<div class="phx-topic abstract-wrapper">The stock price of ocean carrier APL Ltd., a key indicator of investor confidence in container shipp</div>

The stock price of ocean carrier APL Ltd., a key indicator of investor confidence in container shipp

<div>The stock price of ocean carrier APL Ltd., a key indicator of investor confidence in container shipping, is hovering near its lowest point in a year.The stock closed Monday at $21 a share, a 52-week low and off 28 percent from its yearlong high of $29.125, reached briefly last year. The stock recovered Tuesday before sliding to 20 5/8 in midafternoon trading Wednesday.A plunging stock market, measured by the Dow Jones Industrial Average, on Thursday and Monday turned in its worst two-day loss since the crash of 1987, pulling APL's stock with it.Some analysts tracking the Oakland company say the...

The stock price of ocean carrier APL Ltd., a key indicator of investor confidence in container shipping, is hovering near its lowest point in a year. The stock closed Monday at $21 a share, a 52-week low and off 28 percent from its yearlong high of $29.125, reached briefly last year. The stock recovered Tuesday before sliding to 20 5/8 in midafternoon trading Wednesday.A plunging stock market, measured by the Dow Jones Industrial Average, on Thursday and Monday turned in its worst two-day loss since the crash of 1987, pulling APL's stock with it. Some analysts tracking the Oakland company say the weakness in its stock is primarily the result of a wobbly stock market. ''There are a whole lot of companies hitting yearly lows, and it is happening in increasing frequency, so I wouldn't single out APL,'' said James Dowling, a shipping analyst with Furman Selz LLC in New York. Others believe the price is tied less to the market than to the alarming condition of container shipping, which has been reeling from overcapacity and sinking freight rates. APL is the only pure container shipping stock traded in the United States, so for investors it becomes as close to a ''pure bet'' on the business as can be found anywhere in the U.S. equity markets. Few analysts, in fact, blame APL for its poor performance. Despite its declining profit and stock price, APL management, led by company veteran Tim Rhein, is generally applauded by Wall Street for being proactive and decisive. It is the industry that is of most concern. Analysts like Mr. Dowling say no upturn is in sight, while recent reports predict a significant expansion in vessel capacity over the next few years in the Pacific trades, APL's bread and butter. ''It is hard to get away from the fact that ultimately, the overwhelming driver of rates in the next two to three years is the supply (of vessel space), and the supply side is expandingby the minute,'' said James Winchester, an analyst with Lazard Freres & Co. in New York. The state of the industry was clearly apparent in APL's last financial report. In the final quarter of 1996, the company reported earnings of 7 cents a share excluding onetime items, nearly a 90 percent drop from profit reported a year earlier. The company has been preparing shareholders for the possibility of no earnings or even a loss in the first quarter. Those results should be reported during the week of April 21. Signs like those are even starting to worry some of APL's most consistent supporters on Wall Street. Steve Lewins, a transportation analyst with Gruntal & Co., Tuesday pulled APL from its recommended list, changing his outlook to ''neutral.'' APL acknowledged the tough shipping market as a factor holding down its stock, but said its strategy will yield long-term benefits for investors.

STOCK RETREAT ROUGHS UP APL

<div class="phx-topic abstract-wrapper">Despite banking a collective operating profit of around $60 billion in 2024, a worsening supply-demand imbalance could make the next three years difficult for the container shipping industry.</div>

Despite banking a collective operating profit of around $60 billion in 2024, a worsening supply-demand imbalance could make the next three years difficult for the container shipping industry.

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<div class="phx-topic">Container shipping is plunging into another downcycle with an oversupply of capacity and weakening demand hanging over the industry, leaving little to slow the slide in rates on major trades that analysts say have declined beyond seasonal norms. Despite reporting a highly profitable 2024 – operating profit will be around $60 billion across the industry, according to estimates from Sea-Intelligence Maritime Analysis – analysts are predicting a sharp downturn beginning this year. “We think we are entering a multi-year period of losses as the industry grapples with overcapacity,” J.P. Morgan wrote in a market update Monday, noting that the losses will likely emerge even if capacity does not fully return to the Red Sea this year. “Our demand-supply analysis now points to a 30% reduction in freight rates year over year in 2025 (down from the previous estimate of -15%),” the bank’s transport analysts wrote. “This leads to ocean EBIT (earnings before interest and taxes) losses emerging during 2025 and in our view persisting into the next three years, as vessel deliveries re-accelerate in 2027.” On the trans-Pacific, North Asia-US West Coast rates are down 65% since early January, falling an additional $400 last week to $1,800 per FEU. North Asia-US East Coast rates of $2,800/FEU lost $500 in the past week and are down 58% so far this year, according to Platts, a sister company of the Journal of Commerce within S&amp;P Global. Similarly, Asia-North Europe spot rates are down 50% since the beginning of January at $2,549/FEU and are now $148/FEU below the long-term contract rate, according to rate benchmarking platform Xeneta. <h3>Short-lived rate increases </h3>Carriers levied freight-all-kinds (FAK) increases on Asia-North Europe on March 1, but it had little effect on the oversupplied market, according to Peter Sand, Xeneta’s chief analyst. “The short-lived uptick in spot rates at the start of March suggests a weakness in the market and demonstrates the difficulties carriers will face in capacity management during 2025,” Sand said in a market update, adding that a similar weakening of rates can be seen on the Asia to US West and East coasts despite a series of general rate increases (GRIs). Maersk CEO Vincent Clerc <a href="https://www.joc.com/article/excess-capacity-hangs-over-recovering-container-market-maersk-ceo-5214234">said during the carrier’s earnings call</a> earlier this month that no matter how long the Red Sea disruption lasted, the fundamentals of increasing overcapacity in container shipping would “eventually” prevail and could start hitting the market as early as the third quarter. “Even if the situation on the Red Sea was to endure for two years, three years or four years, the current orderbook would eventually be bigger than what we expect market growth to be,” Clerc said. <h3>Flurry of air strikes on Houthi positions </h3>The container shipping orderbook is currently just over 7 million TEUs, representing 25% of the existing fleet, according to S&amp;P Global’s Sea-web, with the supply-demand imbalance expected to be particularly acute over the next two years. Niels Rasmussen, chief shipping analyst at shipping association BIMCO, had forecast cargo volume growth at 3% to 4% in both 2024 and 2025, which will be easily outstripped by fleet growth that was due to top 9.5% in 2024 and is forecast for 4.9% in 2025. An estimated 10% of global capacity has been absorbed by the longer transits around southern Africa to avoid the Red Sea. The Houthi’s move last week to renew attacks on Israeli-linked ships and a flurry of air strikes from US warplanes on the militants’ positions in Yemen over the weekend highlighted the ongoing volatility in the region. “The next incremental addition in capacity will result near term from the reopening of the Red Sea, which we think will likely happen in 2026 as it will take time for the full capacity to return,” J.P. Morgan noted in its update. The bank has forecast 2% growth in global volume this year, with volume rising 5% in the first quarter before falling to 1% growth for the remaining quarters of 2025. "We continue to see the freight backdrop as challenging and it remains subject to heightened demand risks as we enter a global trade war, given recent announcements of reciprocal tariffs with business confidence subject to downside risks,” J.P. Morgan said. John McCown, founder of private equity firm Blue Alpha Capital, agreed in his McCown Report released earlier this month. “The year 2025 could be a return to the roller coaster volume swings that most of us had hoped were in the past,” he wrote. “Whether it's the Panama Canal situation, the complex reciprocal tariffs or the initiative <a href="https://www.joc.com/article/us-port-tax-would-scramble-ocean-services-raise-shipper-costs-drewry-5952046">to tax ships with a Chinese connection</a> each time they call on a US port, these initiatives inject chaos, uncertainty and unnecessary costs into the container supply chain.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Container shipping is plunging into another downcycle with an oversupply of capacity and weakening demand hanging over the industry, leaving little to slow the slide in rates on major trades that analysts say have declined beyond seasonal norms. Despite reporting a highly profitable 2024 – operating profit will be around $60 billion across the industry, according to estimates from Sea-Intelligence Maritime Analysis – analysts are predicting a sharp downturn beginning this year. “We think we are entering a multi-year period of losses as the industry grapples with overcapacity,” J.P. Morgan wrote in a market update Monday, noting that the losses will likely emerge even if capacity does not fully return to the Red Sea this year. “Our demand-supply analysis now points to a 30% reduction in freight rates year over year in 2025 (down from the previous estimate of -15%),” the bank’s transport analysts wrote. “This leads to ocean EBIT (earnings before interest and taxes) losses emerging during 2025 and in our view persisting into the next three years, as vessel deliveries re-accelerate in 2027.” On the trans-Pacific, North Asia-US West Coast rates are down 65% since early January, falling an additional $400 last week to $1,800 per FEU. North Asia-US East Coast rates of $2,800/FEU lost $500 in the past week and are down 58% so far this year, according to Platts, a sister company of the Journal of Commerce within S&P Global. Similarly, Asia-North Europe spot rates are down 50% since the beginning of January at $2,549/FEU and are now $148/FEU below the long-term contract rate, according to rate benchmarking platform Xeneta. Short-lived rate increases Carriers levied freight-all-kinds (FAK) increases on Asia-North Europe on March 1, but it had little effect on the oversupplied market, according to Peter Sand, Xeneta’s chief analyst. “The short-lived uptick in spot rates at the start of March suggests a weakness in the market and demonstrates the difficulties carriers will face in capacity management during 2025,” Sand said in a market update, adding that a similar weakening of rates can be seen on the Asia to US West and East coasts despite a series of general rate increases (GRIs). Maersk CEO Vincent Clerc said during the carrier’s earnings call earlier this month that no matter how long the Red Sea disruption lasted, the fundamentals of increasing overcapacity in container shipping would “eventually” prevail and could start hitting the market as early as the third quarter. “Even if the situation on the Red Sea was to endure for two years, three years or four years, the current orderbook would eventually be bigger than what we expect market growth to be,” Clerc said. Flurry of air strikes on Houthi positions The container shipping orderbook is currently just over 7 million TEUs, representing 25% of the existing fleet, according to S&P Global’s Sea-web, with the supply-demand imbalance expected to be particularly acute over the next two years. Niels Rasmussen, chief shipping analyst at shipping association BIMCO, had forecast cargo volume growth at 3% to 4% in both 2024 and 2025, which will be easily outstripped by fleet growth that was due to top 9.5% in 2024 and is forecast for 4.9% in 2025. An estimated 10% of global capacity has been absorbed by the longer transits around southern Africa to avoid the Red Sea. The Houthi’s move last week to renew attacks on Israeli-linked ships and a flurry of air strikes from US warplanes on the militants’ positions in Yemen over the weekend highlighted the ongoing volatility in the region. “The next incremental addition in capacity will result near term from the reopening of the Red Sea, which we think will likely happen in 2026 as it will take time for the full capacity to return,” J.P. Morgan noted in its update. The bank has forecast 2% growth in global volume this year, with volume rising 5% in the first quarter before falling to 1% growth for the remaining quarters of 2025. "We continue to see the freight backdrop as challenging and it remains subject to heightened demand risks as we enter a global trade war, given recent announcements of reciprocal tariffs with business confidence subject to downside risks,” J.P. Morgan said. John McCown, founder of private equity firm Blue Alpha Capital, agreed in his McCown Report released earlier this month. “The year 2025 could be a return to the roller coaster volume swings that most of us had hoped were in the past,” he wrote. “Whether it's the Panama Canal situation, the complex reciprocal tariffs or the initiative to tax ships with a Chinese connection each time they call on a US port, these initiatives inject chaos, uncertainty and unnecessary costs into the container supply chain.” Contact Greg Knowler at greg.knowler@spglobal.com .

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Oversupplied ocean carriers sailing into new downcycle: analysts

<div class="phx-topic abstract-wrapper">The country’s competition watchdog is reviewing whether DP World’s acquisition of the logistics provider could lead to higher costs for shippers.</div>

The country’s competition watchdog is reviewing whether DP World’s acquisition of the logistics provider could lead to higher costs for shippers.

<div class="phx-topic">Shippers in Australia are backing a probe by the country’s competition authority into DP World’s planned US$110 million acquisition of leading forwarder Silk Logistics, saying the deal could lead to higher charges and anti-competitive behavior. “[The deal] has major implications for competition in Australia’s container freight sector, with potential impacts on supply chain costs for importers, exporters and transport operators,” said Paul Zalai, director of the shippers group Freight &amp; Trade Alliance (FTA). Zalai said the FTA has urged the Australian Competition and Consumer Commission (ACCC) “to oppose the acquisition due to the significant risk of market concentration, potential discrimination against rival transport providers, and misuse of sensitive commercial data.” This comes at a time when landside charges levied by terminal operators, including terminal access charges and container park fees, rose more than 11% to $627 million last year despite declining operating costs, according to ACCC data. Highlighting its main concerns about the DP World-Silk Logistics deal, the commission said it would result in DP World Australia owning a national container transport provider. Silk is the only national door-to-door container logistic provider in Australia. ACCC also said DP World-Silk could leverage its stevedoring dominance to increase charges or degrade service quality for competing transport providers at four key ports — Sydney’s Port Botany, Melbourne, Brisbane and Fremantle. “We are also assessing whether DP World Australia, after acquiring Silk, is likely to offer below-cost transportation prices to importers and exporters if their containers are also picked up and dropped off at DP World Australia’s stevedoring terminals,” ACCC Commissioner Philip Williams said in a statement. That could undercut independent transport operators, forcing them out of the market and allowing DP World to increase prices once market dominance was secured, the commission added. The competition watchdog said it was also concerned the acquisition would give both DP World and Silk access to commercially sensitive information, including volumes and delivery routes, about their rivals’ operations and customers. Given these concerns, the ACCC said it asked the industry to comment on the deal by March 27. DP World announced its intention to acquire Silk Logistics last November, saying the move would strengthen its integrated logistics capabilities. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>.</div>

Shippers in Australia are backing a probe by the country’s competition authority into DP World’s planned US$110 million acquisition of leading forwarder Silk Logistics, saying the deal could lead to higher charges and anti-competitive behavior. “[The deal] has major implications for competition in Australia’s container freight sector, with potential impacts on supply chain costs for importers, exporters and transport operators,” said Paul Zalai, director of the shippers group Freight & Trade Alliance (FTA). Zalai said the FTA has urged the Australian Competition and Consumer Commission (ACCC) “to oppose the acquisition due to the significant risk of market concentration, potential discrimination against rival transport providers, and misuse of sensitive commercial data.” This comes at a time when landside charges levied by terminal operators, including terminal access charges and container park fees, rose more than 11% to $627 million last year despite declining operating costs, according to ACCC data. Highlighting its main concerns about the DP World-Silk Logistics deal, the commission said it would result in DP World Australia owning a national container transport provider. Silk is the only national door-to-door container logistic provider in Australia. ACCC also said DP World-Silk could leverage its stevedoring dominance to increase charges or degrade service quality for competing transport providers at four key ports — Sydney’s Port Botany, Melbourne, Brisbane and Fremantle. “We are also assessing whether DP World Australia, after acquiring Silk, is likely to offer below-cost transportation prices to importers and exporters if their containers are also picked up and dropped off at DP World Australia’s stevedoring terminals,” ACCC Commissioner Philip Williams said in a statement. That could undercut independent transport operators, forcing them out of the market and allowing DP World to increase prices once market dominance was secured, the commission added. The competition watchdog said it was also concerned the acquisition would give both DP World and Silk access to commercially sensitive information, including volumes and delivery routes, about their rivals’ operations and customers. Given these concerns, the ACCC said it asked the industry to comment on the deal by March 27. DP World announced its intention to acquire Silk Logistics last November, saying the move would strengthen its integrated logistics capabilities. Contact Keith Wallis at keithwallis@hotmail.com .

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International ports

Australian shippers back competition probe into DP World’s deal for Silk Logistics

<div class="phx-topic abstract-wrapper">The Federal Maritime Commission is looking at areas where ships are having transit troubles with an eye on how US maritime influence can fix those problems.</div>

The Federal Maritime Commission is looking at areas where ships are having transit troubles with an eye on how US maritime influence can fix those problems.

<div class="phx-topic">The US Federal Maritime Commission (FMC) is asking shipping interests to weigh in on the biggest global maritime chokepoints they face as part of US waterborne commerce. The probe, part of the FMC’s regular work under US shipping law, comes amid the Trump administration’s moves to assert US power across the global maritime sector and to develop a US-based shipping industry. The FMC said Thursday it is investigating “transit constraints at international maritime chokepoints” as part of its regular annual report to Congress about practices in the ocean shipping industry. The agency is asking, in particular, whether the practices or policies of foreign governments and ocean carriers exacerbate those chokepoints. “It appears that constraints on transits ... may have created shipping conditions that call for careful consideration by the Federal Maritime Commission in connection with the determination of its policies and the carrying out of its duties,” the agency said in the docket announcing the probe. The FMC identified seven chokepoints for the probe — the English Channel, the Malacca Strait, the Northern Sea Passage, the Singapore Strait, the Panama Canal, the Strait of Gibraltar and the Suez Canal. The Panama Canal has been a particular area of concern for President Donald Trump, who has criticized the 1977 treaty that ceded US control of the canal to Panama. The Trump administration got one win in that regard when <a href="https://www.joc.com/article/big-hutchison-deal-could-reshuffle-global-ports-network-drewry-5958162">BlackRock-backed investors Global Infrastructure Partners struck a $23 billion deal</a> to buy the ports network belonging to Hong Kong’s CK Hutchison. The deal included two <a href="https://www.joc.com/article/panama-canal-transit-data-belies-trumps-claims-of-chinas-control-project44-5948559">Panama marine terminals that Trump called out for their Chinese ownership</a>. The FMC said in its docket about the investigation that the Panama Canal “holds substantial geopolitical importance [and is] crucial to the interests of the United States.” “Political instability or disruptions in its operation could have far-reaching consequences,” it added. The FMC suggested that if Panama or any other maritime entity appears to be causing problems at the canal, the US is prepared to hit back at Panama’s ship registry — one of the largest in the world with 8,000 vessels — including refusing US entry to Panama-flag vessels. <h3>Attempt to bolster US maritime presence</h3>The FMC is also seeking input on avoiding other types of navigational constraints, including the <a href="https://www.joc.com/article/with-ever-given-freed-suez-backlog-to-clear-through-week-carriers-5250358">2021 grounding of the Ever Given in the Suez Canal</a> and the <a href="https://www.joc.com/article/baltimore-preps-for-limited-port-reopening-by-end-of-april-5225392">2024 closure of the Port of Baltimore</a> after the container ship Dali struck a bridge, causing it to collapse. Alongside the FMC, the Trump administration as a whole has taken interest in the maritime sector, particularly regarding how to boost the US’ presence. The US Trade Representative is currently weighing whether <a href="https://www.joc.com/article/tpm25-us-exporters-starting-to-feel-pinch-of-trump-trade-war-with-china-5956798">Chinese-built and -operated ships should face $1 million fees for US port calls</a> to offset China’s dominance in shipbuilding. A hearing on the matter is scheduled for March 24. Trump also said in his joint address to Congress at the start of March that his administration plans to create an office of commercial and military shipbuilding with a view of “bringing this industry home to America.” Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

The US Federal Maritime Commission (FMC) is asking shipping interests to weigh in on the biggest global maritime chokepoints they face as part of US waterborne commerce. The probe, part of the FMC’s regular work under US shipping law, comes amid the Trump administration’s moves to assert US power across the global maritime sector and to develop a US-based shipping industry. The FMC said Thursday it is investigating “transit constraints at international maritime chokepoints” as part of its regular annual report to Congress about practices in the ocean shipping industry. The agency is asking, in particular, whether the practices or policies of foreign governments and ocean carriers exacerbate those chokepoints. “It appears that constraints on transits ... may have created shipping conditions that call for careful consideration by the Federal Maritime Commission in connection with the determination of its policies and the carrying out of its duties,” the agency said in the docket announcing the probe. The FMC identified seven chokepoints for the probe — the English Channel, the Malacca Strait, the Northern Sea Passage, the Singapore Strait, the Panama Canal, the Strait of Gibraltar and the Suez Canal. The Panama Canal has been a particular area of concern for President Donald Trump, who has criticized the 1977 treaty that ceded US control of the canal to Panama. The Trump administration got one win in that regard when BlackRock-backed investors Global Infrastructure Partners struck a $23 billion deal to buy the ports network belonging to Hong Kong’s CK Hutchison. The deal included two Panama marine terminals that Trump called out for their Chinese ownership . The FMC said in its docket about the investigation that the Panama Canal “holds substantial geopolitical importance [and is] crucial to the interests of the United States.” “Political instability or disruptions in its operation could have far-reaching consequences,” it added. The FMC suggested that if Panama or any other maritime entity appears to be causing problems at the canal, the US is prepared to hit back at Panama’s ship registry — one of the largest in the world with 8,000 vessels — including refusing US entry to Panama-flag vessels. Attempt to bolster US maritime presence The FMC is also seeking input on avoiding other types of navigational constraints, including the 2021 grounding of the Ever Given in the Suez Canal and the 2024 closure of the Port of Baltimore after the container ship Dali struck a bridge, causing it to collapse. Alongside the FMC, the Trump administration as a whole has taken interest in the maritime sector, particularly regarding how to boost the US’ presence. The US Trade Representative is currently weighing whether Chinese-built and -operated ships should face $1 million fees for US port calls to offset China’s dominance in shipbuilding. A hearing on the matter is scheduled for March 24. Trump also said in his joint address to Congress at the start of March that his administration plans to create an office of commercial and military shipbuilding with a view of “bringing this industry home to America.” Contact Michael Angell at michael.angell@spglobal.com .

FMC probes ocean chokepoints as Trump looks to rule the waves

<div class="phx-topic abstract-wrapper">A commentary published in a Hong Kong state-backed newspaper said the acquisition of Hutchison’s Panama assets by BlackRock and TiL would “Americanize” the canal and cause Washington to restrict Chinese access to the waterway. </div>

A commentary published in a Hong Kong state-backed newspaper said the acquisition of Hutchison’s Panama assets by BlackRock and TiL would “Americanize” the canal and cause Washington to restrict Chinese access to the waterway.

<div class="phx-topic">Beijing is voicing its opposition to the sale by Hong Kong conglomerate CK Hutchison of its Panama ports terminals to a consortium of BlackRock Group and Mediterranean Shipping Co.’s Terminal Investment Limited (TiL), warning the Panama Canal would be “Americanized” by the US government restricting Chinese access to the waterway. Chinese government concerns were outlined in a commentary published Thursday by Hong Kong newspaper Ta Kung Pao, a China state-backed newspaper. Official endorsement of the commentary was demonstrated when it was reposted on the joint website of the Chinese Communist Party’s Hong Kong and Macao Work Office and the Chinese government’s Hong Kong and Macao Affairs Office. The report spooked investors, causing Hutchison’s share price to drop more than 6% Friday to close at HK$46.25 (US$6). China’s opposition could put pressure on regulators to reject the sale. Hutchison on March 4 <a href="https://www.joc.com/article/hutchison-inks-228-billion-deal-to-sell-majority-of-port-holdings-to-blackrock-til-5955819">announced it had agreed to sell</a> its 90% stake in the Panama Ports Company as part of a larger $22.8 billion deal to offload its global ports business to BlackRock and TiL. The deal covers its 80% interest in Hutchison Port Holdings, which has terminal operations at 43 ports, but excludes Hutchison’s China ports. The Panama Ports Company controls terminals at Cristobal and Balboa at both ends of the canal. The newspaper commentary said the sale of the Panama terminals would lead the canal to become “Americanized” and “politicized,” with the US using the canal for “political purposes and pursuit of its own political agenda.” “China’s shipping trade will inevitably be constrained by the United States,” it said. “Once the US implements measures such as selective flow restrictions and imposition of political surcharges, the logistics costs and supply chain stability of Chinese enterprises will face great risks.” <h3>‘Not ordinary business practice’</h3>When the deal was announced, Frank Sixt, CK Hutchison’s co-managing director, stressed that the transaction was “purely commercial in nature and wholly unrelated to recent political news reports concerning the Panama Ports.” He added the sale “was the result of a rapid, discrete, but competitive process in which numerous bids and expressions of interest were received.” But the newspaper commentary rejected that explanation, highlighting Donald Trump’s ongoing threats to take back control of the canal and his close relationship with BlackRock co-founder, chairman and CEO Larry Fink. The Hutchison ports sale was “not ordinary business practice,” the commentary said. “Some [on the internet] pointed out that the United States may use this transaction as a template, through political pressure, to set off port mergers and acquisitions around the world, control more key ports in the world, and use ‘long-arm jurisdiction’ to implement suppression methods so that Chinese ships have nowhere to be berth,” the commentary added. “It can be seen that this deal is a hegemonic act by the US to use national power to embezzle the legitimate rights and interests of other countries through coercion, pressure, inducement and other despicable means, and it is power politics packaged as commercial behavior,” it added. CK Hutchison was also attacked, with the commentary saying that observers “generally strongly questioned and criticized this transaction” with the company “ignoring national interests and betraying all Chinese.” Warning of possible consequences if the sale goes ahead, the commentary said: “The relevant enterprises should think twice and think carefully about what position they want to stand on and which side they want to stand on.” Hutchison structured the deal as two transactions so the Panama Ports Company can likely be sold ahead of the other terminals in its portfolio. Regulatory and related issues in jurisdictions where the terminals are located could delay the sale of those assets by about a year, Eleanor Hadland, senior associate and ports and terminals analyst at maritime consultancy Drewry, <a href="https://www.joc.com/article/big-hutchison-deal-could-reshuffle-global-ports-network-drewry-5958162">told the Journal of Commerce</a>. Officially, the Chinese government has not commented on the deal, with a Foreign Ministry spokesperson saying it does not comment on commercial matters. Hutchison, which is in a 145-day exclusive negotiating period with BlackRock and TiL, did not immediately comment. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>.</div>

Beijing is voicing its opposition to the sale by Hong Kong conglomerate CK Hutchison of its Panama ports terminals to a consortium of BlackRock Group and Mediterranean Shipping Co.’s Terminal Investment Limited (TiL), warning the Panama Canal would be “Americanized” by the US government restricting Chinese access to the waterway. Chinese government concerns were outlined in a commentary published Thursday by Hong Kong newspaper Ta Kung Pao, a China state-backed newspaper. Official endorsement of the commentary was demonstrated when it was reposted on the joint website of the Chinese Communist Party’s Hong Kong and Macao Work Office and the Chinese government’s Hong Kong and Macao Affairs Office. The report spooked investors, causing Hutchison’s share price to drop more than 6% Friday to close at HK$46.25 (US$6). China’s opposition could put pressure on regulators to reject the sale. Hutchison on March 4 announced it had agreed to sell its 90% stake in the Panama Ports Company as part of a larger $22.8 billion deal to offload its global ports business to BlackRock and TiL. The deal covers its 80% interest in Hutchison Port Holdings, which has terminal operations at 43 ports, but excludes Hutchison’s China ports. The Panama Ports Company controls terminals at Cristobal and Balboa at both ends of the canal. The newspaper commentary said the sale of the Panama terminals would lead the canal to become “Americanized” and “politicized,” with the US using the canal for “political purposes and pursuit of its own political agenda.” “China’s shipping trade will inevitably be constrained by the United States,” it said. “Once the US implements measures such as selective flow restrictions and imposition of political surcharges, the logistics costs and supply chain stability of Chinese enterprises will face great risks.” ‘Not ordinary business practice’ When the deal was announced, Frank Sixt, CK Hutchison’s co-managing director, stressed that the transaction was “purely commercial in nature and wholly unrelated to recent political news reports concerning the Panama Ports.” He added the sale “was the result of a rapid, discrete, but competitive process in which numerous bids and expressions of interest were received.” But the newspaper commentary rejected that explanation, highlighting Donald Trump’s ongoing threats to take back control of the canal and his close relationship with BlackRock co-founder, chairman and CEO Larry Fink. The Hutchison ports sale was “not ordinary business practice,” the commentary said. “Some [on the internet] pointed out that the United States may use this transaction as a template, through political pressure, to set off port mergers and acquisitions around the world, control more key ports in the world, and use ‘long-arm jurisdiction’ to implement suppression methods so that Chinese ships have nowhere to be berth,” the commentary added. “It can be seen that this deal is a hegemonic act by the US to use national power to embezzle the legitimate rights and interests of other countries through coercion, pressure, inducement and other despicable means, and it is power politics packaged as commercial behavior,” it added. CK Hutchison was also attacked, with the commentary saying that observers “generally strongly questioned and criticized this transaction” with the company “ignoring national interests and betraying all Chinese.” Warning of possible consequences if the sale goes ahead, the commentary said: “The relevant enterprises should think twice and think carefully about what position they want to stand on and which side they want to stand on.” Hutchison structured the deal as two transactions so the Panama Ports Company can likely be sold ahead of the other terminals in its portfolio. Regulatory and related issues in jurisdictions where the terminals are located could delay the sale of those assets by about a year, Eleanor Hadland, senior associate and ports and terminals analyst at maritime consultancy Drewry, told the Journal of Commerce. Officially, the Chinese government has not commented on the deal, with a Foreign Ministry spokesperson saying it does not comment on commercial matters. Hutchison, which is in a 145-day exclusive negotiating period with BlackRock and TiL, did not immediately comment. Contact Keith Wallis at keithwallis@hotmail.com .

Beijing issues warning over Hutchison’s proposed sale of Panama Ports Company

<div class="phx-topic abstract-wrapper">Engineering, procurement and construction companies are in a tailspin about the possible withdrawal of suitable ships for project cargoes if the US government’s port call proposal linked to Chinese tonnage is implemented.</div>

Engineering, procurement and construction companies are in a tailspin about the possible withdrawal of suitable ships for project cargoes if the US government’s port call proposal linked to Chinese tonnage is implemented.

<div class="phx-topic">Engineering, procurement and construction companies (EPCs) are lambasting the Trump administration’s proposed port call tax on Chinese-built and -operated ships, fearing a “devastating” 50%-plus contracting fee increase for chartering multipurpose vessels (MPVs). The increased fee would render some US projects unsustainable, they say. The US Trade Representative <a href="https://www.joc.com/article/us-port-fees-could-hit-chinese-ships-under-trump-trade-proposal-5949409">has proposed sliding scale fees</a> of up to $1.5 million per port call for Chinese tonnage, depending on factors such as the carrier’s current fleet and orders at Chinese shipyards. Chinese-built tonnage dominates the MPV sector, according to a Journal of Commerce analysis of S&amp;P Global Market Intelligence data. About half the global MPV/heavy-lift fleet is Chinese-built, but the order book makes it more vulnerable: 89% is signed for Chinese yards. The multipurpose fleet is also more exposed to the proposed port call tariffs than the container sector because the specialized construction needed for heavy-lift and project cargo ships means very few countries can build MPVs at scale. “For breakbulk shipping this is devastating,” said a global EPC source speaking to the Journal of Commerce under condition of anonymity. For projects, EPCs will often be the sole importer on a ship. On a typical $1.85 million part-charter voyage for heavy lifts and ancillary cargo, port call tariffs could add $1 million to the chartering bill.“Obviously, this is unsustainable for projects if you calculate +50% on a million-dollar charter budget,” said the source.For container shipments related to industrial projects, EPCs said they expect an additional $200 to $300 per container as a result of the port tariffs, equal to a 15% increase in costs. That was described as more manageable as the tariff burden is shared on a container ship carrying multiple consignments for different shippers. But for MPVs, the port call tariff is “horrible,” said the source. A second EPC source shared their calculation of a range of anticipated budget increases as a result of the proposed port call tariff, which maxed out at a 75% increase. “That’s unsustainable. For a $50 million chartering budget for one project, that is an additional $37.5 million,” the source said. “It’s absolutely insane.” <h3>‘Panic’ in the market</h3>EPCs speaking to the Journal of Commerce expressed hope that the US government was overplaying its hand and that after the port tariff consultation deadline of March 24 passes, it will settle for a different fee structure that does not penalize current projects. However, they described the current proposal as a “credible risk.” In considering alternative solutions to avoid the port tariff, one EPC said they had studied transshipment of project cargoes, sharing the fee on a direct deep-sea call and then utilizing a second mode to get the cargo to the job site. However, the EPC concluded this would be unviable as additional handling and on-transport costs, in addition to increased risk, would make that route as expensive as paying the port call fee. “We think that with the fee implementation we could see reduced capacity and increased freight costs, as carriers look to concentrate on other trade lanes,” the source said. An MPV carrier speaking to the Journal of Commerce said EPCs were “sweating buckets” over the Trump administration proposal. The Journal of Commerce has learned that at least one MPV carrier has issued a surcharge note to clients and another is considering employing a government intervention clause, which requires shippers to pay a surcharge or risk cancellation of the shipment if it is not on the water. Another EPC spoke of “panic” in the market regarding the Chinese ship port call tax. “Everything is being renegotiated. We are having real problems getting rates,” the source said, adding that some carriers might simply pull out of the US if they can, choking off supply for US projects.Contact Carly Fields at <a href="mailto:carly.fields@spglobal.com">carly.fields@spglobal.com</a>. </div>

Engineering, procurement and construction companies (EPCs) are lambasting the Trump administration’s proposed port call tax on Chinese-built and -operated ships, fearing a “devastating” 50%-plus contracting fee increase for chartering multipurpose vessels (MPVs). The increased fee would render some US projects unsustainable, they say. The US Trade Representative has proposed sliding scale fees of up to $1.5 million per port call for Chinese tonnage, depending on factors such as the carrier’s current fleet and orders at Chinese shipyards. Chinese-built tonnage dominates the MPV sector, according to a Journal of Commerce analysis of S&P Global Market Intelligence data. About half the global MPV/heavy-lift fleet is Chinese-built, but the order book makes it more vulnerable: 89% is signed for Chinese yards. The multipurpose fleet is also more exposed to the proposed port call tariffs than the container sector because the specialized construction needed for heavy-lift and project cargo ships means very few countries can build MPVs at scale. “For breakbulk shipping this is devastating,” said a global EPC source speaking to the Journal of Commerce under condition of anonymity. For projects, EPCs will often be the sole importer on a ship. On a typical $1.85 million part-charter voyage for heavy lifts and ancillary cargo, port call tariffs could add $1 million to the chartering bill. “Obviously, this is unsustainable for projects if you calculate +50% on a million-dollar charter budget,” said the source. For container shipments related to industrial projects, EPCs said they expect an additional $200 to $300 per container as a result of the port tariffs, equal to a 15% increase in costs. That was described as more manageable as the tariff burden is shared on a container ship carrying multiple consignments for different shippers. But for MPVs, the port call tariff is “horrible,” said the source. A second EPC source shared their calculation of a range of anticipated budget increases as a result of the proposed port call tariff, which maxed out at a 75% increase. “That’s unsustainable. For a $50 million chartering budget for one project, that is an additional $37.5 million,” the source said. “It’s absolutely insane.” ‘Panic’ in the market EPCs speaking to the Journal of Commerce expressed hope that the US government was overplaying its hand and that after the port tariff consultation deadline of March 24 passes, it will settle for a different fee structure that does not penalize current projects. However, they described the current proposal as a “credible risk.” In considering alternative solutions to avoid the port tariff, one EPC said they had studied transshipment of project cargoes, sharing the fee on a direct deep-sea call and then utilizing a second mode to get the cargo to the job site. However, the EPC concluded this would be unviable as additional handling and on-transport costs, in addition to increased risk, would make that route as expensive as paying the port call fee. “We think that with the fee implementation we could see reduced capacity and increased freight costs, as carriers look to concentrate on other trade lanes,” the source said. An MPV carrier speaking to the Journal of Commerce said EPCs were “sweating buckets” over the Trump administration proposal. The Journal of Commerce has learned that at least one MPV carrier has issued a surcharge note to clients and another is considering employing a government intervention clause, which requires shippers to pay a surcharge or risk cancellation of the shipment if it is not on the water. Another EPC spoke of “panic” in the market regarding the Chinese ship port call tax. “Everything is being renegotiated. We are having real problems getting rates,” the source said, adding that some carriers might simply pull out of the US if they can, choking off supply for US projects. Contact Carly Fields at carly.fields@spglobal.com .

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

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Shippers save money, time with automated transportation bidding tools

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

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