<div class="phx-topic abstract-wrapper">The spending program will target the company’s logistics and services arm with a “substantial amount of investment” earmarked for its ocean and terminals infrastructure in the region.</div>

The spending program will target the company’s logistics and services arm with a “substantial amount of investment” earmarked for its ocean and terminals infrastructure in the region.

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<div>AP Moller-Maersk will spend more than $500 million over the next three years to expand its warehousing, air freight and trucking operations in Southeast Asia to support the region’s “emergence as a global production hub and a consumption powerhouse,” the company said Monday. The spending program, which comes even as Maersk has experienced struggles with its integrator strategy, will target the company’s logistics and services arm with a “substantial amount of investment channeled into its ocean and terminals infrastructure,” it said in a statement. The investment includes adding nearly 5.2 million square feet of extra warehousing and distribution space in...

AP Moller-Maersk will spend more than $500 million over the next three years to expand its warehousing, air freight and trucking operations in Southeast Asia to support the region’s “emergence as a global production hub and a consumption powerhouse,” the company said Monday. The spending program, which comes even as Maersk has experienced struggles with its integrator strategy, will target the company’s logistics and services arm with a “substantial amount of investment channeled into its ocean and terminals infrastructure,” it said in a statement. The investment includes adding nearly 5.2 million square feet of extra warehousing and distribution space in Malaysia, Indonesia, Singapore and the Philippines by 2026. The expansion is equivalent to a nearly 50% increase in Maersk’s current capacity in those four countries. Specific projects to be undertaken include developing an integrated logistics hub with multimodal connectivity at Maersk’s Southeast Asia ocean cargo hub at the Port of Tanjung Pelepas in southern Malaysia, plus expanding its landside warehouse capacity at Singapore’s Changi Airport. The Tanjung Pelepas plan is in addition to the $644 million the Port of Tanjung Pelepas is spending over the next five years on automation, digitization and related projects. Tanjung Pelepas is a 30/70 joint venture between APM Terminals and Malaysia’s MMC Group. Maersk said building extra warehousing capacity at Changi Airport will reinforce Singapore’s position as its regional air freight hub. Other projects covered by Monday’s announcement include a significant increase in Maersk’s trucking capacity in Southeast Asia, piloting biodiesel-based haulage trucks and introducing electric trucks by 2024, the company added without giving further details. Maersk said APM Terminals is seeking to bring additional transshipment to the region while working with authorities to explore opportunities to develop green bunkering facilities for its future green vessel fleet. Maersk has 24 methanol-enabled vessels of various sizes on order. Struggles in logistics segment The investments for Southeast Asia come as Maersk is expanding its logistics footprint in other Asian countries, opening a 49,000-square-foot dedicated warehousing and distribution facility for Japan’s Nissan Motor in Wuhan, central China, last month. Maersk is also in the process of developing seven warehouses totaling 1.4 million square feet in Sydney, Melbourne and Brisbane, Australia by the first quarter of 2024. Four of those, including two integrated into the Maersk network as part of the completion of its acquisition of Hong Kong’s LF Logistics in August 2022, are already in operation and three are scheduled to become operational by the end of March. Still, despite continued investment, Maersk is struggling to grow its logistics and services business. Revenue from the division fell 16% to $3.5 billion in the third quarter from one year ago due to lower land and air freight rates, Maersk said in a Q3 results briefing on Nov. 3. Organic revenue growth in the logistics and services business shrank 22% in the third quarter against a year earlier, mainly due to contractions in the retail, lifestyle, automotive and technology sectors of the global economy, Maersk said in an accompanying management review. Overall, Maersk had a target of 10% organic revenue growth for the logistics business in the 12 months to Sept. 30, but organic revenue fell 14% in the period, the company said. Maersk will not ‘relent’ on integrator strategy Tim Power, managing director of Drewry Shipping Consultants, said 2024 will be a test of whether Maersk’s integrator-based strategy will be more resilient to the tough market conditions than that of traditional container lines such as Hapag-Lloyd. Comparing the financial results of both companies while speaking at the Asian Logistics, Maritime and Aviation conference in Hong Kong last month, Power said both companies were about equally matched when comparing the impact of lower rates and earnings. “The jury is still out” on which business model is best, he said, adding: “We will soon know.” Despite the disappointing performance of its logistics and services business, Maersk said it was committed to its integrated logistics strategy. “If there was ever an environment illustrating why we must continue to diversify our revenue and build closer partnerships with our customers, this environment is absolutely it,” CEO Vincent Clerc said during the third-quarter results briefing. “While we will make all the adjustments necessary to weather what is coming, we will not relent on investing in our strategy which has a strong backing from our customers.” Contact Keith Wallis at keithwallis@hotmail.com

Marine terminals

International ports

Container lines

Maersk to invest $500 million in Southeast Asia logistics even as integrator model struggles

<div class="phx-topic abstract-wrapper">The companies say it’s important to be agile with capacity deployment if there is a significant decline in volumes crossing the docks at Los Angeles and Long Beach amid the trade conflict with China.</div>

The companies say it’s important to be agile with capacity deployment if there is a significant decline in volumes crossing the docks at Los Angeles and Long Beach amid the trade conflict with China.

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<div class="phx-topic">Top trucking and rail carriers are warning that volatility linked to uncertain US tariff policy will lead to weaker volumes on the West Coast in the short term and may negatively impact the second half of the year unless clarity comes soon. Economists in recent weeks have downgraded their forecasts for US gross domestic product (GDP), while ocean carriers are reporting sharp declines in <a href="https://www.joc.com/article/hapag-lloyd-saw-china-bookings-drop-hard-after-us-enacted-tariffs-5990185">bookings from China</a>. Maritime consultancy Drewry earlier Thursday said it expects Asia to North America <a href="https://www.joc.com/article/fallout-from-us-china-trade-war-to-depress-trans-pacific-volumes-drewry-5990686">container volumes</a> to drop 5.5% this year. Knight-Swift Transportation and Union Pacific Railroad, during their respective first-quarter earnings calls this week, said it’s important to be nimble with capacity if there is a significant decline in volume crossing the docks at Los Angeles and Long Beach. “Maybe a third [of our customers] are not making any changes because of tariffs…some of our customers that don't have as much exposure to China,” Adam Miller, CEO of Knight Swift, said during an earnings call Wednesday. “Then there are [customers] that are more in a ‘wait and see bucket,’ drawing down inventory and living off that. There are also some that have told us that they've canceled or stopped ordering from China and figuring out how to adjust their supply chain to avoid the cost.” UP CEO Jim Vena, likewise, said focusing on what the railroad can control is essential for navigating any downturn in Asian imports to the West Coast. “There are still a lot of unknowns related to volumes and the economy, but what I do know is that we are driving efficiency throughout our network,” Vena said on the Thursday earnings call. “We are in a good position and will be agile and responsive as we move forward.” <h3>Adjusting capacity to demand </h3>Knight-Swift said there was an impact on freight volumes in March and April, which fell short of the usual seasonal uptick. The carrier plans to cull its capacity by retaining actively used trucks and selling those that are underutilized and not generating revenue. “We can now turn [underutilized tractors] into capital and sell [them] in what's been a relatively good used equipment market,” Miller said. “If we see a surge in a market that rebounds, we have flexibility to slow down what we [sell] as we have new tractors that come in.” Meanwhile, any downturn in freight demand may prolong what has already been three years of shippers exerting pricing leverage over carriers during contract negotiations. Knight-Swift reported low- to mid-single-digit percentage increases in January and February contracts, but momentum stalled as trade tensions escalated in March. “If we're able to get some clarity on trade policy, [maybe we] see some seasonality in June that helps offset maybe some of the unseasonable weakness we will see in May,” said Miller. “That’s really the question: How do things play out in June? There’s a lot of ways that this could play out, but we're watching it really closely and trying to position ourselves to navigate it as well as we can.” <h3>Agile on the rails </h3>Union Pacific anticipates weakness in the international intermodal market for the remainder of the year due to global trade tensions and West Coast market share losses to East Coast ports following the end of labor woes in the latter. “The best thing we can do is just have all the products that we have, a strong service product, and stay close to our customers because we've been seeing these supply chain patterns change at the drop of a hat,” said Kenny Rocker, UP’s executive vice president of sales and marketing. The railroad outlined operational strategies if a steep decline in West Coast imports persists. First, UP would take locomotives and railcars out of service that aren’t being utilized. Second, the railroad would consolidate loads on less popular inland routes, running fewer but fully loaded trains. Finally, UP would explore opportunities to mix containers alongside other non-containerized freight traveling to the same destination. Those measures would help reduce operational costs to offset the revenue lost from less cargo moving inland. Still, UP might be hesitant to pull too much capacity out of the market because it remains bullish on domestic intermodal and there are opportunities to take freight away from trucking. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a></div>

Top trucking and rail carriers are warning that volatility linked to uncertain US tariff policy will lead to weaker volumes on the West Coast in the short term and may negatively impact the second half of the year unless clarity comes soon. Economists in recent weeks have downgraded their forecasts for US gross domestic product (GDP), while ocean carriers are reporting sharp declines in bookings from China . Maritime consultancy Drewry earlier Thursday said it expects Asia to North America container volumes to drop 5.5% this year. Knight-Swift Transportation and Union Pacific Railroad, during their respective first-quarter earnings calls this week, said it’s important to be nimble with capacity if there is a significant decline in volume crossing the docks at Los Angeles and Long Beach. “Maybe a third [of our customers] are not making any changes because of tariffs…some of our customers that don't have as much exposure to China,” Adam Miller, CEO of Knight Swift, said during an earnings call Wednesday. “Then there are [customers] that are more in a ‘wait and see bucket,’ drawing down inventory and living off that. There are also some that have told us that they've canceled or stopped ordering from China and figuring out how to adjust their supply chain to avoid the cost.” UP CEO Jim Vena, likewise, said focusing on what the railroad can control is essential for navigating any downturn in Asian imports to the West Coast. “There are still a lot of unknowns related to volumes and the economy, but what I do know is that we are driving efficiency throughout our network,” Vena said on the Thursday earnings call. “We are in a good position and will be agile and responsive as we move forward.” Adjusting capacity to demand Knight-Swift said there was an impact on freight volumes in March and April, which fell short of the usual seasonal uptick. The carrier plans to cull its capacity by retaining actively used trucks and selling those that are underutilized and not generating revenue. “We can now turn [underutilized tractors] into capital and sell [them] in what's been a relatively good used equipment market,” Miller said. “If we see a surge in a market that rebounds, we have flexibility to slow down what we [sell] as we have new tractors that come in.” Meanwhile, any downturn in freight demand may prolong what has already been three years of shippers exerting pricing leverage over carriers during contract negotiations. Knight-Swift reported low- to mid-single-digit percentage increases in January and February contracts, but momentum stalled as trade tensions escalated in March. “If we're able to get some clarity on trade policy, [maybe we] see some seasonality in June that helps offset maybe some of the unseasonable weakness we will see in May,” said Miller. “That’s really the question: How do things play out in June? There’s a lot of ways that this could play out, but we're watching it really closely and trying to position ourselves to navigate it as well as we can.” Agile on the rails Union Pacific anticipates weakness in the international intermodal market for the remainder of the year due to global trade tensions and West Coast market share losses to East Coast ports following the end of labor woes in the latter. “The best thing we can do is just have all the products that we have, a strong service product, and stay close to our customers because we've been seeing these supply chain patterns change at the drop of a hat,” said Kenny Rocker, UP’s executive vice president of sales and marketing. The railroad outlined operational strategies if a steep decline in West Coast imports persists. First, UP would take locomotives and railcars out of service that aren’t being utilized. Second, the railroad would consolidate loads on less popular inland routes, running fewer but fully loaded trains. Finally, UP would explore opportunities to mix containers alongside other non-containerized freight traveling to the same destination. Those measures would help reduce operational costs to offset the revenue lost from less cargo moving inland. Still, UP might be hesitant to pull too much capacity out of the market because it remains bullish on domestic intermodal and there are opportunities to take freight away from trucking. Contact Ari Ashe at ari.ashe@spglobal.com

North American ports

Intermodal providers

Knight-Swift, Union Pacific brace for West Coast volume downturn

<div class="phx-topic abstract-wrapper">Carriers and importers are dealing with confusion over how tariffs in general, and the trade war between Washington and Beijing specifically, will affect commerce on the US’ busiest trade lane over the next 12 months.</div>

Carriers and importers are dealing with confusion over how tariffs in general, and the trade war between Washington and Beijing specifically, will affect commerce on the US’ busiest trade lane over the next 12 months.

<div class="phx-topic">Uncertainty over the Trump administration’s ever-changing tariff policy is claiming another casualty: the traditional timeline for the signing of annual service contracts between ocean carriers and importers in the eastbound trans-Pacific. Sources tell the Journal of Commerce the typical timeline for locking up deals, most of which begin May 1, has been delayed by at least two weeks. The reason? Confusion over how tariffs in general, and the trade war between Washington and Beijing specifically, will affect commerce on the US’ busiest trade lane over the next 12 months. “The tariff tiff is complicating matters,” said Ben Coleman, president of the forwarder Teampower Logistics. While ocean carriers and their largest retail customers are continuing to disagree over pricing levels in the 2025-26 service contract negotiations, the tariff uncertainty is causing hesitation among shippers who need to make a final decision on the volumes they will import as part of the so-called minimum quantity commitments (MQCs) that must be adhered to during the life of the contracts. Adding another two weeks this late in the negotiating cycle before carriers sign contracts with their largest customers is unusual, Kevin Parkerson, a consultant and former logistics manager at national retailers, told the Journal of Commerce. “Typically by April 23 this should all be done,” he said. On pricing matters, the largest retailers are said to be locked in a standoff with carriers over a $100 per FEU difference in rates for their 2025-26 service contracts. Carriers are refusing to budge from the $1,600 per FEU floor for West Coast trade and $2,600 per FEU to the East Coast that <a href="https://www.joc.com/article/trans-pac-gri-offers-resistance-to-retailers-push-for-lower-contract-rates-5977200">they negotiated earlier this month</a>, forwarders and industry consultants say. In the contracts that they have not already signed, some big-box retailers want to pay no more than $1,500 per FEU to the West Coast. “The big guys are on hold,” Parkerson said. “They’re digging in.” Container lines and major US importers generally conclude annual service contract talks by early April, with non-vessel operating common carriers (NVOs) nailing down their own contracts by late April or early May. Carriers normally extend existing contracts beyond the typical April 30 end for smaller importers and NVOs who are in the final stages of contract talks. The revised timeline will extend those negotiations past the May 1 start date for many of the new contracts. While many of the second- and third-tier importers and NVOs have either concluded negotiations with their core carriers or are close to finalizing them at rates ranging from $1,600 to $1,900 per FEU or higher to the West Coast, they are waiting for the largest retailers to set the floor for rates before they sign the agreements, sources say. A second industry consultant who formerly served as logistics manager at national retailers said $100 per FEU may not sound like a game-breaker. However, “If you’re shipping a couple of hundred thousand containers, that’s a lot of money,” he noted. <h3>Blank sailings prop up spot rates </h3>Meanwhile, NVOs say carriers are emboldened by the current level of spot and freight-all-kinds (FAK) rates from Asia to the US, which remain higher than the existing 2024-25 service contract rates <a href="https://www.joc.com/article/asia-us-blank-sailing-forecast-for-may-increasing-amid-cancellations-5988996">despite a 37% drop in bookings from China</a> since March 31. The spot rate to the West Coast on Wednesday was $2,067 per FEU, with rates to the East Coast at $3,067 per FEU, according to Platts, a Journal of Commerce sister company within S&amp;P Global. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e56fd23a-cfad-4929-899f-b91371ff9fc0"></dynamic-object></div>With US imports from China plummeting because of the tariffs, carriers announced the blanking of dozens of sailings through May, which forwarders say will keep spot rates elevated through the remainder of the service contracting season. Meanwhile, if negotiations with the largest retailers drag on past May 1, carriers are expected to extend existing contracts with their core customers until the new deals are signed. “But if this continues on for a while, eventually you’re going to get a bubble,” the second consultant said, adding that there will be a rush by importers and NVOs to sign their contracts. That could force rates higher in May. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a></div>

Uncertainty over the Trump administration’s ever-changing tariff policy is claiming another casualty: the traditional timeline for the signing of annual service contracts between ocean carriers and importers in the eastbound trans-Pacific. Sources tell the Journal of Commerce the typical timeline for locking up deals, most of which begin May 1, has been delayed by at least two weeks. The reason? Confusion over how tariffs in general, and the trade war between Washington and Beijing specifically, will affect commerce on the US’ busiest trade lane over the next 12 months. “The tariff tiff is complicating matters,” said Ben Coleman, president of the forwarder Teampower Logistics. While ocean carriers and their largest retail customers are continuing to disagree over pricing levels in the 2025-26 service contract negotiations, the tariff uncertainty is causing hesitation among shippers who need to make a final decision on the volumes they will import as part of the so-called minimum quantity commitments (MQCs) that must be adhered to during the life of the contracts. Adding another two weeks this late in the negotiating cycle before carriers sign contracts with their largest customers is unusual, Kevin Parkerson, a consultant and former logistics manager at national retailers, told the Journal of Commerce. “Typically by April 23 this should all be done,” he said. On pricing matters, the largest retailers are said to be locked in a standoff with carriers over a $100 per FEU difference in rates for their 2025-26 service contracts. Carriers are refusing to budge from the $1,600 per FEU floor for West Coast trade and $2,600 per FEU to the East Coast that they negotiated earlier this month , forwarders and industry consultants say. In the contracts that they have not already signed, some big-box retailers want to pay no more than $1,500 per FEU to the West Coast. “The big guys are on hold,” Parkerson said. “They’re digging in.” Container lines and major US importers generally conclude annual service contract talks by early April, with non-vessel operating common carriers (NVOs) nailing down their own contracts by late April or early May. Carriers normally extend existing contracts beyond the typical April 30 end for smaller importers and NVOs who are in the final stages of contract talks. The revised timeline will extend those negotiations past the May 1 start date for many of the new contracts. While many of the second- and third-tier importers and NVOs have either concluded negotiations with their core carriers or are close to finalizing them at rates ranging from $1,600 to $1,900 per FEU or higher to the West Coast, they are waiting for the largest retailers to set the floor for rates before they sign the agreements, sources say. A second industry consultant who formerly served as logistics manager at national retailers said $100 per FEU may not sound like a game-breaker. However, “If you’re shipping a couple of hundred thousand containers, that’s a lot of money,” he noted. Blank sailings prop up spot rates Meanwhile, NVOs say carriers are emboldened by the current level of spot and freight-all-kinds (FAK) rates from Asia to the US, which remain higher than the existing 2024-25 service contract rates despite a 37% drop in bookings from China since March 31. The spot rate to the West Coast on Wednesday was $2,067 per FEU, with rates to the East Coast at $3,067 per FEU, according to Platts, a Journal of Commerce sister company within S&P Global. With US imports from China plummeting because of the tariffs, carriers announced the blanking of dozens of sailings through May, which forwarders say will keep spot rates elevated through the remainder of the service contracting season. Meanwhile, if negotiations with the largest retailers drag on past May 1, carriers are expected to extend existing contracts with their core customers until the new deals are signed. “But if this continues on for a while, eventually you’re going to get a bubble,” the second consultant said, adding that there will be a rush by importers and NVOs to sign their contracts. That could force rates higher in May. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com

Supply chain

Container Shipping News

Transport, Trade and Regulation News

Trans-Pacific

Maritime

Tariff uncertainty disrupting timeline for trans-Pacific service contract talks

<div class="phx-topic abstract-wrapper">US tariffs on China and the 90-day pause on tariffs imposed by Washington on a host of other countries made it difficult to assess how the market would develop this year, according to the forwarder’s CEO.</div>

US tariffs on China and the 90-day pause on tariffs imposed by Washington on a host of other countries made it difficult to assess how the market would develop this year, according to the forwarder’s CEO.

<div class="phx-topic">The extreme market disruption brought on by the tariff-driven US trade policy has left Kuehne + Nagel CEO Stefan Paul unwilling to tamper with the forwarder’s profitability expectations for the year. The Switzerland-based forwarder reported a solid start to the year Thursday, but Paul said its forecast for earnings before interest and taxes (EBIT) would remain unchanged at between $1.8 billion and $2.1 billion. “We will not update the group recurring EBIT guidance for the current year ... in light of the elevated and fluctuating level of market uncertainty, including global tariff developments,” Paul told analysts on K + N’s first-quarter earnings call. The “reciprocal” US tariffs of 145% on China and the 90-day pause on tariffs imposed by the Trump administration on a host of other countries made it difficult to assess how the market would develop. “The challenge is that the level of uncertainty fluctuates from day to day,” Paul said. “If there is not enough information available, it would be irresponsible to make changes.” Kuehne + Nagel Group recorded a strong first quarter with positive results across its key financial metrics. First-quarter revenue grew 15% year over year to $7.6 billion, EBIT increased 7% to $487 million and net profit was up 9% at $367 million. The forwarder handled just over 1 million TEUs in the quarter, up 3% compared with the first three months of last year, while gross profit per TEU increased 11% year over year to $675, lifting EBIT for K + N’s ocean segment by 7% to $253 million. <h3>Lost China-US bookings replaced by Southeast Asia </h3>Paul told analysts that K + N’s ocean freight volume out of Asia would not collapse amid the sharp decline in China-US demand because it would be largely replaced by demand shifting to other markets, notably Southeast Asia. “The volume is almost offset by other trade lanes and a shift to Southeast Asia,” he said, adding that demand through the second quarter was expected to be flat compared with the first quarter. While the ocean freight yield from the Southeast Asia volume was in general higher than that of China, Paul noted that both the rates and profitability were softening. In air freight, K + N’s volume in the first quarter rose 5% year over year to 514,000 tons, with gross profit per 100 kilograms up 6% at $102. EBIT for air logistics was up 23% at $140 million. “We saw continuously strong bookings for air in the first quarter and Q2 might be stronger than Q1,” Paul told analysts. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com. ">greg.knowler@spglobal.com</a>.</div>

The extreme market disruption brought on by the tariff-driven US trade policy has left Kuehne + Nagel CEO Stefan Paul unwilling to tamper with the forwarder’s profitability expectations for the year. The Switzerland-based forwarder reported a solid start to the year Thursday, but Paul said its forecast for earnings before interest and taxes (EBIT) would remain unchanged at between $1.8 billion and $2.1 billion. “We will not update the group recurring EBIT guidance for the current year ... in light of the elevated and fluctuating level of market uncertainty, including global tariff developments,” Paul told analysts on K + N’s first-quarter earnings call. The “reciprocal” US tariffs of 145% on China and the 90-day pause on tariffs imposed by the Trump administration on a host of other countries made it difficult to assess how the market would develop. “The challenge is that the level of uncertainty fluctuates from day to day,” Paul said. “If there is not enough information available, it would be irresponsible to make changes.” Kuehne + Nagel Group recorded a strong first quarter with positive results across its key financial metrics. First-quarter revenue grew 15% year over year to $7.6 billion, EBIT increased 7% to $487 million and net profit was up 9% at $367 million. The forwarder handled just over 1 million TEUs in the quarter, up 3% compared with the first three months of last year, while gross profit per TEU increased 11% year over year to $675, lifting EBIT for K + N’s ocean segment by 7% to $253 million. Lost China-US bookings replaced by Southeast Asia Paul told analysts that K + N’s ocean freight volume out of Asia would not collapse amid the sharp decline in China-US demand because it would be largely replaced by demand shifting to other markets, notably Southeast Asia. “The volume is almost offset by other trade lanes and a shift to Southeast Asia,” he said, adding that demand through the second quarter was expected to be flat compared with the first quarter. While the ocean freight yield from the Southeast Asia volume was in general higher than that of China, Paul noted that both the rates and profitability were softening. In air freight, K + N’s volume in the first quarter rose 5% year over year to 514,000 tons, with gross profit per 100 kilograms up 6% at $102. EBIT for air logistics was up 23% at $140 million. “We saw continuously strong bookings for air in the first quarter and Q2 might be stronger than Q1,” Paul told analysts. Contact Greg Knowler at greg.knowler@spglobal.com .

Air Cargo Forwarder News

Kuehne + Nagel’s financial crystal ball clouded by US tariff disruption

<div class="phx-topic abstract-wrapper">The analyst downgraded its container handling outlook following similar moves on global and US economic growth by the IMF and WTO this week.</div>

The analyst downgraded its container handling outlook following similar moves on global and US economic growth by the IMF and WTO this week.

<div class="phx-topic">Significant downgrades in both global and US economic growth this year and next will translate into dramatic declines in container volumes, especially on the trans-Pacific trade that is facing the combined impact of US tariffs on Beijing and fees that will be levied on Chinese-built tonnage calling the US. The International Monetary Fund (IMF) earlier this week downgraded its US GDP outlook for 2025 to 1.8% from the 2.7% forecast made in January, with the world economic outlook for the year cut to 2.8% from 3.3%. The World Trade Organization (WTO) is predicting global merchandise trade will contract by 0.2% this year under current conditions. Those data points have prompted maritime consultancy Drewry to unveil a “much more pessimistic” outlook for container demand than its forecast just a month ago. “We’re now expecting global container handling to decrease by 1% in 2025, approximately the same level of contraction that the market saw in 2020 with COVID, and it would be only the third year with any annual decline since Drewry’s records started back in 1979,” Simon Heaney, Drewry’s senior manager of container research, told a container shipping outlook webinar Thursday. The 1% decline in global container handling is a downward revision from the 2.3% growth the consultancy expected last month. Drewry is also expecting a substantial decline in Asia-North America container throughput that it now predicts will drop by 5.5% this year compared with 4.8% growth expected in March. While China will also be hit hard by the US actions, it will bounce back quicker than the North American markets, according to the analyst. Drewry’s revised outlook for China is a decline in container volume of 4.8% this year, but its ability to find new markets to offset the loss of US trade will see growth in container volume of 1.6% in 2026. Heaney said the revised forecast was made with the caveat that policy decisions or executive orders on trade made by the Trump administration had no “quality of permanence.” “In the absence of any sort of coherent master plan, we’re left trying to decide the end-game strategy for ourselves, wondering whether there are any conditions at all, whether it’s a looming economic recession or negative public opinion under which this US administration might hesitate and reverse course,” he said. “That question remains unanswered as of today, meaning that any predictions we make for the container shipping market, or any market for that matter, have an extremely short shelf life,” Heaney added. “I’d say we’re in coin flip territory.” <h3>Deployment changes and dislocations </h3>The “reciprocal” US tariffs of 145% on China that went into effect April 9 and the 10% across-the-board tariffs on all US trading partners, as well as the US ship fees on Chinese carriers and China-built vessels, will have a pronounced impact on inbound and outbound US trade, according to container shipping analyst John McCown. “My view is that it is almost certain there will be a double-digit percentage reduction in annual volume for all of 2025 compared to 2024,” McCown wrote in his monthly McCown Report released this week. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e56fd23a-cfad-4929-899f-b91371ff9fc0"></dynamic-object></div>McCown, the founder of private equity firm Blue Alpha Capital, said although the increased costs from tariffs and the ship fee plan would find their way to US consumers, those catalysts would also influence container shipping rates and pricing. “While reduced demand generally puts downward pressure on pricing, we have seen in the past that [vessel] deployment changes and dislocations can result in upwards pressure,” he said. “In addition, it is reasonable to assume that the container shipping industry will aggressively sideline capacity.” McCown pointed to the 81 trans-Pacific sailings blanked in April that were far above the 51 sailings blanked during the height of the pandemic. “This concern regarding reduced demand was confirmed in a recent report showing staggering reductions in the upcoming week of Asia to West Coast loads of 28% and Asia to East Coast loads of 42%,” he noted. The Wall Street Journal reported Wednesday that the White House is considering slashing the tariffs on China, in some cases by more than half, to de-escalate the trade war with Beijing. But whether shippers would quickly resume bookings is unclear as West Coast ports still expect volumes to drop sharply in the coming weeks. And China on Thursday labeled as “fake news” any suggestions by the Trump administration that the two sides were engaged in talks meant to end the trade conflict. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Significant downgrades in both global and US economic growth this year and next will translate into dramatic declines in container volumes, especially on the trans-Pacific trade that is facing the combined impact of US tariffs on Beijing and fees that will be levied on Chinese-built tonnage calling the US. The International Monetary Fund (IMF) earlier this week downgraded its US GDP outlook for 2025 to 1.8% from the 2.7% forecast made in January, with the world economic outlook for the year cut to 2.8% from 3.3%. The World Trade Organization (WTO) is predicting global merchandise trade will contract by 0.2% this year under current conditions. Those data points have prompted maritime consultancy Drewry to unveil a “much more pessimistic” outlook for container demand than its forecast just a month ago. “We’re now expecting global container handling to decrease by 1% in 2025, approximately the same level of contraction that the market saw in 2020 with COVID, and it would be only the third year with any annual decline since Drewry’s records started back in 1979,” Simon Heaney, Drewry’s senior manager of container research, told a container shipping outlook webinar Thursday. The 1% decline in global container handling is a downward revision from the 2.3% growth the consultancy expected last month. Drewry is also expecting a substantial decline in Asia-North America container throughput that it now predicts will drop by 5.5% this year compared with 4.8% growth expected in March. While China will also be hit hard by the US actions, it will bounce back quicker than the North American markets, according to the analyst. Drewry’s revised outlook for China is a decline in container volume of 4.8% this year, but its ability to find new markets to offset the loss of US trade will see growth in container volume of 1.6% in 2026. Heaney said the revised forecast was made with the caveat that policy decisions or executive orders on trade made by the Trump administration had no “quality of permanence.” “In the absence of any sort of coherent master plan, we’re left trying to decide the end-game strategy for ourselves, wondering whether there are any conditions at all, whether it’s a looming economic recession or negative public opinion under which this US administration might hesitate and reverse course,” he said. “That question remains unanswered as of today, meaning that any predictions we make for the container shipping market, or any market for that matter, have an extremely short shelf life,” Heaney added. “I’d say we’re in coin flip territory.” Deployment changes and dislocations The “reciprocal” US tariffs of 145% on China that went into effect April 9 and the 10% across-the-board tariffs on all US trading partners, as well as the US ship fees on Chinese carriers and China-built vessels, will have a pronounced impact on inbound and outbound US trade, according to container shipping analyst John McCown. “My view is that it is almost certain there will be a double-digit percentage reduction in annual volume for all of 2025 compared to 2024,” McCown wrote in his monthly McCown Report released this week. McCown, the founder of private equity firm Blue Alpha Capital, said although the increased costs from tariffs and the ship fee plan would find their way to US consumers, those catalysts would also influence container shipping rates and pricing. “While reduced demand generally puts downward pressure on pricing, we have seen in the past that [vessel] deployment changes and dislocations can result in upwards pressure,” he said. “In addition, it is reasonable to assume that the container shipping industry will aggressively sideline capacity.” McCown pointed to the 81 trans-Pacific sailings blanked in April that were far above the 51 sailings blanked during the height of the pandemic. “This concern regarding reduced demand was confirmed in a recent report showing staggering reductions in the upcoming week of Asia to West Coast loads of 28% and Asia to East Coast loads of 42%,” he noted. The Wall Street Journal reported Wednesday that the White House is considering slashing the tariffs on China, in some cases by more than half, to de-escalate the trade war with Beijing. But whether shippers would quickly resume bookings is unclear as West Coast ports still expect volumes to drop sharply in the coming weeks. And China on Thursday labeled as “fake news” any suggestions by the Trump administration that the two sides were engaged in talks meant to end the trade conflict. Contact Greg Knowler at greg.knowler@spglobal.com .

Fallout from US-China trade war to depress trans-Pacific volumes: Drewry

<div class="phx-topic abstract-wrapper">The president of the second-largest US LTL provider sees Amazon’s decision to offer its vendors LTL service as an opportunity for ODFL to move more retail freight. </div>

The president of the second-largest US LTL provider sees Amazon’s decision to offer its vendors LTL service as an opportunity for ODFL to move more retail freight.

<div class="phx-topic">Amazon’s interest in less-than-truckload (LTL) shipments isn’t a bad thing for the LTL sector, and may even be an opportunity, the president of Old Dominion Freight Line (ODFL) said Wednesday. “We really don’t see Amazon’s LTL offering as a threat to the LTL industry, especially Old Dominion,” Marty Freeman told Wall Street analysts during his company’s first-quarter earnings call. “As I understand it, it’s mainly geared towards their own suppliers.” Recent reports that Amazon was hiring LTL specialists led to rumors the online retail giant might be interested in acquiring an existing LTL carrier or that it would create its own semi-autonomous LTL company to compete directly against ODFL and other carriers. Amazon earlier this month <a href="https://freight.amazon.com/newsroom/2025-ltl-inbound-launch?ref=E_CO_R4S_2025-ltl-inbound-launch_WEB_AR_">launched an LTL service</a> for vendors shipping goods to the company’s fulfillment and distribution centers. “I actually see it as an opportunity for us to help them with their logistics needs,” Freeman said. “If their suppliers need to pick up the same day, we certainly cover [the contiguous] 48 states and we’re able to help them out with that.” If Amazon wants help, ODFL certainly has available space. “We’ve got north of 30% [excess] capacity,” CFO Adam Satterfield said during the earnings call. The second-largest US LTL carrier also has less freight to move through its network, with its shipments per day falling 5% year over year in the first quarter to 44,566. The continuing soft market pushed LTL intercity miles down 7.4% in the quarter. ODFL’s LTL revenue dropped 5.8% year over year in the first quarter to $1.4 billion. So far this month, revenue is down 7% from the same three-week period a year ago, although revenue and demand this year were impacted by the timing of the Easter holiday, which occurred in March last year, Satterfield said. Even so, ODFL has been winning price increases in contract negotiations with customers, he said. “Our costs continue to go up, and so that’s why we’ve got to continue to ask for increases,” Satterfield said. <h3>LTL costs still elevated </h3>LTL pricing rose rapidly earlier this year. The monthly US long-distance LTL producer price index, a measure of all-inclusive shipping prices, was up 5.5% year over year in March, but was up 12.1% from July 2023, when former LTL provider Yellow went out of business. That alone may encourage some of Amazon’s vendors to consider giving their biggest customer more of their palletized shipments. Satterfield pointed out that retail freight represents only about 25% to 30% of ODFL’s business, which is still largely focused on industrial-based freight. But retail freight represents a “tailwind” for the LTL business, he said. Amazon has pulled LTL further into the retail world in the last decade by shifting “middle-mile” freight moving to distribution and fulfillment centers to LTL carriers. That’s a trend that will continue to play out, Satterfield said. “Many of those large retailers have on-time and in full [OTF] programs in place,” Satterfield said. “And that puts the burden on the vendor that’s controlling the freight charges and choosing the carrier to select a carrier that can help them meet those metrics and avoid fines and chargebacks.” Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

Amazon’s interest in less-than-truckload (LTL) shipments isn’t a bad thing for the LTL sector, and may even be an opportunity, the president of Old Dominion Freight Line (ODFL) said Wednesday. “We really don’t see Amazon’s LTL offering as a threat to the LTL industry, especially Old Dominion,” Marty Freeman told Wall Street analysts during his company’s first-quarter earnings call. “As I understand it, it’s mainly geared towards their own suppliers.” Recent reports that Amazon was hiring LTL specialists led to rumors the online retail giant might be interested in acquiring an existing LTL carrier or that it would create its own semi-autonomous LTL company to compete directly against ODFL and other carriers. Amazon earlier this month launched an LTL service for vendors shipping goods to the company’s fulfillment and distribution centers. “I actually see it as an opportunity for us to help them with their logistics needs,” Freeman said. “If their suppliers need to pick up the same day, we certainly cover [the contiguous] 48 states and we’re able to help them out with that.” If Amazon wants help, ODFL certainly has available space. “We’ve got north of 30% [excess] capacity,” CFO Adam Satterfield said during the earnings call. The second-largest US LTL carrier also has less freight to move through its network, with its shipments per day falling 5% year over year in the first quarter to 44,566. The continuing soft market pushed LTL intercity miles down 7.4% in the quarter. ODFL’s LTL revenue dropped 5.8% year over year in the first quarter to $1.4 billion. So far this month, revenue is down 7% from the same three-week period a year ago, although revenue and demand this year were impacted by the timing of the Easter holiday, which occurred in March last year, Satterfield said. Even so, ODFL has been winning price increases in contract negotiations with customers, he said. “Our costs continue to go up, and so that’s why we’ve got to continue to ask for increases,” Satterfield said. LTL costs still elevated LTL pricing rose rapidly earlier this year. The monthly US long-distance LTL producer price index, a measure of all-inclusive shipping prices, was up 5.5% year over year in March, but was up 12.1% from July 2023, when former LTL provider Yellow went out of business. That alone may encourage some of Amazon’s vendors to consider giving their biggest customer more of their palletized shipments. Satterfield pointed out that retail freight represents only about 25% to 30% of ODFL’s business, which is still largely focused on industrial-based freight. But retail freight represents a “tailwind” for the LTL business, he said. Amazon has pulled LTL further into the retail world in the last decade by shifting “middle-mile” freight moving to distribution and fulfillment centers to LTL carriers. That’s a trend that will continue to play out, Satterfield said. “Many of those large retailers have on-time and in full [OTF] programs in place,” Satterfield said. “And that puts the burden on the vendor that’s controlling the freight charges and choosing the carrier to select a carrier that can help them meet those metrics and avoid fines and chargebacks.” Contact William B. Cassidy at bill.cassidy@spglobal.com .

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

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Shippers save money, time with automated transportation bidding tools

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

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