<div class="phx-topic abstract-wrapper">Traditional Exports Textiles and apparel, cocoa, coffee, sugar, fruit, tobacco.Potential Exp</div>

Traditional Exports Textiles and apparel, cocoa, coffee, sugar, fruit, tobacco.Potential Exp

<div>Traditional ExportsTextiles and apparel, cocoa, coffee, sugar, fruit, tobacco.Potential ExportsClay flowerpots, cut flowers, surgical supplies, data entry services.Currency$1 = 6.37 pesos.LanguageSpanish.Time DifferenceGMT -4, EST +1.ClimateThe climate is subtropical, with an average annual temperature of 80 degrees Fahrenheit.International TransportationInternational airports at Santo Domingo and Puerto Plata. The Dominican Republic has 14 ports of which Santo Domingo is by far the largest.Normal Ports of Entry Into the U.S.Houston; Miami; New Orleans; New York; Port Everglades, Fla.; West Palm Beach, Fla.; San Juan, Puerto Rico.Quotas, Tariff StatusExcept for textiles and apparel, watches, petroleum, canned tuna, sugar and a variety of leather goods, exports...

Traditional Exports Textiles and apparel, cocoa, coffee, sugar, fruit, tobacco.Potential Exports Clay flowerpots, cut flowers, surgical supplies, data entry services. Currency $1 = 6.37 pesos. Language Spanish. Time Difference GMT -4, EST +1. Climate The climate is subtropical, with an average annual temperature of 80 degrees Fahrenheit. International Transportation International airports at Santo Domingo and Puerto Plata. The Dominican Republic has 14 ports of which Santo Domingo is by far the largest. Normal Ports of Entry Into the U.S. Houston; Miami; New Orleans; New York; Port Everglades, Fla.; West Palm Beach, Fla.; San Juan, Puerto Rico. Quotas, Tariff Status Except for textiles and apparel, watches, petroleum, canned tuna, sugar and a variety of leather goods, exports from the Dominican Republic have duty-free access to U.S. markets under the Caribbean Basin Economic Recovery Act of 1983. Where to Stay During Buying Trips In Santo Domingo: Sheraton Hotel, Santo Domingo Hotel, El Embajador Hotel. Before You Go Contact the Dominican Republic Embassy, 1715 22nd St. N.W., Washington, D.C., 20008. (202) 332-6280. Intra-City Transportation By air, rail or car. Telecommunications Direct dialing available. Major Banks In June, the central bank ordered the closing of all private exchange houses. Central bank approval is required for all foreign exchange transactions. Citibank and Chase Manhattan have offices in Santo Domingo. Credit Cards Most accepted. Export Regulations, Programs They have 12 operating industrial duty-free zones. Technology Status Developing. Labor Unemployment is about 19 percent. The country also suffers from underemployment. A Greeting Goes a Long Way Como esta? (How are you?) Gracias (Thank you). Official (Bank) Holidays 1988-89: Sept. 24; Oct. 12, 24; Nov. 1; Dec. 25; Jan. 1, 6, 21, 26; Feb. 27; March 24; April 14; May 1; July 16; and Aug. 16. Business Hours Government: Monday-Friday 7:30 a.m.-1:30 p.m., closed Saturdays. Banks: Monday-Friday: 8:30 a.m.-12:30 p.m., closed Saturdays. Commerce and Industry: Monday-Friday 8 a.m.-12 p.m. and 2 p.m.-6 p.m., closed Saturdays.

Maritime

BUYING - IN THE DOMINICAN REPUBLIC

<div class="phx-topic abstract-wrapper">There has been a steady decline in average rate levels on the major trade lanes since December, and as the new alliances and MSC’s standalone network are launched, there is no sign of an end to the slide.</div>

There has been a steady decline in average rate levels on the major trade lanes since December, and as the new alliances and MSC’s standalone network are launched, there is no sign of an end to the slide.

Feature image

<div class="phx-topic">Rising competitive pressure as ocean carriers adjust to the restructured alliances is likely to place downwards pressure on rates on the main east-west trades, according to Sea-Intelligence Maritime Analysis. There has already been a steady decline in average rate levels on the trans-Pacific and Asia-Europe trade lanes since December; as the new alliances and Mediterranean Shipping Company’s standalone network are rolled out, there is no sign of an end to the slide. “There are clear shifts in the relative competitive power between the different players in the new alliances versus the situation we have been used to for the past eight years,” Sea-Intelligence noted in its latest Sunday Spotlight newsletter, adding that for shippers, the downward pressure on rates would intensify. Holding the leading market share on three of the four main trade lanes out of Asia – Asia-US West Coast, Asia-US East Coast and Asia-North Europe – is the Ocean Alliance of Cosco Shipping, CMA CGM, OOCL and Evergreen. MSC is the largest capacity provider on Asia-Mediterranean. Ocean Alliance will be the market leader on the Asia-North America West Coast trade with 35% of the planned capacity, while operating 37% of Asia-North America East Coast capacity and 35% on Asia-North Europe, Sea-Intelligence data shows. MSC will be market leader on Asia-Mediterranean with 30% of the capacity, although Ocean Alliance is just behind at 29%. The Gemini Cooperation between Maersk and Hapag-Lloyd is the smallest player on both the Asia-North America West Coast and East Coast trade lanes, just behind the Premier Alliance of Ocean Network Express (ONE), Yang Ming and HMM. <h3>Signs of a rate war </h3>As carriers reposition ships and take bookings for their new networks, Kathy Liu, vice president of global sales and marketing at Taiwan-based forwarder Dimerco Express Group, said there were increasing signs of a battle for market share emerging, at least on the Asia-Europe trade lane. “With demand slowing...shipping lines need to fill their capacity, so there will for sure be a price war,” she told the Journal of Commerce. Average spot rates from North Asia to the US West Coast were at $3,700 per FEU Monday, down from $5,250/FEU at the beginning of January, according to Platts, a sister company of the Journal of Commerce within S&amp;P Global. Current Asia-US East Coast rates of $5,500/FEU were $2,200 lower than at the beginning of the year. It was a similar picture on Asia-North Europe, where the rate of $3,000/FEU this week was down from $5,000 in the first week of January, while the current Asia-Mediterranean rate of $4,300/FEU has slipped $1,000. There is little clarity into how rates will perform following the late January start to the Lunar New Year and widespread uncertainty into when carriers <a href="https://www.joc.com/article/carriers-eye-red-sea-transits-after-houthi-rebels-pledge-restraint-5925939">will resume shorter Suez Canal transits</a>. The base case from global bank HSBC is for Red Sea transits to resume from mid-2025, which it said implied 10.5% effective capacity growth in 2025 compared with 2.7% volume growth. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Rising competitive pressure as ocean carriers adjust to the restructured alliances is likely to place downwards pressure on rates on the main east-west trades, according to Sea-Intelligence Maritime Analysis. There has already been a steady decline in average rate levels on the trans-Pacific and Asia-Europe trade lanes since December; as the new alliances and Mediterranean Shipping Company’s standalone network are rolled out, there is no sign of an end to the slide. “There are clear shifts in the relative competitive power between the different players in the new alliances versus the situation we have been used to for the past eight years,” Sea-Intelligence noted in its latest Sunday Spotlight newsletter, adding that for shippers, the downward pressure on rates would intensify. Holding the leading market share on three of the four main trade lanes out of Asia – Asia-US West Coast, Asia-US East Coast and Asia-North Europe – is the Ocean Alliance of Cosco Shipping, CMA CGM, OOCL and Evergreen. MSC is the largest capacity provider on Asia-Mediterranean. Ocean Alliance will be the market leader on the Asia-North America West Coast trade with 35% of the planned capacity, while operating 37% of Asia-North America East Coast capacity and 35% on Asia-North Europe, Sea-Intelligence data shows. MSC will be market leader on Asia-Mediterranean with 30% of the capacity, although Ocean Alliance is just behind at 29%. The Gemini Cooperation between Maersk and Hapag-Lloyd is the smallest player on both the Asia-North America West Coast and East Coast trade lanes, just behind the Premier Alliance of Ocean Network Express (ONE), Yang Ming and HMM. Signs of a rate war As carriers reposition ships and take bookings for their new networks, Kathy Liu, vice president of global sales and marketing at Taiwan-based forwarder Dimerco Express Group, said there were increasing signs of a battle for market share emerging, at least on the Asia-Europe trade lane. “With demand slowing...shipping lines need to fill their capacity, so there will for sure be a price war,” she told the Journal of Commerce. Average spot rates from North Asia to the US West Coast were at $3,700 per FEU Monday, down from $5,250/FEU at the beginning of January, according to Platts, a sister company of the Journal of Commerce within S&P Global. Current Asia-US East Coast rates of $5,500/FEU were $2,200 lower than at the beginning of the year. It was a similar picture on Asia-North Europe, where the rate of $3,000/FEU this week was down from $5,000 in the first week of January, while the current Asia-Mediterranean rate of $4,300/FEU has slipped $1,000. There is little clarity into how rates will perform following the late January start to the Lunar New Year and widespread uncertainty into when carriers will resume shorter Suez Canal transits . The base case from global bank HSBC is for Red Sea transits to resume from mid-2025, which it said implied 10.5% effective capacity growth in 2025 compared with 2.7% volume growth. Contact Greg Knowler at greg.knowler@spglobal.com .

Container Shipping News

Container lines

Spot rates falling as new ocean networks roll out: Sea-Intelligence

<div class="phx-topic abstract-wrapper">Ship owners in the sector view the ambitious SHIPS for America legislation as unrealistic, with the domestic shipbuilding industry under-skilled and lacking the capacity needed to meaningfully contribute to the specialized MPV fleet.</div>

Ship owners in the sector view the ambitious SHIPS for America legislation as unrealistic, with the domestic shipbuilding industry under-skilled and lacking the capacity needed to meaningfully contribute to the specialized MPV fleet.

<div class="phx-topic">The lofty ambitions of the proposed <a href="https://www.joc.com/article/us-flag-vessel-owners-investors-tout-wave-of-support-for-expanding-fleet-5819921">SHIPS for America Act</a> could have ramifications for the global multipurpose vessel (MPV) fleet, but only if it manages to achieve the tall order of injecting new life into the US’ stagnating shipbuilding industry.<div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5935841_0.1.jpg"></img></div>The bipartisan act seeks to rebuild the US shipbuilding industry and make US-flagged vessels commercially competitive. At the same time, it aims to reduce the dominance of China on the US maritime fleet. That last goal might be the hardest to achieve, however. In 2024, China delivered 34% of all newbuildings to the global fleet, compared with 11% from Japan, 7% from South Korea and just 2% from the US, according to S&amp;P Global, parent company of the Journal of Commerce. A year earlier, China was the number one shipbuilder in the world, accounting for 50.7% of global shipbuilding in gross tons, whereas the US was ranked 15th with a market share of just 0.1%, according to the UNCTAD Review of Maritime Transport 2024. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="c2866ed5-af04-4a92-8187-96d99d694de3"></dynamic-object></div>Title IV of the SHIPS Act establishes the Strategic Commercial Fleet Program, with the goal of creating a fleet of 250 privately owned, US-built, US-flagged, US-crewed vessels that operate in international trade. One multipurpose ship owner told the Journal of Commerce that the capacity to build general cargo vessels and the timelines set out in the proposed bill are “not realistic." The cost to build an MPV vessel in the US -- if capacity and specialization were available, which they are not -- is currently about four to five times the cost to build in Asia, particularly China. Additionally, costs to operate under the US flag are significantly more than under the popular open registry of Panama. Therefore, any MPV built and maintained under the parameters of the act would be considerably more expensive to operate. The legislation has an answer for that: The fleet program will provide annual support payments to cover that difference in capital and operating costs. MPVs would be included in the US fleet for seven years and therefore eligible for the payments, with the option to renew twice. However, this assumes a vessel lifespan of just 21 years, which in MPV terms is at least nine short of expected demolition.<h3>Notable omission of cargo preference</h3>There are also concerns among US-flag ship owners who spoke with the Journal of Commerce that although the act talks about shipbuilding and ownership, there is little in it related to cargo preference. “Cargo preference” is the general term used to describe US laws, regulations and policies that require the use of US-flag vessels in the movement of cargo that is owned, procured, furnished or financed by the US government. For US Export Import Bank (EXIM) cargo, the percentage required is 100%; for civilian agency cargo, it is 50%. Increasing the cargo preference requirements may come further down the line, though, as the act aims to establish a commercial cargo preference, requiring that within 15 years, 10% of all cargo imported into the US from China will be imported on US-flagged vessels. Title IV of the act also increases the percentage of US government cargo that must sail on US-flagged vessels from 50% to 100%. But there is no mention of an increase in general cargo preference, crucial for MPVs. For the legislation to be successful, MPV ship owners have told the Journal of Commerce that there needs to be guarantees on cargo running in parallel with the investment in shipbuilding -- or ship owners will not sign on the dotted line. Yard capacity is another barrier to success. The two main yards that build commercial (as opposed to military) vessels are Philly and NASSCO. Philly Shipyard is headquartered in Oslo, Norway, with the operating subsidiary in Philadelphia. On the commercial side, it builds tankers and container ships. General Dynamics’ NASSCO has locations on both the US West and East coasts. It specializes in auxiliary and support ships for the US Navy. There are currently seven NASSCO-built heavy-lift semisubmersible vessels trading on behalf of the US government, with one more on the orderbook to be built at NASSCO, according to S&amp;P Global.However, these yards build very few, if any, general cargo ships and no specialized project carriers. Their order books are full for the tonnage that they do build, which include military, small container ships and tankers. This means that there is limited capacity before 2027-28. Substantial investment will be needed to create additional capacity. The legislation has caught the attention of the MPV sector, with Donald Trump’s “Make America Great Again” campaign’ prioritizing these types of protectionist measures. But to succeed, the SHIPS Act needs to force a shift change in an industry that currently lacks the capacity and the expertise to produce ocean-going vessels at scale. Contact Susan Oatway on <a href="mailto:susan.oatway@spglobal.com">susan.oatway@spglobal.com</a>.</div>

The lofty ambitions of the proposed SHIPS for America Act could have ramifications for the global multipurpose vessel (MPV) fleet, but only if it manages to achieve the tall order of injecting new life into the US’ stagnating shipbuilding industry. The bipartisan act seeks to rebuild the US shipbuilding industry and make US-flagged vessels commercially competitive. At the same time, it aims to reduce the dominance of China on the US maritime fleet. That last goal might be the hardest to achieve, however. In 2024, China delivered 34% of all newbuildings to the global fleet, compared with 11% from Japan, 7% from South Korea and just 2% from the US, according to S&P Global, parent company of the Journal of Commerce. A year earlier, China was the number one shipbuilder in the world, accounting for 50.7% of global shipbuilding in gross tons, whereas the US was ranked 15th with a market share of just 0.1%, according to the UNCTAD Review of Maritime Transport 2024. Title IV of the SHIPS Act establishes the Strategic Commercial Fleet Program, with the goal of creating a fleet of 250 privately owned, US-built, US-flagged, US-crewed vessels that operate in international trade. One multipurpose ship owner told the Journal of Commerce that the capacity to build general cargo vessels and the timelines set out in the proposed bill are “not realistic." The cost to build an MPV vessel in the US -- if capacity and specialization were available, which they are not -- is currently about four to five times the cost to build in Asia, particularly China. Additionally, costs to operate under the US flag are significantly more than under the popular open registry of Panama. Therefore, any MPV built and maintained under the parameters of the act would be considerably more expensive to operate. The legislation has an answer for that: The fleet program will provide annual support payments to cover that difference in capital and operating costs. MPVs would be included in the US fleet for seven years and therefore eligible for the payments, with the option to renew twice. However, this assumes a vessel lifespan of just 21 years, which in MPV terms is at least nine short of expected demolition. Notable omission of cargo preference There are also concerns among US-flag ship owners who spoke with the Journal of Commerce that although the act talks about shipbuilding and ownership, there is little in it related to cargo preference. “Cargo preference” is the general term used to describe US laws, regulations and policies that require the use of US-flag vessels in the movement of cargo that is owned, procured, furnished or financed by the US government. For US Export Import Bank (EXIM) cargo, the percentage required is 100%; for civilian agency cargo, it is 50%. Increasing the cargo preference requirements may come further down the line, though, as the act aims to establish a commercial cargo preference, requiring that within 15 years, 10% of all cargo imported into the US from China will be imported on US-flagged vessels. Title IV of the act also increases the percentage of US government cargo that must sail on US-flagged vessels from 50% to 100%. But there is no mention of an increase in general cargo preference, crucial for MPVs. For the legislation to be successful, MPV ship owners have told the Journal of Commerce that there needs to be guarantees on cargo running in parallel with the investment in shipbuilding -- or ship owners will not sign on the dotted line. Yard capacity is another barrier to success. The two main yards that build commercial (as opposed to military) vessels are Philly and NASSCO. Philly Shipyard is headquartered in Oslo, Norway, with the operating subsidiary in Philadelphia. On the commercial side, it builds tankers and container ships. General Dynamics’ NASSCO has locations on both the US West and East coasts. It specializes in auxiliary and support ships for the US Navy. There are currently seven NASSCO-built heavy-lift semisubmersible vessels trading on behalf of the US government, with one more on the orderbook to be built at NASSCO, according to S&P Global. However, these yards build very few, if any, general cargo ships and no specialized project carriers. Their order books are full for the tonnage that they do build, which include military, small container ships and tankers. This means that there is limited capacity before 2027-28. Substantial investment will be needed to create additional capacity. The legislation has caught the attention of the MPV sector, with Donald Trump’s “Make America Great Again” campaign’ prioritizing these types of protectionist measures. But to succeed, the SHIPS Act needs to force a shift change in an industry that currently lacks the capacity and the expertise to produce ocean-going vessels at scale. Contact Susan Oatway on susan.oatway@spglobal.com .

Breakbulk carriers

Project cargo

Breakbulk News

MPV operators largely dismissive of US shipbuilding act

<div class="phx-topic abstract-wrapper">A slow shift away from one-way truckload toward dedicated is reshaping the top tier of truckload carriers, a transformation that may accelerate in a freight recovery. </div>

A slow shift away from one-way truckload toward dedicated is reshaping the top tier of truckload carriers, a transformation that may accelerate in a freight recovery.

<div class="phx-topic">Driven by the capacity needs of customers and desire for more stable revenue and margins, large US truckload carriers are increasingly focused on dedicated trucking, with many companies moving greater numbers of trucks and drivers to dedicated divisions. That shift is a <a href="https://www.joc.com/article/us-shippers-expanding-private-truck-fleets-to-haul-more-of-their-own-freight-5712761">long-term trend</a> that is being accelerated by a freight downcycle that has lasted nearly three years. It also reflects shipper demand for more stable capacity and is tied to the expansion of <a href="https://www.joc.com/article/us-shippers-expanding-private-truck-fleets-to-haul-more-of-their-own-freight-5712761">shipper-owned private fleets</a> since the COVID-19 pandemic. The growth of dedicated services is leading to a significant rebalancing of the upper tier of the truckload market, which includes giant carriers such as Knight-Swift Transportation Holdings, J.B. Hunt Transport Services, Schneider National and Werner Enterprises. All of these trucking companies have made dedicated business -- in which they provide guaranteed capacity to shippers in the form of an outsourced private fleet -- a top priority heading into 2025. Dedicated is a key part of their broader diversification plans. With an end to the so-called freight recession expected – though not certain – by the second half of the year, shippers tell the Journal of Commerce they are once again concerned about truck capacity, even though that capacity is abundant and demand slow in the first quarter. That creates opportunities for dedicated trucking providers. At Green Bay, Wis.-based Schneider National, 70% of its 12,700 tractors are now in dedicated service, a percentage bolstered by the $421 million acquisition of dedicated trucking company Cowan Systems, company officials told Wall Street analysts last Thursday. When Schneider became a publicly traded company in 2017, dedicated services represented only 33% of its fleet, which underscores the scope of the transformation. “Our dedicated business has demonstrated [a] resilient earnings profile over freight cycles and is an important part of our strategy to create enduring shareholder value,” Mark B. Rourke, president and CEO of Schneider, said during a fourth-quarter earnings call. In contrast, the traditional over-the-road (OTR) truckload business “continues to be challenged” and was not profitable in the last quarter, Rourke said. “The freight market is continuing its path towards recovery, and we are playing the long game.” <h3>Driven to diversify </h3>That game requires belt-tightening and diversification as carriers roll toward what they hope will be the end of a freight downturn that began in 2022. Truckload carriers have seen volatile pricing swings since the disruption caused by the COVID-19 pandemic in 2020. Dedicated business tends to have higher profit margins and longer-term contracts, encouraging even greater shift when typical truckload margins are either in single digits or negative. At J.B. Hunt, for example, the average dedicated contract length is five years. The margin goal for dedicated at J.B. Hunt is 12% to 14%, company officials said. The carrier’s truckload division had an operating margin of about 4.7% in the fourth quarter, while its dedicated operating margin was 10.8%, according to quarterly earnings data. The higher margin is in the difference between dedicated and traditional truckload. "When we're putting together a dedicated solution, it's truly dedicated, it is a multiyear agreement,” James Filter, group vice president of transportation and logistics at Schneider, said during Schneider’s earnings call. “It’s structured so that it has teeth in it for both sides and is not something that is going to be replaced by lower-cost spot pricing.” Allocating more capital to dedicated trucking as well as to less-than-truckload (LTL) services is the strategy Phoenix-based Knight-Swift Transportation Holdings is pursuing to reduce its dependence on the volatile one-way, irregular-route truckload market. Knight-Swift’s truckload segment currently operates 15,800 irregular-route trucks and 6,400 dedicated trucks across its truckload subsidiaries, which include Knight and Swift Transportation as well as Barr-Nunn, Abilene Motor Express and U.S. Xpress. “We’re going to build our dedicated fleet,” CFO Andrew Hess said during a Jan. 22 earnings call. Knight-Swift looks to boost dedicated operations at U.S. Xpress, which it acquired in 2023 for $808 million. “We believe [dedicated] has an opportunity for growth,” Hess said. J.B. Hunt Transport Services President and CEO Shelley Simpson, in a Jan. 16 earnings call, called her company’s dedicated service “remarkably resilient” despite the freight downturn. J.B. Hunt puts the value of the overall dedicated trucking market at $90 billion. J.B. Hunt’s dedicated business did come under pressure as truckload spot rates dropped by double digits from 2022 through 2024. That pricing collapse gave some shippers an opportunity to shift some more expensive dedicated business to the open market. "We certainly combated that challenge throughout the year,” Bradley W. Hicks, Hunt’s president of dedicated contract services, said during the earnings call. He expects pressure from “fleet losses” to continue through the early part of the second quarter. After that, however, Hicks sees a clearer road to growth ahead. “We see our retention rates on customers rebounding,” with more trucks in demand, he said. Schneider also expects rising demand will allow it to deploy more dedicated trucks in 2025. “We have line of sight to several hundred trucks of new business awards slated for start-up in the first half of 2025,” Rourke said. The CEO said Schneider has “trucks at the ready” for a few large startups that were delayed from 2024 into 2025. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a></div>

Driven by the capacity needs of customers and desire for more stable revenue and margins, large US truckload carriers are increasingly focused on dedicated trucking, with many companies moving greater numbers of trucks and drivers to dedicated divisions. That shift is a long-term trend that is being accelerated by a freight downcycle that has lasted nearly three years. It also reflects shipper demand for more stable capacity and is tied to the expansion of shipper-owned private fleets since the COVID-19 pandemic. The growth of dedicated services is leading to a significant rebalancing of the upper tier of the truckload market, which includes giant carriers such as Knight-Swift Transportation Holdings, J.B. Hunt Transport Services, Schneider National and Werner Enterprises. All of these trucking companies have made dedicated business -- in which they provide guaranteed capacity to shippers in the form of an outsourced private fleet -- a top priority heading into 2025. Dedicated is a key part of their broader diversification plans. With an end to the so-called freight recession expected – though not certain – by the second half of the year, shippers tell the Journal of Commerce they are once again concerned about truck capacity, even though that capacity is abundant and demand slow in the first quarter. That creates opportunities for dedicated trucking providers. At Green Bay, Wis.-based Schneider National, 70% of its 12,700 tractors are now in dedicated service, a percentage bolstered by the $421 million acquisition of dedicated trucking company Cowan Systems, company officials told Wall Street analysts last Thursday. When Schneider became a publicly traded company in 2017, dedicated services represented only 33% of its fleet, which underscores the scope of the transformation. “Our dedicated business has demonstrated [a] resilient earnings profile over freight cycles and is an important part of our strategy to create enduring shareholder value,” Mark B. Rourke, president and CEO of Schneider, said during a fourth-quarter earnings call. In contrast, the traditional over-the-road (OTR) truckload business “continues to be challenged” and was not profitable in the last quarter, Rourke said. “The freight market is continuing its path towards recovery, and we are playing the long game.” Driven to diversify That game requires belt-tightening and diversification as carriers roll toward what they hope will be the end of a freight downturn that began in 2022. Truckload carriers have seen volatile pricing swings since the disruption caused by the COVID-19 pandemic in 2020. Dedicated business tends to have higher profit margins and longer-term contracts, encouraging even greater shift when typical truckload margins are either in single digits or negative. At J.B. Hunt, for example, the average dedicated contract length is five years. The margin goal for dedicated at J.B. Hunt is 12% to 14%, company officials said. The carrier’s truckload division had an operating margin of about 4.7% in the fourth quarter, while its dedicated operating margin was 10.8%, according to quarterly earnings data. The higher margin is in the difference between dedicated and traditional truckload. "When we're putting together a dedicated solution, it's truly dedicated, it is a multiyear agreement,” James Filter, group vice president of transportation and logistics at Schneider, said during Schneider’s earnings call. “It’s structured so that it has teeth in it for both sides and is not something that is going to be replaced by lower-cost spot pricing.” Allocating more capital to dedicated trucking as well as to less-than-truckload (LTL) services is the strategy Phoenix-based Knight-Swift Transportation Holdings is pursuing to reduce its dependence on the volatile one-way, irregular-route truckload market. Knight-Swift’s truckload segment currently operates 15,800 irregular-route trucks and 6,400 dedicated trucks across its truckload subsidiaries, which include Knight and Swift Transportation as well as Barr-Nunn, Abilene Motor Express and U.S. Xpress. “We’re going to build our dedicated fleet,” CFO Andrew Hess said during a Jan. 22 earnings call. Knight-Swift looks to boost dedicated operations at U.S. Xpress, which it acquired in 2023 for $808 million. “We believe [dedicated] has an opportunity for growth,” Hess said. J.B. Hunt Transport Services President and CEO Shelley Simpson, in a Jan. 16 earnings call, called her company’s dedicated service “remarkably resilient” despite the freight downturn. J.B. Hunt puts the value of the overall dedicated trucking market at $90 billion. J.B. Hunt’s dedicated business did come under pressure as truckload spot rates dropped by double digits from 2022 through 2024. That pricing collapse gave some shippers an opportunity to shift some more expensive dedicated business to the open market. "We certainly combated that challenge throughout the year,” Bradley W. Hicks, Hunt’s president of dedicated contract services, said during the earnings call. He expects pressure from “fleet losses” to continue through the early part of the second quarter. After that, however, Hicks sees a clearer road to growth ahead. “We see our retention rates on customers rebounding,” with more trucks in demand, he said. Schneider also expects rising demand will allow it to deploy more dedicated trucks in 2025. “We have line of sight to several hundred trucks of new business awards slated for start-up in the first half of 2025,” Rourke said. The CEO said Schneider has “trucks at the ready” for a few large startups that were delayed from 2024 into 2025. Contact William B. Cassidy at bill.cassidy@spglobal.com

Trucking News

Truckload

Surface

Large US truckload carriers shifting assets to expand dedicated services

<div class="phx-topic abstract-wrapper">Sources tell the Journal of Commerce the union will convene a midweek meeting in Florida of its local wage scale committees across the 14 ports under its jurisdiction. </div>

Sources tell the Journal of Commerce the union will convene a midweek meeting in Florida of its local wage scale committees across the 14 ports under its jurisdiction.

<div class="phx-topic">The International Longshoremen’s Association (ILA) next week is expected to start a month-long process of selling its members on the new collective bargaining agreement with maritime employers. The process ends two years of fraught labor negotiations and now ensures six years of labor peace at US East and Gulf coast ports. Three sources familiar with the situation have told the Journal of Commerce the ILA will convene a midweek meeting in Florida of its local wage scale committees across the 14 ports under its jurisdiction. The meeting will be called to review terms of the six-year <a href="https://www.joc.com/article/ila-usmx-reach-tentative-deal-that-avoids-another-port-strike-5919519">agreement on a new master contract</a> after four days of talks in New Jersey. The wage scale committees will then present terms of the coastwide master contract, along with port-specific contracts, to local union members. A full vote by the roughly 45,000 registered ILA members at East and Gulf coast ports is expected to take place near the end of February, with March the first full pay period under the new agreement. The United States Maritime Alliance (USMX) board of directors reportedly approved the contract during a vote Wednesday, according to the sources. Both the ILA and USMX declined to comment on the ratification process. The ILA and USMX last October agreed to <a href="https://www.joc.com/article/us-east-gulf-coast-ports-confident-of-smooth-post-strike-reopening-5742607">a 62% wage increase over the contract’s six-year term</a>, ending a brief three-day port strike, the first along the East and Gulf coasts since 1977. The 62% increase, as measured against the top pay scale for longshore workers, represents an average $4 per-hour raise during each of the contract’s six years. The contract further ensures minimum staffing levels for ILA members when ports want to implement semi-automation technology such as <a href="https://www.joc.com/article/ila-targets-rail-mounted-gantry-cranes-amid-impasse-in-port-labor-talks-5874742">rail-mounted gantry cranes</a>, according to sources familiar with the talks. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>.</div>

The International Longshoremen’s Association (ILA) next week is expected to start a month-long process of selling its members on the new collective bargaining agreement with maritime employers. The process ends two years of fraught labor negotiations and now ensures six years of labor peace at US East and Gulf coast ports. Three sources familiar with the situation have told the Journal of Commerce the ILA will convene a midweek meeting in Florida of its local wage scale committees across the 14 ports under its jurisdiction. The meeting will be called to review terms of the six-year agreement on a new master contract after four days of talks in New Jersey. The wage scale committees will then present terms of the coastwide master contract, along with port-specific contracts, to local union members. A full vote by the roughly 45,000 registered ILA members at East and Gulf coast ports is expected to take place near the end of February, with March the first full pay period under the new agreement. The United States Maritime Alliance (USMX) board of directors reportedly approved the contract during a vote Wednesday, according to the sources. Both the ILA and USMX declined to comment on the ratification process. The ILA and USMX last October agreed to a 62% wage increase over the contract’s six-year term , ending a brief three-day port strike, the first along the East and Gulf coasts since 1977. The 62% increase, as measured against the top pay scale for longshore workers, represents an average $4 per-hour raise during each of the contract’s six years. The contract further ensures minimum staffing levels for ILA members when ports want to implement semi-automation technology such as rail-mounted gantry cranes , according to sources familiar with the talks. Contact Michael Angell at michael.angell@spglobal.com .

North American ports

Marine terminals

Longshore labor

ILA officials to meet next week as ratification of USMX deal looms

<div class="phx-topic abstract-wrapper">The Singapore-based carrier reported strong demand on its two main trade lanes out of Asia in its most recent fiscal quarter, with the trans-Pacific recording 100% utilization. </div>

The Singapore-based carrier reported strong demand on its two main trade lanes out of Asia in its most recent fiscal quarter, with the trans-Pacific recording 100% utilization.

<div class="phx-topic">Ocean Network Express (ONE) is now expecting $4 billion in net profit for its operating year ending March 31, upping the forecast by almost $1 billion after posting a strong fiscal third quarter with significant gains in revenue and earnings. The full-year net profit as forecast would be a 30% increase over the previous year, even as container shipping enters its traditional slack season following the rush to export in the runup to the Lunar New Year. “A slowdown in cargo movement is expected, coupled with increasing uncertainty in the business environment,” ONE said in its earnings statement Friday, adding that demand would recover after the Lunar New Year. In its fiscal Q3 ended Dec. 31, the Singapore-based carrier reported a 44% year-over-year increase in revenue to $4.8 billion, with revenue for the first nine months of the financial year growing 40% year over year to almost $15 billion. Quarterly earnings before interest, taxes, depreciation and amortization (EBITDA) of $1.6 billion were up almost nine times compared with the same quarter in the previous year, while the nine-month EBITDA was almost three time higher at $5.1 billion. Strong gains were also reported in EBIT and net profit. The $1 billion in EBIT for the fiscal third quarter turned around a $248 million loss recorded in the comparative period the previous year, while the nine-month EBIT of $3.6 billion was a 95% improvement year over year. Net profit of $1.1 billion in Q3 also turned around an $83 million loss the previous year, and the nine-month net result of $3.9 billion was six times that of the same period the year before. Total Q3 volume of 3.2 million TEUs across all trade lanes was up 5% year over year; for the first nine months of ONE’s fiscal year — April to December — volume of 9.7 million TEUs was up 7.7%. <h3>Trans-Pacific utilization at 100% </h3>Supporting the increased volume were average spot rates that remained elevated from Asia to both North America and Europe. ONE deploys 32% of its capacity on the Asia-North America corridor, its largest trade lane, and reported 100% vessel utilization as eastbound volume increased 15% to 713,000 TEUs. For the first nine months, the carrier’s volume on the trans-Pacific was up almost 10% year over year at 2.1 million TEUs. “In the North America eastbound trade, cargo movement slowed down initially, but recovered in the latter half of the quarter, boosted by concern over the potential strike in the East Coast and Gulf ports,” ONE said. Asia-Europe services comprise 22% of ONE’s capacity. Fiscal Q3 volume on the westbound trade lane increased 9.4% to 418,000 TEUs with vessel utilization of 93%. Nine-month volume of 1.3 million TEUs was an 8% increase year over year. “In the Asia-Europe westbound trade, the advanced cargo rush for the holiday season in the second quarter led to a slowdown in cargo movement at the beginning of Q3, but cargo demand recovered gradually in November and December,” ONE said. Early earnings signals are showing that 2024 appears to have been another strong year for ocean carriers, with Cosco Shipping Holdings, parent of Cosco Shipping and OOCL, <a href="https://www.joc.com/article/cosco-forecasts-95-jump-in-2024-net-profit-on-robust-volumes-freight-rates-5920588">forecasting a 95% increase in net profit</a> to $7.5 billion. Hapag-Lloyd's profit expectations for last year are more subdued, with <a href="https://www.joc.com/article/strong-volume-high-rates-to-lift-hapag-lloyds-2024-earnings-5933806">the Hamburg-based carrier’s preliminary results</a> showing a 3.7% increase in pre-tax profit of $2.8 billion. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Ocean Network Express (ONE) is now expecting $4 billion in net profit for its operating year ending March 31, upping the forecast by almost $1 billion after posting a strong fiscal third quarter with significant gains in revenue and earnings. The full-year net profit as forecast would be a 30% increase over the previous year, even as container shipping enters its traditional slack season following the rush to export in the runup to the Lunar New Year. “A slowdown in cargo movement is expected, coupled with increasing uncertainty in the business environment,” ONE said in its earnings statement Friday, adding that demand would recover after the Lunar New Year. In its fiscal Q3 ended Dec. 31, the Singapore-based carrier reported a 44% year-over-year increase in revenue to $4.8 billion, with revenue for the first nine months of the financial year growing 40% year over year to almost $15 billion. Quarterly earnings before interest, taxes, depreciation and amortization (EBITDA) of $1.6 billion were up almost nine times compared with the same quarter in the previous year, while the nine-month EBITDA was almost three time higher at $5.1 billion. Strong gains were also reported in EBIT and net profit. The $1 billion in EBIT for the fiscal third quarter turned around a $248 million loss recorded in the comparative period the previous year, while the nine-month EBIT of $3.6 billion was a 95% improvement year over year. Net profit of $1.1 billion in Q3 also turned around an $83 million loss the previous year, and the nine-month net result of $3.9 billion was six times that of the same period the year before. Total Q3 volume of 3.2 million TEUs across all trade lanes was up 5% year over year; for the first nine months of ONE’s fiscal year — April to December — volume of 9.7 million TEUs was up 7.7%. Trans-Pacific utilization at 100% Supporting the increased volume were average spot rates that remained elevated from Asia to both North America and Europe. ONE deploys 32% of its capacity on the Asia-North America corridor, its largest trade lane, and reported 100% vessel utilization as eastbound volume increased 15% to 713,000 TEUs. For the first nine months, the carrier’s volume on the trans-Pacific was up almost 10% year over year at 2.1 million TEUs. “In the North America eastbound trade, cargo movement slowed down initially, but recovered in the latter half of the quarter, boosted by concern over the potential strike in the East Coast and Gulf ports,” ONE said. Asia-Europe services comprise 22% of ONE’s capacity. Fiscal Q3 volume on the westbound trade lane increased 9.4% to 418,000 TEUs with vessel utilization of 93%. Nine-month volume of 1.3 million TEUs was an 8% increase year over year. “In the Asia-Europe westbound trade, the advanced cargo rush for the holiday season in the second quarter led to a slowdown in cargo movement at the beginning of Q3, but cargo demand recovered gradually in November and December,” ONE said. Early earnings signals are showing that 2024 appears to have been another strong year for ocean carriers, with Cosco Shipping Holdings, parent of Cosco Shipping and OOCL, forecasting a 95% increase in net profit to $7.5 billion. Hapag-Lloyd's profit expectations for last year are more subdued, with the Hamburg-based carrier’s preliminary results showing a 3.7% increase in pre-tax profit of $2.8 billion. Contact Greg Knowler at greg.knowler@spglobal.com .

ONE upgrades full-year profit forecast by $1 billion after robust Q3

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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>

SMC3rates_shutterstock_5247046 (1).jpg

Filling the Supply Chain Education Gap with LTL Education Courses

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