<div class="phx-topic abstract-wrapper">After a nationwide trucker strike last May, transportation providers like Maersk and Brazilian railroad Brado are taking a multimodal approach to avoid becoming overly dependent on a volatile trucking market.</div>

After a nationwide trucker strike last May, transportation providers like Maersk and Brazilian railroad Brado are taking a multimodal approach to avoid becoming overly dependent on a volatile trucking market.

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<div>Ocean carrier Maersk Line and Brado, Brazil’s leading railroad operator, are investing in inland intermodal infrastructure in Brazil in the wake of a trucker strike that brought supply chains in the South American country to their knees last May.The <a>11-day nationwide truck strike</a> and blockade resulted in the death of one truck driver, hundreds of millions of dollars in cargo damages, and widespread container cargo delays. And although disruptions have been less severe since then, labor actions still occur. As part of an accord to end the strike, the government agreed to a Minimum Freight Rate Table (MFRT), allowing freelance...

Ocean carrier Maersk Line and Brado, Brazil’s leading railroad operator, are investing in inland intermodal infrastructure in Brazil in the wake of a trucker strike that brought supply chains in the South American country to their knees last May. The 11-day nationwide truck strike and blockade resulted in the death of one truck driver, hundreds of millions of dollars in cargo damages, and widespread container cargo delays. And although disruptions have been less severe since then, labor actions still occur. As part of an accord to end the strike, the government agreed to a Minimum Freight Rate Table (MFRT), allowing freelance truckers to charge 50-300 percent more per trip. Inland investment In an effort to mitigate the effects of future disruptions, transportation providers such as Maersk and Brado are building new inland terminals and dedicated trucking fleets, as well as taking more control over end-to-end logistics operations. Maersk and its sister cabotage company, Aliança Navegação, have invested 20 million reais ($5.18 million) in a new 50-truck fleet to give shippers in southeast Brazil more options, Antonio Dominguez, the Maersk managing director for east coast South America (ECSA), told JOC.com. The carriers operated a dedicated fleet of 169 trucks serving the port of Santos and the São Paulo hinterland, with the rest being provided by third-party companies as needed. The expansion of Maersk’s inland logistics presence in Brazil is part of the carrier’s broader strategy to become a provider of end-to-end integrated supply chain services. “We are working to find logistics solutions on land, on the ocean, and also by barge in Brazil, and a new strategy was launched last September, originally with Damco, and now via Twill,” Dominguez said at the Intermodal South America conference in São Paulo. Maersk has also invested in a new terminal in São Bernardo do Campo, halfway between the port of Santos and the city of São Paulo. The city is part of the ABC industrial region, which also includes São Caetano and Santo Andre and sports several major automobile plants run by Ford, Mercedes Benz, Toyota, Volkswagen, and Scania. “We learned a lot from the truckers strike, and among those lessons were that we must develop more rail and trucking solutions,” explained Dominguez. “We are developing services into the hinterland of São Paulo and the trucks are a part of that. We can now go much deeper into our customers’ own supply chains and help optimize them,” letting shippers “focus on their own production and leave logistics to us.” Maersk’s logistics business grew 20 percent year over year in 2018 and has surged 225 percent since the beginning of 2019, according to Dominguez. Large-volume shippers such as chicken and beef exporters BRF Foods, Marfrig, and JBS also invested in new trucks after the MFRT raised trucking rates across the more than 1 million independent truck drivers operating in Brazil. Gustavo Paschoa, Maersk sales director for ECSA, told JOC.com that although subsidiary lines Hamburg Sud and Aliança operate independently in Brazil, the combination gives Maersk “a great critical mass” that allows for economies of scale in areas such as trucking, and these cost reductions are being passed on to shippers. “We are taking advantage of the market and bringing in the trucks because we are a big group and because we have Aliança as a leading cabotage operator,” stated Paschoa. “Therefore, it is not just down to the truckers strike although that was also a big factor.” Modal shift Partly as a consequence of the trucker strike, Brazilian cabotage volumes jumped 16.7 percent year over year to 592,000 TEU last year, with Aliança’s volume up 16 percent, Mark Juzwiak, the head of institutional relations for Hamburg Sud and Aliança, told JOC.com. Another major beneficiary of the trucker strike has been Brado, which saw container shipments skyrocket 75 percent to 280,000 TEU in 2018. And with hundreds of shippers in Brazil looking to diversify their logistics solutions away from trucks and towards rail, Brado is expecting another healthy increase in 2019. Despite efforts by the government to boost freight rail in Brazil, only 2-4 percent of containers in and out of the port of Santos were moved by rail last year, depending on the terminal. But at the port of Paranaguá, Brazil’s second-busiest container gateway, that figure is more than 15 percent of total cargo. Rio de Janeiro and Sepetiba are also seeing growing volumes of boxes arriving and departing by train, pushing the percentage over 10 percent at both ports, roughly double what it was a year ago, according to Brazilian railroad sector analyst Alan Lear. “We used to go to the market looking for new customers, but since the truckers strike, many shippers are now coming to us to provide transport and logistics solutions,” said Marcelo Saraiva, the commercial director of operations at Brado. “Although last year was a phenomenal one after the truckers strike, we are also expecting a decent increase for this year too,” with Brado growth forecasts coming in at more than 20 percent for 2019, Saraiva told JOC.com. In addition to moves to and from ports, the railroad is also reporting significant increases in short-haul and long-haul [inland to inland] shipments across its two regional networks. The increased carryings are putting pressure on existing equipment and infrastructure for Brado, which operates three main services: one connecting the inland rail terminal of Rondonopolis, in the state of Mato Grosso, a major producer and exporter of beef, with Santos via Araquara and Sumare in the interior of São Paulo; and two smaller routes between Paranaguá and the interior of Parana, one of the world’s largest exporters of chicken and pork. As a result, Brado is also investing in additional trucks, primarily for drayage in and around the ports and at its eight inland intermodal terminals. “Because of the increased loadings, we are trying to increase our capacity at these two key ports,” said Henrique Meirelles, Brado’s financial director. “Last year, at Brado we invested 100 million reais [$25.92 million] in trucks and terminals, and this year, we will spend 60 million reais on our eight inland terminals.” Contact Rob Ward at rcward788@btinternet.com .

International rail

Intermodal providers

Brazil truck strike spurs intermodal surge

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

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

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

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

Transport, Trade and Regulation News

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

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

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

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

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

Container Shipping News

Port News

Container lines

Maritime

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

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

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

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

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

Marine terminals

International ports

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

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

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

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

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

Air Cargo Forwarder News

Air Cargo Carriers News

Air Cargo

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

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

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

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

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

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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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