<div class="phx-topic abstract-wrapper">The main prop of Indonesia's economy, its energy sector, is unlikely to recover in the near term, bu</div>

The main prop of Indonesia's economy, its energy sector, is unlikely to recover in the near term, bu

<div>The main prop of Indonesia's economy, its energy sector, is unlikely to recover in the near term, but the country's finances are basically stable, senior officials say.The decline in oil prices battered the economy, which normally relies on energy exports for up to 70 percent of revenue. After slashing its budget earlier this year, the government last month sharply devalued the rupiah.Oil exploration has declined to a minimum, new discoveries are even more infrequent, and activities in many supporting industries have dwindled appreciably, acknowledged J.B. Sumarlin, development minister.He told a conference in Jakarta of the Indonesian Petroleum Association that the...

The main prop of Indonesia's economy, its energy sector, is unlikely to recover in the near term, but the country's finances are basically stable, senior officials say. The decline in oil prices battered the economy, which normally relies on energy exports for up to 70 percent of revenue. After slashing its budget earlier this year, the government last month sharply devalued the rupiah.Oil exploration has declined to a minimum, new discoveries are even more infrequent, and activities in many supporting industries have dwindled appreciably, acknowledged J.B. Sumarlin, development minister. He told a conference in Jakarta of the Indonesian Petroleum Association that the industry will remain fundamental to the country's development, but he indicated any upturn might be a long way off. Supporting that thesis, Ali Wardhana, coordinating minister for the economy, said this year will be seen as the toughest time for the (energy) industry and also for Indonesia because the oil price fall coincided with a similar fall in commodity prices. Export prices of Indonesian crude slumped to below US$9 a barrel last summer but have since recovered to nearly US$11, according to official figures. That contrasts starkly with the assumption of US$25 on which the reduced budget was based. Despite such setbacks, we are back on solid ground thanks to the devaluation, Mr. Wardhana told the conference. It will cut the current account deficit this fiscal year to US$4 billion against the previously estimated US$6 billion, he forecast. Indonesia had a current account shortfall last year of just under US$2 billion. The devaluation demonstrated the government's determination to avoid stop- gap measures in coping with economic difficulty, Mr. Wardhana said. The government has been seeking to stimulate non-energy exports, and Mr. Wardhana said the devaluation would help overseas sales of plywood, textiles and coffee in particular. It has so far eschewed the kind of pump-priming adopted by neighboring Malaysia, recently saying that a number of road projects are to remain on ice. However, the government has announced plans to develop a gas distribution system in Jakarta and other major cities with assistance from a British firm. State-owned Gas Negara says the project will be carried out by International Consultant Services, funded by a US$3.7 million World Bank loan. Efforts to boost non-energy exports have had mixed success, thanks largely to stagnant commodity prices. Rubber output this year is forecast at 950,000 tons, compared with capacity of 1.2 million tons. Of that, about 875,000 tons will be exported, according to the Indonesian Rubber Association, compared with last year's 950,000 tons. Indonesia is the world's second-largest producer of rubber and palm oil - in both cases after Malaysia - and hopes to export 400,000 tons of palm oil this year. Officials are encouraging more palm oil production despite pleas from Malaysia that it should cut back to stabilize prices. Before the devaluation, the Indonesian Association of Coffee Exporters forecast overseas sales this year of 320,000 tons, up from last year's 315,000.

Maritime

INDONESIA SEES STABLE ECONOMY

<div class="phx-topic abstract-wrapper">Booming e-commerce and expectations for faster end-to-end delivery are still reconfiguring distribution networks.</div>

Booming e-commerce and expectations for faster end-to-end delivery are still reconfiguring distribution networks.

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<div class="phx-topic">The big picture: With a large number of industrial logistics and warehousing projects launched early in the COVID-19 pandemic now complete and shippers destocking or rebalancing inventories throughout the year, warehousing space is widely available across the US. Still, solid increases in US imports kept demand positive last year and developers expect supply to tighten as volumes accelerate in 2025. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5910622_0.1.png"></img></div>A look back: Shippers in the US had an easier time finding industrial warehousing and distribution space in 2024 as the Great Destocking of 2023 led to a widespread rebalancing of inventories in 2024. The average US industrial vacancy rate for manufacturing and logistics properties rose to 6.8% in the third quarter, the highest since before the COVID-19 pandemic but still slightly below the pre-pandemic average of 7.1%, according to real estate developer JLL. At the same time, the vacancy rate in Southern California’s Inland Empire dropped 40 basis points to 7.4%, the first vacancy rate reduction in the region for three years, as more e-commerce firms and Asian logistics providers sought space, JLL said. Despite lower demand, average rents in the US remained stable, the developer said, but rent increases are slowing. Developer Prologis also said logistics space built to increase resiliency during the early years of the pandemic is now being used by tenants to keep costs in line during the downcycle. Utilization of that space is increasing, however, as an inflection point draws closer, and that will force decisions on warehouse users who will need new space if US manufacturing gains steam and freight demand rises. Even so, demand for logistics space is expected to remain soft in the near term. A look ahead: How long the near-term softness forecast by Prologis and other developers lasts depends on growth in US manufacturing, increased consumer spending and the impact of disruptions such as the Red Sea crisis and a potential second longshore strike at US East and Gulf coast ports. Trade policy and tariff changes under a second Trump administration could also change the demand equation, but their impact is not yet clear. Prologis believes industrial logistics vacancy rates have peaked, and absorption rates for warehouse construction will increase as the US freight economy improves. As demand rises, rents are expected to follow, and the dynamics that drove warehouse expansion in the early 2020s haven’t changed. Booming e-commerce volumes and expectations for faster end-to-end delivery of goods and inputs are still reconfiguring distribution networks, with more logistics facilities being built closer to end consumers. The rise of manufacturing in Mexico is also shifting distribution networks and needs, with new or expanded logistics facilities popping up along the US-Mexico border. The next inflection: A turning point in demand for warehouse and logistics facilities is expected in 2025, but it depends largely on higher US manufacturing output and increased consumer confidence and spending. Still, some warehouse providers started warning potential customers of tightening capacity and higher rents in late 2024, urging them to “act now” to avoid potential space shortages and position themselves for growth. As a result, some shippers will be looking to lock in storage and logistics capacity early this year. Contact William B. Cassidy at <a href="http://go.microsoft.com/fwlink/p/?LinkId=255141">bill.cassidy@spglobal.com.</a></div>

The big picture: With a large number of industrial logistics and warehousing projects launched early in the COVID-19 pandemic now complete and shippers destocking or rebalancing inventories throughout the year, warehousing space is widely available across the US. Still, solid increases in US imports kept demand positive last year and developers expect supply to tighten as volumes accelerate in 2025. A look back: Shippers in the US had an easier time finding industrial warehousing and distribution space in 2024 as the Great Destocking of 2023 led to a widespread rebalancing of inventories in 2024. The average US industrial vacancy rate for manufacturing and logistics properties rose to 6.8% in the third quarter, the highest since before the COVID-19 pandemic but still slightly below the pre-pandemic average of 7.1%, according to real estate developer JLL. At the same time, the vacancy rate in Southern California’s Inland Empire dropped 40 basis points to 7.4%, the first vacancy rate reduction in the region for three years, as more e-commerce firms and Asian logistics providers sought space, JLL said. Despite lower demand, average rents in the US remained stable, the developer said, but rent increases are slowing. Developer Prologis also said logistics space built to increase resiliency during the early years of the pandemic is now being used by tenants to keep costs in line during the downcycle. Utilization of that space is increasing, however, as an inflection point draws closer, and that will force decisions on warehouse users who will need new space if US manufacturing gains steam and freight demand rises. Even so, demand for logistics space is expected to remain soft in the near term. A look ahead: How long the near-term softness forecast by Prologis and other developers lasts depends on growth in US manufacturing, increased consumer spending and the impact of disruptions such as the Red Sea crisis and a potential second longshore strike at US East and Gulf coast ports. Trade policy and tariff changes under a second Trump administration could also change the demand equation, but their impact is not yet clear. Prologis believes industrial logistics vacancy rates have peaked, and absorption rates for warehouse construction will increase as the US freight economy improves. As demand rises, rents are expected to follow, and the dynamics that drove warehouse expansion in the early 2020s haven’t changed. Booming e-commerce volumes and expectations for faster end-to-end delivery of goods and inputs are still reconfiguring distribution networks, with more logistics facilities being built closer to end consumers. The rise of manufacturing in Mexico is also shifting distribution networks and needs, with new or expanded logistics facilities popping up along the US-Mexico border. The next inflection: A turning point in demand for warehouse and logistics facilities is expected in 2025, but it depends largely on higher US manufacturing output and increased consumer confidence and spending. Still, some warehouse providers started warning potential customers of tightening capacity and higher rents in late 2024, urging them to “act now” to avoid potential space shortages and position themselves for growth. As a result, some shippers will be looking to lock in storage and logistics capacity early this year. Contact William B. Cassidy at bill.cassidy@spglobal.com.

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Industrial Real Estate News

Supply chain

US warehouse vacancies expected to fall from 2024 ‘peak’

<div class="phx-topic abstract-wrapper">It’s difficult to imagine international intermodal growing much more, if at all, on the US West Coast in 2025.</div>

It’s difficult to imagine international intermodal growing much more, if at all, on the US West Coast in 2025.

<div class="phx-topic">The big picture: International intermodal volumes grew by double-digit percentages in 2024 thanks to a surge in freight to the West Coast ports, but those higher volumes caused issues getting ocean containers out of terminals. Domestic intermodal grew at a slower rate, and while there were service disruptions to and from Southern California, the delays were not as severe as for international cargo. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5910622_0.1.png"></img></div>A look back: Thanks to strong import growth in Southern California, international intermodal demand from the US Southwest to the Midwest, South Central and Southeast surged more than 30% year over year in the first 10 months of 2024, according to the Intermodal Association of North America. Lanes that benefitted include Los Angeles to Chicago, Dallas, and Memphis. With the heightened demand, some familiar service issues resurfaced. Dwell times for ocean containers leaving the ports of Los Angeles and Long Beach by train, for example, rose to a two-year high in September, according to the Pacific Merchant Shipping Association. There were also recurring delays on transfers inland at the Port of Tacoma, specifically for Union Pacific (UP) customers. Volumes of 53-foot containers on the same lanes climbed between 8% and 12% through October, leading domestic intermodal providers to institute their first peak season surcharges in three years. While the surcharges didn’t rise to the level of $5,000 per container — as they did in 2020 and 2021 — spot market rates rose $500 to $750 per box in Los Angeles and surcharges of between $250 and $1,250 per load were assessed on select shippers who exceeded their contractual allotments. Other major developments included new expedited UP trains from Los Angeles to Chicago in March and Canadian Pacific Kansas City, CSX Transportation and Schneider National announcing a joint Mexico-US Southeast intermodal service in December. A look ahead: It’s difficult to imagine international intermodal growing much more, if at all, on the West Coast in 2025. Volumes may grow more on the East Coast, especially once the International Longshoremen’s Association agrees to a new coastwide labor deal. International intermodal rose on key inland lanes to Atlanta, Chicago, Memphis, Nashville, and the Ohio Valley, but only by about 5% to 7%, which means the upside for 2025 is higher on these lanes. Lower growth in domestic intermodal may mean volume grows again in 2025. The litmus test will be volumes in Chicago. While traffic from Los Angeles to Chicago grew, volumes from Chicago to Los Angeles and Oakland-Lathrop-Stockton were flat last year. Volumes from the Northeast, South Central and Southeast to Midwest were also flat year over year, including lanes such as Atlanta to Chicago, Dallas to Chicago, Elizabeth to Chicago, and Harrisburg to Chicago. As such, growing domestic intermodal in 2025 will necessitate winning more business on these lanes. The next inflection: The strength of the trucking market will determine whether domestic intermodal can grow in the lanes that were flat in 2024. Intermodal wins when trucks are more difficult and more expensive to procure, rail service is reliable, and environmental goals must be met. For some shippers, three out of the four of those conditions have been met, but they’re still using trucks because it’s easy to find capacity. International intermodal passed its inflection, so growing on the East Coast while maintaining current volume on the West Coast would be a win in 2025. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com.</a></div>

The big picture: International intermodal volumes grew by double-digit percentages in 2024 thanks to a surge in freight to the West Coast ports, but those higher volumes caused issues getting ocean containers out of terminals. Domestic intermodal grew at a slower rate, and while there were service disruptions to and from Southern California, the delays were not as severe as for international cargo. A look back: Thanks to strong import growth in Southern California, international intermodal demand from the US Southwest to the Midwest, South Central and Southeast surged more than 30% year over year in the first 10 months of 2024, according to the Intermodal Association of North America. Lanes that benefitted include Los Angeles to Chicago, Dallas, and Memphis. With the heightened demand, some familiar service issues resurfaced. Dwell times for ocean containers leaving the ports of Los Angeles and Long Beach by train, for example, rose to a two-year high in September, according to the Pacific Merchant Shipping Association. There were also recurring delays on transfers inland at the Port of Tacoma, specifically for Union Pacific (UP) customers. Volumes of 53-foot containers on the same lanes climbed between 8% and 12% through October, leading domestic intermodal providers to institute their first peak season surcharges in three years. While the surcharges didn’t rise to the level of $5,000 per container — as they did in 2020 and 2021 — spot market rates rose $500 to $750 per box in Los Angeles and surcharges of between $250 and $1,250 per load were assessed on select shippers who exceeded their contractual allotments. Other major developments included new expedited UP trains from Los Angeles to Chicago in March and Canadian Pacific Kansas City, CSX Transportation and Schneider National announcing a joint Mexico-US Southeast intermodal service in December. A look ahead: It’s difficult to imagine international intermodal growing much more, if at all, on the West Coast in 2025. Volumes may grow more on the East Coast, especially once the International Longshoremen’s Association agrees to a new coastwide labor deal. International intermodal rose on key inland lanes to Atlanta, Chicago, Memphis, Nashville, and the Ohio Valley, but only by about 5% to 7%, which means the upside for 2025 is higher on these lanes. Lower growth in domestic intermodal may mean volume grows again in 2025. The litmus test will be volumes in Chicago. While traffic from Los Angeles to Chicago grew, volumes from Chicago to Los Angeles and Oakland-Lathrop-Stockton were flat last year. Volumes from the Northeast, South Central and Southeast to Midwest were also flat year over year, including lanes such as Atlanta to Chicago, Dallas to Chicago, Elizabeth to Chicago, and Harrisburg to Chicago. As such, growing domestic intermodal in 2025 will necessitate winning more business on these lanes. The next inflection: The strength of the trucking market will determine whether domestic intermodal can grow in the lanes that were flat in 2024. Intermodal wins when trucks are more difficult and more expensive to procure, rail service is reliable, and environmental goals must be met. For some shippers, three out of the four of those conditions have been met, but they’re still using trucks because it’s easy to find capacity. International intermodal passed its inflection, so growing on the East Coast while maintaining current volume on the West Coast would be a win in 2025. Contact Ari Ashe at ari.ashe@spglobal.com.

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North-American rail

Intermodal providers

Surface

Strong 2024 sets international intermodal up for tough comparisons

<div class="phx-topic abstract-wrapper">Rates in the eastbound trans-Pacific are surging to peak-season levels as US retailers rush to ship merchandise before many factories in Asia close during the holiday celebrations that begin on Jan. 29.</div>

Rates in the eastbound trans-Pacific are surging to peak-season levels as US retailers rush to ship merchandise before many factories in Asia close during the holiday celebrations that begin on Jan. 29.

<div class="phx-topic">US retailers will begin the new year paying spot rates not seen since peak shipping season in August as the eastbound trans-Pacific market strengthens amid the pre-Lunar New Year rush. After successfully raising spot rates by almost $1,000 per FEU on Dec. 15, trans-Pacific carriers are pushing for a similar increase on Jan. 1 which, if successful, would lift rates to the West Coast to about $6,000 per FEU and East Coast rates to approximately $7,000 per FEU. Lunar New Year begins on Jan. 29, and US importers want their cargo on the water before factories in Asia close for the holiday, which typically lasts about two weeks. At the weekend, a half-dozen carriers had informed customers of the Jan. 1 general rate increase (GRI) in the eastbound trans-Pacific, and others are likely to follow suit by Wednesday, forwarders said. “The demand is there, at least right now,” Christian Sur, executive vice president of ocean freight contract logistics at the forwarder Unique Logistics International, told the Journal of Commerce. “Carriers are very bullish.” <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e8c13a3e-9f5a-412f-8741-adbf5e1a7779"></dynamic-object></div>Bob Fredman, principal at the consulting firm SF Global Logistics, said that despite the <a href="https://www.joc.com/article/front-loading-of-ocean-cargo-diminishing-ch-robinson-ceo-says-5907756">frontloading of cargo that has taken place in recent months</a> ahead of a <a href="https://www.joc.com/article/ila-plays-new-trump-card-in-automation-standoff-with-usmx-5905242">possible second strike by dockworkers on the East and Gulf coasts</a> and <a href="https://www.joc.com/article/us-retailers-prepare-for-new-ila-strike-threat-tariffs-on-china-imports-5822904">President-elect Donald Trump’s threatened tariffs</a> after he assumes office in January, the continued strength of the trans-Pacific market is impressive. “I’m surprised at the resilience of this market,” Fredman said. <h3>Pre-Lunar New Year rush underway </h3>Retailers have forecast a strong January before many factories in Asia close for the annual Lunar New Year holidays. The Global Port Tracker, which is published monthly by the National Retail Federation and Hackett Associates, forecasts that US imports will increase 12% next month over January 2024. The pre-Lunar New Year cargo rush is largely responsible for the dramatic increase in spot rates over the past month. The West Coast spot rate is up about 70% since late November, with the East Coast gain about 35%, according to Platts, a Journal of Commerce sister company within S&amp;P Global. Entering December, retailers were ramping up their shipments through the East and Gulf coasts ahead of a threatened second strike by the International Longshoremen’s Association (ILA) that could begin on Jan. 15. Some sources say a second stoppage could last a week or longer, but it appears whatever strike-related urgency retailers had earlier this month is no longer a major operational factor for them. “I’m not seeing any real panic by retailers,” said Kurt McElroy, executive vice president at the forwarder Kerry Apex. Retailers who normally ship through East and Gulf coast ports are continuing to do so because it will be less costly for their merchandise to sit idle on vessels for a week or two during a strike than to route the shipments through the West Coast and pay combined ocean/inland point intermodal (IPI) rates approaching $10,000, Sur said. “No one is doing anything different if the ILA strike happens or not,” he said. Because the threatened ILA strike and the likely Trump tariffs are no longer moving the market in a significant way, all indicators point to the fact that the rush to get shipments from Asian load ports by the end of January is mostly linked to Lunar New Year, forwarders said. “The pre-Chinese New Year cargo rush is real from the perspective of the retailers,” Sur said. <h3>‘Bullet’ rates retreat </h3>Another indicator of the trans-Pacific market strength is that the trade lane-specific special commodity and so-called ad hoc “bullet” rates that were prevalent earlier in the fall have all but disappeared, said McElroy. “Carriers are letting the East Coast special commodity rates expire,” he said. “The West Coast still has some, but they’re closer to the spot rates than they were.” And in yet another sign of the market’s strength, most carriers are honoring their commitments to importers and forwarders to ship under the fixed-rate allocations in their 2024–25 service contracts. But once the minimum quantity commitments (MQCs) are reached, customers must pay the current spot or freight-all-kinds (FAK) rate. “There are no deals out there,” McElroy said. “If you need more space, you will have to pay the price.” A number of carriers signaled their intention to implement another GRI for Jan. 15, but a carrier source told the Journal of Commerce the prospect of that increase sticking before cargo volumes drop steeply during the Lunar New Year lull is doubtful. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>. </div>

US retailers will begin the new year paying spot rates not seen since peak shipping season in August as the eastbound trans-Pacific market strengthens amid the pre-Lunar New Year rush. After successfully raising spot rates by almost $1,000 per FEU on Dec. 15, trans-Pacific carriers are pushing for a similar increase on Jan. 1 which, if successful, would lift rates to the West Coast to about $6,000 per FEU and East Coast rates to approximately $7,000 per FEU. Lunar New Year begins on Jan. 29, and US importers want their cargo on the water before factories in Asia close for the holiday, which typically lasts about two weeks. At the weekend, a half-dozen carriers had informed customers of the Jan. 1 general rate increase (GRI) in the eastbound trans-Pacific, and others are likely to follow suit by Wednesday, forwarders said. “The demand is there, at least right now,” Christian Sur, executive vice president of ocean freight contract logistics at the forwarder Unique Logistics International, told the Journal of Commerce. “Carriers are very bullish.” Bob Fredman, principal at the consulting firm SF Global Logistics, said that despite the frontloading of cargo that has taken place in recent months ahead of a possible second strike by dockworkers on the East and Gulf coasts and President-elect Donald Trump’s threatened tariffs after he assumes office in January, the continued strength of the trans-Pacific market is impressive. “I’m surprised at the resilience of this market,” Fredman said. Pre-Lunar New Year rush underway Retailers have forecast a strong January before many factories in Asia close for the annual Lunar New Year holidays. The Global Port Tracker, which is published monthly by the National Retail Federation and Hackett Associates, forecasts that US imports will increase 12% next month over January 2024. The pre-Lunar New Year cargo rush is largely responsible for the dramatic increase in spot rates over the past month. The West Coast spot rate is up about 70% since late November, with the East Coast gain about 35%, according to Platts, a Journal of Commerce sister company within S&P Global. Entering December, retailers were ramping up their shipments through the East and Gulf coasts ahead of a threatened second strike by the International Longshoremen’s Association (ILA) that could begin on Jan. 15. Some sources say a second stoppage could last a week or longer, but it appears whatever strike-related urgency retailers had earlier this month is no longer a major operational factor for them. “I’m not seeing any real panic by retailers,” said Kurt McElroy, executive vice president at the forwarder Kerry Apex. Retailers who normally ship through East and Gulf coast ports are continuing to do so because it will be less costly for their merchandise to sit idle on vessels for a week or two during a strike than to route the shipments through the West Coast and pay combined ocean/inland point intermodal (IPI) rates approaching $10,000, Sur said. “No one is doing anything different if the ILA strike happens or not,” he said. Because the threatened ILA strike and the likely Trump tariffs are no longer moving the market in a significant way, all indicators point to the fact that the rush to get shipments from Asian load ports by the end of January is mostly linked to Lunar New Year, forwarders said. “The pre-Chinese New Year cargo rush is real from the perspective of the retailers,” Sur said. ‘Bullet’ rates retreat Another indicator of the trans-Pacific market strength is that the trade lane-specific special commodity and so-called ad hoc “bullet” rates that were prevalent earlier in the fall have all but disappeared, said McElroy. “Carriers are letting the East Coast special commodity rates expire,” he said. “The West Coast still has some, but they’re closer to the spot rates than they were.” And in yet another sign of the market’s strength, most carriers are honoring their commitments to importers and forwarders to ship under the fixed-rate allocations in their 2024–25 service contracts. But once the minimum quantity commitments (MQCs) are reached, customers must pay the current spot or freight-all-kinds (FAK) rate. “There are no deals out there,” McElroy said. “If you need more space, you will have to pay the price.” A number of carriers signaled their intention to implement another GRI for Jan. 15, but a carrier source told the Journal of Commerce the prospect of that increase sticking before cargo volumes drop steeply during the Lunar New Year lull is doubtful. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .

Container Shipping News

Port News

Container lines

Trans-Pacific

North American ports

Trans-Pacific spot rates on the rise amid pre-Lunar New Year cargo bump

<div class="phx-topic abstract-wrapper">Most US retailers say they have frontloaded sufficient inventory from Asia to get them through the first quarter, but planning import volumes and supply chains beyond that point remains problematic. </div>

Most US retailers say they have frontloaded sufficient inventory from Asia to get them through the first quarter, but planning import volumes and supply chains beyond that point remains problematic.

<div class="phx-topic"><div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5910621_0.1.png"></img></div>The big picture: The eastbound trans-Pacific rebounded in a big way last year, and although growth is expected to moderate in 2025, frontloading of spring merchandise ahead of tariffs threatened by US President-elect Donald Trump and an early Lunar New Year should keep cargo volumes and spot rates elevated into the first quarter. Carrier on-time performance in the busiest US trade lane continued to languish throughout 2024, with no noticeable improvements foreseen as geopolitical turmoil continues to disrupt global shipping patterns. A look back: US importers began to frontload fall and holiday shipments in June, two months earlier than usual, and the peak shipping season in the eastbound trans-Pacific continued through the end of the year, two months later than usual. The extended peak season occurred as importers rushed to get ahead of the initial expiration of the International Longshoremen’s Association (ILA) contract covering dockworkers up and down the East and Gulf coasts in October, the early Lunar New Year on Jan. 29, 2025, and the threat of tariffs by the incoming Trump administration. As a result, US imports from Asia spiked 17.7% in the first 11 months of the year, according to PIERS, a sister product of the Journal of Commerce within S&amp;P Global. In turn, spot rates increased to near-pandemic levels and remained elevated through November and into December. Short-term pricing from Asia to the US West Coast averaged $4,626 per FEU through mid-December, more than triple the average rate of $1,519 per FEU recorded for the full year in 2023, according to Platts, also part of S&amp;P Global. And with inflation steadily declining and interest rates edging lower following rate cuts by the Federal Reserve, consumer demand was expected to remain at record levels through the end of the year. A look ahead: Retailers and other importers entered the new year facing the triple threat of a possible second strike by the ILA, with its extended contract set to expire on Jan. 15, damaging tariffs on China, Mexico and Canada threatened by the new administration and the early start to Lunar New Year, when many factories in Asia close down for a couple of weeks. These events, which prompted continued frontloading of imports, were projected to keep import volumes elevated at least through January. According to a December forecast from the National Retail Federation (NRF), US imports will rise 12% year over year in January, fall 4.1% in February as factories in Asia close for Lunar New Year, and jump 12.7% in March, when factories return to full production. Carriers and their customers anticipate that the hostilities in the Red Sea that have steered shipping away from the Suez Canal to the much longer and costlier route around the southern tip of Africa for more than a year will continue for some time to come, and they have adjusted their supply chains accordingly. The next inflection: The big unknown for the trans-Pacific in 2025 is Trump’s threatened tariffs, which are steeped in uncertainties. Will there be an across-the-board tariff on US imports from all countries, and even higher tariffs on imports from key trading partners like China, Mexico and Canada? Will the tariffs become effective on day one of the new administration, or will they be phased in over a period of several months? Most retailers say they have frontloaded sufficient inventory to get them through the first quarter, but planning import volumes and supply chains beyond that point remains problematic. email: <a href="bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a> </div>

The big picture: The eastbound trans-Pacific rebounded in a big way last year, and although growth is expected to moderate in 2025, frontloading of spring merchandise ahead of tariffs threatened by US President-elect Donald Trump and an early Lunar New Year should keep cargo volumes and spot rates elevated into the first quarter. Carrier on-time performance in the busiest US trade lane continued to languish throughout 2024, with no noticeable improvements foreseen as geopolitical turmoil continues to disrupt global shipping patterns. A look back: US importers began to frontload fall and holiday shipments in June, two months earlier than usual, and the peak shipping season in the eastbound trans-Pacific continued through the end of the year, two months later than usual. The extended peak season occurred as importers rushed to get ahead of the initial expiration of the International Longshoremen’s Association (ILA) contract covering dockworkers up and down the East and Gulf coasts in October, the early Lunar New Year on Jan. 29, 2025, and the threat of tariffs by the incoming Trump administration. As a result, US imports from Asia spiked 17.7% in the first 11 months of the year, according to PIERS, a sister product of the Journal of Commerce within S&P Global. In turn, spot rates increased to near-pandemic levels and remained elevated through November and into December. Short-term pricing from Asia to the US West Coast averaged $4,626 per FEU through mid-December, more than triple the average rate of $1,519 per FEU recorded for the full year in 2023, according to Platts, also part of S&P Global. And with inflation steadily declining and interest rates edging lower following rate cuts by the Federal Reserve, consumer demand was expected to remain at record levels through the end of the year. A look ahead: Retailers and other importers entered the new year facing the triple threat of a possible second strike by the ILA, with its extended contract set to expire on Jan. 15, damaging tariffs on China, Mexico and Canada threatened by the new administration and the early start to Lunar New Year, when many factories in Asia close down for a couple of weeks. These events, which prompted continued frontloading of imports, were projected to keep import volumes elevated at least through January. According to a December forecast from the National Retail Federation (NRF), US imports will rise 12% year over year in January, fall 4.1% in February as factories in Asia close for Lunar New Year, and jump 12.7% in March, when factories return to full production. Carriers and their customers anticipate that the hostilities in the Red Sea that have steered shipping away from the Suez Canal to the much longer and costlier route around the southern tip of Africa for more than a year will continue for some time to come, and they have adjusted their supply chains accordingly. The next inflection: The big unknown for the trans-Pacific in 2025 is Trump’s threatened tariffs, which are steeped in uncertainties. Will there be an across-the-board tariff on US imports from all countries, and even higher tariffs on imports from key trading partners like China, Mexico and Canada? Will the tariffs become effective on day one of the new administration, or will they be phased in over a period of several months? Most retailers say they have frontloaded sufficient inventory to get them through the first quarter, but planning import volumes and supply chains beyond that point remains problematic. email: bill.mongelluzzo@spglobal.com

Forwarding

Tariffs, ILA tension, early Lunar New Year boost Q1 trans-Pacific forecast

<div class="phx-topic abstract-wrapper"> The considerable intermodal ocean volumes that ordinarily would have moved in 2025 have likely been pulled forward into 2024, writes analyst Larry Gross. </div>

The considerable intermodal ocean volumes that ordinarily would have moved in 2025 have likely been pulled forward into 2024, writes analyst Larry Gross.

<div class="phx-topic">Last year proved to be a strong but turbulent year for North American intermodal. The sector was the recipient of a potent stew of exterior events, some entirely foreseeable and others truly of the “black swan” variety. Overall activity was up significantly, with North American intermodal originations growing 7.5% year over year through the first week of December, according to data from the Association of American Railroads (AAR).<div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5910621_0.1.png"></img></div>The horsepower behind the gain came from the international side of the market. In the first 10 months of 2024, North American revenue movements of ISO containers jumped 15% above prior year, compared with a 3.1% gain in domestic containers and trailers, according to Intermodal Association of North America (IANA) data.A mix of factors drove the gains in international intermodal, including strong retail activity that drove overall import levels and US West Coast ports gaining import share as the long-term trend toward East Coast routings went into reverse. One reason was clearly foreseeable: labor instability on the East and Gulf coasts that culminated in a brief strike that, while suspended for the moment, remains an issue for 2025. But another big reason was the closing of the Suez Canal routing due to Houthi rebels, some 1,500 kilometers distant, firing missiles at passing container ships in the Red Sea. The required routing around Africa added days and dollars to East Coast imports, changing the calculus for shippers choosing between the East and West coasts. Any share shift from east to west constitutes an intermodal tailwind, as the lengths of haul to interior points from the West Coast are much longer and more intermodal-friendly than the more truck-oriented East Coast ports. Undoubtedly, another source of strength was cargo moving earlier than normal to beat or meet congestion, delays, and now, tariffs. This latter, combined with the looming and likely resumption of an East Coast shutdown, will ensure that volume will stay strong through the end of the year. By contrast, the domestic intermodal picture has been much more restrained. The domestic truck market that is a dominant force governing intermodal activity remained difficult, with slow growth in demand and too much capacity. The for-hire carriers that constitute the primary competition for intermodal were further stymied by freight shifting to private fleets. From a geographic perspective, the US was the big winner in 2024, as Canadian markets were badly hurt by repeated labor disruptions. Through October, intra-US activity jumped 9.8%, intra-Canada loadings rose just 4.8% and movements crossing the Canada-US border slipped 2.9%. The Mexico market was extremely strong, with total activity surging by more than 30%, propelled by huge gains in the small but fast-growing domestic sector. However, this strength did not extend to the Mexico-US cross-border market, which has seen a decline year-to-date. The intermodal system has handled the surge reasonably well, without experiencing the service disruptions that were widespread during the COVID-19 pandemic. As the year came to a close, average intermodal train speeds were running a bit below normal and container dwell times in the Los Angeles basin had been stretched. But the number of trains being held in terminals awaiting crews or locomotives was actually lower than normal, indicating that supplies of these critical inputs were more than adequate. The outlook for 2025 appears to be somewhat constrained, particularly on the international side. The considerable volumes that ordinarily would have moved next year have likely been pulled forward into 2024. This somewhat artificial “sugar high” will eventually have to be repaid. In addition, the huge growth differential between international and domestic in 2024 will not endure. The gap will need to be closed by some combination of slowing international volumes and accelerating domestic shipments. The supply-demand balance for domestic truckload has been improving very slowly. Demand has been rising, a trend that is expected to continue, but a dramatic upturn does not appear to be in the cards. Many of the proposed actions that may occur under a second Trump administration could prove to be inflationary, including higher tariffs and large-scale deportation of migrants, many of whom are currently contributing to the workforce. The disruption could be considerable, and in the near term, this poses more of a downside risk than upside potential for 2025. However, the market share shift from for-hire to privates appears to have ended. This, plus a continued slow exiting of capacity, should help shore up trucking rates. The improving situation in truckload will provide an opportunity for domestic intermodal. Railroads have lost considerable share since 2018 due to the implementation of precision scheduled railroading, followed by service disruptions and capacity crises during the pandemic. A small green shoot was spotted in the third quarter of 2024, as domestic intermodal’s share of US long-haul truck movements edged up to 6.1% after spending over a year at 6.0%. This may be a harbinger of continued growth but could also just be noise in the numbers. Time will tell. Intermodal activity in the third quarter was just about equal to the average volume per quarter that was seen in 2017. In other words, the sector has seen zero growth in six years, and those who ascribe the current slow growth to near-term market conditions are mistaken. This is a long-term problem. As such, intermodal needs a competitive strategy that will enable it to thrive in both flush times and lean times. Getting service levels in order was a necessary first step, but by itself, this will be insufficient to drive growth. Further adjustments in the price, service and accessibility equation will be required. Contact Larry Gross at <a href="lgross@intermodalindepth.com ">lgross@intermodalindepth.com</a>.</div>

Last year proved to be a strong but turbulent year for North American intermodal. The sector was the recipient of a potent stew of exterior events, some entirely foreseeable and others truly of the “black swan” variety. Overall activity was up significantly, with North American intermodal originations growing 7.5% year over year through the first week of December, according to data from the Association of American Railroads (AAR). The horsepower behind the gain came from the international side of the market. In the first 10 months of 2024, North American revenue movements of ISO containers jumped 15% above prior year, compared with a 3.1% gain in domestic containers and trailers, according to Intermodal Association of North America (IANA) data. A mix of factors drove the gains in international intermodal, including strong retail activity that drove overall import levels and US West Coast ports gaining import share as the long-term trend toward East Coast routings went into reverse. One reason was clearly foreseeable: labor instability on the East and Gulf coasts that culminated in a brief strike that, while suspended for the moment, remains an issue for 2025. But another big reason was the closing of the Suez Canal routing due to Houthi rebels, some 1,500 kilometers distant, firing missiles at passing container ships in the Red Sea. The required routing around Africa added days and dollars to East Coast imports, changing the calculus for shippers choosing between the East and West coasts. Any share shift from east to west constitutes an intermodal tailwind, as the lengths of haul to interior points from the West Coast are much longer and more intermodal-friendly than the more truck-oriented East Coast ports. Undoubtedly, another source of strength was cargo moving earlier than normal to beat or meet congestion, delays, and now, tariffs. This latter, combined with the looming and likely resumption of an East Coast shutdown, will ensure that volume will stay strong through the end of the year. By contrast, the domestic intermodal picture has been much more restrained. The domestic truck market that is a dominant force governing intermodal activity remained difficult, with slow growth in demand and too much capacity. The for-hire carriers that constitute the primary competition for intermodal were further stymied by freight shifting to private fleets. From a geographic perspective, the US was the big winner in 2024, as Canadian markets were badly hurt by repeated labor disruptions. Through October, intra-US activity jumped 9.8%, intra-Canada loadings rose just 4.8% and movements crossing the Canada-US border slipped 2.9%. The Mexico market was extremely strong, with total activity surging by more than 30%, propelled by huge gains in the small but fast-growing domestic sector. However, this strength did not extend to the Mexico-US cross-border market, which has seen a decline year-to-date. The intermodal system has handled the surge reasonably well, without experiencing the service disruptions that were widespread during the COVID-19 pandemic. As the year came to a close, average intermodal train speeds were running a bit below normal and container dwell times in the Los Angeles basin had been stretched. But the number of trains being held in terminals awaiting crews or locomotives was actually lower than normal, indicating that supplies of these critical inputs were more than adequate. The outlook for 2025 appears to be somewhat constrained, particularly on the international side. The considerable volumes that ordinarily would have moved next year have likely been pulled forward into 2024. This somewhat artificial “sugar high” will eventually have to be repaid. In addition, the huge growth differential between international and domestic in 2024 will not endure. The gap will need to be closed by some combination of slowing international volumes and accelerating domestic shipments. The supply-demand balance for domestic truckload has been improving very slowly. Demand has been rising, a trend that is expected to continue, but a dramatic upturn does not appear to be in the cards. Many of the proposed actions that may occur under a second Trump administration could prove to be inflationary, including higher tariffs and large-scale deportation of migrants, many of whom are currently contributing to the workforce. The disruption could be considerable, and in the near term, this poses more of a downside risk than upside potential for 2025. However, the market share shift from for-hire to privates appears to have ended. This, plus a continued slow exiting of capacity, should help shore up trucking rates. The improving situation in truckload will provide an opportunity for domestic intermodal. Railroads have lost considerable share since 2018 due to the implementation of precision scheduled railroading, followed by service disruptions and capacity crises during the pandemic. A small green shoot was spotted in the third quarter of 2024, as domestic intermodal’s share of US long-haul truck movements edged up to 6.1% after spending over a year at 6.0%. This may be a harbinger of continued growth but could also just be noise in the numbers. Time will tell. Intermodal activity in the third quarter was just about equal to the average volume per quarter that was seen in 2017. In other words, the sector has seen zero growth in six years, and those who ascribe the current slow growth to near-term market conditions are mistaken. This is a long-term problem. As such, intermodal needs a competitive strategy that will enable it to thrive in both flush times and lean times. Getting service levels in order was a necessary first step, but by itself, this will be insufficient to drive growth. Further adjustments in the price, service and accessibility equation will be required. Contact Larry Gross at lgross@intermodalindepth.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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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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