and shipment count,” Zhang noted. Signs of future demand emerging There are encouraging signs of future air freight demand indicated by the Purchasing Managers Indexes (PMIs) produced by S&P Global, parent company of the Journal of Commerce. China’s manufacturing sector expanded at a faster rate in March with factory output growth accelerating on the back of a sustained rise in new orders. New export sales notably increased at the quickest pace in nearly a year, the Caixin China General Manufacturing PMI found. The Eurozone PMI also showed a slight improvement in manufacturing activity, with Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, taking a glass-half-full view in his analysis of the PMI survey results. “Things are looking up,” de la Rubia wrote. “The PMI has increased for the third month in a row ... a significant part of this movement may have to do with the frontloading of orders from the US ahead of the tariffs, which means some backlash is to be expected in the coming months. “However, given the geopolitical developments, there is also increasing speculation that the defense sector will expand significantly over the next few years, with direct and indirect positive effects on the industry.” The uncertainty was playing out in the contracting of air cargo space. While the main online marketplaces contract space directly with airlines, forwarders handle the general air cargo business of shippers. Zhang said just under 45% of Asia-Europe westbound volumes were being bought by forwarders on the spot market, an increase from last year that demonstrates a level of caution. “If there was confidence of significant upward pressure to come, you may expect a higher percentage of seasonal agreements as freight forwarders look to lock in lower rates with airlines so they can then sell to shippers at a higher price down the line,” she noted. Flexible contracts are key The key to navigating the unsettled air cargo market is having the flexibility to handle rapidly changing conditions, said Martin Habisreitinger, COO for airfreight at Hellmann Worldwide Logistics. “We are closely monitoring the evolving global landscape and its impact on demand volatility, particularly driven by trade wars and geopolitical challenges,” Habisreitinger told the Journal of Commerce. “To navigate this uncertainty and ensure continuity for our customers, we are actively working on flexible agreements with airlines and partners,” he added. “These agreements allow us to adapt to fluctuating demand and remain agile in our service offerings.” Habisreitinger said Hellmann was also diversifying routing options to mitigate the impact of capacity constraints on some trade lanes. Contact Greg Knowler at greg.knowler@spglobal.com .

Air Cargo Forwarder News

Air Cargo Carriers News

Air Cargo

New Trump tariffs spur rise in US-bound air cargo rates amid frontloading

<div class="phx-topic abstract-wrapper">Firms sourcing from Vietnam, India or Mexico rely heavily on components, raw materials and equipment from China, which will remain an essential link in the production supply chain even if it’s no longer the only one.</div>

Firms sourcing from Vietnam, India or Mexico rely heavily on components, raw materials and equipment from China, which will remain an essential link in the production supply chain even if it’s no longer the only one.

<div class="phx-topic">Economic volatility, geopolitical instability and trade policy uncertainty, especially from the US, have disrupted the relatively stable sourcing playbook that for decades had China at its center, according to the Council for Supply Chain Management Professionals (CSCMP). And the ongoing series of shocks to the global economy, the Red Sea attacks on commercial shipping, logistics bottlenecks and growing regulatory scrutiny are forcing companies to look deeper into where their products are sourced, moved and managed. “Sourcing from Asia, and especially from China, was almost automatic, and the logic was clear — there was cost-effective labor, scale, efficiency and predictability — and China became the factory of the world,” Len Pannett, managing director of consultancy Supercharg3d, told a recent CSCMP webinar on Asia sourcing. “What’s different now is the sheer complexity,” Pannett added. “Supply chain leaders are no longer just choosing the cheapest locations. They’re navigating tariff walls, national security concerns, ESG [environment and social governance] scrutiny, infrastructure gaps and freight volatility.” In this volatile and changing environment, China-plus-one sourcing has become a buzz phrase, but Pannett said it was not a clean or simple pivot, and the reality was more nuanced. “Many firms that source from, say, Vietnam, India or Mexico, still rely heavily on components, raw materials and equipment from China, and in that sense, China remains an essential link, even if it’s no longer the only one,” he said. Dan Krassenstein, global supply chain director at packaging producer Procon Pacific, agreed that China would remain a key sourcing location despite the politically-driven US trade policy. The US will begin implementing an array of tariffs on April 2 in what President Donald Trump has dubbed “Liberation Day.” “There’s going to be a lot of reciprocal tariffs applied across the globe, and it’s going to be a game of Russian roulette,” Krassenstein told the CSCMP webinar. “I was just in India speaking with my suppliers and they really don’t know what to expect.” <h3>Manufacturing role ‘deemphasized’ </h3>But even with the tariffs, China will remain a core manufacturing base, although its role is being “deemphasized,” Krassenstein noted. “Vietnam and Mexico get a lot of their raw materials and semi-finished components from China, and even India gets a lot of its machinery from China, and the amount of intra-Asia trade is enormous,” he said. “China still plays a key role in global trade, but it is just a little bit deemphasized.” Krassenstein said while labor costs in China are increasing, the US tariffs are exacerbating the cost difference between manufacturing in China and alternative countries, thus accelerating the search for “China-plus-one” sourcing among US importers. “When you get to production of certain items, Mexico makes more sense and a lot of Chinese manufacturers shifted some of their production very early on to Mexico to take advantage of the free trade accord and proximity to the US to reduce some of the geopolitical risks,” he said. The European Union is not facing the same political pressure on corporations to look for alternative sourcing locations to China, according to Tom van der Heyden, co-founder and CEO of sourcing strategy consultancy S3 Group. “We also do not have a Mexico next door in Europe ... it is much harder for European corporations to look into that so we are more stuck to China,” he noted. But van der Heyden added that despite tariffs and the political environment affecting China’s ability to supply the US, the country remained a competitive manufacturing powerhouse. “The skill set, the combination of skills, the supplier clusters in China and the infrastructure are unmatched, and that creates an environment that is so hard to get away from,” he said. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Economic volatility, geopolitical instability and trade policy uncertainty, especially from the US, have disrupted the relatively stable sourcing playbook that for decades had China at its center, according to the Council for Supply Chain Management Professionals (CSCMP). And the ongoing series of shocks to the global economy, the Red Sea attacks on commercial shipping, logistics bottlenecks and growing regulatory scrutiny are forcing companies to look deeper into where their products are sourced, moved and managed. “Sourcing from Asia, and especially from China, was almost automatic, and the logic was clear — there was cost-effective labor, scale, efficiency and predictability — and China became the factory of the world,” Len Pannett, managing director of consultancy Supercharg3d, told a recent CSCMP webinar on Asia sourcing. “What’s different now is the sheer complexity,” Pannett added. “Supply chain leaders are no longer just choosing the cheapest locations. They’re navigating tariff walls, national security concerns, ESG [environment and social governance] scrutiny, infrastructure gaps and freight volatility.” In this volatile and changing environment, China-plus-one sourcing has become a buzz phrase, but Pannett said it was not a clean or simple pivot, and the reality was more nuanced. “Many firms that source from, say, Vietnam, India or Mexico, still rely heavily on components, raw materials and equipment from China, and in that sense, China remains an essential link, even if it’s no longer the only one,” he said. Dan Krassenstein, global supply chain director at packaging producer Procon Pacific, agreed that China would remain a key sourcing location despite the politically-driven US trade policy. The US will begin implementing an array of tariffs on April 2 in what President Donald Trump has dubbed “Liberation Day.” “There’s going to be a lot of reciprocal tariffs applied across the globe, and it’s going to be a game of Russian roulette,” Krassenstein told the CSCMP webinar. “I was just in India speaking with my suppliers and they really don’t know what to expect.” Manufacturing role ‘deemphasized’ But even with the tariffs, China will remain a core manufacturing base, although its role is being “deemphasized,” Krassenstein noted. “Vietnam and Mexico get a lot of their raw materials and semi-finished components from China, and even India gets a lot of its machinery from China, and the amount of intra-Asia trade is enormous,” he said. “China still plays a key role in global trade, but it is just a little bit deemphasized.” Krassenstein said while labor costs in China are increasing, the US tariffs are exacerbating the cost difference between manufacturing in China and alternative countries, thus accelerating the search for “China-plus-one” sourcing among US importers. “When you get to production of certain items, Mexico makes more sense and a lot of Chinese manufacturers shifted some of their production very early on to Mexico to take advantage of the free trade accord and proximity to the US to reduce some of the geopolitical risks,” he said. The European Union is not facing the same political pressure on corporations to look for alternative sourcing locations to China, according to Tom van der Heyden, co-founder and CEO of sourcing strategy consultancy S3 Group. “We also do not have a Mexico next door in Europe ... it is much harder for European corporations to look into that so we are more stuck to China,” he noted. But van der Heyden added that despite tariffs and the political environment affecting China’s ability to supply the US, the country remained a competitive manufacturing powerhouse. “The skill set, the combination of skills, the supplier clusters in China and the infrastructure are unmatched, and that creates an environment that is so hard to get away from,” he said. Contact Greg Knowler at greg.knowler@spglobal.com .

Logistics Technology News

Supply chain

China to maintain pivotal production role globally despite tariffs: CSCMP

<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. 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">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

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">Ongoing supply chain disruption and a significant increase in trading of container freight futures among speculative investors could accelerate the adoption of financial hedging tools among shippers and other physical industry players.</div>

Ongoing supply chain disruption and a significant increase in trading of container freight futures among speculative investors could accelerate the adoption of financial hedging tools among shippers and other physical industry players.

<div class="phx-topic">After two decades of minimal progress, the environment for the adoption of container freight futures is increasingly ripe as ongoing supply chain disruption has heightened demand for risk management tools among beneficial cargo owners (BCOs). It is too soon to say, but the landscape has shifted such that BCOs and other industry players may give futures, financial instruments aimed at mitigating the risk of rate volatility, a second look. The successful introduction in 2023 of a futures market in Shanghai — the value of which is already multiple times the value of the underlying Asia-Europe freight rate — has added momentum to that shift. “If you look at the level of liquidity that [the Shanghai-traded] futures have been able to achieve within the last 18 months, it’s well in excess of $1.5 billion daily,” Hua Joo Tan, analyst at Linerlytica, explained in a March 24 seminar on container freight futures during Singapore Maritime Week. “To put this in perspective, that’s almost 20 times the size of the physical market of physical containers moving from Asia to North Europe.” The Shanghai futures market has reached that level of liquidity, “with almost zero industry participation at this point,” Tan added. Speculative investors have been far more active in trading than BCOs and other industry players, but the industry itself is headed in that direction. A growing mindset of risk mitigation among BCOs in the face of continuing disruptions has led to increased adoption of index-linked contracts, for example, which mitigate price as a point of stress in contracts. At the Journal of Commerce’s TPM25 conference in early March, the first panel on this topic in several years drew a packed room. A logical next step would be for BCOs to use futures or other financial instruments to hedge against adverse price movements within their index-linked contracts. That’s a big leap, considering that chief financial officers view the risk of rapid increases in container freight rates as an issue to be managed alongside more traditional risks such as foreign currency, interest rates, commodity prices or inflation. That would be a sea change by itself. Container freight futures emerged around the time of the 2008 global financial crisis, the theory being that container freight is a commodity market no different from pork bellies or soybeans. Several investment banks, including Morgan Stanley, thought they saw an opportunity and jumped on board. But container freight futures trading never took off, in large part because the commodity market was an imperfect analogy; although container freight bears some resemblance to a commodity market, with supply and demand driving pricing, the fact that BCOs need shipping irrespective of costs — as the COVID-19 pandemic proved, when prices soared but cargo continued to move — undermined the logic. Fast forward to 2023, container freight futures trading entered the Shanghai International Energy Exchange, part of Shanghai Futures Exchange (SHFE), based on a tradable, auditable version of the Shanghai Containerized Freight Index, called the SCFI-S. The SCFI-S is based on so-called shipped-on-board pricing, rather than rates at the time of booking. Other container freight derivative markets are in development in Europe and North America. In November, the New York Shipping Exchange (NYSHEX) <a href="https://www.joc.com/article/nyshex-says-will-launch-ocean-freight-rate-indexes-next-year-5820643">announced the creation of new shipping rate indexes</a>, developed in conjunction with the Intercontinental Exchange (ICE), that will launch this year. “We expect leading banks like Goldman Sachs and Citi will be able to offer their corporate clients a range of container freight hedging options, such as swaps, options and collars,” NYSHEX CEO Gordon Downes told the Journal of Commerce. “We also expect that a futures market will develop over time to make the cost and process of hedging much more efficient.” “As we see the container shipping industry moving toward index-linked contracts, there is a growing need for ways to hedge the volatility of container spot rates,” Zach Fields, an investor on Goldman Sachs Alternatives’ growth equity team, said in a statement announcing the launch of the NYSHEX indexes. Still, futures have yet to overcome the hurdle they have faced for years: becoming a market for “physical” players, as opposed to just traders. A few China-based physical players dabble in the market, but international forwarders, carriers and BCOs so far have remained on the sidelines. “There’s still a lot of resistance and inertia against the adoption of these freight futures,” Tan said. But that could change, if only because BCOs have a limited ability to mitigate supply chain disruption, which is often unpredictable, and are looking for creative ways to address the challenge. One way has always been to build better relationships with ocean carriers to maximize the odds of cargo being loaded in tight markets through index-linked contracts. These floating contract rates are gaining traction because they ensure a shipper’s cargo won’t be priced below the market and thus become vulnerable to getting rolled in favor of higher-paying freight. But index-linked contracts bring another risk, unanticipated cost increases, which complicate budgeting and can impact financial results and investor relations. Given the rising recognition of supply chain risk, it is time for chief financial officers to give container freight futures a second look. Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>. </div>

After two decades of minimal progress, the environment for the adoption of container freight futures is increasingly ripe as ongoing supply chain disruption has heightened demand for risk management tools among beneficial cargo owners (BCOs). It is too soon to say, but the landscape has shifted such that BCOs and other industry players may give futures, financial instruments aimed at mitigating the risk of rate volatility, a second look. The successful introduction in 2023 of a futures market in Shanghai — the value of which is already multiple times the value of the underlying Asia-Europe freight rate — has added momentum to that shift. “If you look at the level of liquidity that [the Shanghai-traded] futures have been able to achieve within the last 18 months, it’s well in excess of $1.5 billion daily,” Hua Joo Tan, analyst at Linerlytica, explained in a March 24 seminar on container freight futures during Singapore Maritime Week. “To put this in perspective, that’s almost 20 times the size of the physical market of physical containers moving from Asia to North Europe.” The Shanghai futures market has reached that level of liquidity, “with almost zero industry participation at this point,” Tan added. Speculative investors have been far more active in trading than BCOs and other industry players, but the industry itself is headed in that direction. A growing mindset of risk mitigation among BCOs in the face of continuing disruptions has led to increased adoption of index-linked contracts, for example, which mitigate price as a point of stress in contracts. At the Journal of Commerce’s TPM25 conference in early March, the first panel on this topic in several years drew a packed room. A logical next step would be for BCOs to use futures or other financial instruments to hedge against adverse price movements within their index-linked contracts. That’s a big leap, considering that chief financial officers view the risk of rapid increases in container freight rates as an issue to be managed alongside more traditional risks such as foreign currency, interest rates, commodity prices or inflation. That would be a sea change by itself. Container freight futures emerged around the time of the 2008 global financial crisis, the theory being that container freight is a commodity market no different from pork bellies or soybeans. Several investment banks, including Morgan Stanley, thought they saw an opportunity and jumped on board. But container freight futures trading never took off, in large part because the commodity market was an imperfect analogy; although container freight bears some resemblance to a commodity market, with supply and demand driving pricing, the fact that BCOs need shipping irrespective of costs — as the COVID-19 pandemic proved, when prices soared but cargo continued to move — undermined the logic. Fast forward to 2023, container freight futures trading entered the Shanghai International Energy Exchange, part of Shanghai Futures Exchange (SHFE), based on a tradable, auditable version of the Shanghai Containerized Freight Index, called the SCFI-S. The SCFI-S is based on so-called shipped-on-board pricing, rather than rates at the time of booking. Other container freight derivative markets are in development in Europe and North America. In November, the New York Shipping Exchange (NYSHEX) announced the creation of new shipping rate indexes , developed in conjunction with the Intercontinental Exchange (ICE), that will launch this year. “We expect leading banks like Goldman Sachs and Citi will be able to offer their corporate clients a range of container freight hedging options, such as swaps, options and collars,” NYSHEX CEO Gordon Downes told the Journal of Commerce. “We also expect that a futures market will develop over time to make the cost and process of hedging much more efficient.” “As we see the container shipping industry moving toward index-linked contracts, there is a growing need for ways to hedge the volatility of container spot rates,” Zach Fields, an investor on Goldman Sachs Alternatives’ growth equity team, said in a statement announcing the launch of the NYSHEX indexes. Still, futures have yet to overcome the hurdle they have faced for years: becoming a market for “physical” players, as opposed to just traders. A few China-based physical players dabble in the market, but international forwarders, carriers and BCOs so far have remained on the sidelines. “There’s still a lot of resistance and inertia against the adoption of these freight futures,” Tan said. But that could change, if only because BCOs have a limited ability to mitigate supply chain disruption, which is often unpredictable, and are looking for creative ways to address the challenge. One way has always been to build better relationships with ocean carriers to maximize the odds of cargo being loaded in tight markets through index-linked contracts. These floating contract rates are gaining traction because they ensure a shipper’s cargo won’t be priced below the market and thus become vulnerable to getting rolled in favor of higher-paying freight. But index-linked contracts bring another risk, unanticipated cost increases, which complicate budgeting and can impact financial results and investor relations. Given the rising recognition of supply chain risk, it is time for chief financial officers to give container freight futures a second look. Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

Freight futures get second look amid increased risk, trading volumes

<div class="phx-topic abstract-wrapper">An alliance of global shippers is calling on the IMO to use the April gathering of its Marine Environment Protection Committee to meet the “urgency of the moment” when it comes to lowering emissions from shipping.</div>

An alliance of global shippers is calling on the IMO to use the April gathering of its Marine Environment Protection Committee to meet the “urgency of the moment” when it comes to lowering emissions from shipping.

<div class="phx-topic">An alliance of global cargo owners is urging the International Maritime Organization (IMO) to use its upcoming Marine Environment Protection Committee (MEPC) meeting to approve “a clear, comprehensive, globally consistent set of measures” that will accelerate the transition to clean energy. The 176 member states of the IMO will gather <a href="https://www.joc.com/article/us-in-holding-pattern-over-imo-membership-dnv-5967501">for the 83rd MEPC meeting</a> April 7–11 in London, where topping the agenda will be the design of a greenhouse gas (GHG) fuel intensity regulation and an economic measure for taxing carbon emissions. It is critical that the meeting ends with consensus over both “mid-term measures,” said Ingrid Irigoyen, president and CEO of the Zero Emission Maritime Buyers Alliance (ZEMBA). “Given shipping’s essential role in global trade and private sector actors ready to invest in innovative fuels and technologies under the right conditions, it is critical the IMO succeeds in delivering much-needed regulatory clarity and incentivizes the most scalable, long-term solutions,” Irigoyen wrote in an open letter to IMO Secretary-General Arsenio Dominguez. She pointed out that the 40 global freight buyers within ZEMBA who rely on maritime shipping embarked on their own first-mover initiative in March 2023 to accelerate the market for low- and zero-emission fuels and urged the IMO to match the urgency shown by the private sector shippers. <h3>‘Urgency of the moment’ </h3>The inaugural tender from ZEMBA, <a href="https://www.joc.com/article/hapag-lloyd-wins-asia-europe-green-shipping-tender-to-launch-next-year-5240949">won by Hapag-Lloyd</a>, is expected to prevent at least 82,000 metric tons of carbon dioxide equivalent (CO2e) emissions in 2025 and 2026 through deployment of waste-based, third-party certified maritime biomethane sourced from landfill gas and livestock manure. ZEMBA’s second tender, launched in February, is far more ambitious and seeks commitments from ocean carriers to power at least 80 billion metric ton-nautical miles of ocean shipping using e-fuels. “Our private sector partners are moving quickly to match the urgency of the moment, and we encourage the IMO to act with deliberate speed and ambition as well,” Irigoyen wrote in the open letter. “As global employers and customers of the shipping industry, freight buyers have a significant stake in the sector’s energy transition and the decisions that the IMO will make this year,” she added. The IMO in 2023 revised its roadmap for the industry’s transition that set an end goal of net-zero GHG emissions by or around 2050 and includes key checkpoints for the journey: at least a 20% GHG emissions reduction, and striving for 30%, by 2030; and at least a 70% GHG emissions reduction, striving for 80%, by 2040. The checkpoints are compared to a 2008 GHG emissions baseline. Drawing on the experience gained from ZEMBA, Irigoyen said it was critical that consensus was received over aligning the midterm measures with the trajectories laid out in the GHG strategy. She said the fuel standard must apply to a full “well-to-wake” lifecycle, and the midterm measures must be designed with adequate financial incentives to foster a viable market for long-term scalable fuels and technologies essential to shipping’s transition. “Miscalibration of the financial rewards for fuels and technologies risks locking the sector into unsustainable short-term options, undermining market confidence and increasing the cost of the transition overall,” she wrote. Irigoyen also urged the IMO meeting to develop a “transparent, robust fuel certification framework” with the IMO data collection system updated to support transparent and effective reporting under the midterm measures. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com.</a></div>

An alliance of global cargo owners is urging the International Maritime Organization (IMO) to use its upcoming Marine Environment Protection Committee (MEPC) meeting to approve “a clear, comprehensive, globally consistent set of measures” that will accelerate the transition to clean energy. The 176 member states of the IMO will gather for the 83rd MEPC meeting April 7–11 in London, where topping the agenda will be the design of a greenhouse gas (GHG) fuel intensity regulation and an economic measure for taxing carbon emissions. It is critical that the meeting ends with consensus over both “mid-term measures,” said Ingrid Irigoyen, president and CEO of the Zero Emission Maritime Buyers Alliance (ZEMBA). “Given shipping’s essential role in global trade and private sector actors ready to invest in innovative fuels and technologies under the right conditions, it is critical the IMO succeeds in delivering much-needed regulatory clarity and incentivizes the most scalable, long-term solutions,” Irigoyen wrote in an open letter to IMO Secretary-General Arsenio Dominguez. She pointed out that the 40 global freight buyers within ZEMBA who rely on maritime shipping embarked on their own first-mover initiative in March 2023 to accelerate the market for low- and zero-emission fuels and urged the IMO to match the urgency shown by the private sector shippers. ‘Urgency of the moment’ The inaugural tender from ZEMBA, won by Hapag-Lloyd , is expected to prevent at least 82,000 metric tons of carbon dioxide equivalent (CO2e) emissions in 2025 and 2026 through deployment of waste-based, third-party certified maritime biomethane sourced from landfill gas and livestock manure. ZEMBA’s second tender, launched in February, is far more ambitious and seeks commitments from ocean carriers to power at least 80 billion metric ton-nautical miles of ocean shipping using e-fuels. “Our private sector partners are moving quickly to match the urgency of the moment, and we encourage the IMO to act with deliberate speed and ambition as well,” Irigoyen wrote in the open letter. “As global employers and customers of the shipping industry, freight buyers have a significant stake in the sector’s energy transition and the decisions that the IMO will make this year,” she added. The IMO in 2023 revised its roadmap for the industry’s transition that set an end goal of net-zero GHG emissions by or around 2050 and includes key checkpoints for the journey: at least a 20% GHG emissions reduction, and striving for 30%, by 2030; and at least a 70% GHG emissions reduction, striving for 80%, by 2040. The checkpoints are compared to a 2008 GHG emissions baseline. Drawing on the experience gained from ZEMBA, Irigoyen said it was critical that consensus was received over aligning the midterm measures with the trajectories laid out in the GHG strategy. She said the fuel standard must apply to a full “well-to-wake” lifecycle, and the midterm measures must be designed with adequate financial incentives to foster a viable market for long-term scalable fuels and technologies essential to shipping’s transition. “Miscalibration of the financial rewards for fuels and technologies risks locking the sector into unsustainable short-term options, undermining market confidence and increasing the cost of the transition overall,” she wrote. Irigoyen also urged the IMO meeting to develop a “transparent, robust fuel certification framework” with the IMO data collection system updated to support transparent and effective reporting under the midterm measures. Contact Greg Knowler at greg.knowler@spglobal.com.

Cargo owners push IMO on measures to accelerate energy transition

<div class="phx-topic abstract-wrapper">Capacity improvements at the New Jersey facility will include optimization of the terminal layout, rebuilding berths at a higher level to allow for anticipated increases in the sea level and replacing existing cargo-handling equipment with zero-emission, electric machines.</div>

Capacity improvements at the New Jersey facility will include optimization of the terminal layout, rebuilding berths at a higher level to allow for anticipated increases in the sea level and replacing existing cargo-handling equipment with zero-emission, electric machines.

<div class="phx-topic">APM Terminals will invest more than $500 million to improve cargo handling capacity at its 350-acre Elizabeth terminal after it agreed to a 33-year lease extension with the Port Authority of New York and New Jersey, the two parties announced Monday. The current lease, which was due to expire in December 2029, will be extended to December 2062, according to the new agreement. The deal will be voted on by the port authority’s board of commissioners on March 27. APM Terminals said the capacity improvements will include optimization of the terminal layout, rebuilding the berths at a higher level to allow for anticipated increases in sea level and replacing existing cargo-handling equipment with zero-emission, electric machines. Elizabeth has a current terminal capacity of 2.3 million TEUs over 6,000 feet of wharfage. Specifics of the planned capacity growth at the New Jersey facility were not disclosed. Work to optimize the terminal layout and invest in the electrification of equipment will begin in the coming weeks as soon as the new lease is signed, an APM Terminals spokesperson told the Journal of Commerce. “The optimization of the layout and electrification will take place over the next several years as the terminal is modernized,” the spokesperson said. “Optimization entails improving the densification of the terminal to be able to efficiently handle higher cargo volumes within the same footprint.” The construction work at the terminal will result in an increase in jobs at the facility. “The modernization improvements will result in a significant capacity increase and our experience shows that the biggest driver of longshore employment is increases in volume growth,” the APM spokesperson said. “As a result, we expect our workforce on the terminal to expand as our volumes increase due to these investments.” The Elizabeth terminal handles more than 25% of the annual container throughput at the port’s terminals, which saw combined volumes rise 11.5% last year to 8.7 million TEUs. The Port Authority said the investment supports its 2050 port master plan, which anticipates cargo volumes doubling or tripling by mid-century. “This lease extension secures transformative infrastructure and capacity enhancements at the second-largest container terminal in the East Coast’s busiest port,” Port Authority Executive Director Rick Cotton said in a statement. “These commitments will enable the Port of New York and New Jersey to move more goods, create more jobs and further cement its role as an essential driver of our region’s economy and our nation’s supply chain.” <h3>Fixed berthing windows </h3>The APM Terminals spokesperson said the new Gemini Cooperation network of Maersk and Hapag-Lloyd is expected to slightly increase cargo volumes at the Elizabeth terminal when fully implemented. APM is owned by A.P. Moller–Maersk. APM Terminals is also introducing fixed berthing windows at dedicated berths for Gemini vessels and those of other carriers. “Keeping all services at dedicated and separate berths consistently will isolate port delays,” the spokesperson said, adding that if a vessel arrives late due to bad weather it will only affect other vessels calling at that specific berth. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>.</div>

APM Terminals will invest more than $500 million to improve cargo handling capacity at its 350-acre Elizabeth terminal after it agreed to a 33-year lease extension with the Port Authority of New York and New Jersey, the two parties announced Monday. The current lease, which was due to expire in December 2029, will be extended to December 2062, according to the new agreement. The deal will be voted on by the port authority’s board of commissioners on March 27. APM Terminals said the capacity improvements will include optimization of the terminal layout, rebuilding the berths at a higher level to allow for anticipated increases in sea level and replacing existing cargo-handling equipment with zero-emission, electric machines. Elizabeth has a current terminal capacity of 2.3 million TEUs over 6,000 feet of wharfage. Specifics of the planned capacity growth at the New Jersey facility were not disclosed. Work to optimize the terminal layout and invest in the electrification of equipment will begin in the coming weeks as soon as the new lease is signed, an APM Terminals spokesperson told the Journal of Commerce. “The optimization of the layout and electrification will take place over the next several years as the terminal is modernized,” the spokesperson said. “Optimization entails improving the densification of the terminal to be able to efficiently handle higher cargo volumes within the same footprint.” The construction work at the terminal will result in an increase in jobs at the facility. “The modernization improvements will result in a significant capacity increase and our experience shows that the biggest driver of longshore employment is increases in volume growth,” the APM spokesperson said. “As a result, we expect our workforce on the terminal to expand as our volumes increase due to these investments.” The Elizabeth terminal handles more than 25% of the annual container throughput at the port’s terminals, which saw combined volumes rise 11.5% last year to 8.7 million TEUs. The Port Authority said the investment supports its 2050 port master plan, which anticipates cargo volumes doubling or tripling by mid-century. “This lease extension secures transformative infrastructure and capacity enhancements at the second-largest container terminal in the East Coast’s busiest port,” Port Authority Executive Director Rick Cotton said in a statement. “These commitments will enable the Port of New York and New Jersey to move more goods, create more jobs and further cement its role as an essential driver of our region’s economy and our nation’s supply chain.” Fixed berthing windows The APM Terminals spokesperson said the new Gemini Cooperation network of Maersk and Hapag-Lloyd is expected to slightly increase cargo volumes at the Elizabeth terminal when fully implemented. APM is owned by A.P. Moller–Maersk. APM Terminals is also introducing fixed berthing windows at dedicated berths for Gemini vessels and those of other carriers. “Keeping all services at dedicated and separate berths consistently will isolate port delays,” the spokesperson said, adding that if a vessel arrives late due to bad weather it will only affect other vessels calling at that specific berth. Contact Keith Wallis at keithwallis@hotmail.com .

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APM to spend $500 million to enhance cargo handling at Elizabeth terminal

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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 .

Forwarding

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

<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’

<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 .

North-American rail

MSC subsidiary acquiring US intermodal provider COFC Logistics

<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 .

Hutchison to delay Panama ports deal signing amid growing Beijing pressure

<div class="phx-topic abstract-wrapper">Consolidation in container shipping over the last two decades and better capacity management in recent years show that the old ways of looking at vessel capacity are outdated, writes Journal of Commerce Executive Editor Mark Szakonyi.</div>

Consolidation in container shipping over the last two decades and better capacity management in recent years show that the old ways of looking at vessel capacity are outdated, writes Journal of Commerce Executive Editor Mark Szakonyi.

<div class="phx-topic">The conventional thinking is that container lines are heading for another down cycle due to mounting overcapacity and weakening global demand. After record profits during the COVID-19 pandemic era and $60 billion more in 2024, JP Morgan in a March 17 research note said it thinks the industry is “entering a multi-year period of losses.” That may very well be how this year and 2026 shake out. But a scenario in which external factors keep restraining effective container shipping capacity and carriers muster enough pricing discipline isn’t outlandish, either. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5970290_0.1.jpg"></img></div>Internally, thanks to consolidation over the last two decades and better capacity management in recent years, whether through blank sailings or holding firm on contract allocations when space gets tight, the old ways of looking at capacity aren’t relevant. Even so, the size of the current order book is daunting, with new orders representing a quarter of the existing fleet, according to S&amp;P Global’s Sea-web, a sister company of the Journal of Commerce. Maersk CEO Vincent Clerc said approximately 2 million TEUs of capacity will be delivered this year, equating to 6% of the existing fleet, according to Sea-web. Another 1.5 million to 2 million TEUs could be released whenever the Red Sea reopens to commercial traffic, Clerc said during the company’s first-quarter earnings call Feb. 6. The industry’s return to Suez Canal transits is expected to cause three to six months of disruption, with ships repositioning and causing bunching at European and US East Coast ports, ultimately reducing effective capacity. “The overcapacity anticipated last year has been delayed to 2025, but the supply-demand equation is much more nuanced and benign than what we had in front of us just a year ago before the outbreak of the Red Sea disruption,” Clerc told investors. He added that Maersk expects stronger global demand in 2025 than last year, expanding at 4% — in line with the market — despite the US slapping tariffs on goods from China, Europe and other trading partners. <h3>Red Sea factor is ever-present </h3>So much depends on when the container shipping industry deems it safe to route through the Red Sea. US President Donald Trump’s decision to move a second aircraft carrier to the Middle East on March 23, a week after his order of strikes on Houthi-held areas in Yemen, may not open the waterway as he hopes. “The resumption of US airstrikes significantly increases the likelihood of further Houthi attacks on US and US-allied naval assets in the Red Sea and Gulf of Aden — representing a severe risk to all vessels in transit due to uncertainties around Houthi targeting selection,” said Jack Kennedy, head of Middle East and North Africa country risk at S&amp;P Global Market Intelligence. Kennedy said it was unlikely that the US would be able to “restore unchecked freedom of navigation” in six months by pressuring Iran to stop helping its Houthi proxies. He doubts that the US can uproot the Houthi without help from the UAE and Saudi Arabia, a move that would most likely trigger retaliation from the Houthis. The Israel-Hamas ceasefire, announced Jan. 15, initially raised hopes of a return to Red Sea transits, Jeremy Nixon, CEO of Ocean Network Express (ONE), said Monday at Singapore Maritime Week. “That doesn’t look likely now based on the events, particularly in the last week, so probably routing around the Cape of Good Hope is a continued paradigm for likely the rest of this year is the way things stand, and that has a big impact on our operations, big impact on the supply and demand,” Nixon said. <h3>Unused levers </h3>Independent of the Red Sea, carriers still have unused levers to curb overcapacity, including idling and slow steaming, Jan Tiedemann, senior analyst at Alphaliner, said at TPM25 in Long Beach earlier this month. Less than 1% of tonnage is idling, reflecting the belief of carriers that it’s better to have extra tonnage in case of disruption than send older vessels to the scrapping yards, he said. Scrapping last year was well below 1%, but there is limited yard capacity to break ships if carriers retire older tonnage. While container lines have sailed ships faster due to Red Sea diversions, there is plenty of functional capacity that can be reabsorbed by slowing down by just a few knots. “That doesn’t seem a lot, but if [a] ship only sails at 18 knots, and it goes down to 15, that’s quite a reduction in terms of the percentage” of capacity needed, Tiedemann said. Global port congestion and other events that pull down ocean reliability are curbing the effective capacity of the fleet, according to Simon Sundboell, founder and CEO of maritime intelligence firm eeSea. For example, the deployment of capacity out of Asia to Europe, North America and the Caribbean and Central America rose 7.9% year over year in 2024, according to eeSea. But the functional capacity was just 3.4%. The question for 2025 and beyond is not whether there will be tonnage overcapacity, as there surely will be, but to what degree there will an overhang of functional capacity. Contact Mark Szakonyi at <a href="https://www.joc.com/article/mark.szakonyi@spglobal.com.">mark.szakonyi@spglobal.com</a>.</div>

The conventional thinking is that container lines are heading for another down cycle due to mounting overcapacity and weakening global demand. After record profits during the COVID-19 pandemic era and $60 billion more in 2024, JP Morgan in a March 17 research note said it thinks the industry is “entering a multi-year period of losses.” That may very well be how this year and 2026 shake out. But a scenario in which external factors keep restraining effective container shipping capacity and carriers muster enough pricing discipline isn’t outlandish, either. Internally, thanks to consolidation over the last two decades and better capacity management in recent years, whether through blank sailings or holding firm on contract allocations when space gets tight, the old ways of looking at capacity aren’t relevant. Even so, the size of the current order book is daunting, with new orders representing a quarter of the existing fleet, according to S&P Global’s Sea-web, a sister company of the Journal of Commerce. Maersk CEO Vincent Clerc said approximately 2 million TEUs of capacity will be delivered this year, equating to 6% of the existing fleet, according to Sea-web. Another 1.5 million to 2 million TEUs could be released whenever the Red Sea reopens to commercial traffic, Clerc said during the company’s first-quarter earnings call Feb. 6. The industry’s return to Suez Canal transits is expected to cause three to six months of disruption, with ships repositioning and causing bunching at European and US East Coast ports, ultimately reducing effective capacity. “The overcapacity anticipated last year has been delayed to 2025, but the supply-demand equation is much more nuanced and benign than what we had in front of us just a year ago before the outbreak of the Red Sea disruption,” Clerc told investors. He added that Maersk expects stronger global demand in 2025 than last year, expanding at 4% — in line with the market — despite the US slapping tariffs on goods from China, Europe and other trading partners. Red Sea factor is ever-present So much depends on when the container shipping industry deems it safe to route through the Red Sea. US President Donald Trump’s decision to move a second aircraft carrier to the Middle East on March 23, a week after his order of strikes on Houthi-held areas in Yemen, may not open the waterway as he hopes. “The resumption of US airstrikes significantly increases the likelihood of further Houthi attacks on US and US-allied naval assets in the Red Sea and Gulf of Aden — representing a severe risk to all vessels in transit due to uncertainties around Houthi targeting selection,” said Jack Kennedy, head of Middle East and North Africa country risk at S&P Global Market Intelligence. Kennedy said it was unlikely that the US would be able to “restore unchecked freedom of navigation” in six months by pressuring Iran to stop helping its Houthi proxies. He doubts that the US can uproot the Houthi without help from the UAE and Saudi Arabia, a move that would most likely trigger retaliation from the Houthis. The Israel-Hamas ceasefire, announced Jan. 15, initially raised hopes of a return to Red Sea transits, Jeremy Nixon, CEO of Ocean Network Express (ONE), said Monday at Singapore Maritime Week. “That doesn’t look likely now based on the events, particularly in the last week, so probably routing around the Cape of Good Hope is a continued paradigm for likely the rest of this year is the way things stand, and that has a big impact on our operations, big impact on the supply and demand,” Nixon said. Unused levers Independent of the Red Sea, carriers still have unused levers to curb overcapacity, including idling and slow steaming, Jan Tiedemann, senior analyst at Alphaliner, said at TPM25 in Long Beach earlier this month. Less than 1% of tonnage is idling, reflecting the belief of carriers that it’s better to have extra tonnage in case of disruption than send older vessels to the scrapping yards, he said. Scrapping last year was well below 1%, but there is limited yard capacity to break ships if carriers retire older tonnage. While container lines have sailed ships faster due to Red Sea diversions, there is plenty of functional capacity that can be reabsorbed by slowing down by just a few knots. “That doesn’t seem a lot, but if [a] ship only sails at 18 knots, and it goes down to 15, that’s quite a reduction in terms of the percentage” of capacity needed, Tiedemann said. Global port congestion and other events that pull down ocean reliability are curbing the effective capacity of the fleet, according to Simon Sundboell, founder and CEO of maritime intelligence firm eeSea. For example, the deployment of capacity out of Asia to Europe, North America and the Caribbean and Central America rose 7.9% year over year in 2024, according to eeSea. But the functional capacity was just 3.4%. The question for 2025 and beyond is not whether there will be tonnage overcapacity, as there surely will be, but to what degree there will an overhang of functional capacity. Contact Mark Szakonyi at mark.szakonyi@spglobal.com .

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