<div class="phx-topic abstract-wrapper">US importers in the coming weeks will begin to encounter a tightening of vessel space and occasional equipment shortages.</div>

US importers in the coming weeks will begin to encounter a tightening of vessel space and occasional equipment shortages.

<div>Changes consumer habits have helped to flatten out the traditional peaks in shipping demand throughout the year.US importers in the coming weeks will begin to encounter a tightening of vessel space and occasional equipment shortages, but the likelihood of large rate increases or peak-season surcharges in the eastbound Pacific will be slim this peak season.That will be a challenge for carriers hoping to improve their bottom line during the peak shipping season after signing at best <a>break-even</a> service contract rates of about $1,300 per 40-foot container to the West Coast and $2,300 to the East Coast. Carriers say break-even rates...

Changes consumer habits have helped to flatten out the traditional peaks in shipping demand throughout the year. US importers in the coming weeks will begin to encounter a tightening of vessel space and occasional equipment shortages, but the likelihood of large rate increases or peak-season surcharges in the eastbound Pacific will be slim this peak season. That will be a challenge for carriers hoping to improve their bottom line during the peak shipping season after signing at best break-even service contract rates of about $1,300 per 40-foot container to the West Coast and $2,300 to the East Coast. Carriers say break-even rates are in the range $1,600 to $1,700 to the West Coast when taking into the account the cost to resposition containers to Asia. Transportation executives from throughout the supply chain say significant general rate increases (GRIs) or peak-season surcharges in August through October appear unlikely due to a nagging capacity overhang. In a recent report, Drewry stated that carriers in the major east-west trade lanes this year are recovering some pricing power, certainly when compared with the “rock-bottom” rates that were in effect in the spring and summer of 2016. Nevertheless, rate increases on the spot market have been more muted in the eastbound trans-Pacific, where spot rates are up 33 percent from last summer, compared with the Asia-Europe trade lane, where the increase is 61 percent. However, spot shortages of space and equipment are possible, and carrier executives are therefore urging retailers and other importers who intend to ramp up their imports from Asia to begin immediately to plan ahead for their space and equipment needs so they are not shut out when the real capacity crunch hits in August and September. While some shipments invariably miss their intended voyages and are “rolled” to a subsequent voyage during the height of the peak season, experts said capacity is sufficient between most port pairs so rolled cargo will be one-off incidents and will not last for a prolonged period. Click to Enlarge “We have observed marked improvements in the global economic environment since the turn of the year, and we expect a much healthier outlook for the liner sector and a stronger peak season compared to 2016,” said Stephen Ng, director of trade at Orient Overseas Container Line (OOCL). “We see positive momentum going into the second half of the year,” said an APL spokesman. “APL has already started working closely with our customers on space allocation issues to ensure that their shipping needs and service expectations are met,” the spokesman said. The spot rate increases tied to GRIs, followed by immediate rate drops, that occurred over the past couple of months, are seen by shippers and carriers as an indication that the peak-shipping season this year will look much like those of recent years. This is likely to be the case in the trucking and rail sectors as well as ocean shipping. “The past two years, peaks have been relatively mild, with stable service, an earlier start, and a longer finish consistent with improved planning and the new consumer purchasing patterns,” said Mark Yeager, CEO of the LTL management company, Simplified Logistics, and former president of intermodal marketing company Hub Group. “The peak season curve is not as steep as it used to be,” said Dave Arsenault, president of Logistics Transformation Solutions and former president of the Americas at Hyundai Merchant Marine. He said the spread between the winter slack months and the busy late summer to fall period is not as great as it used to be. Import volumes are more consistent now throughout the year because of e-commerce purchasing habits that dictate inventory must be in stock in the United States or sales will be lost. The traditional peak will still occur, but it will be less intense compared with the not-too-distant past, and it will be driven by holiday-season items like toys that are placed under the Christmas tree, he said. Click to Enlarge However, due to economic growth in the United States, Europe, and Asia there is tighter vessel space and a strain on container and chassis availability in some locations. Zvi Schreiber, CEO of Freightos, said indicators are already present that point to a good peak season. “One of the best indicators of this is air freight pre-booking for [the fourth quarter]. It is already booked up earlier than it was at this time last year, which was a strong year for air freight,” he said. The spot rates in the eastbound Pacific increased by double digits before a previously announced general rate increase for July 1, but in the week ending July 7 the rates backed off 2 to 3 percent. That development indicated that the full impact of the peak season had not been felt, but the modest drop from the previous week’s spike also demonstrated that vessel space is starting to fill up. Beneficial cargo owners are urged to meet with their carriers to pre-plan vessel space and equipment needs. “Equipment availability has indeed been tighter than usual due to new regulations requiring water-based paint for new containers. For OOCL, we have taken steps to ensure supply through leasing sources as well as from production of new containers to meet expected demand from customers,” Ng said. Railroads also appear to be ahead of the curve when it comes to intermodal service. “Rail reliability on the intermodal side is very good,” said transportation analyst Tony Hatch, although he added: “It’s not truck-like.” There has been some expectation in the trade that completion of the Panama Canal expansion project in June 2016 and the Bayonne Bridge raising project last month will produce a surge in cargo volume at East Coast ports, which could create space issues this peak season. Schreiber predicts that volumes to the East Coast may be greater early in the peak season, but as it gets closer to the holidays, the more efficient, albeit more costly, West Coast intermodal routing will kick in. Citing last year’s experience, Schreiber noted that West Coast imports increased 1 percent between October and November, and East Coast imports dropped 2 percent. Containerized imports in the first half of 2017 are predicted to have increased 6.4 percent from the same period last year, according to Global Port Tracker. Ports on the East and West coasts reported exceptionally strong performances in May , the last month for which hard numbers are available, according to PIERS, the JOC.com sister product. Percentage growth in the second half of the year is projected to be healthy, although not quite as robust as in the first half of the year because the numbers will be compared to relatively good growth figures in the second half of 2016. Early indications from ports that have released hard numbers show that June imports may exceed earlier expectations. The Port of Long Beach reported Monday that imports increased 7 percent, and the Port of Oakland reported that imports increased 5.1 percent, from June 2016. Projecting container volumes in the eastbound Pacific for the second half of the year is an imprecise science, with some obvious disagreements among forecasters. A survey of freight forwarders and other intermediaries by Mike King and Cathy Roberson is not as bullish as projections by US retailers. Their June APAC Forwarding Index revealed that only 38 percent of respondents predicted that ocean freight shipments in September, which is considered a peak shipping month, would be higher than the volumes recorded in May in the eastbound Pacific. Some 42 percent predicted lower volumes compared with May. “The fall in optimism, at least compared to previous surveys, chimes with recent ocean spot freight rate declines on the major trades,” the authors stated. The monthly Global Port Tracker published by the National Retail Federation and Hackett Associates is more bullish on the second half of the year. They predict that July and August should be two of the busiest months ever seen for imports at all of the major US gateways. “We’re expecting retailers to import some of the largest volumes of merchandise ever,” said Jonathan Gold, president of supply chain and Customs policy at the NRF. Global Port Tracker predicts that US ports in August will handle 1.75 million TEU container imports, which would be the highest monthly volume recorded since the NRF and Hackett Associates began tracing imports. Nevertheless, the continued capacity overhang in the Pacific, the introduction of bigger ships by the restructured alliances and the fact that carriers so far this summer have not been able to implement rate hikes that stick for more than a week, all point to modest general rate increases or peak-season surcharges in late summer and fall. Click to Enlarge “Rates in the long-haul trades have stabilized and we do not anticipate massive peak-season related surcharges or rate increases from where the market is today,” said Joerg Hoppe, DB Schenker’s director of ocean freight North/Central China. “Space into the US, and to the East Coast especially, is not an issue,” he said. Even a sudden, unexpected event such as last week’s cyber attack that affected Maersk Line and its APM terminal affiliate, which saw Maersk bookings drop by about 35 percent on the Freightos AcceleRate platform, did not move spot rates, Schreiber said. “Chronic oversupply remains the leading cause of excess capacity this peak season,” he said. This reality could have a chilling effect on carriers that are filling much of their allotted space with service contract rates of about $1,300 per FEU to the West Coast and $2,300 to the East Coast. Some industry analysts, such as Ed Zaninelli, president of Griffin Creek consulting, considers those to be break-even rates, with peak-season surcharges or GRIs needed to push the carriers to profitability. Others in the industry said break-even is closer to $1,600 and $2,600 per FEU, given today’s higher longshore labor, bunker fuel, and intermodal costs. Contact Bill Mongelluzzo at bill.mongelluzzo@ihsmarkit.com and follow him on Twitter: @billmongelluzzo .

Container lines

Trans-Pac space tightening but peak season surcharges likely feeble

<div class="phx-topic abstract-wrapper">Disruption caused by trade wars will reach deep into global supply chains, depressing an already uncertain outlook for the US freight economy. </div>

Disruption caused by trade wars will reach deep into global supply chains, depressing an already uncertain outlook for the US freight economy.

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<div class="phx-topic">The tailwinds that brought a strong increase in US imports and certain exports last year have turned to cold, hard headwinds this year as disruptions caused by the Trump administration’s tariffs take root and multiply. The shock waves from those tariffs are rippling from ports in Asia and Europe through freight docks deep in industrial America. The latest shock came from the US Trade Representative (USTR), which said April 18 it will <a href="https://www.joc.com/article/scaled-back-ustr-port-tariff-to-hit-chinese-carriers-hardest-5987549">charge entrance fees for China-based ocean carriers</a> and lines operating Chinese-built ships calling at US ports based on cargo capacity or container volume. Given the chaotic rollout of President Donald Trump’s trade policies, the outlook for the US freight economy in the second half of 2025 isn’t just cloudy — it’s reached a point of uncertainty that is crippling shippers’ ability to plan. US shippers “are waiting for the dust to settle to determine how tariffs might influence and change their short- and long-term business strategies,” Spencer Frazier, executive vice president of sales at J.B. Hunt Transport Services, said during an earnings call April 15. S&amp;P Global, the parent company of the Journal of Commerce, in April pulled down its US GDP growth forecasts for 2025 and 2026 from 1.9% in both years to 1.3% and 1.5%, respectively, thanks in part to expectations that tariffs will result in higher inflation. Although the risk of a recession in the US has diminished, US policy volatility and related economic uncertainties are likely to linger into the year, S&amp;P Global said. On land, the so-called freight recession that began in 2022, sending trucking and intermodal rates tumbling by double-digit percentages, is entering its fourth consecutive year. Shippers will maintain pricing power in the truckload and intermodal rail segments in 2025, but they’re also going to make, ship and sell less. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="9fd84e22-d76c-4e34-8c52-c038bd25ad91"></dynamic-object></div>Despite an uptick in truckload spot rates early this year, led by flatbed spot rates, truckload pricing is still bouncing along a bottom it reached in 2023. Less-than-truckload (LTL) pricing has been elevated since the collapse of Yellow in 2023, but volumes remain essentially flat aside from some tariff-driven frontloading. The question isn’t whether trucking volumes will decline in the second quarter or second half of 2025, but by how much. That may trigger a broader loss of truck capacity. <h3>Blanking and canceling </h3>On the seas, the Trump administration’s multi-front trade war has already led to a drop in shipments, compounding the disruption caused by attacks on shipping in the Red Sea, where the US is escalating attacks on Houthis in Yemen. Ocean freight rates have fallen steeply in the first four months of 2025. Average spot pricing from Asia to the US West Coast of $2,050 per FEU in the week of April 18 was down 61% from the beginning of the year and 74.8% from its most recent peak in July 2024, according to Platts, a sister product of the Journal of Commerce within S&amp;P Global. Asia-US East Coast spot rates have sunk 53.7% since Jan. 1 and 69.4% from last summer to $3,100 per FEU. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="cbb65e03-1d9b-43c6-97ee-0afa0e7dfc1d"></dynamic-object></div>A slew of booking cancellations by US importers is leading ocean carriers to <a href="https://www.joc.com/article/trans-pacific-blank-sailings-set-to-rise-after-china-bookings-drop-sharply-5984166">blank more voyages</a> in the eastbound trans-Pacific. Some ships are leaving China half-empty. The scale-back in US-bound imports from China is affecting the entire ocean carrier industry. “People are canceling and putting cargo [from] China on pause,” a source at a trans-Pacific container line who asked not to be identified told the Journal of Commerce in April. The broad pause in bookings and orders extends beyond China to other sourcing origins. Amazon, for example, has canceled orders of goods ranging from beach chairs and scooters to air conditioners from Vietnam and Thailand, as well as China, according to a report from Bloomberg. Retailer Five Below paused orders from China in April as those tariffs escalated, CFO Kristy Chipman told analysts during a March 19 call. “The breadth and magnitude of the tariffs are significant given that approximately 60% of our total cost of goods are imported from China, either directly or through our domestic vendors,” Chipman said. Trans-Pacific air cargo traffic, meanwhile, is expected to increase through May 2 as importers rush to beat the end of the exclusion from tariffs for low-value imports. After that final spurt of frontloading, tariffs and the loss of the de minimis exemption for shipments from China and Hong Kong are expected to <a href="https://www.joc.com/article/prepare-for-period-of-panic-in-trans-pacific-air-cargo-market-tiaca-5978829">drag on demand</a>. Limited blank sailings have been announced on the trans-Atlantic trade in the coming weeks, with just 7,124 TEUs from North Europe to the US East and Gulf coasts <a href="https://www.joc.com/article/early-signs-of-rising-tariff-driven-demand-emerge-on-the-trans-atlantic-5986678">scheduled to be withdrawn</a> in May, according to maritime data provider eeSea. “It seems as if carriers are pushing up capacity to cater for whatever frontloading may be needed by European exporters,” said Peter Sand, chief analyst at rate benchmarking platform Xeneta. <h3>A bubble about to burst </h3>In 2024, containerized US imports jumped 15.3% to 27.7 million TEUs, while exports rose 0.9% to 11.3 million TEUs, according to PIERS, also part of S&amp;P Global. Manufactured goods, machinery and mechanical products and minerals rode atop the wave of imports, spiking 17.6%, 14.8% and 11.4%, respectively. Goods were still pouring into the US in the first three months of 2025, with container imports rising 9.2% year over year, according to PIERS, but retailers say the import wave is collapsing as the race to beat the US tariffs ends. The Global Port Tracker report, produced by the National Retail Federation (NRF) and Hackett Associates, forecasts imports to plunge 20.5% in May, 26.6% in June, 27% in July and 26.7% in August. “At present, we expect to see imports begin to decline by May and that they will drop dramatically during the remainder of the year,” Hackett Associates Founder Ben Hackett said in the April Global Port Tracker report. The NRF and Hackett project inbound container shipments will fall 20% in the second half from the year-ago period, which would result in a full-year decline of 15% or more, approximately equal to last year’s gain. Exporters are feeling the effects of tariffs, too, especially those shipping <a href="https://www.joc.com/article/uncertain-trade-environment-especially-fraught-for-us-ag-shippers-5987561">US agricultural and forestry products</a>. China, the largest US market for those products, levied a 125% tariff on them in retaliation for new US tariffs. Bookings for US exports to China for the week of April 15 <a href="https://www.joc.com/article/us-exporters-see-rise-in-canceled-orders-from-chinese-buyers-amid-trade-war-5986165">were down 5.4%</a> from the prior week at 17,220 TEUs, according to maritime visibility provider Vizion and data and analytics company Dun &amp; Bradstreet. “In [the] short term, I think we’re going to see a lot of agriculture sourcing shift [from China] to other countries,” Peter Friedmann, executive director of the Agriculture Transportation Coalition (AgTC), said in an interview with the Journal of Commerce. A drop in the value of the US dollar — down about 5% against other major world currencies after April’s tariff announcements — could help exporters sell goods overseas, but retaliatory tariffs and backlash among foreign consumers will likely dampen any currency gains. Such backlash has already occurred in Canada, where retailers have withdrawn American-made items from whiskey to diapers from their shelves. <h3>Manufacturing losing momentum </h3>Fewer US imports mean fewer intermodal containers moving inland to Chicago or Dallas and fewer truckload and LTL shipments. But a continued decline in US factory output will have an even greater impact on demand for trucking and rail services. Almost 60% of US truck tonnage is tied to industrial output, according to US Census Bureau data. North America manufacturing output fell at one of the steepest rates seen in the past two years in March, according to S&amp;P Global, with broad-based production losses in the US, Canada and Mexico. The US Manufacturing Purchasing Managers’ Index (PMI) from S&amp;P Global dropped to 50.2 in March from 52.7 in February and 51.2 in January. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e4bcb827-f97b-43d7-a4df-83a0b6ac9b48"></dynamic-object></div>Optimism surrounding the Trump administration and the need to “front run” tariffs buoyed manufacturers in the first two months of the year, but “cracks are now starting to appear,” S&amp;P Global said in its PMI release in April. The longer trade disputes last, the more US manufacturers will have difficulty finding specific components, including some that are critical to production, said Michael Regan, chief relationship officer at logistics company and shipper consultant TranzAct Technologies, citing Chinese-made magnets used in automotive transmissions as an example. “These are ‘dirty magnets’ produced from rare earth metals, and China is limiting their export,” Regan told the Journal of Commerce in mid-April. “A company I know has enough inventory to last only through July.” <h3>Resilient, but worried </h3>US consumer spending has been relatively steadfast so far this year, supported by continued wage increases and low unemployment. US retail sales grew 1.4% month over month in March, the biggest monthly increase since January 2023. Excluding sales of cars and trucks and automotive parts, retail sales only rose 0.5% from February, according to US Census Bureau data. But those results fly in the face of consumer sentiment. The University of Michigan Index of Consumer Sentiment dropped 11% sequentially in April, its fourth consecutive monthly decline. The Conference Board’s monthly index of consumer expectations dropped 9.6 points in March to 65.2, its lowest level in 12 years and far below the threshold of 80 that usually signals a recession ahead. Unlike in 2024, the consumer “is not feeling great,” NRF Chief Economist Jack Kleinhenz said in a statement in mid-April, but the NRF still expects US retail sales to rise this year with or without tariffs. The retailers’ association forecasts retail sales will grow between 2.7% and 3.7% year over year to between $5.42 trillion and $5.48 trillion. What’s more, there’s no expectation the disputes will end in the near future, and even if they do, damage has already been done that will take time to repair. The Trump administration’s goals, whether achievable or not, are part of a long-term strategy that is likely to survive weekly or even daily policy flips. As long as tariff uncertainty and trade wars linger, however, it will be more difficult to find a catalyst that will increase freight demand in the US. That’s pushing hopes for a freight recovery farther into 2026. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>. Journal of Commerce editors Ari Ashe, Greg Knowler, Bill Mongelluzzo and Laura Robb contributed to this report, along with Research Analyst Cathy Morrow Roberson. </div>

The tailwinds that brought a strong increase in US imports and certain exports last year have turned to cold, hard headwinds this year as disruptions caused by the Trump administration’s tariffs take root and multiply. The shock waves from those tariffs are rippling from ports in Asia and Europe through freight docks deep in industrial America. The latest shock came from the US Trade Representative (USTR), which said April 18 it will charge entrance fees for China-based ocean carriers and lines operating Chinese-built ships calling at US ports based on cargo capacity or container volume. Given the chaotic rollout of President Donald Trump’s trade policies, the outlook for the US freight economy in the second half of 2025 isn’t just cloudy — it’s reached a point of uncertainty that is crippling shippers’ ability to plan. US shippers “are waiting for the dust to settle to determine how tariffs might influence and change their short- and long-term business strategies,” Spencer Frazier, executive vice president of sales at J.B. Hunt Transport Services, said during an earnings call April 15. S&P Global, the parent company of the Journal of Commerce, in April pulled down its US GDP growth forecasts for 2025 and 2026 from 1.9% in both years to 1.3% and 1.5%, respectively, thanks in part to expectations that tariffs will result in higher inflation. Although the risk of a recession in the US has diminished, US policy volatility and related economic uncertainties are likely to linger into the year, S&P Global said. On land, the so-called freight recession that began in 2022, sending trucking and intermodal rates tumbling by double-digit percentages, is entering its fourth consecutive year. Shippers will maintain pricing power in the truckload and intermodal rail segments in 2025, but they’re also going to make, ship and sell less. Despite an uptick in truckload spot rates early this year, led by flatbed spot rates, truckload pricing is still bouncing along a bottom it reached in 2023. Less-than-truckload (LTL) pricing has been elevated since the collapse of Yellow in 2023, but volumes remain essentially flat aside from some tariff-driven frontloading. The question isn’t whether trucking volumes will decline in the second quarter or second half of 2025, but by how much. That may trigger a broader loss of truck capacity. Blanking and canceling On the seas, the Trump administration’s multi-front trade war has already led to a drop in shipments, compounding the disruption caused by attacks on shipping in the Red Sea, where the US is escalating attacks on Houthis in Yemen. Ocean freight rates have fallen steeply in the first four months of 2025. Average spot pricing from Asia to the US West Coast of $2,050 per FEU in the week of April 18 was down 61% from the beginning of the year and 74.8% from its most recent peak in July 2024, according to Platts, a sister product of the Journal of Commerce within S&P Global. Asia-US East Coast spot rates have sunk 53.7% since Jan. 1 and 69.4% from last summer to $3,100 per FEU. A slew of booking cancellations by US importers is leading ocean carriers to blank more voyages in the eastbound trans-Pacific. Some ships are leaving China half-empty. The scale-back in US-bound imports from China is affecting the entire ocean carrier industry. “People are canceling and putting cargo [from] China on pause,” a source at a trans-Pacific container line who asked not to be identified told the Journal of Commerce in April. The broad pause in bookings and orders extends beyond China to other sourcing origins. Amazon, for example, has canceled orders of goods ranging from beach chairs and scooters to air conditioners from Vietnam and Thailand, as well as China, according to a report from Bloomberg. Retailer Five Below paused orders from China in April as those tariffs escalated, CFO Kristy Chipman told analysts during a March 19 call. “The breadth and magnitude of the tariffs are significant given that approximately 60% of our total cost of goods are imported from China, either directly or through our domestic vendors,” Chipman said. Trans-Pacific air cargo traffic, meanwhile, is expected to increase through May 2 as importers rush to beat the end of the exclusion from tariffs for low-value imports. After that final spurt of frontloading, tariffs and the loss of the de minimis exemption for shipments from China and Hong Kong are expected to drag on demand . Limited blank sailings have been announced on the trans-Atlantic trade in the coming weeks, with just 7,124 TEUs from North Europe to the US East and Gulf coasts scheduled to be withdrawn in May, according to maritime data provider eeSea. “It seems as if carriers are pushing up capacity to cater for whatever frontloading may be needed by European exporters,” said Peter Sand, chief analyst at rate benchmarking platform Xeneta. A bubble about to burst In 2024, containerized US imports jumped 15.3% to 27.7 million TEUs, while exports rose 0.9% to 11.3 million TEUs, according to PIERS, also part of S&P Global. Manufactured goods, machinery and mechanical products and minerals rode atop the wave of imports, spiking 17.6%, 14.8% and 11.4%, respectively. Goods were still pouring into the US in the first three months of 2025, with container imports rising 9.2% year over year, according to PIERS, but retailers say the import wave is collapsing as the race to beat the US tariffs ends. The Global Port Tracker report, produced by the National Retail Federation (NRF) and Hackett Associates, forecasts imports to plunge 20.5% in May, 26.6% in June, 27% in July and 26.7% in August. “At present, we expect to see imports begin to decline by May and that they will drop dramatically during the remainder of the year,” Hackett Associates Founder Ben Hackett said in the April Global Port Tracker report. The NRF and Hackett project inbound container shipments will fall 20% in the second half from the year-ago period, which would result in a full-year decline of 15% or more, approximately equal to last year’s gain. Exporters are feeling the effects of tariffs, too, especially those shipping US agricultural and forestry products . China, the largest US market for those products, levied a 125% tariff on them in retaliation for new US tariffs. Bookings for US exports to China for the week of April 15 were down 5.4% from the prior week at 17,220 TEUs, according to maritime visibility provider Vizion and data and analytics company Dun & Bradstreet. “In [the] short term, I think we’re going to see a lot of agriculture sourcing shift [from China] to other countries,” Peter Friedmann, executive director of the Agriculture Transportation Coalition (AgTC), said in an interview with the Journal of Commerce. A drop in the value of the US dollar — down about 5% against other major world currencies after April’s tariff announcements — could help exporters sell goods overseas, but retaliatory tariffs and backlash among foreign consumers will likely dampen any currency gains. Such backlash has already occurred in Canada, where retailers have withdrawn American-made items from whiskey to diapers from their shelves. Manufacturing losing momentum Fewer US imports mean fewer intermodal containers moving inland to Chicago or Dallas and fewer truckload and LTL shipments. But a continued decline in US factory output will have an even greater impact on demand for trucking and rail services. Almost 60% of US truck tonnage is tied to industrial output, according to US Census Bureau data. North America manufacturing output fell at one of the steepest rates seen in the past two years in March, according to S&P Global, with broad-based production losses in the US, Canada and Mexico. The US Manufacturing Purchasing Managers’ Index (PMI) from S&P Global dropped to 50.2 in March from 52.7 in February and 51.2 in January. Optimism surrounding the Trump administration and the need to “front run” tariffs buoyed manufacturers in the first two months of the year, but “cracks are now starting to appear,” S&P Global said in its PMI release in April. The longer trade disputes last, the more US manufacturers will have difficulty finding specific components, including some that are critical to production, said Michael Regan, chief relationship officer at logistics company and shipper consultant TranzAct Technologies, citing Chinese-made magnets used in automotive transmissions as an example. “These are ‘dirty magnets’ produced from rare earth metals, and China is limiting their export,” Regan told the Journal of Commerce in mid-April. “A company I know has enough inventory to last only through July.” Resilient, but worried US consumer spending has been relatively steadfast so far this year, supported by continued wage increases and low unemployment. US retail sales grew 1.4% month over month in March, the biggest monthly increase since January 2023. Excluding sales of cars and trucks and automotive parts, retail sales only rose 0.5% from February, according to US Census Bureau data. But those results fly in the face of consumer sentiment. The University of Michigan Index of Consumer Sentiment dropped 11% sequentially in April, its fourth consecutive monthly decline. The Conference Board’s monthly index of consumer expectations dropped 9.6 points in March to 65.2, its lowest level in 12 years and far below the threshold of 80 that usually signals a recession ahead. Unlike in 2024, the consumer “is not feeling great,” NRF Chief Economist Jack Kleinhenz said in a statement in mid-April, but the NRF still expects US retail sales to rise this year with or without tariffs. The retailers’ association forecasts retail sales will grow between 2.7% and 3.7% year over year to between $5.42 trillion and $5.48 trillion. What’s more, there’s no expectation the disputes will end in the near future, and even if they do, damage has already been done that will take time to repair. The Trump administration’s goals, whether achievable or not, are part of a long-term strategy that is likely to survive weekly or even daily policy flips. As long as tariff uncertainty and trade wars linger, however, it will be more difficult to find a catalyst that will increase freight demand in the US. That’s pushing hopes for a freight recovery farther into 2026. Contact William B. Cassidy at bill.cassidy@spglobal.com . Journal of Commerce editors Ari Ashe, Greg Knowler, Bill Mongelluzzo and Laura Robb contributed to this report, along with Research Analyst Cathy Morrow Roberson.

Surface

Air Cargo

Supply chain

Maritime

Tariff-related disruption spreading as US shippers ‘pause’ plans

<div class="phx-topic abstract-wrapper">Container lines have blanked at least 80 sailings this month compared with 51 in March 2020, when volumes crashed amid early COVID-19 lockdowns, according to Sea-Intelligence Maritime Analysis. </div>

Container lines have blanked at least 80 sailings this month compared with 51 in March 2020, when volumes crashed amid early COVID-19 lockdowns, according to Sea-Intelligence Maritime Analysis.

<div class="phx-topic">Container lines are blanking trans-Pacific capacity at rates higher than in the early days of the COVID-19 pandemic as US importers are increasingly canceling or suspending orders due to tariff increases that have made some business infeasible. Carriers are skipping at least 80 sailings this month, compared with the 51 sailings canceled in March 2020, when US imports from Asia plunged due to pandemic-induced recession fears, according to Sea-Intelligence Maritime Analysis. The escalation in blank sailings in the last two weeks has been “staggering,” giving a glimpse of just how sharp the decline could be next month, said Sea-Intelligence CEO Alan Murphy. Based on the removal of functional capacity, “carriers now clearly anticipate container demand in week 18 to be 28% lower than expected, and on Asia-North America East Coast in week 19, they now expect shippers to move as much as 42% less cargo than anticipated,” Murphy wrote in the analyst’s Sunday Spotlight newsletter. The increase in blank sailings coincides with the Port of Los Angeles’ expectation that container volumes will plunge 14% month over month in week 18 and 38.6% in week 19, respectively, according to the port’s forecasting tool. In the first full week of May, volumes through the country’s largest import gateway are projected to plummet 43% year over year. Forwarders say bookings from Southeast Asia to the US have held up better than those for shipments from China, presumably thanks to the 90-day suspension of significantly higher tariffs on goods sourced from Vietnam and Cambodia. Imports from those countries now face a 10% tariff, rather than the initially announced duties of 46% and 49%, respectively. Weekly bookings for shipments from China have plunged 37% since March 31, while bookings for Southeast Asian imports from have risen 10%, according to a Monday analysis of data from maritime visibility provider Vizion and analytics firm Dun &amp; Bradstreet. Earlier this month, US retailers slashed their outlook for US imports in the second quarter and the second half, warning that volumes would fall by more than 20% on an annual basis in every month from May through August. <h3>‘Consolidating’ services </h3>Container lines have yet to outright cancel container services, however, choosing instead to blank sailings and skip individual port calls. Taiwan-based Evergreen Marine, which operates the Hangzhou Bay Bridge (HBB) service as part of the Ocean Alliance, has canceled sailings for four straight weeks into Los Angeles and Oakland, removing 8,000 TEUs to 12,000 TEUs of weekly capacity. South Korea, which is serviced on HBB’s call at Busan, reported a 5% drop in exports during the first 20 days of April, following the release of Trump’s reciprocal tariffs. Ocean Alliance’s Bohai service, operated by Cosco Shipping, will cancel a China departure for Long Beach in the first week of May, according to vessel schedules, removing 10,000 TEUs of capacity during that time. Ocean Alliance’s Hibiscus Express and Yangtze services are also expected to blank one weekly departure each from China. A US-based executive with an independent ocean carrier who asked not to be identified said that while they have not yet seen further cancellations of their China bookings, there will likely be fewer China port calls as carriers prepare for lower volumes. “We have not seen an increase in cancellations, but the market is still soft,” he told the Journal of Commerce. “It’s likely that carriers will start to consolidate their China services in the short term.” While services may be outright canceled, there appears to be some withdrawal of vessels in the trans-Pacific trade. The 8,500-TEU Cosco Thailand, part of the Pacific South China Express Service operated by OOCL, appears to have been removed from the service’s schedule for May, along with the 8,800-TEU OOCL Utah. Following its voyage back to China, the Cosco Thailand will start calling Mexico’s West Coast ports in late June, according to the vessel’s schedule. The withdrawals effectively leave the 8,063-TEU OOCL Southampton as the only nominated ship in the service, which will require it to only offer a once-a-month service from Asia. <h3>Then, and now </h3>Approximately five years ago, when volumes plunged 62% from February to March, imports from Asia came roaring back and demand remained at historic highs for two years. This time around, however, there’s less reason to expect a similar rebound given the high level of uncertainty around US tariffs — now 145% on imports from China — and months of frontloading in anticipation of the higher duties. Various US retailers tell the Journal of Commerce that they’ve got as much as three and a half months of core inventory, allowing logistics managers to see if President Donald Trump reduces tariff levels or adds exemptions. Some shippers are moving inventory into bonded warehouses to avoid paying tariffs, betting that the severity of US tariffs can’t last more than a few months. Senior Editors Bill Mongelluzzo and Michael Angell and associate editor Laura Robb contributed to this report. Contact Mark Szakonyi at <a href="mark.szakonyi@spglobal.com">mark.szakonyi@spglobal.com</a>. </div>

Container lines are blanking trans-Pacific capacity at rates higher than in the early days of the COVID-19 pandemic as US importers are increasingly canceling or suspending orders due to tariff increases that have made some business infeasible. Carriers are skipping at least 80 sailings this month, compared with the 51 sailings canceled in March 2020, when US imports from Asia plunged due to pandemic-induced recession fears, according to Sea-Intelligence Maritime Analysis. The escalation in blank sailings in the last two weeks has been “staggering,” giving a glimpse of just how sharp the decline could be next month, said Sea-Intelligence CEO Alan Murphy. Based on the removal of functional capacity, “carriers now clearly anticipate container demand in week 18 to be 28% lower than expected, and on Asia-North America East Coast in week 19, they now expect shippers to move as much as 42% less cargo than anticipated,” Murphy wrote in the analyst’s Sunday Spotlight newsletter. The increase in blank sailings coincides with the Port of Los Angeles’ expectation that container volumes will plunge 14% month over month in week 18 and 38.6% in week 19, respectively, according to the port’s forecasting tool. In the first full week of May, volumes through the country’s largest import gateway are projected to plummet 43% year over year. Forwarders say bookings from Southeast Asia to the US have held up better than those for shipments from China, presumably thanks to the 90-day suspension of significantly higher tariffs on goods sourced from Vietnam and Cambodia. Imports from those countries now face a 10% tariff, rather than the initially announced duties of 46% and 49%, respectively. Weekly bookings for shipments from China have plunged 37% since March 31, while bookings for Southeast Asian imports from have risen 10%, according to a Monday analysis of data from maritime visibility provider Vizion and analytics firm Dun & Bradstreet. Earlier this month, US retailers slashed their outlook for US imports in the second quarter and the second half, warning that volumes would fall by more than 20% on an annual basis in every month from May through August. ‘Consolidating’ services Container lines have yet to outright cancel container services, however, choosing instead to blank sailings and skip individual port calls. Taiwan-based Evergreen Marine, which operates the Hangzhou Bay Bridge (HBB) service as part of the Ocean Alliance, has canceled sailings for four straight weeks into Los Angeles and Oakland, removing 8,000 TEUs to 12,000 TEUs of weekly capacity. South Korea, which is serviced on HBB’s call at Busan, reported a 5% drop in exports during the first 20 days of April, following the release of Trump’s reciprocal tariffs. Ocean Alliance’s Bohai service, operated by Cosco Shipping, will cancel a China departure for Long Beach in the first week of May, according to vessel schedules, removing 10,000 TEUs of capacity during that time. Ocean Alliance’s Hibiscus Express and Yangtze services are also expected to blank one weekly departure each from China. A US-based executive with an independent ocean carrier who asked not to be identified said that while they have not yet seen further cancellations of their China bookings, there will likely be fewer China port calls as carriers prepare for lower volumes. “We have not seen an increase in cancellations, but the market is still soft,” he told the Journal of Commerce. “It’s likely that carriers will start to consolidate their China services in the short term.” While services may be outright canceled, there appears to be some withdrawal of vessels in the trans-Pacific trade. The 8,500-TEU Cosco Thailand, part of the Pacific South China Express Service operated by OOCL, appears to have been removed from the service’s schedule for May, along with the 8,800-TEU OOCL Utah. Following its voyage back to China, the Cosco Thailand will start calling Mexico’s West Coast ports in late June, according to the vessel’s schedule. The withdrawals effectively leave the 8,063-TEU OOCL Southampton as the only nominated ship in the service, which will require it to only offer a once-a-month service from Asia. Then, and now Approximately five years ago, when volumes plunged 62% from February to March, imports from Asia came roaring back and demand remained at historic highs for two years. This time around, however, there’s less reason to expect a similar rebound given the high level of uncertainty around US tariffs — now 145% on imports from China — and months of frontloading in anticipation of the higher duties. Various US retailers tell the Journal of Commerce that they’ve got as much as three and a half months of core inventory, allowing logistics managers to see if President Donald Trump reduces tariff levels or adds exemptions. Some shippers are moving inventory into bonded warehouses to avoid paying tariffs, betting that the severity of US tariffs can’t last more than a few months. Senior Editors Bill Mongelluzzo and Michael Angell and associate editor Laura Robb contributed to this report. Contact Mark Szakonyi at mark.szakonyi@spglobal.com .

Container Shipping News

Port News

North American ports

Trans-Pacific

Asia-US blank sailings exceed early pandemic levels: analyst

<div class="phx-topic abstract-wrapper">The alcoholic beverage industry is in decline as consumer tastes change, which is being felt in the import business as it deals with flat volumes. </div>

The alcoholic beverage industry is in decline as consumer tastes change, which is being felt in the import business as it deals with flat volumes.

<div class="phx-topic">Higher tariffs on US imports of wine and other alcoholic beverages are a nightcap the industry doesn’t need given a broader multi-year decline in drinking among Americans. After draining down inventories in 2023, wine and spirits shipments into the US rebounded last year, but volumes remain below levels prior to the COVID-19 pandemic amid a secular downturn in alcohol consumption, forcing retailers and wholesalers to be more selective in which products to stock. Total containerized imports of alcoholic beverages rose 12.8% in 2024, according to PIERS, a sister product of the Journal of Commerce within S&amp;P Global. However, that growth came after an 18% plunge in 2023, and volumes were the second lowest in six years of data and down 6.4% from 2019. Alison Leavitt, managing director of the Wine and Spirits Shippers Association, told the Journal of Commerce that last year’s growth reflects some restocking among importers and distributors after they had reduced a pandemic-era oversupply throughout 2023. Census Bureau data show monthly wholesale US alcoholic beverage inventories peaking at just over $26 billion in March 2023, with inventories hovering at about $25 billion since then. However, it appears unlikely that distributors would build up inventories in the short term, Leavitt said. Merchant wholesalers of alcoholic beverages saw annual sales peak at $191.1 billion in 2022 before falling to $185.4 billion in 2024. Leavitt said the drop in sales reflects a trend of some consumers eschewing alcohol for cannabis, as well as lower drinking rates among members of Generation Z. “There’s a decline in overall consumption, in all categories,” Leavitt said. “The decline is a factor in shipping volumes. The US is a dead market for most categories.” Leavitt said there are a few categories that are still growing at a decent clip, such as Sauvignon Blancs from New Zealand, but those volumes are not enough to make up for the declines in “Old World” wine and spirits from Europe, Leavitt said. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="9a4ef4ce-e8b7-4577-8464-187b9b81b4be"></dynamic-object></div>The decline is reflected in the long-term growth trends for various US gateways. The Port of New York and New Jersey, the first port of call for most European wine and spirits imports, has seen a 3% average annual decline in such shipments since 2019. Even South American wines from Chile and Argentina appear to be taking a hit, with alcoholic beverage imports into the ports of Los Angeles and Long Beach down 4.2% per year on average since 2019. The Florida ports of Miami and Jacksonville have bucked this trend. Miami has seen five-year average annual growth of 4.5% while Jacksonville has seen 17% growth. Leavitt said these numbers reflect the healthy demand in Florida’s cruise industry, which continues to rebound after the pandemic, along with alcohol reexported to Caribbean resorts. “The cruise and duty-free trade came back strong after COVID, and Miami is the hub for that,” Leavitt said. Trump’s ongoing trade dispute will further scramble the outlook for alcoholic beverage imports in 2025, Leavitt said. Most European wine only had a small duty rate under previous administrations. Constellation Brands, the bottler of Corona and other Mexican beer brands, said on an April 10 earnings call that the 25% tariff on imported beer and empty aluminum cans will affect earnings results for 2025. Constellation said the tariffs will also affect imports from New Zealand and Italy. With a 20% base tariff on all imported goods from the EU, along with the threat of further reciprocal tariffs, wine and spirits distributors’ already thin margins are getting squeezed even more, Leavitt added. “The tariff issues have created a lot of uncertainty,” she said. “Companies are looking seriously at their products and wondering, ‘Do I order this?’” Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

Higher tariffs on US imports of wine and other alcoholic beverages are a nightcap the industry doesn’t need given a broader multi-year decline in drinking among Americans. After draining down inventories in 2023, wine and spirits shipments into the US rebounded last year, but volumes remain below levels prior to the COVID-19 pandemic amid a secular downturn in alcohol consumption, forcing retailers and wholesalers to be more selective in which products to stock. Total containerized imports of alcoholic beverages rose 12.8% in 2024, according to PIERS, a sister product of the Journal of Commerce within S&P Global. However, that growth came after an 18% plunge in 2023, and volumes were the second lowest in six years of data and down 6.4% from 2019. Alison Leavitt, managing director of the Wine and Spirits Shippers Association, told the Journal of Commerce that last year’s growth reflects some restocking among importers and distributors after they had reduced a pandemic-era oversupply throughout 2023. Census Bureau data show monthly wholesale US alcoholic beverage inventories peaking at just over $26 billion in March 2023, with inventories hovering at about $25 billion since then. However, it appears unlikely that distributors would build up inventories in the short term, Leavitt said. Merchant wholesalers of alcoholic beverages saw annual sales peak at $191.1 billion in 2022 before falling to $185.4 billion in 2024. Leavitt said the drop in sales reflects a trend of some consumers eschewing alcohol for cannabis, as well as lower drinking rates among members of Generation Z. “There’s a decline in overall consumption, in all categories,” Leavitt said. “The decline is a factor in shipping volumes. The US is a dead market for most categories.” Leavitt said there are a few categories that are still growing at a decent clip, such as Sauvignon Blancs from New Zealand, but those volumes are not enough to make up for the declines in “Old World” wine and spirits from Europe, Leavitt said. The decline is reflected in the long-term growth trends for various US gateways. The Port of New York and New Jersey, the first port of call for most European wine and spirits imports, has seen a 3% average annual decline in such shipments since 2019. Even South American wines from Chile and Argentina appear to be taking a hit, with alcoholic beverage imports into the ports of Los Angeles and Long Beach down 4.2% per year on average since 2019. The Florida ports of Miami and Jacksonville have bucked this trend. Miami has seen five-year average annual growth of 4.5% while Jacksonville has seen 17% growth. Leavitt said these numbers reflect the healthy demand in Florida’s cruise industry, which continues to rebound after the pandemic, along with alcohol reexported to Caribbean resorts. “The cruise and duty-free trade came back strong after COVID, and Miami is the hub for that,” Leavitt said. Trump’s ongoing trade dispute will further scramble the outlook for alcoholic beverage imports in 2025, Leavitt said. Most European wine only had a small duty rate under previous administrations. Constellation Brands, the bottler of Corona and other Mexican beer brands, said on an April 10 earnings call that the 25% tariff on imported beer and empty aluminum cans will affect earnings results for 2025. Constellation said the tariffs will also affect imports from New Zealand and Italy. With a 20% base tariff on all imported goods from the EU, along with the threat of further reciprocal tariffs, wine and spirits distributors’ already thin margins are getting squeezed even more, Leavitt added. “The tariff issues have created a lot of uncertainty,” she said. “Companies are looking seriously at their products and wondering, ‘Do I order this?’” Contact Michael Angell at michael.angell@spglobal.com .

Trans-Atlantic

Fewer drinkers keep lid on US wine and spirits imports

<div class="phx-topic abstract-wrapper">The very idea of the United States getting back into shipbuilding at scale shows an erosion in acceptance of the concept of global trade, specifically comparative advantage. </div>

The very idea of the United States getting back into shipbuilding at scale shows an erosion in acceptance of the concept of global trade, specifically comparative advantage.

<div class="phx-topic"><div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5985578_0.1.jpg"></img></div>Should the United States be building commercial ships at scale? We know President Trump’s answer to that question — supporting US shipbuilding was a key rationale for the <a href="https://www.joc.com/article/scaled-back-ustr-port-tariff-to-hit-chinese-carriers-hardest-5987549">fines on China-built</a> and -owned ships announced on April 17 by the United States Trade Representative (USTR). The action “sends a demand signal for US-built ships,” said USTR Jamieson Greer.Whether the US should engage in a massive ramp-up in non-military shipbuilding is a worthy question to ask, raising far-reaching questions of reindustrialization, national security, and trade facilitation. Let’s be clear: A bipartisan consensus has existed for decades that the US should at some level be a commercial shipbuilder. That explains the stubborn endurance of the Jones Act, the world’s most protectionist maritime law. Despite its critics — Sen. John McCain once called it “an archaic 1920s-era law that hinders free trade, stifles the economy and hurts consumers” — it survived the long era of trade liberalization. Political support from US seagoing unions and other interests that benefit from the Jones Act kept the law entrenched, with supportive members of Congress and other leaders of the cause feted at the annual Admiral of the Ocean Seas (AOTOS) dinner. But behind that lies more visceral support for commercial shipbuilding. Long memories of World War II help explain that — without 2,800 Liberty ships and thousands of other merchant vessels launched from US shipyards in just a few years’ time, the US and its allies would not have won the war. It is thus not surprising that the US had a 0.1% share of shipbuilding as of 2023, with only the Jones Act keeping deep draft commercial shipbuilding afloat. That is in stark contrast to China — a rising power that catapulted from building less than 5% of global tonnage in 1999 to commanding more than half of the tonnage by 2023, according to the USTR. But does that justify the massive revival of shipbuilding Trump has envisioned? “We’re going to resurrect the American shipbuilding industry,” he said in March. <h3>Aging rationales amid new landscapes </h3>The question is, why? The two reasons the US used to need its own commercial fleet and the shipbuilding capacity behind it are no longer relevant. One is sealift during conflict. The armada built during World War II was required to support eight million US troops deployed overseas fighting in two theaters of war, as well as support for allies. Given technology and the evolution toward asymmetric conflict, US troop numbers were far lower in subsequent conflicts and will likely be further diminished in the future. As it stands today the US military has access to considerable sealift, including 60 subsidized US-flag vessels under the Maritime Security Program operated by divisions of Maersk, Hapag-Lloyd, CMA CGM and others — all based in US ally countries. The program was created in the 1990s to maintain a US-flag fleet for military purposes as APL and Sea-Land, the largest US-based carriers, were sold to foreign owners. US forces overseas receive support from commercial container and roll-on/roll-off services, in addition to 125 civilian-crewed ships under the Navy’s Military Sealift Command. The other rationale — indeed, for shipbuilding in any country — is to support exports. In the postwar decades, carriers such as American Export Lines symbolized US export dominance. A rough analogy today is the Chinese electric car maker BYD building its own fleet of car carriers as its exports rapidly ramp up. The US will regain manufacturing — it’s hard to see Trump not accomplishing that — but if predictions are accurate, to the extent manufacturing is dominated by high-end goods such as semiconductors that can be profitably manufactured in the US, it won’t be ships but planes that will be the primary mode of shipment. The very idea of the US getting back into shipbuilding at scale, moreover, shows an erosion in acceptance of the concept of global trade, specifically comparative advantage, as a means of building countries’ wealth and prosperity by focusing on what each does best. It is hard to see a comparative advantage to Americans’ building ships when the cost is three times what other nations’ shipbuilders charge. The <a href="https://www.phillyshipyard.com/philly-shipyard-wins-usd-1-billion-contract-to-build-three-aloha-class-lng-fueled-containerships-for-matson/">$333 million per ship price</a> charged a few years ago by the Philly Shipyard to build three 3,600-TEU ships for Matson Navigation compares with $50 million for building a ship of that same size in an Asian yard, according to carrier sources. The US-built cost would be even more today given that US-built container ships increased in price by approximately $56,000 per TEU since 2002, while foreign-built container ships increased by less than $7,000 over the same period, <a href="https://www.cato.org/blog/competitiveness-protected-us-shipyards-continues-erode#:~:text=The%20recent%20run%2Dup%20in,beyond%20their%20normal%20life%20cycle.">according to the Cato Institute</a>, a libertarian think-tank. Thus, if it’s not military sealift or support for exports, what is the rationale? The lack of one is why criticism has been heaped on the USTR action. “The US shipbuilding sector already faces significant constraints, including a backlog of military orders and ongoing labor shortages,” said World Shipping Council president and CEO Joe Kramek. The action “is a step in the wrong direction as it will raise prices for consumers, weaken US trade and do little to revitalize the US maritime industry.” Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>. </div>

Should the United States be building commercial ships at scale? We know President Trump’s answer to that question — supporting US shipbuilding was a key rationale for the fines on China-built and -owned ships announced on April 17 by the United States Trade Representative (USTR). The action “sends a demand signal for US-built ships,” said USTR Jamieson Greer. Whether the US should engage in a massive ramp-up in non-military shipbuilding is a worthy question to ask, raising far-reaching questions of reindustrialization, national security, and trade facilitation. Let’s be clear: A bipartisan consensus has existed for decades that the US should at some level be a commercial shipbuilder. That explains the stubborn endurance of the Jones Act, the world’s most protectionist maritime law. Despite its critics — Sen. John McCain once called it “an archaic 1920s-era law that hinders free trade, stifles the economy and hurts consumers” — it survived the long era of trade liberalization. Political support from US seagoing unions and other interests that benefit from the Jones Act kept the law entrenched, with supportive members of Congress and other leaders of the cause feted at the annual Admiral of the Ocean Seas (AOTOS) dinner. But behind that lies more visceral support for commercial shipbuilding. Long memories of World War II help explain that — without 2,800 Liberty ships and thousands of other merchant vessels launched from US shipyards in just a few years’ time, the US and its allies would not have won the war. It is thus not surprising that the US had a 0.1% share of shipbuilding as of 2023, with only the Jones Act keeping deep draft commercial shipbuilding afloat. That is in stark contrast to China — a rising power that catapulted from building less than 5% of global tonnage in 1999 to commanding more than half of the tonnage by 2023, according to the USTR. But does that justify the massive revival of shipbuilding Trump has envisioned? “We’re going to resurrect the American shipbuilding industry,” he said in March. Aging rationales amid new landscapes The question is, why? The two reasons the US used to need its own commercial fleet and the shipbuilding capacity behind it are no longer relevant. One is sealift during conflict. The armada built during World War II was required to support eight million US troops deployed overseas fighting in two theaters of war, as well as support for allies. Given technology and the evolution toward asymmetric conflict, US troop numbers were far lower in subsequent conflicts and will likely be further diminished in the future. As it stands today the US military has access to considerable sealift, including 60 subsidized US-flag vessels under the Maritime Security Program operated by divisions of Maersk, Hapag-Lloyd, CMA CGM and others — all based in US ally countries. The program was created in the 1990s to maintain a US-flag fleet for military purposes as APL and Sea-Land, the largest US-based carriers, were sold to foreign owners. US forces overseas receive support from commercial container and roll-on/roll-off services, in addition to 125 civilian-crewed ships under the Navy’s Military Sealift Command. The other rationale — indeed, for shipbuilding in any country — is to support exports. In the postwar decades, carriers such as American Export Lines symbolized US export dominance. A rough analogy today is the Chinese electric car maker BYD building its own fleet of car carriers as its exports rapidly ramp up. The US will regain manufacturing — it’s hard to see Trump not accomplishing that — but if predictions are accurate, to the extent manufacturing is dominated by high-end goods such as semiconductors that can be profitably manufactured in the US, it won’t be ships but planes that will be the primary mode of shipment. The very idea of the US getting back into shipbuilding at scale, moreover, shows an erosion in acceptance of the concept of global trade, specifically comparative advantage, as a means of building countries’ wealth and prosperity by focusing on what each does best. It is hard to see a comparative advantage to Americans’ building ships when the cost is three times what other nations’ shipbuilders charge. The $333 million per ship price charged a few years ago by the Philly Shipyard to build three 3,600-TEU ships for Matson Navigation compares with $50 million for building a ship of that same size in an Asian yard, according to carrier sources. The US-built cost would be even more today given that US-built container ships increased in price by approximately $56,000 per TEU since 2002, while foreign-built container ships increased by less than $7,000 over the same period, according to the Cato Institute , a libertarian think-tank. Thus, if it’s not military sealift or support for exports, what is the rationale? The lack of one is why criticism has been heaped on the USTR action. “The US shipbuilding sector already faces significant constraints, including a backlog of military orders and ongoing labor shortages,” said World Shipping Council president and CEO Joe Kramek. The action “is a step in the wrong direction as it will raise prices for consumers, weaken US trade and do little to revitalize the US maritime industry.” Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

Transport, Trade and Regulation News

Questions of need, cost dog US shipbuilding ambitions

<div class="phx-topic abstract-wrapper">Apparel importers are concerned that tariffs on China will do harm given more than 4 out of every 10 shipments of the product come from China.</div>

Apparel importers are concerned that tariffs on China will do harm given more than 4 out of every 10 shipments of the product come from China.

<div class="phx-topic">A March study from consultancy firm Trade Partnership Worldwide has warned of a modest reduction in clothing imports if the US government makes higher tariffs on imported goods permanent and imposes fees on Chinese ships calling US ports. The US Trade Representative (USTR) on Thursday <a href="https://www.joc.com/article/scaled-back-ustr-port-tariff-to-hit-chinese-carriers-hardest-5987549">scaled back the scope of planned port fees</a> on Chinese-built ships, but a 124.1% tariff on clothing and shoes from China remains in place. And with China supplying the lion’s share of apparel and footwear imports, US importers have limited options to shift sourcing elsewhere. Imports of apparel and footwear rose 13.3% year over year in 2024, including a 28.2% jump in shipments through the ports of Los Angeles and Long Beach, according to PIERS, a sister product of the Journal of Commerce within S&amp;P Global. However, compared with pre-pandemic 2019 levels, clothing imports were up just 3.8%. The five-year compound annual growth rates of 4% nationally and a mere 0.5% in Los Angeles and Long Beach also betray a much slower long-term expansion of consumer demand. While sourcing has increased from Bangladesh, India, Indonesia and Vietnam since 2019, China still accounted for 41.7% of containerized US apparel and footwear imports last year, according to PIERS. Citing a study by <a href="https://tradepartnership.com/reports/the-economic-effects-of-proposed-action-in-the-section-301-investigation-of-chinas-maritime-logistics-and-shipbuilding-policies-and-practices-2025/">Trade Partnership Worldwide</a>, the American Apparel and Footwear Association (AAFA) said in comments to the USTR that tariffs will cause apparel imports to decline 1.6% annually and leather imports such as shoes and accessories 2.7% annually. In addition, the study estimated retaliatory tariffs imposed by China and other countries would cause US apparel exports to drop 11.1% and leather products shipments to fall 13%, assuming current tariffs remain in place. Even with the 90-day pause to reciprocal tariffs, the association is concerned about how the uncertainty impacts shippers. Many of its members shifted sourcing to Vietnam during the first Trump administration. “The on-again, off-again tariff policy is forcing companies to careen between chaos and costs,” said AAFA CEO Steve Lamar in an April 9 statement. “This extreme tariff on US imports from China, which is in addition to President Trump’s Section 301 tariffs, will lead to higher prices for everyday apparel, footwear, and accessories and higher costs for US manufacturers who rely on materials and items they can only source from China.” The group is also worried about whether US terminal and rail infrastructure can handle the consolidation of calls and volumes at larger ports that ocean carriers have warned would result from the USTR port fees. “The supply of intermodal transportation is already limited, and the increased demand to move goods to major ports would further aggravate this issue, causing significant congestion,” said Nate Herman, AAFA senior vice president of policy, in a letter to the USTR. Apparel and footwear shippers have also lost traction on other key issues in the last year. The AAFA pushed for the US Foreign Trade Zone Parity Act to expand de minimis rules to foreign trade zones and against efforts to eliminate the de minimis rules on China. The de minimis rule allows packages under $800 to enter duty-free. Retailers and trade groups say removing this exemption for China will increase costs and delay deliveries. The de minimis exemption for China was set to end May 2, barring a reversal from the Trump administration. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>. </div>

A March study from consultancy firm Trade Partnership Worldwide has warned of a modest reduction in clothing imports if the US government makes higher tariffs on imported goods permanent and imposes fees on Chinese ships calling US ports. The US Trade Representative (USTR) on Thursday scaled back the scope of planned port fees on Chinese-built ships, but a 124.1% tariff on clothing and shoes from China remains in place. And with China supplying the lion’s share of apparel and footwear imports, US importers have limited options to shift sourcing elsewhere. Imports of apparel and footwear rose 13.3% year over year in 2024, including a 28.2% jump in shipments through the ports of Los Angeles and Long Beach, according to PIERS, a sister product of the Journal of Commerce within S&P Global. However, compared with pre-pandemic 2019 levels, clothing imports were up just 3.8%. The five-year compound annual growth rates of 4% nationally and a mere 0.5% in Los Angeles and Long Beach also betray a much slower long-term expansion of consumer demand. While sourcing has increased from Bangladesh, India, Indonesia and Vietnam since 2019, China still accounted for 41.7% of containerized US apparel and footwear imports last year, according to PIERS. Citing a study by Trade Partnership Worldwide , the American Apparel and Footwear Association (AAFA) said in comments to the USTR that tariffs will cause apparel imports to decline 1.6% annually and leather imports such as shoes and accessories 2.7% annually. In addition, the study estimated retaliatory tariffs imposed by China and other countries would cause US apparel exports to drop 11.1% and leather products shipments to fall 13%, assuming current tariffs remain in place. Even with the 90-day pause to reciprocal tariffs, the association is concerned about how the uncertainty impacts shippers. Many of its members shifted sourcing to Vietnam during the first Trump administration. “The on-again, off-again tariff policy is forcing companies to careen between chaos and costs,” said AAFA CEO Steve Lamar in an April 9 statement. “This extreme tariff on US imports from China, which is in addition to President Trump’s Section 301 tariffs, will lead to higher prices for everyday apparel, footwear, and accessories and higher costs for US manufacturers who rely on materials and items they can only source from China.” The group is also worried about whether US terminal and rail infrastructure can handle the consolidation of calls and volumes at larger ports that ocean carriers have warned would result from the USTR port fees. “The supply of intermodal transportation is already limited, and the increased demand to move goods to major ports would further aggravate this issue, causing significant congestion,” said Nate Herman, AAFA senior vice president of policy, in a letter to the USTR. Apparel and footwear shippers have also lost traction on other key issues in the last year. The AAFA pushed for the US Foreign Trade Zone Parity Act to expand de minimis rules to foreign trade zones and against efforts to eliminate the de minimis rules on China. The de minimis rule allows packages under $800 to enter duty-free. Retailers and trade groups say removing this exemption for China will increase costs and delay deliveries. The de minimis exemption for China was set to end May 2, barring a reversal from the Trump administration. Contact Ari Ashe at ari.ashe@spglobal.com .

US apparel shippers brace for tariff-driven volume decline

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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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