<div class="phx-topic abstract-wrapper">The agency said there needs to be additional information submitted concerning the environmental impact of the merger. </div>

The agency said there needs to be additional information submitted concerning the environmental impact of the merger.

Feature image

<div class="phx-topic">The US Surface Transportation Board Thursday unanimously voted to accept the Union Pacific Railroad’s revised application to acquire Norfolk Southern Railway but held off from giving a final blessing. Instead, the STB put a final decision in abeyance, because the agency said there needs to be additional information submitted concerning the environmental impact of the merger. The STB gave Union Pacific until July 26 to submit that material. The decision allows the process to go forward, but it is potentially another delay in the regulatory review of the proposed $85 billion transaction. The decision does not kill the deal but signals that regulators still do not believe the companies have provided enough information to allow a formal review of the proposed merger to begin, <a href="https://www.joc.com/article/stb-rejects-up-ns-merger-application-as-incomplete-6154074">much like they wrote in January</a>. “Today, the Board finds that Applicants have provided sufficient information to satisfy the completeness requirements for a major merger application.  Given the fairly narrow procedural question of completeness, issues raised by commenters do not warrant rejecting the revised application,” the STB wrote in its decision. Still, the STB’s decision might end the proposed marriage due to the costs associated with the deal. Previously, UP and NS disclosed that each was spending between $40 million and $60 million per quarter on merger-related expenses; eventually, shareholders might decide the costs are too much to continue. “However, the Board finds that there are several aspects of the revised application that are unclear or underdeveloped and require supplementation at this stage of the proceeding so that the Board may have the information necessary to thoroughly evaluate—and the public has an adequate opportunity to comment on—whether the transaction is in the public interest.” While not a rejection, the ruling is a setback because UP and NS thought the revised application fixed everything that was deemed deficient in January. The revised filing updated truck-to-rail conversions and attempted to address concerns over two entities — Kansas City Terminal Railway and the Terminal Railroad Association of St. Louis — which control switching and operations across those cities. Both groups are jointly owned by Class I railroads. It also disclosed Schedule 5.8 of the merger agreement, the document that defines which regulatory conditions would be onerous enough for the companies to walk away from the deal. Nevertheless, regulators effectively sided with opponents who argued the revised application remained too vague on market concentration, traffic diversions and control of jointly owned rail assets. UP and NS said <a href="https://www.joc.com/article/ups-revised-filing-for-ns-merger-boosts-number-of-freight-conversions-6212318">the merger would shift 2.1 million truckloads from highways to rail each year</a> and save shippers an estimated $3.5 billion annually. UP and NS also say the combined railroad would create 88,000 new county-to-county lanes for single-line rail service and convert 10,000 existing interline lanes into single-line routes.  Opponents argued that those figures are too optimistic and not sufficiently supported. Their central claim is that UP and NS are overstating how much freight would move from truck to rail while understating how much traffic would simply be diverted from rival railroads. In its statement announcing the decision, the STB indicated it may be losing patience with Union Pacific, but it appears willing to give the parties 60 days to resolve the questions. <h3>Decision time for UP, NS </h3>In a May 22 filing to the STB, state attorneys general from Florida, Iowa, Kansas, Montana, North Dakota and South Dakota argued that the application still failed to address how the combined UP and NS would control about half of US Class I freight rail traffic. The attorneys general also said the companies had not adequately analyzed whether the deal could trigger another round of Class I consolidation or provided enough detail on Kansas City, St. Louis, or a joint equipment pool of intermodal railcars called TTX. For UP and NS, the ruling turns what had been expected to be a procedural move into another test of the merger’s viability. The two railroads must now decide whether to submit additional information, providing more detail on the competitive and operational issues opponents have raised. Or they can decide to walk away from the deal. The calendar may also become a factor. As it stands, a decision from the STB was not likely until late 2027, but an additional delay would likely push attempts to rescue the deal into 2028, an election year. Democrats on Capitol Hill have already voiced their opposition to the merger because they believe it would create a virtual monopoly and harm union labor. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>. Special Correspondent Dan Ronan contributed to this report. </div>

The US Surface Transportation Board Thursday unanimously voted to accept the Union Pacific Railroad’s revised application to acquire Norfolk Southern Railway but held off from giving a final blessing. Instead, the STB put a final decision in abeyance, because the agency said there needs to be additional information submitted concerning the environmental impact of the merger. The STB gave Union Pacific until July 26 to submit that material. The decision allows the process to go forward, but it is potentially another delay in the regulatory review of the proposed $85 billion transaction. The decision does not kill the deal but signals that regulators still do not believe the companies have provided enough information to allow a formal review of the proposed merger to begin, much like they wrote in January . “Today, the Board finds that Applicants have provided sufficient information to satisfy the completeness requirements for a major merger application.  Given the fairly narrow procedural question of completeness, issues raised by commenters do not warrant rejecting the revised application,” the STB wrote in its decision. Still, the STB’s decision might end the proposed marriage due to the costs associated with the deal. Previously, UP and NS disclosed that each was spending between $40 million and $60 million per quarter on merger-related expenses; eventually, shareholders might decide the costs are too much to continue. “However, the Board finds that there are several aspects of the revised application that are unclear or underdeveloped and require supplementation at this stage of the proceeding so that the Board may have the information necessary to thoroughly evaluate—and the public has an adequate opportunity to comment on—whether the transaction is in the public interest.” While not a rejection, the ruling is a setback because UP and NS thought the revised application fixed everything that was deemed deficient in January. The revised filing updated truck-to-rail conversions and attempted to address concerns over two entities — Kansas City Terminal Railway and the Terminal Railroad Association of St. Louis — which control switching and operations across those cities. Both groups are jointly owned by Class I railroads. It also disclosed Schedule 5.8 of the merger agreement, the document that defines which regulatory conditions would be onerous enough for the companies to walk away from the deal. Nevertheless, regulators effectively sided with opponents who argued the revised application remained too vague on market concentration, traffic diversions and control of jointly owned rail assets. UP and NS said the merger would shift 2.1 million truckloads from highways to rail each year and save shippers an estimated $3.5 billion annually. UP and NS also say the combined railroad would create 88,000 new county-to-county lanes for single-line rail service and convert 10,000 existing interline lanes into single-line routes.  Opponents argued that those figures are too optimistic and not sufficiently supported. Their central claim is that UP and NS are overstating how much freight would move from truck to rail while understating how much traffic would simply be diverted from rival railroads. In its statement announcing the decision, the STB indicated it may be losing patience with Union Pacific, but it appears willing to give the parties 60 days to resolve the questions. Decision time for UP, NS In a May 22 filing to the STB, state attorneys general from Florida, Iowa, Kansas, Montana, North Dakota and South Dakota argued that the application still failed to address how the combined UP and NS would control about half of US Class I freight rail traffic. The attorneys general also said the companies had not adequately analyzed whether the deal could trigger another round of Class I consolidation or provided enough detail on Kansas City, St. Louis, or a joint equipment pool of intermodal railcars called TTX. For UP and NS, the ruling turns what had been expected to be a procedural move into another test of the merger’s viability. The two railroads must now decide whether to submit additional information, providing more detail on the competitive and operational issues opponents have raised. Or they can decide to walk away from the deal. The calendar may also become a factor. As it stands, a decision from the STB was not likely until late 2027, but an additional delay would likely push attempts to rescue the deal into 2028, an election year. Democrats on Capitol Hill have already voiced their opposition to the merger because they believe it would create a virtual monopoly and harm union labor. Contact Ari Ashe at ari.ashe@spglobal.com . Special Correspondent Dan Ronan contributed to this report.

Rail News

North-American rail

Intermodal providers

Surface

STB accepts UP/NS paperwork, buts holds on merger decision

<div class="phx-topic abstract-wrapper">Last month’s deal between the agency running Canada’s largest container port and the terminal operator tenant ends a years-long legal battle over development of the Robert Banks Terminal 2 and GCT’s separate plan to build a fourth berth at its Deltaport facility. </div>

Last month’s deal between the agency running Canada’s largest container port and the terminal operator tenant ends a years-long legal battle over development of the Robert Banks Terminal 2 and GCT’s separate plan to build a fourth berth at its Deltaport facility.

<div class="phx-topic">The recent decision by Global Container Terminals and the Vancouver Fraser Port Authority to jointly study development of the port’s proposed mega-terminal squashes the duo’s long-running dispute, positions GCT to run the terminal, and inches the long-planned facility closer to realization. The <a href="https://www.joc.com/article/gct-vancouver-port-to-jointly-study-roberts-bank-terminal-project-6207642">truce between the agency running Canada’s largest container port and the terminal operator tenant</a> ends a years-long <a href="https://www.joc.com/article/vancouver-capacity-needs-spark-conflict-among-port-tenant-5223507">legal battle tied</a> to the port trying to develop the Robert Banks Terminal 2 and GCT’s separate plan to build a fourth berth at its Deltaport facility. The RB2 project is expected to cost more than C$3 billion ($2.17 billion). <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6227603_0.1.jpg"></img></div>The memorandum of understanding announced in April gives the two sides a year to determine how GCT could offer unique efficiencies by operating the planned RBT2 terminal given that its existing Deltaport would share a causeway with the new project. The port authority tentatively gains a terminal operator in GCT in exchange for the latter scrapping its plan to build another berth. Canadian Prime Minister Mark Carney’s Major Project Office is involved in driving the deal between the port authority and tenant. In the fall of 2024, Peter Xotta, CEO of the Vancouver Fraser Port Authority, told local media the port authority would allow GCT to take part in the selection process for an operator of RBT2. Under previous leadership, the port authority had argued a third-party operator was needed to keep the terminal competitive, ruling out GCT, which also operates the downtown Vanterm terminal. “Given the reality of where we're at geopolitically and the risk associated with a project of this order of magnitude, it seemed prudent to me and to our board that we didn't want to exclude anybody from bringing solutions forward that would help Canada,” Xotta told the Journal of Commerce last week. “It’s up to (GCT) to put their best foot forward to the landlord about the merits of them as the operator.” The sharing of administrative and maintenance facilities with GCT are some of the possible ways to mitigate the rising price tag of the RBT2 terminal, Xotta said. Potentially, both terminals could share a truck gate and the existing rail terminal at Deltaport. Separately, the port authority has shortlisted three consortia interested in building the landmass that would support the terminal. Vancouver sought terminal operators to build and operate RBT2 in 2002 and again in 2008 amid the global financial crisis, but there were no willing takers. On why another request for proposals wasn’t floated again, Xotta said terminal operator selection is “always bespoke,” but would be consistent with Canadian law and would be done in partnership with the federal government’s Office of Major Projects. “The port bellied up to the bar twice on this and without being able to get it across the line,” he said. “I’m determined this won’t happen a third time.” The shift in approach to seeking a partnership with an existing tenant rather than opening the project to bid again raised questions whether Canadian shippers would get the most competitive terminal, according to a source close to the RBT2 development. Roberts Bank 2 would provide an additional 2.4 million TEUs of capacity to Vancouver, which, by some estimates, would near its existing full capacity by the 2030s. The port now has nominal capacity of 5 million TEUs. The current timeline, which has been delayed by lengthy environmental reviews, is for the new terminal to open in the early 2030s. The project received environmental approval in 2023. <h3>Next steps </h3>Xotta, who is cautiously optimistic that the agreement will end with GCT as operator of RBT2, said future milestones for the proposed terminal would be receiving funding from Canada’s Infrastructure Bank and getting regulatory approvals fast-tracked by being added to the country’s major projects list. Meanwhile, on Canada’s eastern coast, the Port of Montreal’s <a href="https://www.joc.com/article/canada-looks-for-new-container-gateways-for-decoupling-from-us-6122714">own stalled mega-terminal project</a>, known as Contrecoeur, got a recent jolt back to life thanks to a C$1.16 million loan from the Infrastructure Bank, while Carney tapped it as one of five national infrastructure projects being fast-tracked. DP World and the port authority are developing the C$1.6 million terminal which would have an annual throughput of 1.15 million TEUs. In a May 20 interview at the Greater Vancouver Board of Trade, the prime minister said there is similar urgency to add port capacity in Western Canada. “We’re going to run out of capacity at the Port of Vancouver over the next, well, decade in effect,” he said. “We would likely run out of capacity sooner than that, because we would like to be growing our exports faster than that which means we act now” in terms of building more port capacity for container and bulk exports. Carney aims to double Canada’s non-US exports in a decade to diversify away from US trade. Contact Mark Szakonyi at <a href="mailto:mark.szakonyi@spglobal.com">mark.szakonyi@spglobal.com</a>. </div>

The recent decision by Global Container Terminals and the Vancouver Fraser Port Authority to jointly study development of the port’s proposed mega-terminal squashes the duo’s long-running dispute, positions GCT to run the terminal, and inches the long-planned facility closer to realization. The truce between the agency running Canada’s largest container port and the terminal operator tenant ends a years-long legal battle tied to the port trying to develop the Robert Banks Terminal 2 and GCT’s separate plan to build a fourth berth at its Deltaport facility. The RB2 project is expected to cost more than C$3 billion ($2.17 billion). The memorandum of understanding announced in April gives the two sides a year to determine how GCT could offer unique efficiencies by operating the planned RBT2 terminal given that its existing Deltaport would share a causeway with the new project. The port authority tentatively gains a terminal operator in GCT in exchange for the latter scrapping its plan to build another berth. Canadian Prime Minister Mark Carney’s Major Project Office is involved in driving the deal between the port authority and tenant. In the fall of 2024, Peter Xotta, CEO of the Vancouver Fraser Port Authority, told local media the port authority would allow GCT to take part in the selection process for an operator of RBT2. Under previous leadership, the port authority had argued a third-party operator was needed to keep the terminal competitive, ruling out GCT, which also operates the downtown Vanterm terminal. “Given the reality of where we're at geopolitically and the risk associated with a project of this order of magnitude, it seemed prudent to me and to our board that we didn't want to exclude anybody from bringing solutions forward that would help Canada,” Xotta told the Journal of Commerce last week. “It’s up to (GCT) to put their best foot forward to the landlord about the merits of them as the operator.” The sharing of administrative and maintenance facilities with GCT are some of the possible ways to mitigate the rising price tag of the RBT2 terminal, Xotta said. Potentially, both terminals could share a truck gate and the existing rail terminal at Deltaport. Separately, the port authority has shortlisted three consortia interested in building the landmass that would support the terminal. Vancouver sought terminal operators to build and operate RBT2 in 2002 and again in 2008 amid the global financial crisis, but there were no willing takers. On why another request for proposals wasn’t floated again, Xotta said terminal operator selection is “always bespoke,” but would be consistent with Canadian law and would be done in partnership with the federal government’s Office of Major Projects. “The port bellied up to the bar twice on this and without being able to get it across the line,” he said. “I’m determined this won’t happen a third time.” The shift in approach to seeking a partnership with an existing tenant rather than opening the project to bid again raised questions whether Canadian shippers would get the most competitive terminal, according to a source close to the RBT2 development. Roberts Bank 2 would provide an additional 2.4 million TEUs of capacity to Vancouver, which, by some estimates, would near its existing full capacity by the 2030s. The port now has nominal capacity of 5 million TEUs. The current timeline, which has been delayed by lengthy environmental reviews, is for the new terminal to open in the early 2030s. The project received environmental approval in 2023. Next steps Xotta, who is cautiously optimistic that the agreement will end with GCT as operator of RBT2, said future milestones for the proposed terminal would be receiving funding from Canada’s Infrastructure Bank and getting regulatory approvals fast-tracked by being added to the country’s major projects list. Meanwhile, on Canada’s eastern coast, the Port of Montreal’s own stalled mega-terminal project , known as Contrecoeur, got a recent jolt back to life thanks to a C$1.16 million loan from the Infrastructure Bank, while Carney tapped it as one of five national infrastructure projects being fast-tracked. DP World and the port authority are developing the C$1.6 million terminal which would have an annual throughput of 1.15 million TEUs. In a May 20 interview at the Greater Vancouver Board of Trade, the prime minister said there is similar urgency to add port capacity in Western Canada. “We’re going to run out of capacity at the Port of Vancouver over the next, well, decade in effect,” he said. “We would likely run out of capacity sooner than that, because we would like to be growing our exports faster than that which means we act now” in terms of building more port capacity for container and bulk exports. Carney aims to double Canada’s non-US exports in a decade to diversify away from US trade. Contact Mark Szakonyi at  mark.szakonyi@spglobal.com .

Port News

North American ports

Maritime

Vancouver truce opens door for GCT as mega-terminal operator

<div class="phx-topic abstract-wrapper">Strong regional cargo demand, buoyant market sentiment and higher bunker costs signal continued upward movement on intra-Asia rates, executives and analysts warn.</div>

Strong regional cargo demand, buoyant market sentiment and higher bunker costs signal continued upward movement on intra-Asia rates, executives and analysts warn.

<div class="phx-topic">The unseasonally high container spot rates on intra-Asia trades — up double-digit year over year — show no signs of slowing, thanks to strong regional cargo demand, buoyant market sentiment and higher bunker costs, according to freight executives and analysts. The upbeat conditions have led some carriers including Orient Overseas Container Line to push general rate increases (GRI) although others have so far left June rates unchanged. “The overall rate development is quite dynamic,” a FIBS Logistics spokesperson told the Journal of Commerce. OOCL has implemented a GRI of between $25 and $100 per TEU depending on the trade, said the spokesperson, adding that Maersk, Ocean Network Express and Hapag-Lloyd are maintaining the same rate for June. “We see increases in both rates and volumes in the intra-Asia market,” the head of an Asia-headquartered container line told the Journal of Commerce, adding that “It’s not very common at this time of the year so we hope it lasts as long as possible.” Wider trade dislocations caused by the Middle East war which have tightened capacity, put upward pressure on rates on long-haul East-West trades, said Peter Sand, chief analyst at benchmarking platform Xeneta. The container spot rates from Shanghai to Singapore have soared 56% since Feb. 28, the start of the Iran war, Sand noted, while rates from Shanghai to Vietnam have risen 40% and Shanghai-Bangkok, 15%. They now stand at $1,489 per FEU from Shanghai to Singapore, the highest since Jan. 14, 2025, $1,648 per FEU for Shanghai to Bangkok and $1,287 per FEU from Shanghai to Vietnam, which are both the highest since Dec. 31, 2025.<div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="435f0ad1-f797-4f48-8a29-74f1f3c33961"></dynamic-object></div>Shanghai Shipping Exchange rate data reflected the Xeneta statistics, with SSE also reporting rates from Shanghai to Japan at around $333 per TEU, the highest since early August 2023, according to its data carried on the Journal of Commerce’s Gateway platform. Drewry said its intra-Asia container index, a weighted average of weekly spot rates on 18 regional trades, reached a record $959 per FEU on May 22, the highest since it was launched on Oct. 31, 2025, partly due to higher longer haul Shanghai-Dubai rates. <h3>Peak season comes early </h3>Other executives said the healthy increases in cargo volumes are due to generally upbeat consumer demand in Asia with growth rates this year varying between 3% in China, 4% in Singapore and Malaysia and 10% in Vietnam, plus a likely early peak season in Europe and North America. This is driving shipments of semi-manufactured goods and components within Asia, especially between China and Southeast Asia, the Asia container line head said. UPS estimated that up to 80% of intra-Asia container volumes comprise raw materials, goods, parts, and semi-manufactured products transported between multiple Asian countries for processing and assembly before final export. “The uncertainty and prospect of further cost increases and perhaps operational disruptions is causing Western BCO’s to call forward their Christmas goods earlier, which, as a knock-on, is lifting the volumes of raw and intermediate materials on the intra-Asian trades sooner than usual,” Stijn Rubens, senior consultant, Drewry Supply Chain Advisors, told the Journal of Commerce. “Manufacturing shifts and stronger regional trade ties are what’s boosting intra-Asia trade and container flows,” the FIBS Logistics spokesperson said. Highlighting the growth in volumes, Hong Kong-listed intra-Asia carrier SITC said first quarter liftings climbed 8% to 855,795 TEU, Cosco Shipping Holdings saw a 6% rise in intra-Asia volumes to 2.3 million TEU, while Hong Kong’s TS Lines recorded a 3% increase to 396,935 TEU. Executives said higher fuel prices have also likely contributed to the increase in freight rates, which are paid by shippers to carriers through bunker adjustment factor surcharges. The cost of high-sulfur fuel in Singapore has risen 15% from an average of $579 per metric ton this year to $665 per mt on May 22, while the price of low sulfur diesel has increased 22% from an average of $684 per mt this year to $834 per mt on May 22. ”Fuel surcharges hit shippers unevenly. As some are capable of pushing back, while others don’t or can’t. Fuel surcharges don’t hit all trades in the same way,” Xeneta’s Sand said. He also thought port congestion may being playing a mild role in supporting intra-Asia freight rates by reducing available capacity. Sand said Singapore especially has “been challenged — not to the point of consistent peak trouble, but it continues to be under pressure as the world’s more important transshipment hub”. Carriers have highlighted congestion in Singapore, Shanghai and Osaka, Nagoya and Tokyo in Japan as reasons for vessel delays deployed in intra-Asia services. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

The unseasonally high container spot rates on intra-Asia trades — up double-digit year over year — show no signs of slowing, thanks to strong regional cargo demand, buoyant market sentiment and higher bunker costs, according to freight executives and analysts. The upbeat conditions have led some carriers including Orient Overseas Container Line to push general rate increases (GRI) although others have so far left June rates unchanged. “The overall rate development is quite dynamic,” a FIBS Logistics spokesperson told the Journal of Commerce. OOCL has implemented a GRI of between $25 and $100 per TEU depending on the trade, said the spokesperson, adding that Maersk, Ocean Network Express and Hapag-Lloyd are maintaining the same rate for June. “We see increases in both rates and volumes in the intra-Asia market,” the head of an Asia-headquartered container line told the Journal of Commerce, adding that “It’s not very common at this time of the year so we hope it lasts as long as possible.” Wider trade dislocations caused by the Middle East war which have tightened capacity, put upward pressure on rates on long-haul East-West trades, said Peter Sand, chief analyst at benchmarking platform Xeneta. The container spot rates from Shanghai to Singapore have soared 56% since Feb. 28, the start of the Iran war, Sand noted, while rates from Shanghai to Vietnam have risen 40% and Shanghai-Bangkok, 15%. They now stand at $1,489 per FEU from Shanghai to Singapore, the highest since Jan. 14, 2025, $1,648 per FEU for Shanghai to Bangkok and $1,287 per FEU from Shanghai to Vietnam, which are both the highest since Dec. 31, 2025. Shanghai Shipping Exchange rate data reflected the Xeneta statistics, with SSE also reporting rates from Shanghai to Japan at around $333 per TEU, the highest since early August 2023, according to its data carried on the Journal of Commerce’s Gateway platform. Drewry said its intra-Asia container index, a weighted average of weekly spot rates on 18 regional trades, reached a record $959 per FEU on May 22, the highest since it was launched on Oct. 31, 2025, partly due to higher longer haul Shanghai-Dubai rates. Peak season comes early Other executives said the healthy increases in cargo volumes are due to generally upbeat consumer demand in Asia with growth rates this year varying between 3% in China, 4% in Singapore and Malaysia and 10% in Vietnam, plus a likely early peak season in Europe and North America. This is driving shipments of semi-manufactured goods and components within Asia, especially between China and Southeast Asia, the Asia container line head said. UPS estimated that up to 80% of intra-Asia container volumes comprise raw materials, goods, parts, and semi-manufactured products transported between multiple Asian countries for processing and assembly before final export. “The uncertainty and prospect of further cost increases and perhaps operational disruptions is causing Western BCO’s to call forward their Christmas goods earlier, which, as a knock-on, is lifting the volumes of raw and intermediate materials on the intra-Asian trades sooner than usual,” Stijn Rubens, senior consultant, Drewry Supply Chain Advisors, told the Journal of Commerce. “Manufacturing shifts and stronger regional trade ties are what’s boosting intra-Asia trade and container flows,” the FIBS Logistics spokesperson said. Highlighting the growth in volumes, Hong Kong-listed intra-Asia carrier SITC said first quarter liftings climbed 8% to 855,795 TEU, Cosco Shipping Holdings saw a 6% rise in intra-Asia volumes to 2.3 million TEU, while Hong Kong’s TS Lines recorded a 3% increase to 396,935 TEU. Executives said higher fuel prices have also likely contributed to the increase in freight rates, which are paid by shippers to carriers through bunker adjustment factor surcharges. The cost of high-sulfur fuel in Singapore has risen 15% from an average of $579 per metric ton this year to $665 per mt on May 22, while the price of low sulfur diesel has increased 22% from an average of $684 per mt this year to $834 per mt on May 22. ”Fuel surcharges hit shippers unevenly. As some are capable of pushing back, while others don’t or can’t. Fuel surcharges don’t hit all trades in the same way,” Xeneta’s Sand said. He also thought port congestion may being playing a mild role in supporting intra-Asia freight rates by reducing available capacity. Sand said Singapore especially has “been challenged — not to the point of consistent peak trouble, but it continues to be under pressure as the world’s more important transshipment hub”. Carriers have highlighted congestion in Singapore, Shanghai and Osaka, Nagoya and Tokyo in Japan as reasons for vessel delays deployed in intra-Asia services. Contact Keith Wallis at keithwallis@hotmail.com .

Container lines

Container Shipping News

Double-digit rate increases whip up intra-Asia trades

<div class="phx-topic abstract-wrapper">Caterpillar and Deere are key global manufacturers of high-and-heavy cargo and considered bellwether companies for the ro/ro breakbulk shipping segment.</div>

Caterpillar and Deere are key global manufacturers of high-and-heavy cargo and considered bellwether companies for the ro/ro breakbulk shipping segment.

<div class="phx-topic">Demand for equipment to support the buildout of data centers is driving production for high-and-heavy equipment makers Caterpillar and Deere, helping offset tariff costs and — for Deere — declines stemming from geopolitical uncertainty. Caterpillar and Deere are key global manufacturers of high-and-heavy cargo and considered bellwether companies for the roll-on/roll-off (ro/ro) breakbulk shipping segment. Both US-based companies import some materials and parts, even though much of their equipment comes from domestic production and sourcing. Farming industry pressures are taking a toll on agriculture equipment sales for Illinois-based Deere &amp; Company, but data centers, oil and gas expansions, and infrastructure projects are pushing up orders for heavy construction equipment. Deere is projecting a 15% to 20% decline for farming equipment sales in the US and Canada, driven by higher manufacturing expenses and ongoing global market uncertainty, including the war in Iran and surging farming expenses stemming from the conflict, according to the company’s latest quarterly earnings report. Year-over-year sales for large agricultural equipment fell 14% to $4.5 billion in its fiscal second quarter ending May 3. “Our baseline view remains that 2026 will represent the bottom of the ag cycle,” Brent Norwood, Deere’s senior vice president and CFO, said during the company’s May 21 earnings call. Deere saw some cost relief in the fiscal second quarter in the form of a $272 million refund on US import tariffs following the Supreme Court’s ruling in February invalidating billions of dollars in tariffs. Factoring in the refund and the ruling, Deere’s tariff cost projections for 2026 remain unchanged at $1.2 billion, although the refund brings those costs down to about $900 million. As part of its long-term plan to get a handle on production expenses, Deere is pouring $20 billion into US manufacturing facilities over the next 10 years. This quarter, the company started building Deere-designed excavators in North Carolina, following a $70 million investment to bring US-designed and -manufactured excavators to the market. Approximately 80% of Deere’s US equipment is produced at domestic manufacturing facilities, and about 75% of those components are sourced from US suppliers. Construction, meanwhile, is propping up Deere, with the company projecting an increase of approximately 5% for equipment sales in the sector. Year-over-year construction equipment sales rose 29% to $3.8 billion in its second quarter. Deere is riding the wave of a surge in construction projects, supported by the data center boom, expansions in the oil and gas sector, federal infrastructure investment, road projects, and warehouse construction. “Reflecting that strength, we’ve increased our year-over-year net sales guide to up about 20%,” Norwood said. In the US and Canada, Deere’s construction equipment orders have risen by over 60% since November, reaching their highest level since April 2024; over 80% of production slots are filled for the year, Norwood said. Data center construction is expected to top $100 billion in 2026, with additional double-digit growth into 2027, Norwood said. “This is great for our customers in both large-scale site prep, but also water and utility contractors who also support these projects,” he said. <h3>Order backlog surges for CAT </h3>The rise of generative AI and cloud computing is generating growth for heavy equipment maker Caterpillar, as the Illinois-based company is seeing greater demand for its equipment to support data center construction. Along with construction and mining equipment, Caterpillar manufactures engines and turbines needed to provide backup power to data centers, as well as the electrical infrastructure that supports these facilities. “Our largest customers and the broader data center industry have significantly increased their expectations for capital spending. That has translated to accelerated order rates for us,” Alex Kapper, Caterpillar’s vice president for investor relations, said during the company’s first-quarter earnings call April 30. Kapper said customers are committing to longer-term orders, including some well into 2028. In part because of that demand, Caterpillar is projecting low double-digit sales growth for 2026, according to the company’s first-quarter earnings report. Deere also lowered its tariff cost estimate for the year to $2.2 billion from $2.4 billion, down from the company’s previous estimate of $2.6 billion. With growth across its primary business segments, Caterpillar’s order backlog surged to $63 billion in the first quarter, up 79% year over year. Construction equipment sales saw the sharpest increase in the quarter, up 38% to $7.2 billion year over year, while power and energy sales rose 22% to $7 billion. Caterpillar’s resource industries business, which includes mining equipment, grew 4% to $3.8 billion in the first quarter. Contact Autumn Cafiero Giusti at <a href="mailto:autumn@autumngiusti.com">autumn@autumngiusti.com</a>. </div>

Demand for equipment to support the buildout of data centers is driving production for high-and-heavy equipment makers Caterpillar and Deere, helping offset tariff costs and — for Deere — declines stemming from geopolitical uncertainty. Caterpillar and Deere are key global manufacturers of high-and-heavy cargo and considered bellwether companies for the roll-on/roll-off (ro/ro) breakbulk shipping segment. Both US-based companies import some materials and parts, even though much of their equipment comes from domestic production and sourcing. Farming industry pressures are taking a toll on agriculture equipment sales for Illinois-based Deere & Company, but data centers, oil and gas expansions, and infrastructure projects are pushing up orders for heavy construction equipment. Deere is projecting a 15% to 20% decline for farming equipment sales in the US and Canada, driven by higher manufacturing expenses and ongoing global market uncertainty, including the war in Iran and surging farming expenses stemming from the conflict, according to the company’s latest quarterly earnings report. Year-over-year sales for large agricultural equipment fell 14% to $4.5 billion in its fiscal second quarter ending May 3. “Our baseline view remains that 2026 will represent the bottom of the ag cycle,” Brent Norwood, Deere’s senior vice president and CFO, said during the company’s May 21 earnings call. Deere saw some cost relief in the fiscal second quarter in the form of a $272 million refund on US import tariffs following the Supreme Court’s ruling in February invalidating billions of dollars in tariffs. Factoring in the refund and the ruling, Deere’s tariff cost projections for 2026 remain unchanged at $1.2 billion, although the refund brings those costs down to about $900 million. As part of its long-term plan to get a handle on production expenses, Deere is pouring $20 billion into US manufacturing facilities over the next 10 years. This quarter, the company started building Deere-designed excavators in North Carolina, following a $70 million investment to bring US-designed and -manufactured excavators to the market. Approximately 80% of Deere’s US equipment is produced at domestic manufacturing facilities, and about 75% of those components are sourced from US suppliers. Construction, meanwhile, is propping up Deere, with the company projecting an increase of approximately 5% for equipment sales in the sector. Year-over-year construction equipment sales rose 29% to $3.8 billion in its second quarter. Deere is riding the wave of a surge in construction projects, supported by the data center boom, expansions in the oil and gas sector, federal infrastructure investment, road projects, and warehouse construction. “Reflecting that strength, we’ve increased our year-over-year net sales guide to up about 20%,” Norwood said. In the US and Canada, Deere’s construction equipment orders have risen by over 60% since November, reaching their highest level since April 2024; over 80% of production slots are filled for the year, Norwood said. Data center construction is expected to top $100 billion in 2026, with additional double-digit growth into 2027, Norwood said. “This is great for our customers in both large-scale site prep, but also water and utility contractors who also support these projects,” he said. Order backlog surges for CAT The rise of generative AI and cloud computing is generating growth for heavy equipment maker Caterpillar, as the Illinois-based company is seeing greater demand for its equipment to support data center construction. Along with construction and mining equipment, Caterpillar manufactures engines and turbines needed to provide backup power to data centers, as well as the electrical infrastructure that supports these facilities. “Our largest customers and the broader data center industry have significantly increased their expectations for capital spending. That has translated to accelerated order rates for us,” Alex Kapper, Caterpillar’s vice president for investor relations, said during the company’s first-quarter earnings call April 30. Kapper said customers are committing to longer-term orders, including some well into 2028. In part because of that demand, Caterpillar is projecting low double-digit sales growth for 2026, according to the company’s first-quarter earnings report. Deere also lowered its tariff cost estimate for the year to $2.2 billion from $2.4 billion, down from the company’s previous estimate of $2.6 billion. With growth across its primary business segments, Caterpillar’s order backlog surged to $63 billion in the first quarter, up 79% year over year. Construction equipment sales saw the sharpest increase in the quarter, up 38% to $7.2 billion year over year, while power and energy sales rose 22% to $7 billion. Caterpillar’s resource industries business, which includes mining equipment, grew 4% to $3.8 billion in the first quarter. Contact Autumn Cafiero Giusti at autumn@autumngiusti.com .

Ro/ro cargo

Breakbulk News

High-and-heavy equipment makers tap into data centers for growth

<div class="phx-topic abstract-wrapper">Spot rates on the corridor hit their highest level of the year in the first half of May, but there are mixed views on whether demand will continue into the summer. </div>

Spot rates on the corridor hit their highest level of the year in the first half of May, but there are mixed views on whether demand will continue into the summer.

<div class="phx-topic">A demand recovery on the trans-Atlantic westbound trade that followed a lackluster first quarter has begun to slow, with the sharply higher rates flattening over the past two weeks. But the supply-demand picture is confusing. From a capacity perspective, expectations of a weakening market were not reflected in June’s vessel deployment plans by ocean carriers. Data from Xeneta’s eeSea shows planned capacity on the North Europe-US East Coast westbound trade in June will be 327,860 TEUs, up 10,000 TEUs from May. Yet US imports in April, the latest available data from PIERS, a sister company of the Journal of Commerce within S&amp;P Global, show volume declining 11% year over year at 185,960 TEUs following a 2.8% drop in March. Spot rates on the corridor reached their highest level of the year in the first half of May, but there has been little upward movement since then, according to most rate indexes. North Europe to USEC spot rates have been stuck at $2,100 per FEU since the first week of May, although that rate is up 60% from late March, according to Platts, a sister company of the Journal of Commerce. Drewry’s World Container Index this week was at $2,453/FEU for the trade lane, up 65% compared with the last week of March. There are mixed industry views on what to expect from US import demand in June, although Hapag-Lloyd holds a positive view of the market heading into summer. “The projection for June is pretty good ... it’s coming from all different industries, excluding forestry,” a spokesperson for the carrier told the Journal of Commerce Wednesday. “Since May last year rates have been going down and a recovery was urgently needed,” the spokesperson added. “We saw a good March and a good April with strong volume growth, and the second half of May was a bit softer.” <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="a18ac559-edc2-4292-b7d8-5dca37d16335"></dynamic-object></div>Philip Damas, managing director and head of Drewry Supply Chain Advisors, said the latest data reflected a moderating market. “We are not aware of strong demand flows on this route now; June is not typically a strong month for trans-Atlantic traffic,” Damas said. “We forecast a reduction in spot rates from Northern Europe to the US East Coast in June, ending the latest upswing period for spot rates.” <h3>Westbound vessels ‘getting lighter’ </h3>Peter Sand, chief analyst at rate benchmarking platform Xeneta, also highlighted a weakening trans-Atlantic market. “The carriers pulled capacity in January and convinced shippers that the market was tight,” he said. “[Capacity] is mostly back now and weak demand means there is no tight market on the trans-Atlantic.” An ocean freight executive at a global forwarder agreed that the market was softening after a strong couple of months. “We already see that vessels are getting lighter again and expect a calm summer,” the source told the Journal of Commerce. The executive said several of the forwarder’s customers had shipped higher volumes than usual over the past two months “for different reasons.” “Some customers said it was because of uncertainty over future Donald Trump and US Federal Reserve decisions,” he said. “Others said demand was returning to more normal in US markets and some people even talked about a shipment run due to the soccer World Cup.” <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="8d2a87d6-d5a7-4df4-b8b7-7cb4a299dcc1"></dynamic-object></div>Damas said the strong spot rate increases on the trans-Atlantic that extended into May were mostly due to capacity reductions by the Ocean Alliance and higher bunker fuel charges. Meanwhile, very low-sulfur fuel oil (VLSFO) bunker prices in Rotterdam are currently trading at $725/metric ton, a 48% premium compared with the Feb. 27 price just before the war in the Middle East began, according to data from Ship &amp; Bunker. At the other end of the trans-Atlantic trade lane, VLSFO in New York is trading at $794/metric ton after hitting a record high of $862/metric ton on May 5. The current price is 50% higher since the start of the war, Ship &amp; Bunker data shows. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

A demand recovery on the trans-Atlantic westbound trade that followed a lackluster first quarter has begun to slow, with the sharply higher rates flattening over the past two weeks. But the supply-demand picture is confusing. From a capacity perspective, expectations of a weakening market were not reflected in June’s vessel deployment plans by ocean carriers. Data from Xeneta’s eeSea shows planned capacity on the North Europe-US East Coast westbound trade in June will be 327,860 TEUs, up 10,000 TEUs from May. Yet US imports in April, the latest available data from PIERS, a sister company of the Journal of Commerce within S&P Global, show volume declining 11% year over year at 185,960 TEUs following a 2.8% drop in March. Spot rates on the corridor reached their highest level of the year in the first half of May, but there has been little upward movement since then, according to most rate indexes. North Europe to USEC spot rates have been stuck at $2,100 per FEU since the first week of May, although that rate is up 60% from late March, according to Platts, a sister company of the Journal of Commerce. Drewry’s World Container Index this week was at $2,453/FEU for the trade lane, up 65% compared with the last week of March. There are mixed industry views on what to expect from US import demand in June, although Hapag-Lloyd holds a positive view of the market heading into summer. “The projection for June is pretty good ... it’s coming from all different industries, excluding forestry,” a spokesperson for the carrier told the Journal of Commerce Wednesday. “Since May last year rates have been going down and a recovery was urgently needed,” the spokesperson added. “We saw a good March and a good April with strong volume growth, and the second half of May was a bit softer.” Philip Damas, managing director and head of Drewry Supply Chain Advisors, said the latest data reflected a moderating market. “We are not aware of strong demand flows on this route now; June is not typically a strong month for trans-Atlantic traffic,” Damas said. “We forecast a reduction in spot rates from Northern Europe to the US East Coast in June, ending the latest upswing period for spot rates.” Westbound vessels ‘getting lighter’ Peter Sand, chief analyst at rate benchmarking platform Xeneta, also highlighted a weakening trans-Atlantic market. “The carriers pulled capacity in January and convinced shippers that the market was tight,” he said. “[Capacity] is mostly back now and weak demand means there is no tight market on the trans-Atlantic.” An ocean freight executive at a global forwarder agreed that the market was softening after a strong couple of months. “We already see that vessels are getting lighter again and expect a calm summer,” the source told the Journal of Commerce. The executive said several of the forwarder’s customers had shipped higher volumes than usual over the past two months “for different reasons.” “Some customers said it was because of uncertainty over future Donald Trump and US Federal Reserve decisions,” he said. “Others said demand was returning to more normal in US markets and some people even talked about a shipment run due to the soccer World Cup.” Damas said the strong spot rate increases on the trans-Atlantic that extended into May were mostly due to capacity reductions by the Ocean Alliance and higher bunker fuel charges. Meanwhile, very low-sulfur fuel oil (VLSFO) bunker prices in Rotterdam are currently trading at $725/metric ton, a 48% premium compared with the Feb. 27 price just before the war in the Middle East began, according to data from Ship & Bunker. At the other end of the trans-Atlantic trade lane, VLSFO in New York is trading at $794/metric ton after hitting a record high of $862/metric ton on May 5. The current price is 50% higher since the start of the war, Ship & Bunker data shows. Contact Greg Knowler at greg.knowler@spglobal.com .

Trans-Atlantic

Higher trans-Atlantic ocean rates plateau as demand rally slows

<div class="phx-topic abstract-wrapper">Industry sources say operations have been affected by yard congestion and associated delays in inter-terminal transfer activity, which is an integral part of transshipment operations.</div>

Industry sources say operations have been affected by yard congestion and associated delays in inter-terminal transfer activity, which is an integral part of transshipment operations.

<div class="phx-topic">Sri Lanka’s Colombo Port has become another Asian container hub facing the pressure of supply chains squeezed by rerouted Middle East-bound containers. Industry sources in Colombo who spoke with the Journal of Commerce said terminal operations have been affected by yard congestion and associated delays in inter-terminal transfer (ITT) activity, which is an integral part of transshipment operations. Colombo is a key intermediate port in South Asia, especially for Indian East Coast shippers historically relying on transshipment connections. “Vessels are experiencing an average berthing delay of two to three days,” said an executive at a European liner who didn’t want to be identified. “Longer waits have a significant negative impact on our overall vessel operating costs.” Additionally, seasonal weather patterns along the Sri Lankan coast are posing operational challenges for carriers striving to keep their Colombo sailings on schedule. The bottlenecks have left some carriers announcing last-minute terminal changes for their regular service calls in Colombo. For example, the Gemini Cooperation has declared that its current week westbound and eastbound calls on the South India-Europe service known as the ME2 for Maersk and the IEX for Hapag-Lloyd will call Colombo’s South Asia Gateway Terminal (SAGT) instead of using the fixed-day berthing windows at the Colombo West International Terminal (CWIT). Adani Ports-managed CWIT opened to business in April 2025 with an ad-hoc Gemini network call. <h3>Colombo volumes up 20% since war began </h3>Maersk declined to comment on the vessel flow disruption at Colombo, which has seen volume gains of 20% since the Middle East war began on Feb. 28, rising from 636,084 TEUs in February to 736,094 TEUs in March and 761,096 TEUs in April, according to available data. The disruptive impact of unexpected transshipment volumes on port flows is widespread in the region as carriers diverted vessels away from the war zone. India’s busiest container hubs of <a href="https://www.joc.com/article/rising-container-dwells-hobble-vessel-flows-at-indias-nhava-sheva-mundra-ports-6220540">Nhava Sheva and Mundra have been plagued by clogged yards and considerable gate activity slowdowns</a> over the past month, an issue that continues to raise alarm bells through supply chain stakeholders and government circles. Responding to fresh government directives, Nhava Sheva is now pushing rail evacuations and green channel operations to ease freight delays, while the Indian Ports Association (IPA) is set to conduct an audit to measure the scale of yard congestion at the port. Contact Bency Mathew at <a href="mailto:bencyvmathew@gmail.com">bencyvmathew@gmail.com</a>. </div>

Sri Lanka’s Colombo Port has become another Asian container hub facing the pressure of supply chains squeezed by rerouted Middle East-bound containers. Industry sources in Colombo who spoke with the Journal of Commerce said terminal operations have been affected by yard congestion and associated delays in inter-terminal transfer (ITT) activity, which is an integral part of transshipment operations. Colombo is a key intermediate port in South Asia, especially for Indian East Coast shippers historically relying on transshipment connections. “Vessels are experiencing an average berthing delay of two to three days,” said an executive at a European liner who didn’t want to be identified. “Longer waits have a significant negative impact on our overall vessel operating costs.” Additionally, seasonal weather patterns along the Sri Lankan coast are posing operational challenges for carriers striving to keep their Colombo sailings on schedule. The bottlenecks have left some carriers announcing last-minute terminal changes for their regular service calls in Colombo. For example, the Gemini Cooperation has declared that its current week westbound and eastbound calls on the South India-Europe service known as the ME2 for Maersk and the IEX for Hapag-Lloyd will call Colombo’s South Asia Gateway Terminal (SAGT) instead of using the fixed-day berthing windows at the Colombo West International Terminal (CWIT). Adani Ports-managed CWIT opened to business in April 2025 with an ad-hoc Gemini network call. Colombo volumes up 20% since war began Maersk declined to comment on the vessel flow disruption at Colombo, which has seen volume gains of 20% since the Middle East war began on Feb. 28, rising from 636,084 TEUs in February to 736,094 TEUs in March and 761,096 TEUs in April, according to available data. The disruptive impact of unexpected transshipment volumes on port flows is widespread in the region as carriers diverted vessels away from the war zone. India’s busiest container hubs of Nhava Sheva and Mundra have been plagued by clogged yards and considerable gate activity slowdowns over the past month, an issue that continues to raise alarm bells through supply chain stakeholders and government circles. Responding to fresh government directives, Nhava Sheva is now pushing rail evacuations and green channel operations to ease freight delays, while the Indian Ports Association (IPA) is set to conduct an audit to measure the scale of yard congestion at the port. Contact Bency Mathew at bencyvmathew@gmail.com .

International ports

Choked container yards strain terminal operations at Sri Lanka’s Colombo Port

<div class="phx-topic abstract-wrapper">Small carriers that practice pricing discipline and manage costs are turning a profit, but whether they can maintain profitability will directly affect how much capacity is available to shippers and how sharply rates may rise.</div>

Small carriers that practice pricing discipline and manage costs are turning a profit, but whether they can maintain profitability will directly affect how much capacity is available to shippers and how sharply rates may rise.

<div class="phx-topic">A regulatory crackdown is reshaping the US truckload market, leading to a supply-side recovery in spot and contract rates. Suddenly, small carriers that practice pricing discipline and manage costs are turning a profit, not just spinning their wheels. Whether they can maintain profitability will directly affect how much capacity is available to shippers and how sharply rates may rise. Small fleet profitability comes down to two variables: spot rates and diesel prices. When those variables move together, carriers survive. When they diverge, trucks go dark. DAT Freight &amp; Analytics data tracking the estimated annual average gross profit for small fleets reveals a swing from $46,550 in June 2018 to a $5,700 annualized loss in May 2020 (based on all costs for a typical dry-van spot market carrier). That average rose to $110,200 in January 2022 and fell to $5,700 by October 2025. Estimated gross profit is now recovering, rising to $36,000 in April — completing a full cycle that took eight years to complete and wiped out thousands of small carriers along the way. To understand that cycle fully, and where we may be headed, start where the data does: the boom following the 2018 electronic logging device (ELD) mandate. <h3>Strong start in 2018 </h3>January 2018 opened with all-in DAT spot rates at $2.24 per mile and a small fleet gross profit of $43,700. Breakeven costs were a manageable $1.63 per mile, leaving a $0.33 per mile gross margin. But the real catalyst was still building. The US ELD mandate took full effect in April 2018, compressing available capacity overnight. All-in spot rates surged to $2.32 per mile in June. That September, carriers placed record numbers of new truck orders, betting the good times would last. They were wrong. The freight market cooled rapidly into the fourth quarter of 2018. New trucks ordered at the peak of the 2018 boom rolled off assembly lines and into a softening market. By 2019, the industry was sitting on a structural oversupply of capacity. The ELD boom seeded its own bust. <h3>Freight recession </h3>From June 2018 to January 2019, spot linehaul rates collapsed from $2.03 to $1.67 per mile as shippers who had frontloaded inventory ahead of the ELD deadline and US tariffs on China let demand normalize. Small fleet annual gross profit fell from $46,550 to $19,950 in six months, then dropped further to $3,800 by April 2019. Breakeven costs held steady at $1.62 to $1.65 per mile — but costs weren’t the problem; rates simply wouldn’t cooperate. This was a demonstration of how quickly a capacity shock reversal can gut small fleet margins. Then COVID-19 hit. April and May 2020 produced the only negative gross profit months in the dataset, with losses of $4,750 and $5,700, respectively, as all-in rates collapsed to $1.62 and $1.59 per mile while breakeven costs barely budged at $1.58 to $1.59 per mile. It was a brief but brutal reminder that breakeven isn’t the floor — it’s just where you stop making money and start burning it. <h3>Boom to bust </h3>Pandemic stimulus, inventory restocking and port congestion drove spot rates from $1.59 per mile on average in May 2020 to $3.11 per mile by January 2022. Small fleet gross profit surged to $110,200 — the highest in the data set. Then Russia invaded Ukraine in February 2022. Diesel spiked, pushing breakeven costs from $1.77 to $2.08 per mile in five months, a 17% jump. By October 2022, small fleet gross profit had collapsed 75% to $27,550. Spot linehaul rates bottomed around $1.54 to $1.65 per mile and flatlined for nearly two years. Gross profit hovered between $3,800 and $19,950 for 24 consecutive months, with most months in the $6,000 to $12,000 range. This is the period that drove capacity rationalization — small fleets exiting, authorities being revoked, and the industry slowly bleeding out excess trucks. It was the longest freight recession in a generation, and carriers that survived it earned what’s coming next. <h3>A new cycle </h3>What’s coming next is a supply-driven inflection in rates. Spot rates began climbing again in December 2025, with gross profit jumping to $29,450 as all-in rates hit $2.29 per mile. January and February 2026 continued the trend, with average gross profit hitting $30,400 and $32,300, respectively. Then the Iran war started. The national average retail diesel price surged above $5 per gallon, pushing owner-operator breakeven costs from $1.88 per mile in February to $2.09 per mile by early May, a spike eerily similar in magnitude to the 2022 Ukraine shock. But this time spot truckload rates are rising, too. May’s to-date all-in rate of $2.62 per mile is the highest since mid-2022, producing a gross profit of $25,000 despite the elevated fuel costs. The rate recovery and diesel spike are running a race, and right now, rates are keeping pace. Contact Dean Croke at <a href="mailto:dean.croke@dat.com">dean.croke@dat.com</a>.</div>

A regulatory crackdown is reshaping the US truckload market, leading to a supply-side recovery in spot and contract rates. Suddenly, small carriers that practice pricing discipline and manage costs are turning a profit, not just spinning their wheels. Whether they can maintain profitability will directly affect how much capacity is available to shippers and how sharply rates may rise. Small fleet profitability comes down to two variables: spot rates and diesel prices. When those variables move together, carriers survive. When they diverge, trucks go dark. DAT Freight & Analytics data tracking the estimated annual average gross profit for small fleets reveals a swing from $46,550 in June 2018 to a $5,700 annualized loss in May 2020 (based on all costs for a typical dry-van spot market carrier). That average rose to $110,200 in January 2022 and fell to $5,700 by October 2025. Estimated gross profit is now recovering, rising to $36,000 in April — completing a full cycle that took eight years to complete and wiped out thousands of small carriers along the way. To understand that cycle fully, and where we may be headed, start where the data does: the boom following the 2018 electronic logging device (ELD) mandate. Strong start in 2018 January 2018 opened with all-in DAT spot rates at $2.24 per mile and a small fleet gross profit of $43,700. Breakeven costs were a manageable $1.63 per mile, leaving a $0.33 per mile gross margin. But the real catalyst was still building. The US ELD mandate took full effect in April 2018, compressing available capacity overnight. All-in spot rates surged to $2.32 per mile in June. That September, carriers placed record numbers of new truck orders, betting the good times would last. They were wrong. The freight market cooled rapidly into the fourth quarter of 2018. New trucks ordered at the peak of the 2018 boom rolled off assembly lines and into a softening market. By 2019, the industry was sitting on a structural oversupply of capacity. The ELD boom seeded its own bust. Freight recession From June 2018 to January 2019, spot linehaul rates collapsed from $2.03 to $1.67 per mile as shippers who had frontloaded inventory ahead of the ELD deadline and US tariffs on China let demand normalize. Small fleet annual gross profit fell from $46,550 to $19,950 in six months, then dropped further to $3,800 by April 2019. Breakeven costs held steady at $1.62 to $1.65 per mile — but costs weren’t the problem; rates simply wouldn’t cooperate. This was a demonstration of how quickly a capacity shock reversal can gut small fleet margins. Then COVID-19 hit. April and May 2020 produced the only negative gross profit months in the dataset, with losses of $4,750 and $5,700, respectively, as all-in rates collapsed to $1.62 and $1.59 per mile while breakeven costs barely budged at $1.58 to $1.59 per mile. It was a brief but brutal reminder that breakeven isn’t the floor — it’s just where you stop making money and start burning it. Boom to bust Pandemic stimulus, inventory restocking and port congestion drove spot rates from $1.59 per mile on average in May 2020 to $3.11 per mile by January 2022. Small fleet gross profit surged to $110,200 — the highest in the data set. Then Russia invaded Ukraine in February 2022. Diesel spiked, pushing breakeven costs from $1.77 to $2.08 per mile in five months, a 17% jump. By October 2022, small fleet gross profit had collapsed 75% to $27,550. Spot linehaul rates bottomed around $1.54 to $1.65 per mile and flatlined for nearly two years. Gross profit hovered between $3,800 and $19,950 for 24 consecutive months, with most months in the $6,000 to $12,000 range. This is the period that drove capacity rationalization — small fleets exiting, authorities being revoked, and the industry slowly bleeding out excess trucks. It was the longest freight recession in a generation, and carriers that survived it earned what’s coming next. A new cycle What’s coming next is a supply-driven inflection in rates. Spot rates began climbing again in December 2025, with gross profit jumping to $29,450 as all-in rates hit $2.29 per mile. January and February 2026 continued the trend, with average gross profit hitting $30,400 and $32,300, respectively. Then the Iran war started. The national average retail diesel price surged above $5 per gallon, pushing owner-operator breakeven costs from $1.88 per mile in February to $2.09 per mile by early May, a spike eerily similar in magnitude to the 2022 Ukraine shock. But this time spot truckload rates are rising, too. May’s to-date all-in rate of $2.62 per mile is the highest since mid-2022, producing a gross profit of $25,000 despite the elevated fuel costs. The rate recovery and diesel spike are running a race, and right now, rates are keeping pace. Contact Dean Croke at dean.croke@dat.com .

Truckload

Fuel prices threaten small trucker profits, pose capacity risk for shippers

<div class="phx-topic abstract-wrapper">The application of emergency fuel charges amid the war in the Middle East is the latest episode in poorly thought-out ideas and “short-termism” by carriers that has hammered another nail in the coffin of trust between them and BCOs. </div>

The application of emergency fuel charges amid the war in the Middle East is the latest episode in poorly thought-out ideas and “short-termism” by carriers that has hammered another nail in the coffin of trust between them and BCOs.

<div class="phx-topic">Trust, like any other brand, takes a long time to build. It requires patience, competence, consistency, reliability, and the impression (not always reality) of being not too self-serving. On the other side of the equation, trust is fragile and, depending on the action, can erode over time or vanish in a puff of smoke. I will not attempt to speculate on individual carrier and beneficial cargo owner (BCO) relationships as they are both individualistic and often dependent on one-to-one relationships rather than structural business-to-business in the wider sense. And so to describe the state of BCO-carrier relationships broadly, there is a predominance of mistrust on both sides. Part of this is structural and dates back to the early days of container shipping where the rules were unclear and many of the actors came from a bulk shipping background where charter parties were the benchmark of BCO/carrier contractual and relationship behavior. I recall a venerable shipper, steeped in charter party fine details, insisting we had to position refrigerated containers AND a vessel into Rockhampton, Queensland (Australia), as this was a named port in the annual meat shippers’ negotiations with the Japan Shipping conference. Needless to say, we didn’t do so, much to his disgust. And so it continued through the years. Carriers slowly shifting from trying to manage providing a service and making a profit to maximizing profit, while shippers played at relationships, too. BCOs cashed in when markets crashed and tried to limit the damage when markets were high. Meanwhile, carriers abandoned their attempt to provide a service versus profit. Schedule reliability is laughably low by any measure despite the best efforts to constrain supply through blank sailings, abandoning the chassis market, schedule slippages, etc. All make complete commercial and financial sense, but all contribute to erosion of trust. Shippers have not helped this dynamic, either, with poor forecasting, “best estimate” of volumes, etc., giving many a low reliability standing with carriers. <h3>A ‘new low’ after the pandemic </h3>COVID-19 ushered in a new low, with carriers generating extraordinary profits and cash piles enough to placate their long-suffering shareholders, allowing them to engage in seemingly random excursions into tangential asset plays (aircraft, tankers etc.) while retaining enough cash for the inevitable cyclical downturn. The downturn did not arrive, but in its place we found the geopolitical mess of the war that led to the effective closing of the Strait of Hormuz with all its implications for shipping and seafarers. Which leads to the latest significant erosion of trust. While spot rates typically incorporate the bunker adjustment factor (BAF) and other surcharges into an all-in price (quote, not invoice), a BCO has two contract options for a BAF mechanism. They can choose the carrier-published rates (some BCOs have been coerced to use these), or they can use their own formulas. BAF mechanisms are usually set for a quarter with a tolerance for movement above or below a certain percentage. For example, if the BAF moves 2%, this would be considered an insufficient change to warrant the administration required, thus a threshold is typically set at 5%. However, in either case the mechanism has relied on one overriding truth. The calculation is made at an agreed point before the end of the quarter, and the new BAF (if beyond the threshold) is applied for the subsequent quarter. This means that any significant movement up or down within the current quarter will only be recovered in the subsequent quarter. <h3>‘When is a contract not a contract?’ </h3>Certain carriers have insisted that an emergency BAF is warranted. BCOs read the papers too and know there is a major price and supply issue. Many BCOs have asked for detailed clarification in order to get a sense of what is being asked. In some cases, a flat rate across trades was proposed, which makes no sense. Account managers providing the advice were in most cases unable to explain in any detail what was proposed. Another point of contention is the carrier assertion they are burning cash because of fuel while accumulating cash over time to cover at least three years of operations. As one BCO said to me: “When is a contract not a contract?” This latest episode in poorly thought-out ideas and “short-termism” by carriers has hammered another nail in the coffin of trust between them and BCOs. Surely not the final one? John McCauley, formerly a vice president of transportation and logistics at Cargill, now consults for shippers. Contact him at <a href="mailto:john-mccauley1@outlook.com">john-mccauley1@outlook.com</a>. </div>

Trust, like any other brand, takes a long time to build. It requires patience, competence, consistency, reliability, and the impression (not always reality) of being not too self-serving. On the other side of the equation, trust is fragile and, depending on the action, can erode over time or vanish in a puff of smoke. I will not attempt to speculate on individual carrier and beneficial cargo owner (BCO) relationships as they are both individualistic and often dependent on one-to-one relationships rather than structural business-to-business in the wider sense. And so to describe the state of BCO-carrier relationships broadly, there is a predominance of mistrust on both sides. Part of this is structural and dates back to the early days of container shipping where the rules were unclear and many of the actors came from a bulk shipping background where charter parties were the benchmark of BCO/carrier contractual and relationship behavior. I recall a venerable shipper, steeped in charter party fine details, insisting we had to position refrigerated containers AND a vessel into Rockhampton, Queensland (Australia), as this was a named port in the annual meat shippers’ negotiations with the Japan Shipping conference. Needless to say, we didn’t do so, much to his disgust. And so it continued through the years. Carriers slowly shifting from trying to manage providing a service and making a profit to maximizing profit, while shippers played at relationships, too. BCOs cashed in when markets crashed and tried to limit the damage when markets were high. Meanwhile, carriers abandoned their attempt to provide a service versus profit. Schedule reliability is laughably low by any measure despite the best efforts to constrain supply through blank sailings, abandoning the chassis market, schedule slippages, etc. All make complete commercial and financial sense, but all contribute to erosion of trust. Shippers have not helped this dynamic, either, with poor forecasting, “best estimate” of volumes, etc., giving many a low reliability standing with carriers. A ‘new low’ after the pandemic COVID-19 ushered in a new low, with carriers generating extraordinary profits and cash piles enough to placate their long-suffering shareholders, allowing them to engage in seemingly random excursions into tangential asset plays (aircraft, tankers etc.) while retaining enough cash for the inevitable cyclical downturn. The downturn did not arrive, but in its place we found the geopolitical mess of the war that led to the effective closing of the Strait of Hormuz with all its implications for shipping and seafarers. Which leads to the latest significant erosion of trust. While spot rates typically incorporate the bunker adjustment factor (BAF) and other surcharges into an all-in price (quote, not invoice), a BCO has two contract options for a BAF mechanism. They can choose the carrier-published rates (some BCOs have been coerced to use these), or they can use their own formulas. BAF mechanisms are usually set for a quarter with a tolerance for movement above or below a certain percentage. For example, if the BAF moves 2%, this would be considered an insufficient change to warrant the administration required, thus a threshold is typically set at 5%. However, in either case the mechanism has relied on one overriding truth. The calculation is made at an agreed point before the end of the quarter, and the new BAF (if beyond the threshold) is applied for the subsequent quarter. This means that any significant movement up or down within the current quarter will only be recovered in the subsequent quarter. ‘When is a contract not a contract?’ Certain carriers have insisted that an emergency BAF is warranted. BCOs read the papers too and know there is a major price and supply issue. Many BCOs have asked for detailed clarification in order to get a sense of what is being asked. In some cases, a flat rate across trades was proposed, which makes no sense. Account managers providing the advice were in most cases unable to explain in any detail what was proposed. Another point of contention is the carrier assertion they are burning cash because of fuel while accumulating cash over time to cover at least three years of operations. As one BCO said to me: “When is a contract not a contract?” This latest episode in poorly thought-out ideas and “short-termism” by carriers has hammered another nail in the coffin of trust between them and BCOs. Surely not the final one? John McCauley, formerly a vice president of transportation and logistics at Cargill, now consults for shippers. Contact him at john-mccauley1@outlook.com .

Another nail in the coffin of trust between carriers, clients

Shanghai to East Coast

{name} 
{dateX.formatDate('MMM dd, yyyy')}: ${valueY} 
Y-o-Y: {US_East_Coast_YoY.formatNumber("##.#'%'")}

 Shanghai to West Coast

{name} 
{dateX.formatDate('MMM dd, yyyy')}: ${valueY} 
Y-o-Y: {US_West_YoY.formatNumber("##.#'%'")}

The Shanghai Shipping Exchange’s (SSE) Shanghai Containerized Freight Index (SCFI) reflects spot rates and associated seaborne charges for containerized exports from Shanghai. The SCFI includes indices of freight rates in 13 individual shipping routes and a composite index, using Oct. 16, 2009, as the base period (Oct. 16, 2009 = 1,000). [SSE](https://en.sse.net.cn/indices/scfinew.jsp)

Shanghai to US West and East Coast container spot rates (SSE)

Shanghai to US Coasts container spot rates (SCFI-Weekly) Gateway

<div class="phx-topic abstract-wrapper">The move is likely to raise costs for forwarders and carriers as they devote more resources to ensure compliance with rate filing procedures, and it could hasten a wider shakeup in China’s logistics sector.</div>

The move is likely to raise costs for forwarders and carriers as they devote more resources to ensure compliance with rate filing procedures, and it could hasten a wider shakeup in China’s logistics sector.

<div class="phx-topic">Freight forwarders and ocean carriers are facing a widening crackdown by China's Transport Ministry and provincial authorities over the filing of ocean rate data, ostensibly as part of an effort to protect shippers from unclear pricing strategies, forwarders say. The move is likely to raise costs for forwarders and carriers as they devote more resources to ensure compliance with rate filing procedures. And it could hasten a wider shakeup in China's logistics sector, with increased consolidation and the demise of smaller, less-compliant operators, the forwarders said. The crackdown by Chinese authorities comes after nine carriers and seven non-vessel operating common carriers (NVOCCs) received fines or warning letters after Transport Ministry officials found discrepancies in rate data filed for international shipments at three gateway ports late last year. “Since the government has emphasized (that) enterprises must improve internal rate filing work systems and institutionalize accountability, with responsibility assigned to specific personnel, it may cost more for internal compliance costs, (and) force both large shipping lines and smaller forwarders to be more transparent," Cliff Xu, regional director of Greater China for the forwarder Rhenus Air &amp; Ocean, told the Journal of Commerce. “This would reduce the ability of non-compliant operators to undercut compliant competitors through opaque pricing strategies,” he added. “This may accelerate industry consolidation, with smaller and less-compliant operators struggling to survive.” Inspections last year focused on Guangzhou, Ningbo, and Qingdao. “We anticipate further expansion nationwide,” Xu said. “The logical next steps would include other major trade gateways such as Shanghai, Shenzhen, and Tianjin in future enforcement rounds. “The government has explicitly stated that it will increase the intensity of inspections on enterprises regarding the implementation of filed freight rates, and that both the central ministry and its authorized provincial transportation authorities will carry out these enforcement actions,” Xu added. Ocean Network Express (ONE), Hapag-Lloyd, CMA CGM, Mediterranean Shipping Co., Evergreen Marine (Asia), and Wan Hai Lines (Singapore) were among the carriers that received "administrative punishment" following the inspections between August and November last year. ONE said it was penalized due to a “filing inaccuracy in mid-2025.” “ONE has since addressed the relevant findings through appropriate follow-up and corrective actions,” a spokesperson for the carrier told the Journal of Commerce, not providing further details. “Our current operations remain unaffected, and we remain committed to full regulatory compliance.” Hapag-Lloyd declined to comment. “Please understand that we cannot comment on ongoing proceedings as a general matter,” a spokesperson for the carrier said. The seven forwarders that received “administrative punishment,” which can also include license suspension, include Huilida International Freight Forwarding (Guangzhou), the Qingdao branch of Xuda International Freight Forwarding (Shanghai), and Ningbo Port Southeast Logistics Group, according to a Transport Ministry statement on May 12. <h3>‘Significant increase’ in scrutiny </h3>The Transport Ministry made it mandatory for carriers and forwarders to file rate data and information to the Shanghai Shipping Exchange, as the ministry’s agent, in 2013. But forwarder FIBS Logistics said freight rate filing enforcement “was considered a bit of a toothless paper tiger” until 2024 when Shanghai’s municipal transport commission carried out a two-week inspection blitz on freight rate filing procedures. Those checks included copies of bills of lading, freight lists, bank accounts, invoices, and “financial accounting vouchers,” according to the notice issued by the commission shortly before the inspection regime started. It was at that time that FIBS put a dedicated person in charge of the local filings for all China contracts, a spokesperson for the company told the Journal of Commerce. “We have never actually been audited, nor did we really hear much about other forwarders getting audited,” the spokesperson said. “I guess only forwarders who never or just rarely update the filing system will be audited.” Xu from Rhenus Logistics said the company has seen “a significant increase in enforcement and systematic scrutiny” since 2024. “The authorities have moved beyond simple filing mandates to vigorously enforce compliance with filed rates,” he said. “This represents a clear step-change in regulatory oversight. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

Freight forwarders and ocean carriers are facing a widening crackdown by China's Transport Ministry and provincial authorities over the filing of ocean rate data, ostensibly as part of an effort to protect shippers from unclear pricing strategies, forwarders say. The move is likely to raise costs for forwarders and carriers as they devote more resources to ensure compliance with rate filing procedures. And it could hasten a wider shakeup in China's logistics sector, with increased consolidation and the demise of smaller, less-compliant operators, the forwarders said. The crackdown by Chinese authorities comes after nine carriers and seven non-vessel operating common carriers (NVOCCs) received fines or warning letters after Transport Ministry officials found discrepancies in rate data filed for international shipments at three gateway ports late last year. “Since the government has emphasized (that) enterprises must improve internal rate filing work systems and institutionalize accountability, with responsibility assigned to specific personnel, it may cost more for internal compliance costs, (and) force both large shipping lines and smaller forwarders to be more transparent," Cliff Xu, regional director of Greater China for the forwarder Rhenus Air & Ocean, told the Journal of Commerce. “This would reduce the ability of non-compliant operators to undercut compliant competitors through opaque pricing strategies,” he added. “This may accelerate industry consolidation, with smaller and less-compliant operators struggling to survive.” Inspections last year focused on Guangzhou, Ningbo, and Qingdao. “We anticipate further expansion nationwide,” Xu said. “The logical next steps would include other major trade gateways such as Shanghai, Shenzhen, and Tianjin in future enforcement rounds. “The government has explicitly stated that it will increase the intensity of inspections on enterprises regarding the implementation of filed freight rates, and that both the central ministry and its authorized provincial transportation authorities will carry out these enforcement actions,” Xu added. Ocean Network Express (ONE), Hapag-Lloyd, CMA CGM, Mediterranean Shipping Co., Evergreen Marine (Asia), and Wan Hai Lines (Singapore) were among the carriers that received "administrative punishment" following the inspections between August and November last year. ONE said it was penalized due to a “filing inaccuracy in mid-2025.” “ONE has since addressed the relevant findings through appropriate follow-up and corrective actions,” a spokesperson for the carrier told the Journal of Commerce, not providing further details. “Our current operations remain unaffected, and we remain committed to full regulatory compliance.” Hapag-Lloyd declined to comment. “Please understand that we cannot comment on ongoing proceedings as a general matter,” a spokesperson for the carrier said. The seven forwarders that received “administrative punishment,” which can also include license suspension, include Huilida International Freight Forwarding (Guangzhou), the Qingdao branch of Xuda International Freight Forwarding (Shanghai), and Ningbo Port Southeast Logistics Group, according to a Transport Ministry statement on May 12. ‘Significant increase’ in scrutiny The Transport Ministry made it mandatory for carriers and forwarders to file rate data and information to the Shanghai Shipping Exchange, as the ministry’s agent, in 2013. But forwarder FIBS Logistics said freight rate filing enforcement “was considered a bit of a toothless paper tiger” until 2024 when Shanghai’s municipal transport commission carried out a two-week inspection blitz on freight rate filing procedures. Those checks included copies of bills of lading, freight lists, bank accounts, invoices, and “financial accounting vouchers,” according to the notice issued by the commission shortly before the inspection regime started. It was at that time that FIBS put a dedicated person in charge of the local filings for all China contracts, a spokesperson for the company told the Journal of Commerce. “We have never actually been audited, nor did we really hear much about other forwarders getting audited,” the spokesperson said. “I guess only forwarders who never or just rarely update the filing system will be audited.” Xu from Rhenus Logistics said the company has seen “a significant increase in enforcement and systematic scrutiny” since 2024. “The authorities have moved beyond simple filing mandates to vigorously enforce compliance with filed rates,” he said. “This represents a clear step-change in regulatory oversight. Contact Keith Wallis at keithwallis@hotmail.com .

Forwarding

Asia-Europe

China widens regulatory crackdown on filing of ocean transport rate data

<div class="phx-topic abstract-wrapper">Costs rose sharply following the start of the war, and although emergency fuel surcharges were quickly levied on spot shipments, cargo under contract was locked into quarterly BAFs.</div>

Costs rose sharply following the start of the war, and although emergency fuel surcharges were quickly levied on spot shipments, cargo under contract was locked into quarterly BAFs.

<div class="phx-topic">Fuel prices that rocketed higher since the war with Iran began on Feb. 28 have so far added $5.5 billion to the bunker costs of container lines, according to Sea-Intelligence Maritime Analysis. Ocean carriers have rolled out emergency fuel surcharges in an urgent bid to recover that increase in operating costs, <a href="https://www.joc.com/article/war-adding-40-50-million-per-week-to-hapag-lloyds-costs-ceo-6193532">estimated at up to $50 million a week by Hapag-Lloyd</a>. “It is clear that if the (Strait of) Hormuz crisis persists, and hence fuel prices remain elevated, the industry would become clearly loss-making, unless the added fuel costs translate into higher freight rates,” Alan Murphy, CEO of Sea-Intelligence, wrote in his weekly Sunday Spotlight newsletter. “Spot rates have indeed been on the rise these past couple of weeks, especially on the Asia-Europe trade, implying that the process of passing on the added fuel costs is under way,” Murphy added. Bunker costs rose sharply following the start of the war, and although emergency fuel surcharges were quickly levied on spot shipments, cargo under contract was locked into quarterly bunker adjustment factors (BAFs). <a href="https://www.joc.com/article/demand-rising-on-asia-europe-ocean-trade-as-july-bunker-hike-looms-6225813">Those costs will be passed on to shippers in the third quarter</a> beginning July 1. Murphy put the scale of the additional fuel costs for the three-month period through May in context, noting that the first-quarter financial results for 2026 implied combined industry-wide revenue of $61 billion and earnings before interest and taxes (EBIT) of $2.7 billion. <h3>Peace prospects spark oil price drop</h3>While oil prices have fallen to a two-week low amid hopes that Washington and Tehran were close to a peace deal, the fragility of the current ceasefire was illustrated Monday by renewed US strikes and return fire from Iranian positions. Very low-sulfur fuel oil (VLSFO) was trading at $782 per metric ton (mt) Monday, down 11% since a mid-May high, according to Ship &amp; Bunker. High-sulfur fuel oil (HSFO) is trading at a substantial discount to VLSFO at $628/mt, down 13% since mid-May. To arrive at a daily added fuel cost per-container for the industry from the Middle East war, Sea-Intelligence used an estimated fuel use of 70 million tons per year, with 47.2 million TEUs shipped in the first three months of 2026, according to Container Trades Statistics (CTS). “The CTS data period is not quite the same as the fuel premium period,” Murphy acknowledged. “However, as a ballpark estimate, this implies an added fuel cost on average of $117/TEU.” Whether a vessel was equipped with an exhaust scrubber or not would also influence the cost per container. “Vessels equipped with a scrubber can use the lower-priced (HSFO), whereas vessels without a scrubber need to purchase the more expensive VLSFO,” Murphy said. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>.</div>

Fuel prices that rocketed higher since the war with Iran began on Feb. 28 have so far added $5.5 billion to the bunker costs of container lines, according to Sea-Intelligence Maritime Analysis. Ocean carriers have rolled out emergency fuel surcharges in an urgent bid to recover that increase in operating costs, estimated at up to $50 million a week by Hapag-Lloyd . “It is clear that if the (Strait of) Hormuz crisis persists, and hence fuel prices remain elevated, the industry would become clearly loss-making, unless the added fuel costs translate into higher freight rates,” Alan Murphy, CEO of Sea-Intelligence, wrote in his weekly Sunday Spotlight newsletter. “Spot rates have indeed been on the rise these past couple of weeks, especially on the Asia-Europe trade, implying that the process of passing on the added fuel costs is under way,” Murphy added. Bunker costs rose sharply following the start of the war, and although emergency fuel surcharges were quickly levied on spot shipments, cargo under contract was locked into quarterly bunker adjustment factors (BAFs). Those costs will be passed on to shippers in the third quarter beginning July 1. Murphy put the scale of the additional fuel costs for the three-month period through May in context, noting that the first-quarter financial results for 2026 implied combined industry-wide revenue of $61 billion and earnings before interest and taxes (EBIT) of $2.7 billion. Peace prospects spark oil price drop While oil prices have fallen to a two-week low amid hopes that Washington and Tehran were close to a peace deal, the fragility of the current ceasefire was illustrated Monday by renewed US strikes and return fire from Iranian positions. Very low-sulfur fuel oil (VLSFO) was trading at $782 per metric ton (mt) Monday, down 11% since a mid-May high, according to Ship & Bunker. High-sulfur fuel oil (HSFO) is trading at a substantial discount to VLSFO at $628/mt, down 13% since mid-May. To arrive at a daily added fuel cost per-container for the industry from the Middle East war, Sea-Intelligence used an estimated fuel use of 70 million tons per year, with 47.2 million TEUs shipped in the first three months of 2026, according to Container Trades Statistics (CTS). “The CTS data period is not quite the same as the fuel premium period,” Murphy acknowledged. “However, as a ballpark estimate, this implies an added fuel cost on average of $117/TEU.” Whether a vessel was equipped with an exhaust scrubber or not would also influence the cost per container. “Vessels equipped with a scrubber can use the lower-priced (HSFO), whereas vessels without a scrubber need to purchase the more expensive VLSFO,” Murphy said. Contact Greg Knowler at greg.knowler@spglobal.com .

Middle East war adds $5.5 billion to ocean carriers' bunker costs: Sea-Intelligence

<div class="phx-topic abstract-wrapper">Ag exporters have always faced logistical challenges because their crops are grown in the interior US and shipped through ports located hundreds of miles away; those challenges seem to be growing, the AgTC conference heard this week. </div>

Ag exporters have always faced logistical challenges because their crops are grown in the interior US and shipped through ports located hundreds of miles away; those challenges seem to be growing, the AgTC conference heard this week.

<div class="phx-topic">US agricultural shippers are facing increasing and costly challenges in getting their goods to global markets as the war in the Middle East and schedule changes by ocean carriers upset the cadence of their operations. “Container availability, schedule changes, rail delays from the interior of the country; these things can combine and create sort of a monster for us,” Christopher Jennum, global manager of export logistics and marketing at the Dairy Farmers of America, told the annual Agriculture Transportation Coalition (AgTC) conference this week in Tacoma. Ag exporters have always faced logistical challenges because their crops are grown in the interior US and shipped through ports located hundreds of miles away. This makes it difficult for exporters to secure empty containers, plan their rail moves to the ports, and meet marine terminal requirements for the on-time delivery of their boxes. Shippers must commit to delivery of their containers weeks ahead of time. “They’re committing to an export window that hasn’t formed,” said Vijay Harrell, CEO of logistics provider Tradelanes. Additionally, ag exporters are operating in a transportation environment designed decades ago and not equipped to handle modern day disruptions such as the pandemic and now the war in the Middle East. “I think the system that has carried us this far is starting to show some wear and tear,” Ken O’Brien, CEO of Gemini Shippers Association, told AgTC. “The disruption we face has somehow fundamentally changed our industry.” That wear and tear has affected the reliability of service, while communication between carriers and their customers has been compromised and the ability to accurately forecast supply and demand has been degraded, he said. “Both (carriers and customers) have to do a better job as to how we forecast demand,” O’Brien said. The fact that ag exports originate across a vast heartland and are shipped through a number of gateways makes it difficult for ocean carriers to consistently provide the equipment and services their customers demand and need, said Patrick “PJ” McGrath, senior vice president for commercial at Hapag-Lloyd in North America. If all imports and exports went through either Los Angeles-Long Beach or New York-New Jersey, serving shippers in the interior would be easy and much less costly for the ocean carriers. They’re not, but there is a strategy, McGrath said. “So how do I look at each individual piece? It boils down to communication (between the parties),” he said. <h3>Communication among parties is crucial </h3>Carriers must do a better job of communicating disruptions in vessel scheduling and services, as well as the fuel surcharges they are implementing due to the war in the Middle East, said Irina Brown, cotton export specialist at Dunavant Global Logistics Group. “The biggest problem is managing communication during disruptions, but it is super hard when you have trouble receiving responses from carriers, especially during the past year,” Brown told AgTC. “We get responses from carriers that make no sense.” Rapidly rising fuel costs and accompanying surcharges, which vary from carrier to carrier, have become a huge cost burden for shippers, said Cynthia Tathwell, supply chain logistics specialist at Columbia Grain. “I’ve seen unjustified rises in rates and billing practices outside of published tariffs,” Tathwell said. “It’s a pattern across the industry.” She added that she has challenged these charges, which has its own set of problems, noting that disputes “equal time and money for both sides.” <h3>FMC ‘has teeth’ </h3>Ag exporters also face ongoing problems with transportation providers in the levying of detention fees for the late return of equipment to the marine terminal or railyard and demurrage charges for containers remaining at a marine terminal or railyard after free storage time has expired. Laura DiBella, chairman of the Federal Maritime Commission (FMC), told the ag shippers the agency is aware of these practices and will move to stop any unfair implementation of detention and demurrage fees. “You are going to see plenty more on that,” DiBella told AgTc. “We’re definitely taking a more aggressive stance.” Whether it’s addressing unfair detention and demurrage fees or fuel surcharge issues, the FMC has various investigatory and enforcement powers it will use to move against unfair practices, she said. “The FMC has teeth,” DiBella said. “It has very big teeth.” Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>. </div>

US agricultural shippers are facing increasing and costly challenges in getting their goods to global markets as the war in the Middle East and schedule changes by ocean carriers upset the cadence of their operations. “Container availability, schedule changes, rail delays from the interior of the country; these things can combine and create sort of a monster for us,” Christopher Jennum, global manager of export logistics and marketing at the Dairy Farmers of America, told the annual Agriculture Transportation Coalition (AgTC) conference this week in Tacoma. Ag exporters have always faced logistical challenges because their crops are grown in the interior US and shipped through ports located hundreds of miles away. This makes it difficult for exporters to secure empty containers, plan their rail moves to the ports, and meet marine terminal requirements for the on-time delivery of their boxes. Shippers must commit to delivery of their containers weeks ahead of time. “They’re committing to an export window that hasn’t formed,” said Vijay Harrell, CEO of logistics provider Tradelanes. Additionally, ag exporters are operating in a transportation environment designed decades ago and not equipped to handle modern day disruptions such as the pandemic and now the war in the Middle East. “I think the system that has carried us this far is starting to show some wear and tear,” Ken O’Brien, CEO of Gemini Shippers Association, told AgTC. “The disruption we face has somehow fundamentally changed our industry.” That wear and tear has affected the reliability of service, while communication between carriers and their customers has been compromised and the ability to accurately forecast supply and demand has been degraded, he said. “Both (carriers and customers) have to do a better job as to how we forecast demand,” O’Brien said. The fact that ag exports originate across a vast heartland and are shipped through a number of gateways makes it difficult for ocean carriers to consistently provide the equipment and services their customers demand and need, said Patrick “PJ” McGrath, senior vice president for commercial at Hapag-Lloyd in North America. If all imports and exports went through either Los Angeles-Long Beach or New York-New Jersey, serving shippers in the interior would be easy and much less costly for the ocean carriers. They’re not, but there is a strategy, McGrath said. “So how do I look at each individual piece? It boils down to communication (between the parties),” he said. Communication among parties is crucial Carriers must do a better job of communicating disruptions in vessel scheduling and services, as well as the fuel surcharges they are implementing due to the war in the Middle East, said Irina Brown, cotton export specialist at Dunavant Global Logistics Group. “The biggest problem is managing communication during disruptions, but it is super hard when you have trouble receiving responses from carriers, especially during the past year,” Brown told AgTC. “We get responses from carriers that make no sense.” Rapidly rising fuel costs and accompanying surcharges, which vary from carrier to carrier, have become a huge cost burden for shippers, said Cynthia Tathwell, supply chain logistics specialist at Columbia Grain. “I’ve seen unjustified rises in rates and billing practices outside of published tariffs,” Tathwell said. “It’s a pattern across the industry.” She added that she has challenged these charges, which has its own set of problems, noting that disputes “equal time and money for both sides.” FMC ‘has teeth’ Ag exporters also face ongoing problems with transportation providers in the levying of detention fees for the late return of equipment to the marine terminal or railyard and demurrage charges for containers remaining at a marine terminal or railyard after free storage time has expired. Laura DiBella, chairman of the Federal Maritime Commission (FMC), told the ag shippers the agency is aware of these practices and will move to stop any unfair implementation of detention and demurrage fees. “You are going to see plenty more on that,” DiBella told AgTc. “We’re definitely taking a more aggressive stance.” Whether it’s addressing unfair detention and demurrage fees or fuel surcharge issues, the FMC has various investigatory and enforcement powers it will use to move against unfair practices, she said. “The FMC has teeth,” DiBella said. “It has very big teeth.” Contact Bill Mongelluzzo at  bill.mongelluzzo@spglobal.com .

Supply chain

US ag shippers navigate creaky supply chain not built for modern disruption

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<div class="phx-topic abstract-wrapper">The speech by Bobby Olvera sends a warning shot to employers and cargo owners ahead of the expiration of its longshore contract in 2028.</div>

The speech by Bobby Olvera sends a warning shot to employers and cargo owners ahead of the expiration of its longshore contract in 2028.

<div class="phx-topic">The president of the International Longshore and Warehouse Union (ILWU) on Wednesday slammed US West Coast employers as being dominated by foreign shipping companies, accusing them of caring more about the profits they send back to their headquarters than the port communities in which they operate. The message, delivered by Bobby Olvera at the annual meeting of the Agriculture Transportation Coalition (AgTC) in Tacoma, Washington, sends a warning shot to employers — and cargo owners — ahead of the expiration of the union’s coastwide contract in 2028. The previous contract, in which the ILWU scored a <a href="https://www.joc.com/article/ilwu-scores-32-wage-increase-70-million-bonus-in-tentative-new-contract-5223607">32% increase in wages for its members</a>, was finalized in 2022 after <a href="https://www.joc.com/article/west-coast-ports-hit-with-new-round-of-cargo-handling-disruptions-5226851">work stoppages and slowdowns</a> that resulted in a significant diversion of cargo to East and Gulf Coast ports. “The foreign shipping lines, they should not be operating our terminals here in the United States. That should be American stevedoring companies,” Olvera told the AgTC event. “They don’t care about our ports. It’s all [about] profit generating. It’s control generating.” Olvera said the ILWU is using this period to advocate for strong West Coast ports and their customers, which include agricultural importers and exporters, before the appropriate state and federal agencies regarding legislation and regulations that impact the flow of cargo. “But things have changed. What they’ve done, in my opinion, is turned the PMA into a one-trick pony. All they advocate [and] lobby for are tax incentives, tax breaks, dollars for tax breaks and tax funds for the terminals,” Olvera said. The Pacific Maritime Association (PMA), which represents ocean carrier and terminal operator employers in negotiations with the ILWU, said that is not the case at all. “PMA is focused each day on promoting strong and efficient West Coast ports that support the nation’s supply chain and sustain thousands of jobs at port terminals and millions of jobs throughout the US economy,” the association said in a statement Thursday. <h3>The role of private equity </h3>Former shipping company executive and Journal of Commerce contributor Ted Prince noted that the phenomenon of ocean carriers dominating terminal operators in a vertically-integrated operation developed decades ago, but that model has been changing due to investments by private equity and infrastructure funds in ports and marine terminals. “How do you deal with this silent force of private equity that in my mind is going to increasingly call the shots?” Prince asked Olvera during the event. “It starts and stops with the ports, with our public port authorities,” Olvera said. “I think we fail to recognize that they’re owned by the citizens. They’re owned by the communities. The port authority has an obligation when they execute 30- and 40-year leases on the terminals to ask the right questions.” Those “right questions” involve how to make their facilities more responsive to port users and their needs for sufficient gate hours and efficient operations, he added. A California-based agriculture exporter told Olvera that the lack of trust between the PMA and the ILWU has hurt the supply chain by imposing higher costs on shippers, which has resulted in a diversion of cargo to East and Gulf Coast ports. She suggested that some forms of technology that are now common at marine terminals are designed to reduce costs and improve efficiency, not to eliminate longshore jobs. “That’s where the technology comes in — to move more cargo,” she said. Olvera responded that he was not going to talk about automation at the ports. The West Coast longshore labor contract allows for automation, but anticipated union resistance has resulted in a new dynamic in which port authorities are working with terminal operators and the ILWU to ensure that <a href="https://www.joc.com/article/hesitation-from-port-authorities-slows-automation-in-southern-california-6199922">future projects move forward with the cooperation of both parties</a>. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>. </div>

The president of the International Longshore and Warehouse Union (ILWU) on Wednesday slammed US West Coast employers as being dominated by foreign shipping companies, accusing them of caring more about the profits they send back to their headquarters than the port communities in which they operate. The message, delivered by Bobby Olvera at the annual meeting of the Agriculture Transportation Coalition (AgTC) in Tacoma, Washington, sends a warning shot to employers — and cargo owners — ahead of the expiration of the union’s coastwide contract in 2028. The previous contract, in which the ILWU scored a 32% increase in wages for its members , was finalized in 2022 after work stoppages and slowdowns that resulted in a significant diversion of cargo to East and Gulf Coast ports. “The foreign shipping lines, they should not be operating our terminals here in the United States. That should be American stevedoring companies,” Olvera told the AgTC event. “They don’t care about our ports. It’s all [about] profit generating. It’s control generating.” Olvera said the ILWU is using this period to advocate for strong West Coast ports and their customers, which include agricultural importers and exporters, before the appropriate state and federal agencies regarding legislation and regulations that impact the flow of cargo. “But things have changed. What they’ve done, in my opinion, is turned the PMA into a one-trick pony. All they advocate [and] lobby for are tax incentives, tax breaks, dollars for tax breaks and tax funds for the terminals,” Olvera said. The Pacific Maritime Association (PMA), which represents ocean carrier and terminal operator employers in negotiations with the ILWU, said that is not the case at all. “PMA is focused each day on promoting strong and efficient West Coast ports that support the nation’s supply chain and sustain thousands of jobs at port terminals and millions of jobs throughout the US economy,” the association said in a statement Thursday. The role of private equity Former shipping company executive and Journal of Commerce contributor Ted Prince noted that the phenomenon of ocean carriers dominating terminal operators in a vertically-integrated operation developed decades ago, but that model has been changing due to investments by private equity and infrastructure funds in ports and marine terminals. “How do you deal with this silent force of private equity that in my mind is going to increasingly call the shots?” Prince asked Olvera during the event. “It starts and stops with the ports, with our public port authorities,” Olvera said. “I think we fail to recognize that they’re owned by the citizens. They’re owned by the communities. The port authority has an obligation when they execute 30- and 40-year leases on the terminals to ask the right questions.” Those “right questions” involve how to make their facilities more responsive to port users and their needs for sufficient gate hours and efficient operations, he added. A California-based agriculture exporter told Olvera that the lack of trust between the PMA and the ILWU has hurt the supply chain by imposing higher costs on shippers, which has resulted in a diversion of cargo to East and Gulf Coast ports. She suggested that some forms of technology that are now common at marine terminals are designed to reduce costs and improve efficiency, not to eliminate longshore jobs. “That’s where the technology comes in — to move more cargo,” she said. Olvera responded that he was not going to talk about automation at the ports. The West Coast longshore labor contract allows for automation, but anticipated union resistance has resulted in a new dynamic in which port authorities are working with terminal operators and the ILWU to ensure that future projects move forward with the cooperation of both parties . Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .

Marine terminals

ILWU chief slams ‘foreign shipping companies’ ahead of contract expiration

<div class="phx-topic abstract-wrapper">Volumes under contract when the Middle East war began were locked into quarterly bunker fuel adjustments, and those costs are set to be passed on to shippers at the start of the third quarter.</div>

Volumes under contract when the Middle East war began were locked into quarterly bunker fuel adjustments, and those costs are set to be passed on to shippers at the start of the third quarter.

<div class="phx-topic">Cargo owners are accelerating shipments on the Asia-Europe ocean trade to get ahead of the next quarterly bunker fuel adjustment due July 1, with strong demand seen into June. Bunker costs rocketed higher following the start of the Middle East war on Feb. 28, and although emergency fuel surcharges were quickly levied on spot shipments, cargo under contract was locked into quarterly bunker adjustment factors (BAFs). Those costs will now be passed on to shippers in the third quarter, according to Thomas Cassuto, senior vice president of air and ocean at forwarder CEVA Logistics. “We are seeing exceptionally strong shipper demand in late May across most major trade lanes, including Asia-North Europe and Asia-Med, with momentum expected to continue through June,” Cassuto told the Journal of Commerce. “The key driver is a sharp acceleration in bookings from major beneficial cargo owners [BCOs] seeking to move cargo ahead of July 1,” he noted. “From that date, most large shippers will face an automatic increase in freight rates linked to quarterly BAF adjustments.” Data from Vizion indicates bookings from China to the Mediterranean are up almost 50% over the past two weeks and 36% higher to North Europe in what looks to be an early start to the peak shipping season. Traditionally, Asia-Europe peak season activity begins in late June and continues to China’s Golden Week in early October. Recent global disruptions have made seasonal patterns increasingly unpredictable, with last year’s peak season barely getting started and this year’s demand picking up strongly in May and June. <h3>Robust forward bookings </h3>Kuehne + Nagel and DHL Global Forwarding both reported robust forward bookings and rising rates on the Asia-Europe trade lane, despite an increase in deployed capacity and a cut in blank sailings. Data from eeSea, part of rate benchmarking platform Xeneta, shows capacity on Asia-North Europe in May will be up 16% from April at 1.2 million TEUs, with blank sailings down 5%. In June, planned capacity will fall to 1.1 million TEUs while planned blank sailings will be halved. “We are observing an increased demand for Asia-Europe, partly driven by an earlier peak season linked to extended transit times and lower capacity due to the rerouting [around the Cape of Good Hope],” Paolo Montrone, head of global sea logistics at Kuehne + Nagel, told the Journal of Commerce. “This is consistent with patterns seen last year,” he added. “Demand is expected to remain strong in the coming months; however, visibility remains limited as energy costs and rates continue to be a concern.” A spokesperson for DHL Global Forwarding said there was “significant demand” on Asia-Europe, accompanied by a substantial increase in rates. “Vessels are operating at full capacity, and bookings need to be made well in advance,” the spokesperson said. “In addition, there are capacity restrictions in place, and securing space requires a mix of NAC [named accounts] and FAK [freight-all-kinds].” <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="3e0caaad-ce43-47fa-b859-a779e74cb6a4"></dynamic-object></div>Named accounts are long-term contracts between carriers and customers that guaranteed space and equipment at fixed rates, while cargo moved under FAK is subject to the spot market. Cassuto said vessels out of Asia were fully booked four to five weeks in advance, which has prompted carriers to implement general rate increases and peak season surcharges. “We expect this pattern to extend into July and overlap with what is traditionally the peak season for Christmas shipments, which effectively started earlier this year,” he said. <h3>Hefty rate increases announced for June 1 </h3>Several carriers this week announced June 1 rate increases on eastbound corridors, with Asia to North Europe FAK rates moving to $4,300-$4,700 per FEU and Asia-East Mediterranean rates at $5,500-$5,700/FEU. If they stick, the FAK increases will be at a significant premium to spot rates currently at $2,900/FEU on Asia-North Europe and $4,000/FEU for Asia to the Mediterranean, according to Platts, a sister company of the Journal of Commerce within S&amp;P Global. “I would be very surprised if those spot rates are not going to trend up over the upcoming couple of weeks as we see significant overbooking, and as such, there is certainly not a lot of downward pressure on pricing,” Hapag-Lloyd CEO Rolf Habben Jansen said in a media briefing following the carrier’s first-quarter results. “If anything, there is upward pressure, which is probably a little bit later than we would have liked, but I think you will start seeing that.” <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="af999948-957c-4237-b7e6-873522d9fd5b"></dynamic-object></div>In a market update Friday, HSBC highlighted the demand holding up in container shipping. The bank’s transportation analysts said the global container trade rose 4.4% year over year in the first quarter, with Maersk and Hapag-Lloyd expecting demand to remain strong through the second quarter and the third-quarter peak season because of disruption-related frontloading. Still, fuel and network cost pressures are building, Cassuto noted, which would place European import volumes from Asia under increasing pressure. “We are anticipating higher energy costs, persistent inflation and elevated inventory levels to weigh on trade flows in the second half of 2026, leading to a gradual slowdown in volumes,” the CEVA executive said. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com.</a></div>

Cargo owners are accelerating shipments on the Asia-Europe ocean trade to get ahead of the next quarterly bunker fuel adjustment due July 1, with strong demand seen into June. Bunker costs rocketed higher following the start of the Middle East war on Feb. 28, and although emergency fuel surcharges were quickly levied on spot shipments, cargo under contract was locked into quarterly bunker adjustment factors (BAFs). Those costs will now be passed on to shippers in the third quarter, according to Thomas Cassuto, senior vice president of air and ocean at forwarder CEVA Logistics. “We are seeing exceptionally strong shipper demand in late May across most major trade lanes, including Asia-North Europe and Asia-Med, with momentum expected to continue through June,” Cassuto told the Journal of Commerce. “The key driver is a sharp acceleration in bookings from major beneficial cargo owners [BCOs] seeking to move cargo ahead of July 1,” he noted. “From that date, most large shippers will face an automatic increase in freight rates linked to quarterly BAF adjustments.” Data from Vizion indicates bookings from China to the Mediterranean are up almost 50% over the past two weeks and 36% higher to North Europe in what looks to be an early start to the peak shipping season. Traditionally, Asia-Europe peak season activity begins in late June and continues to China’s Golden Week in early October. Recent global disruptions have made seasonal patterns increasingly unpredictable, with last year’s peak season barely getting started and this year’s demand picking up strongly in May and June. Robust forward bookings Kuehne + Nagel and DHL Global Forwarding both reported robust forward bookings and rising rates on the Asia-Europe trade lane, despite an increase in deployed capacity and a cut in blank sailings. Data from eeSea, part of rate benchmarking platform Xeneta, shows capacity on Asia-North Europe in May will be up 16% from April at 1.2 million TEUs, with blank sailings down 5%. In June, planned capacity will fall to 1.1 million TEUs while planned blank sailings will be halved. “We are observing an increased demand for Asia-Europe, partly driven by an earlier peak season linked to extended transit times and lower capacity due to the rerouting [around the Cape of Good Hope],” Paolo Montrone, head of global sea logistics at Kuehne + Nagel, told the Journal of Commerce. “This is consistent with patterns seen last year,” he added. “Demand is expected to remain strong in the coming months; however, visibility remains limited as energy costs and rates continue to be a concern.” A spokesperson for DHL Global Forwarding said there was “significant demand” on Asia-Europe, accompanied by a substantial increase in rates. “Vessels are operating at full capacity, and bookings need to be made well in advance,” the spokesperson said. “In addition, there are capacity restrictions in place, and securing space requires a mix of NAC [named accounts] and FAK [freight-all-kinds].” Named accounts are long-term contracts between carriers and customers that guaranteed space and equipment at fixed rates, while cargo moved under FAK is subject to the spot market. Cassuto said vessels out of Asia were fully booked four to five weeks in advance, which has prompted carriers to implement general rate increases and peak season surcharges. “We expect this pattern to extend into July and overlap with what is traditionally the peak season for Christmas shipments, which effectively started earlier this year,” he said. Hefty rate increases announced for June 1 Several carriers this week announced June 1 rate increases on eastbound corridors, with Asia to North Europe FAK rates moving to $4,300-$4,700 per FEU and Asia-East Mediterranean rates at $5,500-$5,700/FEU. If they stick, the FAK increases will be at a significant premium to spot rates currently at $2,900/FEU on Asia-North Europe and $4,000/FEU for Asia to the Mediterranean, according to Platts, a sister company of the Journal of Commerce within S&P Global. “I would be very surprised if those spot rates are not going to trend up over the upcoming couple of weeks as we see significant overbooking, and as such, there is certainly not a lot of downward pressure on pricing,” Hapag-Lloyd CEO Rolf Habben Jansen said in a media briefing following the carrier’s first-quarter results. “If anything, there is upward pressure, which is probably a little bit later than we would have liked, but I think you will start seeing that.” In a market update Friday, HSBC highlighted the demand holding up in container shipping. The bank’s transportation analysts said the global container trade rose 4.4% year over year in the first quarter, with Maersk and Hapag-Lloyd expecting demand to remain strong through the second quarter and the third-quarter peak season because of disruption-related frontloading. Still, fuel and network cost pressures are building, Cassuto noted, which would place European import volumes from Asia under increasing pressure. “We are anticipating higher energy costs, persistent inflation and elevated inventory levels to weigh on trade flows in the second half of 2026, leading to a gradual slowdown in volumes,” the CEVA executive said. Contact Greg Knowler at greg.knowler@spglobal.com.

Demand rising on Asia-Europe ocean trade as July bunker hike looms

<div class="phx-topic abstract-wrapper">Rising fuel costs, reliable service and higher rates amid the end of the four-year recession in trucking are helping convert more freight to rail in the eastern US. </div>

Rising fuel costs, reliable service and higher rates amid the end of the four-year recession in trucking are helping convert more freight to rail in the eastern US.

<div class="phx-topic">US domestic intermodal demand has rebounded sharply since the war with Iran began, with the growth coming, surprisingly, on lanes east of the Mississippi River rather than the long-haul West Coast corridors that typically offer the biggest fuel advantage over trucking. Intermodal providers have historically struggled to compete with trucking in the eastern US because the shorter lengths of haul mean less cost savings than transcontinental moves. But railroads and intermodal marketing companies (IMCs) say rising fuel costs, higher rates amid the end of the four-year recession in the trucking industry, and reliable service are helping convert more freight to rail in the east. Combined domestic container traffic in March and April was up 9% over the same period in 2025, according to the International Association of North America (IANA), a surge not seen since the pandemic-related lockdowns six years ago. Freight originating in the Northeast, South-Central and Southeast US have all jumped more than 10% year over year. “You’re finally seeing us coming out of ... the worst trucking cycle that we’ve witnessed — at least the worst one certainly that I’ve seen,” Kevin Boone, CFO of CSX Transportation, said at the Bank of America Annual Industrials Conference on May 13. “We’re seeing [freight] start to convert over to rail and with our service product, we’re pretty optimistic that can continue here.” The strongest gains have been concentrated in eastern corridors. Traffic from the Northeast to the Southeast jumped 17.7% year over year in March and April, according to IANA, while Southeast-to-Northeast traffic on the same corridor rose 16%. Midwest-to-Northeast volume increased 17.6%. Those are three routes where CSX will be able to better compete after beginning double-stack intermodal service through the Howard Street Tunnel in Baltimore <a href="https://www.joc.com/article/soaring-truck-rates-power-major-rebound-in-domestic-intermodal-volume-6208736">earlier this month</a>. The upgrade allows CSX to compete better against Norfolk Southern (NS) on freight between Atlanta and Newark and cuts about a day from transit times between Chicago and Newark. That gives CSX a chance to capture more of the eastern demand upswing, along with private-asset intermodal partners such as J.B. Hunt Transport Services. J.B. Hunt executives are signaling the same strong demand pattern in the east, with shippers beginning to save more money on freight in the region. “The discount has grown from 15% to 20% in the last six to eight weeks,” Darren Field, the company’s president of intermodal, said this week at Wolfe Research’s Annual Global Transportation and Industrials Conference. “I don’t know that we can close that 20% discount gap back to 15% in just this cycle, but I would anticipate certainly our intermodal pricing opportunity to start to improve [in the 2027 bid cycle].” <h3>Rebound tied to diesel prices? </h3>The Journal of Commerce <a href="https://www.joc.com/resources/special-reports/intermodal-savings-index">Intermodal Savings Index</a> also showed the steepest increases in rail savings sequentially compared with truckload in March occurred in the eastern US. Even so, Norfolk Southern cautioned that the rebound may be tied more to higher diesel prices than to a structural change, meaning it could fade if energy markets ease. “If the war ends in the next couple of weeks and fuel prices start going back down over the next few months, does that dynamic persist or does it reverse back to where it was? Hard to say,” NS CEO Mark George said at the Wolfe Research conference. Service will help determine whether intermodal keeps gaining share from trucking on the East Coast. CSX’s intermodal train speed was 7.2% faster from March through the first week of May than during the same period last year, while Norfolk Southern’s speeds were 1.1% slower over the same span, according to the Association of American Railroads. A disruption at CSX’s Fairburn intermodal terminal in Atlanta in April sharply increased truck turn times, in some cases forcing drivers to wait hours and pushing deliveries to the next day. The issue has since been resolved. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>. </div>

US domestic intermodal demand has rebounded sharply since the war with Iran began, with the growth coming, surprisingly, on lanes east of the Mississippi River rather than the long-haul West Coast corridors that typically offer the biggest fuel advantage over trucking. Intermodal providers have historically struggled to compete with trucking in the eastern US because the shorter lengths of haul mean less cost savings than transcontinental moves. But railroads and intermodal marketing companies (IMCs) say rising fuel costs, higher rates amid the end of the four-year recession in the trucking industry, and reliable service are helping convert more freight to rail in the east. Combined domestic container traffic in March and April was up 9% over the same period in 2025, according to the International Association of North America (IANA), a surge not seen since the pandemic-related lockdowns six years ago. Freight originating in the Northeast, South-Central and Southeast US have all jumped more than 10% year over year. “You’re finally seeing us coming out of ... the worst trucking cycle that we’ve witnessed — at least the worst one certainly that I’ve seen,” Kevin Boone, CFO of CSX Transportation, said at the Bank of America Annual Industrials Conference on May 13. “We’re seeing [freight] start to convert over to rail and with our service product, we’re pretty optimistic that can continue here.” The strongest gains have been concentrated in eastern corridors. Traffic from the Northeast to the Southeast jumped 17.7% year over year in March and April, according to IANA, while Southeast-to-Northeast traffic on the same corridor rose 16%. Midwest-to-Northeast volume increased 17.6%. Those are three routes where CSX will be able to better compete after beginning double-stack intermodal service through the Howard Street Tunnel in Baltimore earlier this month . The upgrade allows CSX to compete better against Norfolk Southern (NS) on freight between Atlanta and Newark and cuts about a day from transit times between Chicago and Newark. That gives CSX a chance to capture more of the eastern demand upswing, along with private-asset intermodal partners such as J.B. Hunt Transport Services. J.B. Hunt executives are signaling the same strong demand pattern in the east, with shippers beginning to save more money on freight in the region. “The discount has grown from 15% to 20% in the last six to eight weeks,” Darren Field, the company’s president of intermodal, said this week at Wolfe Research’s Annual Global Transportation and Industrials Conference. “I don’t know that we can close that 20% discount gap back to 15% in just this cycle, but I would anticipate certainly our intermodal pricing opportunity to start to improve [in the 2027 bid cycle].” Rebound tied to diesel prices? The Journal of Commerce Intermodal Savings Index also showed the steepest increases in rail savings sequentially compared with truckload in March occurred in the eastern US. Even so, Norfolk Southern cautioned that the rebound may be tied more to higher diesel prices than to a structural change, meaning it could fade if energy markets ease. “If the war ends in the next couple of weeks and fuel prices start going back down over the next few months, does that dynamic persist or does it reverse back to where it was? Hard to say,” NS CEO Mark George said at the Wolfe Research conference. Service will help determine whether intermodal keeps gaining share from trucking on the East Coast. CSX’s intermodal train speed was 7.2% faster from March through the first week of May than during the same period last year, while Norfolk Southern’s speeds were 1.1% slower over the same span, according to the Association of American Railroads. A disruption at CSX’s Fairburn intermodal terminal in Atlanta in April sharply increased truck turn times, in some cases forcing drivers to wait hours and pushing deliveries to the next day. The issue has since been resolved. Contact Ari Ashe at ari.ashe@spglobal.com .

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