<div class="phx-topic abstract-wrapper">Vincent Clerc instead expects the ILA and maritime employers to extend the current deal while talks continue rather than shutting down terminals when the contract expires at the end of September.</div>

Vincent Clerc instead expects the ILA and maritime employers to extend the current deal while talks continue rather than shutting down terminals when the contract expires at the end of September.

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<div>A strike by dockworkers at marine terminals along the US East and Gulf coasts is “highly unlikely,” Maersk CEO Vincent Clerc said Wednesday. The existing contract between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) expires Sept. 30. ILA leadership has vowed to strike if a new deal is not inked by then. “I look at the likelihood of having strong industrial action as in a strike as being highly unlikely,” Clerc told analysts during Maersk’s second-quarter earnings call. “It is our expectation that when the contract expires in September there may be some extension of...

A strike by dockworkers at marine terminals along the US East and Gulf coasts is “highly unlikely,” Maersk CEO Vincent Clerc said Wednesday. The existing contract between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) expires Sept. 30. ILA leadership has vowed to strike if a new deal is not inked by then. “I look at the likelihood of having strong industrial action as in a strike as being highly unlikely,” Clerc told analysts during Maersk’s second-quarter earnings call. “It is our expectation that when the contract expires in September there may be some extension of the contract as there is a lot that still needs to be negotiated, but I hope we can get to be seeing eye-to-eye with the ILA before we [see a strike],” he added. Clerc played down fears of port shutdowns across the Eastern seaboard and Gulf Coast despite a ratcheting up of tensions by the ILA, which last weekend warned members to prepare for a strike . ILA President Harold Daggett said in a statement that the union’s 45,000 members “are ready to hit the streets if our demands are not met.” Negotiations are ongoing between the ILA and the USMX over a new master contract, covering workers at ports from Maine to Texas. The ILA is believed to be seeking an almost 80% wage increase over the life of its next six-year contract with maritime employers. “We have had lockdowns and strikes in relation to negotiations on the West Coast, but that has not been the case on the East Coast,” Clerc said, adding that a strike would have serious consequences. “If a strike were to happen, the impact could be quite significant in terms of the congestion it would create [and] the delays and the absorption of capacity it would suddenly create would be a big bottleneck in a well-traveled route,” he said. Christian Roeloffs, co-founder and CEO of equipment visibility platform Container xChange, said the labor negotiations added another layer of potential volatility to US trade lanes. “Retailers have been preparing for the peak season since early 2024, aiming to avoid stock shortages, and now that we’re entering this busy period, the focus will be on understanding the true demand dynamics,” Roeloffs said in a market update Wednesday. Contact Greg Knowler at greg.knowler@spglobal.com .

Container Shipping News

North American ports

Longshore labor

Maritime

Maersk CEO says port strike along US East, Gulf coasts is ‘highly unlikely’

<div class="phx-topic abstract-wrapper">A calendar quirk is causing consternation for importers of non-Chinese goods with long lead times who believed they had avoided the first salvo of US tariffs by loading their cargo before the prescribed “load-by” date and are now facing unexpected costs.</div>

A calendar quirk is causing consternation for importers of non-Chinese goods with long lead times who believed they had avoided the first salvo of US tariffs by loading their cargo before the prescribed “load-by” date and are now facing unexpected costs.

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<div class="phx-topic">Some US importers with long ocean transit times, including those who move cargo through transshipment hubs, will be on the hook for the 10% US tariffs now in place on non-Chinese goods even if those goods beat an April 5 load-by deadline to avoid the tariffs. That’s because of a shorter-than-usual length of time set by the Trump administration encompassing the cutoff dates between when goods needed to depart their origin ports and arrive at destination ports. And that scheduling quirk is causing consternation for importers who believed they had avoided the first salvo of tariffs by loading their cargo before the prescribed date and are now facing unexpected costs. Don Pisano, president of American Coffee Corp., said shipments from Southeast Asia to US Gulf ports regularly take 60 days, longer than the gap between the “load-by” April 5 deadline set by the White House and the May 27 arrival date set by US Customs and Border Protection (CBP) in which the goods must be “entered for consumption.” “It seems completely arbitrary and punitive,” Pisano told the Journal of Commerce. Pisano pointed to another example on a different lane, a containerized shipment of coffee that left Brazil’s Port of Santos in late March on a service that went west through the Panama Canal, to Shanghai and then to the US West Coast. “That’s not arriving until May 29, and we’ll have to pay $20,000 in tariffs because [the carrier] routed it through Shanghai,” he said. Further, shippers whose goods were transshipped, with the final leg departing after April 5, will also be subject to the 10% US tariffs, even if the cargo shipped from origin prior to April 5. In many cases, the decision to transship is out of the control of importers. <h3>Delay in ‘end-date’ guidance </h3>Gabrielle Griffith, a director at BPE Global, a trade compliance consulting firm, said an end date for the in-transit exemption was not initially specified <a href="https://www.joc.com/article/trump-announces-10-across-the-board-tariffs-on-all-us-imports-5975639">when the reciprocal tariffs were imposed April 2 through President Donald Trump’s executive order</a>. The end-date guidance came two days later, on April 4, in a separate message in the Cargo Systems Messaging Service (CSMS), a channel CBP uses to communicate with the trade community. Griffith said the April 4 message from CBP added the May 27 cutoff in order to, in the agency’s words, “prevent abuse of exemption,” and was reiterated by CBP on April 8. Pisano’s contention is that most goods aiming to beat the April 5 deadline were loaded or on the water prior to either of those guidance messages being issued, since importers were racing to beat the deadline. Griffith said the end-date provision aligns with prior CBP practices for tariff exclusions but differs from earlier executive orders issued under the International Emergency Economic Powers Act (IEPPA) that lacked time limits. The end-date was not specified in Trump’s executive order, but CBP has some leeway to interpret the application of that order. <h3>Transshipment confusion </h3>The transshipment issue is potentially more vexing for importers, since CBP’s original guidance on April 4 wasn’t clear, according to a range of trade compliance experts. At issue is whether reciprocal tariffs would be exempted if goods departed their origin port before April 5, or if transshipped, departed the final leg of their ocean journey prior to April 5. Guidance issued by CBP on May 15, which included a set of frequently asked questions (FAQs), included details on how transshipment would impact tariff exemptions. The guidance painted a scenario where prior to the cutoff date for the reciprocal tariff in-transit provision, US-bound cargo is loaded onto a vessel destined for a foreign port prior to shipment to the US. At that foreign port, after April 5, the cargo is transferred onto a different vessel destined for the US. “The cargo in this scenario does not qualify for the in-transit exception for reciprocal tariffs because the US bound cargo was laden onto a vessel destined for the US after the cutoff date irrespective of when it departed from the original port of lading,” CBP wrote, responding to its own rhetorical question in the guidance. A trade attorney who did not want to be identified told the Journal of Commerce that the May 15 guidance on transshipment is “inconsistent with previous guidance we received from CBP on the same question, so we are trying to reconcile this.” The fact that guidance on transshipment came six weeks after the initial executive order will now impact importers for whom it wasn’t clear that such a routing wouldn’t be exempted, Pisano said. “It took them six weeks to come up with the wrong conclusion,” he said. Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com.</a></div>

Some US importers with long ocean transit times, including those who move cargo through transshipment hubs, will be on the hook for the 10% US tariffs now in place on non-Chinese goods even if those goods beat an April 5 load-by deadline to avoid the tariffs. That’s because of a shorter-than-usual length of time set by the Trump administration encompassing the cutoff dates between when goods needed to depart their origin ports and arrive at destination ports. And that scheduling quirk is causing consternation for importers who believed they had avoided the first salvo of tariffs by loading their cargo before the prescribed date and are now facing unexpected costs. Don Pisano, president of American Coffee Corp., said shipments from Southeast Asia to US Gulf ports regularly take 60 days, longer than the gap between the “load-by” April 5 deadline set by the White House and the May 27 arrival date set by US Customs and Border Protection (CBP) in which the goods must be “entered for consumption.” “It seems completely arbitrary and punitive,” Pisano told the Journal of Commerce. Pisano pointed to another example on a different lane, a containerized shipment of coffee that left Brazil’s Port of Santos in late March on a service that went west through the Panama Canal, to Shanghai and then to the US West Coast. “That’s not arriving until May 29, and we’ll have to pay $20,000 in tariffs because [the carrier] routed it through Shanghai,” he said. Further, shippers whose goods were transshipped, with the final leg departing after April 5, will also be subject to the 10% US tariffs, even if the cargo shipped from origin prior to April 5. In many cases, the decision to transship is out of the control of importers. Delay in ‘end-date’ guidance Gabrielle Griffith, a director at BPE Global, a trade compliance consulting firm, said an end date for the in-transit exemption was not initially specified when the reciprocal tariffs were imposed April 2 through President Donald Trump’s executive order . The end-date guidance came two days later, on April 4, in a separate message in the Cargo Systems Messaging Service (CSMS), a channel CBP uses to communicate with the trade community. Griffith said the April 4 message from CBP added the May 27 cutoff in order to, in the agency’s words, “prevent abuse of exemption,” and was reiterated by CBP on April 8. Pisano’s contention is that most goods aiming to beat the April 5 deadline were loaded or on the water prior to either of those guidance messages being issued, since importers were racing to beat the deadline. Griffith said the end-date provision aligns with prior CBP practices for tariff exclusions but differs from earlier executive orders issued under the International Emergency Economic Powers Act (IEPPA) that lacked time limits. The end-date was not specified in Trump’s executive order, but CBP has some leeway to interpret the application of that order. Transshipment confusion The transshipment issue is potentially more vexing for importers, since CBP’s original guidance on April 4 wasn’t clear, according to a range of trade compliance experts. At issue is whether reciprocal tariffs would be exempted if goods departed their origin port before April 5, or if transshipped, departed the final leg of their ocean journey prior to April 5. Guidance issued by CBP on May 15, which included a set of frequently asked questions (FAQs), included details on how transshipment would impact tariff exemptions. The guidance painted a scenario where prior to the cutoff date for the reciprocal tariff in-transit provision, US-bound cargo is loaded onto a vessel destined for a foreign port prior to shipment to the US. At that foreign port, after April 5, the cargo is transferred onto a different vessel destined for the US. “The cargo in this scenario does not qualify for the in-transit exception for reciprocal tariffs because the US bound cargo was laden onto a vessel destined for the US after the cutoff date irrespective of when it departed from the original port of lading,” CBP wrote, responding to its own rhetorical question in the guidance. A trade attorney who did not want to be identified told the Journal of Commerce that the May 15 guidance on transshipment is “inconsistent with previous guidance we received from CBP on the same question, so we are trying to reconcile this.” The fact that guidance on transshipment came six weeks after the initial executive order will now impact importers for whom it wasn’t clear that such a routing wouldn’t be exempted, Pisano said. “It took them six weeks to come up with the wrong conclusion,” he said. Contact Eric Johnson at eric.johnson@spglobal.com.

Transport, Trade and Regulation News

Trans-Pacific

Supply chain

Scheduling linked to 10% tariffs causing confusion, angst for US importers

<div class="phx-topic abstract-wrapper">Hapag-Lloyd is betting it can extract economic value for itself through smart containers in the form of improved fleet utilization, thereby de-risking the uptake – or lack thereof – from customers.</div>

Hapag-Lloyd is betting it can extract economic value for itself through smart containers in the form of improved fleet utilization, thereby de-risking the uptake – or lack thereof – from customers.

<div class="phx-topic">Hapag-Lloyd is testing whether a major investment in container sensors deployed on its two-million-unit container fleet can take cargo visibility, a longtime source of frustration to shippers, to a new level. That bet comes as container lines continue to struggle to commercialize such investments by charging shippers for more accurate and continuous location and condition data. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6009190_0.1.jpg"></img></div>“The smart container industry has faced challenges in scaling due to [the] lack of customer's willingness to pay for the additional service, and carriers’ difficulties in justifying the internal [return on investment],” said a study by consultancy Roland Burger published in November. Hapag-Lloyd is trying to change this paradigm by betting it can extract economic value for itself through smart containers in the form of improved fleet utilization, thereby de-risking the uptake – or lack thereof – from customers. “What carriers do with visibility operationally will justify their investment initially, enabling the subsequent pursuit of the other commercial use case categories,” said Erik Lund, managing director for maritime and logistics at Nexxiot, which along with Orbcomm supplies the IoT devices used by Hapag-Lloyd. The ROI for a carrier, excluding revenue from customers, can come from multiple sources, including reducing empty repositioning costs if boxes can be more easily redirected to the next user versus having to flow through a depot. A carrier can also use smart containers to better position empties where they expect demand to materialize, thus being in a better place to accept spot bookings, theoretically at a more competitive cost than other lines because they don't need to move that empty after receiving a booking request. “If I have much more accurate information about where my empty is I am going to get greater utilization out of my container fleet overall,” said Curtis Spencer, CEO of Bloodhound Tracking Devices, a subscription-based IoT device provider to the industry. But even if an acceptable return on investment is achieved through improved asset utilization, it still leaves unanswered the question of whether smart containers can produce a breakthrough in visibility valuable enough for shippers that significant numbers would be willing to pay for it. The question boils down to this: Will a continuously emitting IoT device attached to the outside of a container create an accurate and consistent enough data flow that it can drive more meaningful decisions versus milestone-based visibility methods long criticized for inaccurate and incomplete data? With Hapag-Lloyd having installed tracking devices on 90% of its container fleet (with a goal to reach 100% “shortly”), and this summer rolling out a predictive ETA service for shippers, the premise will soon be put to the test. Even if the data is good enough, scale, at least currently, is still a limitation. Hapag-Lloyd is only one carrier, with Zim Integrated Shipping Services and Ocean Network Express having announced similar plans. And standards don’t yet exist for smart containers to transmit while aboard the ships of alliance partners, according to the Digital Container Shipping Association (DCSA). Other carriers such as Mediterranean Shipping Co. (MSC), the world’s largest, are using smart containers selectively in reefer and to combat drug smuggling in the wake of the 2019 cocaine seizure aboard an MSC ship in Philadelphia. MSC's use of Traxens is also available for shippers on an ad hoc basis if they want continuous premium tracking, but it's used sparingly. <h3>Lack of ‘transformative outcomes’ </h3>Ocean visibility made progress in recent years with the advent of niche specialists like project44 and FourKites, which aggregate data feeds from multiple sources for customers. But both companies have recently appeared to de-emphasize visibility as their core product propositions amid larger questions about overall value creation. As previously reported by the Journal of Commerce, the more than $1.4 billion of venture capital invested into freight visibility providers over the last five years has not translated into transformative outcomes for users. A different approach – sensors attached to the cargo or the pallet inside the container – has found a market in shipper-specific scenarios for high-value or sensitive cargoes, including electronics and pharma, but faces a reverse logistics challenge in needing to be removed and re-delivered after each transit. “We have not seen a mass scale adoption for broader logistics [beneficial cargo owners] use cases,” said Nexxiot’s Lund. “We’re still at the foot of the mountain as an industry.” According to Hapag-Lloyd, its product will be differentiated in a few ways. “The material difference lies in two main dimensions: first, our inland ETA prediction will use the container GPS data – which is available independent from which route the container is travelling on or which trucker/rail company is currently moving the box,” said Olaf Habert, who leads the program at Hapag-Lloyd. “Second, we are deploying purpose-built prediction algorithms for container transportation across all modes of transport,” Habert added. “Therefore, we are targeting for our ETA prediction for inland destinations to be accurate within a couple of hours.” The bigger question is whether, via smart containers, ocean carriers are able break into what for them has been an elusive value-added logistics market. Maersk has embraced that strategy fully, with mixed results, through its integrator strategy. According to the Roland Burger study, “The shipping industry, characterized by highly volatile freight rates, has struggled to monetize value-added services, often absorbing their costs into global ocean freight.” Will IoT containers meet the same fate? Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com.</a>Senior Technology Editor Eric Johnson contributed to this analysis. </div>

Hapag-Lloyd is testing whether a major investment in container sensors deployed on its two-million-unit container fleet can take cargo visibility, a longtime source of frustration to shippers, to a new level. That bet comes as container lines continue to struggle to commercialize such investments by charging shippers for more accurate and continuous location and condition data. “The smart container industry has faced challenges in scaling due to [the] lack of customer's willingness to pay for the additional service, and carriers’ difficulties in justifying the internal [return on investment],” said a study by consultancy Roland Burger published in November. Hapag-Lloyd is trying to change this paradigm by betting it can extract economic value for itself through smart containers in the form of improved fleet utilization, thereby de-risking the uptake – or lack thereof – from customers. “What carriers do with visibility operationally will justify their investment initially, enabling the subsequent pursuit of the other commercial use case categories,” said Erik Lund, managing director for maritime and logistics at Nexxiot, which along with Orbcomm supplies the IoT devices used by Hapag-Lloyd. The ROI for a carrier, excluding revenue from customers, can come from multiple sources, including reducing empty repositioning costs if boxes can be more easily redirected to the next user versus having to flow through a depot. A carrier can also use smart containers to better position empties where they expect demand to materialize, thus being in a better place to accept spot bookings, theoretically at a more competitive cost than other lines because they don't need to move that empty after receiving a booking request. “If I have much more accurate information about where my empty is I am going to get greater utilization out of my container fleet overall,” said Curtis Spencer, CEO of Bloodhound Tracking Devices, a subscription-based IoT device provider to the industry. But even if an acceptable return on investment is achieved through improved asset utilization, it still leaves unanswered the question of whether smart containers can produce a breakthrough in visibility valuable enough for shippers that significant numbers would be willing to pay for it. The question boils down to this: Will a continuously emitting IoT device attached to the outside of a container create an accurate and consistent enough data flow that it can drive more meaningful decisions versus milestone-based visibility methods long criticized for inaccurate and incomplete data? With Hapag-Lloyd having installed tracking devices on 90% of its container fleet (with a goal to reach 100% “shortly”), and this summer rolling out a predictive ETA service for shippers, the premise will soon be put to the test. Even if the data is good enough, scale, at least currently, is still a limitation. Hapag-Lloyd is only one carrier, with Zim Integrated Shipping Services and Ocean Network Express having announced similar plans. And standards don’t yet exist for smart containers to transmit while aboard the ships of alliance partners, according to the Digital Container Shipping Association (DCSA). Other carriers such as Mediterranean Shipping Co. (MSC), the world’s largest, are using smart containers selectively in reefer and to combat drug smuggling in the wake of the 2019 cocaine seizure aboard an MSC ship in Philadelphia. MSC's use of Traxens is also available for shippers on an ad hoc basis if they want continuous premium tracking, but it's used sparingly. Lack of ‘transformative outcomes’ Ocean visibility made progress in recent years with the advent of niche specialists like project44 and FourKites, which aggregate data feeds from multiple sources for customers. But both companies have recently appeared to de-emphasize visibility as their core product propositions amid larger questions about overall value creation. As previously reported by the Journal of Commerce, the more than $1.4 billion of venture capital invested into freight visibility providers over the last five years has not translated into transformative outcomes for users. A different approach – sensors attached to the cargo or the pallet inside the container – has found a market in shipper-specific scenarios for high-value or sensitive cargoes, including electronics and pharma, but faces a reverse logistics challenge in needing to be removed and re-delivered after each transit. “We have not seen a mass scale adoption for broader logistics [beneficial cargo owners] use cases,” said Nexxiot’s Lund. “We’re still at the foot of the mountain as an industry.” According to Hapag-Lloyd, its product will be differentiated in a few ways. “The material difference lies in two main dimensions: first, our inland ETA prediction will use the container GPS data – which is available independent from which route the container is travelling on or which trucker/rail company is currently moving the box,” said Olaf Habert, who leads the program at Hapag-Lloyd. “Second, we are deploying purpose-built prediction algorithms for container transportation across all modes of transport,” Habert added. “Therefore, we are targeting for our ETA prediction for inland destinations to be accurate within a couple of hours.” The bigger question is whether, via smart containers, ocean carriers are able break into what for them has been an elusive value-added logistics market. Maersk has embraced that strategy fully, with mixed results, through its integrator strategy. According to the Roland Burger study, “The shipping industry, characterized by highly volatile freight rates, has struggled to monetize value-added services, often absorbing their costs into global ocean freight.” Will IoT containers meet the same fate? Contact Peter Tirschwell at peter.tirschwell@spglobal.com. Senior Technology Editor Eric Johnson contributed to this analysis.

Container lines

Carriers forge new paths in ongoing quest to monetize visibility investments

<div class="phx-topic abstract-wrapper">The 15,000-square-foot, 37-dock-door facility is the latest example of how LTL carriers are expanding into drayage, container handling and global supply chains. </div>

The 15,000-square-foot, 37-dock-door facility is the latest example of how LTL carriers are expanding into drayage, container handling and global supply chains.

<div class="phx-topic">US less-than-truckload (LTL) carrier Pitt Ohio is bridging the gap between domestic and international freight by opening its first marine terminal in Norfolk, Virginia. The 15,000-square-foot, 37-dock-door facility is the latest example of how LTL carriers are <a href="https://www.joc.com/article/us-import-disruption-opens-up-ltl-transload-opportunities-5249857">expanding into drayage</a>, container handling and global supply chains. It is a new direction for trucking companies looking to route more freight into their networks. From the Norfolk terminal, Pittsburgh-based Pitt Ohio will coordinate inland transportation, customs clearance and related services, the company said in a statement Tuesday. Pitt Ohio is also a non-vessel-operating common carrier (NVO,). The 14th-largest US LTL carrier in 2024, Pitt Ohio said it will use its own chassis to maintain control over shipments for importers and exporters while integrating maritime, inland transportation and warehousing. The Norfolk terminal has been several years in the making. Pitt Ohio, which has been hauling regional LTL freight since 1979, was <a href="https://www.joc.com/article/disruption-forcing-us-importers-to-take-greater-control-of-landside-logistics-5246609">drawn into the drayage business</a> during the COVID-19 pandemic, when shipper customers turned to the company for help. The pandemic saw increased interest in transloading, which requires the type of cross-dock operation that has sustained LTL carriers since the 1920s. In addition to Pitt Ohio, carriers such as Estes Express Lines, <a href="https://www.joc.com/article/averitt-connects-teu-to-ltl-market-in-houston-5207737">Averitt</a> and A. Duie Pyle are building and opening terminals near seaports. LTL freight is still primarily sourced from domestic industrial manufacturers, but e-commerce and the shrinking size of shipments are driving more freight toward LTL. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

US less-than-truckload (LTL) carrier Pitt Ohio is bridging the gap between domestic and international freight by opening its first marine terminal in Norfolk, Virginia. The 15,000-square-foot, 37-dock-door facility is the latest example of how LTL carriers are expanding into drayage , container handling and global supply chains. It is a new direction for trucking companies looking to route more freight into their networks. From the Norfolk terminal, Pittsburgh-based Pitt Ohio will coordinate inland transportation, customs clearance and related services, the company said in a statement Tuesday. Pitt Ohio is also a non-vessel-operating common carrier (NVO,). The 14th-largest US LTL carrier in 2024, Pitt Ohio said it will use its own chassis to maintain control over shipments for importers and exporters while integrating maritime, inland transportation and warehousing. The Norfolk terminal has been several years in the making. Pitt Ohio, which has been hauling regional LTL freight since 1979, was drawn into the drayage business during the COVID-19 pandemic, when shipper customers turned to the company for help. The pandemic saw increased interest in transloading, which requires the type of cross-dock operation that has sustained LTL carriers since the 1920s. In addition to Pitt Ohio, carriers such as Estes Express Lines, Averitt and A. Duie Pyle are building and opening terminals near seaports. LTL freight is still primarily sourced from domestic industrial manufacturers, but e-commerce and the shrinking size of shipments are driving more freight toward LTL. Contact William B. Cassidy at bill.cassidy@spglobal.com .

Port News

Trucking News

Surface

LTL trucker Pitt Ohio opens marine terminal near Norfolk port

<div class="phx-topic abstract-wrapper">The US price index for LTL trucking, bolstered by new contracts, is as high as it’s ever been, but the truckload sector is stuck in a two-year trough. </div>

The US price index for LTL trucking, bolstered by new contracts, is as high as it’s ever been, but the truckload sector is stuck in a two-year trough.

<div class="phx-topic">US less-than-truckload (LTL) pricing has flatlined, but at the highest point on record, according to the US Bureau of Labor Statistics (BLS). The current BLS long-distance LTL producer price index (PPI) of 259 has remained stable from February through April, level with its previous pandemic-era peak in June 2022. The BLS uses pricing data from December 2003 as its base (100) for calculating the LTL and truckload PPIs. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="9014abeb-369b-4328-97ae-ee1793647b6e"></dynamic-object></div>The April reading is 4.9% higher than a year ago and 12.1% higher than July 2023, when the <a href="https://www.joc.com/article/yellows-collapse-already-pushing-ltl-rates-higher-as-capacity-tightens-5216052">collapse of Yellow</a> into bankruptcy set LTL costs climbing for the next 22 months. The LTL PPI is a measure of the total “selling price” LTL customers pay carriers for services, including accessorial fees and fuel surcharges as well as base LTL trucking rates. It is a metric tracking the total cost of LTL services to shippers, rather than base rates. The LTL PPI flatlined from September through December 2024 before jumping 5.8% from December to January and climbing another 0.8% in February to its current plateau. The jump in early 2025 most likely corresponds with new rates set by contract renewals. The PPI corresponds closely with contractual rate increases reported by LTL carriers in recent first-quarter earnings reports and in interviews with the Journal of Commerce. Most carriers reported annualized rate increases in the <a href="https://www.joc.com/article/us-ltl-rates-rising-despite-falling-volumes-more-cautious-shippers-5996463">mid-single-digit percentage range</a> in the first quarter. New contract agreements are still coming into effect. To date, tariff-related variations in demand have had little effect on the US LTL market. The rebound in LTL pricing stands in contrast to the performance of the truckload sector, where pricing is still close to the bottom of a trough first entered in June 2023. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="ca91266b-e12d-4977-9e6a-03d09f9b08f0"></dynamic-object></div>The BLS long-distance truckload PPI of 175.2 fell just less than 1 percentage point in April and is down 2.6% from January and 24.6% from its pandemic-era peak in May 2022. The basic explanation for the LTL/truckload divergence is capacity. The loss of Yellow put more than 300 LTL terminals on the market; not all of them have been sold or returned to service. The LTL sector as a whole added only 83 terminals in 2024, bringing its total to 3,216 facilities, according to SJ Consulting Group. That is a 2.7% gain over 2023. The truckload sector <a href="https://www.joc.com/article/large-truckload-carriers-make-capacity-cuts-but-trucks-reenter-the-market-6004177">still has excess capacity</a>, with about 37% more carriers with active operating authorities than in 2019, data from the Federal Motor Carrier Safety Administration shows. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>. </div>

US less-than-truckload (LTL) pricing has flatlined, but at the highest point on record, according to the US Bureau of Labor Statistics (BLS). The current BLS long-distance LTL producer price index (PPI) of 259 has remained stable from February through April, level with its previous pandemic-era peak in June 2022. The BLS uses pricing data from December 2003 as its base (100) for calculating the LTL and truckload PPIs. The April reading is 4.9% higher than a year ago and 12.1% higher than July 2023, when the collapse of Yellow into bankruptcy set LTL costs climbing for the next 22 months. The LTL PPI is a measure of the total “selling price” LTL customers pay carriers for services, including accessorial fees and fuel surcharges as well as base LTL trucking rates. It is a metric tracking the total cost of LTL services to shippers, rather than base rates. The LTL PPI flatlined from September through December 2024 before jumping 5.8% from December to January and climbing another 0.8% in February to its current plateau. The jump in early 2025 most likely corresponds with new rates set by contract renewals. The PPI corresponds closely with contractual rate increases reported by LTL carriers in recent first-quarter earnings reports and in interviews with the Journal of Commerce. Most carriers reported annualized rate increases in the mid-single-digit percentage range in the first quarter. New contract agreements are still coming into effect. To date, tariff-related variations in demand have had little effect on the US LTL market. The rebound in LTL pricing stands in contrast to the performance of the truckload sector, where pricing is still close to the bottom of a trough first entered in June 2023. The BLS long-distance truckload PPI of 175.2 fell just less than 1 percentage point in April and is down 2.6% from January and 24.6% from its pandemic-era peak in May 2022. The basic explanation for the LTL/truckload divergence is capacity. The loss of Yellow put more than 300 LTL terminals on the market; not all of them have been sold or returned to service. The LTL sector as a whole added only 83 terminals in 2024, bringing its total to 3,216 facilities, according to SJ Consulting Group. That is a 2.7% gain over 2023. The truckload sector still has excess capacity , with about 37% more carriers with active operating authorities than in 2019, data from the Federal Motor Carrier Safety Administration shows. Contact William B. Cassidy at bill.cassidy@spglobal.com .

Truckload

US LTL pricing maintains record high as truckload slumps

<div class="phx-topic abstract-wrapper">Importers can get a fairly good sense of how to proceed over the next few months based on developments to date, but things will get fuzzy when the separate cooldown periods for tariffs on China and the rest of the world expire this summer, writes Lars Jensen. </div>

Importers can get a fairly good sense of how to proceed over the next few months based on developments to date, but things will get fuzzy when the separate cooldown periods for tariffs on China and the rest of the world expire this summer, writes Lars Jensen.

<div class="phx-topic">How should one think about planning their supply chain to and from the US during the upcoming peak season? The easy answer would be to simply state that everything is unpredictable, and hence, you must resort merely to short-term tactical actions. And while there is some truth to the unpredictability and need for a tactical approach, this does not mean the imminent peak season is completely unpredictable. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6008658_0.1.jpg"></img></div>Let us start with what we know, then follow up with what further developments will likely be. On that basis, it will emerge that some elements are indeed partially predictable. Presently, we know that reciprocal tariffs on countries other than China are on pause until July 9. We also know that the <a href="https://www.joc.com/article/capacity-crunch-beckons-on-eastbound-trans-pacific-after-us-china-deal-6002956">US tariffs on China are lowered to 30% and Chinese tariffs on the US are at 10% until Aug. 14.</a> We know that carriers reduced capacity from Asia to the US West Coast by 18% from the US tariffs announcement on April 2 until the announced pause in China tariffs. The capacity from Asia to the US East Coast was adjusted down by 7%. We know that various carriers and forwarders have reported a cut of 20% to 40% in bookings from China due to the tariffs. We know that following the partial pause in China tariffs, carriers have seen a surge in cargo bookings. Not much has been forthcoming in terms of data yet, but <a href="https://www.joc.com/article/china-us-ocean-bookings-surge-since-weekend-trade-deal-hapag-lloyd-6004653">Hapag-Lloyd has mentioned a nearly 50% increase in bookings from China</a>, not compared with the recent slump, but compared with the situation before April 2. These are all elements we know to be factually true. Then there are elements we can predict with a good degree of certainty. Spot rates in the short term will rise sharply. The carriers cannot physically un-blank the blank sailings rapidly. This takes a little while. That means right now demand exceeds the capacity available, which inevitably will cause a sharp spike in spot rates. This will continue until enough capacity has been brought back into the trans-Pacific. Given the sharp rise in spot rates, it is also inevitable that carriers will indeed place more capacity into the trade. One way to do that is to blank sailings on other ex-Asia trades, such as Asia-Europe, Asia-Indian subcontinent and Asia-South America. This is likely to happen, especially where spot rates on those trades have been trending downward. The blank sailings out of Asia for the past four weeks are simply a fact already. But that also means we will now see a four-week period of significant blank sailings on the backhaul from the US to Asia. This also means the ability of carriers to reposition empty containers back to China is reduced. This reduced amount of repositioning will “hit” China about three to four weeks into the future. Given the two deadlines of July 9 and Aug. 14, it is very predictable that US importers will attempt to fast-track part of their peak season cargo where possible. This means the main part of the trans-Pacific peak will be from June to mid-August. The drop in empty container repositioning will come to fruition in the middle of this period. This could lead to sporadic and temporary equipment shortages. Will the surge in Chinese exports lead to congestion at US ports? This is very likely, although it is a matter of nuance in terms of how severe it will be. The main factor is how quickly the carriers can bring more capacity into the trans-Pacific. If it happens rapidly, there will be a significant problem, but if it happens more gradually, the impact will be less severe. It will nonetheless put pressure on truck, rail and chassis availability as we get closer to the middle of June. <h3>Post-pause uncertainty </h3>Where the predictions become much more problematic is when we get to the expiry of the pause on reciprocal tariffs. The latest statements from the US government imply that the US will announce the new reciprocal tariffs within the next two to three weeks. But what the level will be and whether it will only come into force on July 9 is not known. The same applies for the Aug. 14 deadline with China. If the tariffs revert to high levels, we should expect cargo volumes to once again drop sharply, in part because shippers will look to the past track record of the trade war and conclude that “wait and see” appears to be the best strategy under the circumstances. And if this subsequently leads to yet another round of cargo declines followed by a cargo surge and spot rate hikes, this might be an acceptable risk. It should also be noted that the rate spike we are seeing now and in the coming week entails a much lower cost than if the importers had chosen to move cargo subject to the 145% tariffs. All in all, the plan — insofar as there is a medium-term plan — would have to be one that assumes potentially another stop-start cycle of container cargo movements to the US. Contact Lars Jensen at <a href="https://www.joc.com/article/lars.jensen@vespucci-maritime.com">lars.jensen@vespucci-maritime.com</a>.</div>

How should one think about planning their supply chain to and from the US during the upcoming peak season? The easy answer would be to simply state that everything is unpredictable, and hence, you must resort merely to short-term tactical actions. And while there is some truth to the unpredictability and need for a tactical approach, this does not mean the imminent peak season is completely unpredictable. Let us start with what we know, then follow up with what further developments will likely be. On that basis, it will emerge that some elements are indeed partially predictable. Presently, we know that reciprocal tariffs on countries other than China are on pause until July 9. We also know that the US tariffs on China are lowered to 30% and Chinese tariffs on the US are at 10% until Aug. 14. We know that carriers reduced capacity from Asia to the US West Coast by 18% from the US tariffs announcement on April 2 until the announced pause in China tariffs. The capacity from Asia to the US East Coast was adjusted down by 7%. We know that various carriers and forwarders have reported a cut of 20% to 40% in bookings from China due to the tariffs. We know that following the partial pause in China tariffs, carriers have seen a surge in cargo bookings. Not much has been forthcoming in terms of data yet, but Hapag-Lloyd has mentioned a nearly 50% increase in bookings from China , not compared with the recent slump, but compared with the situation before April 2. These are all elements we know to be factually true. Then there are elements we can predict with a good degree of certainty. Spot rates in the short term will rise sharply. The carriers cannot physically un-blank the blank sailings rapidly. This takes a little while. That means right now demand exceeds the capacity available, which inevitably will cause a sharp spike in spot rates. This will continue until enough capacity has been brought back into the trans-Pacific. Given the sharp rise in spot rates, it is also inevitable that carriers will indeed place more capacity into the trade. One way to do that is to blank sailings on other ex-Asia trades, such as Asia-Europe, Asia-Indian subcontinent and Asia-South America. This is likely to happen, especially where spot rates on those trades have been trending downward. The blank sailings out of Asia for the past four weeks are simply a fact already. But that also means we will now see a four-week period of significant blank sailings on the backhaul from the US to Asia. This also means the ability of carriers to reposition empty containers back to China is reduced. This reduced amount of repositioning will “hit” China about three to four weeks into the future. Given the two deadlines of July 9 and Aug. 14, it is very predictable that US importers will attempt to fast-track part of their peak season cargo where possible. This means the main part of the trans-Pacific peak will be from June to mid-August. The drop in empty container repositioning will come to fruition in the middle of this period. This could lead to sporadic and temporary equipment shortages. Will the surge in Chinese exports lead to congestion at US ports? This is very likely, although it is a matter of nuance in terms of how severe it will be. The main factor is how quickly the carriers can bring more capacity into the trans-Pacific. If it happens rapidly, there will be a significant problem, but if it happens more gradually, the impact will be less severe. It will nonetheless put pressure on truck, rail and chassis availability as we get closer to the middle of June. Post-pause uncertainty Where the predictions become much more problematic is when we get to the expiry of the pause on reciprocal tariffs. The latest statements from the US government imply that the US will announce the new reciprocal tariffs within the next two to three weeks. But what the level will be and whether it will only come into force on July 9 is not known. The same applies for the Aug. 14 deadline with China. If the tariffs revert to high levels, we should expect cargo volumes to once again drop sharply, in part because shippers will look to the past track record of the trade war and conclude that “wait and see” appears to be the best strategy under the circumstances. And if this subsequently leads to yet another round of cargo declines followed by a cargo surge and spot rate hikes, this might be an acceptable risk. It should also be noted that the rate spike we are seeing now and in the coming week entails a much lower cost than if the importers had chosen to move cargo subject to the 145% tariffs. All in all, the plan — insofar as there is a medium-term plan — would have to be one that assumes potentially another stop-start cycle of container cargo movements to the US. Contact Lars Jensen at lars.jensen@vespucci-maritime.com .

US supply chain planning must involve a mix of the known and unknown

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

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Shippers save money, time with automated transportation bidding tools

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

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