<div class="phx-topic abstract-wrapper">The Baltic Freight Index is a daily indicator of world bulk shipping freight rate levels. </div>

The Baltic Freight Index is a daily indicator of world bulk shipping freight rate levels.

<div>The Baltic Freight Index is a daily indicator of world bulk shipping freight rate levels.</div>...

Maritime

BALTIC FREIGHT INDEX

<div class="phx-topic abstract-wrapper">Airbus’ sudden shutdown of its heavy-lift subsidiary is pushing aviation experts to investigate alternative options to ensure lifts for outsized and project cargo loads are maintained.</div>

Airbus’ sudden shutdown of its heavy-lift subsidiary is pushing aviation experts to investigate alternative options to ensure lifts for outsized and project cargo loads are maintained.

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<div class="phx-topic">Airbus’ closure of its Airbus Beluga Transport operation just 18 months after launch has intensified pressure on the availability of aircraft capable of carrying outsized and project loads.Airbus Beluga Transport CEO Benoît Lemonnier said in a Jan. 21 letter to customers seen by the Journal of Commerce that the activities of the company had been terminated “due to economic difficulties,” with the last flight recorded on Jan. 17.The company had spent 2024 developing its operations with four 40 metric ton (mt) capacity Airbus BelugaST aircraft and had planned this year to ramp up marketing of its services to forwarders and shippers to carry more cargo for external customers, Lemonnier previously told the Journal of Commerce. The blow compounds the problems of an aging fleet, which is pushing aviation experts to investigate alternative options to ensure lifts for outsized and project cargo loads are maintained.They include a European Commission-backed proposal to develop a heavy-lift transport aircraft for both commercial and military use, plus upgrades of existing aircraft such as the Antonov AN-124 Ruslan by Ukraine’s Antonov Airlines.Air cargo executives speaking to the Journal of Commerce said the AN-124s, which can carry up to 150 metric tons (mt), are approaching 40 years old, while some of the 129 mt-capacity Boeing 747-400 freighters are over 30 years old.Those two aircraft are the workhorses of the outsized and heavy-lift project cargo sector because of their flexibility and unique capability to load cargo through the nose.<h3>Coming ‘scarcity’ </h3>Andriy Blagovisniy, global director for air chartering at LP Aero, part of US-headquartered Logistics Plus, listed typical cargoes as oil, gas and other energy related equipment such as power transformers and generators, plus project freight such as aerospace equipment.Highlighting the potential shortage of heavy-lift capacity, Cargolux president and CEO Richard Forson told the Journal of Commerce that many 747-400 freighters will be retired over the next five to 15 years. He said Cargolux alone plans to retire 10 of its 30 Boeing 747-400 freighters beginning in 2026. From 2040 onwards, Forson said there will be a “scarcity of 747 capacity in the market.”“Those that are kept flying will come with a much higher maintenance cost,” he said. “Charter rates will reflect that increased cost.”Airline data shows around 330 747 freighters currently flying; only 80 from 10 airlines are available for non-scheduled charters. Forson said some freight forwarders and industrial customers are starting to realize the impact of the Boeing 747 retirements on the heavy-lift and project cargo market. “There has always been demand for the 747s nose door capability for project cargo, especially from the oil and gas and aerospace industries,” he said.“The oil and gas industry needs to transport items that typically don’t fit through the side door, or otherwise it’s a tight fit,” Forson added. “The 747 plays a significant role for this type of industry.” The Boeing 777, which has replaced the 747, has just a side door and can only carry about 90 mt, meaning it doesn’t have the same flexibility.Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com.</a></div>

Airbus’ closure of its Airbus Beluga Transport operation just 18 months after launch has intensified pressure on the availability of aircraft capable of carrying outsized and project loads. Airbus Beluga Transport CEO Benoît Lemonnier said in a Jan. 21 letter to customers seen by the Journal of Commerce that the activities of the company had been terminated “due to economic difficulties,” with the last flight recorded on Jan. 17. The company had spent 2024 developing its operations with four 40 metric ton (mt) capacity Airbus BelugaST aircraft and had planned this year to ramp up marketing of its services to forwarders and shippers to carry more cargo for external customers, Lemonnier previously told the Journal of Commerce. The blow compounds the problems of an aging fleet, which is pushing aviation experts to investigate alternative options to ensure lifts for outsized and project cargo loads are maintained. They include a European Commission-backed proposal to develop a heavy-lift transport aircraft for both commercial and military use, plus upgrades of existing aircraft such as the Antonov AN-124 Ruslan by Ukraine’s Antonov Airlines. Air cargo executives speaking to the Journal of Commerce said the AN-124s, which can carry up to 150 metric tons (mt), are approaching 40 years old, while some of the 129 mt-capacity Boeing 747-400 freighters are over 30 years old. Those two aircraft are the workhorses of the outsized and heavy-lift project cargo sector because of their flexibility and unique capability to load cargo through the nose. Coming ‘scarcity’ Andriy Blagovisniy, global director for air chartering at LP Aero, part of US-headquartered Logistics Plus, listed typical cargoes as oil, gas and other energy related equipment such as power transformers and generators, plus project freight such as aerospace equipment. Highlighting the potential shortage of heavy-lift capacity, Cargolux president and CEO Richard Forson told the Journal of Commerce that many 747-400 freighters will be retired over the next five to 15 years. He said Cargolux alone plans to retire 10 of its 30 Boeing 747-400 freighters beginning in 2026. From 2040 onwards, Forson said there will be a “scarcity of 747 capacity in the market.” “Those that are kept flying will come with a much higher maintenance cost,” he said. “Charter rates will reflect that increased cost.” Airline data shows around 330 747 freighters currently flying; only 80 from 10 airlines are available for non-scheduled charters. Forson said some freight forwarders and industrial customers are starting to realize the impact of the Boeing 747 retirements on the heavy-lift and project cargo market. “There has always been demand for the 747s nose door capability for project cargo, especially from the oil and gas and aerospace industries,” he said. “The oil and gas industry needs to transport items that typically don’t fit through the side door, or otherwise it’s a tight fit,” Forson added. “The 747 plays a significant role for this type of industry.” The Boeing 777, which has replaced the 747, has just a side door and can only carry about 90 mt, meaning it doesn’t have the same flexibility. Contact Keith Wallis at keithwallis@hotmail.com.

Air Cargo

Energy projects

Project cargo

Breakbulk News

Closure of heavy-lift airline heightens concerns over aging global fleet

<div class="phx-topic abstract-wrapper">Donald Trump, just hours after returning to the White House Monday, signed an executive order to begin the process of pulling the US out of the Paris Agreement climate change treaty.</div>

Donald Trump, just hours after returning to the White House Monday, signed an executive order to begin the process of pulling the US out of the Paris Agreement climate change treaty.

<div class="phx-topic">Progress toward rolling out a fuel standard and carbon pricing mechanism for global shipping by this October will not be derailed by Donald Trump’s skeptical view on environmental initiatives, according to the International Maritime Organization (IMO). An IMO spokesperson, asked if the US representative to the UN body would continue to support the IMO’s emissions-cutting measures, said “all member states” have been part of discussions on the midterm measures to reduce greenhouse gas (GHG) emissions. That comes as Trump, just hours after returning to the White House Monday, signed an executive order to begin the process of pulling the US out of the Paris Agreement climate change treaty. Trump also withdrew the US from the accord during his first term as president in 2017, but the move was reversed by Joe Biden in 2021. “All IMO member states have committed to playing their part to meet our shared objectives, and we continue to work together with all our members,” the spokesperson told the Journal of Commerce this week. The member nations of the IMO have already agreed to include a GHG emissions pricing mechanism as part of the IMO Strategy for the Reduction of GHG Emissions that was adopted in 2023. “The discussions now are on the details of what such a mechanism will take ... this includes a timeline for implementation, which we remain confident we can achieve,” the IMO spokesperson said. Most decisions at the IMO are taken by consensus that requires a wide agreement with no, or limited, objections. The spokesperson said the <a href="https://www.joc.com/article/midterm-emissions-plan-to-take-center-stage-at-upcoming-imo-meeting-5731399">midterm GHG reduction measures</a> will be adopted via amendments to the International Convention for the Prevention of Pollution from Ships (MARPOL, Annex VI) and will require a two-thirds majority of all parties signed up to the convention, which is most member states. But the timeline is under pressure. Legal text for the midterm measures must be thrashed out and approved at the IMO’s next Marine Environment Protection Committee (MEPC) meeting in April to allow the fuel standard and pricing mechanism to be implemented in October if the maritime industry is to have any hope of achieving its 2030 interim emissions targets. <h3>Narrowing the price gap </h3>The key issue is that the price differential between fossil fuels and sustainable alternatives is far too wide to make investment in green fuel production and infrastructure attractive; the proposals currently under discussion are aimed at narrowing the price gap and accelerating investment in alternative fuels. There is strong support from shipowners for an economic measure to <a href="https://www.joc.com/article/imo-must-set-zero-emission-target-2050-norwegian-shipowners_20230608.html">take the form of a carbon levy</a> that will be used to build up a multi-billion-dollar global fund aimed at reducing the cost gap. The World Shipping Council (WSC) has proposed its own <a href="https://www.joc.com/article/green-fuel-mechanism-a-rifle-shot-at-addressing-fuel-pricing-gap-wsc-5234353">green balance mechanism</a>, while another proposal is for a “feebate” system under which all ships emitting GHGs pay a levy that is used to subsidize zero-emission fuels and energy sources. The European Union decided it could not wait for the IMO and included shipping in its cap-and-trade Emissions Trading System from Jan. 1 last year. But that is this kind of regional approach to cutting emissions the IMO is anxious to avoid. Whatever pricing mechanism is decided on this year, the IMO spokesperson said rolling it out across the maritime industry as a binding global measure was the only way forward. “Shipping is global, which requires robust global regulations that will support free and fair world trade and ensure a level playing field for all,” the spokesperson said. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Progress toward rolling out a fuel standard and carbon pricing mechanism for global shipping by this October will not be derailed by Donald Trump’s skeptical view on environmental initiatives, according to the International Maritime Organization (IMO). An IMO spokesperson, asked if the US representative to the UN body would continue to support the IMO’s emissions-cutting measures, said “all member states” have been part of discussions on the midterm measures to reduce greenhouse gas (GHG) emissions. That comes as Trump, just hours after returning to the White House Monday, signed an executive order to begin the process of pulling the US out of the Paris Agreement climate change treaty. Trump also withdrew the US from the accord during his first term as president in 2017, but the move was reversed by Joe Biden in 2021. “All IMO member states have committed to playing their part to meet our shared objectives, and we continue to work together with all our members,” the spokesperson told the Journal of Commerce this week. The member nations of the IMO have already agreed to include a GHG emissions pricing mechanism as part of the IMO Strategy for the Reduction of GHG Emissions that was adopted in 2023. “The discussions now are on the details of what such a mechanism will take ... this includes a timeline for implementation, which we remain confident we can achieve,” the IMO spokesperson said. Most decisions at the IMO are taken by consensus that requires a wide agreement with no, or limited, objections. The spokesperson said the midterm GHG reduction measures will be adopted via amendments to the International Convention for the Prevention of Pollution from Ships (MARPOL, Annex VI) and will require a two-thirds majority of all parties signed up to the convention, which is most member states. But the timeline is under pressure. Legal text for the midterm measures must be thrashed out and approved at the IMO’s next Marine Environment Protection Committee (MEPC) meeting in April to allow the fuel standard and pricing mechanism to be implemented in October if the maritime industry is to have any hope of achieving its 2030 interim emissions targets. Narrowing the price gap The key issue is that the price differential between fossil fuels and sustainable alternatives is far too wide to make investment in green fuel production and infrastructure attractive; the proposals currently under discussion are aimed at narrowing the price gap and accelerating investment in alternative fuels. There is strong support from shipowners for an economic measure to take the form of a carbon levy that will be used to build up a multi-billion-dollar global fund aimed at reducing the cost gap. The World Shipping Council (WSC) has proposed its own green balance mechanism , while another proposal is for a “feebate” system under which all ships emitting GHGs pay a levy that is used to subsidize zero-emission fuels and energy sources. The European Union decided it could not wait for the IMO and included shipping in its cap-and-trade Emissions Trading System from Jan. 1 last year. But that is this kind of regional approach to cutting emissions the IMO is anxious to avoid. Whatever pricing mechanism is decided on this year, the IMO spokesperson said rolling it out across the maritime industry as a binding global measure was the only way forward. “Shipping is global, which requires robust global regulations that will support free and fair world trade and ensure a level playing field for all,” the spokesperson said. Contact Greg Knowler at greg.knowler@spglobal.com .

Container Shipping News

Transport, Trade and Regulation News

Container lines

Progress on carbon pricing on track despite US stance on green initiatives: IMO

<div class="phx-topic abstract-wrapper">A “pivot” from LTL acquisitions and terminal openings may signal greater belt-tightening by trucking companies in a continuing soft market.</div>

A “pivot” from LTL acquisitions and terminal openings may signal greater belt-tightening by trucking companies in a continuing soft market.

<div class="phx-topic">Knight-Swift Transportation Holdings plans to shift away from less-than-truckload (LTL) acquisitions in 2025 to focus on gaining more volume in a soft market. “The focus in 2025 will pivot to growing shipment count to drive margin expansion,” CEO Adam Miller told Wall Street analysts Wednesday during a fourth-quarter earnings call. That decision slows, but doesn’t stop, the truckload provider’s expansion into the LTL market, where it has acquired three regional carriers and dozens of terminals since 2021. Knight-Swift is the largest US truckload operator. “Right now, we’re kind of working on optimizing what we currently have,” Miller said. That may become a slogan for large LTL carriers in 2025, especially those that purchased large numbers of terminals from bankrupt LTL provider Yellow, which shut down in 2023. The LTL market is slowing, with <a href="https://www.joc.com/article/us-ltl-truck-pricing-flat-but-still-elevated-despite-low-demand-5922714">pricing and volumes going flat</a>. The US long-haul LTL producer price index (PPI) has been flat for four consecutive months since September. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="935a6c49-c525-4961-afd6-bf9c5ae50b91"></dynamic-object></div>The PPI, which represents all-inclusive “selling prices” paid by shippers, is still 5.5% higher than before Yellow’s bankruptcy in 2023 but its upward trajectory has stalled. That means the <a href="https://www.joc.com/article/us-ltl-companies-intensify-push-to-open-new-terminals-5703180">LTL land rush</a> sparked by Yellow’s bankruptcy and dominated by Estes, XPO, Saia and Knight-Swift may, in turn, slow its pace in 2025. There are still about 100 former Yellow terminals on the market. The LTL carriers in effect enjoyed an all-you-can-eat feast of terminals and properties in 2024 and some, including Knight-Swift, will need more time to digest that meal. <h3>Costs of growth </h3>Knight-Swift added 51 LTL facilities and more than 1,400 doors in 2024 alone, Miller said, representing more than 40% growth in locations and 30% growth in doors. Knight-Swift also <a href="https://www.joc.com/article/knight-swift-acquisition-expands-ltl-network-coast-to-coast-5703164">acquired Dependable Highway Express (DHE)</a> last July, which helped boost its daily LTL shipment count by 13.3% year over year in the fourth quarter. Almost all of that growth in volume came from DHE, according to an analysis by SJ Consulting Group. The fast pace of the expansion and the cost of integrating DHE with AAA Cooper Transportation (ACT) and Midwest Motor Express (MME) cut into LTL margins. Knight-Swift’s adjusted LTL operating ratio in the fourth quarter was 94.5%, compared with 85.5% a year ago. That translates to an LTL operating profit margin of 5.5%. “That’s a very significant drop year over year,” said Satish Jindel, president of SJ Consulting Group. In contrast, Knight-Swift’s truckload operating ratio improved last quarter. Knight-Swift isn’t the only company feeling a pinch after rapid LTL expansion. Rival Saia last fall said it plans far fewer terminal purchases and additions in 2025. Smaller LTL carriers are more likely to expand through acquisition this year, with regional carriers looking to increase density in their markets and expand footprints. In the Northeast — where Knight-Swift lacks a presence — A. Duie Pyle added two terminals in Pennsylvania this month. Pitt Ohio purchased Midwest carrier <a href="https://www.joc.com/article/ma-activity-redrawing-regional-ltl-map-in-us-midwest-and-beyond-5917864">Sutton Transport</a>. Knight-Swift hasn’t ruled out a Northeast acquisition. “We still feel like we have several options,” Miller said. “Right now, we have a lot that we’re digesting with DHE and the new facilities.” Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

Knight-Swift Transportation Holdings plans to shift away from less-than-truckload (LTL) acquisitions in 2025 to focus on gaining more volume in a soft market. “The focus in 2025 will pivot to growing shipment count to drive margin expansion,” CEO Adam Miller told Wall Street analysts Wednesday during a fourth-quarter earnings call. That decision slows, but doesn’t stop, the truckload provider’s expansion into the LTL market, where it has acquired three regional carriers and dozens of terminals since 2021. Knight-Swift is the largest US truckload operator. “Right now, we’re kind of working on optimizing what we currently have,” Miller said. That may become a slogan for large LTL carriers in 2025, especially those that purchased large numbers of terminals from bankrupt LTL provider Yellow, which shut down in 2023. The LTL market is slowing, with pricing and volumes going flat . The US long-haul LTL producer price index (PPI) has been flat for four consecutive months since September. The PPI, which represents all-inclusive “selling prices” paid by shippers, is still 5.5% higher than before Yellow’s bankruptcy in 2023 but its upward trajectory has stalled. That means the LTL land rush sparked by Yellow’s bankruptcy and dominated by Estes, XPO, Saia and Knight-Swift may, in turn, slow its pace in 2025. There are still about 100 former Yellow terminals on the market. The LTL carriers in effect enjoyed an all-you-can-eat feast of terminals and properties in 2024 and some, including Knight-Swift, will need more time to digest that meal. Costs of growth Knight-Swift added 51 LTL facilities and more than 1,400 doors in 2024 alone, Miller said, representing more than 40% growth in locations and 30% growth in doors. Knight-Swift also acquired Dependable Highway Express (DHE) last July, which helped boost its daily LTL shipment count by 13.3% year over year in the fourth quarter. Almost all of that growth in volume came from DHE, according to an analysis by SJ Consulting Group. The fast pace of the expansion and the cost of integrating DHE with AAA Cooper Transportation (ACT) and Midwest Motor Express (MME) cut into LTL margins. Knight-Swift’s adjusted LTL operating ratio in the fourth quarter was 94.5%, compared with 85.5% a year ago. That translates to an LTL operating profit margin of 5.5%. “That’s a very significant drop year over year,” said Satish Jindel, president of SJ Consulting Group. In contrast, Knight-Swift’s truckload operating ratio improved last quarter. Knight-Swift isn’t the only company feeling a pinch after rapid LTL expansion. Rival Saia last fall said it plans far fewer terminal purchases and additions in 2025. Smaller LTL carriers are more likely to expand through acquisition this year, with regional carriers looking to increase density in their markets and expand footprints. In the Northeast — where Knight-Swift lacks a presence — A. Duie Pyle added two terminals in Pennsylvania this month. Pitt Ohio purchased Midwest carrier Sutton Transport . Knight-Swift hasn’t ruled out a Northeast acquisition. “We still feel like we have several options,” Miller said. “Right now, we have a lot that we’re digesting with DHE and the new facilities.” Contact William B. Cassidy at bill.cassidy@spglobal.com .

Trucking News

Surface

Knight-Swift puts LTL buyouts on hold as US freight market flattens

<div class="phx-topic abstract-wrapper">Ocean carriers may soon finalize a series of large ship orders as the newbuilding spree that took the order book to a record 8.3 million TEUs by the end of 2024 is set to continue.</div>

Ocean carriers may soon finalize a series of large ship orders as the newbuilding spree that took the order book to a record 8.3 million TEUs by the end of 2024 is set to continue.

<div class="phx-topic">The transition to new fuels and an aging fleet continue to drive container ship orders, with no sign of a newbuilding slowdown despite full yards, an uncertain demand outlook and a lack of clarity over green fuel availability. By the end of 2024, record capacity of 8.3 million TEUs filled the global vessel order book — some 27.7% of the in-service fleet — with a potential series of large new orders waiting for the green light, according to Jan Tiedemann, senior analyst at Alphaliner. “Currently, there is little sign of an order slowdown, despite sky-high newbuilding prices,” he told the Journal of Commerce Wednesday. “One of the reasons for this is quite simple: The carriers are sitting on piles of cash, which they ‘have to’ spend.” Tiedemann outlined a series of orders that may be finalized soon, including a 12-ship order of 24,000-TEU vessels by Evergreen; 10 or 12 ships of 18,000 TEUs by CMA CGM that could be followed by another order for 10 vessels of the same size; and an order for 10 ships of 11,500 TEUs by Greek shipowner George Economou. Yang Ming was also mulling over a fleet renewal plan and Mediterranean Shipping Co. could also drop a big order at any time, he said. In a shipbuilding report released Wednesday, global bank HSBC said ocean carriers were heading into a period of fleet renewal and a transition to more energy-efficient vessels. And while new orders would decline over the next four years compared with 2024 levels, they would remain 40% above the annual average during 2016 to 2020, the bank said. “We believe a long-term newbuild cycle is underway, with tailwinds from the renewal of an aging fleet and over 60,000 fossil-fueled cargo ships to be replaced over the next two decades,” the report noted. In 2024, 69% of all container ship orders were for ships capable of being powered by alternative fuels, driven by cargo owners responding to consumer demands for more sustainable practices and ocean carriers preparing to replace older tonnage, according to a report by classification society DNV. Last year, 515 vessels were added to the order book, up 38% year over year, DNV data showed. Of that total, 264 vessels powered by liquefied natural gas (LNG) were ordered, up 103% from 2023, with 166 orders for methanol-capable vessels, up 4%. <h3>Record ship deliveries </h3>Niels Rasmussen, chief shipping analyst at BIMCO, said even with the record size of the order book at the end of 2024 — and record deliveries during the year of 2.9 million TEUs — orders have continued. Although five ships have already been contracted for delivery in 2030, 99% of the order book will be delivered during 2025–29, he noted. According to the current delivery schedule, Rasmussen said 700,000 TEUs of capacity will be delivered in 2029 while an average of 1.9 million TEUs will be delivered every year from 2025 to 2028, peaking at 2.2 million TEUs in 2027. There has been virtually no scrapping over the past few years that has seen the average age of the container shipping fleet increase by 1.4 years since the beginning of 2020 to about 14 years on a per-ship basis, according to BIMCO. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="ebf7a345-5b3c-47d3-8195-72b417c920b6"></dynamic-object></div>The number of ships now 20 years old or older comprises 3.4 million TEUs, equal to 11% of the fleet, BIMCO data shows. Rasmussen said if all ships 20 years old or older were recycled during the next five years, the fleet will grow to 35.8 million TEUs by end-2029, assuming no more ships are contracted for delivery before 2030. That is equal to 16% growth, or average annual growth of 3%. “It would require 680,000 TEUs per year to recycle all ships 20 years old or older during the next five years — the current annual record is 657,000 TEUs — but actual recycling is likely to end lower,” Rasmussen said. “As long as ships cannot fully return to the Red Sea, recycling will likely continue to be low and at the same time the smaller ship segments tend to be recycled later than average,” he added. “Therefore, average annual fleet growth during the next five years could end higher than 3%.” The scale of new capacity required to renew the global fleet was explained by Tiedemann. “Assuming 25 years as the normal asset life of a ship, you would need 4% of fleet capacity every year just as a 1:1 replacement,” he said. "That means in the long run, we would need to see 1.25 million TEUs ordered and delivered year-in year-out just to replace the current fleet on a revolving basis. Add to that a modest 2% year-over-year growth and extra fleet demand from further slow steaming and congestion etc...” Contact Greg Knowler at <a href="mailto:greg.knowler@ihsmarkit.com">greg.knowler@spglobal.com</a>.</div>

The transition to new fuels and an aging fleet continue to drive container ship orders, with no sign of a newbuilding slowdown despite full yards, an uncertain demand outlook and a lack of clarity over green fuel availability. By the end of 2024, record capacity of 8.3 million TEUs filled the global vessel order book — some 27.7% of the in-service fleet — with a potential series of large new orders waiting for the green light, according to Jan Tiedemann, senior analyst at Alphaliner. “Currently, there is little sign of an order slowdown, despite sky-high newbuilding prices,” he told the Journal of Commerce Wednesday. “One of the reasons for this is quite simple: The carriers are sitting on piles of cash, which they ‘have to’ spend.” Tiedemann outlined a series of orders that may be finalized soon, including a 12-ship order of 24,000-TEU vessels by Evergreen; 10 or 12 ships of 18,000 TEUs by CMA CGM that could be followed by another order for 10 vessels of the same size; and an order for 10 ships of 11,500 TEUs by Greek shipowner George Economou. Yang Ming was also mulling over a fleet renewal plan and Mediterranean Shipping Co. could also drop a big order at any time, he said. In a shipbuilding report released Wednesday, global bank HSBC said ocean carriers were heading into a period of fleet renewal and a transition to more energy-efficient vessels. And while new orders would decline over the next four years compared with 2024 levels, they would remain 40% above the annual average during 2016 to 2020, the bank said. “We believe a long-term newbuild cycle is underway, with tailwinds from the renewal of an aging fleet and over 60,000 fossil-fueled cargo ships to be replaced over the next two decades,” the report noted. In 2024, 69% of all container ship orders were for ships capable of being powered by alternative fuels, driven by cargo owners responding to consumer demands for more sustainable practices and ocean carriers preparing to replace older tonnage, according to a report by classification society DNV. Last year, 515 vessels were added to the order book, up 38% year over year, DNV data showed. Of that total, 264 vessels powered by liquefied natural gas (LNG) were ordered, up 103% from 2023, with 166 orders for methanol-capable vessels, up 4%. Record ship deliveries Niels Rasmussen, chief shipping analyst at BIMCO, said even with the record size of the order book at the end of 2024 — and record deliveries during the year of 2.9 million TEUs — orders have continued. Although five ships have already been contracted for delivery in 2030, 99% of the order book will be delivered during 2025–29, he noted. According to the current delivery schedule, Rasmussen said 700,000 TEUs of capacity will be delivered in 2029 while an average of 1.9 million TEUs will be delivered every year from 2025 to 2028, peaking at 2.2 million TEUs in 2027. There has been virtually no scrapping over the past few years that has seen the average age of the container shipping fleet increase by 1.4 years since the beginning of 2020 to about 14 years on a per-ship basis, according to BIMCO. The number of ships now 20 years old or older comprises 3.4 million TEUs, equal to 11% of the fleet, BIMCO data shows. Rasmussen said if all ships 20 years old or older were recycled during the next five years, the fleet will grow to 35.8 million TEUs by end-2029, assuming no more ships are contracted for delivery before 2030. That is equal to 16% growth, or average annual growth of 3%. “It would require 680,000 TEUs per year to recycle all ships 20 years old or older during the next five years — the current annual record is 657,000 TEUs — but actual recycling is likely to end lower,” Rasmussen said. “As long as ships cannot fully return to the Red Sea, recycling will likely continue to be low and at the same time the smaller ship segments tend to be recycled later than average,” he added. “Therefore, average annual fleet growth during the next five years could end higher than 3%.” The scale of new capacity required to renew the global fleet was explained by Tiedemann. “Assuming 25 years as the normal asset life of a ship, you would need 4% of fleet capacity every year just as a 1:1 replacement,” he said. "That means in the long run, we would need to see 1.25 million TEUs ordered and delivered year-in year-out just to replace the current fleet on a revolving basis. Add to that a modest 2% year-over-year growth and extra fleet demand from further slow steaming and congestion etc...” Contact Greg Knowler at greg.knowler@spglobal.com .

Murky outlook for container shipping is no barrier to ship ordering bonanza

<div class="phx-topic abstract-wrapper">President Donald Trump injecting himself into longshore labor talks and his recent threat to take over the Panama Canal are a precursor to the unpredictability container shipping will face over the next four years, writes Journal of Commerce Executive Editor Mark Szakonyi.</div>

President Donald Trump injecting himself into longshore labor talks and his recent threat to take over the Panama Canal are a precursor to the unpredictability container shipping will face over the next four years, writes Journal of Commerce Executive Editor Mark Szakonyi.

<div class="phx-topic"><div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5927220_0.1.jpg"></img></div>Even before starting his second term, Donald Trump gave the shipping industry a taste of the unpredictability he will inject over the next four years, first by upending longshore labor contract negotiations and then threatening to take over the Panama Canal. Upon taking office Jan. 20, Trump surprised again by holding back on his widely anticipated threat to slap higher tariffs on Chinese goods on his first day back in the White House. Still, he pledged tariffs were on the way during his inauguration speech and has threatened to put them at 100% if a deal over Chinese-owned TikTok isn’t reached. Trump also said that a 25% tariff on goods coming from Canada and Mexico could come as soon as Feb. 1.The tariffs Trump implemented against China during his first four years in office brought some unpredictability to the shipping industry. Section 301 tariffs hit US importers, who frontloaded cargo as they could beat deadlines for the tariffs and ultimately shifted even more manufacturing out of China. Broader escalatory tensions with China, coupled with an emboldened Trump administration, promise an even more volatile second term. Closer to home, Trump injected himself into negotiations between the International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) when he publicly backed the union’s opposition to automation. With that reality hanging over the contract talks, the major carriers and terminal operators that comprise the USMX knew they would only risk the new president’s ire if they dug in on the automation question and a second longshore strike occurred as a result. Trump’s support of prohibitions on automation at marine terminals surprised the shipping industry, as it defied the conventions of traditional Republican support for corporations over unions, Peter Friedmann, executive director of the Agriculture Transportation Coalition, said at a shipping conference in December. “It is simply unprecedented, at least for the last 200 years, for a president so obviously making the policy objectives and decisions on his own, seemingly without input by staff and the federal bureaucracy, and certainly without deference to them,” said Friedmann, who added that the Trump administration was rushing into policy changes rather than coasting the first three months similar to other new administrations. Trump wasted little time in elevating Louis Sola from commissioner to chairman of the Federal Maritime Commission (FMC) just hours after taking the oath of office on Monday. Joe Biden only tapped Daniel Maffei for the chairman role after three months in office. <h3>A bid to limit Chinese influence </h3>Trump’s threat to take back the Panama Canal over “ridiculous, highly unfair” fees may not ultimately result in US troops swooping in as occurred during the 1989 US invasion to depose Panamanian military leader Manuel Noriega. But it does speak to the president wanting to expand regional control, whether it’s in Greenland — or even more improbably, Canada — to limit Chinese and Russian influence in the Western Hemisphere. In November 2024, China-based Cosco Shipping opened a $1.3 billion mega-terminal in Peru. Cosco created the terminal — a major gateway for the Pacific Coast of South America — in a joint venture with Peruvian miner Volcan, which is owned by Argentina-based Integra Capital. Hutchinson Port Holdings, based in Hong Kong, operates a port on each side of the Panama Canal. On the day of Trump’s inauguration, during which he accused China of “operating the critical waterway,” the Panamanian government <a href="https://x.com/ContraloriaPma/status/1881395041413046517">posted a video on X</a> showing inspectors heading to begin an audit at Hutchinson’s local offices, seemingly a move to placate Trump. The Panama Canal Authority, a government agency, has operated and managed the canal since the United States returned full oversight to the country in 1999. The container shipping industry is second only to the semiconductor industry in the economic and military struggle between China and the United States, said Carl Bentzel, a former FMC commissioner and now president of the National Association of Waterfront Employers. That fuels bipartisan support for shoring up US maritime capacities — ranging from ambitious legislation <a href="https://www.joc.com/article/legislation-aims-to-mandate-rising-share-of-china-imports-on-expanded-us-flag-fleet-5909698">to expand the US-flag commercial fleet</a> to the <a href="https://www.joc.com/article/white-house-counters-risk-of-chinese-port-cranes-with-20-billion-for-us-sourcing-5200230">Biden administration warning</a> that Chinese-built cranes at US ports pose a cyberthreat, Bentzel told the Journal of Commerce. On Jan. 7, the US Department of Defense published its annual listing of companies that it determines are tied to the Chinese military, revealing the addition of Cosco Shipping. While the designation prevents the US government from contracting with the ocean carrier, it has no impact on Cosco’s ability to serve the US commercial market. On the heels of that designation, the Biden administration announced on Jan. 15 that China was manipulating market policies and practices to <a href="https://www.joc.com/article/chinas-predatory-maritime-policies-threaten-global-trade-white-house-5923952">support its shipbuilding</a> and <a href="https://www.joc.com/article/chinas-chassis-container-role-entrenched-by-government-fmcs-bentzel-5228464">shipping equipment production</a>. While an FMC commissioner, Bentzel highlighted China’s dominance in the manufacturing of chassis and containers in a 2022 report. “This is the first time I have seen such an alignment against China’s maritime dominance,” Bentzel, a Hill veteran who was senior counsel to the Senate’s transportation and commerce committee, including on maritime policy, said Jan. 15. “I’ve never seen this in my entire career.” Contact Mark Szakonyi at <a href="mark.szakonyi@spglobal.com">mark.szakonyi@spglobal.com</a>. </div>

Even before starting his second term, Donald Trump gave the shipping industry a taste of the unpredictability he will inject over the next four years, first by upending longshore labor contract negotiations and then threatening to take over the Panama Canal. Upon taking office Jan. 20, Trump surprised again by holding back on his widely anticipated threat to slap higher tariffs on Chinese goods on his first day back in the White House. Still, he pledged tariffs were on the way during his inauguration speech and has threatened to put them at 100% if a deal over Chinese-owned TikTok isn’t reached. Trump also said that a 25% tariff on goods coming from Canada and Mexico could come as soon as Feb. 1. The tariffs Trump implemented against China during his first four years in office brought some unpredictability to the shipping industry. Section 301 tariffs hit US importers, who frontloaded cargo as they could beat deadlines for the tariffs and ultimately shifted even more manufacturing out of China. Broader escalatory tensions with China, coupled with an emboldened Trump administration, promise an even more volatile second term. Closer to home, Trump injected himself into negotiations between the International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) when he publicly backed the union’s opposition to automation. With that reality hanging over the contract talks, the major carriers and terminal operators that comprise the USMX knew they would only risk the new president’s ire if they dug in on the automation question and a second longshore strike occurred as a result. Trump’s support of prohibitions on automation at marine terminals surprised the shipping industry, as it defied the conventions of traditional Republican support for corporations over unions, Peter Friedmann, executive director of the Agriculture Transportation Coalition, said at a shipping conference in December. “It is simply unprecedented, at least for the last 200 years, for a president so obviously making the policy objectives and decisions on his own, seemingly without input by staff and the federal bureaucracy, and certainly without deference to them,” said Friedmann, who added that the Trump administration was rushing into policy changes rather than coasting the first three months similar to other new administrations. Trump wasted little time in elevating Louis Sola from commissioner to chairman of the Federal Maritime Commission (FMC) just hours after taking the oath of office on Monday. Joe Biden only tapped Daniel Maffei for the chairman role after three months in office. A bid to limit Chinese influence Trump’s threat to take back the Panama Canal over “ridiculous, highly unfair” fees may not ultimately result in US troops swooping in as occurred during the 1989 US invasion to depose Panamanian military leader Manuel Noriega. But it does speak to the president wanting to expand regional control, whether it’s in Greenland — or even more improbably, Canada — to limit Chinese and Russian influence in the Western Hemisphere. In November 2024, China-based Cosco Shipping opened a $1.3 billion mega-terminal in Peru. Cosco created the terminal — a major gateway for the Pacific Coast of South America — in a joint venture with Peruvian miner Volcan, which is owned by Argentina-based Integra Capital. Hutchinson Port Holdings, based in Hong Kong, operates a port on each side of the Panama Canal. On the day of Trump’s inauguration, during which he accused China of “operating the critical waterway,” the Panamanian government posted a video on X showing inspectors heading to begin an audit at Hutchinson’s local offices, seemingly a move to placate Trump. The Panama Canal Authority, a government agency, has operated and managed the canal since the United States returned full oversight to the country in 1999. The container shipping industry is second only to the semiconductor industry in the economic and military struggle between China and the United States, said Carl Bentzel, a former FMC commissioner and now president of the National Association of Waterfront Employers. That fuels bipartisan support for shoring up US maritime capacities — ranging from ambitious legislation to expand the US-flag commercial fleet to the Biden administration warning that Chinese-built cranes at US ports pose a cyberthreat, Bentzel told the Journal of Commerce. On Jan. 7, the US Department of Defense published its annual listing of companies that it determines are tied to the Chinese military, revealing the addition of Cosco Shipping. While the designation prevents the US government from contracting with the ocean carrier, it has no impact on Cosco’s ability to serve the US commercial market. On the heels of that designation, the Biden administration announced on Jan. 15 that China was manipulating market policies and practices to support its shipbuilding and shipping equipment production . While an FMC commissioner, Bentzel highlighted China’s dominance in the manufacturing of chassis and containers in a 2022 report. “This is the first time I have seen such an alignment against China’s maritime dominance,” Bentzel, a Hill veteran who was senior counsel to the Senate’s transportation and commerce committee, including on maritime policy, said Jan. 15. “I’ve never seen this in my entire career.” Contact Mark Szakonyi at mark.szakonyi@spglobal.com .

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

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Shippers save money, time with automated transportation bidding tools

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

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