<div class="phx-topic abstract-wrapper">TRAC Intermodal CEO Keith Lovetro says he’s optimistic a “gray” chassis pool can be created for the Port of New York and New Jersey, but that chassis providers should have a say in how the portwide pool is governed.</div>

TRAC Intermodal CEO Keith Lovetro says he’s optimistic a “gray” chassis pool can be created for the Port of New York and New Jersey, but that chassis providers should have a say in how the portwide pool is governed.

<div>TRAC Intermodal CEO Keith Lovetro says he’s optimistic a “gray” chassis pool can be created for the Port of New York and New Jersey, but that chassis providers should have a say in how the portwide pool is governed.“We would have difficulty supporting any pool where we didn’t have a voice in the governance, or at least a vote,” Lovetro told JOC.com.TRAC’s market dominance gives the company a pivital role in the New York-New Jersey port’s chassis supply. The 21,000 units in TRAC’s Metro Pool comprise an estimated 63 percent of the port’s overall working fleet, and 75 percent of...

TRAC Intermodal CEO Keith Lovetro says he’s optimistic a “gray” chassis pool can be created for the Port of New York and New Jersey, but that chassis providers should have a say in how the portwide pool is governed. “We would have difficulty supporting any pool where we didn’t have a voice in the governance, or at least a vote,” Lovetro told JOC.com. TRAC’s market dominance gives the company a pivital role in the New York-New Jersey port’s chassis supply. The 21,000 units in TRAC’s Metro Pool comprise an estimated 63 percent of the port’s overall working fleet, and 75 percent of the chassis provided by third-party lessors and rental companies. Chassis are widely seen as the biggest challenge to efforts to end bottlenecks and delays that plague New York-New Jersey container terminals and threaten the port’s ability to handle larger ships and increased volume expected to follow the lifting of the Bayonne Bridge roadway and the expansion of the Panama Canal. During the last five years, most container lines have withdrawn from their traditional role as primary provider of marine chassis for the U.S. market and have transferred most of their fleets to leasing companies. The lessors, in turn, now rely less on long-term leases to ocean carriers and more on daily rentals to truckers. In New York-New Jersey, 90 percent of port chassis now are controlled by lessors TRAC, Flexi-van, and Direct ChassisLink Inc. However, container lines often still require use of a certain pool’s chassis for shipments booked under carrier-haulage terms. With no interchange between competing chassis pools, this means truckers often must switch chassis between pickups or deliveries of different carriers’ containers. These extra trips worsen congestion at terminal gates and cause equipment imbalances that leave terminals short of chassis. New York-New Jersey’s chassis supply problems spiked last winter, when icy weather delayed repairs and slowed the return of equipment to terminals and chassis depots. The crisis abated, but truckers still complain that chassis often are unavailable or so rundown that drivers receive police citations that affect safety scores. An industrywide port performance task force organized by the Port Authority of New York and New Jersey identified chassis as a top issue. The task force reviewed six potential new supply models but reached no consensus and recommended further study. Support was strongest for a portwide “market pool” of chassis in which pools would cooperate in a gray pool allowing full interchange of chassis. Co-op members would retain their commercial arrangements with customers, but the pool’s operations would be run by an appointed manager. Some task force members favored a “pool of pools, in which competing pools would interchange chassis and share maintenance, as is being proposed by two existing chassis pools in Los Angeles-Long Beach, and a central port-run pool such as the one at the Port of Virginia. Lovetro said TRAC likes the concept of a market pool, provided that equipment providers have a voice on its board. He said that if such a pool is created, TRAC would “aggressively” bid to win the contract to manage it. “Frankly, I would expect that we would win it, but in an open bid you never know … Let the best man win.” He said the appointed manager should serve for a specific term, be rated on key performance indicators, and be replaced if the KPIs aren’t met. Lovetro has long complained that lessors contribute most chassis in the six regional pools run by Container Chassis Management but have no CCM board representation. He said that if equipment providers don’t have a vote on board of a New York-New Jersey gray pool, “it’s hard to see the other pieces working.” TRAC participated in the port performance task force discussions. Lovetro praised the group’s work. “I’m very optimistic we will find a reasonable solution” on chassis, he said. The task force determined that the port has enough chassis to meet annualized demand, but not enough to avoid shortages when volume spikes or multiple off-schedule ships arrive simultaneously. Lovetro said chassis supply is adequate, and that shortages at terminals are due mainly to equipment being out of position because of cargo flows. He said chassis availability is “much improved” from a few months ago and that TRAC expects ample capacity for the summer-fall import peak season. “Are we where we want to be? No. But we’re doing things to improve the fluidity in the port,” he said. In addition to availability, chassis quality has been a sore point for New York-New Jersey truckers. Much of the carriers’ equipment that TRAC and other lessors have acquired during the last several years has been old and in poor repair. Truckers complain that chassis upgrades have been too slow to materialize, and that maintenance and repair have lagged. The M&R issue has been brought into sharper focus recently with roadability audits in the port by the Federal Motor Carrier Safety Administration. TRAC’s companywide M&R costs for its marine equipment increased 16 percent in the first quarter while the average number of chassis operating in its marine pools rose 35 percent. The company’s quarterly report cited “a lower average cost per repair and lower frequency of repair per pooled chassis utilized.” Lovetro said the reduction in M&R costs per day of chassis use reflects improved efficiency, and that TRAC is committed to improving its fleet. “We’re going to repair to the FMSCA standard and make sure the equipment is roadable. We’re very focused on improving and being very efficient in our repair,” he said. Like other lessors in the port, TRAC uses International Longshoremen’s Association labor for chassis maintenance and repair. In early June, TRAC’s Metro Pool launched a program to make its overtime scheduling more systematic and predictable — a change Lovetro said makes workers’ lives easier and aids productivity. However, Lovetro said overtime is “a short-term solution” and that TRAC would like to see faster hiring of ILA mechanics, which has been slowed by disagreements between employers and the Waterfront Commission of New York Harbor. “If we had more mechanics, we’d put them to work,” he said. He said TRAC also is addressing the quantity of available equipment in the port by stepping up M&R, repositioning 2,000 units from other regions, and overhauling up to 2,800 units — 1,800 under a recently signed contract and 1,000 for a contract TRAC hopes to sign soon. TRAC is absorbing costs of an expanded program to use flatbed trailers to rebalance chassis among port terminals. In addition, the Metro Pool recently launched an incentive program that pays truckers to reposition chassis between terminals on what otherwise would be a deadhead trip. Lovetro said he’s surprised more truckers haven’t used the latter program. “It’s still early,” he said. “We’re hoping as the guys learn about it, it begins to change behavior. That really is the intent, to change behavior through financial incentives.” Contact Joseph Bonney at jbonney@joc.com and follow him on Twitter: @JosephBonney .

Drayage

Marine terminals

TRAC: Chassis providers want voice in NY-NJ ‘gray’ pool

<div class="phx-topic abstract-wrapper">General rate increases ranging from 4.9% to 7.9% are setting expectations for higher contract pricing as less-than-truckload carriers attempt to recoup the costs of network expansion. </div>

General rate increases ranging from 4.9% to 7.9% are setting expectations for higher contract pricing as less-than-truckload carriers attempt to recoup the costs of network expansion.

Feature image

<div class="phx-topic">US less-than-truckload (LTL) carriers are laying the groundwork for higher pricing in 2025, well before higher freight volumes hit their docks. Several of the largest LTL carriers in recent weeks have released average general rate increases (GRIs) for 2025 ranging from the mid- to upper single digits. The GRIs are for non-contract business, but they set expectations for contract pricing in 2025. Old Dominion Freight Line set the base with a 4.9% GRI announced Monday that will take effect Dec. 2. FedEx Freight earlier announced a 5.9% GRI effective Jan. 6, while TForce Freight, the former UPS Freight, raised its LTL rates 5.9% on average in October. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="4a956aa9-0f8d-4079-ab21-88b58ab2775a"></dynamic-object></div>The biggest GRI came from Saia, which raised rates 7.9% on average in October. That GRI matched the average rate increase Saia claims it is getting in contract renewals. “We’ve got to really continue to focus on pricing,” Saia President and CEO Frederick J. Holzgrefe told Wall Street analysts during Saia’s third-quarter earnings call last month. “The rates have got to go up across the board in all elements of the business.” Higher rates and revenue are needed to support the <a href="https://www.joc.com/article/yellow-puts-remaining-112-ltl-terminals-on-the-block-5737425">ongoing expansion of terminal networks</a> and to keep pace with operating costs, carrier executives say. Saia, for example, will spend $1 billion this year on real estate, employees, equipment and technology. Shippers have told the Journal of Commerce they expect LTL costs to rise in 2025, but not as steeply as some carriers anticipate. But shippers may be surprised. <h3>Costing, pricing discipline </h3>Before the 2008-2009 Great Recession, GRIs often were whittled down in contract negotiations, especially in years when the market was soft. That’s less likely to happen today. “Now it’s all about measuring profitability, not just putting freight on trucks” to gain market share, said Dean Jones, chief commercial officer of AFS Logistics, a third-party logistics company that offers LTL cost management and other services.LTL carriers are not only disciplined when it comes to pricing, resisting rate discounting, but they’re also more disciplined in their approach to costing, Jones said in an interview. “The carrier pricing teams are way more sophisticated than they’ve ever been,” he said. “All their costing models for every contractual customer will be run with their GRIs. They know exactly what they need to make the margins they want lane by lane.” The GRIs, he pointed out, are averages, which means some shippers will pay less and others more. “They know who’s a good client and who’s a bad client, who delays shipments and who expedites them,” Jones said. In many ways, LTL carriers are taking pages from the playbook of Old Dominion, which pioneered a cost- and profitability-based <a href="https://www.joc.com/article/qa-david-congdon-old-dominion-freight-line-5196932">approach to LTL pricing</a>. Companies that didn’t adopt some version of that approach and relied on lower rates to draw shippers and freight have failed, from Yellow to <a href="https://www.joc.com/article/central-freight-shutdown-adds-to-ltl-pressure-5206107">Central Freight Lines</a>. <h3>Looking beyond rates </h3>But LTL trucking companies aren’t relying on higher rates alone to grow revenue. They’re expanding their use of accessorial charges, tinkering with fuel surcharges, adding premium-priced services and using technology to reach new customers. They’re also using dimensioning equipment on docks and forklifts to check and double-check shipment dimensions to ensure freight is correctly classified and priced. The LTL sector is cribbing pages from the playbook used by parcel companies, Jones said. “We never used to see remote delivery charges in LTL, and now LTL carriers are doing that,” he said. “Like the parcel carriers, if it costs them more to deliver, they’re going to charge more.” Accessorial charges are also being used to change shipper behavior. During the COVID-19 pandemic, LTL carriers with congested terminals introduced higher surcharges for shipments that exceeded length limits; those surcharges remain in place. FedEx Freight, for example, has an extreme length surcharge that runs from $672 to $1,430 per shipment depending on the length of the shipment. “At first people thought it was a fad, but today every LTL carrier doesn’t want anything over 8 feet in length,” Jones said. What they do want is palletized, stackable freight that will efficiently fill trailers. Shippers have told the Journal of Commerce that LTL carriers are increasingly willing to turn away freight that doesn’t match their requirements — or charge much higher rates to haul it. The cumulative result of all these strategies will be higher LTL costs to shippers, but also pricing that is more closely based on the actual cost to move freight. And while accessorial fees may be added or raised, “the place to move the needle the most is the base rates,” Jones said. “The carriers that are more focused on the larger picture are going to go after the line-haul rates.” Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>. </div>

US less-than-truckload (LTL) carriers are laying the groundwork for higher pricing in 2025, well before higher freight volumes hit their docks. Several of the largest LTL carriers in recent weeks have released average general rate increases (GRIs) for 2025 ranging from the mid- to upper single digits. The GRIs are for non-contract business, but they set expectations for contract pricing in 2025. Old Dominion Freight Line set the base with a 4.9% GRI announced Monday that will take effect Dec. 2. FedEx Freight earlier announced a 5.9% GRI effective Jan. 6, while TForce Freight, the former UPS Freight, raised its LTL rates 5.9% on average in October. The biggest GRI came from Saia, which raised rates 7.9% on average in October. That GRI matched the average rate increase Saia claims it is getting in contract renewals. “We’ve got to really continue to focus on pricing,” Saia President and CEO Frederick J. Holzgrefe told Wall Street analysts during Saia’s third-quarter earnings call last month. “The rates have got to go up across the board in all elements of the business.” Higher rates and revenue are needed to support the ongoing expansion of terminal networks and to keep pace with operating costs, carrier executives say. Saia, for example, will spend $1 billion this year on real estate, employees, equipment and technology. Shippers have told the Journal of Commerce they expect LTL costs to rise in 2025, but not as steeply as some carriers anticipate. But shippers may be surprised. Costing, pricing discipline Before the 2008-2009 Great Recession, GRIs often were whittled down in contract negotiations, especially in years when the market was soft. That’s less likely to happen today. “Now it’s all about measuring profitability, not just putting freight on trucks” to gain market share, said Dean Jones, chief commercial officer of AFS Logistics, a third-party logistics company that offers LTL cost management and other services. LTL carriers are not only disciplined when it comes to pricing, resisting rate discounting, but they’re also more disciplined in their approach to costing, Jones said in an interview. “The carrier pricing teams are way more sophisticated than they’ve ever been,” he said. “All their costing models for every contractual customer will be run with their GRIs. They know exactly what they need to make the margins they want lane by lane.” The GRIs, he pointed out, are averages, which means some shippers will pay less and others more. “They know who’s a good client and who’s a bad client, who delays shipments and who expedites them,” Jones said. In many ways, LTL carriers are taking pages from the playbook of Old Dominion, which pioneered a cost- and profitability-based approach to LTL pricing . Companies that didn’t adopt some version of that approach and relied on lower rates to draw shippers and freight have failed, from Yellow to Central Freight Lines . Looking beyond rates But LTL trucking companies aren’t relying on higher rates alone to grow revenue. They’re expanding their use of accessorial charges, tinkering with fuel surcharges, adding premium-priced services and using technology to reach new customers. They’re also using dimensioning equipment on docks and forklifts to check and double-check shipment dimensions to ensure freight is correctly classified and priced. The LTL sector is cribbing pages from the playbook used by parcel companies, Jones said. “We never used to see remote delivery charges in LTL, and now LTL carriers are doing that,” he said. “Like the parcel carriers, if it costs them more to deliver, they’re going to charge more.” Accessorial charges are also being used to change shipper behavior. During the COVID-19 pandemic, LTL carriers with congested terminals introduced higher surcharges for shipments that exceeded length limits; those surcharges remain in place. FedEx Freight, for example, has an extreme length surcharge that runs from $672 to $1,430 per shipment depending on the length of the shipment. “At first people thought it was a fad, but today every LTL carrier doesn’t want anything over 8 feet in length,” Jones said. What they do want is palletized, stackable freight that will efficiently fill trailers. Shippers have told the Journal of Commerce that LTL carriers are increasingly willing to turn away freight that doesn’t match their requirements — or charge much higher rates to haul it. The cumulative result of all these strategies will be higher LTL costs to shippers, but also pricing that is more closely based on the actual cost to move freight. And while accessorial fees may be added or raised, “the place to move the needle the most is the base rates,” Jones said. “The carriers that are more focused on the larger picture are going to go after the line-haul rates.” Contact William B. Cassidy at bill.cassidy@spglobal.com .

Trucking News

Surface

US LTL carriers laying groundwork for higher pricing in 2025

<div class="phx-topic abstract-wrapper">While some shippers say they are still facing a measure of disruption, CSX says it has recovered following a rough patch in keeping cargo flowing through central Florida after hurricanes Helene and Milton battered the state.</div>

While some shippers say they are still facing a measure of disruption, CSX says it has recovered following a rough patch in keeping cargo flowing through central Florida after hurricanes Helene and Milton battered the state.

<div class="phx-topic">Intermodal shippers are still facing disruption in service to central Florida on CSX Transportation in the aftermath of back-to-back hurricanes that wreaked havoc on the state in September and October. Hurricane Milton made landfall on Oct. 9, leaving damage in its wake across the Interstate-4 corridor, home to CSX terminals in Tampa and Winter Haven. One month later, CSX’s partners say there are still significant delays shipping 53-foot containers into Winter Haven, according to comments made in the latest Journal of Commerce Intermodal Service Scorecard survey. “Yes, there were hurricanes, but a month later and CSX Winter Haven is at a standstill,” one intermodal marketing company (IMC) wrote in the survey. “Empty containers are being left behind. Drivers are waiting hours for containers to be mounted on chassis due to the massive stacks of boxes in Winter Haven.” Another IMC said it was “struggling with chassis availability” as recently as this week. Still, other IMCs noted that conditions have improved significantly in the last two weeks. Norfolk Southern Railway (NS) does not have any terminals on the I-4 corridor. NS has a terminal in Jacksonville, while partner Florida East Coast Railway operates along the east coast of Florida from Jacksonville to Miami. CSX told the Journal of Commerce that hurricanes Helene and Milton caused power outages and damaged roadways and warehouses, disrupting the flow of the final-mile dray at its Winter Haven terminal. But the railroad said operations in Winter Haven have recently returned to normal. “Goods experienced delays leaving the terminal, increasing dwell time both in the terminal and on the street,” CSX said in a statement Wednesday. “This created significant congestion and delayed the turnaround of key assets, such as chassis. To address these challenges, CSX implemented several recovery measures, including establishing alternate service options in Tampa and Jacksonville and deploying additional equipment and personnel to manage the surge in volume.” Intermodal volumes in the Southeast US have been relatively muted compared with lanes such as Los Angeles to Chicago, which saw a 20% surge in October year over year, according to Journal of Commerce estimates. The Intermodal Association of North America reported railroads in October moved 47,000 containers into the Southeast from originations in the Midwest and Northeast, up 3.4% year over year. The data, however, doesn’t differentiate between specific origin and destination pairs, and trains to Atlanta have more cargo than Tampa or Winter Haven. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>. </div>

Intermodal shippers are still facing disruption in service to central Florida on CSX Transportation in the aftermath of back-to-back hurricanes that wreaked havoc on the state in September and October. Hurricane Milton made landfall on Oct. 9, leaving damage in its wake across the Interstate-4 corridor, home to CSX terminals in Tampa and Winter Haven. One month later, CSX’s partners say there are still significant delays shipping 53-foot containers into Winter Haven, according to comments made in the latest Journal of Commerce Intermodal Service Scorecard survey. “Yes, there were hurricanes, but a month later and CSX Winter Haven is at a standstill,” one intermodal marketing company (IMC) wrote in the survey. “Empty containers are being left behind. Drivers are waiting hours for containers to be mounted on chassis due to the massive stacks of boxes in Winter Haven.” Another IMC said it was “struggling with chassis availability” as recently as this week. Still, other IMCs noted that conditions have improved significantly in the last two weeks. Norfolk Southern Railway (NS) does not have any terminals on the I-4 corridor. NS has a terminal in Jacksonville, while partner Florida East Coast Railway operates along the east coast of Florida from Jacksonville to Miami. CSX told the Journal of Commerce that hurricanes Helene and Milton caused power outages and damaged roadways and warehouses, disrupting the flow of the final-mile dray at its Winter Haven terminal. But the railroad said operations in Winter Haven have recently returned to normal. “Goods experienced delays leaving the terminal, increasing dwell time both in the terminal and on the street,” CSX said in a statement Wednesday. “This created significant congestion and delayed the turnaround of key assets, such as chassis. To address these challenges, CSX implemented several recovery measures, including establishing alternate service options in Tampa and Jacksonville and deploying additional equipment and personnel to manage the surge in volume.” Intermodal volumes in the Southeast US have been relatively muted compared with lanes such as Los Angeles to Chicago, which saw a 20% surge in October year over year, according to Journal of Commerce estimates. The Intermodal Association of North America reported railroads in October moved 47,000 containers into the Southeast from originations in the Midwest and Northeast, up 3.4% year over year. The data, however, doesn’t differentiate between specific origin and destination pairs, and trains to Atlanta have more cargo than Tampa or Winter Haven. Contact Ari Ashe at ari.ashe@spglobal.com .

North-American rail

Intermodal providers

Intermodal shippers still feeling ripple effects from Florida hurricanes

<div class="phx-topic abstract-wrapper">Frontloading and Red Sea diversions pushed volume and rates higher in the third quarter, and ongoing geopolitical disruption will allow carriers to extend their robust financial health into next year, according to the founder of the global equity firm.</div>

Frontloading and Red Sea diversions pushed volume and rates higher in the third quarter, and ongoing geopolitical disruption will allow carriers to extend their robust financial health into next year, according to the founder of the global equity firm.

<div class="phx-topic">The 47 million TEUs transported by ocean carriers in the third quarter comprised the highest quarterly volume on record, besting the previous high set in 2021 at the height of the pandemic by just over 2%, according to the founder of global equity firm Blue Alpha Capital. John McCown wrote in his quarterly market report this week that volume data from Container Trades Statistics (CTS) also showed that for the first nine months of 2024, the 136.7-million-TEU volume moved worldwide was up 6.3% year over year and 1.5% above the first nine months of 2021. The robust volume was accompanied by higher rate levels that saw the average revenue per load assessed by CTS up 52.5% in the third quarter year over year and 23.4% higher compared with the second quarter. “Driven by the capacity tightening resulting from the Red Sea situation and augmented by robust volume, the sector moved to a $5.4 billion Q1 profit that was doubled in the second quarter and more than doubled in the third quarter,” McCown said. Average global spot rate levels in the third quarter recorded by the Shanghai Containerized Freight Index (SCFI) of $3,074 per TEU were more than double the year-ago period and up 19% from the second quarter. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="b1d23881-2ae2-4545-ac9b-03e4ae60579e"></dynamic-object></div>McCown said the carriers’ third-quarter net profit of $26.8 billion was up 164% sequentially over the second quarter and almost nine times higher year over year. It was also more than twice what the container shipping industry earned in any full pre-pandemic year, he noted. The three consecutive quarters of exponential net profit growth this year followed an industry loss of $700 million in the last three months of 2023. Maritime consultancy Drewry has estimated that container shipping will report a pre-tax profit of $50 billion this year, up from $28 billion in 2023. While it is a fraction of the $298 billion recorded in 2022, the carriers will enter an uncertain 2025 in solid financial health. “Stronger-than-expected volume has certainly buoyed rates, but much of the recent pricing strength remains tied to the Red Sea situation that is effectively absorbing 8% of worldwide capacity,” McCown wrote. <h3>Tariffs on China ‘now more of a reality’ </h3>Looking ahead to next year, McCown said in addition to continued diversions around southern Africa to avoid the Red Sea, US President-elect Donald Trump’s stated intention to impose tariffs of 60% and more on Chinese imports and 10% to 20% on all other imports iss now more of a reality. The tariffs would also follow <a href="https://www.joc.com/article/ila-breaks-off-contract-talks-accuses-usmx-of-semi-automation-push-5810392">a possible second strike</a> by the International Longshoremen’s Association (ILA) when its tentative contract extension expires on Jan. 15. “The combined impact of those two, happening at the same time, would indeed be a perfect storm for the sector,” McCown warned. “My hope is that reason prevails and that the supposed silver bullet of tariffs was more about campaigning and less about administering.” Global bank HSBC also highlighted tariffs and ILA industrial action as catalysts for strong volume development on the US import trades for the rest of the year and into 2025. “We expect the looming US East [and Gulf] coasts labor union strike and an earlier Lunar New Year [Jan. 29] <a href="https://www.joc.com/article/us-importers-dabbling-in-frontloading-ahead-of-new-tariff-threat-5821448">to drive cargo frontloading into the year-end</a>,” HSBC said in a market update. “Separately, following the election of Donald Trump, we expect further frontloading due to potential tariff concerns to keep near-term freight rates elevated.” US imports from Asia were up 10.5% year over year in October, according to PIERS, a Journal of Commerce sister product within S&amp;P Global. <h3>‘Meaningful uplift to 2025 earnings’ </h3>Carriers will reap the benefits of elevated rate levels on the east-west trade lanes, which HSBC believes will see 2025 contract rates on Asia-Europe rising sharply compared with this year, providing “meaningful uplift to 2025 earnings.” Potentially standing in the way of continuing profitability is shipping supply, with the order book approaching 30% of the in-fleet capacity. Data from shipping association BIMCO has forecast cargo volume this year will grow between 4% and 5% against 16% growth in capacity. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="b1577241-6a7f-498a-8c5d-7a1e12ab9b6b"></dynamic-object></div>However, assuming Red Sea diversions last through 2025, container shipping analyst Clarksons estimates that nominal fleet capacity growth will slow from over 10% to 5% against estimated 18% growth in TEU-mile demand in 2024 and 3% growth in 2025. “While supply growth still exceeds demand and we continue to assume freight rates to trend lower in 2025 as our base case, we think the pace of supply delivery and demand from frontloading indicates that near-term freight rates may not capitulate as the market feared,” HSBC noted in its report. Ocean carriers are also becoming more optimistic in their capacity outlooks for next year as the Red Sea diversions absorb capacity. Maersk CEO Vincent Clerc told analysts in a third-quarter earnings call that demand would remain solid into 2025 and <a href="https://www.joc.com/article/scrapping-slow-steaming-demand-will-limit-capacity-overhang-clerc-5785020">the supply-demand balance could be smoothed out</a> by carriers pulling on the capacity management levers of increased scrapping and slow steaming. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

The 47 million TEUs transported by ocean carriers in the third quarter comprised the highest quarterly volume on record, besting the previous high set in 2021 at the height of the pandemic by just over 2%, according to the founder of global equity firm Blue Alpha Capital. John McCown wrote in his quarterly market report this week that volume data from Container Trades Statistics (CTS) also showed that for the first nine months of 2024, the 136.7-million-TEU volume moved worldwide was up 6.3% year over year and 1.5% above the first nine months of 2021. The robust volume was accompanied by higher rate levels that saw the average revenue per load assessed by CTS up 52.5% in the third quarter year over year and 23.4% higher compared with the second quarter. “Driven by the capacity tightening resulting from the Red Sea situation and augmented by robust volume, the sector moved to a $5.4 billion Q1 profit that was doubled in the second quarter and more than doubled in the third quarter,” McCown said. Average global spot rate levels in the third quarter recorded by the Shanghai Containerized Freight Index (SCFI) of $3,074 per TEU were more than double the year-ago period and up 19% from the second quarter. McCown said the carriers’ third-quarter net profit of $26.8 billion was up 164% sequentially over the second quarter and almost nine times higher year over year. It was also more than twice what the container shipping industry earned in any full pre-pandemic year, he noted. The three consecutive quarters of exponential net profit growth this year followed an industry loss of $700 million in the last three months of 2023. Maritime consultancy Drewry has estimated that container shipping will report a pre-tax profit of $50 billion this year, up from $28 billion in 2023. While it is a fraction of the $298 billion recorded in 2022, the carriers will enter an uncertain 2025 in solid financial health. “Stronger-than-expected volume has certainly buoyed rates, but much of the recent pricing strength remains tied to the Red Sea situation that is effectively absorbing 8% of worldwide capacity,” McCown wrote. Tariffs on China ‘now more of a reality’ Looking ahead to next year, McCown said in addition to continued diversions around southern Africa to avoid the Red Sea, US President-elect Donald Trump’s stated intention to impose tariffs of 60% and more on Chinese imports and 10% to 20% on all other imports iss now more of a reality. The tariffs would also follow a possible second strike by the International Longshoremen’s Association (ILA) when its tentative contract extension expires on Jan. 15. “The combined impact of those two, happening at the same time, would indeed be a perfect storm for the sector,” McCown warned. “My hope is that reason prevails and that the supposed silver bullet of tariffs was more about campaigning and less about administering.” Global bank HSBC also highlighted tariffs and ILA industrial action as catalysts for strong volume development on the US import trades for the rest of the year and into 2025. “We expect the looming US East [and Gulf] coasts labor union strike and an earlier Lunar New Year [Jan. 29] to drive cargo frontloading into the year-end ,” HSBC said in a market update. “Separately, following the election of Donald Trump, we expect further frontloading due to potential tariff concerns to keep near-term freight rates elevated.” US imports from Asia were up 10.5% year over year in October, according to PIERS, a Journal of Commerce sister product within S&P Global. ‘Meaningful uplift to 2025 earnings’ Carriers will reap the benefits of elevated rate levels on the east-west trade lanes, which HSBC believes will see 2025 contract rates on Asia-Europe rising sharply compared with this year, providing “meaningful uplift to 2025 earnings.” Potentially standing in the way of continuing profitability is shipping supply, with the order book approaching 30% of the in-fleet capacity. Data from shipping association BIMCO has forecast cargo volume this year will grow between 4% and 5% against 16% growth in capacity. However, assuming Red Sea diversions last through 2025, container shipping analyst Clarksons estimates that nominal fleet capacity growth will slow from over 10% to 5% against estimated 18% growth in TEU-mile demand in 2024 and 3% growth in 2025. “While supply growth still exceeds demand and we continue to assume freight rates to trend lower in 2025 as our base case, we think the pace of supply delivery and demand from frontloading indicates that near-term freight rates may not capitulate as the market feared,” HSBC noted in its report. Ocean carriers are also becoming more optimistic in their capacity outlooks for next year as the Red Sea diversions absorb capacity. Maersk CEO Vincent Clerc told analysts in a third-quarter earnings call that demand would remain solid into 2025 and the supply-demand balance could be smoothed out by carriers pulling on the capacity management levers of increased scrapping and slow steaming. Contact Greg Knowler at greg.knowler@spglobal.com .

Container Shipping News

Container lines

Trans-Atlantic

Asia-Europe

Trans-Pacific

Maritime

Global ocean volume in Q3 beat pandemic record: Blue Alpha Capital

<div class="phx-topic abstract-wrapper">A dearth of consolidation means there are still plenty of visibility vendors for shippers to choose from, but it also means the market as a whole is on somewhat unsteady ground. </div>

A dearth of consolidation means there are still plenty of visibility vendors for shippers to choose from, but it also means the market as a whole is on somewhat unsteady ground.

<div class="phx-topic">It’s been more than three years since the last major consolidation within the real-time transportation visibility market, a period in which urgency from shippers around granular insights into global shipments has dampened but not disappeared. Not since project44 acquired ClearMetal, Ocean Insights and Convey and FourKites acquired Haven in 2021 has there been an appreciable shrinking of the vendor list in the visibility market. Instead, standalone vendors such as Shippeo, Overhaul, Vizion, Terminal49, OpenTrack, Wakeo and Portcast all coexist alongside project44 and FourKites. For shippers, this means there is still a catalog of vendors from which to choose depending on their needs, which split along modal, geographic and predictive capabilities. That’s especially significant given that one provider estimates fewer than 20% of shippers and third-party logistics providers (3PLs) are currently using supply chain visibility technology. But it also means the visibility market as a whole is on somewhat unsteady ground; it’s unclear whether acquisitions can or will occur, or whether some providers will go under, leaving customers to find alternative data sources. Nearly every vendor in the sector has undertaken layoffs, executive reshuffles or both in the last two years, but they’re all still standing. That begs the question: is the current market structure sustainable, or will the category be reshaped by mergers, acquisitions or closures. “The world does not need 100-plus visibility platforms, but it instead needs a few large, networked platforms per region and mode,” said Bart de Muynck, a strategic advisor to logistics technology companies, including project44, and a former analyst with Gartner who focused on the visibility market. “Just as we don’t need hundreds of telecommunications providers, but a handful of large vendors with global coverage.” <h3>A difficult M&amp;A market </h3>De Muynck, who spent 18 months as an executive with project44 until 2023, said he expects the market will consolidate, not due to acquisitions, “but smaller vendors running out of funds and leaving the market or changing their focus.” There are a few challenges facing the market in terms of consolidation. One major hurdle is the massive funding rounds that some of the largest providers took before and during the COVID-19 pandemic, investments that resulted in sky-high company valuations. As the pandemic-induced surge in freight demand — and resulting supply chain disruption — receded in the second half of 2022 and the first half of 2023, so did the market for real-time visibility. And although the market has recovered, some of those large valuations are proving difficult to justify, a dynamic made more difficult by the continued presence of multiple vendors in the market. The multitude of options for shippers also fosters competition among venders, forcing them to invest in product engineering and marketing to differentiate themselves and putting downward pressure on pricing and contract lengths. Companies with once-large valuations that are currently lower are naturally more difficult to sell because investors want a return based on the valuation in which they invested. But potential buyers are aware that other options exist in the market. Further, a potential buyer might decide that using a given visibility product makes more sense than purchasing the company that owns it, or that it could build a similar product in-house for less. All these factors are leading to market stasis. project44 is the largest provider and has the largest geographic footprint, with FourKites a close second. Paris-based Shippeo is attempting to expand into North America, building on its solid customer base in Europe. The others tend to be focused more narrowly on international transportation visibility. <h3>Best-in-breed vs. one-stop shop </h3>The market is further clouded by the existence of other types of visibility vendors. There are hardware-focused providers that deploy devices on containers, pallets or individual products, such as Tive, Roambee, Traxens, and Nexxiot, as well as logistics software providers including Infor Nexus, E2open, Transporeon and Gnosis Freight that offer visibility as part of a broader suite of technology products. Gnosis, for example, provides visibility data to a number of other software vendors, including some real-time visibility providers. One theory for the lack of consolidation is that there actually is enough demand for all the standalone visibility providers to prosper because the pandemic recalibrated shippers’ needs for such data. “Each mode of transportation has deep specificities, so today there is no ‘one size fits all,’” said Julien Cote, CEO of Wakeo. “And global organizations have different buying teams — one for intercontinental, one for local road transport in North America and one for European road transport — so the one-stop-shop approach has limitations both from a buyer and product perspective.” Cote said the reality that most shippers take a patchwork approach to visibility based on mode and geography is part of what’s keeping many vendors in the game. “Vendors tend to coexist,” he said. “Typically, many of our customers, like Michelin, use Wakeo for all their intercontinental flows, and then locally they can be using p44 for road in North America. In the end, several companies can prosper.” Cote compared the current landscape to that of a transportation management system (TMS) market, where “many people thought a large player like SAP would consolidate the end-to-end supply chain. In reality, we’re far from this, and the best-of-breed approach took over the one-stop-shop play.” Melding data from more than one visibility provider means shippers, or their 3PL partners, need to be adept at integrating and normalizing tracking data across modes, or use a platform that specializes in logistics data integrations. That’s not as difficult a task as it was in previous generations of logistics software. Most visibility providers already integrate with widely used TMSs, and some even plug directly into enterprise resource planning (ERP) systems so shippers can use visibility data in functional areas outside of logistics. “It’s really not a big issue for clients,” Cote said. “Via APIs, they can still connect everything back to the ERP, but this means you need good IT architects and integration teams.” <h3>A problem of profitability </h3>Beyond the technical lift of combining data from multiple visibility providers, there is a sense that more vendors are good for the market. Logistics has a natural predilection for fragmentation, evidenced by the tens of thousands of 3PLs, trucking companies and software providers that serve shippers. “Lack of consolidation means there’s more competition,” said Akshay Dodeja, CEO of Terminal49. “There’s more appetite to continue to innovate, to improve the quality of the data and the user experience. “It’s an old industry that we’re trying to evolve and change, and it’s going to take some time,” he added. “There’s a linear increase in technology improvement instead of an exponential increase.” But competition — at least in theory — creates winners and losers, leaving the question of whether all these vendors can survive in their current forms very much unanswered. FourKites told the Journal of Commerce it is currently profitable, but none of the other vendors have yet to reach that milestone. With all but project44 likely too small to consider a public offering, the only viable options are to trim costs and win more business until they become profitable or find an acquirer. De Muynck said the latter would be difficult. “A lot of the functionality is not differentiated, and so there is no upside for a larger vendor to acquire a smaller vendor,” he said. Brian Glick, CEO of logistics systems integrations specialist Chain.io, which is tasked with connecting many of the visibility providers to shippers’ and 3PLs’ execution systems, agreed. “I don’t know why a visibility company would buy another one at this point,” he said. “The original set of acquisitions were about getting coverage for different modes and geographies. Now, it would be more about buying customer lists. I don’t think the smaller ones have a big enough reach to make their customer lists interesting enough for the big ones. I think the big ones are too highly valued to sell to each other.” Glick said he also doesn’t think other software companies or 3PLs would be willing to meet current valuations to “buy a shortcut to what they’d see as a feature in their suite. If I’m [TMS provider] Blue Yonder, I’d argue that I could build any visibility provider’s functionality for a lot less than what I’d pay to buy them.” Another technical challenge to market consolidation is that previous platform combinations haven’t really helped the market concentrate. They’ve either extended the modal or geographical reach of a vendor, or added to their customer list, but the market fragmentation persisted. “The multiples on our revenue or some of our competitors’ would be high enough that a project44 or FourKites, which already has these capabilities, does not have the cash to acquire other companies,” Dodeja said. “And the founders would not settle for lower multiples in a sale as long as they have money in the bank and they continue to go win in the market.” Dodeja said visibility providers are in “capital preservation mode” and that companies on the top end of the market no longer have the growth rate to raise huge amounts of capital needed to fund acquisitions. “Raising growth equity rounds right now is effectively impossible, unless you are growing extremely fast,” he said. “And the struggle that logistics tech companies had in 2022–23, where if you look at their metrics, they might not look as appealing to a potential buyer.” Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. </div>

It’s been more than three years since the last major consolidation within the real-time transportation visibility market, a period in which urgency from shippers around granular insights into global shipments has dampened but not disappeared. Not since project44 acquired ClearMetal, Ocean Insights and Convey and FourKites acquired Haven in 2021 has there been an appreciable shrinking of the vendor list in the visibility market. Instead, standalone vendors such as Shippeo, Overhaul, Vizion, Terminal49, OpenTrack, Wakeo and Portcast all coexist alongside project44 and FourKites. For shippers, this means there is still a catalog of vendors from which to choose depending on their needs, which split along modal, geographic and predictive capabilities. That’s especially significant given that one provider estimates fewer than 20% of shippers and third-party logistics providers (3PLs) are currently using supply chain visibility technology. But it also means the visibility market as a whole is on somewhat unsteady ground; it’s unclear whether acquisitions can or will occur, or whether some providers will go under, leaving customers to find alternative data sources. Nearly every vendor in the sector has undertaken layoffs, executive reshuffles or both in the last two years, but they’re all still standing. That begs the question: is the current market structure sustainable, or will the category be reshaped by mergers, acquisitions or closures. “The world does not need 100-plus visibility platforms, but it instead needs a few large, networked platforms per region and mode,” said Bart de Muynck, a strategic advisor to logistics technology companies, including project44, and a former analyst with Gartner who focused on the visibility market. “Just as we don’t need hundreds of telecommunications providers, but a handful of large vendors with global coverage.” A difficult M&A market De Muynck, who spent 18 months as an executive with project44 until 2023, said he expects the market will consolidate, not due to acquisitions, “but smaller vendors running out of funds and leaving the market or changing their focus.” There are a few challenges facing the market in terms of consolidation. One major hurdle is the massive funding rounds that some of the largest providers took before and during the COVID-19 pandemic, investments that resulted in sky-high company valuations. As the pandemic-induced surge in freight demand — and resulting supply chain disruption — receded in the second half of 2022 and the first half of 2023, so did the market for real-time visibility. And although the market has recovered, some of those large valuations are proving difficult to justify, a dynamic made more difficult by the continued presence of multiple vendors in the market. The multitude of options for shippers also fosters competition among venders, forcing them to invest in product engineering and marketing to differentiate themselves and putting downward pressure on pricing and contract lengths. Companies with once-large valuations that are currently lower are naturally more difficult to sell because investors want a return based on the valuation in which they invested. But potential buyers are aware that other options exist in the market. Further, a potential buyer might decide that using a given visibility product makes more sense than purchasing the company that owns it, or that it could build a similar product in-house for less. All these factors are leading to market stasis. project44 is the largest provider and has the largest geographic footprint, with FourKites a close second. Paris-based Shippeo is attempting to expand into North America, building on its solid customer base in Europe. The others tend to be focused more narrowly on international transportation visibility. Best-in-breed vs. one-stop shop The market is further clouded by the existence of other types of visibility vendors. There are hardware-focused providers that deploy devices on containers, pallets or individual products, such as Tive, Roambee, Traxens, and Nexxiot, as well as logistics software providers including Infor Nexus, E2open, Transporeon and Gnosis Freight that offer visibility as part of a broader suite of technology products. Gnosis, for example, provides visibility data to a number of other software vendors, including some real-time visibility providers. One theory for the lack of consolidation is that there actually is enough demand for all the standalone visibility providers to prosper because the pandemic recalibrated shippers’ needs for such data. “Each mode of transportation has deep specificities, so today there is no ‘one size fits all,’” said Julien Cote, CEO of Wakeo. “And global organizations have different buying teams — one for intercontinental, one for local road transport in North America and one for European road transport — so the one-stop-shop approach has limitations both from a buyer and product perspective.” Cote said the reality that most shippers take a patchwork approach to visibility based on mode and geography is part of what’s keeping many vendors in the game. “Vendors tend to coexist,” he said. “Typically, many of our customers, like Michelin, use Wakeo for all their intercontinental flows, and then locally they can be using p44 for road in North America. In the end, several companies can prosper.” Cote compared the current landscape to that of a transportation management system (TMS) market, where “many people thought a large player like SAP would consolidate the end-to-end supply chain. In reality, we’re far from this, and the best-of-breed approach took over the one-stop-shop play.” Melding data from more than one visibility provider means shippers, or their 3PL partners, need to be adept at integrating and normalizing tracking data across modes, or use a platform that specializes in logistics data integrations. That’s not as difficult a task as it was in previous generations of logistics software. Most visibility providers already integrate with widely used TMSs, and some even plug directly into enterprise resource planning (ERP) systems so shippers can use visibility data in functional areas outside of logistics. “It’s really not a big issue for clients,” Cote said. “Via APIs, they can still connect everything back to the ERP, but this means you need good IT architects and integration teams.” A problem of profitability Beyond the technical lift of combining data from multiple visibility providers, there is a sense that more vendors are good for the market. Logistics has a natural predilection for fragmentation, evidenced by the tens of thousands of 3PLs, trucking companies and software providers that serve shippers. “Lack of consolidation means there’s more competition,” said Akshay Dodeja, CEO of Terminal49. “There’s more appetite to continue to innovate, to improve the quality of the data and the user experience. “It’s an old industry that we’re trying to evolve and change, and it’s going to take some time,” he added. “There’s a linear increase in technology improvement instead of an exponential increase.” But competition — at least in theory — creates winners and losers, leaving the question of whether all these vendors can survive in their current forms very much unanswered. FourKites told the Journal of Commerce it is currently profitable, but none of the other vendors have yet to reach that milestone. With all but project44 likely too small to consider a public offering, the only viable options are to trim costs and win more business until they become profitable or find an acquirer. De Muynck said the latter would be difficult. “A lot of the functionality is not differentiated, and so there is no upside for a larger vendor to acquire a smaller vendor,” he said. Brian Glick, CEO of logistics systems integrations specialist Chain.io, which is tasked with connecting many of the visibility providers to shippers’ and 3PLs’ execution systems, agreed. “I don’t know why a visibility company would buy another one at this point,” he said. “The original set of acquisitions were about getting coverage for different modes and geographies. Now, it would be more about buying customer lists. I don’t think the smaller ones have a big enough reach to make their customer lists interesting enough for the big ones. I think the big ones are too highly valued to sell to each other.” Glick said he also doesn’t think other software companies or 3PLs would be willing to meet current valuations to “buy a shortcut to what they’d see as a feature in their suite. If I’m [TMS provider] Blue Yonder, I’d argue that I could build any visibility provider’s functionality for a lot less than what I’d pay to buy them.” Another technical challenge to market consolidation is that previous platform combinations haven’t really helped the market concentrate. They’ve either extended the modal or geographical reach of a vendor, or added to their customer list, but the market fragmentation persisted. “The multiples on our revenue or some of our competitors’ would be high enough that a project44 or FourKites, which already has these capabilities, does not have the cash to acquire other companies,” Dodeja said. “And the founders would not settle for lower multiples in a sale as long as they have money in the bank and they continue to go win in the market.” Dodeja said visibility providers are in “capital preservation mode” and that companies on the top end of the market no longer have the growth rate to raise huge amounts of capital needed to fund acquisitions. “Raising growth equity rounds right now is effectively impossible, unless you are growing extremely fast,” he said. “And the struggle that logistics tech companies had in 2022–23, where if you look at their metrics, they might not look as appealing to a potential buyer.” Contact Eric Johnson at eric.johnson@spglobal.com .

Forwarding

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International ports

Truckload

Logistics Technology News

Lack of consolidation driving freight visibility differentiation, competition

<div class="phx-topic abstract-wrapper">While there is some frontloading of US imports from China to get ahead of expected tariffs in the coming Trump administration, most cargo owners appear to be holding their fire, writes Journal of Commerce Executive Editor Mark Szakonyi. </div>

While there is some frontloading of US imports from China to get ahead of expected tariffs in the coming Trump administration, most cargo owners appear to be holding their fire, writes Journal of Commerce Executive Editor Mark Szakonyi.

<div class="phx-topic">US importers are better prepared for the imminent tariffs that President-elect Donald Trump has promised to slap on goods from China, yet the majority don’t seem to be significantly rushing orders to get those goods across the docks ahead of his inauguration. Rather, tariff fears are just one of several factors pushing US importers to book more than usual during this extended peak season. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5821199_0.1.jpg"></img></div>In Trump’s first term, US importers were at first unsure how serious the president was about following through with his tariff threats; indeed, he was very serious. In his second term, it’s less a question of “if” and more “when” Trump will implement harsher tariffs on China, which he says will be higher than 60%. The extent to which US importers frontload ocean cargoes has implications for shipping price and service. Trump’s first term was marked by three waves of escalating US tariffs on Chinese goods and two postponements of implementations. That created five periods in which US importers moved goods earlier, artificially creating demand that fueled differing degrees of spot rate volatility and pulled down ocean reliability. And, to a lesser degree, slowed cargo flow through ports. This time, however, knowing that more tariffs will be a reality rather than a possibility gives shippers a firmer base to scope out potential responses and make plans, said Chris Rogers, head of supply chain research at S&amp;P Global Market Intelligence. S&amp;P Global is the parent company of the Journal of Commerce. There’s also some degree of knowing what types of goods are first in the firing line for higher US tariffs, given the first Trump administration in December 2019 suspended tariffs targeting imports of mobile phones and laptops from China. Such high-value items could easily be moved via faster air transport rather than ocean shipping to narrowly avoid any tariff deadline. <h3>Multiple factors drive booking bump </h3>Based on discussions with three cargo owners and various forwarders, a degree of frontloading to avoid imminent Chinese tariffs is occurring and will continue. The logistics directors at three midsize importers said they had an internal goal to get more goods from China into US ports by Jan. 1. “We are experiencing an overwhelming surge in booking demands, with available space becoming increasingly constrained for both the USWC and the USEC,” Marc Meier, global head of ocean freight at Toll Global Forwarding, told the Journal of Commerce. The stronger-than-normal booking demand, Meier said, was due to a litany of factors: Chinese tariff fears, strong blank sailings and the <a href="https://www.joc.com/article/ila-breaks-off-contract-talks-accuses-usmx-of-semi-automation-push-5810392">looming Jan. 15 deadline for longshore workers and employers</a> to reach a deal or risk another strike along the US East and Gulf coasts. Beyond knowing that tariffs are coming, US importers have higher carrying costs than they did during Trump’s first term, thanks to higher interest rates. The more elevated prices to store goods will prompt some importers to be more conservative with just how much they frontload. How much of that frontloading is fueled by importers moving goods to avoid the strike threat and earlier Lunar New Year celebrations is unclear. Chinese factories stall or slow production during the nearly two-week holiday period that next year begins on Jan. 29. US import bookings out of China haven’t jumped despite the tariff threat, according to logistics software provider e2open. “While November has seen a slight uptick compared to October, this is likely due to the lower order volume during China’s Golden Week holiday in October,” e2open said in a statement to the Journal of Commerce. US imports from Asia were up 10.5% year over year in October, according to PIERS, a Journal of Commerce sister product within S&amp;P Global. Stephen Nothdurft, vice president of North America sales at forwarder MOL Consolidation Service, said tariffs were playing just “a bit of a role” in extending peak season volumes. He also expected importers dependent on the East and Gulf coasts to wait out the Jan. 15 deadline. “Nobody is looking to rush to get crazily ahead of this East Coast situation,” he said. “[And] nobody is charging forward on the tariff [risk].” That seems to be the sentiment of approximately 100 shippers polled by Ravi Shanker, Morgan Stanley's managing director and lead analyst for North American freight transportation. More than 70% of those polled said they didn’t plan to restock differently due to Trump winning a second term. Of those shippers, a little more than a third said they are considering “moderating or significantly” increasing inventories ahead of tariffs while an amazing 42% of shippers don’t expect to change behavior in the face of impending tariffs. Contact Mark Szakonyi at <a href="mark.szakonyi@spglobal.com">mark.szakonyi@spglobal.com</a>. </div>

US importers are better prepared for the imminent tariffs that President-elect Donald Trump has promised to slap on goods from China, yet the majority don’t seem to be significantly rushing orders to get those goods across the docks ahead of his inauguration. Rather, tariff fears are just one of several factors pushing US importers to book more than usual during this extended peak season. In Trump’s first term, US importers were at first unsure how serious the president was about following through with his tariff threats; indeed, he was very serious. In his second term, it’s less a question of “if” and more “when” Trump will implement harsher tariffs on China, which he says will be higher than 60%. The extent to which US importers frontload ocean cargoes has implications for shipping price and service. Trump’s first term was marked by three waves of escalating US tariffs on Chinese goods and two postponements of implementations. That created five periods in which US importers moved goods earlier, artificially creating demand that fueled differing degrees of spot rate volatility and pulled down ocean reliability. And, to a lesser degree, slowed cargo flow through ports. This time, however, knowing that more tariffs will be a reality rather than a possibility gives shippers a firmer base to scope out potential responses and make plans, said Chris Rogers, head of supply chain research at S&P Global Market Intelligence. S&P Global is the parent company of the Journal of Commerce. There’s also some degree of knowing what types of goods are first in the firing line for higher US tariffs, given the first Trump administration in December 2019 suspended tariffs targeting imports of mobile phones and laptops from China. Such high-value items could easily be moved via faster air transport rather than ocean shipping to narrowly avoid any tariff deadline. Multiple factors drive booking bump Based on discussions with three cargo owners and various forwarders, a degree of frontloading to avoid imminent Chinese tariffs is occurring and will continue. The logistics directors at three midsize importers said they had an internal goal to get more goods from China into US ports by Jan. 1. “We are experiencing an overwhelming surge in booking demands, with available space becoming increasingly constrained for both the USWC and the USEC,” Marc Meier, global head of ocean freight at Toll Global Forwarding, told the Journal of Commerce. The stronger-than-normal booking demand, Meier said, was due to a litany of factors: Chinese tariff fears, strong blank sailings and the looming Jan. 15 deadline for longshore workers and employers to reach a deal or risk another strike along the US East and Gulf coasts. Beyond knowing that tariffs are coming, US importers have higher carrying costs than they did during Trump’s first term, thanks to higher interest rates. The more elevated prices to store goods will prompt some importers to be more conservative with just how much they frontload. How much of that frontloading is fueled by importers moving goods to avoid the strike threat and earlier Lunar New Year celebrations is unclear. Chinese factories stall or slow production during the nearly two-week holiday period that next year begins on Jan. 29. US import bookings out of China haven’t jumped despite the tariff threat, according to logistics software provider e2open. “While November has seen a slight uptick compared to October, this is likely due to the lower order volume during China’s Golden Week holiday in October,” e2open said in a statement to the Journal of Commerce. US imports from Asia were up 10.5% year over year in October, according to PIERS, a Journal of Commerce sister product within S&P Global. Stephen Nothdurft, vice president of North America sales at forwarder MOL Consolidation Service, said tariffs were playing just “a bit of a role” in extending peak season volumes. He also expected importers dependent on the East and Gulf coasts to wait out the Jan. 15 deadline. “Nobody is looking to rush to get crazily ahead of this East Coast situation,” he said. “[And] nobody is charging forward on the tariff [risk].” That seems to be the sentiment of approximately 100 shippers polled by Ravi Shanker, Morgan Stanley's managing director and lead analyst for North American freight transportation. More than 70% of those polled said they didn’t plan to restock differently due to Trump winning a second term. Of those shippers, a little more than a third said they are considering “moderating or significantly” increasing inventories ahead of tariffs while an amazing 42% of shippers don’t expect to change behavior in the face of impending tariffs. Contact Mark Szakonyi at mark.szakonyi@spglobal.com .

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US importers dabbling in frontloading ahead of new tariff threat

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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

SSA Marine Mexico has made significant strides in modernizing its infrastructure at the Port of Manzanillo, investing $15 million to enhance operational efficiency and sustainability at its facilities. This move is part of the company's broader strategy to remain at the forefront of the shipping and logistics industry. •	Strengthening Sustainability with Advanced Technology <figure class="joc_admin__inline-image-position-left joc_admin__inline-image-size-medium" data-figure-size="medium" data-figure-position="left"><img src="/content-assets/1730488295264_Cranes%20arrival%20to%20TEC%20I.png" alt="Cranes arrival to TEC I" class="joc_admin__inline-image-inherit"></figure> In July, SSA Marine Mexico added seven state-of-the-art E-RTG (Electric Rubber-Tired Gantry) cranes to its fleet, valued at $14 million. These advanced cranes were distributed across its two terminals: four cranes were assigned to the Multipurpose Terminal, and three to the Specialized Container Terminal I. What sets these cranes apart is their dual-operation capability, allowing them to function either on electric power or diesel fuel. This innovation plays a critical role in reducing the environmental impact of operations, contributing to a 7% increase in energy efficiency. This efficiency improvement is equivalent to eliminating nearly 4,000 tons of CO2 emissions annually, underscoring SSA Marine Mexico's commitment to sustainability. Through this acquisition, SSA Marine Mexico not only enhances its cargo-handling capabilities but also reinforces its leadership in integrating cutting-edge, eco-friendly technology in the maritime industry. The company continues to push the boundaries of efficiency and sustainability, ensuring long-term value for both its customers and the environment. •	Upgraded Facilities to Meet Growing Demand <figure class="joc_admin__inline-image-position-left joc_admin__inline-image-size-medium" data-figure-size="medium" data-figure-position="left"><img src="/content-assets/1730488350634_Multipurpose%20terminal.png" alt="Multipurpose Terminal" class="joc_admin__inline-image-inherit"></figure> In addition to the new cranes, SSA Marine Mexico has completed crucial modernization and repair work across its Multipurpose Terminal and Specialized Facility at the Port of Manzanillo. This $1 million investment targeted critical infrastructure enhancements, focusing on both structural integrity and operational functionality. Key improvements included leveling approximately 12,000 square meters in the dock area, along with the removal of outdated concrete curbs and asphalt layers. The upgraded space now features high-resistance pavers designed to optimize water drainage and prevent pooling, ensuring safer and more efficient operations. Moreover, the Specialized Facility saw significant upgrades, including the leveling of key warehouse areas to facilitate smoother cargo handling processes. These infrastructure improvements directly enhance the handling of TEUS (Twenty-foot Equivalent Unit containers), further demonstrating SSA Marine Mexico's unwavering commitment to continuous modernization, operational safety, and efficiency. With these initiatives, SSA Marine Mexico is well-positioned to meet the growing demands of the global shipping industry while setting new standards in sustainable port operations. LINK:<a href="https://www.ssamarine.mx/ssa-ing/index" rel="noreferrer" class="joc_admin__link"> https://www.ssamarine.mx/ssa-ing/index</a>

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SSA Marine Mexico Modernizes Facilities with $15 Million Investment 

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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