<div class="phx-topic abstract-wrapper">Project slowdowns ease pressure on heavy transport service providers and the breakbulk supply chain, injecting realism into schedules, but a buoyant outlook could mask signs of stress, executives say. </div>

Project slowdowns ease pressure on heavy transport service providers and the breakbulk supply chain, injecting realism into schedules, but a buoyant outlook could mask signs of stress, executives say.

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<div>Despite strong demand, scattered project slowdowns and cancellations due to red tape and a tougher global financing environment are fostering a new realism among heavy transportation and engineering companies, industry executives said. Several major offshore wind (OSW) projects — key generators of project cargo — have been scrapped or slowed. In the US, for example, Danish developer Orsted cancelled 2,400-megawatt (MW) Ocean Wind I and II, to be built in New Jersey waters, in late 2023. Orsted also withdrew from commitments to build 966-MW Skipjack I and II off the coast of Maryland, although it continues advanced development and permitting...

Despite strong demand, scattered project slowdowns and cancellations due to red tape and a tougher global financing environment are fostering a new realism among heavy transportation and engineering companies, industry executives said. Several major offshore wind (OSW) projects — key generators of project cargo — have been scrapped or slowed. In the US, for example, Danish developer Orsted cancelled 2,400-megawatt (MW) Ocean Wind I and II, to be built in New Jersey waters, in late 2023. Orsted also withdrew from commitments to build 966-MW Skipjack I and II off the coast of Maryland, although it continues advanced development and permitting work, according to the Energy Information Administration. Beyond macroeconomic issues, red tape and bureaucratic hurdles often stymie progress, but the heavy transport industry is well-occupied nonetheless thanks to global projects focused on power generation, infrastructure, and manufacturing. “The heavy transportation and engineering market remains very busy,” said Yannick Sel, group commercial director for projects at Belgium-headquartered heavy transportation company Sarens. While some projects have been postponed, this only serves to make the supply chain outlook more realistic, in his opinion. “With all the projects that were planned, the supply chain would never [have been] able to deliver,” he told the Journal of Commerce. However, Riccardo Tippmann, a heavy transport and lifting consultant who was formerly a director at Italian heavy transport and lifting company Fagioli, is less upbeat about the sector. The market has slowed in the past year, and “the unstable economic situation and the weak political situation in Europe does not help. The US elections will also play an important role which in some way may affect development in Europe as well,” he told the Journal of Commerce. “While the oil and gas industry is continuing to develop out of Europe and new investments are planned in India and the Middle East, there appears to a slowing down in renewable energy in Europe,” said Tippmann. A shift in focus Oil majors including Shell, Exxon and BP are shifting at least some focus from renewable energy projects including green fuels and wind to traditional oil and gas development, according to corporate sources including earnings reports and strategy documents that cite lackluster returns, rising costs and increased competition for these decisions. Offshore wind developers are suffering from a reality check thanks to rising commodity prices, interest rate hikes, and supply chain bottlenecks that have put pressure on them, business consultant McKinsey said in a wind energy report released July 15. In the UK, for example, offshore wind failed to attract a single bid in a fifth round of bidding for government-backed renewable energy projects last September. However, Britain’s new Labor government has increased the country’s offshore wind energy targets to 60 gigawatts (GW) by 2030 including 5 GW for floating offshore wind. To incentivize potential bidders in the sixth round of bidding, which closed in August, Britain’s new Labor government increased subsidies by 50% to almost $2 billion, including $1.4 billion for offshore wind development. Despite setbacks, the offshore wind industry holds significant room for growth, the McKinsey report said. “In theory, there is potential for 20,000 GW of fixed offshore wind, in addition to 50,000 GW of floating offshore wind capacity globally,” the report said. In North America, power and infrastructure projects continue to invigorate heavy transport and engineering. Jeff Latture, executive vice president of Tennessee-headquartered heavy lift company Barnhart Crane & Rigging, told the Journal of Commerce that while high interest rates have slowed capital construction, “We seem to be in a good place in the economy with a steady flow of projects, which is much [healthier] than a boom/bust cycle. Power demand continues to be a primary driver.” The return of manufacturing to North America, especially the US, has created demand for heavy lift and heavy-haul services to move presses and other machinery and equipment , Latture said. And despite turmoil in the Red Sea and reported slowdowns and scaling back at Saudi Arabia’s nearly $1.7 trillion NEOM project , the Middle East remains an active project market, Sel said. Major headaches While the business outlook for the heavy lift and transportation sector remains generally positive, ESTA, a Netherlands-based lobbying group for European heavy-haul transport and mobile crane operators, said bureaucracy and creaking infrastructure create significant headwinds in Europe, similarly to the US. This makes the industry “less safe and less efficient, raising costs for our clients and ultimately for the consumer,” ESTA Director Ton Klijn told the Journal of Commerce. “Just getting wind turbines from a factory to the port or their onshore location can result in lengthy and time-consuming detours and delays because far too many of Europe’s road and bridges simply can’t take the loads,” he said. “It is essential — for the efficiency of European industry as a whole — that we urgently prioritize investment in infrastructure, at the very least on key trading routes,” Klijn added. Recent repeated road closures around the Port of Hamburg underlined the need for urgent infrastructure investment, he said. The rules for marking, lighting and escorting heavy loads differ from country to country across Europe, even though the trucks, equipment and loads are the same, he said. “It makes no sense at all — yet getting agreement on such a simple and obvious [simplification] has already taken years and we have not managed it yet,” he told the Journal of Commerce.  In an unusual twist, heavy-haul operators in Germany can even see permits cancelled if loads are underweight and undersized, Klijn said. Current regulations allow for a 5% variation in weight or a 6-inch (15 centimeter) variation in size; variations beyond those margins and permits can be cancelled. “The situation where a permit can be deemed null and void because a load is slightly undersize defies belief, and authorities should be more flexible when loads are under weight or under sized, because they pose no additional threat to weak roads and bridges,” Klijn told the Journal of Commerce.   “Europe-wide, we need common, sensible, properly enforced regulations that will not just make the industry more efficient but also safer, as everyone will know what the rules are and what they have to do to comply with them,” Klijn said.  Industry reconfiguration Netherlands-headquartered conglomerate SHV, the parent company of Mammoet, the world’s largest heavy transportation and engineering company, scrapped a 2023 plan to sell Mammoet because it was unable to find a buyer, but said this spring that “the intent to divest Mammoet remains.” In July, Mammoet launched an initiative which involves splitting its operations into two separate divisions — large projects and crane rentals — with the global projects business headed by Mammoet COO Jan Kleijn and crane rentals fronted by Wouter van Noort, currently European regional director. In creating a separate equipment rental business, Mammoet joins other companies including Sarens, Tippmann told the Journal of Commerce. “Specialized high value equipment rental is beneficial for firms wanting to limit their investment when they just need special equipment for a limited period. But too many companies renting equipment can saturate the market, leading to lower prices and therefore lower margins.” Heavy transport and lift companies renting out their own equipment can also be a sign that they are not able to keep all their equipment busy. “Sometimes, if you look at certain rental rates, they are just in line with pure depreciation values,” Tippmann noted. Contact Keith Wallis at keithwallis@hotmail.com .

Energy projects

Heavy-haul transport

Project cargo

Breakbulk News

Transportation industry welcomes project cargo ‘reality check’

<div class="phx-topic abstract-wrapper">Both volumes and rates in the flatbed sector of the truckload spot market are rising as importers rush industrial products through US ports and across the border.</div>

Both volumes and rates in the flatbed sector of the truckload spot market are rising as importers rush industrial products through US ports and across the border.

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<div class="phx-topic">With tariff deadlines looming, importers are rushing to get industrial goods into the US, sending spot market demand for flatbed trucks soaring in recent weeks. That indicates importers are struggling to find the capacity to move transactional loads of goods such as machinery, steel coils and beams and agricultural equipment ahead of tariffs on Canada and Mexico, while also trying to beat new levies on steel and aluminum as well as cars and trucks from all sources. Add to that list reciprocal tariffs on a broad range of global imports that are scheduled to take effect April 2. Tariffs on Mexico and Canada are slated to be expanded April 2 as well. “No one is able to quantify how this is going to impact things, but if your business makes things with aluminum or steel or lumber, you’re buying now,” said Michael Regan, shipper consultant and chief customer relationship officer with logistics management firm TranzAct Technologies. Flatbed spot rates rose 8.3% from late February through March 25 to $2.36 per mile on the 50 largest US truckload lanes, according to DAT Freight &amp; Analytics. Excluding fuel surcharges, flatbed spot rates on Truckstop’s load boards are up about 7.5% year over year, according to research firm and Truckstop partner FTR Transportation Intelligence. Year over year, posted flatbed spot loads moved are up by double-digit percentages — 34% last week, according to FTR, and 42% on DAT’s load boards. That doesn’t indicate an inflection is coming in overall truckload demand or pricing, however. There is even a split between the spot and contract flatbed markets. Instead, the sudden increase in transactional flatbed demand and rates appears more a market distortion caused by normal seasonality combined with pre-tariff demand. “It really feels like it’s not domestic production-driven but is import activity,” said Avery Vise, vice president of trucking at FTR. Vise points out that spot market flatbed activity is strong in much of the US, especially the Southeast, but also in the Northeast and Midwest, areas with strong port gateways. “We’re seeing increases in the West as well, but much more recently than in the East,” he said. Capital goods imported from Asia would typically arrive in the ports of Los Angeles and Long Beach and move inland by rail, rather than flatbed truck, he said. “It would make sense to see a much stronger increase [in flatbed spot demand] in the East than in the West” if import volumes of heavy goods were rising, said Vise. <h3>Accelerated demand </h3>The speed and timing of the recent increase in flatbed spot activity also points to a pre-tariff pull-forward of goods, said Dean Croke, principal analyst at DAT. “We typically see flatbed demand and pricing move up over a longer trajectory headed toward May,” said Croke. “This year we’ve seen pricing move up quickly in March.” Neither the US housing market nor the manufacturing sector have seen the type of surge that would account for the spike in flatbed demand, Croke and Vise both told the Journal of Commerce. Shrinking flatbed spot market capacity is one factor in the spike, Croke said. “The overall attrition of carriers is having an effect on the specialized part of the market,” he said. Contract flatbed rates have remained stable over the past three months, rising only 2 cents to $2.57 per mile, excluding fuel surcharges, in March, according to DAT. “Large contract [flatbed] carriers are still decreasing rates to hold volume,” Croke said. The DAT flatbed replacement contract rate index is down 6.2% year over year. “The market for moving things like roofing shingles is oversupplied,” he said. It’s also likely that those large contract carriers are shifting more assets to the spot market. The flatbed volume spike will likely diminish after US tariffs take effect — if it is largely due to those tariffs. “There’s a lot of reason to think this is the case, but we’ll only know after the fact,” said Vise. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

With tariff deadlines looming, importers are rushing to get industrial goods into the US, sending spot market demand for flatbed trucks soaring in recent weeks. That indicates importers are struggling to find the capacity to move transactional loads of goods such as machinery, steel coils and beams and agricultural equipment ahead of tariffs on Canada and Mexico, while also trying to beat new levies on steel and aluminum as well as cars and trucks from all sources. Add to that list reciprocal tariffs on a broad range of global imports that are scheduled to take effect April 2. Tariffs on Mexico and Canada are slated to be expanded April 2 as well. “No one is able to quantify how this is going to impact things, but if your business makes things with aluminum or steel or lumber, you’re buying now,” said Michael Regan, shipper consultant and chief customer relationship officer with logistics management firm TranzAct Technologies. Flatbed spot rates rose 8.3% from late February through March 25 to $2.36 per mile on the 50 largest US truckload lanes, according to DAT Freight & Analytics. Excluding fuel surcharges, flatbed spot rates on Truckstop’s load boards are up about 7.5% year over year, according to research firm and Truckstop partner FTR Transportation Intelligence. Year over year, posted flatbed spot loads moved are up by double-digit percentages — 34% last week, according to FTR, and 42% on DAT’s load boards. That doesn’t indicate an inflection is coming in overall truckload demand or pricing, however. There is even a split between the spot and contract flatbed markets. Instead, the sudden increase in transactional flatbed demand and rates appears more a market distortion caused by normal seasonality combined with pre-tariff demand. “It really feels like it’s not domestic production-driven but is import activity,” said Avery Vise, vice president of trucking at FTR. Vise points out that spot market flatbed activity is strong in much of the US, especially the Southeast, but also in the Northeast and Midwest, areas with strong port gateways. “We’re seeing increases in the West as well, but much more recently than in the East,” he said. Capital goods imported from Asia would typically arrive in the ports of Los Angeles and Long Beach and move inland by rail, rather than flatbed truck, he said. “It would make sense to see a much stronger increase [in flatbed spot demand] in the East than in the West” if import volumes of heavy goods were rising, said Vise. Accelerated demand The speed and timing of the recent increase in flatbed spot activity also points to a pre-tariff pull-forward of goods, said Dean Croke, principal analyst at DAT. “We typically see flatbed demand and pricing move up over a longer trajectory headed toward May,” said Croke. “This year we’ve seen pricing move up quickly in March.” Neither the US housing market nor the manufacturing sector have seen the type of surge that would account for the spike in flatbed demand, Croke and Vise both told the Journal of Commerce. Shrinking flatbed spot market capacity is one factor in the spike, Croke said. “The overall attrition of carriers is having an effect on the specialized part of the market,” he said. Contract flatbed rates have remained stable over the past three months, rising only 2 cents to $2.57 per mile, excluding fuel surcharges, in March, according to DAT. “Large contract [flatbed] carriers are still decreasing rates to hold volume,” Croke said. The DAT flatbed replacement contract rate index is down 6.2% year over year. “The market for moving things like roofing shingles is oversupplied,” he said. It’s also likely that those large contract carriers are shifting more assets to the spot market. The flatbed volume spike will likely diminish after US tariffs take effect — if it is largely due to those tariffs. “There’s a lot of reason to think this is the case, but we’ll only know after the fact,” said Vise. Contact William B. Cassidy at bill.cassidy@spglobal.com .

Trucking News

Flatbed

Surface

Pre-tariff imports seen driving US flatbed spot demand higher

<div class="phx-topic abstract-wrapper">Forwarders say they are seeing utilization only near 50% on the Asia-Mexico lane amid seasonally low demand and tariff uncertainties. </div>

Forwarders say they are seeing utilization only near 50% on the Asia-Mexico lane amid seasonally low demand and tariff uncertainties.

<div class="phx-topic">The Mexican Pacific ports of Lazaro Cardenas and Manzanillo are experiencing delays of up to five days as they face operational challenges caused by bigger ships calling the gateways. “A couple of years ago, the biggest ship arriving in Mexico was about 10,000 TEUs,” said Nicolas Portenza, president of Eternity International Freight Forwarder México. “Now you have Maersk, MSC [Mediterranean Shipping Company] and CMA CGM arriving with vessels between 12,000 TEUs and 16,000 TEUs to a port that is the same size.” As such, sources say carriers had difficulty in March filling vessels, many of which were <a href="https://www.joc.com/article/carriers-boost-tonnage-on-asia-wcsa-to-meet-growing-manufacturing-demand-5950892">brought on recently due to manufacturing growth in Latin America</a>. Freight forwarders say they are seeing utilization near 50% as seasonally low demand combined with tariff uncertainties drive down demand on the Asia-Mexico lane. But despite the bearish market signals, some sources expect a turnaround soon. “I think it will recover during April and May,” Portenza told the Journal of Commerce. “Demand is not weak per se, it’s just not keeping up with the [vessel] supply.” Still, industry sources are paying attention to talk of even more capacity to come serving Central America and the West Coast of South America (WCSA). “There is news of new services to Mexico and also to WCSA,” said a forwarder source with cargo on the lane. “It will be a bloodbath if they come.” <h3>Decreasing blank sailings </h3>Meanwhile, the Asia to West Coast South America and Central America lane is positioned for fewer blanks in April as forwarders report green shoots of demand, although it may not be enough to offset the increased vessel sizes and excess capacity. eeSea as of Monday reports that no blanks are forecast on the lane in April, down from 12 blank sailings in March that accounted for about 12.2% of the total capacity for WCSA imports from Asia. March marked the highest number of blank sailings observed on the trade since September, a likely response to <a href="https://www.joc.com/article/new-capacity-coming-to-asia-mexico-trade-despite-recent-rate-pressure-5967003">several capacity injections on the lane</a> in the past several months. According to Eternity International, the Asia to Mexico lane had a total of five blank sailings spread among four carriers in March, although that is expected to drop to three blanks in April, all from Cosco. Spot rates from Asia to WCSA were pegged at $1,400 per FEU as of Monday, down 46.1% from the first week of January and lower by the same amount year over year, according to Platts, a sister company of the Journal of Commerce within S&amp;P Global. Contact Laura Robb at <a href="mailto:Laura.Robb@spglobal.com">laura.robb@spglobal.com</a>.  </div>

The Mexican Pacific ports of Lazaro Cardenas and Manzanillo are experiencing delays of up to five days as they face operational challenges caused by bigger ships calling the gateways. “A couple of years ago, the biggest ship arriving in Mexico was about 10,000 TEUs,” said Nicolas Portenza, president of Eternity International Freight Forwarder México. “Now you have Maersk, MSC [Mediterranean Shipping Company] and CMA CGM arriving with vessels between 12,000 TEUs and 16,000 TEUs to a port that is the same size.” As such, sources say carriers had difficulty in March filling vessels, many of which were brought on recently due to manufacturing growth in Latin America . Freight forwarders say they are seeing utilization near 50% as seasonally low demand combined with tariff uncertainties drive down demand on the Asia-Mexico lane. But despite the bearish market signals, some sources expect a turnaround soon. “I think it will recover during April and May,” Portenza told the Journal of Commerce. “Demand is not weak per se, it’s just not keeping up with the [vessel] supply.” Still, industry sources are paying attention to talk of even more capacity to come serving Central America and the West Coast of South America (WCSA). “There is news of new services to Mexico and also to WCSA,” said a forwarder source with cargo on the lane. “It will be a bloodbath if they come.” Decreasing blank sailings Meanwhile, the Asia to West Coast South America and Central America lane is positioned for fewer blanks in April as forwarders report green shoots of demand, although it may not be enough to offset the increased vessel sizes and excess capacity. eeSea as of Monday reports that no blanks are forecast on the lane in April, down from 12 blank sailings in March that accounted for about 12.2% of the total capacity for WCSA imports from Asia. March marked the highest number of blank sailings observed on the trade since September, a likely response to several capacity injections on the lane in the past several months. According to Eternity International, the Asia to Mexico lane had a total of five blank sailings spread among four carriers in March, although that is expected to drop to three blanks in April, all from Cosco. Spot rates from Asia to WCSA were pegged at $1,400 per FEU as of Monday, down 46.1% from the first week of January and lower by the same amount year over year, according to Platts, a sister company of the Journal of Commerce within S&P Global. Contact Laura Robb at laura.robb@spglobal.com . 

Maritime

Port News

Container lines

Trans-Pacific

International ports

Container Shipping News

Key Mexican container ports facing delays amid calls by larger vessels

<div class="phx-topic abstract-wrapper">The carrier is deriving an increasing share of its revenue from long-haul trans-Pacific and Asia-Europe services while the contribution from the intra-Asia trade declined last year.</div>

The carrier is deriving an increasing share of its revenue from long-haul trans-Pacific and Asia-Europe services while the contribution from the intra-Asia trade declined last year.

<div class="phx-topic">Taiwan’s Yang Ming Marine Transport will buy three 8,000-TEU methanol-ready container ships from Japanese owner Shoei Kisen Kaisha for up to $360 million as the initial stage of a wider plan to acquire up to 13 vessels of between 8,000 and 15,000 TEUs. The vessels “will strengthen Yang Ming’s global service network” as it increases its focus on long-haul trades, the carrier said in a statement. The ships are under construction at Japan’s Imabari Shipbuilding and are due for delivery between 2028 and 2029. Yang Ming said the total cost of the vessels would be between $339 million and $360 million. The deal was confirmed Friday ahead of an investors conference Monday that showed Yang Ming is deriving an increasing share of revenue from long-haul trans-Pacific and Asia-Europe services, while the contribution from its intra-Asia trade declined year over year. Acquisition of the other vessels under the expansion plan “will be carried out in accordance with internal procurement procedures to ensure mid- to long-term fleet stability and maintain service quality,” the carrier said. It gave no timeline for the remaining vessel acquisitions. Yang Ming’s directors agreed in December to acquire new ships to expand its network and replace 5,500-TEU and 6,500-TEU ships that are more than 20 years old. The carrier said it operated 99 vessels totaling 723,107 TEUs in the first quarter, including 38 chartered-in ships. Figures released during Monday’s conference show trans-Pacific and Asia-Europe services each contributed 38%, equivalent to $2.7 billion, to total revenue of $7 billion last year amid stronger freight rates. That compared with 35% for each trade in 2023, but on lower total revenues of $4.5 billion. The contribution from core intra-Asia services dropped to 9% last year from 12% a year earlier, while the proportion of revenues from longer-haul intra-Asia services to India and the Middle East also fell, to 15% from 18% in 2023. Yang Ming said it saw a mixed freight rate environment in January and February, with rates dipping last month on lower cargo volumes. Still, average revenue per TEU was $1,256 in the first two months, higher than $1,096/TEU the carrier recorded in the first two months of last year. Yang Ming said it expects cargo volume in the second quarter to “recover from the low levels in the first quarter,” although it acknowledged that new tariffs, geopolitical conflicts and ongoing port congestion are creating uncertainty in the market. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>.</div>

Taiwan’s Yang Ming Marine Transport will buy three 8,000-TEU methanol-ready container ships from Japanese owner Shoei Kisen Kaisha for up to $360 million as the initial stage of a wider plan to acquire up to 13 vessels of between 8,000 and 15,000 TEUs. The vessels “will strengthen Yang Ming’s global service network” as it increases its focus on long-haul trades, the carrier said in a statement. The ships are under construction at Japan’s Imabari Shipbuilding and are due for delivery between 2028 and 2029. Yang Ming said the total cost of the vessels would be between $339 million and $360 million. The deal was confirmed Friday ahead of an investors conference Monday that showed Yang Ming is deriving an increasing share of revenue from long-haul trans-Pacific and Asia-Europe services, while the contribution from its intra-Asia trade declined year over year. Acquisition of the other vessels under the expansion plan “will be carried out in accordance with internal procurement procedures to ensure mid- to long-term fleet stability and maintain service quality,” the carrier said. It gave no timeline for the remaining vessel acquisitions. Yang Ming’s directors agreed in December to acquire new ships to expand its network and replace 5,500-TEU and 6,500-TEU ships that are more than 20 years old. The carrier said it operated 99 vessels totaling 723,107 TEUs in the first quarter, including 38 chartered-in ships. Figures released during Monday’s conference show trans-Pacific and Asia-Europe services each contributed 38%, equivalent to $2.7 billion, to total revenue of $7 billion last year amid stronger freight rates. That compared with 35% for each trade in 2023, but on lower total revenues of $4.5 billion. The contribution from core intra-Asia services dropped to 9% last year from 12% a year earlier, while the proportion of revenues from longer-haul intra-Asia services to India and the Middle East also fell, to 15% from 18% in 2023. Yang Ming said it saw a mixed freight rate environment in January and February, with rates dipping last month on lower cargo volumes. Still, average revenue per TEU was $1,256 in the first two months, higher than $1,096/TEU the carrier recorded in the first two months of last year. Yang Ming said it expects cargo volume in the second quarter to “recover from the low levels in the first quarter,” although it acknowledged that new tariffs, geopolitical conflicts and ongoing port congestion are creating uncertainty in the market. Contact Keith Wallis at keithwallis@hotmail.com .

Yang Ming to buy three 8,000-TEU ships in first stage of fleet expansion

<div class="phx-topic abstract-wrapper">In creating the threat of a clearly significant penalty, the US Trade Representative essentially forced observers to not merely give a thumbs up or down to the proposal, but to offer alternative solutions. </div>

In creating the threat of a clearly significant penalty, the US Trade Representative essentially forced observers to not merely give a thumbs up or down to the proposal, but to offer alternative solutions.

<div class="phx-topic">Hearings this week held by the US Trade Representative (USTR) over the potential levying of fees on Chinese-built and -operated ships calling at US ports certainly struck a nerve in the maritime industry. The Section 301 investigation, officially known as “China’s Targeting of the Maritime, Logistics, and Shipbuilding Sectors for Dominance,” prompted 520 comments submitted to the USTR by the March 24 deadline. More than 60 individuals gave testimony over two days of hearings. Perhaps the process was designed to elicit the heavy response the USTR received. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5971718_0.1.jpg"></img></div>By proposing fees of up to $1.5 million per US port call by Chinese tonnage, the industry had no option but to take notice. Some providing comments and testimony noted that the imposition of such fees would create an existential threat to their ability to serve US trades or specific ports, or, in some cases, to operate at all. In creating the threat of a clearly significant penalty, the USTR essentially forced those commenting to not merely give a thumbs up or down to the proposal, but to give alternative solutions based on the assumption that the Trump administration wanted something to be done to stimulate US shipbuilding. <h3>‘Think creatively’ </h3>“This essentially turned into a big brainstorming session,” Lauren Beagen, a trade attorney and former counsel at the US Federal Maritime Commission, told the Journal of Commerce this week. Beagen said the hearings forced the industry to think about ways that would allow the Trump administration to progress in its goals toward revitalizing the shipbuilding industry and US merchant fleet that likely wouldn’t have happened if the proposed penalties weren’t severe. “If the USTR just held a public hearing about how trade policies were impacting our shipbuilding industry, no one would have come,” she said. “This made everyone pay attention, and it also forced them to think creatively. How else would you have gotten the entire industry together to brainstorm like this.” To wit, a number of comments submitted to the USTR said the proposed fees were unworkable, but also had alternative suggestions to help invigorate US shipbuilding. The National Association of Waterfront Employers (NAWE), for instance, urged the USTR to consider a per-sailing fee, rather than a fee per port call, to prevent ocean carriers from consolidating port calls and hurting economic interests at US secondary and tertiary ports. <h3>Phased approach </h3>The Duluth Seaway Authority suggested the USTR phase in the port call fees and adopt a tiered approach to assessing the fees based on vessel and cargo types and the economic impact to the region. Similarly, the Port of New York and New Jersey said a phased approach to enforcing the fees would not penalize carriers for vessel and terminal investments that in some cases were made more than a decade ago. Container shipping analyst John McCown said in comments to the USTR that all fees collected in a prospective tariff program should go to a trust fund purely to support the US maritime sector. McCown estimated, using 2024 figures, that $58.9 billion would be collected annually in port fees, which represents 3.8% of the $1.5 trillion in imported goods moved via ocean, according to figures from UN Trade and Development (UNCTAD). “The good news/bad news is that the high value of container cargo puts that sector in the best position to absorb such large fees,” McCown wrote. And as an alternative to port call fees, he floated the idea of assessing per-container fees on boxes moving on Chinese-built ships that would be approximately equivalent to the amount China subsidizes its container line operators and shipbuilding industries. While that proposal, amounting to a fee of up to $60 per container, would generate far less revenue than the port call option, it would have a negligible impact on carrier networks and shippers’ supply chains, McCown argued. The broad effect of the port call fee proposal has been a call to arms across maritime and cargo interests to take seriously the administration’s efforts to reinvigorate US shipbuilding and operations in a way that would have been absent minus the threat of economic pain. Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. </div>

Hearings this week held by the US Trade Representative (USTR) over the potential levying of fees on Chinese-built and -operated ships calling at US ports certainly struck a nerve in the maritime industry. The Section 301 investigation, officially known as “China’s Targeting of the Maritime, Logistics, and Shipbuilding Sectors for Dominance,” prompted 520 comments submitted to the USTR by the March 24 deadline. More than 60 individuals gave testimony over two days of hearings. Perhaps the process was designed to elicit the heavy response the USTR received. By proposing fees of up to $1.5 million per US port call by Chinese tonnage, the industry had no option but to take notice. Some providing comments and testimony noted that the imposition of such fees would create an existential threat to their ability to serve US trades or specific ports, or, in some cases, to operate at all. In creating the threat of a clearly significant penalty, the USTR essentially forced those commenting to not merely give a thumbs up or down to the proposal, but to give alternative solutions based on the assumption that the Trump administration wanted something to be done to stimulate US shipbuilding. ‘Think creatively’ “This essentially turned into a big brainstorming session,” Lauren Beagen, a trade attorney and former counsel at the US Federal Maritime Commission, told the Journal of Commerce this week. Beagen said the hearings forced the industry to think about ways that would allow the Trump administration to progress in its goals toward revitalizing the shipbuilding industry and US merchant fleet that likely wouldn’t have happened if the proposed penalties weren’t severe. “If the USTR just held a public hearing about how trade policies were impacting our shipbuilding industry, no one would have come,” she said. “This made everyone pay attention, and it also forced them to think creatively. How else would you have gotten the entire industry together to brainstorm like this.” To wit, a number of comments submitted to the USTR said the proposed fees were unworkable, but also had alternative suggestions to help invigorate US shipbuilding. The National Association of Waterfront Employers (NAWE), for instance, urged the USTR to consider a per-sailing fee, rather than a fee per port call, to prevent ocean carriers from consolidating port calls and hurting economic interests at US secondary and tertiary ports. Phased approach The Duluth Seaway Authority suggested the USTR phase in the port call fees and adopt a tiered approach to assessing the fees based on vessel and cargo types and the economic impact to the region. Similarly, the Port of New York and New Jersey said a phased approach to enforcing the fees would not penalize carriers for vessel and terminal investments that in some cases were made more than a decade ago. Container shipping analyst John McCown said in comments to the USTR that all fees collected in a prospective tariff program should go to a trust fund purely to support the US maritime sector. McCown estimated, using 2024 figures, that $58.9 billion would be collected annually in port fees, which represents 3.8% of the $1.5 trillion in imported goods moved via ocean, according to figures from UN Trade and Development (UNCTAD). “The good news/bad news is that the high value of container cargo puts that sector in the best position to absorb such large fees,” McCown wrote. And as an alternative to port call fees, he floated the idea of assessing per-container fees on boxes moving on Chinese-built ships that would be approximately equivalent to the amount China subsidizes its container line operators and shipbuilding industries. While that proposal, amounting to a fee of up to $60 per container, would generate far less revenue than the port call option, it would have a negligible impact on carrier networks and shippers’ supply chains, McCown argued. The broad effect of the port call fee proposal has been a call to arms across maritime and cargo interests to take seriously the administration’s efforts to reinvigorate US shipbuilding and operations in a way that would have been absent minus the threat of economic pain. Contact Eric Johnson at eric.johnson@spglobal.com .

Trans-Atlantic

Transport, Trade and Regulation News

Plan to tax Chinese ships turned maritime malaise into ‘brainstorming session’

<div class="phx-topic abstract-wrapper">The move comes as Hutchison is facing increasing pressure from the Chinese government over the $22.8 billion sale of its ports business outside of China to BlackRock and TiL, especially the Panama ports.</div>

The move comes as Hutchison is facing increasing pressure from the Chinese government over the $22.8 billion sale of its ports business outside of China to BlackRock and TiL, especially the Panama ports.

<div class="phx-topic">Hong Kong-based CK Hutchison will miss next week’s target date to sign a deal selling its Panama Ports Company (PPC) to a consortium of BlackRock and Mediterranean Shipping Co. subsidiary Terminal Investment Limited (TiL). While the signing will not happen by the initial April 2 target date, the sale that has been shrouded in geopolitical intrigue has not been canceled, Hong Kong newspaper South China Morning Post reported Friday, quoting a source close to Hutchison. No new target date has been announced. The apparent delay comes as Hutchison is facing increasing pressure from the Chinese government over <a href="https://www.joc.com/article/hutchison-inks-228-billion-deal-to-sell-majority-of-port-holdings-to-blackrock-til-5955819">the $22.8 billion sale of its ports business outside of China to BlackRock and TiL</a>, especially the PPC-owned ports, Cristobal and Balboa, at either ends of the Panama Canal. On Friday, China’s State Administration for Market Regulation confirmed its second Anti-Monopoly Department will review the transaction “to protect fair competition in the market and safeguard the public interest.” The regulator gave no timeline for the probe in a notice published on its website. China has also reportedly told state-owned companies to halt new deals with CK Hutchison and other businesses linked to its founder, Hong Kong billionaire Li Ka-shing and his family, pending a review of their China operations, Bloomberg News reported Thursday. Only new ventures are covered by the moratorium, while existing operations are unaffected, Bloomberg said. Sale documentation for PPC was expected to be signed on or before April 2, Hutchison said in its March 4 announcement that it had reached an agreement “in principle” to sell PPC and its overseas ports network outside of China to BlackRock/TiL. The ports-telecoms-retail conglomerate had packaged PPC and its other global ports, excluding its China and Hong Kong terminals, into two separate contracts to enable a quicker sale of PPC and its two Panama ports. Hutchison has a 145-day exclusive negotiating period with BlackRock/TiL to sign final sale documents for both PPC and the other ports, which in total comprise 199 berths in 43 ports spread over 23 countries. The deal was announced amid growing ire within the new Trump administration over alleged Chinese influence in the operation of the Panama Canal. Beijing has not officially commented on the deal, saying it is a commercial transaction, but it has indicated its displeasure in other ways. That includes posting several critical commentaries on government websites, the most recent one on Wednesday, published by a Hong Kong-based pro-Beijing newspaper. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>.</div>

Hong Kong-based CK Hutchison will miss next week’s target date to sign a deal selling its Panama Ports Company (PPC) to a consortium of BlackRock and Mediterranean Shipping Co. subsidiary Terminal Investment Limited (TiL). While the signing will not happen by the initial April 2 target date, the sale that has been shrouded in geopolitical intrigue has not been canceled, Hong Kong newspaper South China Morning Post reported Friday, quoting a source close to Hutchison. No new target date has been announced. The apparent delay comes as Hutchison is facing increasing pressure from the Chinese government over the $22.8 billion sale of its ports business outside of China to BlackRock and TiL , especially the PPC-owned ports, Cristobal and Balboa, at either ends of the Panama Canal. On Friday, China’s State Administration for Market Regulation confirmed its second Anti-Monopoly Department will review the transaction “to protect fair competition in the market and safeguard the public interest.” The regulator gave no timeline for the probe in a notice published on its website. China has also reportedly told state-owned companies to halt new deals with CK Hutchison and other businesses linked to its founder, Hong Kong billionaire Li Ka-shing and his family, pending a review of their China operations, Bloomberg News reported Thursday. Only new ventures are covered by the moratorium, while existing operations are unaffected, Bloomberg said. Sale documentation for PPC was expected to be signed on or before April 2, Hutchison said in its March 4 announcement that it had reached an agreement “in principle” to sell PPC and its overseas ports network outside of China to BlackRock/TiL. The ports-telecoms-retail conglomerate had packaged PPC and its other global ports, excluding its China and Hong Kong terminals, into two separate contracts to enable a quicker sale of PPC and its two Panama ports. Hutchison has a 145-day exclusive negotiating period with BlackRock/TiL to sign final sale documents for both PPC and the other ports, which in total comprise 199 berths in 43 ports spread over 23 countries. The deal was announced amid growing ire within the new Trump administration over alleged Chinese influence in the operation of the Panama Canal. Beijing has not officially commented on the deal, saying it is a commercial transaction, but it has indicated its displeasure in other ways. That includes posting several critical commentaries on government websites, the most recent one on Wednesday, published by a Hong Kong-based pro-Beijing newspaper. Contact Keith Wallis at keithwallis@hotmail.com .

Hutchison to delay Panama ports deal signing amid growing Beijing pressure

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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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