<div class="phx-topic abstract-wrapper">Economists and shipping industry leaders warn the US-China trade war could be a potential tipping point for a global economy that was already cooling before President Donald Trump raised tariffs on $200 billion in Chinese goods.</div>

Economists and shipping industry leaders warn the US-China trade war could be a potential tipping point for a global economy that was already cooling before President Donald Trump raised tariffs on $200 billion in Chinese goods.

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<div>The trade war between China and the United States is casting a shadow stretching from US ports to distribution centers, truck terminals, factories, retail outlets, and, ultimately, consumers in the US heartland. Higher tariffs will not only affect the price of imports and exports, but when, where, and how freight moves over the ocean, in the air, and on the ground.Economists and shipping industry leaders warn the US-China trade war could be a potential tipping point for a global economy that was already cooling before President Donald Trump raised tariffs on $200 billion in Chinese goods in mid-May. Alphaliner recently...

The trade war between China and the United States is casting a shadow stretching from US ports to distribution centers, truck terminals, factories, retail outlets, and, ultimately, consumers in the US heartland. Higher tariffs will not only affect the price of imports and exports, but when, where, and how freight moves over the ocean, in the air, and on the ground. Economists and shipping industry leaders warn the US-China trade war could be a potential tipping point for a global economy that was already cooling before President Donald Trump raised tariffs on $200 billion in Chinese goods in mid-May. Alphaliner recently downgraded its global container throughput growth estimate for 2019 from 3.6 percent to 2.5 percent. Click to enlarge And the trade war is likely to make cooling US surface freight activity even chillier. US truck freight and intermodal volumes have been sliding for five straight months, according to the Cass Freight Index, making the possibility of economic contraction seem much more likely in the short term, despite healthy consumer sentiment and record low unemployment. Trans-Pacific shipping lines already are rushing to reduce vessel capacity, blanking sailings for June as eastbound spot rates to the US West Coast tumble. Air cargo rates between Hong Kong and North America spiked as beneficial cargo owners (BCOs) looked to expedite freight from China, but it was to no avail, as cargo had to be en route by May 10 and arrive in the US by June 1 in order to beat the tariff increase. The re-escalating trade war between the United States and China will damage growth, both directly and indirectly, according to Nariman Behravesh, chief economist at IHS Markit, parent company of JOC. “Higher US tariffs and Chinese retaliation will directly hurt growth in the economies of the two antagonists. This, along with disruptions in supply chains, will drag down growth in the emerging world.” IHS Markit estimates the impact of the announced tariffs will cut global growth by 0.2 to 0.3 percentage points, Behravesh said. That estimate would double, he said, if Trump follows through on a threat to impose tariffs on another $325 billion in Chinese exports to the United States, a step that could draw further retaliation from China. Before the latest round of tariffs, IHS Markit recently nudged up its 2019 global economic growth forecast by 0.1 percentage point to 2.9 percent. However, “the downside risks have once again risen,” Behravesh said. “Both the global manufacturing and services PMIs [Purchasing Managers’ Indexes] compiled by IHS Markit for JP Morgan dropped in April, highlighting this fragility.” Taking off the gloves The United States on May 10 raised tariffs from 10 percent to 25 percent on Chinese products totaling $200 billion in value. Another $50 billion in Chinese goods was hit with a 25 percent tariff last July. China responded May 13 with retaliatory tariffs on $60 billion of US goods that took effect at the beginning of June. That brings the tariffs imposed by China to $110 billion . Trump on May 13 threatened to impose tariffs on the remaining Chinese goods not covered by previous tariffs. The only US action to reduce tariffs has been the lifting of US levies on Canadian and Mexican steel and aluminum imposed last year, as the White House pushes for approval and implementation of its United States-Mexico-Canada Agreement. The trade battle goes well beyond tariffs. On May 15, Trump banned US companies from providing technology or components to Chinese telecommunications company Huawei and blocked the use of Huawei equipment in the United States. According to the South China Morning Post, China is considering cutting back on natural gas purchases from the United States. Certainly, Chinese President Xi Jinping’s recent comment that China is beginning a “new Long March,” a reference to the Chinese Communist Party Red Army’s historic fighting retreat in 1934 and 1935, doesn’t bode well for a quick reconciliation with the US in further trade talks. Trump and Xi are scheduled to meet at the G-20 summit in Osaka, Japan, June 28 and 29. The US-China trade spat is unlikely to be resolved quickly because it isn’t primarily about trade, Boris Glass, senior economist with S&P Global Ratings, said at Breakbulk Europe 2019. For the US, the dispute is about protecting intellectual property, opening and increasing market access, and creating a level playing field for US companies, Glass said May 23 at the conference in Bremen, Germany. For China, the priorities are aggressive technology acquisition, protecting domestic champions, and maintaining state-supported development. Bilateral US-China trade represents a relatively small share of total global trade, but what’s important is “the impact on confidence,” he said. Trade pessimism could lead to lower investment, which leads to lower growth. If the US-China dispute escalates, it could have a larger effect on world trade, particularly driving trade diversion and shifts in sourcing. Click to enlarge US imports from China have fallen sharply in the early part of the year, partly because of the front-loading of imports to beat higher US tariffs that initially were expected to take effect Jan. 1 but were delayed. Shipments declined 6 percent year over year to 3.5 million TEU in the first four months of 2019, according to PIERS, a sister product of JOC.com within IHS Markit. On the landside, the Cass Freight Shipments Index was down 3.2 percent year over year in April, and 0.3 percent from March. The index dropped 1 percent year over year in March, 2.1 percent in February, 0.3 percent in January, and 0.8 percent in December. Those five months of annualized decline follow 24 consecutive months of expansion, starting in December 2016. “We see material and growing downside risk to the economic outlook,” said analyst Donald Broughton, founder of Broughton Capital and author of the Cass Freight Index report. “The weakness in spot market pricing for many transportation services, especially trucking ... heightens our concerns about the economy and the risk of ongoing trade policy disputes.” Blanked sailings, lower volumes Because of the trade war, container volume growth this year could come in as little as 2 percent, according to London-based ship broker Braemar ACM, as quoted by The Wall Street Journal. If Trump goes through with his latest threat to expand tariffs, Alphaliner warns eastbound trans-Pacific volume will fall at least 8 percent in 2019 after rising 8.3 percent in 2018. Based on a previous impact analysis, Drewry calculates that a 10 percent increase in the prices of US imports from China results in a 6 percent decline in TEU volume from China to the US over time, holding all other factors constant. With tariffs of 25 percent, the potential TEU contraction would be around 15 percent for that leg alone. Increased sourcing from other Asian countries won’t make up for the shortfall from China, the maritime analyst said. The newest tariff shock hits the trans-Pacific before the summer peak season and puts downward pressure on spot rates. “Despite the uncertainties over the global trade environment, container volumes are still expected to achieve positive growth in 2019, albeit at a much lower rate than in the previous two years,” Alphaliner said May 15. The Ocean Alliance will blank a June 2 sailing from Fuzhou that was set to call Nansha, Hong Kong, Yantian, Xiamen, Los Angeles, and Oakland, and a June 18 sailing from Qingdao that was set to call Ningbo, Shanghai, Busan, Colon, Savannah, Charleston, Boston, and New York, Alphaliner said. The blank sailings will take 23,218 TEU of capacity out of the trade lane. The higher US tariffs could eliminate as much as 10 to 15 percent of trans-Pacific eastbound volume from China in the short term, Ludovic Renou, president for container line CMA CGM America, said at the 2019 JOC Gulf Shipping Conference in Houston May 21. “Successive waves of tariffs are a massive game changer” in reducing trade between the US and China, he said. In the week after the tariff announcement, air freight forwarders were “quoting like crazy” for trans-Pacific cargo. Eytan Buchman, chief marketing officer of the cargo marketplace and rate intelligence platform Freightos, said the sudden decision to raise tariffs left no time for ocean freight to beat the June 1 deadline, sending air cargo searches on his platform up 35 percent. This was confirmed by Edoardo Podesta, managing director of air and sea logistics, Asia Pacific, at Dachser Far East. Interest in air cargo is rising, he said, but has not yet translated into a significant rise in shipments. “I believe there will be a bit more activity in the next two to three weeks until the G-20 Summit,” with a gradual rise in rates, he told The Journal of Commerce. China is in no hurry to resolve the US tariff battle, Hackett Associates' Daniel Hackett said at the Gulf Shipping Conference. Ultimately, that means rising prices on consumers and declining transportation volumes. Hackett told the Gulf Shipping Conference the trade war between the global powers was the biggest uncertainty for a shipping industry confronting a “sea” of uncertainties. High inventories depress demand Those uncertainties extend to US highways and rail lines. It’s more difficult to draw a direct line between trade policy and softness in trucking or domestic intermodal rail, largely because multiple domestic factors influence those modal freight volumes. But the front-loading of imports last autumn does connect with the buildup of inventories that depressed first-quarter volumes. US containerized imports from Asia dropped 0.5 percent year over year in the first quarter of 2019, after rising 15.5 percent in the fourth quarter, according to PIERS data. As a result, inventories of goods built up and, according to the latest data from the US Census Bureau, are still high — as high as they’ve been since 2016, a very slow year for US trucking. Total US business inventories were up 4.9 percent in February from the same month a year ago. US retail inventories rose 4.3 percent, while manufacturing inventories expanded 3.6 percent. At Walmart, US comparable store inventories were up 3.1 percent, and total inventories were up about 5.9 percent in the first quarter, the company said in its latest earnings report. The impact has been fewer loads moving on road and rail across the US. At least that was the case in the first quarter. The Cass Freight Shipments Index was down 0.3 percent year over year in January, 2.1 percent in February, 1 percent in March, and 3.2 percent in April. The index, based on $25 billion worth of freight shipping a year, first dropped in December, falling 0.8 percent. Click to enlarge Still, those decreases are off super-heated high points in 2018, and were also fed in part by front-loading of imports from China as US importers tried to get ahead of the tariffs imposed last July and September. And shipper expenditures on freight transportation were up 6.2 percent year over year in April, despite the months-long slide in spot market truckload pricing. Over a two-year period, the Cass Shipper Expenditure Index is up 19.8 percent. The index rose 0.7 percent from March to April. “Realized pricing power is still being reported at the contract level in some modes,” Broughton said. Spot market weakness “suggests contract pricing is under increasing amounts of pressure and is at risk of going negative by the end of the year.” That’s truckload contract pricing. Less-than-truckload (LTL) carriers appear to be holding their own when it comes to pricing, largely because their capacity is more limited and because they’ve adopted technology and costing models that give them a pricing advantage. The days of trading deep pricing discounts for LTL market share are becoming a distant memory. A year ago, the Cass Truckload Linehaul Index, which measures changes in realized linehaul rates before fuel surcharges or accessorials, was climbing at an 8.2 percent annualized rate per month toward an 11.1 percent peak last August. Since January 2019, the truckload linehaul index’s rate of increase has dropped from 6.4 percent year over year to 2.7 percent. Sequentially, the index has decreased in three out of the first four months of 2019, dropping 1.1 percent in April. That brought the index 5.8 points down from its December peak of 144.2 to 138.4. That’s the same reading as last August, when the index was expanding most rapidly. The decline led Broughton to lower his 2019 pricing outlook to a range of negative 2 to 1 percent. There are signs that domestic US freight demand can power through trade disruption, to an extent. The American Trucking Associations For-Hire Truck Tonnage Index jumped 7.4 percent in April from March and climbed 7.7 percent year over year. A big part of that sequential increase, however, came from seasonal adjustment of the underlying tonnage data. And the downward pressure on US imports has only just begun. Contact William B. Cassidy at bill.cassidy@ihsmarkit.com and follow him on Twitter: @willbcassidy .

Maritime

Trucking News

Container lines

Transport, Trade and Regulation News

Tariff war casts shadow on US ocean, surface freight

<div class="phx-topic abstract-wrapper">Cargo theft in trucking and on the rails has been a problem for years, but it’s getting harder to combat as criminals become more sophisticated in their tactics.</div>

Cargo theft in trucking and on the rails has been a problem for years, but it’s getting harder to combat as criminals become more sophisticated in their tactics.

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<div class="phx-topic">A bipartisan coalition of federal lawmakers has introduced legislation to combat incidents of theft from truck trailers and shipping containers that have exploded in frequency and sophistication in the last three years. The <a href="https://www.judiciary.senate.gov/imo/media/doc/corca_final.pdf">Combating Organized Retail Crime Act of 2025</a> (CORCA), sponsored by Sens. Chuck Grassley (R-Iowa) and Catherine Cortez Masto (D-Nevada) along with several House members, seeks to strengthen laws and enhance coordination between law enforcement, shippers and carriers.The bill, introduced Thursday, would establish an “Organized Retail and Supply Chain Crime Coordination Center” within the Department of Homeland Security to share intelligence and coordinate federal investigations involving cargo and retail theft. “Organized theft rings deploy innovative tactics to pilfer goods,” Grassley said in a statement. “Our bill improves the federal response and deters future attacks on American retailers.” The legislation would broaden federal statutes to treat cargo theft as an interstate commerce crime, allowing prosecutors to aggregate losses from multiple thefts totaling at least $5,000 within a 12-month period into a felony charge. The measures address complaints from BNSF Railway and CSX Transportation that crimes are prosecuted on a “per container basis,” which the railroads say makes punishment weak. The bill would also expand the law to treat organized cargo theft as an underlying federal offense under the Racketeer Influenced and Corrupt Organizations Act (RICO) and allow law enforcement to seize vehicles, warehouses and financial proceeds connected to theft operations. RICO charges carry a sentence of up to 20 years in federal prison. This is the third attempt to pass CORCA after prior versions failed in 2022 and 2023, but it’s the first version to address cargo theft in trucking and rail. The more comprehensive bill has brought in support from the American Trucking Associations (ATA), Association of American Railroads (AAR), and the Intermodal Association of North America (IANA). Grassley is also the head of the Senate Judiciary Committee, which should expedite marking up the legislation and getting approval from both the Senate and House. Growing problem in rail The legislative push comes amid high-profile thefts on the rails over the last three years. In January and February, a rash of thefts in Arizona, California and New Mexico targeted ocean containers carrying limited-edition Nike shoes. Some of the thefts involved criminal groups sabotaging train brakes and signal systems to force emergency stops, according to investigators quoted by the <a href="https://www.latimes.com/california/story/2025-02-23/freight-train-heists-targeting-nike-merchandise-are-probed-as-related">Los Angeles Times</a>. The criminals also employed surveillance teams to monitor law enforcement activity. In 2022, images of <a href="https://www.bloomberg.com/news/newsletters/2022-01-17/supply-chain-latest-union-pacific-battles-rail-freight-theft-in-l-a">plundered containers</a> outside Union Pacific Railroad’s Los Angeles Terminal Center made national headlines. Last fall, videos of thieves in Chicago stealing from a Union Pacific train being interchanged with Norfolk Southern Railway also made national headlines. News helicopter images showed criminals breaching specific containers while ignoring others, suggesting insider knowledge. Six individuals were detained, but only <a href="https://abc7chicago.com/post/chicago-crime-derrick-weathers-lemar-hollingsworth-charges-freight-train-looting-south-austin-police-say/15424077/">two were charged with local misdemeanors</a> rather than federal charges. “This alarming trend affects every industry, including the nation’s largest railroads, which experienced a 40% spike in cargo theft last year,” AAR CEO Ian Jeffries said in a statement. “Disrupting these organized crime networks requires a unified, federally led response.” BNSF CEO Katie Farmer said at the <a href="https://www.joc.com/article/tpm25-bnsf-ceo-says-fighting-cargo-theft-requires-collective-effort-5956508">Journal of Commerce’s TPM25 conference</a> in March that arrests do not serve as a deterrence. “We are arresting people on Monday and seeing them again on Friday,” Farmer said. “We can’t solve this alone.” <h3>Cargo theft in trucking </h3>In trucking, cargo thieves have targeted freight brokers. Criminals are impersonating trucking companies to get loads using US Department of Transportation (USDOT) registration numbers, then booking the load with an unsuspecting driver. The cargo will be diverted to an alternate destination where it’s unloaded and vanishes. The driver doesn’t get paid, the shipper loses its cargo and the broker must mend a fractured relationship. “This trend raises costs for consumers and puts drivers in danger,” ATA CEO Chris Spear said in a statement. “Improved federal coordination and enforcement is essential to protecting the integrity of freight transportation.” The trucking crimes are as equally sophisticated as the rail crimes. Criminals are buying real USDOT numbers off companies going out of business, then spoof the email address and phone number of real employees of US freight brokers. The email signatures, logos, and rate confirmation sheets sent to the unsuspecting driver are virtually identical to the real thing. It may be difficult to truly reduce the number of crimes, even if the CORCA bill becomes law, as many of the ringleaders are based overseas, according to cargo theft experts. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a></div>

A bipartisan coalition of federal lawmakers has introduced legislation to combat incidents of theft from truck trailers and shipping containers that have exploded in frequency and sophistication in the last three years. The Combating Organized Retail Crime Act of 2025 (CORCA), sponsored by Sens. Chuck Grassley (R-Iowa) and Catherine Cortez Masto (D-Nevada) along with several House members, seeks to strengthen laws and enhance coordination between law enforcement, shippers and carriers. The bill, introduced Thursday, would establish an “Organized Retail and Supply Chain Crime Coordination Center” within the Department of Homeland Security to share intelligence and coordinate federal investigations involving cargo and retail theft. “Organized theft rings deploy innovative tactics to pilfer goods,” Grassley said in a statement. “Our bill improves the federal response and deters future attacks on American retailers.” The legislation would broaden federal statutes to treat cargo theft as an interstate commerce crime, allowing prosecutors to aggregate losses from multiple thefts totaling at least $5,000 within a 12-month period into a felony charge. The measures address complaints from BNSF Railway and CSX Transportation that crimes are prosecuted on a “per container basis,” which the railroads say makes punishment weak. The bill would also expand the law to treat organized cargo theft as an underlying federal offense under the Racketeer Influenced and Corrupt Organizations Act (RICO) and allow law enforcement to seize vehicles, warehouses and financial proceeds connected to theft operations. RICO charges carry a sentence of up to 20 years in federal prison. This is the third attempt to pass CORCA after prior versions failed in 2022 and 2023, but it’s the first version to address cargo theft in trucking and rail. The more comprehensive bill has brought in support from the American Trucking Associations (ATA), Association of American Railroads (AAR), and the Intermodal Association of North America (IANA). Grassley is also the head of the Senate Judiciary Committee, which should expedite marking up the legislation and getting approval from both the Senate and House. Growing problem in rail The legislative push comes amid high-profile thefts on the rails over the last three years. In January and February, a rash of thefts in Arizona, California and New Mexico targeted ocean containers carrying limited-edition Nike shoes. Some of the thefts involved criminal groups sabotaging train brakes and signal systems to force emergency stops, according to investigators quoted by the Los Angeles Times . The criminals also employed surveillance teams to monitor law enforcement activity. In 2022, images of plundered containers outside Union Pacific Railroad’s Los Angeles Terminal Center made national headlines. Last fall, videos of thieves in Chicago stealing from a Union Pacific train being interchanged with Norfolk Southern Railway also made national headlines. News helicopter images showed criminals breaching specific containers while ignoring others, suggesting insider knowledge. Six individuals were detained, but only two were charged with local misdemeanors rather than federal charges. “This alarming trend affects every industry, including the nation’s largest railroads, which experienced a 40% spike in cargo theft last year,” AAR CEO Ian Jeffries said in a statement. “Disrupting these organized crime networks requires a unified, federally led response.” BNSF CEO Katie Farmer said at the Journal of Commerce’s TPM25 conference in March that arrests do not serve as a deterrence. “We are arresting people on Monday and seeing them again on Friday,” Farmer said. “We can’t solve this alone.” Cargo theft in trucking In trucking, cargo thieves have targeted freight brokers. Criminals are impersonating trucking companies to get loads using US Department of Transportation (USDOT) registration numbers, then booking the load with an unsuspecting driver. The cargo will be diverted to an alternate destination where it’s unloaded and vanishes. The driver doesn’t get paid, the shipper loses its cargo and the broker must mend a fractured relationship. “This trend raises costs for consumers and puts drivers in danger,” ATA CEO Chris Spear said in a statement. “Improved federal coordination and enforcement is essential to protecting the integrity of freight transportation.” The trucking crimes are as equally sophisticated as the rail crimes. Criminals are buying real USDOT numbers off companies going out of business, then spoof the email address and phone number of real employees of US freight brokers. The email signatures, logos, and rate confirmation sheets sent to the unsuspecting driver are virtually identical to the real thing. It may be difficult to truly reduce the number of crimes, even if the CORCA bill becomes law, as many of the ringleaders are based overseas, according to cargo theft experts. Contact Ari Ashe at ari.ashe@spglobal.com

Truck brokers

North-American rail

Congress makes fresh attempt to target cargo theft in US

<div class="phx-topic abstract-wrapper">From an international supply chain perspective, the plan that could hit Chinese-made and -operated ships with fees in excess of $1 million per US port call could have impacts as profound as the current tariff controversy.</div>

From an international supply chain perspective, the plan that could hit Chinese-made and -operated ships with fees in excess of $1 million per US port call could have impacts as profound as the current tariff controversy.

<div class="phx-topic">Somewhat — and maybe temporarily — sidelined amid the current tariff maelstrom was the recent <a href="https://www.joc.com/article/us-port-fees-could-hit-chinese-ships-under-trump-trade-proposal-5949409">announcement by the US Trade Representative (USTR) regarding Chinese-manufactured ocean vessels</a> and its proposed remedy for container lines to pay over $1 million per US port call. Given that the plan was roundly denounced <a href="https://www.joc.com/article/plan-to-tax-chinese-ships-turned-maritime-malaise-into-brainstorming-session-5971753">during recent hearings on the topic</a>, the chances are fairly good that when the final plan rolls out, perhaps later this month, it will see some significant changes. But given the Trump administration’s tariff posture and the current animosity versus China, things could easily go the other way. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5981078_0.1.jpg"></img></div>From an international supply chain perspective, the proposed charges could have impacts as profound as the current tariff controversies. Three main impacts are evident: (1) increased costs resulting from the pass-through of port fees to importers; (2) consolidation of port calls and elimination of calls at secondary ports; and (3) diversion of freight to adjacent non-US ports such as Vancouver/Prince Rupert and Halifax in Canada and Lazaro Cardenas in Mexico. Item #1 is somewhat of a no-brainer, in that the additional costs will certainly be passed along. Even though potentially significant, they stand to be a rounding error given the scope of the tariffs, assuming they remain in place. Item #2 betrays a certain lack of understanding of how things work on the part of the USTR. If the plan remains “as is,” then the bypassing of secondary ports is a near-certainty, as many of these do not have the volume to justify the additional port fee expense. However, from an intermodal perspective, this does not represent a potential bonanza, as most of the resulting hauls would be relatively short-haul north-south moves for which the system is not particularly well-suited. Most likely, the moves would be long-haul drays — although the potential for transloading to feeder vessels would be another alternative. From a structural perspective, this problem would be easily solved by a change in the way the rule is written, such that only the first US port of call incurs a fee. This might be a larger number than currently envisioned, but subsequent US ports of call by the same vessel on the same voyage would not incur a fee. This would eliminate the perverting effects of the fees on the network structure. That leaves #3, the last item, which involves potential diversion of imports away from US ports of entry. The International Longshore and Warehouse Union (ILWU) has proposed a solution that involves a border fee on containers entering the US overland from Canada and Mexico to “level out” the playing field. However, even if such a fee is not included in the revisions, it’s not clear how much volume will actually be diverted. A back-of-the-envelope analysis would be to take the fee incurred in calling at Los Angeles, for instance, and divide the fee among all the containers being discharged. But there is no such requirement for the fee to be evenly spread among all the discharged boxes. <h3>Innocent bystanders ‘caught in the crossfire’ </h3>Another approach would be for the carrier to skew the fees more toward local traffic, for which no alternative to Los Angeles exists, and to hold down the fees on the ultra-competitive inland point intermodal traffic for which abundant alternatives are available. Once the decision is made to have a port call in LA to serve the large amount of local traffic, then the fee becomes, in effect, a “sunk cost.” The discharge of additional inland volume doesn’t change the fee one cent, and even if the inland volume picks up only a small slice of the pie, it will still help reduce the overall fee per box. The same calculus applies up north. Over the last six months, about 55% of the TEUs landing in the US Pacific Northwest did not exit the region on rail. This works out to an average of about 65,000 TEUs per month. Add in the additional volume that would be generated by eliminating the call at Oakland and this would likely be enough volume to warrant a port call at Sea-Tac. Again, once that decision is made, then it makes sense to pull as much volume as possible into each call. This would incentivize carriers to price the inland volume competitively so that they can pick up at least some of the cost. None of this should be interpreted to mean that the proposed changes, even if modified in a sensible manner, won’t be hugely disruptive. The problem will be compounded by the continued uncertainty engendered by the administration’s “ready, fire, aim” approach, with subsequent rollbacks, modifications and on-the-fly changes made on short notice. This is making a near-term recession more likely by the day, as investment and planning efforts are frozen, waiting for clarity that will most likely never arrive, because a deal is never final. This will all eventually get sorted out. But in the meantime, huge damage will be done and many innocent bystanders, both in the US and overseas, will be caught in the crossfire. Contact Larry Gross at <a href="https://www.joc.com/article/lgross@intermodalindepth.com">lgross@intermodalindepth.com</a>.</div>

Somewhat — and maybe temporarily — sidelined amid the current tariff maelstrom was the recent announcement by the US Trade Representative (USTR) regarding Chinese-manufactured ocean vessels and its proposed remedy for container lines to pay over $1 million per US port call. Given that the plan was roundly denounced during recent hearings on the topic , the chances are fairly good that when the final plan rolls out, perhaps later this month, it will see some significant changes. But given the Trump administration’s tariff posture and the current animosity versus China, things could easily go the other way. From an international supply chain perspective, the proposed charges could have impacts as profound as the current tariff controversies. Three main impacts are evident: (1) increased costs resulting from the pass-through of port fees to importers; (2) consolidation of port calls and elimination of calls at secondary ports; and (3) diversion of freight to adjacent non-US ports such as Vancouver/Prince Rupert and Halifax in Canada and Lazaro Cardenas in Mexico. Item #1 is somewhat of a no-brainer, in that the additional costs will certainly be passed along. Even though potentially significant, they stand to be a rounding error given the scope of the tariffs, assuming they remain in place. Item #2 betrays a certain lack of understanding of how things work on the part of the USTR. If the plan remains “as is,” then the bypassing of secondary ports is a near-certainty, as many of these do not have the volume to justify the additional port fee expense. However, from an intermodal perspective, this does not represent a potential bonanza, as most of the resulting hauls would be relatively short-haul north-south moves for which the system is not particularly well-suited. Most likely, the moves would be long-haul drays — although the potential for transloading to feeder vessels would be another alternative. From a structural perspective, this problem would be easily solved by a change in the way the rule is written, such that only the first US port of call incurs a fee. This might be a larger number than currently envisioned, but subsequent US ports of call by the same vessel on the same voyage would not incur a fee. This would eliminate the perverting effects of the fees on the network structure. That leaves #3, the last item, which involves potential diversion of imports away from US ports of entry. The International Longshore and Warehouse Union (ILWU) has proposed a solution that involves a border fee on containers entering the US overland from Canada and Mexico to “level out” the playing field. However, even if such a fee is not included in the revisions, it’s not clear how much volume will actually be diverted. A back-of-the-envelope analysis would be to take the fee incurred in calling at Los Angeles, for instance, and divide the fee among all the containers being discharged. But there is no such requirement for the fee to be evenly spread among all the discharged boxes. Innocent bystanders ‘caught in the crossfire’ Another approach would be for the carrier to skew the fees more toward local traffic, for which no alternative to Los Angeles exists, and to hold down the fees on the ultra-competitive inland point intermodal traffic for which abundant alternatives are available. Once the decision is made to have a port call in LA to serve the large amount of local traffic, then the fee becomes, in effect, a “sunk cost.” The discharge of additional inland volume doesn’t change the fee one cent, and even if the inland volume picks up only a small slice of the pie, it will still help reduce the overall fee per box. The same calculus applies up north. Over the last six months, about 55% of the TEUs landing in the US Pacific Northwest did not exit the region on rail. This works out to an average of about 65,000 TEUs per month. Add in the additional volume that would be generated by eliminating the call at Oakland and this would likely be enough volume to warrant a port call at Sea-Tac. Again, once that decision is made, then it makes sense to pull as much volume as possible into each call. This would incentivize carriers to price the inland volume competitively so that they can pick up at least some of the cost. None of this should be interpreted to mean that the proposed changes, even if modified in a sensible manner, won’t be hugely disruptive. The problem will be compounded by the continued uncertainty engendered by the administration’s “ready, fire, aim” approach, with subsequent rollbacks, modifications and on-the-fly changes made on short notice. This is making a near-term recession more likely by the day, as investment and planning efforts are frozen, waiting for clarity that will most likely never arrive, because a deal is never final. This will all eventually get sorted out. But in the meantime, huge damage will be done and many innocent bystanders, both in the US and overseas, will be caught in the crossfire. Contact Larry Gross at lgross@intermodalindepth.com .

North American ports

USTR port fee proposal would open a ‘second front’ in trade war

<div class="phx-topic abstract-wrapper">First-quarter carrier earnings are likely to be buoyed by high rates and strong demand that has spilled over from 2024, but tariffs, slowing volume and excess capacity are darkening the outlook for the rest of the year.</div>

First-quarter carrier earnings are likely to be buoyed by high rates and strong demand that has spilled over from 2024, but tariffs, slowing volume and excess capacity are darkening the outlook for the rest of the year.

<div class="phx-topic">Ocean carriers will report a strong first quarter due to elevated rates on the trans-Pacific and Asia-Europe trades that were significantly higher compared with the same period last year, analysts say. But the outlook for the rest of the year has become clouded given the impact of US tariffs, retaliatory tariffs, slowing demand and rising capacity in an oversupplied container shipping market. Carriers will report their first-quarter financial results over the next few weeks, with the earnings likely to be buoyed by strong demand on the trans-Pacific and high rates on both the Asia-US and Asia-Europe trade lanes. That was evident in <a href="https://www.joc.com/article/cosco-on-course-for-big-jump-in-first-quarter-net-profit-5979846">Cosco Shipping Holdings’ estimated first-quarter earnings</a> released this week that show a highly profitable result. It looks to be downhill from here, however. J.P. Morgan analysts are expecting full-year profitability guidance cuts to be made by carriers “across the board” based on a weakening demand outlook and the backdrop of US tariffs. “The high fourth-quarter 2024 freight rate will have supported a solid start of the year for EBIT [earnings before interest and taxes], but the environment has rapidly deteriorated throughout the first quarter, with the Shanghai Containerized Freight Index down 18% quarter over quarter and expected market volume growth of around 3%,” the bank’s transportation analysts wrote in a market update this week. Tariff uncertainty has already caused cargo bookings on vessels leaving Asia for the US over the next few weeks to plummet as <a href="https://www.joc.com/article/tariff-uncertainty-causes-plunge-in-us-cargo-bookings-at-asia-load-ports-5980498">importers place a hold on China factory orders</a> until greater clarity emerges. Befitting the chaos that has marked the on-again, off-again nature of the tariff rollout, President Donald Trump on Wednesday announced he was lowering the widely varied “reciprocal” tariffs on all countries — except China — to a 10% baseline for 90 days. And in what has become a near-daily escalation of the trade war with Beijing, Trump said he was again raising tariffs on goods imported from China, this time to 125%. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="43ce164b-7c51-4602-89a9-1ad80311460a"></dynamic-object></div>The wait-and-see approach from US importers on the eastbound trans-Pacific has as yet not caused any significant movement among various spot rate indexes. Data from rate benchmarking platform Xeneta shows average spot rates from China to the US West Coast at $2,886 per FEU as of Thursday, essentially flat since a general rate increase April 1. The Asia-US East Coast rate has also been flat since April 1 at $3,861/FEU. It was a weaker picture on China-North Europe where the rates have been falling since late December and are down 55% at $2,250/FEU; China-Mediterranean rates have followed a similar path, down 50% since Dec. 31 at $2,955/FEU. <h3>Recession threat looms </h3>Sea-Intelligence Maritime Analysis CEO Alan Murphy said when tariffs, demand and supply were considered, the problem was whether the world was heading into a wider recession and how that will impact the container shipping market. “The baseline outlook for world demand is for growth of around 3.2%, matching the GDP outlook, but that was from before the tariff war was launched this past week,” Murphy said. “Whether the tariff war becomes as severe as the financial crisis — when global demand fell 9% year over year — is still entirely unknown, but even if the impact was half of the financial crisis, this would tip the global supply/demand balance away from a strong 2025 peak and into overcapacity,” he added. The vessel capacity on order is now at 28% of the current fleet at 8.6 million TEUs, according to Sea-web, a sister company of the Journal of Commerce within S&amp;P Global. Demolition data from Sea-web shows just 2,379 TEUs of capacity are set to be scrapped this year compared with more than 91,000 TEUs in 2024. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="5f4d2d49-843e-4e72-a473-c1076ca7264e"></dynamic-object></div>Alphaliner noted in its newsletter this week that demand for all types of ships was robust amid sustained cargo volumes on various trades despite container shipping being in its traditional slack season. “In late March, not a single ship larger than 18,000 TEUs was idle, and only three vessels of the second-biggest size class — 12,500 TEUs — were commercially inactive,” Alphaliner noted. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Ocean carriers will report a strong first quarter due to elevated rates on the trans-Pacific and Asia-Europe trades that were significantly higher compared with the same period last year, analysts say. But the outlook for the rest of the year has become clouded given the impact of US tariffs, retaliatory tariffs, slowing demand and rising capacity in an oversupplied container shipping market. Carriers will report their first-quarter financial results over the next few weeks, with the earnings likely to be buoyed by strong demand on the trans-Pacific and high rates on both the Asia-US and Asia-Europe trade lanes. That was evident in Cosco Shipping Holdings’ estimated first-quarter earnings released this week that show a highly profitable result. It looks to be downhill from here, however. J.P. Morgan analysts are expecting full-year profitability guidance cuts to be made by carriers “across the board” based on a weakening demand outlook and the backdrop of US tariffs. “The high fourth-quarter 2024 freight rate will have supported a solid start of the year for EBIT [earnings before interest and taxes], but the environment has rapidly deteriorated throughout the first quarter, with the Shanghai Containerized Freight Index down 18% quarter over quarter and expected market volume growth of around 3%,” the bank’s transportation analysts wrote in a market update this week. Tariff uncertainty has already caused cargo bookings on vessels leaving Asia for the US over the next few weeks to plummet as importers place a hold on China factory orders until greater clarity emerges. Befitting the chaos that has marked the on-again, off-again nature of the tariff rollout, President Donald Trump on Wednesday announced he was lowering the widely varied “reciprocal” tariffs on all countries — except China — to a 10% baseline for 90 days. And in what has become a near-daily escalation of the trade war with Beijing, Trump said he was again raising tariffs on goods imported from China, this time to 125%. The wait-and-see approach from US importers on the eastbound trans-Pacific has as yet not caused any significant movement among various spot rate indexes. Data from rate benchmarking platform Xeneta shows average spot rates from China to the US West Coast at $2,886 per FEU as of Thursday, essentially flat since a general rate increase April 1. The Asia-US East Coast rate has also been flat since April 1 at $3,861/FEU. It was a weaker picture on China-North Europe where the rates have been falling since late December and are down 55% at $2,250/FEU; China-Mediterranean rates have followed a similar path, down 50% since Dec. 31 at $2,955/FEU. Recession threat looms Sea-Intelligence Maritime Analysis CEO Alan Murphy said when tariffs, demand and supply were considered, the problem was whether the world was heading into a wider recession and how that will impact the container shipping market. “The baseline outlook for world demand is for growth of around 3.2%, matching the GDP outlook, but that was from before the tariff war was launched this past week,” Murphy said. “Whether the tariff war becomes as severe as the financial crisis — when global demand fell 9% year over year — is still entirely unknown, but even if the impact was half of the financial crisis, this would tip the global supply/demand balance away from a strong 2025 peak and into overcapacity,” he added. The vessel capacity on order is now at 28% of the current fleet at 8.6 million TEUs, according to Sea-web, a sister company of the Journal of Commerce within S&P Global. Demolition data from Sea-web shows just 2,379 TEUs of capacity are set to be scrapped this year compared with more than 91,000 TEUs in 2024. Alphaliner noted in its newsletter this week that demand for all types of ships was robust amid sustained cargo volumes on various trades despite container shipping being in its traditional slack season. “In late March, not a single ship larger than 18,000 TEUs was idle, and only three vessels of the second-biggest size class — 12,500 TEUs — were commercially inactive,” Alphaliner noted. Contact Greg Knowler at greg.knowler@spglobal.com .

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Asia-Europe

Trans-Pacific

US tariffs could help undo solid start to 2025 for ocean carriers

<div class="phx-topic abstract-wrapper">US and Canadian regulators have used different standards to determine whether chassis made by a Vietnamese supplier ran contrary to trade regulations directed at China.</div>

US and Canadian regulators have used different standards to determine whether chassis made by a Vietnamese supplier ran contrary to trade regulations directed at China.

<div class="phx-topic">Canadian regulators have found that British Columbia-based chassis lessor Ocean Trailer did not illegally circumvent crippling antidumping and countervailing duties levied on China when it purchased equipment from a Vietnamese supplier, a preliminary decision ahead of a final ruling expected in May. The Canada Border Services Agency (CBSA) issued its preliminary decision Wednesday, clearing Ocean Trailer of <a href="https://www.joc.com/article/canadian-investigation-again-raises-questions-of-chinese-chassis-origin-5874539">allegations brought by its competitor</a>, Max-Atlas Equipment International, which argued that the chassis were largely made with Chinese components and therefore should be treated as Chinese in origin. “Ocean Trailer has maintained from the beginning of this investigation we were confident that we would be absolved of any wrongdoing,” Mack Keay, Ocean Trailer’s chief operating officer, told the Journal of Commerce. “We are happy with the decision and look forward to putting this behind us, and to continue to provide high-quality container chassis to our customers.” The complaint, filed last November, had much in common with a <a href="https://www.joc.com/article/us-commerce-department-rejects-pitts-appeal-in-marine-chassis-case-5200425">US case involving CIE Manufacturing</a> and a subsidiary of Pitts Enterprises named Dorsey Intermodal in 2023. While both cases centered on Truong Hai Auto Corporation (THACO) of Vietnam, a chassis manufacturer, the US and Canadian governments reached different conclusions. In the US, the Customs and Border Protection (CBP) investigation determined between 59% and 69% of the chassis components were sourced from China. The agency ruled that Pitts Enterprises failed to disclose the Chinese origin of key subcomponents and that THACO had not substantially transformed them in Vietnam. As a result, the chassis were deemed to originate in China and were subject to duties. CBSA reached a different conclusion following an on-site inspection of THACO’s facilities in Vietnam last month. Canadian investigators found THACO’s manufacturing “is not done using parts or components that are in ‘major portion’ from China,” and that the assembly, blasting, coating, painting and welding in Vietnam constitutes a significant transformation to a final chassis. The conclusion was Ocean Trailer did not violate any regulations and so the chassis were not subject to duties. Keay said Ocean Trailer did “due diligence” before partnering with THACO. <h3>Canadian ruling could impact US chassis manufacturers </h3>Ripple waves of the preliminary ruling, once finalized, could spread to the US. Pitts Enterprises lost an appeal and was expelled from the coalition of US chassis manufacturers that had lobbied for the duties in 2020. A new coalition was formed with the remaining members, Cheetah Chassis and Stoughton Trailers, which <a href="https://www.joc.com/article/us-chassis-manufacturers-targeting-makers-in-mexico-thailand-and-vietnam-5952748">filed a new case in February</a> to expand the crippling duties to Mexico, Thailand and Vietnam. The new coalition singled out the material injury that THACO’s operations in Vietnam allegedly cause US manufacturing. Canada was not one of the countries singled out in the ongoing US case. If Cheetah and Stoughton are successful when a preliminary decision is issued this summer, then it would deal a serious blow to importers such as CIE Manufacturing and Hyundai Translead. If trade barriers between the US and Canada were to ease while punitive duties were assessed on CIE and Hyundai Translead, then Max Atlas and Ocean Trailer could emerge as a competitive northern supplier to American truckers, logistics companies and cargo owners seeking to increase supply chain resiliency. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>.</div>

Canadian regulators have found that British Columbia-based chassis lessor Ocean Trailer did not illegally circumvent crippling antidumping and countervailing duties levied on China when it purchased equipment from a Vietnamese supplier, a preliminary decision ahead of a final ruling expected in May. The Canada Border Services Agency (CBSA) issued its preliminary decision Wednesday, clearing Ocean Trailer of allegations brought by its competitor , Max-Atlas Equipment International, which argued that the chassis were largely made with Chinese components and therefore should be treated as Chinese in origin. “Ocean Trailer has maintained from the beginning of this investigation we were confident that we would be absolved of any wrongdoing,” Mack Keay, Ocean Trailer’s chief operating officer, told the Journal of Commerce. “We are happy with the decision and look forward to putting this behind us, and to continue to provide high-quality container chassis to our customers.” The complaint, filed last November, had much in common with a US case involving CIE Manufacturing and a subsidiary of Pitts Enterprises named Dorsey Intermodal in 2023. While both cases centered on Truong Hai Auto Corporation (THACO) of Vietnam, a chassis manufacturer, the US and Canadian governments reached different conclusions. In the US, the Customs and Border Protection (CBP) investigation determined between 59% and 69% of the chassis components were sourced from China. The agency ruled that Pitts Enterprises failed to disclose the Chinese origin of key subcomponents and that THACO had not substantially transformed them in Vietnam. As a result, the chassis were deemed to originate in China and were subject to duties. CBSA reached a different conclusion following an on-site inspection of THACO’s facilities in Vietnam last month. Canadian investigators found THACO’s manufacturing “is not done using parts or components that are in ‘major portion’ from China,” and that the assembly, blasting, coating, painting and welding in Vietnam constitutes a significant transformation to a final chassis. The conclusion was Ocean Trailer did not violate any regulations and so the chassis were not subject to duties. Keay said Ocean Trailer did “due diligence” before partnering with THACO. Canadian ruling could impact US chassis manufacturers Ripple waves of the preliminary ruling, once finalized, could spread to the US. Pitts Enterprises lost an appeal and was expelled from the coalition of US chassis manufacturers that had lobbied for the duties in 2020. A new coalition was formed with the remaining members, Cheetah Chassis and Stoughton Trailers, which filed a new case in February to expand the crippling duties to Mexico, Thailand and Vietnam. The new coalition singled out the material injury that THACO’s operations in Vietnam allegedly cause US manufacturing. Canada was not one of the countries singled out in the ongoing US case. If Cheetah and Stoughton are successful when a preliminary decision is issued this summer, then it would deal a serious blow to importers such as CIE Manufacturing and Hyundai Translead. If trade barriers between the US and Canada were to ease while punitive duties were assessed on CIE and Hyundai Translead, then Max Atlas and Ocean Trailer could emerge as a competitive northern supplier to American truckers, logistics companies and cargo owners seeking to increase supply chain resiliency. Contact Ari Ashe at ari.ashe@spglobal.com .

Canadian regulators find Vietnamese chassis didn’t circumvent China duties

<div class="phx-topic abstract-wrapper">A full evaluation of on-time performance will not be possible until July once the transition to the new deep-sea services has been completed, but data for February and March is positive for the Maersk/Hapag-Lloyd alliance.</div>

A full evaluation of on-time performance will not be possible until July once the transition to the new deep-sea services has been completed, but data for February and March is positive for the Maersk/Hapag-Lloyd alliance.

<div class="phx-topic">The Gemini Cooperation of Maersk and Hapag-Lloyd is close to delivering on its public promise of 90%-plus schedule reliability since launching Feb. 1, eclipsing the on-time performance of rival alliances and standalone Mediterranean Shipping Co., analysts say. While ocean visibility provider eeSea and Sea-Intelligence Maritime Analysis both emphasized that a full evaluation of schedule reliability will not be possible until July once a full rotation of deep-sea services has been completed, the data for February and March has Gemini firmly in front. “Both Maersk and Hapag-Lloyd have been cautioning that it will take several months before the network is fully in place, but they’re off to a good start at 86% for Q1,” eeSea CEO Simon Sundboell said in a market update this week. “You would expect as much, though, as the network starts off with a blank slate and all vessel positions at zero as they start out on their respective new services,” he added. The field for second-best is crowded, according to eeSea data. Premier Alliance, renamed from THE Alliance after Hapag-Lloyd’s departure and launched in February, recorded on-time performance in the first quarter of 31%, while Ocean Alliance, the only unchanged carrier grouping, was at 25%. MSC, which left the 2M Alliance to operate as a standalone carrier in February, recorded on-time performance of 22%. Non-alliance services are at 30% schedule reliability on east-west services, including the Middle East trades, according to eeSea. Gemini’s network is structured around a hub-and-spoke approach compared with the direct port-to-port services that MSC and the other alliances offer. When fully rolled out, there will be 28 shuttle services operating under the Gemini model, a factor that has raised concerns among shippers that have a historic dislike of transshipment. But the initial data is encouraging. <h3>Almost all shuttle services hitting 100% </h3>Sea-Intelligence analyzed the performance of the 15 Gemini shuttle services that had arrivals for February, with 10 deployed in Asia, two in Europe and three in the Indian subcontinent/Middle East. The overall schedule reliability for the services was 98.4% in February and all except two services in Asia had 100% schedule reliability. “While we do not yet have a complete rollout of shuttle services, we do have a substantial number of vessel arrivals covered, which is why we can say that these scores are somewhat representative of the general schedule reliability performance of the Gemini shuttle services,” Sea-Intelligence noted in its latest Sunday Spotlight newsletter. That the Gemini services were performing with such high reliability was not unexpected, according to Lars Mikael Jensen, head of hubs at Maersk-owned APM Terminals. “This is not something that we worked out around the coffee machine on a Friday afternoon,” Jensen told customers during a recent briefing on the new services. “This has been ongoing work for five years and in the prototypes, we could see that this would work.” Jensen said fewer port calls meant fewer delays, with the hubs in Gemini’s modular network serving as junction points and the shuttles providing the spokes to destination ports. “Essentially, the shuttles are ferries that go back and forth between hubs and destinations and by covering those ports we don’t call direct anymore with the shuttles, we can isolate any problems when they appear and not impact the rest of the service,” he said. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

The Gemini Cooperation of Maersk and Hapag-Lloyd is close to delivering on its public promise of 90%-plus schedule reliability since launching Feb. 1, eclipsing the on-time performance of rival alliances and standalone Mediterranean Shipping Co., analysts say. While ocean visibility provider eeSea and Sea-Intelligence Maritime Analysis both emphasized that a full evaluation of schedule reliability will not be possible until July once a full rotation of deep-sea services has been completed, the data for February and March has Gemini firmly in front. “Both Maersk and Hapag-Lloyd have been cautioning that it will take several months before the network is fully in place, but they’re off to a good start at 86% for Q1,” eeSea CEO Simon Sundboell said in a market update this week. “You would expect as much, though, as the network starts off with a blank slate and all vessel positions at zero as they start out on their respective new services,” he added. The field for second-best is crowded, according to eeSea data. Premier Alliance, renamed from THE Alliance after Hapag-Lloyd’s departure and launched in February, recorded on-time performance in the first quarter of 31%, while Ocean Alliance, the only unchanged carrier grouping, was at 25%. MSC, which left the 2M Alliance to operate as a standalone carrier in February, recorded on-time performance of 22%. Non-alliance services are at 30% schedule reliability on east-west services, including the Middle East trades, according to eeSea. Gemini’s network is structured around a hub-and-spoke approach compared with the direct port-to-port services that MSC and the other alliances offer. When fully rolled out, there will be 28 shuttle services operating under the Gemini model, a factor that has raised concerns among shippers that have a historic dislike of transshipment. But the initial data is encouraging. Almost all shuttle services hitting 100% Sea-Intelligence analyzed the performance of the 15 Gemini shuttle services that had arrivals for February, with 10 deployed in Asia, two in Europe and three in the Indian subcontinent/Middle East. The overall schedule reliability for the services was 98.4% in February and all except two services in Asia had 100% schedule reliability. “While we do not yet have a complete rollout of shuttle services, we do have a substantial number of vessel arrivals covered, which is why we can say that these scores are somewhat representative of the general schedule reliability performance of the Gemini shuttle services,” Sea-Intelligence noted in its latest Sunday Spotlight newsletter. That the Gemini services were performing with such high reliability was not unexpected, according to Lars Mikael Jensen, head of hubs at Maersk-owned APM Terminals. “This is not something that we worked out around the coffee machine on a Friday afternoon,” Jensen told customers during a recent briefing on the new services. “This has been ongoing work for five years and in the prototypes, we could see that this would work.” Jensen said fewer port calls meant fewer delays, with the hubs in Gemini’s modular network serving as junction points and the shuttles providing the spokes to destination ports. “Essentially, the shuttles are ferries that go back and forth between hubs and destinations and by covering those ports we don’t call direct anymore with the shuttles, we can isolate any problems when they appear and not impact the rest of the service,” he said. Contact Greg Knowler at greg.knowler@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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Filling the Supply Chain Education Gap with LTL Education Courses

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The Journal of Commerce’s supply chain news and analysis impacting the management of end-to-end supply chains reports on supply chain strategies, cargo visibility, inventory trends, sourcing, customs certification and contract logistics. Supply chain news coverage also delves into refrigerated shipping advancements and management of inventory status, regulatory updates and government funding projects.

Our logistics technology news include logistics technology startups, solutions, and the impact of technology on logistics and supply chain management.

Logistics Technology News | Journal of Commerce

Logistics Technology News

A thorough cool cargoes news by Journal of Commerce. Learn about the latest trends in refrigerated cargo transportation, weight capacity, technology, and more.

Cool Cargo News | Journal of Commerce

Cool Cargo News

Journal of Commerce keeps you informed on the latest last mile news with comprehensive coverage of carriers, logistics, and last mile transportation solutions.

Last Mile News | Journal of Commerce

Last Mile News

Discover the latest industrial real estate news and trends. Covering projects, real estate supply chain, logistics, pricing, cross dock facilities, and more.

Industrial Real Estate News | Journal of Commerce

Industrial Real Estate News

Stay updated on supply chain strategies, cargo visibility, inventory trends and more with our comprehensive supply chain news and analysis.

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