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Platts Containers Update

<div class="phx-topic abstract-wrapper">Unless legally binding safeguards are introduced, there is a risk that fossil fuels will be replaced with unsustainable biofuels that provide “a cure worse than the disease,” shipping groups said in an open letter to the IMO.</div>

Unless legally binding safeguards are introduced, there is a risk that fossil fuels will be replaced with unsustainable biofuels that provide “a cure worse than the disease,” shipping groups said in an open letter to the IMO.

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<div>Hapag-Lloyd, Hoegh Autoliners and Louis Dreyfus are among several shipping companies calling for the International Maritime Organization (IMO) to exclude crop-based biofuels from its list of sustainable alternatives to fossil fuels citing fears of deforestation and water and food scarcity. The call, which included shipping association NABU and climate activist Transport &amp; Environment (T&amp;E), comes despite the continuing rollout of lower-emission feedstock-based biofuel services by several carriers, including Hapag-Lloyd, as growing regulatory pressure on shippers to reduce their “scope 3” supply chain carbon footprints increases demand for those services. The groups outlined their concerns in an open letter to the...

Hapag-Lloyd, Hoegh Autoliners and Louis Dreyfus are among several shipping companies calling for the International Maritime Organization (IMO) to exclude crop-based biofuels from its list of sustainable alternatives to fossil fuels citing fears of deforestation and water and food scarcity. The call, which included shipping association NABU and climate activist Transport & Environment (T&E), comes despite the continuing rollout of lower-emission feedstock-based biofuel services by several carriers, including Hapag-Lloyd, as growing regulatory pressure on shippers to reduce their “scope 3” supply chain carbon footprints increases demand for those services. The groups outlined their concerns in an open letter to the IMO ahead of the 18th Intersessional Working Group on Greenhouse Gases that is meeting in London this week. “Unless legally binding safeguards are introduced, there is a risk that a large amount of fossil fuels will be replaced with unsustainable biofuels,” the open letter warned. It pointed out that Europe has already decided to exclude the use of feed- and food-based biofuels from its flagship shipping fuels regulation known as FuelEU, adding that the IMO should follow suit. “The IMO should take note of the biofuels policy experiences and avoid similar mistakes to ensure a sustainable future for international shipping ... otherwise we risk deploying a cure worse than the disease to address shipping’s climate impact,” the open letter said. While some biofuels may be produced sustainably and deliver significant greenhouse gas (GHG) reductions, there are scalability limitations. Most biofuels are produced from food crop-based feedstocks, which come with direct and indirect deforestation, as well as many other sustainability issues ranging from water scarcity to food security, the letter said. The volumes carried under the premium feedstock-based biofuel products offered by Hapag-Lloyd, Maersk, Ocean Network Express, CMA CGM and HMM are slowly increasing but are only growing at low single-digit percentages of annual volumes. Carrier executives also acknowledge that biofuel is, at best, a temporary measure and not a means to achieve the IMO’s 2030 targets of reducing CO2 emissions by 20% to 30%. Biofuel demand driving deforestation The open letter to the IMO noted that when the EU decided to encourage the use of biofuels in 2009, the consumption of palm oil-based biofuels doubled over the following 10 years, comprising close to one-third of EU biofuels use by 2020. Scientific evidence later demonstrated that 45% of palm oil expansion happened at the expense of carbon-rich ecosystems such as forests or peatlands over that same period, with similar findings uncovered for other crop-based feedstock such as soy, the letter said. A study by energy consultancy Cerulogy on behalf of T&E shows that palm and soy oil would likely make up almost two-thirds of the biodiesel used to power the shipping industry in 2030 because they represented the cheapest fuels to comply with emissions reduction targets. However, that would have a detrimental impact on the climate with palm and soy responsible for two to three times more carbon emissions than even the dirtiest shipping fuels today once deforestation and land clearance are considered, T&E warned. “Fueling cargo ships with deforestation is a terrible idea. Burning crops for fuel is bad for the planet and bad for global food security,” Constance Dijkstra, shipping manager at T&E, said in a statement Monday. “The IMO should consider the climate impact of bad biofuels to avoid doing more harm than good.” T&E said waste biofuels such as used cooking oil and animal fats had limited availability and would only cover just a small proportion of shipping’s projected biofuel demand. As an example, T&E noted that a cargo ship traveling between China and Brazil would require the yearly waste oil from more than 2,000 McDonald’s restaurants, and to run the vessel on animal fats would require more than one million pigs. T&E estimated that 34 million hectares of farmland — the total area of Germany — would be needed by 2030 to produce enough crops to meet the increased biofuels demand from the shipping industry alone. Still, demand for biofuel is not only from shipping. China is the world’s main producer of biofuel derived from used cooking oil and exports more than half of its stocks, mainly to power trucks in the US and Europe. Airlines are also ramping up their usage of biofuel-generated sustainable aviation fuel (SAF). More sustainable routes to net-zero are being debated this week at the IMO’s Intersessional Working Group, where proposals for a carbon intensity index and fuel efficiency standards, economic measures such as carbon pricing and new technologies for cleaner marine fuels will be among the topics under discussion. The working group will meet again in April before their recommendations are carried over to the IMO’s Marine Environment Protection Committee (MEPC) meeting April 7-11 that will vote on the crucial mid-term measures, including a global pricing mechanism for carbon emissions to be rolled out in October. Contact Greg Knowler at greg.knowler@spglobal.com .

Biofuel not the answer to shipping decarbonization: carriers

<div class="phx-topic abstract-wrapper">The Federal Motor Carrier Safety Administration will accept additional comments on a proposed rule that would require brokers to make transactional data available to carriers.</div>

The Federal Motor Carrier Safety Administration will accept additional comments on a proposed rule that would require brokers to make transactional data available to carriers.

<div class="phx-topic">US regulators are requesting additional comments <a href="https://www.joc.com/article/regulator-proposes-tougher-transparency-requirements-for-us-freight-brokers-5821502">on a proposed rule</a> that would let trucking companies access and review rates shippers pay to brokers. The Federal Motor Carrier Safety Administration (FMCSA) on Tuesday reopened its “broker transparency” rulemaking for additional comment through March 20. The FMCSA has received more than 4,800 comments since publishing its proposal Nov. 20. The reopening of the comment period was requested by the Small Business in Transportation Coalition (SBTC), one of the groups that petitioned the FMCSA for a rulemaking on broker transparency in 2020, during the first Trump administration. Comments on docket FMCSA-2023-0257 may be <a href="https://www.regulations.gov/docket/FMCSA-2023-0257/document?withinCommentPeriod=true">filed online</a> or by mail at addresses provided in the <a href="https://www.govinfo.gov/content/pkg/FR-2025-02-18/pdf/2025-02707.pdf">Feb. 18 Federal Register</a>. The rulemaking is part of a long-running dispute between freight brokers and owner-operators and small carriers over access to transactional data that would reveal shipper-paid rates and broker margins. The rulemaking was launched in 2020. In <a href="https://www.federalregister.gov/documents/2024/11/20/2024-27115/transparency-in-property-broker-transactions">its proposal</a>, the FMCSA suggested requiring brokers to keep electronic records of their freight transactions and make those records available to carriers and shippers electronically within 48 hours of a request. The FMCSA is also proposing standards for those transactional records, requiring them to contain all charges and payments connected to the shipment, including a description, amount and date, as well as any claims filed by shippers for damages or delays. The FMCSA denied an SBTC request that the agency ban provisions included in broker contracts that would waive a carrier’s right to review transaction data. The FMCSA said it will accept any comments received between Jan. 21, when the original comment period closed, and Feb. 18, when the period reopened. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

US regulators are requesting additional comments on a proposed rule that would let trucking companies access and review rates shippers pay to brokers. The Federal Motor Carrier Safety Administration (FMCSA) on Tuesday reopened its “broker transparency” rulemaking for additional comment through March 20. The FMCSA has received more than 4,800 comments since publishing its proposal Nov. 20. The reopening of the comment period was requested by the Small Business in Transportation Coalition (SBTC), one of the groups that petitioned the FMCSA for a rulemaking on broker transparency in 2020, during the first Trump administration. Comments on docket FMCSA-2023-0257 may be filed online or by mail at addresses provided in the Feb. 18 Federal Register . The rulemaking is part of a long-running dispute between freight brokers and owner-operators and small carriers over access to transactional data that would reveal shipper-paid rates and broker margins. The rulemaking was launched in 2020. In its proposal , the FMCSA suggested requiring brokers to keep electronic records of their freight transactions and make those records available to carriers and shippers electronically within 48 hours of a request. The FMCSA is also proposing standards for those transactional records, requiring them to contain all charges and payments connected to the shipment, including a description, amount and date, as well as any claims filed by shippers for damages or delays. The FMCSA denied an SBTC request that the agency ban provisions included in broker contracts that would waive a carrier’s right to review transaction data. The FMCSA said it will accept any comments received between Jan. 21, when the original comment period closed, and Feb. 18, when the period reopened. Contact William B. Cassidy at bill.cassidy@spglobal.com .

US regulator reopens truck broker-transparency proposal for new comments

<div class="phx-topic abstract-wrapper">SeaLead is offering a new service from Turkey after Hapag-Lloyd ended one of its standalone loops following the launch of the Gemini alliance with Maersk.</div>

SeaLead is offering a new service from Turkey after Hapag-Lloyd ended one of its standalone loops following the launch of the Gemini alliance with Maersk.

<div class="phx-topic">Ocean carriers are adding services and emphasizing speed between the Mediterranean and the US East Coast amid a reshuffling of southern European port coverage on trans-Atlantic services. Independent carrier SeaLead announced Monday it will launch a new biweekly service called MEDUS connecting Turkey, Morocco and the US East Coast, with the first voyage departing from the Turkish port of Mersin at the end of March. Along with Mersin, MEDUS’ port rotation includes Istanbul, Gebze, Aliaga, Casablanca, New York-New Jersey and Norfolk. SeaLead did not provide any other details about the service but said it would offer “fast transit times to the US East Coast” and feeder connections from other East Mediterranean and North African ports. The new service offering comes after Hapag-Lloyd ended its standalone Turkey East Coast service this year. The carrier still offers its Turkey East Coast Express (TEX) service covering Turkey with a 23-day service from Mersin to NY-NJ. Hapag-Lloyd is also a slot charterer on Zim Integrated Shipping’s ZCA service covering the East Mediterranean region, which has a 28-day transit from Mersin. SeaLead’s new service announcement comes a week after Mediterranean Shipping Co. said it planned to revamp its Mediterranean-US East Coast (MEDUSEC) service by removing port calls at Barcelona and Portugal’s Sines. MSC said the Barcelona and Sines port rotations will remain part of its East Mediterranean-USA service. The MEDUSEC service will now only call Italy’s West Coast ports of Gioia Tauro, Naples, Livorno and Genoa, with MSC adding that the service change will offer an “industry-leading” transit time of nine days between Genoa and NY-NJ. MSC’s service pledge comes as the Maersk/Hapag-Lloyd Gemini Cooperation alliance will offer Genoa coverage on one of its direct trans-Atlantic services, the AL6, offering a 12-day transit between the Italian port and NY-NJ. As for Livorno coverage, it will be part of Gemini’s transshipment service through its main Mediterranean hub at Morocco’s Port Tangier. Livorno is also a call for Hapag-Lloyd’s TEX service.Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com ">michael.angell@spglobal.com</a>.</div>

Ocean carriers are adding services and emphasizing speed between the Mediterranean and the US East Coast amid a reshuffling of southern European port coverage on trans-Atlantic services. Independent carrier SeaLead announced Monday it will launch a new biweekly service called MEDUS connecting Turkey, Morocco and the US East Coast, with the first voyage departing from the Turkish port of Mersin at the end of March. Along with Mersin, MEDUS’ port rotation includes Istanbul, Gebze, Aliaga, Casablanca, New York-New Jersey and Norfolk. SeaLead did not provide any other details about the service but said it would offer “fast transit times to the US East Coast” and feeder connections from other East Mediterranean and North African ports. The new service offering comes after Hapag-Lloyd ended its standalone Turkey East Coast service this year. The carrier still offers its Turkey East Coast Express (TEX) service covering Turkey with a 23-day service from Mersin to NY-NJ. Hapag-Lloyd is also a slot charterer on Zim Integrated Shipping’s ZCA service covering the East Mediterranean region, which has a 28-day transit from Mersin. SeaLead’s new service announcement comes a week after Mediterranean Shipping Co. said it planned to revamp its Mediterranean-US East Coast (MEDUSEC) service by removing port calls at Barcelona and Portugal’s Sines. MSC said the Barcelona and Sines port rotations will remain part of its East Mediterranean-USA service. The MEDUSEC service will now only call Italy’s West Coast ports of Gioia Tauro, Naples, Livorno and Genoa, with MSC adding that the service change will offer an “industry-leading” transit time of nine days between Genoa and NY-NJ. MSC’s service pledge comes as the Maersk/Hapag-Lloyd Gemini Cooperation alliance will offer Genoa coverage on one of its direct trans-Atlantic services, the AL6, offering a 12-day transit between the Italian port and NY-NJ. As for Livorno coverage, it will be part of Gemini’s transshipment service through its main Mediterranean hub at Morocco’s Port Tangier. Livorno is also a call for Hapag-Lloyd’s TEX service. Contact Michael Angell at michael.angell@spglobal.com .

Mediterranean-US East Coast container services get revamp for 2025

<div class="phx-topic abstract-wrapper">Spot rates on the eastbound corridor are fast converging on long-term prices, and carriers want to lock in cargo owners ahead of a return to Red Sea transits and the resulting capacity overhang.</div>

Spot rates on the eastbound corridor are fast converging on long-term prices, and carriers want to lock in cargo owners ahead of a return to Red Sea transits and the resulting capacity overhang.

<div class="phx-topic">Uncertainty over the timing of shipping’s resumption of Red Sea transits is being reflected in Asia-North Europe long-term rate deals, with carriers offering substantial “discounts” to shippers agreeing to contracts longer than six months, according to rate benchmarking platform Xeneta. The move by carriers comes as the spot market on the eastbound trade lane continues its slide, with Xeneta’s average short-term rates assessed on Tuesday of $2,949 per FEU now just $199 above the long-term rates signed in the last three months. The data shows Asia-North Europe spot rates have almost halved since the start of the year. Emily Stausbøll, senior shipping analyst at Xeneta, noted in a market update this week that the uncertainty prevalent in the Asia-North Europe trade lane was seeing carriers agreeing to discounts of 22% as they tried to lock shippers in for longer periods. “On the one hand you have the seller trying to incentivize longer-term agreements to manage risk and protect market share ... on the other hand, you have the buyer doing everything possible to keep their options open for as long as possible while not spending more than necessary,” Stausbøll said. Marc Meier, global head of ocean freight at the forwarder Toll Group, said freight-all-kinds (FAK) rates on Asia-North Europe were coming under growing pressure and were at the same level as long-term rates for the January to December period. “We expect the market to be decreasing between now and [the] end of March or early April at the earliest before we see conditions to push for a rate increase,” Meier told the Journal of Commerce. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="a1e904d2-7e92-4785-b6a0-a738fca52dd1"></dynamic-object></div>Some carriers have announced March 1 FAK rates on Asia-North Europe of $4,100/FEU. A 22% discount on the current Xeneta spot rate would drop the rate on the index to $2,300/FEU, but with the short-term market softening every week, some cargo owners are holding off on signing contracts. “Some shippers may be happy to lock in for more than six months if it protects their supply chains and negates the need for further negotiation in the event of another major global disruption,” Stausbøll said. “Other shippers may choose to gamble on being able to achieve a lower rate in a few months and are happy to go through another tender round.” <h3>Base case for a second half return to Red Sea </h3>The risk tolerance level of shippers on Asia-North Europe is ultimately based around a guess when diversions around southern Africa will end. The base case of many analysts is for a return to Red Sea transits at some point in the second half, but the fast-changing political dynamics in the Israel-Hamas conflict provide little certainty. Carriers have said they will only return to the Red Sea and Suez Canal “<a href="https://www.joc.com/article/carriers-eye-red-sea-transits-after-houthi-rebels-pledge-restraint-5925939">when it was safe to do so</a>,” and are continuing to divert vessels around Africa despite Hamas-supporting Houthi militants pledging to only attack Israel-affiliated ships following <a href="https://www.joc.com/article/return-to-suez-not-a-certainty-even-after-israel-hamas-ceasefire-analysts-5923830">the start of a ceasefire</a> in Gaza in January. The only consensus appears to be that when Red Sea voyages do finally resume, significant amounts of capacity no longer being diverted will overwhelm the market. Sea-Intelligence Maritime Analysis expects the impact to be “dramatic” — although temporary — as the trade lane adjusts to the resumption of shorter transits. The analyst estimated that demand growth on Asia-Europe received a boost of 2.9 percentage points in 2024 once the longer voyages and increased inventory levels were factored into the equation. Demand would contract by the same amount when the Red Sea reopens, according to Sea-Intelligence CEO Alan Murphy. “The excess inventory held in the longer supply chain will be released, and for a temporary period, importers will curb ordering to mitigate this sudden excess inventory,” Murphy wrote in his Sunday Spotlight newsletter. “If it unravels over just a few months, the Asia-Europe trade will see dramatic decreases in demand.” Murphy noted that the fall in demand would occur at the same time as shorter sailing times released significant amounts of capacity into the market, with the supply overhang placing downward pressure on rates. But <a href="https://www.joc.com/article/container-shipping-still-has-an-overcapacity-problem-but-its-far-from-insurmountable-5234357">carriers have been playing down the impact of overcapacity</a> once the resumption of transits through Suez occurs, pointing to an increase in scrapping — which has been close to zero for the last few years — and the ability to slow steam ships that have been at full speed since the Africa diversions began. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Uncertainty over the timing of shipping’s resumption of Red Sea transits is being reflected in Asia-North Europe long-term rate deals, with carriers offering substantial “discounts” to shippers agreeing to contracts longer than six months, according to rate benchmarking platform Xeneta. The move by carriers comes as the spot market on the eastbound trade lane continues its slide, with Xeneta’s average short-term rates assessed on Tuesday of $2,949 per FEU now just $199 above the long-term rates signed in the last three months. The data shows Asia-North Europe spot rates have almost halved since the start of the year. Emily Stausbøll, senior shipping analyst at Xeneta, noted in a market update this week that the uncertainty prevalent in the Asia-North Europe trade lane was seeing carriers agreeing to discounts of 22% as they tried to lock shippers in for longer periods. “On the one hand you have the seller trying to incentivize longer-term agreements to manage risk and protect market share ... on the other hand, you have the buyer doing everything possible to keep their options open for as long as possible while not spending more than necessary,” Stausbøll said. Marc Meier, global head of ocean freight at the forwarder Toll Group, said freight-all-kinds (FAK) rates on Asia-North Europe were coming under growing pressure and were at the same level as long-term rates for the January to December period. “We expect the market to be decreasing between now and [the] end of March or early April at the earliest before we see conditions to push for a rate increase,” Meier told the Journal of Commerce. Some carriers have announced March 1 FAK rates on Asia-North Europe of $4,100/FEU. A 22% discount on the current Xeneta spot rate would drop the rate on the index to $2,300/FEU, but with the short-term market softening every week, some cargo owners are holding off on signing contracts. “Some shippers may be happy to lock in for more than six months if it protects their supply chains and negates the need for further negotiation in the event of another major global disruption,” Stausbøll said. “Other shippers may choose to gamble on being able to achieve a lower rate in a few months and are happy to go through another tender round.” Base case for a second half return to Red Sea The risk tolerance level of shippers on Asia-North Europe is ultimately based around a guess when diversions around southern Africa will end. The base case of many analysts is for a return to Red Sea transits at some point in the second half, but the fast-changing political dynamics in the Israel-Hamas conflict provide little certainty. Carriers have said they will only return to the Red Sea and Suez Canal “ when it was safe to do so ,” and are continuing to divert vessels around Africa despite Hamas-supporting Houthi militants pledging to only attack Israel-affiliated ships following the start of a ceasefire in Gaza in January. The only consensus appears to be that when Red Sea voyages do finally resume, significant amounts of capacity no longer being diverted will overwhelm the market. Sea-Intelligence Maritime Analysis expects the impact to be “dramatic” — although temporary — as the trade lane adjusts to the resumption of shorter transits. The analyst estimated that demand growth on Asia-Europe received a boost of 2.9 percentage points in 2024 once the longer voyages and increased inventory levels were factored into the equation. Demand would contract by the same amount when the Red Sea reopens, according to Sea-Intelligence CEO Alan Murphy. “The excess inventory held in the longer supply chain will be released, and for a temporary period, importers will curb ordering to mitigate this sudden excess inventory,” Murphy wrote in his Sunday Spotlight newsletter. “If it unravels over just a few months, the Asia-Europe trade will see dramatic decreases in demand.” Murphy noted that the fall in demand would occur at the same time as shorter sailing times released significant amounts of capacity into the market, with the supply overhang placing downward pressure on rates. But carriers have been playing down the impact of overcapacity once the resumption of transits through Suez occurs, pointing to an increase in scrapping — which has been close to zero for the last few years — and the ability to slow steam ships that have been at full speed since the Africa diversions began. Contact Greg Knowler at greg.knowler@spglobal.com .

Asia-Europe carriers dangle contract discounts before shippers: Xeneta

<div class="phx-topic abstract-wrapper">The Journal of Commerce Truckload Capacity Index hit a 10-year low in the fourth quarter, but its rate of decline has slowed considerably as truckload pricing begins to rise from its bottom.</div>

The Journal of Commerce Truckload Capacity Index hit a 10-year low in the fourth quarter, but its rate of decline has slowed considerably as truckload pricing begins to rise from its bottom.

<div class="phx-topic">Large US truckload carriers made shallow cuts to their truck counts in the fourth quarter, curbing capacity while anticipating an end to a more than two-year freight downturn. From the carriers’ perspective, that turning point <a href="https://www.joc.com/article/stakeholders-still-in-wait-and-see-mode-on-us-freight-market-turn-5941683">is long overdue</a>. US shippers using truckload services have enjoyed an unprecedented long stretch of pricing power, and the pendulum bearing negotiating leverage hasn’t swung back toward the carriers yet. “Market conditions continue to favor the shipper,” Landstar System CEO Frank Lonegro said during a recent earnings call. He cited “choppy conditions” in the industrial economy, which saw an <a href="https://www.joc.com/article/us-ltl-rates-rising-as-industrial-outlook-shipper-confidence-improve-5944443">uptick in orders</a> and production in January. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="0207574c-45c4-46a7-bcc6-498de7fadebe"></dynamic-object></div>Even so, the truckload carriers represented by the Journal of Commerce Truckload Capacity Index (TCI) are trimming rather than slashing their fleet counts, which they <a href="https://www.joc.com/article/large-carrier-truckload-capacity-stabilizing-alongside-rates-5788958">cut deeply</a> from 2022 through mid-2024. That indicates they see a turning point on the horizon. “The fundamentals of the general freight industry have improved to a level that is now allowing us to negotiate pricing from a better posture than the last two years,” James Grant, CFO of Covenant Logistics, told Wall Street analysts during a January earnings call. <h3>Lowest TCI in 10 years </h3>The TCI, a measure of truck capacity at some of the largest US truckload providers, dropped from 76.6 in the third quarter to 75.7 in the fourth quarter, its lowest reading in 10 years. The index is down 18.8% from its mid-2022 peak reading of 93.2. But the purge of equipment from large truckload fleets has slowed in the past two quarters, as business for many companies began to gradually and incrementally improve. Capacity is still readily available to shippers in truckload lanes, with only occasional pockets of tightness, according to trucking executives. That underscores just how much small-carrier truckload capacity entered the market from 2020 through 2023. The number of active motor carrier operating authorities — mostly truckload carriers — rose 53% from 2019 through 2022, according to the US Federal Motor Carrier Safety Administration (FMCSA). Since 2022, about 35,000 to 40,000 trucking companies have left the market, whether through shutdowns or acquisitions. “While capacity has continued to exit the market, the pace has been slow,” Derek Leathers, CEO of Werner Enterprises, said during a Feb. 6 earnings call. That shows carriers are finding ways to stay on the road despite low rates. <h3>A coming bounce? </h3>There are indicators that the Journal of Commerce TCI may begin to climb again in the next few quarters, possibly turning upward by the third quarter of 2025. From mid-2022 through mid-2024, the US long-distance truckload producer price index (PPI) fell 24.2%. The PPI represents all-inclusive, mostly contractual selling prices. From last June through January, however, the PPI climbed 6.5%, mostly since November. Last month, the truckload PPI was up 6.4% year over year.<div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="949edfd1-bde1-4178-8bc3-b818539048c2"></dynamic-object></div>The Journal of Commerce TCI typically lags the PPI and other pricing measures by several months. Most truckload pricing indexes were largely flat from mid-2023 through late 2024. Improvements in pricing are likely to show up in the TCI in the second half of 2025. Leathers expects fairly limited truck count growth in the first half of 2025, with most of that growth in dedicated fleets. “We’re not looking to grow that one-way truckload fleet intentionally, at least until we get a much improved rate environment,” Leathers said. Lonegro expects Landstar’s truck count to continue to drop in the first quarter. “I’d like to think that we’re in the beginning of the next cycle, but I could also argue that we’re at the end of the prior cycle,” he said. “It does feel like some capacity needs to continue to come out.” Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

Large US truckload carriers made shallow cuts to their truck counts in the fourth quarter, curbing capacity while anticipating an end to a more than two-year freight downturn. From the carriers’ perspective, that turning point is long overdue . US shippers using truckload services have enjoyed an unprecedented long stretch of pricing power, and the pendulum bearing negotiating leverage hasn’t swung back toward the carriers yet. “Market conditions continue to favor the shipper,” Landstar System CEO Frank Lonegro said during a recent earnings call. He cited “choppy conditions” in the industrial economy, which saw an uptick in orders and production in January. Even so, the truckload carriers represented by the Journal of Commerce Truckload Capacity Index (TCI) are trimming rather than slashing their fleet counts, which they cut deeply from 2022 through mid-2024. That indicates they see a turning point on the horizon. “The fundamentals of the general freight industry have improved to a level that is now allowing us to negotiate pricing from a better posture than the last two years,” James Grant, CFO of Covenant Logistics, told Wall Street analysts during a January earnings call. Lowest TCI in 10 years The TCI, a measure of truck capacity at some of the largest US truckload providers, dropped from 76.6 in the third quarter to 75.7 in the fourth quarter, its lowest reading in 10 years. The index is down 18.8% from its mid-2022 peak reading of 93.2. But the purge of equipment from large truckload fleets has slowed in the past two quarters, as business for many companies began to gradually and incrementally improve. Capacity is still readily available to shippers in truckload lanes, with only occasional pockets of tightness, according to trucking executives. That underscores just how much small-carrier truckload capacity entered the market from 2020 through 2023. The number of active motor carrier operating authorities — mostly truckload carriers — rose 53% from 2019 through 2022, according to the US Federal Motor Carrier Safety Administration (FMCSA). Since 2022, about 35,000 to 40,000 trucking companies have left the market, whether through shutdowns or acquisitions. “While capacity has continued to exit the market, the pace has been slow,” Derek Leathers, CEO of Werner Enterprises, said during a Feb. 6 earnings call. That shows carriers are finding ways to stay on the road despite low rates. A coming bounce? There are indicators that the Journal of Commerce TCI may begin to climb again in the next few quarters, possibly turning upward by the third quarter of 2025. From mid-2022 through mid-2024, the US long-distance truckload producer price index (PPI) fell 24.2%. The PPI represents all-inclusive, mostly contractual selling prices. From last June through January, however, the PPI climbed 6.5%, mostly since November. Last month, the truckload PPI was up 6.4% year over year. The Journal of Commerce TCI typically lags the PPI and other pricing measures by several months. Most truckload pricing indexes were largely flat from mid-2023 through late 2024. Improvements in pricing are likely to show up in the TCI in the second half of 2025. Leathers expects fairly limited truck count growth in the first half of 2025, with most of that growth in dedicated fleets. “We’re not looking to grow that one-way truckload fleet intentionally, at least until we get a much improved rate environment,” Leathers said. Lonegro expects Landstar’s truck count to continue to drop in the first quarter. “I’d like to think that we’re in the beginning of the next cycle, but I could also argue that we’re at the end of the prior cycle,” he said. “It does feel like some capacity needs to continue to come out.” Contact William B. Cassidy at bill.cassidy@spglobal.com .

Large US truckload carriers, expecting more demand, rein in capacity cuts

<div class="phx-topic">Hapag-Lloyd, Hoegh Autoliners and Louis Dreyfus are among several shipping companies calling for the International Maritime Organization (IMO) to exclude crop-based biofuels from its list of sustainable alternatives to fossil fuels citing fears of deforestation and water and food scarcity. The call, which included shipping association NABU and climate activist Transport &amp; Environment (T&amp;E), comes despite the continuing rollout of lower-emission feedstock-based biofuel services by several carriers, including Hapag-Lloyd, as growing regulatory pressure on shippers to reduce their “scope 3” supply chain carbon footprints increases demand for those services. The groups outlined their concerns in an open letter to the IMO ahead of the 18th Intersessional Working Group on Greenhouse Gases that is meeting in London this week. “Unless legally binding safeguards are introduced, there is a risk that a large amount of fossil fuels will be replaced with unsustainable biofuels,” the open letter warned. It pointed out that Europe has already decided to exclude the use of feed- and food-based biofuels from its flagship shipping fuels regulation known as FuelEU, adding that the IMO should follow suit. “The IMO should take note of the biofuels policy experiences and avoid similar mistakes to ensure a sustainable future for international shipping ... otherwise we risk deploying a cure worse than the disease to address shipping’s climate impact,” the open letter said. While some biofuels may be produced sustainably and deliver significant greenhouse gas (GHG) reductions, there are scalability limitations. Most biofuels are produced from food crop-based feedstocks, which come with direct and indirect deforestation, as well as many other sustainability issues ranging from water scarcity to food security, the letter said. The volumes carried under the premium feedstock-based biofuel products offered by Hapag-Lloyd, Maersk, Ocean Network Express, CMA CGM and HMM are slowly increasing but are only growing at low single-digit percentages of annual volumes. Carrier executives also acknowledge that biofuel is, at best, a temporary measure and not a means to achieve the IMO’s 2030 targets of reducing CO2 emissions by 20% to 30%. <h3>Biofuel demand driving deforestation </h3>The open letter to the IMO noted that when the EU decided to encourage the use of biofuels in 2009, the consumption of palm oil-based biofuels doubled over the following 10 years, comprising close to one-third of EU biofuels use by 2020. Scientific evidence later demonstrated that 45% of palm oil expansion happened at the expense of carbon-rich ecosystems such as forests or peatlands over that same period, with similar findings uncovered for other crop-based feedstock such as soy, the letter said. A study by energy consultancy Cerulogy on behalf of T&amp;E shows that palm and soy oil would likely make up almost two-thirds of the biodiesel used to power the shipping industry in 2030 because they represented the cheapest fuels to comply with emissions reduction targets. However, that would have a detrimental impact on the climate with palm and soy responsible for two to three times more carbon emissions than even the dirtiest shipping fuels today once deforestation and land clearance are considered, T&amp;E warned. “Fueling cargo ships with deforestation is a terrible idea. Burning crops for fuel is bad for the planet and bad for global food security,” Constance Dijkstra, shipping manager at T&amp;E, said in a statement Monday. “The IMO should consider the climate impact of bad biofuels to avoid doing more harm than good.” T&amp;E said waste biofuels such as used cooking oil and animal fats had limited availability and would only cover just a small proportion of shipping’s projected biofuel demand. As an example, T&amp;E noted that a cargo ship traveling between China and Brazil would require the yearly waste oil from more than 2,000 McDonald’s restaurants, and to run the vessel on animal fats would require more than one million pigs. T&amp;E estimated that 34 million hectares of farmland — the total area of Germany — would be needed by 2030 to produce enough crops to meet the increased biofuels demand from the shipping industry alone. Still, demand for biofuel is not only from shipping. China is the world’s main producer of biofuel derived from used cooking oil and exports more than half of its stocks, mainly to power trucks in the US and Europe. Airlines are also ramping up their usage of biofuel-generated sustainable aviation fuel (SAF). More sustainable routes to net-zero are being debated this week at the IMO’s Intersessional Working Group, where proposals for a carbon intensity index and fuel efficiency standards, economic measures such as carbon pricing and new technologies for cleaner marine fuels will be among the topics under discussion. The working group will meet again in April before their recommendations are carried over to the IMO’s Marine Environment Protection Committee (MEPC) meeting April 7-11 that will vote on the crucial mid-term measures, including a global pricing mechanism for carbon emissions to be rolled out in October. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

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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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