<div class="phx-topic abstract-wrapper">The 2M Alliance has closed one of its six Asia-North Europe services as MSC prepares for a wave of megaship capacity to be delivered in the next two months.</div>

The 2M Alliance has closed one of its six Asia-North Europe services as MSC prepares for a wave of megaship capacity to be delivered in the next two months.

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<div>The first signs of an unwinding 2M Alliance may be emerging on the Asia-Europe trade, with Maersk and Mediterranean Shipping Co. not reinstating a North Europe loop suspended in December. MSC is instead directing its massive orderbook into upsizing existing services and launching new ones. The dissolution of one of the alliance’s six Asia-North Europe loops comes just weeks after the 2M Alliance members <a>announced their vessel-sharing agreement would end in 2025</a>, with both carriers dismissing concerns over service interruptions ahead of the break-up. Maersk and MSC suspended the AE1/Shogun service in December, but it is now the first major...

The first signs of an unwinding 2M Alliance may be emerging on the Asia-Europe trade, with Maersk and Mediterranean Shipping Co. not reinstating a North Europe loop suspended in December. MSC is instead directing its massive orderbook into upsizing existing services and launching new ones. The dissolution of one of the alliance’s six Asia-North Europe loops comes just weeks after the 2M Alliance members announced their vessel-sharing agreement would end in 2025 , with both carriers dismissing concerns over service interruptions ahead of the break-up. Maersk and MSC suspended the AE1/Shogun service in December, but it is now the first major alliance loop in the Asia-Europe trade to be officially closed since Chinese export volumes began to tumble in September, Alphaliner noted in its weekly newsletter. MSC is preparing to take delivery of an enormous amount of megaship tonnage, with five vessels of 24,000 TEU to be delivered in April and May, and another nine vessels between 19,000 and 24,000 TEU to be delivered before the end of the year. A total of 40 megaships are in MSC’s 1.8 million TEU orderbook . With vessels beginning to flood into service, MSC is upsizing or introducing standalone services. Four of the megaships will be deployed on 2M’s Asia-North Europe AE6/Lion service starting this month, making it the biggest of all the alliance’s loops with average capacity increasing from 20,300 TEU to 22,700 TEU per week, according to Alphaliner. In a major capacity injection into the Asia-Mediterranean trade, MSC on Wednesday launched a revamped Dragon service — one of four 2M loops that was suspended in May 2020 — as a new standalone loop. The revamped service will continue to focus on the French and Italian markets but will not call at any Spanish ports or in Beirut, with a call instead added at Ashdod in Israel. Lars Jensen, founder and CEO of Vespucci Maritime and a Journal of Commerce analyst, predicted that after this Mediterranean standalone service, the 2M carriers “will drift apart more rapidly.” Restarting the Asia-Mediterranean loop after two years enables MSC to utilize its abundance of capacity in a trade that from a rate perspective is more attractive than North European destinations. Data from rate benchmarking platform Xeneta shows average Asia-North Europe spot rates valid for 90 days this week stand at $1,616 per FEU, while Asia-Mediterranean rates are at $2,740 per FEU. Structural overcapacity Rates from Asia to South Europe may be higher than those to destinations further north, but the Mediterranean trades have not escaped the precipitous decline in the spot market over the past few months. At this point last year, spot rates from Shanghai to Genoa in Italy were $12,619 per FEU, according to Drewry’s World Container Index, and the injection of capacity into Mediterranean routes will increase downward pressure on rate levels at a time of weak demand. Container Trades Statistics data for January, the latest figures available, shows volume on the Asia to Europe and Mediterranean trade fell by 11 percent year over year to 1.3 million TEU. “The structural overcapacity remains with carriers doing little to pull capacity out of the market,” Platts, a sister company of the Journal of Commerce within S&P Global, noted in a market update this week. “Instead, they continued to compete on volumes to fill vessels by offering discounted rates. The recent round of price competition has led to a significant dive in rates.” With demand differing across trade lanes that are burdened with an oversupply of capacity, carriers are suspending or adjusting services in pursuit of the shifting volume flows. MSC has extended its Asia-US West Coast standalone Sentosa service to North India and Sri Lanka, while Maersk has announced the temporary suspension of its standalone Southeast Asia-US East Coast TP20 service. CMA CGM in December launched its Americas XL service connecting the US East Coast with the West Coast of South America, with Zim Integrated Shipping Services (Zim) increasing capacity on its own US East Coast-West Coast South America service. Zim has also suspended its expedited trans-Pacific service from China to the US West Coast while increasing capacity on a service connecting the growing Southeast Asian market with the US East Coast. The Israeli carrier has also launched a direct service between the West Coast of South America and the US East Coast. Any decision to suspend or scrap a particular service essentially comes down to money, Zim CFO Xavier Destriau explained in an interview with the Journal of Commerce following the carrier’s 2022 annual results announcement this week. “We had to suspend the service as it could no longer generate the sort of premium that would make that sort of service profitable, and we could better deploy the vessels elsewhere,” he said. “If the rates stay where they are or go lower on other trades, we may decide to suspend some services,” Destriau added. “We have taken a few decisions in redeploying capacity to trades where we believe there are more opportunities to make money.” Contact Greg Knowler at greg.knowler@spglobal.com and follow him on Twitter: @greg_knowler .

Container Shipping News

Asia-Europe

Maritime

MSC makes moves to upsize, launch standalone services

<div class="phx-topic abstract-wrapper">The fees come as dwell times for refrigerated containers in Houston exceed a week and reefer volumes topped 10,000 TEUs for the first time in three years.</div>

The fees come as dwell times for refrigerated containers in Houston exceed a week and reefer volumes topped 10,000 TEUs for the first time in three years.

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<div class="phx-topic">Port Houston will implement new fees next month to force the movement of long-dwelling refrigerated import containers at the port. That comes as dwell times for reefer containers in Houston — a long-running problem — exceed a week and reefer volumes topped 10,000 TEUs for the first time in three years. “We are implementing these fees to maintain current operations, encourage the flow of cargo, and protect and add capacity ahead of forecasted demand,” Chief Port Operations Officer Ryan Mariacher told the Journal of Commerce. The new fees, which begin July 1 and kick in after one week of free time for most cargo, are $51.60 per day per container for one to three days, $77.40 per day for four to seven days, $103.20 per day for eight to 13 days, and $154.80 per day for 14 or more gate days. The new fees will override the existing sustained import dwell fee, which is $45 per day after one week. Mariacher acknowledged that reefer equipment at Houston is “dwelling excessively ... more than seven days.” The number of reefer containers being moved through Houston has risen every month between February and May, according to PIERS, a sister product of the Journal of Commerce within S&amp;P Global, with the boxes containing a variety of cargo including frozen chicken paws, shrimp, prawns, meat, plantains and pineapples. In May, the most recent data available, total reefer throughput was 10,747 TEUs — exceeding 10,000 TEUs for the first time since May 2022, according to PIERS. Reefer volume in May was up 40% over the same month a year earlier. Contact Laura Robb at <a href="mailto:Laura.Robb@spglobal.com">laura.robb@spglobal.com</a>.  </div>

Port Houston will implement new fees next month to force the movement of long-dwelling refrigerated import containers at the port. That comes as dwell times for reefer containers in Houston — a long-running problem — exceed a week and reefer volumes topped 10,000 TEUs for the first time in three years. “We are implementing these fees to maintain current operations, encourage the flow of cargo, and protect and add capacity ahead of forecasted demand,” Chief Port Operations Officer Ryan Mariacher told the Journal of Commerce. The new fees, which begin July 1 and kick in after one week of free time for most cargo, are $51.60 per day per container for one to three days, $77.40 per day for four to seven days, $103.20 per day for eight to 13 days, and $154.80 per day for 14 or more gate days. The new fees will override the existing sustained import dwell fee, which is $45 per day after one week. Mariacher acknowledged that reefer equipment at Houston is “dwelling excessively ... more than seven days.” The number of reefer containers being moved through Houston has risen every month between February and May, according to PIERS, a sister product of the Journal of Commerce within S&P Global, with the boxes containing a variety of cargo including frozen chicken paws, shrimp, prawns, meat, plantains and pineapples. In May, the most recent data available, total reefer throughput was 10,747 TEUs — exceeding 10,000 TEUs for the first time since May 2022, according to PIERS. Reefer volume in May was up 40% over the same month a year earlier. Contact Laura Robb at laura.robb@spglobal.com . 

North American ports

Port Houston implementing reefer dwell fees to encourage container flow

<div class="phx-topic abstract-wrapper">The railroad said the disruptions were the result of the switchover to a new operating system in early May, with the technology integration intended to unify old KCS systems into the CP network.</div>

The railroad said the disruptions were the result of the switchover to a new operating system in early May, with the technology integration intended to unify old KCS systems into the CP network.

<div class="phx-topic">Canadian Pacific Kansas City (CPKC) has acknowledged to US regulators that its customers have experienced poor service from the railroad since early May and vowed to fix the core issue — a messy transition from legacy Kansas City Southern (KCS) computer systems to CP networks. <a href="https://dcms-external.s3.amazonaws.com/DCMS_External_PROD/1750688210397/309692.pdf">A letter from CPKC</a> to the US Surface Transportation Board (STB), dated June 20, outlined how the railroad will restore service to normal levels within the next month. The disruptions have centered not on the trains themselves but rather on the first and last miles of journeys, with the problems linked to terminals and switch yards. “CPKC’s level of service performance on the legacy KCS network since May 3, 2025 … does not measure up to CPKC’s standards for the quality of service it provides customers or the efficient operation of its network,” the railroad wrote to the STB. “CPKC also wishes to reassure the board that there is no broader underlying service problem.” CPKC said the disruptions were the result of the switchover to a new operating system in early May. The technology integration was intended to unify old KCS systems into the CP network. But CPKC wrote that the rollout encountered critical failures that disrupted car tracking, customer billing and switching operations. The ripple effects were significant, forcing crews to manually reconstruct data. Congestion soon mounted across the former KCS network, and some of the railroad’s customers were caught unprepared. <h3>Impact on intermodal and manifest trains </h3>In the initial weeks of the disruption, truck drivers were <a href="https://www.joc.com/article/cpkc-grapples-with-complaints-over-us-canada-terminal-operations-6009914">spending hours waiting in lines</a> at terminals as crews had to be stationed at the gate to write receipts by hand. One CPKC customer had containers stuck inside the Wylie terminal in Texas for 10 days, according to data from GPS devices on the boxes. Two high-volume intermodal customers told the Journal of Commerce they pulled freight off the CPKC network in response. But Schneider National, CPKC’s top US partner, said the disruption was a minor blip. While CPKC’s letter to the STB focused on non-containerized freight, manifest and intermodal trains can impact one another in Laredo and Wylie, Texas, because they often share the same human resources, equipment and infrastructure. CPKC said the on-time performance of manifest trains, which hold a mixture of cargo, fell to 57.3% in a rolling four-week average ending June 13, dropping each week since the May 3 transition. Prior to May, on-time performance was regularly 75% to 85%. The situation was serious enough that CPKC created a “war room” in early May to troubleshoot issues. CPKC also flew in top executives, including COO Mark Redd, from Calgary to locations in Texas and the Gulf Coast to organize remedial efforts. “CPKC soon established cross-functional ‘SWAT-like’ support teams [comprised of experts from Operations, IT, and Network Support, and Marketing &amp; Sales, and including senior executives] to work through the issues arising from the IT transition,” CPKC wrote in the STB letter. “CPKC understands that some customer interactions with CPKC customer service personnel during the period may have been frustrating as a result of the issues with data visibility.” CPKC said it will continue to file weekly supplemental reports to update US regulators on the status of recovery efforts. “This report, along with the weekly cadence of updates we anticipate filing with the board as noted below, will provide those stakeholders with up-to-date data reflecting progress towards a return to normal service,” the railroad wrote. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>.</div>

Canadian Pacific Kansas City (CPKC) has acknowledged to US regulators that its customers have experienced poor service from the railroad since early May and vowed to fix the core issue — a messy transition from legacy Kansas City Southern (KCS) computer systems to CP networks. A letter from CPKC to the US Surface Transportation Board (STB), dated June 20, outlined how the railroad will restore service to normal levels within the next month. The disruptions have centered not on the trains themselves but rather on the first and last miles of journeys, with the problems linked to terminals and switch yards. “CPKC’s level of service performance on the legacy KCS network since May 3, 2025 … does not measure up to CPKC’s standards for the quality of service it provides customers or the efficient operation of its network,” the railroad wrote to the STB. “CPKC also wishes to reassure the board that there is no broader underlying service problem.” CPKC said the disruptions were the result of the switchover to a new operating system in early May. The technology integration was intended to unify old KCS systems into the CP network. But CPKC wrote that the rollout encountered critical failures that disrupted car tracking, customer billing and switching operations. The ripple effects were significant, forcing crews to manually reconstruct data. Congestion soon mounted across the former KCS network, and some of the railroad’s customers were caught unprepared. Impact on intermodal and manifest trains In the initial weeks of the disruption, truck drivers were spending hours waiting in lines at terminals as crews had to be stationed at the gate to write receipts by hand. One CPKC customer had containers stuck inside the Wylie terminal in Texas for 10 days, according to data from GPS devices on the boxes. Two high-volume intermodal customers told the Journal of Commerce they pulled freight off the CPKC network in response. But Schneider National, CPKC’s top US partner, said the disruption was a minor blip. While CPKC’s letter to the STB focused on non-containerized freight, manifest and intermodal trains can impact one another in Laredo and Wylie, Texas, because they often share the same human resources, equipment and infrastructure. CPKC said the on-time performance of manifest trains, which hold a mixture of cargo, fell to 57.3% in a rolling four-week average ending June 13, dropping each week since the May 3 transition. Prior to May, on-time performance was regularly 75% to 85%. The situation was serious enough that CPKC created a “war room” in early May to troubleshoot issues. CPKC also flew in top executives, including COO Mark Redd, from Calgary to locations in Texas and the Gulf Coast to organize remedial efforts. “CPKC soon established cross-functional ‘SWAT-like’ support teams [comprised of experts from Operations, IT, and Network Support, and Marketing & Sales, and including senior executives] to work through the issues arising from the IT transition,” CPKC wrote in the STB letter. “CPKC understands that some customer interactions with CPKC customer service personnel during the period may have been frustrating as a result of the issues with data visibility.” CPKC said it will continue to file weekly supplemental reports to update US regulators on the status of recovery efforts. “This report, along with the weekly cadence of updates we anticipate filing with the board as noted below, will provide those stakeholders with up-to-date data reflecting progress towards a return to normal service,” the railroad wrote. Contact Ari Ashe at ari.ashe@spglobal.com .

North-American rail

CPKC acknowledges service woes to US regulators, vows remediation

<div class="phx-topic abstract-wrapper">Internal and external forces in the first half of 2025 mitigated container vessel overcapacity, but steep challenges lie ahead, writes Journal of Commerce Executive Editor Mark Szakonyi.</div>

Internal and external forces in the first half of 2025 mitigated container vessel overcapacity, but steep challenges lie ahead, writes Journal of Commerce Executive Editor Mark Szakonyi.

<div class="phx-topic">External forces and a modicum of industry discipline mitigated yawning overcapacity in container shipping in the first half of 2025. But the sharpest pressures on ocean carriers’ capacity control, and resulting pricing, in the coming year are only intensifying — as reflected by the plunge in container spot rates on the trans-Pacific. The signs and rewards of capacity discipline in the first six months were modest. Container lines concluded annual trans-Pacific service contracts at levels 10% to 20% higher than last year, moving closer to $2,000 per FEU to the US West Coast for midsize importers, executives at three container lines told the Journal of Commence on the condition of anonymity. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6030001_0.1.jpg"></img></div>Those gains are less impressive when carriers’ operating costs have risen in the mid-single digits in the same period, largely due to higher chartering rates and terminal handling charges, but still speak to carriers’ increasing control of the market. Service contract rate levels in the past have crumbled in the face of a second-half plunge in spot rates, with importers successfully demanding pricing relief on minimum quantity commitments (MQCs) agreed to earlier in the year. There is no guarantee carriers would show the same resolve if a spot rate plunge followed the early and already waning peak season. But the fact that carriers mostly kept contracted importers to their MQC when spot rates began spiking in early May bodes well for their resolve. “We won’t be revising contracts,” an executive at a major Europe-based container line said he told major customers, adding that the biggest shipper customers finally realize that sharp enough rate declines will spur major capacity withdrawals, jeopardizing their restocking plans. The lessons of the danger of not pulling capacity fast enough when demand plunges, such as in 2008–09 when rates fell on a pullback of US imports due to the global financial crisis, still resonates. When China bookings surged in early May, carriers were able to add about 600,000 TEUs of capacity in the trans-Pacific within approximately a month, equating to up to 15% more weekly capacity than normal deployment levels, said Michael Aldwell, Kuehne +Nagel’s executive vice president of sea logistics. That Mediterranean Shipping Co. is no longer in an alliance gave it a free hand to restore capacity faster, and a modest peak season in Asia-Europe allowed the deployment of extra loaders by the world’s largest carrier (as measured by tonnage) and its rivals. The Gemini Cooperation of Maersk and Hapag-Lloyd substituted smaller vessels for larger ships when demand plunged, and then reversed course when bookings rebounded. Thus, Gemini didn’t need to blank capacity by skipping port calls, although some Asia outbound cargo initially shipped later than scheduled when demand outpaced what the smaller vessels could handle. That allowed Gemini to maintain its 90% reliability, keeping “our services going, while others have had to take capacity out by blanking,” Charles van der Steene, Maersk’s president of North America, told the Journal of Commerce in late May. But intra-Asia carriers piling into the trans-Pacific to take advantage of rising container spot rates, coupled with signs of a weaker-than-expected surge tied to the reprieve in higher US tariffs, began pulling down spot rates in early June. Carriers’ greater control of capacity “is a good thing, because we need stable, profitable ocean carriers to have a healthy industry,” Aldwell said in a June 16 interview at K+N’s headquarters in Schindellegi, Switzerland. “The last thing we need is another Hanjin [Shipping] crisis, because we’ve got long sustained losses in an industry which is so vital to global trade,” he added, referring to the 2016 collapse of the South Korea-based carrier. While carriers have exercised greater capacity control in recent years, Aldwell said the overcapacity challenges are still steep but added that it “doesn’t have to be a train wreck financially if it’s managed well for both customers and suppliers.” <h3>External factors tying up capacity </h3>MSC and CMA CGM’s major purchase of second-hand tonnage, sapping the amount of available chartered tonnage, has also served as a backstop to overcapacity, said Jeremy Masters, a shipping analyst and Journal of Commerce contributor. Approximately 2.3 million TEUs of capacity in the most-traded sector of the charter market — 7,000- to 9,000-TEU ships — has shrunk by 3.7 million TEUs in the last five years, according to analyst Alphaliner. “Of course, there will be a point of oversupply where even if all the assets were in the hands of the carriers, they would not be able to park enough ships in a concerted enough fashion quickly enough to keep supply below demand and thus keep rates up,” said Masters. “Recently, the carriers have been like a cat with seven lives,” he added, referring to how looming overcapacity has yet to bite. External factors such as port congestion are also tying up functional capacity. Northern European ports have been congested for months, while Asian ports such as Shanghai and Singapore have also been heavily affected. Major container lines still view Suez Canal transits as too risky even after President Donald Trump’s early May assertion that the Houthi rebels would stop attacks on commercial shipping in the Red Sea. The US missile attacks on Iran on Saturday demolished that fragile peace. The real test for container capacity control, according to the Europe-based shipping executive, will be after Golden Week, the week-long holiday in early October in which Chinese factories slow or halt production. US retailers’ confidence may falter by then, and the signals pointing to future consumption are worsening. In May, US retail sales fell, residential housing construction reached a five-year low and employment shrank, while airline travel fell in April and May. Contact Mark Szakonyi at <a href="mailto:mark.szakonyi@spglobal.com">mark.szakonyi@spglobal.com</a>.</div>

External forces and a modicum of industry discipline mitigated yawning overcapacity in container shipping in the first half of 2025. But the sharpest pressures on ocean carriers’ capacity control, and resulting pricing, in the coming year are only intensifying — as reflected by the plunge in container spot rates on the trans-Pacific. The signs and rewards of capacity discipline in the first six months were modest. Container lines concluded annual trans-Pacific service contracts at levels 10% to 20% higher than last year, moving closer to $2,000 per FEU to the US West Coast for midsize importers, executives at three container lines told the Journal of Commence on the condition of anonymity. Those gains are less impressive when carriers’ operating costs have risen in the mid-single digits in the same period, largely due to higher chartering rates and terminal handling charges, but still speak to carriers’ increasing control of the market. Service contract rate levels in the past have crumbled in the face of a second-half plunge in spot rates, with importers successfully demanding pricing relief on minimum quantity commitments (MQCs) agreed to earlier in the year. There is no guarantee carriers would show the same resolve if a spot rate plunge followed the early and already waning peak season. But the fact that carriers mostly kept contracted importers to their MQC when spot rates began spiking in early May bodes well for their resolve. “We won’t be revising contracts,” an executive at a major Europe-based container line said he told major customers, adding that the biggest shipper customers finally realize that sharp enough rate declines will spur major capacity withdrawals, jeopardizing their restocking plans. The lessons of the danger of not pulling capacity fast enough when demand plunges, such as in 2008–09 when rates fell on a pullback of US imports due to the global financial crisis, still resonates. When China bookings surged in early May, carriers were able to add about 600,000 TEUs of capacity in the trans-Pacific within approximately a month, equating to up to 15% more weekly capacity than normal deployment levels, said Michael Aldwell, Kuehne +Nagel’s executive vice president of sea logistics. That Mediterranean Shipping Co. is no longer in an alliance gave it a free hand to restore capacity faster, and a modest peak season in Asia-Europe allowed the deployment of extra loaders by the world’s largest carrier (as measured by tonnage) and its rivals. The Gemini Cooperation of Maersk and Hapag-Lloyd substituted smaller vessels for larger ships when demand plunged, and then reversed course when bookings rebounded. Thus, Gemini didn’t need to blank capacity by skipping port calls, although some Asia outbound cargo initially shipped later than scheduled when demand outpaced what the smaller vessels could handle. That allowed Gemini to maintain its 90% reliability, keeping “our services going, while others have had to take capacity out by blanking,” Charles van der Steene, Maersk’s president of North America, told the Journal of Commerce in late May. But intra-Asia carriers piling into the trans-Pacific to take advantage of rising container spot rates, coupled with signs of a weaker-than-expected surge tied to the reprieve in higher US tariffs, began pulling down spot rates in early June. Carriers’ greater control of capacity “is a good thing, because we need stable, profitable ocean carriers to have a healthy industry,” Aldwell said in a June 16 interview at K+N’s headquarters in Schindellegi, Switzerland. “The last thing we need is another Hanjin [Shipping] crisis, because we’ve got long sustained losses in an industry which is so vital to global trade,” he added, referring to the 2016 collapse of the South Korea-based carrier. While carriers have exercised greater capacity control in recent years, Aldwell said the overcapacity challenges are still steep but added that it “doesn’t have to be a train wreck financially if it’s managed well for both customers and suppliers.” External factors tying up capacity MSC and CMA CGM’s major purchase of second-hand tonnage, sapping the amount of available chartered tonnage, has also served as a backstop to overcapacity, said Jeremy Masters, a shipping analyst and Journal of Commerce contributor. Approximately 2.3 million TEUs of capacity in the most-traded sector of the charter market — 7,000- to 9,000-TEU ships — has shrunk by 3.7 million TEUs in the last five years, according to analyst Alphaliner. “Of course, there will be a point of oversupply where even if all the assets were in the hands of the carriers, they would not be able to park enough ships in a concerted enough fashion quickly enough to keep supply below demand and thus keep rates up,” said Masters. “Recently, the carriers have been like a cat with seven lives,” he added, referring to how looming overcapacity has yet to bite. External factors such as port congestion are also tying up functional capacity. Northern European ports have been congested for months, while Asian ports such as Shanghai and Singapore have also been heavily affected. Major container lines still view Suez Canal transits as too risky even after President Donald Trump’s early May assertion that the Houthi rebels would stop attacks on commercial shipping in the Red Sea. The US missile attacks on Iran on Saturday demolished that fragile peace. The real test for container capacity control, according to the Europe-based shipping executive, will be after Golden Week, the week-long holiday in early October in which Chinese factories slow or halt production. US retailers’ confidence may falter by then, and the signals pointing to future consumption are worsening. In May, US retail sales fell, residential housing construction reached a five-year low and employment shrank, while airline travel fell in April and May. Contact Mark Szakonyi at mark.szakonyi@spglobal.com .

Container lines

Trans-Atlantic

International ports

Ocean carriers flex tonnage control, but overcapacity is mounting

<div class="phx-topic abstract-wrapper">Iran has yet to make good on its threat to close the Strait of Hormuz, but nervous carriers are preparing contingency plans as the region moves onto a war footing.</div>

Iran has yet to make good on its threat to close the Strait of Hormuz, but nervous carriers are preparing contingency plans as the region moves onto a war footing.

<div class="phx-topic">Ocean carriers are poised to adjust schedules and omit key Persian Gulf transshipment hubs should Tehran carry out its threat to close the Strait of Hormuz to international shipping following the US bombing raids on Iranian nuclear facilities on Sunday. A series of customer advisories were issued by carriers on Monday, emphasizing the safety of crew, vessels and cargo as the shipping companies closely monitor a rapidly deteriorating security situation. “We are actively evaluating potential risks and stand ready to adjust our operations should conditions change,” Hapag-Lloyd said in an advisory. “At present, our vessels continue to transit the Strait of Hormuz. The safety and well-being of our crews and ships remain our highest priority.” The US launched airstrikes on three of Iran’s nuclear sites at Fordow, Natanz and Isfahan early Sunday in a dramatic escalation of the war between Iran and Israel. Iran’s parliament voted on June 22 in support of closing the Strait of Hormuz, although the final decision will be made by the Supreme Leader in consultation with the Supreme National Security Council. As of Monday, the only entrance to the Persian Gulf remained open to shipping. Lars Jensen, CEO of consultant Vespucci Maritime and a Journal of Commerce analyst, said how and where Iran would retaliate against US interests in the region was being closely monitored. “But for commercial shipping, the question is not whether or not vessels are attacked — the question is whether or not the risk itself is sufficient to cause a change in vessel deployment to reduce traffic through the Strait of Hormuz,” Jensen wrote in a LinkedIn post. In a country risk report Monday, S&amp;P Global Maritime Intelligence noted that Iran’s leadership now almost certainly perceives a severe threat to its survival, whether direct or indirect, and that is likely to heavily influence decision making. “We expect Iran’s response to first remain focused on continued ballistic missile and [drone] attacks on Israel [and] being likely to attempt to impede transit through the Strait of Hormuz,” the report noted. Disrupting ship transits could include vessel seizures, GPS/AIS spoofing and the use of military boats to harass vessels, it added. CMA CGM said in its customer advisory that “the geopolitical context is evolving.” “At this stage, we confirm that shipping activities are proceeding as normal in the area, and that our operations and logistics chains remain unchanged,” the carrier stated. “We continue to ensure full service coverage across all routes and ports of call.” However, ocean visibility provider eeSea noted that CMA CGM’s CMA-LMX service has been renamed and rerouted. The Europe-Middle East service that has been operating in the Persian Gulf since September 2024 has dropped calls to Jebel Ali, Abu Dhabi and Jubail in the Gulf and has added an additional call to the Turkish port of Ambarli near Istanbul. The service is now advertised under the name CMA-LRX (Levant Red Sea Express) and will see a reduction of three slots and a total roundtrip time cut in half from 42 to 21 days. <h3>Hormuz closure would impact key transshipment hub </h3>Any closure of the Strait of Hormuz will be felt first in the energy markets. According to Platts, a sister company of the Journal of Commerce within S&amp;P Global, more than 17 million barrels of crude oil each day move through Hormuz, coming not just from Iran, but from Saudi Arabia, Kuwait, the UAE and Qatar. That is more than 20% of daily global crude production. But container traffic would face significant disruption as well, with 4% of global volume passing through the strait in 2024, primarily destined for the United Arab Emirates’ transshipment hubs of Jebel Ali and Khalifa, and for the ports of Dammam in Saudi Arabia and Doha in Qatar. Jebel Ali, which handled 15.5 million TEUs in 2024, has become the region’s leading transshipment hub with feeder services connecting ports across the Persian Gulf, South Asia and East Africa. A blockade of Hormuz would see calls diverted to neighboring Indian, Omani and East African ports, where a surge in transshipment demand could lead to congestion and delays, a report from S&amp;P Global Market Intelligence noted. Multipurpose carrier AAL Shipping said in a statement Monday it was “deeply concerned” with the war between Israel and Iran and its impact on shipping in the region. “While our normal trade lane schedules currently remain unaffected, we are monitoring the situation and taking all necessary precautions to ensure the safety of our crew and cargo as we trade regional waters for our customers,” AAL said. But the carrier warned that there was also a rising cost element to the deteriorating situation in the Middle East. “We would highlight that such evolving threats can lead to increased insurance premiums and other security-related costs, affecting operational considerations for all parties,” it said. Meanwhile, at the other end of the war, Maersk announced it was cutting calls to the Israeli port of Haifa in the Mediterranean. “After carefully analyzing threat risk reports regarding the ongoing conflict between Israel and Iran — particularly the potential risks of calling specific Israeli ports and their implications for the safety of our crews — Maersk has made the decision to temporarily suspend vessel calls at the Port of Haifa, Israel, and also suspend cargo acceptance for Haifa,” the carrier said in an advisory Friday. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com ">greg.knowler@spglobal.com</a>.</div>

Ocean carriers are poised to adjust schedules and omit key Persian Gulf transshipment hubs should Tehran carry out its threat to close the Strait of Hormuz to international shipping following the US bombing raids on Iranian nuclear facilities on Sunday. A series of customer advisories were issued by carriers on Monday, emphasizing the safety of crew, vessels and cargo as the shipping companies closely monitor a rapidly deteriorating security situation. “We are actively evaluating potential risks and stand ready to adjust our operations should conditions change,” Hapag-Lloyd said in an advisory. “At present, our vessels continue to transit the Strait of Hormuz. The safety and well-being of our crews and ships remain our highest priority.” The US launched airstrikes on three of Iran’s nuclear sites at Fordow, Natanz and Isfahan early Sunday in a dramatic escalation of the war between Iran and Israel. Iran’s parliament voted on June 22 in support of closing the Strait of Hormuz, although the final decision will be made by the Supreme Leader in consultation with the Supreme National Security Council. As of Monday, the only entrance to the Persian Gulf remained open to shipping. Lars Jensen, CEO of consultant Vespucci Maritime and a Journal of Commerce analyst, said how and where Iran would retaliate against US interests in the region was being closely monitored. “But for commercial shipping, the question is not whether or not vessels are attacked — the question is whether or not the risk itself is sufficient to cause a change in vessel deployment to reduce traffic through the Strait of Hormuz,” Jensen wrote in a LinkedIn post. In a country risk report Monday, S&P Global Maritime Intelligence noted that Iran’s leadership now almost certainly perceives a severe threat to its survival, whether direct or indirect, and that is likely to heavily influence decision making. “We expect Iran’s response to first remain focused on continued ballistic missile and [drone] attacks on Israel [and] being likely to attempt to impede transit through the Strait of Hormuz,” the report noted. Disrupting ship transits could include vessel seizures, GPS/AIS spoofing and the use of military boats to harass vessels, it added. CMA CGM said in its customer advisory that “the geopolitical context is evolving.” “At this stage, we confirm that shipping activities are proceeding as normal in the area, and that our operations and logistics chains remain unchanged,” the carrier stated. “We continue to ensure full service coverage across all routes and ports of call.” However, ocean visibility provider eeSea noted that CMA CGM’s CMA-LMX service has been renamed and rerouted. The Europe-Middle East service that has been operating in the Persian Gulf since September 2024 has dropped calls to Jebel Ali, Abu Dhabi and Jubail in the Gulf and has added an additional call to the Turkish port of Ambarli near Istanbul. The service is now advertised under the name CMA-LRX (Levant Red Sea Express) and will see a reduction of three slots and a total roundtrip time cut in half from 42 to 21 days. Hormuz closure would impact key transshipment hub Any closure of the Strait of Hormuz will be felt first in the energy markets. According to Platts, a sister company of the Journal of Commerce within S&P Global, more than 17 million barrels of crude oil each day move through Hormuz, coming not just from Iran, but from Saudi Arabia, Kuwait, the UAE and Qatar. That is more than 20% of daily global crude production. But container traffic would face significant disruption as well, with 4% of global volume passing through the strait in 2024, primarily destined for the United Arab Emirates’ transshipment hubs of Jebel Ali and Khalifa, and for the ports of Dammam in Saudi Arabia and Doha in Qatar. Jebel Ali, which handled 15.5 million TEUs in 2024, has become the region’s leading transshipment hub with feeder services connecting ports across the Persian Gulf, South Asia and East Africa. A blockade of Hormuz would see calls diverted to neighboring Indian, Omani and East African ports, where a surge in transshipment demand could lead to congestion and delays, a report from S&P Global Market Intelligence noted. Multipurpose carrier AAL Shipping said in a statement Monday it was “deeply concerned” with the war between Israel and Iran and its impact on shipping in the region. “While our normal trade lane schedules currently remain unaffected, we are monitoring the situation and taking all necessary precautions to ensure the safety of our crew and cargo as we trade regional waters for our customers,” AAL said. But the carrier warned that there was also a rising cost element to the deteriorating situation in the Middle East. “We would highlight that such evolving threats can lead to increased insurance premiums and other security-related costs, affecting operational considerations for all parties,” it said. Meanwhile, at the other end of the war, Maersk announced it was cutting calls to the Israeli port of Haifa in the Mediterranean. “After carefully analyzing threat risk reports regarding the ongoing conflict between Israel and Iran — particularly the potential risks of calling specific Israeli ports and their implications for the safety of our crews — Maersk has made the decision to temporarily suspend vessel calls at the Port of Haifa, Israel, and also suspend cargo acceptance for Haifa,” the carrier said in an advisory Friday. Contact Greg Knowler at greg.knowler@spglobal.com .

Carriers ‘stand ready’ to cut Persian Gulf calls as security threat escalates

<div class="phx-topic abstract-wrapper">From his hometown hub of Memphis, Fred Smith built FedEx from a $4 million inheritance to an $88 billion behemoth. </div>

From his hometown hub of Memphis, Fred Smith built FedEx from a $4 million inheritance to an $88 billion behemoth.

<div class="phx-topic">Fred Smith, the founder of FedEx who revolutionized parcel shipment through his visionary “hub-and-spoke” model, which helped to galvanize global trade, died Saturday at the age of 80. From his hometown hub of Memphis, Fred Smith built FedEx from a $4 million inheritance to an $88 billion behemoth, with spokes reaching more than 210 countries and territories. His idea, famously rejected by his then college professor, collected packages at central points, from which they would be flown to various locations overnight. The US Marine veteran founded Federal Express in Little Rock, Arkansas, in 1971, beginning operations in Memphis two years later with fewer than 400 employees and serving 25 cities. The company, which now has more than 500,000 employees, includes truck and delivery van service FedEx Ground, less-than-truckload carrier FedEx Freight, and forwarder FedEx Trade Networks. Smith was a forceful advocate for free trade, championing FedEx’s role in promoting economic growth and prosperity. “Trade has made America great, and expanding trade has been a bipartisan pursuit for over 80 years,” Smith told the National Council on Competitiveness a month before President Donald Trump’s first inauguration in January 2017. “The failure to continue to do so would be a severe mistake with enormous consequences for America and the world.” Smith vehemently lobbied for air cargo deregulation signed into law by President Jimmy Carter in 1977. “Protectionism squelches competition and lowers economic growth,” Smith said at the TPM Conference in 2014, where he was the keynote speaker. “Over the last few years, almost every trading nation has introduced policies that permit greater government intervention in the trade process.” Smith had more influence on federal regulation than any other transportation executive, and his impact rippled through all modes of shipping, said Satish Jindel, president of SJ Consulting Group. “He saw the importance of information about the documents and parcels being shipped long before businesses and people even had computers,” Jindel said. Calling him “more than just the pioneer and the founder,” FedEx CEO Raj Subramaniam said in a statement that Smith was the heart and soul of FedEx — its [people-first philosophy] culture, values, integrity, and spirit.” Contact Mark Szakonyi at <a href="mark.szakonyi@spglobal.com.">mark.szakonyi@spglobal.com</a>.</div>

Fred Smith, the founder of FedEx who revolutionized parcel shipment through his visionary “hub-and-spoke” model, which helped to galvanize global trade, died Saturday at the age of 80. From his hometown hub of Memphis, Fred Smith built FedEx from a $4 million inheritance to an $88 billion behemoth, with spokes reaching more than 210 countries and territories. His idea, famously rejected by his then college professor, collected packages at central points, from which they would be flown to various locations overnight. The US Marine veteran founded Federal Express in Little Rock, Arkansas, in 1971, beginning operations in Memphis two years later with fewer than 400 employees and serving 25 cities. The company, which now has more than 500,000 employees, includes truck and delivery van service FedEx Ground, less-than-truckload carrier FedEx Freight, and forwarder FedEx Trade Networks. Smith was a forceful advocate for free trade, championing FedEx’s role in promoting economic growth and prosperity. “Trade has made America great, and expanding trade has been a bipartisan pursuit for over 80 years,” Smith told the National Council on Competitiveness a month before President Donald Trump’s first inauguration in January 2017. “The failure to continue to do so would be a severe mistake with enormous consequences for America and the world.” Smith vehemently lobbied for air cargo deregulation signed into law by President Jimmy Carter in 1977. “Protectionism squelches competition and lowers economic growth,” Smith said at the TPM Conference in 2014, where he was the keynote speaker. “Over the last few years, almost every trading nation has introduced policies that permit greater government intervention in the trade process.” Smith had more influence on federal regulation than any other transportation executive, and his impact rippled through all modes of shipping, said Satish Jindel, president of SJ Consulting Group. “He saw the importance of information about the documents and parcels being shipped long before businesses and people even had computers,” Jindel said. Calling him “more than just the pioneer and the founder,” FedEx CEO Raj Subramaniam said in a statement that Smith was the heart and soul of FedEx — its [people-first philosophy] culture, values, integrity, and spirit.” Contact Mark Szakonyi at mark.szakonyi@spglobal.com .

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Fred Smith, FedEx founder and visionary, dead at 80

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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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