<div class="phx-topic abstract-wrapper">The carrier said the move was a response to “ongoing robust demand” on the trade lane, becoming the second trans-Pacific service MSC has relaunched this year.</div>

The carrier said the move was a response to “ongoing robust demand” on the trade lane, becoming the second trans-Pacific service MSC has relaunched this year.

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<div>Mediterranean Shipping Co. is reintroducing a trans-Pacific service to the US East Coast that had been suspended in 2022, the second service the carrier has reinstated on the trade lane this year as Asia-US ocean freight rates have surged and Panama Canal restrictions have eased. MSC said Wednesday its Liberty service to the East Coast will resume with the departure of the 4,432-TEU MSC Houston V from Singapore on Aug. 8. Along with Singapore, other Asia load ports include Shanghai and Busan. The US port rotation includes Miami, Savannah, Charleston, Philadelphia and New York-New Jersey. MSC said in a statement...

Mediterranean Shipping Co. is reintroducing a trans-Pacific service to the US East Coast that had been suspended in 2022, the second service the carrier has reinstated on the trade lane this year as Asia-US ocean freight rates have surged and Panama Canal restrictions have eased. MSC said Wednesday its Liberty service to the East Coast will resume with the departure of the 4,432-TEU MSC Houston V from Singapore on Aug. 8. Along with Singapore, other Asia load ports include Shanghai and Busan. The US port rotation includes Miami, Savannah, Charleston, Philadelphia and New York-New Jersey. MSC said in a statement that “ongoing robust demand in the trans-Pacific market” prompted the reintroduction of the Liberty service, with the loop’s new call at Philadelphia “responding directly to current market demands.” The Liberty service had previously been run jointly with Maersk under the 2M Alliance. Introduced during the pandemic, MSC and Maersk suspended the service in late 2022 due to the sharp drop in ocean freight rates during that year . This will be the second trans-Pacific service MSC has restored this year. In June, the carrier reintroduced its Mustang service with a port rotation that includes China’s major ports and Long Beach. The Mustang service had previously called Portland on the US West Coast. Liberty’s reinstatement comes as the Panama Canal’s transit and draft limits have eased following the return of seasonal rains that have filled the reservoirs for the canal’s locks. The canal handled an average of 29 ships per day in June, up from an average of 22 in January. Despite having the largest order book among ocean carriers, MSC has deployed most of its new ships to the Asia-Europe trade in response to strong demand there and the longer voyage times around southern Africa’s Cape of Good Hope. According to Bespoke Maritime Data Services, a sister company of the Journal of Commerce within S&P Global, MSC has deployed just two newbuild, 7,900-TEU ships on its trans-Pacific Emerald service to the US East Coast, the MSC Cotonou VIII and the MSC Tema. Other carriers also added trans-Pacific capacity as rates from Asia surged in recent months. Zim Integrated Shipping Services began offering a premium shuttle service to Los Angeles along with another Asia service to Vancouver . Cosco Shipping and OOCL have also launched services to Long Beach and Vancouver. Wan Hai Lines has also relaunched its AA1 service into Long Beach, while HMM restarted its PN3 service to the Pacific Northwest. Niche carrier Hede International has also introduced a feeder-size service to the US West Coast . Spot rates from Asia to the US East Coast were $9,400 per FEU as of July 23, down 4% on the week but up from $4,860 per FEU on May 3, according to Platts, a sister company of the Journal of Commerce within S&P Global. Rates to the West Coast were $6,500 per FEU, down 10% on the week but up from $4,000 per FEU in early May. Trans-Pacific rates began to cool earlier this month amid the new capacity injected into the trade lane. Contact Michael Angell at michael.angell@spglobal.com .

Container Shipping News

North American ports

Container lines

MSC restores trans-Pacific Liberty service with new call at Philadelphia

<div class="phx-topic abstract-wrapper">With volumes likely to increase again in 2025, new port infrastructure across the region should help maintain fluidity throughout the coming year.</div>

With volumes likely to increase again in 2025, new port infrastructure across the region should help maintain fluidity throughout the coming year.

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<div class="phx-topic">The big picture: US Gulf Coast ports have seen higher-than-expected container volumes as consumer spending remained resilient during 2024 and shippers brought in cargo ahead of the deadline for a longshore labor strike. With volumes likely to increase again in 2025, new port infrastructure across the region should help maintain fluidity throughout the coming year. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5910620_0.1.png"></img></div>A look back: The Port of Houston continues to be the region’s preferred gateway, with containerized imports rising 9.3% in the first 11 months of 2024, according to PIERS, a sister product of the Journal of Commerce within S&amp;P Global. That year-to-date growth has significantly outstripped the 1% total volume growth forecast in Port of Houston’s 2024 operating budget, as well as the 7.9% growth rate for the Gulf Coast region as a whole. Despite a hurricane and a CrowdStrike outage, both of which shut the port down for several days, and a three-day coastwide dockworker strike, Houston’s two marine terminals remained fluid, evidenced by low container dwell and truck turn times throughout the year. The ports of Mobile and New Orleans saw container imports grow 4.2% and 4.8%, respectively, through November. Amid the import growth, ocean carriers have added more container services to the US Gulf Coast. Maersk, for example, resumed its TP20 service between Asia and Houston in March 2024, thanks to higher container demand. Zim Integrated Shipping Services also added its first north-south container service to the Gulf Coast, with calls at Houston and Mobile. A look ahead: Houston has already started testing its first appointment system for drayage drivers, and the port hopes to increase voluntary participation to over 70% before mandating its use sometime in 2025. Houston’s container handling capacity is set for a boost with the expected mid-2025 completion of the first half of Project 11, a widening of the port’s shipping channel that will allow an additional 1,400 vessels of all types to call the port each year. The completion of a major phase of Project 11 coincides with the installation of three new cranes at Houston’s Bayport terminal, with another eight on order for a new berth. Mobile will be able to handle increased volumes in 2025 with the addition of two new cranes at its container terminal last year. The port is also furthering its intermodal access, with plans announced in 2024 for the development of the North Alabama inland port, served by CSX Transportation and catering to the state’s manufacturing sector. Mobile also plans to open another inland port in Montgomery, Alabama, early this year. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="1a3cc60a-ab27-40f6-b828-ca14a4f96ca6"></dynamic-object></div>The next inflection: Mobile will also increase vessel capacity in mid-2025 with the end of its harbor modernization project, which will deepen the port to 50 feet and allow easier passage for large vessels. Mobile also announced the fourth expansion of its container terminal, which will eventually bring its capacity to over 1 million TEUs per year. New Orleans will also start work this year on its new terminal, the 2 million-TEU Louisiana International Terminal, after receiving $300 million in federal grants, with a goal of receiving its first ships in 2028. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

The big picture: US Gulf Coast ports have seen higher-than-expected container volumes as consumer spending remained resilient during 2024 and shippers brought in cargo ahead of the deadline for a longshore labor strike. With volumes likely to increase again in 2025, new port infrastructure across the region should help maintain fluidity throughout the coming year. A look back: The Port of Houston continues to be the region’s preferred gateway, with containerized imports rising 9.3% in the first 11 months of 2024, according to PIERS, a sister product of the Journal of Commerce within S&P Global. That year-to-date growth has significantly outstripped the 1% total volume growth forecast in Port of Houston’s 2024 operating budget, as well as the 7.9% growth rate for the Gulf Coast region as a whole. Despite a hurricane and a CrowdStrike outage, both of which shut the port down for several days, and a three-day coastwide dockworker strike, Houston’s two marine terminals remained fluid, evidenced by low container dwell and truck turn times throughout the year. The ports of Mobile and New Orleans saw container imports grow 4.2% and 4.8%, respectively, through November. Amid the import growth, ocean carriers have added more container services to the US Gulf Coast. Maersk, for example, resumed its TP20 service between Asia and Houston in March 2024, thanks to higher container demand. Zim Integrated Shipping Services also added its first north-south container service to the Gulf Coast, with calls at Houston and Mobile. A look ahead: Houston has already started testing its first appointment system for drayage drivers, and the port hopes to increase voluntary participation to over 70% before mandating its use sometime in 2025. Houston’s container handling capacity is set for a boost with the expected mid-2025 completion of the first half of Project 11, a widening of the port’s shipping channel that will allow an additional 1,400 vessels of all types to call the port each year. The completion of a major phase of Project 11 coincides with the installation of three new cranes at Houston’s Bayport terminal, with another eight on order for a new berth. Mobile will be able to handle increased volumes in 2025 with the addition of two new cranes at its container terminal last year. The port is also furthering its intermodal access, with plans announced in 2024 for the development of the North Alabama inland port, served by CSX Transportation and catering to the state’s manufacturing sector. Mobile also plans to open another inland port in Montgomery, Alabama, early this year. The next inflection: Mobile will also increase vessel capacity in mid-2025 with the end of its harbor modernization project, which will deepen the port to 50 feet and allow easier passage for large vessels. Mobile also announced the fourth expansion of its container terminal, which will eventually bring its capacity to over 1 million TEUs per year. New Orleans will also start work this year on its new terminal, the 2 million-TEU Louisiana International Terminal, after receiving $300 million in federal grants, with a goal of receiving its first ships in 2028. Contact Michael Angell at michael.angell@spglobal.com .

Port News

Maritime

US Gulf Coast ports expanding to handle continued volume growth

<div class="phx-topic abstract-wrapper">The action, announced last week, is likely to result in US e-commerce brands shifting their fulfillment back to the US or switching to fulfillment providers in Asia, sources have told the Journal of Commerce.</div>

The action, announced last week, is likely to result in US e-commerce brands shifting their fulfillment back to the US or switching to fulfillment providers in Asia, sources have told the Journal of Commerce.

<div class="phx-topic">Mexico has ended a program that enabled US apparel and textile importers to avoid paying duties while using Mexican warehouses as fulfillment hubs for low-cost finished products sourced outside Mexico that are sent directly to US consumers. The action, announced last week, is likely to result in US e-commerce brands shifting their fulfillment back to the US or switching to fulfillment providers in Asia, sources have told the Journal of Commerce. Neither option comes without cost, or risk. “How impactful would this be to US-based e-commerce as whole?” said Matthew Hertz, founder and CEO of Third Person, a platform that helps e-commerce brands find and connect with fulfillment partners. “There will be companies that suffer.” Using US-based third-party logistics providers (3PLs) that fulfill from US locations translates to higher labor costs, which would be somewhat offset by shorter delivery times to customers, Hertz said. Switching to fulfill directly from Asia, while cost-effective for US brands sourcing in Asia, would subject importers to the risk of further regulatory upheaval if a US program that allows single shipments of $800 or less per day to be imported to the US duty-free is changed in 2025. The Mexican decree, unveiled Dec. 19 by President Claudia Sheinbaum, essentially stops the use, for whole categories of apparel and textiles, of Mexico’s so-called IMMEX program, which allows companies to defer duties on the import of raw materials and components used in the production of goods destined for export. Mexico-focused fulfillment 3PLs will also be affected, as their business has effectively been wiped away by the changes. Sheinbaum’s action also increased tariffs to 35% — up from 20% to 25% — on 121 apparel products and textiles. Another category of textiles will see tariff levels increase to 15% from the current 10%. “These increases aim to level the playing field for Mexican industries facing competition from lower-priced imports, particularly from countries without free trade agreements with Mexico, and they will remain in effect until April 23, 2026,” trade law firm Sandler, Travis, &amp; Rosenberg said in a note to clients Tuesday. The e-commerce import volumes affected by the decree will now be up for grabs among more diversified fulfillment-focused 3PLs that aren’t overly exposed to Mexico, as well as global 3PLs that have fulfillment services for e-commerce in the US. ”We’ve been talking about this forever,” Hertz said of the ability of US e-commerce apparel and textiles brands to import to the US via Mexico to avoid duties. “It’s a loophole. Loopholes are good until they’re not available anymore.” He said he’s already hearing of 3PLs offering relief on transition costs for e-commerce brands that will need to move inventory out of Mexico. His conservative estimate of the value of 3PL services now in play to move back to the US is $10 billion. “That’s a lot of absorb and it’s going to happen quickly,” Hertz said. <h3>Duty-free uncertainty </h3>Sheinbaum’s decree comes amid a changing landscape for so-called US Section 321 shipments, also known as “de minimis.” The Biden administration in September announced it would be ending duty-free treatment on all shipments that would ordinarily be subject to 25% Section 301 tariffs on Chinese imports, tariffs originally implemented during the first Trump administration. While that rule would wipe away the $800 duty-free threshold on most shipments from China, there has yet to be a timeline for implementation of that rule. “As of right now the timeline and exact implementation remain uncertain, but most close to the situation have understood that brands probably had [until] April to make the transition,” Flexport CEO Ryan Petersen wrote in a comment on X Monday. “Most brands were already planning an exit from Mexican fulfillment centers and reshoring that work as soon as the details become more clear.” Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. Journal of Commerce Research Analyst Cathy Morrow Roberson contributed to this report. </div>

Mexico has ended a program that enabled US apparel and textile importers to avoid paying duties while using Mexican warehouses as fulfillment hubs for low-cost finished products sourced outside Mexico that are sent directly to US consumers. The action, announced last week, is likely to result in US e-commerce brands shifting their fulfillment back to the US or switching to fulfillment providers in Asia, sources have told the Journal of Commerce. Neither option comes without cost, or risk. “How impactful would this be to US-based e-commerce as whole?” said Matthew Hertz, founder and CEO of Third Person, a platform that helps e-commerce brands find and connect with fulfillment partners. “There will be companies that suffer.” Using US-based third-party logistics providers (3PLs) that fulfill from US locations translates to higher labor costs, which would be somewhat offset by shorter delivery times to customers, Hertz said. Switching to fulfill directly from Asia, while cost-effective for US brands sourcing in Asia, would subject importers to the risk of further regulatory upheaval if a US program that allows single shipments of $800 or less per day to be imported to the US duty-free is changed in 2025. The Mexican decree, unveiled Dec. 19 by President Claudia Sheinbaum, essentially stops the use, for whole categories of apparel and textiles, of Mexico’s so-called IMMEX program, which allows companies to defer duties on the import of raw materials and components used in the production of goods destined for export. Mexico-focused fulfillment 3PLs will also be affected, as their business has effectively been wiped away by the changes. Sheinbaum’s action also increased tariffs to 35% — up from 20% to 25% — on 121 apparel products and textiles. Another category of textiles will see tariff levels increase to 15% from the current 10%. “These increases aim to level the playing field for Mexican industries facing competition from lower-priced imports, particularly from countries without free trade agreements with Mexico, and they will remain in effect until April 23, 2026,” trade law firm Sandler, Travis, & Rosenberg said in a note to clients Tuesday. The e-commerce import volumes affected by the decree will now be up for grabs among more diversified fulfillment-focused 3PLs that aren’t overly exposed to Mexico, as well as global 3PLs that have fulfillment services for e-commerce in the US. ”We’ve been talking about this forever,” Hertz said of the ability of US e-commerce apparel and textiles brands to import to the US via Mexico to avoid duties. “It’s a loophole. Loopholes are good until they’re not available anymore.” He said he’s already hearing of 3PLs offering relief on transition costs for e-commerce brands that will need to move inventory out of Mexico. His conservative estimate of the value of 3PL services now in play to move back to the US is $10 billion. “That’s a lot of absorb and it’s going to happen quickly,” Hertz said. Duty-free uncertainty Sheinbaum’s decree comes amid a changing landscape for so-called US Section 321 shipments, also known as “de minimis.” The Biden administration in September announced it would be ending duty-free treatment on all shipments that would ordinarily be subject to 25% Section 301 tariffs on Chinese imports, tariffs originally implemented during the first Trump administration. While that rule would wipe away the $800 duty-free threshold on most shipments from China, there has yet to be a timeline for implementation of that rule. “As of right now the timeline and exact implementation remain uncertain, but most close to the situation have understood that brands probably had [until] April to make the transition,” Flexport CEO Ryan Petersen wrote in a comment on X Monday. “Most brands were already planning an exit from Mexican fulfillment centers and reshoring that work as soon as the details become more clear.” Contact Eric Johnson at eric.johnson@spglobal.com . Journal of Commerce Research Analyst Cathy Morrow Roberson contributed to this report.

Last Mile News

Transport, Trade and Regulation News

Mexico curtails duty-free fulfillment option for apparel, textile importers

<div class="phx-topic abstract-wrapper">The market’s normal tranquility is threatened by President-elect Donald Trump’s promise to raise imports tariffs, as well as a potential second strike by the International Longshoremen’s Association.</div>

The market’s normal tranquility is threatened by President-elect Donald Trump’s promise to raise imports tariffs, as well as a potential second strike by the International Longshoremen’s Association.

<div class="phx-topic">The big picture: After a steep decline in 2023, westbound trans-Atlantic trade volumes came roaring back in 2024. Still, the accompanying rise in rates was marginal compared with the huge increases seen in the main trades out of Asia, as excess capacity depressed prices until carriers began shifting vessels to the more lucrative ex-Asia lanes. Going into 2025, the supply-demand balance appears to have been reasserted, and cargo owners can expect greater rate stability, with more predictable disruption-driven price hikes. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5910620_0.1.png"></img></div>A look back: By the time Auld Lang Syne heralded the start of 2024, average spot rates from Europe to North America had sunk to record lows of close to $500 per FEU, according to rate benchmarking platform Xeneta. But after a weak January, US import demand began to pick up, with year-over-year growth recorded in eight of the following nine months on the North Europe-US trade and Mediterranean-US volumes rising in every month of 2024. Through November, imports from North Europe and the Mediterranean rose 7.7% and 13.6%, respectively, from the 2023 period, according to PIERS, a sister product of the Journal of Commerce within S&amp;P Global. The rising volume lifted average North Europe-US East Coast spot rates through April, but even with steady demand during the historically slow summer months, excess capacity dragged down pricing. It was only when carriers closed several services and transferred capacity to the more lucrative trades out of Asia and shippers began frontloading cargo in the buildup to the International Longshoremen’s Association (ILA) strike on the US East and Gulf coasts that rates began to rise again, reaching a 2024 peak of about $2,700 per FEU in early October, according to Platts. But even with the removal of 91,100 TEUs in capacity from the trade in the first 10 months of 2024, an 8.2% year-over-year drop, according to Alphaliner, that peak was short-lived. By mid-November, average short-term pricing had fallen to $2,200 per FEU. A look ahead: With supply and demand largely in balance, the westbound trans-Atlantic trade lane has returned to its traditionally stable state. But that tranquility is threatened by US President-elect Donald Trump’s promise to raise imports tariffs, as well as a potential second strike by the ILA. The products moved on the trans-Atlantic are dominated by industrial equipment, vehicles, pharmaceuticals and wine and spirits, limiting the ability for US importers to frontload on a large scale. But with the removal of capacity by the carriers, any advancement of orders to avoid disruption will quickly fill all available space and raise rate levels. And if rising volume meets labor action at US East and Gulf coast terminals, bottlenecks will soon build at the busy import gateways, tying up capacity, extending transit times and exerting additional upward pressure on pricing. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="42a85896-984c-42cb-aa81-dc67689a6055"></dynamic-object></div>The next inflection: The trans-Atlantic trade over the past few years has seen a disconnect in the traditional supply-demand balance, with excess capacity offsetting rising volume and curbing rates. But carriers have grown cannier at flexing capacity to cater to volatility in demand, and with the shifting of vessels to the trades out of Asia and replacement of larger ships with smaller units, cargo owners can expect their fixed-rate commitments to go up in annual contract talks and any disruption on the westbound trade to be quickly reflected on the spot market. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com.</a></div>

The big picture: After a steep decline in 2023, westbound trans-Atlantic trade volumes came roaring back in 2024. Still, the accompanying rise in rates was marginal compared with the huge increases seen in the main trades out of Asia, as excess capacity depressed prices until carriers began shifting vessels to the more lucrative ex-Asia lanes. Going into 2025, the supply-demand balance appears to have been reasserted, and cargo owners can expect greater rate stability, with more predictable disruption-driven price hikes. A look back: By the time Auld Lang Syne heralded the start of 2024, average spot rates from Europe to North America had sunk to record lows of close to $500 per FEU, according to rate benchmarking platform Xeneta. But after a weak January, US import demand began to pick up, with year-over-year growth recorded in eight of the following nine months on the North Europe-US trade and Mediterranean-US volumes rising in every month of 2024. Through November, imports from North Europe and the Mediterranean rose 7.7% and 13.6%, respectively, from the 2023 period, according to PIERS, a sister product of the Journal of Commerce within S&P Global. The rising volume lifted average North Europe-US East Coast spot rates through April, but even with steady demand during the historically slow summer months, excess capacity dragged down pricing. It was only when carriers closed several services and transferred capacity to the more lucrative trades out of Asia and shippers began frontloading cargo in the buildup to the International Longshoremen’s Association (ILA) strike on the US East and Gulf coasts that rates began to rise again, reaching a 2024 peak of about $2,700 per FEU in early October, according to Platts. But even with the removal of 91,100 TEUs in capacity from the trade in the first 10 months of 2024, an 8.2% year-over-year drop, according to Alphaliner, that peak was short-lived. By mid-November, average short-term pricing had fallen to $2,200 per FEU. A look ahead: With supply and demand largely in balance, the westbound trans-Atlantic trade lane has returned to its traditionally stable state. But that tranquility is threatened by US President-elect Donald Trump’s promise to raise imports tariffs, as well as a potential second strike by the ILA. The products moved on the trans-Atlantic are dominated by industrial equipment, vehicles, pharmaceuticals and wine and spirits, limiting the ability for US importers to frontload on a large scale. But with the removal of capacity by the carriers, any advancement of orders to avoid disruption will quickly fill all available space and raise rate levels. And if rising volume meets labor action at US East and Gulf coast terminals, bottlenecks will soon build at the busy import gateways, tying up capacity, extending transit times and exerting additional upward pressure on pricing. The next inflection: The trans-Atlantic trade over the past few years has seen a disconnect in the traditional supply-demand balance, with excess capacity offsetting rising volume and curbing rates. But carriers have grown cannier at flexing capacity to cater to volatility in demand, and with the shifting of vessels to the trades out of Asia and replacement of larger ships with smaller units, cargo owners can expect their fixed-rate commitments to go up in annual contract talks and any disruption on the westbound trade to be quickly reflected on the spot market. Contact Greg Knowler at greg.knowler@spglobal.com.

Trans-Atlantic

Restabilized trans-Atlantic facing dual strike, tariff threats

<div class="phx-topic abstract-wrapper">Industry observers believe carriers on the trade lane could struggle to manage the huge influx of capacity, thus forcing them to undercut each other on pricing to maximize loadings.</div>

Industry observers believe carriers on the trade lane could struggle to manage the huge influx of capacity, thus forcing them to undercut each other on pricing to maximize loadings.

<div class="phx-topic">Indian shippers moving goods to Europe could soon find more ocean connections and vessel space with the Gemini alliance between Maersk and Hapag-Lloyd going live from early February. According to new service updates obtained by the Journal of Commerce, India’s largest export trade lane by volume will have three direct premium services — two out of the West Coast (Nhava Sheva and Mundra), named the ME1 and ME11 by Maersk, and one out of the East (Ennore/Chennai), named the ME2, under the collaborative network framework. Hapag-Lloyd has branded the joint loops as the IOS, IMX and IEX, respectively. Riding on the so-called <a href="https://www.joc.com/article/hapag-lloyd-says-gemini-alliance-cargo-bookings-to-open-dec-3-5846853">hub-and-spoke operational model</a>, these services have fewer direct port calls: featuring Jebel Ali, Mundra, Nhava Sheva, Salalah, Port Tangier, Rotterdam, Hamburg and London Gateway on the ME1/IOS; Jebel Ali, Mundra, Nhava Sheva, Salalah, Port Tangier, Valencia and Port Said on the ME11/IMX; and Ennore, Colombo, Algeciras, Rotterdam, London Gateway, Bremerhaven and Port Tangier on the ME2/IEX. It is estimated that combined operations will inject significant additional capacity into the market for westbound loading due to enhanced network strengths, larger vessel deployments and greater transshipment opportunities. As a product differentiator, Maersk is touting faster transits for Indian loads to Spain and Italy via its hubs of Port Tangier and Algeciras, as well as the East Mediterranean through Port Said, which it believes will be a boost for Indian exporters/importers in the lifestyle, retail, automobile and reefer sectors. Indian capacity allocations have been structured in terms of historical market share dynamics — 60% for Hapag-Lloyd and 40% for Maersk in West India, with the split in the opposite way for the South India routing. “We believe Maersk will also connect Europe loads via Port Tangier on the ME11,” a Mumbai-based liner executive who didn’t want to be identified told the Journal of Commerce. <h3>‘Major oversupply situation’</h3>Gemini’s India-Europe network will compete with CMA CGM’s longtime flagship “Epic” routing and a new vessel-sharing deal led by Ocean Network Express (ONE), HMM and Yang Ming known as the IOX. Following Hapag-Lloyd’s exit from the Epic loop, CMA CGM now has higher allocations to fill at Nhava Sheva/Mundra, reportedly an additional 1,500 TEUs a week. At the same time, industry observers believe all carriers could struggle to manage the huge influx of capacity, thus forcing them to undercut each other on pricing to maximize loadings, and in the process, inevitably jeopardize profitability. “The westbound trade seems to be moving into a major oversupply situation without enough demand building in the market,” a freight forwarder told the Journal of Commerce. “This will keep rates under tremendous pressure, for sure.” Local freight industry circles are already abuzz amid talk of heightened competition, with forwarders reporting frenzied sales calls from carrier executives seeking long-term volume commitments with special rate offers. “Carriers are willing to sign contracts at $1,200 per TEU and $1,400 per FEU for Nhava Sheva-London Gateway bookings, after some steady spot pricing signals in early December with quotes settled in the range of $1,600 and $1,800, respectively,” a second forwarder noted. Contact Bency Mathew at <a href="mailto:bencyvmathew@gmail.com">bencyvmathew@gmail.com.</a></div>

Indian shippers moving goods to Europe could soon find more ocean connections and vessel space with the Gemini alliance between Maersk and Hapag-Lloyd going live from early February. According to new service updates obtained by the Journal of Commerce, India’s largest export trade lane by volume will have three direct premium services — two out of the West Coast (Nhava Sheva and Mundra), named the ME1 and ME11 by Maersk, and one out of the East (Ennore/Chennai), named the ME2, under the collaborative network framework. Hapag-Lloyd has branded the joint loops as the IOS, IMX and IEX, respectively. Riding on the so-called hub-and-spoke operational model , these services have fewer direct port calls: featuring Jebel Ali, Mundra, Nhava Sheva, Salalah, Port Tangier, Rotterdam, Hamburg and London Gateway on the ME1/IOS; Jebel Ali, Mundra, Nhava Sheva, Salalah, Port Tangier, Valencia and Port Said on the ME11/IMX; and Ennore, Colombo, Algeciras, Rotterdam, London Gateway, Bremerhaven and Port Tangier on the ME2/IEX. It is estimated that combined operations will inject significant additional capacity into the market for westbound loading due to enhanced network strengths, larger vessel deployments and greater transshipment opportunities. As a product differentiator, Maersk is touting faster transits for Indian loads to Spain and Italy via its hubs of Port Tangier and Algeciras, as well as the East Mediterranean through Port Said, which it believes will be a boost for Indian exporters/importers in the lifestyle, retail, automobile and reefer sectors. Indian capacity allocations have been structured in terms of historical market share dynamics — 60% for Hapag-Lloyd and 40% for Maersk in West India, with the split in the opposite way for the South India routing. “We believe Maersk will also connect Europe loads via Port Tangier on the ME11,” a Mumbai-based liner executive who didn’t want to be identified told the Journal of Commerce. ‘Major oversupply situation’ Gemini’s India-Europe network will compete with CMA CGM’s longtime flagship “Epic” routing and a new vessel-sharing deal led by Ocean Network Express (ONE), HMM and Yang Ming known as the IOX. Following Hapag-Lloyd’s exit from the Epic loop, CMA CGM now has higher allocations to fill at Nhava Sheva/Mundra, reportedly an additional 1,500 TEUs a week. At the same time, industry observers believe all carriers could struggle to manage the huge influx of capacity, thus forcing them to undercut each other on pricing to maximize loadings, and in the process, inevitably jeopardize profitability. “The westbound trade seems to be moving into a major oversupply situation without enough demand building in the market,” a freight forwarder told the Journal of Commerce. “This will keep rates under tremendous pressure, for sure.” Local freight industry circles are already abuzz amid talk of heightened competition, with forwarders reporting frenzied sales calls from carrier executives seeking long-term volume commitments with special rate offers. “Carriers are willing to sign contracts at $1,200 per TEU and $1,400 per FEU for Nhava Sheva-London Gateway bookings, after some steady spot pricing signals in early December with quotes settled in the range of $1,600 and $1,800, respectively,” a second forwarder noted. Contact Bency Mathew at bencyvmathew@gmail.com.

International ports

Gemini to bulk up capacity on India-Europe trade amid rate push pressure

<div class="phx-topic abstract-wrapper">Carriers have penciled in a return to the Red Sea and Suez Canal for the second half of the year, and some analysts are also using that as a baseline for their market outlooks, but the reality is that no one knows. </div>

Carriers have penciled in a return to the Red Sea and Suez Canal for the second half of the year, and some analysts are also using that as a baseline for their market outlooks, but the reality is that no one knows.

<div class="phx-topic"><div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5910619_0.1.png"></img></div>The big picture: The Red Sea crisis will continue to impact service levels, rates and shipper-carrier relationships on the Asia-Europe trade for the foreseeable future. While the diversion of vessels away from the Suez Canal starting in late 2023 came as an unpleasant surprise for shippers — and a welcome relief for heavily oversupplied carriers — the industry enters 2025 with the longer voyages firmly established in ocean schedules. A look back: As 2023 drew to a close, carriers were bracing for battle with a familiar foe: overcapacity. The container ship order book had grown to almost 30% of the in-service fleet and new, larger vessels were steadily sailing into service on the Asia-Europe trade. A precipitous rate decline appeared to be virtually guaranteed, and carriers were preparing to blank sailings, slow steam, and idle and scrap ships to manage capacity. But Houthi militant attacks on commercial shipping in the Red Sea completely flipped the supply-demand picture, forcing carriers to divert vessels around southern Africa and sending spot rates through the roof and all prior capacity management plans out the porthole. To offset the longer route adding about two weeks to transit times, carriers deployed everything that could float, which, in turn, caused severe port bottlenecks at both ends of the Asia–Europe corridor, further reducing effective capacity. European importers advanced orders from Asia to try to mitigate delays, which led to an early start to the peak season, quickly filled all available capacity and saw carriers slashing agreed volume allocations while charging huge premiums to guarantee loading. The peak season also came to an early end, but even as volumes slowed through September and into the fourth quarter, the longer voyages continued to disrupt schedules and kept short-term rates well above prior-year levels. Through mid-December, spot rates from Asia to North Europe averaged $5,067 per FEU, nearly four times the $1,312 per FEU average recorded for the full year in 2023, according to Platts, a sister product of the Journal of Commerce within S&amp;P Global. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e07960fd-fb05-486f-9266-38ad6d488c7b"></dynamic-object></div>A look ahead: When carriers can resume Suez Canal transits is the single largest question mark hanging over the Asia-Europe trade going into 2025. It will determine the structure of annual contracts, rate levels, shipper transportation costs, seasonal cargo flows and carrier profitability. Carriers have penciled in a return to the Red Sea for the second half, and some analysts are also using that as a baseline for their market outlooks, but the reality is that no one knows. Should the mid-year prediction be correct, it will immediately see the estimated 10% of excess capacity soaked up by the diversions around Africa returned to the market and rate levels will quickly come under downward pressure. That pressure, however, may not be as severe as initially thought, with cash-rich carriers vowing to pull hard on several levers at their disposal to limit the capacity overhang. In addition, carriers are expected to increase scrapping, with an estimated 3.4 million TEUs of capacity over 20 years old, increased blank sailings that can quickly withdraw capacity and growing numbers of idle vessels. Ship owner association BIMCO projects Asia-Europe headhaul volume will grow between 3% and 4% against capacity growth of 6.7% in 2025. The next inflection: While the Red Sea diversions look set to prevail, at least through the first half of 2025, volumes on those ships will be impacted by weak underlying economic growth in Europe. The region’s manufacturing sector is stuck in recession, with the EU’s major economies facing uncertainty over persistent core inflation, policy directions and geopolitical conflicts that are dampening the near-term outlook. Although European consumer confidence is edging higher, it remains significantly below pre-pandemic levels and will have a direct influence on retail sales and freight demand. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com.</a></div>

The big picture: The Red Sea crisis will continue to impact service levels, rates and shipper-carrier relationships on the Asia-Europe trade for the foreseeable future. While the diversion of vessels away from the Suez Canal starting in late 2023 came as an unpleasant surprise for shippers — and a welcome relief for heavily oversupplied carriers — the industry enters 2025 with the longer voyages firmly established in ocean schedules. A look back: As 2023 drew to a close, carriers were bracing for battle with a familiar foe: overcapacity. The container ship order book had grown to almost 30% of the in-service fleet and new, larger vessels were steadily sailing into service on the Asia-Europe trade. A precipitous rate decline appeared to be virtually guaranteed, and carriers were preparing to blank sailings, slow steam, and idle and scrap ships to manage capacity. But Houthi militant attacks on commercial shipping in the Red Sea completely flipped the supply-demand picture, forcing carriers to divert vessels around southern Africa and sending spot rates through the roof and all prior capacity management plans out the porthole. To offset the longer route adding about two weeks to transit times, carriers deployed everything that could float, which, in turn, caused severe port bottlenecks at both ends of the Asia–Europe corridor, further reducing effective capacity. European importers advanced orders from Asia to try to mitigate delays, which led to an early start to the peak season, quickly filled all available capacity and saw carriers slashing agreed volume allocations while charging huge premiums to guarantee loading. The peak season also came to an early end, but even as volumes slowed through September and into the fourth quarter, the longer voyages continued to disrupt schedules and kept short-term rates well above prior-year levels. Through mid-December, spot rates from Asia to North Europe averaged $5,067 per FEU, nearly four times the $1,312 per FEU average recorded for the full year in 2023, according to Platts, a sister product of the Journal of Commerce within S&P Global. A look ahead: When carriers can resume Suez Canal transits is the single largest question mark hanging over the Asia-Europe trade going into 2025. It will determine the structure of annual contracts, rate levels, shipper transportation costs, seasonal cargo flows and carrier profitability. Carriers have penciled in a return to the Red Sea for the second half, and some analysts are also using that as a baseline for their market outlooks, but the reality is that no one knows. Should the mid-year prediction be correct, it will immediately see the estimated 10% of excess capacity soaked up by the diversions around Africa returned to the market and rate levels will quickly come under downward pressure. That pressure, however, may not be as severe as initially thought, with cash-rich carriers vowing to pull hard on several levers at their disposal to limit the capacity overhang. In addition, carriers are expected to increase scrapping, with an estimated 3.4 million TEUs of capacity over 20 years old, increased blank sailings that can quickly withdraw capacity and growing numbers of idle vessels. Ship owner association BIMCO projects Asia-Europe headhaul volume will grow between 3% and 4% against capacity growth of 6.7% in 2025. The next inflection: While the Red Sea diversions look set to prevail, at least through the first half of 2025, volumes on those ships will be impacted by weak underlying economic growth in Europe. The region’s manufacturing sector is stuck in recession, with the EU’s major economies facing uncertainty over persistent core inflation, policy directions and geopolitical conflicts that are dampening the near-term outlook. Although European consumer confidence is edging higher, it remains significantly below pre-pandemic levels and will have a direct influence on retail sales and freight demand. Contact Greg Knowler at greg.knowler@spglobal.com.

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Red Sea to dominate Asia-Europe ocean trade again in 2025

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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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