<div class="phx-topic abstract-wrapper">While long-term optimism supports the MPV market, industry analysts see short-term divergence in time charter rate averages. </div>

While long-term optimism supports the MPV market, industry analysts see short-term divergence in time charter rate averages.

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<div>November forecasts for two key indices focused on the multipurpose/heavy-lift (MPV/HL) fleet continue to diverge in a trend first seen in October, with Toepfer’s Multipurpose Index (TMI) sliding while Drewry’s Multipurpose Index ticks higher.However, even as the TMI sags thanks to project delays and a lack of expected wind energy cargo, the owners and operators that provide the data for the index remain optimistic for the longer term, according to Yorck Niclas Prehm, Hamburg-based Toepfer’s head of research. The TMI is expected to be up 3.12% in six months and 7.23% in 12 months. Prehm said that optimism is supported...

November forecasts for two key indices focused on the multipurpose/heavy-lift (MPV/HL) fleet continue to diverge in a trend first seen in October, with Toepfer’s Multipurpose Index (TMI) sliding while Drewry’s Multipurpose Index ticks higher. However, even as the TMI sags thanks to project delays and a lack of expected wind energy cargo, the owners and operators that provide the data for the index remain optimistic for the longer term, according to Yorck Niclas Prehm, Hamburg-based Toepfer’s head of research. The TMI is expected to be up 3.12% in six months and 7.23% in 12 months. Prehm said that optimism is supported by a modest upswing of MPV newbuilding orders, with more expected. “Three German tonnage providers as well as an entity close to a carrier have ordered in total 12 firm F500s over the past three month, with all of them holding options for additional ships,” Prehm told the Journal of Commerce Thursday. “Furthermore, quite a few carriers are actively tendering newbuildings at Asian shipyards.” Toepfer’s TMI is expected to decline to $12,208 per day in November, down 2.9% from October’s $12,572. The TMI has been sliding since July 2022, the height of the COVID market for the MPV sector when it topped out at $23,099 per day. It is down 47% from that record high and 35.5% lower year over year. The TMI is based on expected average rates for six- to 12-month time charters for 12,500 deadweight ton (dwt) heavy-lift capable “F-Type” vessels, as reported to Toepfer by owners and operators.  In contrast, London-based maritime consultancy Drewry’s Multipurpose Time Charter Index came in at $8,640 per day for October, just above the forecast of $8,634. It is forecast to increase 0.3% during November, to $8,669. The Drewry index averages one-year charter rates across a basket of three multipurpose vessel sizes, including smaller low to ungeared vessels used primarily in European short-sea trades. Drewry noted in its November report that China’s domination of shipbuilding could potentially create issues for the industry. “Recent China-US tensions in relation to Taiwan, Chinese military activity in the South China Sea and the government’s stance on the Russia-Ukraine war increase the risk of trade sanctions or restrictions between China and the West,” the report said. “If this situation escalates, delayed vessel deliveries or even complete abandonment of certain contracts could become a possibility, depending on the severity of the situation.” Rates for handysize bulkers, which are important competitors with MPVs for neobulk and bulk cargoes, particularly backhauls, slid over the summer but began improving into the fall.  As reported by Singapore-based bulk carrier Pacific Basin , the Baltic Exchange Handysize Index was at 588 on Nov. 12, up 51% from a summertime low of 389 on Aug. 6 but down 15% from October’s high of 691. Contact Janet Nodar at janet.nodar@spglobal.com .

Breakbulk carriers

Energy projects

Breakbulk News

MPV indices from Toepfer, Drewry continue down different paths

<div class="phx-topic abstract-wrapper">The main heavy-lift components needed for datacenters are cooling infrastructure such as large-scale air conditioners and backup power infrastructure such as batteries, diesel generators and transformers. </div>

The main heavy-lift components needed for datacenters are cooling infrastructure such as large-scale air conditioners and backup power infrastructure such as batteries, diesel generators and transformers.

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<div class="phx-topic">The already rapid construction of datacenters in the US is struggling to keep up with the growing needs of artificial intelligence and cloud storage — and now, tariffs are amplifying those hurdles. Capital expenditures by the five largest cloud infrastructure providers increased by almost 60% in the second quarter of 2024 year over year to $55 billion, according to data from S&amp;P Global Market Intelligence, and most of that spending is directed to the building of datacenters that host AI capabilities. Market Intelligence data also shows the datacenter footprint is projected to grow more than 58% — to more than 480 million square feet — between 2024 and 2029. “The datacenter industry has been growing dramatically in the past several years even before the AI explosion two years ago,” said Liu Perkins, S&amp;P Global Market Intelligence’s senior research analyst on datacenter infrastructure. “The cloud datacenters have already been in strong growth. But on top of that, this AI growth has triggered a big change, [positioning] the North American market in the leading position, and now the rest of the world is trying to catch up as well.” S&amp;P Global is the parent company of the Journal of Commerce. Speaking at the Journal of Commerce Breakbulk and Project Cargo Conference in New Orleans last month, Beth Branch, president and CEO of the Port of New Orleans and CEO of the New Orleans Public Belt Railroad, said that datacenters offered a “really massive” opportunity for breakbulk and project cargo over the coming years. She referenced Meta’s construction of a $10 billion AI datacenter in northeast Louisiana — which will be Meta’s largest site globally — as an example of the scale of data projects in the pipeline. Growth has been driven further by government investments and incentivization. “The speed that datacenters are being built has become condensed,” a project cargo shipper told the Journal of Commerce. “The velocity that projects like this can be done in is amazing when there is government money available that can be thrown at them.” Dan Thompson, an S&amp;P Global research analyst with a focus on datacenters, said that the industry is “operating behind the curve” in terms of fulfilling demand, and while companies are aggressively building datacenters, questions remain whether they can truly meet the infrastructure needs for emerging technologies such as AI. <h3>Sourcing hurdles could stunt growth </h3>The demand for datacenters has led to a significant manufacturing backlog, which some analysts say could be impacted by tariffs on Chinese products, thus affecting project timelines and import costs. AI and cloud storage are forcing exponential growth in the datacenter industry, and in an industry where manufacturing is already a significant pain point, tariffs on Chinese-sourced infrastructure components are a taboo topic for many datacenter engineering, procurement and construction companies (EPCs). According to S&amp;P Global Market Intelligence, AI’s growing use of graphic processing units (GPUs) consumes as much as 10 times more energy per chip than traditional central processing units (CPUs). While many of the infrastructure components are subject to manufacturing hurdles, transformer availability continues to pose a critical issue, said Thompson. The datacenter projects — costing about $10 million per megawatt — usually take about 12 to 18 months in the US, with two to three years needed in other countries, he said. While the US tends to get the projects done faster, there are delays — especially on the manufacturing side. As such, many project managers have begun to get ahead of their procurement schedules, opting to head off any growing backlog. “We see a lot of providers, operators, try to secure the supply of key parts and equipment way ahead of time — putting orders in a year or two ahead of their schedule to try and secure the supply,” Perkins said. The main heavy-lift components needed for datacenters are cooling infrastructure — such as large-scale air conditioners — and backup power infrastructure such as batteries, diesel generators and transformers. “A lot of the delays are in getting these large-scale transformers,” said Thompson. “It seems to me that manufacturing can’t keep up. Along with diesel generators — the leads times on those keep getting longer.” Both Perkins and Thompson agreed that tariffs have exacerbated concerns around sourcing, which was already considered a difficult topic before the Trump tariffs were implemented in April. “Suddenly, no one wants to get very precise as to where all of this stuff comes from,” said Thompson. “Most companies have some manufacturing in the United States, but it may just be assembly.” <h3>Destination factors a consideration </h3>Much of the datacenter construction is taking place in rural areas of Ohio, Wyoming, Virginia and Texas. That means things such as the availability of power and roads designed to handle heavy cargo pose significant infrastructure challenges. Much of the equipment is brought in and assembled locally before installation, but large components continue to pose hurdles for the projects. Additionally, beyond the roads, there is a need for terminals designed to handle sufficient pounds per square foot for the heavyweight components being used. While many of the existing datacenters were constructed near hubs and urban areas, there is a growing need to serve more rural areas with lower network connectivity. As such, the development of centers in those areas often presents a catch-22 — depending on existing utility infrastructure but demanding increased output from that same infrastructure. “In addition to the traditional hubs, there’s also emergent places, especially because of the increase of the need,” said Perkins. “That capacity is driving more demand to the utility system, and the utility is not quick enough to catch up to provide the energy required by these datacenters, forcing datacenters to go where energy is available.” There are also the accompanying power centers to construct, needed to supply the vast amounts of energy needed for datacenters and offering another cargo avenue for the heavy-lift industry. “Datacenters do not want to build their own power plants; that’s not their goal. They would much rather take power from the grid,” said Amy Groeschel, principal research analyst, costs and technology, at S&amp;P Global Commodity Insights. “So, the siting of those datacenters will become very key.” And while the growth in datacenter development poses a hurdle for manufacturers, it also offers an opportunity for project cargo vessel operators. “The time on the water is back to the normal situation,” Perkins said. “It was chaos during the pandemic and for a short time post-pandemic, but I think that the shipment part is [back to normal] already. I think the challenge is specifically with manufacturing capability.” Contact Laura Robb at <a href="mailto:laura.robb@spglobal.com">laura.robb@spglobal.com</a>.  </div>

The already rapid construction of datacenters in the US is struggling to keep up with the growing needs of artificial intelligence and cloud storage — and now, tariffs are amplifying those hurdles. Capital expenditures by the five largest cloud infrastructure providers increased by almost 60% in the second quarter of 2024 year over year to $55 billion, according to data from S&P Global Market Intelligence, and most of that spending is directed to the building of datacenters that host AI capabilities. Market Intelligence data also shows the datacenter footprint is projected to grow more than 58% — to more than 480 million square feet — between 2024 and 2029. “The datacenter industry has been growing dramatically in the past several years even before the AI explosion two years ago,” said Liu Perkins, S&P Global Market Intelligence’s senior research analyst on datacenter infrastructure. “The cloud datacenters have already been in strong growth. But on top of that, this AI growth has triggered a big change, [positioning] the North American market in the leading position, and now the rest of the world is trying to catch up as well.” S&P Global is the parent company of the Journal of Commerce. Speaking at the Journal of Commerce Breakbulk and Project Cargo Conference in New Orleans last month, Beth Branch, president and CEO of the Port of New Orleans and CEO of the New Orleans Public Belt Railroad, said that datacenters offered a “really massive” opportunity for breakbulk and project cargo over the coming years. She referenced Meta’s construction of a $10 billion AI datacenter in northeast Louisiana — which will be Meta’s largest site globally — as an example of the scale of data projects in the pipeline. Growth has been driven further by government investments and incentivization. “The speed that datacenters are being built has become condensed,” a project cargo shipper told the Journal of Commerce. “The velocity that projects like this can be done in is amazing when there is government money available that can be thrown at them.” Dan Thompson, an S&P Global research analyst with a focus on datacenters, said that the industry is “operating behind the curve” in terms of fulfilling demand, and while companies are aggressively building datacenters, questions remain whether they can truly meet the infrastructure needs for emerging technologies such as AI. Sourcing hurdles could stunt growth The demand for datacenters has led to a significant manufacturing backlog, which some analysts say could be impacted by tariffs on Chinese products, thus affecting project timelines and import costs. AI and cloud storage are forcing exponential growth in the datacenter industry, and in an industry where manufacturing is already a significant pain point, tariffs on Chinese-sourced infrastructure components are a taboo topic for many datacenter engineering, procurement and construction companies (EPCs). According to S&P Global Market Intelligence, AI’s growing use of graphic processing units (GPUs) consumes as much as 10 times more energy per chip than traditional central processing units (CPUs). While many of the infrastructure components are subject to manufacturing hurdles, transformer availability continues to pose a critical issue, said Thompson. The datacenter projects — costing about $10 million per megawatt — usually take about 12 to 18 months in the US, with two to three years needed in other countries, he said. While the US tends to get the projects done faster, there are delays — especially on the manufacturing side. As such, many project managers have begun to get ahead of their procurement schedules, opting to head off any growing backlog. “We see a lot of providers, operators, try to secure the supply of key parts and equipment way ahead of time — putting orders in a year or two ahead of their schedule to try and secure the supply,” Perkins said. The main heavy-lift components needed for datacenters are cooling infrastructure — such as large-scale air conditioners — and backup power infrastructure such as batteries, diesel generators and transformers. “A lot of the delays are in getting these large-scale transformers,” said Thompson. “It seems to me that manufacturing can’t keep up. Along with diesel generators — the leads times on those keep getting longer.” Both Perkins and Thompson agreed that tariffs have exacerbated concerns around sourcing, which was already considered a difficult topic before the Trump tariffs were implemented in April. “Suddenly, no one wants to get very precise as to where all of this stuff comes from,” said Thompson. “Most companies have some manufacturing in the United States, but it may just be assembly.” Destination factors a consideration Much of the datacenter construction is taking place in rural areas of Ohio, Wyoming, Virginia and Texas. That means things such as the availability of power and roads designed to handle heavy cargo pose significant infrastructure challenges. Much of the equipment is brought in and assembled locally before installation, but large components continue to pose hurdles for the projects. Additionally, beyond the roads, there is a need for terminals designed to handle sufficient pounds per square foot for the heavyweight components being used. While many of the existing datacenters were constructed near hubs and urban areas, there is a growing need to serve more rural areas with lower network connectivity. As such, the development of centers in those areas often presents a catch-22 — depending on existing utility infrastructure but demanding increased output from that same infrastructure. “In addition to the traditional hubs, there’s also emergent places, especially because of the increase of the need,” said Perkins. “That capacity is driving more demand to the utility system, and the utility is not quick enough to catch up to provide the energy required by these datacenters, forcing datacenters to go where energy is available.” There are also the accompanying power centers to construct, needed to supply the vast amounts of energy needed for datacenters and offering another cargo avenue for the heavy-lift industry. “Datacenters do not want to build their own power plants; that’s not their goal. They would much rather take power from the grid,” said Amy Groeschel, principal research analyst, costs and technology, at S&P Global Commodity Insights. “So, the siting of those datacenters will become very key.” And while the growth in datacenter development poses a hurdle for manufacturers, it also offers an opportunity for project cargo vessel operators. “The time on the water is back to the normal situation,” Perkins said. “It was chaos during the pandemic and for a short time post-pandemic, but I think that the shipment part is [back to normal] already. I think the challenge is specifically with manufacturing capability.” Contact Laura Robb at laura.robb@spglobal.com . 

Maritime

Supply chain

Heavy-haul transport

Project cargo

Datacenter growth poses manufacturing hurdle, project carrier opportunity

<div class="phx-topic abstract-wrapper">Importers in the US are rewiring their supply chains and drawing extra inventory from Canada, Mexico and domestically in a “wait and see” response to the trans-Pacific trade war, according to Vincent Clerc.</div>

Importers in the US are rewiring their supply chains and drawing extra inventory from Canada, Mexico and domestically in a “wait and see” response to the trans-Pacific trade war, according to Vincent Clerc.

<div class="phx-topic">US retailers are in a race to find inventory from alternative sources to China, with Maersk CEO Vincent Clerc warning Thursday they may have until summer to fill stocks or risk seeing shortages “across the board.” Volume from China to the US has fallen 30% to 40% since the Trump administration’s imposition of 145% tariffs on most Chinese imports on April 9, Clerc told analysts on the carrier’s first-quarter earnings call. “Everybody is rewiring their supply chains and looking at bringing in extra inventory based on the SKUs [stock keeping units] that they’re most concerned with,” Clerc said, as shippers waited to see whether there would be any easing of tariffs on China. “Right now, the race is about trying to get your hands on as much inventory as possible,” he added. “They’re drawing on the inventories they have in Canada. They’re drawing on inventories they have in Mexico, and on distributors and other vendors inside the US to see how long they can hoard those goods.” Clerc said in the industrials and automotive sectors, and in commodities such as rare earth and semiconductors, the import decline was “going to bite soon.” “There are certain commodities where you can’t substitute imports freely, both in terms of SKUs but also in terms of quantities, because the capacity there was in China is not readily available elsewhere to support the US market,” he said. While empty shelves in big box retailers in the US were not “right around the corner,” Clerc said if inventory could not be found before the summer “it’s going to start to hurt quite a lot across the board.” Maersk is not as exposed as other carriers to the trans-Pacific disruption. The dramatic drop in US imports from China had little effect on its first-quarter result, with China-US trade comprising only 5% of the carrier’s total volume. Maersk reported a strong start to the year with revenue in the first quarter rising 7.8% year over year to $13.3 billion and earnings before interest, taxes, depreciation and amortization (EBITDA) up 70% at $2.7 billion. Earnings before interest and taxes (EBIT) of $1.25 billion were six times higher than the year-ago period, as was a net profit of $1.2 billion. The carrier’s volume in the first quarter grew just 0.1% year over year at 2.9 million FEUs, but it was a decline of 6.5% compared with the last quarter of 2024. Its average rates followed a similar trajectory, rising 2.5% year over year to $2,427 per FEU but down 8.7% quarter over quarter. <h3>Geopolitics drags down global volume forecast </h3>Maersk left its full-year EBIT forecast of zero to $3 billion unchanged. But the increasing macroeconomic and geopolitical uncertainty saw the carrier leave open the possibility of negative growth in global container volumes, revising its forecast to a range between -1% and 4%. Its previous forecast was for 4% market growth in volumes. Clerc explained the reasoning behind the revised volume growth, saying the supply-side risks from new tonnage being delivered combined with a return to Red Sea transits have faded this year. Although significant amounts of capacity were still entering the market, there was little chance of carriers returning to the Red Sea this year despite <a href="https://www.joc.com/article/apparent-houthi-ceasefire-raises-container-shipping-overcapacity-risk-5999930">an apparent ceasefire with the Houthis announced earlier this week</a> by US President Donald Trump. On the demand side, Clerc pointed to the erratic nature of the US tariffs that were creating new levels of uncertainty. “For me, 145% tariffs on China were not really in the base case that we had ... and some of these other tariffs that have been set on pause for 90 days were also higher than what most people expected,” he said. The Trump administration a month ago announced a 90-day pause for countries open to negotiations, leaving a 10% across-the-board baseline tariff in place during the negotiating period. Some positive trade momentum has begun to emerge. The White House announced a trade deal between the US and the UK Thursday, although no details were provided, and representatives from the US and China are set to meet for trade talks in Switzerland this weekend. “If this resolves itself quickly with a lot of trade deals within the 90 days, and maybe a de-escalation with China, you will see the demand side bounce back to somewhere around 4% for the year,” Clerc said. But if the tariffs became entrenched, it would lead to lower global demand and increase the risk of recession in the US, he added. “Because ultimately, given the lack of alternatives to China, both in terms of scale and breadth, this will have to be passed on to consumers,” Clerc said. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

US retailers are in a race to find inventory from alternative sources to China, with Maersk CEO Vincent Clerc warning Thursday they may have until summer to fill stocks or risk seeing shortages “across the board.” Volume from China to the US has fallen 30% to 40% since the Trump administration’s imposition of 145% tariffs on most Chinese imports on April 9, Clerc told analysts on the carrier’s first-quarter earnings call. “Everybody is rewiring their supply chains and looking at bringing in extra inventory based on the SKUs [stock keeping units] that they’re most concerned with,” Clerc said, as shippers waited to see whether there would be any easing of tariffs on China. “Right now, the race is about trying to get your hands on as much inventory as possible,” he added. “They’re drawing on the inventories they have in Canada. They’re drawing on inventories they have in Mexico, and on distributors and other vendors inside the US to see how long they can hoard those goods.” Clerc said in the industrials and automotive sectors, and in commodities such as rare earth and semiconductors, the import decline was “going to bite soon.” “There are certain commodities where you can’t substitute imports freely, both in terms of SKUs but also in terms of quantities, because the capacity there was in China is not readily available elsewhere to support the US market,” he said. While empty shelves in big box retailers in the US were not “right around the corner,” Clerc said if inventory could not be found before the summer “it’s going to start to hurt quite a lot across the board.” Maersk is not as exposed as other carriers to the trans-Pacific disruption. The dramatic drop in US imports from China had little effect on its first-quarter result, with China-US trade comprising only 5% of the carrier’s total volume. Maersk reported a strong start to the year with revenue in the first quarter rising 7.8% year over year to $13.3 billion and earnings before interest, taxes, depreciation and amortization (EBITDA) up 70% at $2.7 billion. Earnings before interest and taxes (EBIT) of $1.25 billion were six times higher than the year-ago period, as was a net profit of $1.2 billion. The carrier’s volume in the first quarter grew just 0.1% year over year at 2.9 million FEUs, but it was a decline of 6.5% compared with the last quarter of 2024. Its average rates followed a similar trajectory, rising 2.5% year over year to $2,427 per FEU but down 8.7% quarter over quarter. Geopolitics drags down global volume forecast Maersk left its full-year EBIT forecast of zero to $3 billion unchanged. But the increasing macroeconomic and geopolitical uncertainty saw the carrier leave open the possibility of negative growth in global container volumes, revising its forecast to a range between -1% and 4%. Its previous forecast was for 4% market growth in volumes. Clerc explained the reasoning behind the revised volume growth, saying the supply-side risks from new tonnage being delivered combined with a return to Red Sea transits have faded this year. Although significant amounts of capacity were still entering the market, there was little chance of carriers returning to the Red Sea this year despite an apparent ceasefire with the Houthis announced earlier this week by US President Donald Trump. On the demand side, Clerc pointed to the erratic nature of the US tariffs that were creating new levels of uncertainty. “For me, 145% tariffs on China were not really in the base case that we had ... and some of these other tariffs that have been set on pause for 90 days were also higher than what most people expected,” he said. The Trump administration a month ago announced a 90-day pause for countries open to negotiations, leaving a 10% across-the-board baseline tariff in place during the negotiating period. Some positive trade momentum has begun to emerge. The White House announced a trade deal between the US and the UK Thursday, although no details were provided, and representatives from the US and China are set to meet for trade talks in Switzerland this weekend. “If this resolves itself quickly with a lot of trade deals within the 90 days, and maybe a de-escalation with China, you will see the demand side bounce back to somewhere around 4% for the year,” Clerc said. But if the tariffs became entrenched, it would lead to lower global demand and increase the risk of recession in the US, he added. “Because ultimately, given the lack of alternatives to China, both in terms of scale and breadth, this will have to be passed on to consumers,” Clerc said. Contact Greg Knowler at greg.knowler@spglobal.com .

Container lines

Trans-Pacific

Container Shipping News

US in race to replenish China stocks to avoid summer shortages: Maersk CEO

<div class="phx-topic abstract-wrapper">Sources anticipate the additional rerouting costs in the region will force other ocean carriers to follow suit on similar surcharges.</div>

Sources anticipate the additional rerouting costs in the region will force other ocean carriers to follow suit on similar surcharges.

<div class="phx-topic">Shippers are beginning to feel the financial pinch of the sudden escalation in military tensions between India and Pakistan in the form of contingency surcharges levied by mainline ocean carriers. The first known levy comes from CMA CGM, which has slapped an “operational recovery surcharge” of $800 per container for Pakistan exports and $300 per box for imports. The extra charges are due to start May 15 on non-US trade lanes and from June 6 for US cargo. “This decision has been necessitated by the recent geopolitical developments in the region, which are significantly impacting our operations,” the French carrier told Pakistani customers. “To ensure that we continue to provide you with the high level of service you expect from us, we have had to adapt and adjust our services accordingly.” Sources anticipate additional rerouting costs in the region will force other carriers to follow suit on similar surcharges. Indian shippers should also expect some “add-on” charges, albeit milder than that of the Pakistan scale, local forwarders believe. The Indian government last week imposed a ban on Pakistan-origin cargo passing through its ports, raising the risk of schedule disruptions for services with twin market coverage in India and Pakistan. Major liners are frantically adjusting schedules and rotations for their Indian networks calling both markets to keep freight moving, with Hapag-Lloyd choosing Salalah Port in Oman and CMA CGM opting for Abu Dhabi’s Khalifa Port as alternative transshipment hubs to serve Pakistani trades with feeder support. Salalah is already a key intermediate point for Gemini Cooperation services, including Hapag-Lloyd’s India-Europe string (IOS). “We are actively working on evaluating long-term alternative solutions and rerouting measures to minimize the impact on [customer] supply chain,” Hapag-Lloyd said in a customer advisory. CMA CGM has also announced a new feeder loop, known as the PIKEX, with a rotation of Jebel Ali, Khalifa, Karachi, Port Qasim, Colombo, Karachi and Jebel Ali to handle Pakistan cargo relays. “We have undertaken a thorough review of our maritime services to ensure the continued reliability and safety of ... cargo shipments,” CMA CGM said. Contact Bency Mathew at <a href="mailto:bencyvmathew@gmail.com">bencyvmathew@gmail.com</a>. </div>

Shippers are beginning to feel the financial pinch of the sudden escalation in military tensions between India and Pakistan in the form of contingency surcharges levied by mainline ocean carriers. The first known levy comes from CMA CGM, which has slapped an “operational recovery surcharge” of $800 per container for Pakistan exports and $300 per box for imports. The extra charges are due to start May 15 on non-US trade lanes and from June 6 for US cargo. “This decision has been necessitated by the recent geopolitical developments in the region, which are significantly impacting our operations,” the French carrier told Pakistani customers. “To ensure that we continue to provide you with the high level of service you expect from us, we have had to adapt and adjust our services accordingly.” Sources anticipate additional rerouting costs in the region will force other carriers to follow suit on similar surcharges. Indian shippers should also expect some “add-on” charges, albeit milder than that of the Pakistan scale, local forwarders believe. The Indian government last week imposed a ban on Pakistan-origin cargo passing through its ports, raising the risk of schedule disruptions for services with twin market coverage in India and Pakistan. Major liners are frantically adjusting schedules and rotations for their Indian networks calling both markets to keep freight moving, with Hapag-Lloyd choosing Salalah Port in Oman and CMA CGM opting for Abu Dhabi’s Khalifa Port as alternative transshipment hubs to serve Pakistani trades with feeder support. Salalah is already a key intermediate point for Gemini Cooperation services, including Hapag-Lloyd’s India-Europe string (IOS). “We are actively working on evaluating long-term alternative solutions and rerouting measures to minimize the impact on [customer] supply chain,” Hapag-Lloyd said in a customer advisory. CMA CGM has also announced a new feeder loop, known as the PIKEX, with a rotation of Jebel Ali, Khalifa, Karachi, Port Qasim, Colombo, Karachi and Jebel Ali to handle Pakistan cargo relays. “We have undertaken a thorough review of our maritime services to ensure the continued reliability and safety of ... cargo shipments,” CMA CGM said. Contact Bency Mathew at bencyvmathew@gmail.com .

Port News

Asia-Europe

CMA CGM levies emergency surcharges on Pakistani trade amid India tensions

<div class="phx-topic abstract-wrapper">The world’s largest shipping company said Wednesday the service suspensions and network changes were “in response to the recent changes in demand for cargo transport from Asia to the US.”</div>

The world’s largest shipping company said Wednesday the service suspensions and network changes were “in response to the recent changes in demand for cargo transport from Asia to the US.”

<div class="phx-topic">Mediterranean Shipping Co. has halted two services from China to the US and revamped other container services to the East and Gulf coasts as the Trump administration’s tariffs against Beijing continue to weaken freight demand. The world’s largest shipping company said in an advisory Wednesday the service suspensions and network changes were “in response to the recent changes in demand for cargo transport from Asia to the US.” Following the Trump administration’s imposition of 145% tariffs on most Chinese imports, ocean carriers reported seeing container volumes drop by one-third. Hapag-Lloyd and US-based Matson both said volumes out of China dropped 30% after April 9 when the new China tariffs went into effect. The affected MSC services are all part of <a href="https://www.joc.com/article/network-realignment-shines-light-on-hub-focused-product-vs-direct-calls-5783930">the carrier’s 2025 network following the dissolution of the 2M Alliance with Maersk</a>. In place of Maersk, <a href="https://www.joc.com/article/zim-msc-ink-cooperation-deal-on-services-linking-asia-europe-and-med-5223119">Zim Integrated Shipping Services has signed on to share vessel space and charter slots</a> on some of MSC’s Asia-US routes. The suspensions include the Empire service, which calls three of China’s largest ports and the East Coast ports of New York and New Jersey, Norfolk and Baltimore. The service provided 11,500 TEUs in weekly capacity, according to a report from Hong Kong-based logistics provider Honour Lane Shipping.MSC will also suspend the Pelican service from the Chinese ports of Xiamen and Yantian, along with Vietnam’s Vung Tau and South Korea’s Busan, and calling the Gulf Coast ports of Houston, Mobile and Tampa. Honour Lane said the Pelican service provides weekly capacity ranging between 6,500 and 8,500 TEUs. <h3>Boost SE Asia coverage</h3>The two service suspensions coincide with other interim changes by MSC taking effect this week on four other services that will increase port coverage of Southeast Asia and fill in coverage gaps. The America service from Asia to the US East Coast will stop calling China’s Yantian port, MSC said, while adding a westbound call at Vietnam’s Haiphong port and an eastbound call at the Port of Colombo in Sri Lanka. The service will also add East Coast calls at the ports of Savannah and Jacksonville, while dropping a call to Norfolk. The Amberjack service from China to the US Southeast will drop a call at China’s Nansha port but keep calling other major Chinese ports. Likewise, the Amberjack’s US rotation will now make its first two calls at the ports of New York-New Jersey and Baltimore and drop service to the Port of Wilmington, North Carolina. MSC’s Emerald service will add an outbound call at Taiwan’s Kaohsiung port. The service’s US leg will stop calling Jacksonville and Baltimore but add calls to Norfolk and Boston. The Lone Star service from Asia to the Gulf Coast will add a call at China’s Yantian port, along with adding calls to Singapore and Vung Tau. The service’s US rotation will drop a call at the Port of New Orleans. The MSC suspensions, among the first big ones to hit the East and Gulf coasts, follow similar steps for West Coast services that are also heavily exposed to Chinese freight. Alphaliner reported Tuesday that MSC also suspended its Orient service to Long Beach, while OOCL suspended its Pacific South China Express service to Long Beach.Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

Mediterranean Shipping Co. has halted two services from China to the US and revamped other container services to the East and Gulf coasts as the Trump administration’s tariffs against Beijing continue to weaken freight demand. The world’s largest shipping company said in an advisory Wednesday the service suspensions and network changes were “in response to the recent changes in demand for cargo transport from Asia to the US.” Following the Trump administration’s imposition of 145% tariffs on most Chinese imports, ocean carriers reported seeing container volumes drop by one-third. Hapag-Lloyd and US-based Matson both said volumes out of China dropped 30% after April 9 when the new China tariffs went into effect. The affected MSC services are all part of the carrier’s 2025 network following the dissolution of the 2M Alliance with Maersk . In place of Maersk, Zim Integrated Shipping Services has signed on to share vessel space and charter slots on some of MSC’s Asia-US routes. The suspensions include the Empire service, which calls three of China’s largest ports and the East Coast ports of New York and New Jersey, Norfolk and Baltimore. The service provided 11,500 TEUs in weekly capacity, according to a report from Hong Kong-based logistics provider Honour Lane Shipping. MSC will also suspend the Pelican service from the Chinese ports of Xiamen and Yantian, along with Vietnam’s Vung Tau and South Korea’s Busan, and calling the Gulf Coast ports of Houston, Mobile and Tampa. Honour Lane said the Pelican service provides weekly capacity ranging between 6,500 and 8,500 TEUs. Boost SE Asia coverage The two service suspensions coincide with other interim changes by MSC taking effect this week on four other services that will increase port coverage of Southeast Asia and fill in coverage gaps. The America service from Asia to the US East Coast will stop calling China’s Yantian port, MSC said, while adding a westbound call at Vietnam’s Haiphong port and an eastbound call at the Port of Colombo in Sri Lanka. The service will also add East Coast calls at the ports of Savannah and Jacksonville, while dropping a call to Norfolk. The Amberjack service from China to the US Southeast will drop a call at China’s Nansha port but keep calling other major Chinese ports. Likewise, the Amberjack’s US rotation will now make its first two calls at the ports of New York-New Jersey and Baltimore and drop service to the Port of Wilmington, North Carolina. MSC’s Emerald service will add an outbound call at Taiwan’s Kaohsiung port. The service’s US leg will stop calling Jacksonville and Baltimore but add calls to Norfolk and Boston. The Lone Star service from Asia to the Gulf Coast will add a call at China’s Yantian port, along with adding calls to Singapore and Vung Tau. The service’s US rotation will drop a call at the Port of New Orleans. The MSC suspensions, among the first big ones to hit the East and Gulf coasts, follow similar steps for West Coast services that are also heavily exposed to Chinese freight. Alphaliner reported Tuesday that MSC also suspended its Orient service to Long Beach, while OOCL suspended its Pacific South China Express service to Long Beach. Contact Michael Angell at michael.angell@spglobal.com .

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MSC suspends two US services, rejigs others as tariffs hit Chinese imports

<div class="phx-topic abstract-wrapper">Stephen Carmel’s nomination to lead the agency comes after the White House withdrew previous nominee Brent Sadler from consideration for the post.</div>

Stephen Carmel’s nomination to lead the agency comes after the White House withdrew previous nominee Brent Sadler from consideration for the post.

<div class="phx-topic">Former Maersk executive Stephen Carmel has been tapped by the Trump administration to serve as head of the US Maritime Administration (MARAD) after Brent Sadler’s nomination for the post was pulled. No reason was given for the switch, but Sadler, a retired US Navy Captain initially nominated in March to head MARAD, said on social media he supports Carmel. The White House announced on Tuesday that it would nominate Carmel as MARAD administrator. Carmel is currently president of US Marine Management, a Norfolk, Virginia-based maritime services provider to commercial and military fleets. Until September 2023, he served as senior vice president at Maersk Line Limited, the shipping line’s US-flag subsidiary. The MARAD administrator role has been vacant since January, when Ann Phillips resigned. MARAD, part of the US Department of Transportation, is responsible for US waterways, as well as supporting the US Maritime Service and US Merchant Marine. Carmel’s nomination comes amid a push by the Trump administration to revitalize US shipbuilding, with a planned set of fees targeting Chinese-built ships due to come into force in October. The revenue from those fees is meant to be channeled into a trust fund supporting US maritime activity. Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. </div>

Former Maersk executive Stephen Carmel has been tapped by the Trump administration to serve as head of the US Maritime Administration (MARAD) after Brent Sadler’s nomination for the post was pulled. No reason was given for the switch, but Sadler, a retired US Navy Captain initially nominated in March to head MARAD, said on social media he supports Carmel. The White House announced on Tuesday that it would nominate Carmel as MARAD administrator. Carmel is currently president of US Marine Management, a Norfolk, Virginia-based maritime services provider to commercial and military fleets. Until September 2023, he served as senior vice president at Maersk Line Limited, the shipping line’s US-flag subsidiary. The MARAD administrator role has been vacant since January, when Ann Phillips resigned. MARAD, part of the US Department of Transportation, is responsible for US waterways, as well as supporting the US Maritime Service and US Merchant Marine. Carmel’s nomination comes amid a push by the Trump administration to revitalize US shipbuilding, with a planned set of fees targeting Chinese-built ships due to come into force in October. The revenue from those fees is meant to be channeled into a trust fund supporting US maritime activity. Contact Eric Johnson at eric.johnson@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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