<div class="phx-topic abstract-wrapper">The case of TCW Trucking versus Evergreen could set a precedent for whether the US Federal Maritime Commission can penalize ocean carriers for charging detention and demurrage fees during weekends and holidays when a port is closed. </div>

The case of TCW Trucking versus Evergreen could set a precedent for whether the US Federal Maritime Commission can penalize ocean carriers for charging detention and demurrage fees during weekends and holidays when a port is closed.

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<div>The opening hearing before the US Court of Appeals Friday challenging maritime regulators’ ruling against Evergreen Shipping Agency Corp. centered on whether the Federal Maritime Commission (FMC) did enough fact finding before interpreting its own detention and demurrage rule. The case before the United States Court of Appeals for the DC Circuit will determine whether the FMC can penalize carriers for charging detention on weekend and holidays when equipment cannot be returned because the port is closed.In December, the FMC voted in favor of TCW Trucking against Evergreen, with four of the five commissioners saying the fees did not adequately...

The opening hearing before the US Court of Appeals Friday challenging maritime regulators’ ruling against Evergreen Shipping Agency Corp. centered on whether the Federal Maritime Commission (FMC) did enough fact finding before interpreting its own detention and demurrage rule. The case before the United States Court of Appeals for the DC Circuit will determine whether the FMC can penalize carriers for charging detention on weekend and holidays when equipment cannot be returned because the port is closed. In December, the FMC voted in favor of TCW Trucking against Evergreen, with four of the five commissioners saying the fees did not adequately incentivize the drayage provider to return empty containers. Commissioner Carl Bentzel dissented, arguing it is only inappropriate to charge for detention when the port closure is unscheduled or related to an unannounced policy change. The FMC defended its ruling in court Friday, arguing TCW made its best effort to return the container and chassis on time to the Port of Savannah. Evergreen countered that there was no evidence of such effort being undertaken because the FMC failed to ask what those attempts were. Evergreen counsel Robert Magovern, a member of Cozen O'Connor law firm, told the court the case needs to be reexamined with all the evidence. “The commission couldn’t find reasonableness here because they just simply didn’t ask the questions and do the appropriate amount of fact finding,” he added. In addition, the FMC failed to consider that TCW signed a contract promising to pay detention on weekends and holidays and that the drayage provider had advanced notice of the port closure and three weeks of free time to plan properly, Magovern said. During the hearing, the FMC argued that charging three days of detention fees when the customer was only one weekday late is unfair and that no shipper or drayage carrier should be expected to pay fees when it is “impossible” to return equipment. “As we put it in the brief, you literally can’t incentivize the impossible, so why would a trucker be penalized for something that he couldn’t do on that day?” FMC Counsel Christopher Hughey asked the court. Hughey added that the detention system puts all the risk on truckers and cargo owners, offering no incentive for the carriers to update their per diem processes, whether by changing their hours of operation or equipment borrowing policies. Some carriers, of their own accord, have updated their detention and demurrage policies after following along with the case. Many shippers have praised the proactive approach, but carriers have pushed back that the decision is in conflict with the incentive principle and discourages truckers from returning equipment on time. Magovern said charging detention on weekends is an incentive to return equipment before fees are assessed, just like a library assesses fees for late books. If a book is due Friday and the library is closed for the weekend, you’ll return your book Friday to avoid any charges. “But if you tell me that there will be no charges over the weekend, then I have no reason, no incentive to go to the library today and return my book,” Magovern said. The three-judge panel has 45 days to review the argument and issue a written decision. Contact Teri Errico Griffis at teri.griffis@spglobal.com .

Container Shipping News

Container lines

Transport, Trade and Regulation News

US Court of Appeals probes FMC fact-finding in Evergreen detention case

<div class="phx-topic abstract-wrapper">The US’ second-largest intermodal carrier has not yet felt the effects of US tariffs on China but notes the delay in impact between the ports and the rails could take a few weeks.</div>

The US’ second-largest intermodal carrier has not yet felt the effects of US tariffs on China but notes the delay in impact between the ports and the rails could take a few weeks.

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<div class="phx-topic">Hub Group, the US’ second-largest intermodal carrier, is warning that a drop in domestic intermodal volumes linked to US tariffs on China could emerge on the West Coast between mid-May and the end of June. Approximately a quarter of Hub Group’s West Coast business is tied to US imports, and about 30% of that originates in China, the company said during its first-quarter earnings call Thursday evening. The intermodal carrier laid out three potential outcomes based on how shippers respond to the evolving trade environment. “At the high end of the range is a short West Coast slowdown of China imports and strong bounce back of demand in the West Coast leading to a surge of volume in the back half of the year,” Hub Group CEO Phil Yeager said on the call. “The low end of the range would be an extended slowdown in China imports or the weakening of consumer spending.” Yeager said the more likely occurrence is a middle-ground scenario in which intermodal volumes decline modestly in the second half of the year without peak season surcharges. Last year, some shippers faced <a href="https://www.joc.com/article/up-joins-peers-in-assessing-peak-season-surcharges-for-southern-california-5709819">peak surcharges</a> when they exceeded their contractual allotments out of Southern California. A year of flat rates Hub Group’s intermodal volume rose 8% year over year in the first quarter, but revenue per load dropped 12%. One likely reason for the revenue decline is that Hub Group has taken a more aggressive pricing position than competitor Schneider National, according to several shippers the Journal of Commerce has spoken with. Another factor is the mix of freight. While Hub Group’s local East Coast volume rose 13% year over year, its transcontinental freight originating on the West Coast declined 1%. Shorter hauls on the East Coast naturally generate less revenue per load than longer intermodal routes from Southern California to inland markets such as Atlanta, Chicago, Dallas, or Memphis. Hub Group said intermodal contract rates remained flat, echoing the data in the Journal of Commerce’s <a href="https://www.joc.com/resources/special-reports/intermodal-savings-index">Intermodal Savings Index</a>. Hub Group does not anticipate any changes through the end of the year. “In the initial onset of bid season, carriers were trying to push truckload rates up … what we’ve seen now in the second portion is more truckload competition [due to geopolitical trade tensions],” Yeager said. “In the second quarter, 38% of our business is getting bid out. I would say it’s been a little bit more aggressive, which is leading us to say we think flattish on pricing for the full year.” Yeager also said Hub Group does not plan to purchase additional containers in 2025; as much as 25% of the company’s containers are currently stacked and out of service. While the company does not disclose its total fleet size, independent estimates suggest Hub Group has idled about 10,000 containers nationwide. Those estimates come from Jason Hilsenbeck, the founder of drayage platform Loadmatch.com, which tracks domestic container fleet sizes across the US. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>.</div>

Hub Group, the US’ second-largest intermodal carrier, is warning that a drop in domestic intermodal volumes linked to US tariffs on China could emerge on the West Coast between mid-May and the end of June. Approximately a quarter of Hub Group’s West Coast business is tied to US imports, and about 30% of that originates in China, the company said during its first-quarter earnings call Thursday evening. The intermodal carrier laid out three potential outcomes based on how shippers respond to the evolving trade environment. “At the high end of the range is a short West Coast slowdown of China imports and strong bounce back of demand in the West Coast leading to a surge of volume in the back half of the year,” Hub Group CEO Phil Yeager said on the call. “The low end of the range would be an extended slowdown in China imports or the weakening of consumer spending.” Yeager said the more likely occurrence is a middle-ground scenario in which intermodal volumes decline modestly in the second half of the year without peak season surcharges. Last year, some shippers faced peak surcharges when they exceeded their contractual allotments out of Southern California. A year of flat rates Hub Group’s intermodal volume rose 8% year over year in the first quarter, but revenue per load dropped 12%. One likely reason for the revenue decline is that Hub Group has taken a more aggressive pricing position than competitor Schneider National, according to several shippers the Journal of Commerce has spoken with. Another factor is the mix of freight. While Hub Group’s local East Coast volume rose 13% year over year, its transcontinental freight originating on the West Coast declined 1%. Shorter hauls on the East Coast naturally generate less revenue per load than longer intermodal routes from Southern California to inland markets such as Atlanta, Chicago, Dallas, or Memphis. Hub Group said intermodal contract rates remained flat, echoing the data in the Journal of Commerce’s Intermodal Savings Index . Hub Group does not anticipate any changes through the end of the year. “In the initial onset of bid season, carriers were trying to push truckload rates up … what we’ve seen now in the second portion is more truckload competition [due to geopolitical trade tensions],” Yeager said. “In the second quarter, 38% of our business is getting bid out. I would say it’s been a little bit more aggressive, which is leading us to say we think flattish on pricing for the full year.” Yeager also said Hub Group does not plan to purchase additional containers in 2025; as much as 25% of the company’s containers are currently stacked and out of service. While the company does not disclose its total fleet size, independent estimates suggest Hub Group has idled about 10,000 containers nationwide. Those estimates come from Jason Hilsenbeck, the founder of drayage platform Loadmatch.com, which tracks domestic container fleet sizes across the US. Contact Ari Ashe at ari.ashe@spglobal.com .

North-American rail

Intermodal providers

Drop in USWC domestic intermodal volumes could come soon: Hub Group

<div class="phx-topic abstract-wrapper">The National Retail Federation also warned the negative growth will accelerate, with imports through the summer expected to be at least 20% lower than the corresponding month last year. </div>

The National Retail Federation also warned the negative growth will accelerate, with imports through the summer expected to be at least 20% lower than the corresponding month last year. 

<div class="phx-topic">US imports this month will see their first year-over-year decline in more than a year and a half as the “true impact” of the Trump administration’s tariffs come to fruition, a major retail group said Friday. The National Retail Federation (NRF) also warned the negative growth will accelerate, with imports from June through September expected to be at least 20% lower than the corresponding month last year.  “We are starting to see the true impact of President Trump’s tariffs on the supply chain,” Jonathan Gold, NRF’s vice president for Supply Chain and Customs Policy, said in the group’s newly released Global Port Tracker (GPT) published with Hackett Associates. Gold said the US tariffs will result in “higher costs for businesses as well as reduced cargo volumes.”  “In the end, these tariffs will affect consumers in the form of higher prices and less availability on store shelves,” he said.  That less availability will begin in May, with projected imports of 1.81 million TEUs down almost 13% from May 2024 and the first year-over-year drop in imports in 19 months, according to the GPT. Imports for June through September are projected to see year-over-year declines of 20.2%, 23.4%, 21.5% and 21.2%, respectively. Expected June imports of 1.71 million TEUs would be the lowest for any month since March 2023, the GPT said. Tariff impacts Tariffs implemented by President Donald Trump in April “come at the most important time in the buying process” for retailers, said Gold, adding that many retailers are being forced to delay or cancel orders — with small retailers being especially impacted. With a pre-tariff rush of imports that appears to have largely ended in January, the ratio of US retail inventories to sales, a barometer of inventory balance, was unchanged in February, at 1.31, according to US Census Bureau data. Amid US importers increasingly canceling or suspending orders, ocean carriers are making capacity adjustments in the form of <a href="https://www.joc.com/article/msc-suspends-two-us-services-rejigs-others-as-tariffs-hit-chinese-imports-6000649">suspended services</a> and blanked sailings. “Container carriers are indeed dropping voyages and consolidating cargo and service to ensure that their vessels are as full as possible and to maintain economies of scale as demand declines,” said Ben Hackett, founder of Hackett Associates.  While carriers have begun to suspend services on the trans-Pacific, Hackett added that reports of a “broken” supply chain and ships “making U-turns in mid-voyage” because of the tariffs are “very far from the truth and the reality on the ground.” The GPT expects 12.13 million TEUs in US imports for the first half of 2025, up just 0.3% on the year and a significant downgrade from the 5.7% growth that was forecast before tariffs were implemented. The GPT is published monthly using import data collected from 13 ports on the US East, West and Gulf coasts. Contact Laura Robb at <a href="">Laura.Robb@spglobal.com</a>.  </div>

US imports this month will see their first year-over-year decline in more than a year and a half as the “true impact” of the Trump administration’s tariffs come to fruition, a major retail group said Friday. The National Retail Federation (NRF) also warned the negative growth will accelerate, with imports from June through September expected to be at least 20% lower than the corresponding month last year.  “We are starting to see the true impact of President Trump’s tariffs on the supply chain,” Jonathan Gold, NRF’s vice president for Supply Chain and Customs Policy, said in the group’s newly released Global Port Tracker (GPT) published with Hackett Associates. Gold said the US tariffs will result in “higher costs for businesses as well as reduced cargo volumes.”  “In the end, these tariffs will affect consumers in the form of higher prices and less availability on store shelves,” he said.  That less availability will begin in May, with projected imports of 1.81 million TEUs down almost 13% from May 2024 and the first year-over-year drop in imports in 19 months, according to the GPT. Imports for June through September are projected to see year-over-year declines of 20.2%, 23.4%, 21.5% and 21.2%, respectively. Expected June imports of 1.71 million TEUs would be the lowest for any month since March 2023, the GPT said. Tariff impacts Tariffs implemented by President Donald Trump in April “come at the most important time in the buying process” for retailers, said Gold, adding that many retailers are being forced to delay or cancel orders — with small retailers being especially impacted. With a pre-tariff rush of imports that appears to have largely ended in January, the ratio of US retail inventories to sales, a barometer of inventory balance, was unchanged in February, at 1.31, according to US Census Bureau data. Amid US importers increasingly canceling or suspending orders, ocean carriers are making capacity adjustments in the form of suspended services and blanked sailings. “Container carriers are indeed dropping voyages and consolidating cargo and service to ensure that their vessels are as full as possible and to maintain economies of scale as demand declines,” said Ben Hackett, founder of Hackett Associates.  While carriers have begun to suspend services on the trans-Pacific, Hackett added that reports of a “broken” supply chain and ships “making U-turns in mid-voyage” because of the tariffs are “very far from the truth and the reality on the ground.” The GPT expects 12.13 million TEUs in US imports for the first half of 2025, up just 0.3% on the year and a significant downgrade from the 5.7% growth that was forecast before tariffs were implemented. The GPT is published monthly using import data collected from 13 ports on the US East, West and Gulf coasts. Contact Laura Robb at Laura.Robb@spglobal.com . 

Maritime

Trans-Atlantic

Forwarding

Trans-Pacific

US retailers project first year-over-year import cut in 19 months as tariffs bite

<div class="phx-topic abstract-wrapper">Trade disputes cast a pall over US manufacturing and trucking as exports and imports drop, PMI surveys show. </div>

Trade disputes cast a pall over US manufacturing and trucking as exports and imports drop, PMI surveys show.

<div class="phx-topic">A weakening outlook for US manufacturing combined with slowing imports is raising prospects of a further drop in already-soft truck freight demand. Two US manufacturing Purchasing Managers’ Indexes (PMIs) indicated either mild contraction or incremental expansion in April. The weakening in US manufacturing comes as imports and exports drop amid uncertainty over US trade policy. That has immediate implications for truck tonnage, as both truckload and less-than-truckload (LTL) are highly dependent on industrial freight. In total, 59% of for-hire truck tonnage in the US is sourced from domestic manufacturing plants, according to the US Census Bureau Commodity Flow Survey. Truck volumes have dropped year over year on a monthly basis since March 2023, according to the Cass Freight Shipments Index. In March, the shipments index — which also includes some rail and parcel data — was down 5.3% from a year earlier. The US manufacturing PMI from the Institute of Supply Management (ISM) dropped 0.3 percentage points in April to 48.7, the second month of contraction for the PMI. “Demand and output weakened while input strengthened further, conditions that are not considered positive for economic growth,” Timothy R. Fiore, chair of the ISM business survey committee, said when releasing the ISM PMI report early this month. In contrast, the S&amp;P Global US manufacturing PMI was flat at 50.2, just above the breaking point between contraction and expansion. It has been above 50 for four months. “Manufacturing continued to flat-line in April amid worrying downside risks to the outlook and sharply rising costs,” Chris Williamson, chief business economist for S&amp;P Global Market Intelligence, said in a statement at the start of the month. S&amp;P Global is the parent company of the Journal of Commerce. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="56be088e-5b54-4d09-add3-f841e65711ec"></dynamic-object></div>A PMI reading below 50 indicates contraction in manufacturing. Both the ISM and S&amp;P Global PMIs rose above 50 in the first two months of the year after a long period of contraction. The ISM PMI had been below 50 for 24 of the previous 25 months. S&amp;P Global’s read on manufacturing was slightly more positive, but volatile, over the long term. Its PMI had been above 50 during the first half of 2024 and in contraction during the second half of the year. <h3>Declining metrics </h3>As the US economy slows, with early estimates of gross domestic product growth turning negative in the first quarter, signs of the supply chain impact are becoming clearer. Despite lower demand, average lead times for manufacturing orders lengthened for a seventh consecutive month, according to S&amp;P Global. The ISM Supplier Deliveries Index showed a continued slowing of deliveries to manufacturers in April. S&amp;P Global noted a reduction in purchases by manufacturers adding to their stocks. That may reflect lower orders and additions of inputs manufactured overseas as high tariffs on China took effect in April. “Supply disruptions and cost concerns, again linked to tariffs, were widely noted,” S&amp;P Global said in its April PMI report. One of the few bright spots for US manufacturers was a gain in new sales from customers switching from imports to goods produced in US-based factories, Williamson said. However, “any such sales increase was countered by worries over tariff-related disruptions to supply chains and lost export sales,” he said. The US Federal Reserve System also found the US economy struggling to gain traction in April. “Uncertainty around international trade policy was pervasive,” the Fed said in its Beige Book economic report for the month, released in early May. Just five of the 12 Federal Reserve districts covered by the report saw slight growth in economic activity, while three districts saw little change and four reported slight to modest declines. “Manufacturing was mixed, but two-thirds of districts said activity was little changed or had declined” from the previous month, the Fed said. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

A weakening outlook for US manufacturing combined with slowing imports is raising prospects of a further drop in already-soft truck freight demand. Two US manufacturing Purchasing Managers’ Indexes (PMIs) indicated either mild contraction or incremental expansion in April. The weakening in US manufacturing comes as imports and exports drop amid uncertainty over US trade policy. That has immediate implications for truck tonnage, as both truckload and less-than-truckload (LTL) are highly dependent on industrial freight. In total, 59% of for-hire truck tonnage in the US is sourced from domestic manufacturing plants, according to the US Census Bureau Commodity Flow Survey. Truck volumes have dropped year over year on a monthly basis since March 2023, according to the Cass Freight Shipments Index. In March, the shipments index — which also includes some rail and parcel data — was down 5.3% from a year earlier. The US manufacturing PMI from the Institute of Supply Management (ISM) dropped 0.3 percentage points in April to 48.7, the second month of contraction for the PMI. “Demand and output weakened while input strengthened further, conditions that are not considered positive for economic growth,” Timothy R. Fiore, chair of the ISM business survey committee, said when releasing the ISM PMI report early this month. In contrast, the S&P Global US manufacturing PMI was flat at 50.2, just above the breaking point between contraction and expansion. It has been above 50 for four months. “Manufacturing continued to flat-line in April amid worrying downside risks to the outlook and sharply rising costs,” Chris Williamson, chief business economist for S&P Global Market Intelligence, said in a statement at the start of the month. S&P Global is the parent company of the Journal of Commerce. A PMI reading below 50 indicates contraction in manufacturing. Both the ISM and S&P Global PMIs rose above 50 in the first two months of the year after a long period of contraction. The ISM PMI had been below 50 for 24 of the previous 25 months. S&P Global’s read on manufacturing was slightly more positive, but volatile, over the long term. Its PMI had been above 50 during the first half of 2024 and in contraction during the second half of the year. Declining metrics As the US economy slows, with early estimates of gross domestic product growth turning negative in the first quarter, signs of the supply chain impact are becoming clearer. Despite lower demand, average lead times for manufacturing orders lengthened for a seventh consecutive month, according to S&P Global. The ISM Supplier Deliveries Index showed a continued slowing of deliveries to manufacturers in April. S&P Global noted a reduction in purchases by manufacturers adding to their stocks. That may reflect lower orders and additions of inputs manufactured overseas as high tariffs on China took effect in April. “Supply disruptions and cost concerns, again linked to tariffs, were widely noted,” S&P Global said in its April PMI report. One of the few bright spots for US manufacturers was a gain in new sales from customers switching from imports to goods produced in US-based factories, Williamson said. However, “any such sales increase was countered by worries over tariff-related disruptions to supply chains and lost export sales,” he said. The US Federal Reserve System also found the US economy struggling to gain traction in April. “Uncertainty around international trade policy was pervasive,” the Fed said in its Beige Book economic report for the month, released in early May. Just five of the 12 Federal Reserve districts covered by the report saw slight growth in economic activity, while three districts saw little change and four reported slight to modest declines. “Manufacturing was mixed, but two-thirds of districts said activity was little changed or had declined” from the previous month, the Fed said. Contact William B. Cassidy at bill.cassidy@spglobal.com .

Supply chain

Trucking News

Truckload

Surface

Manufacturing malaise clouds outlook for US industrial freight

<div class="phx-topic abstract-wrapper">There remains no guarantee of safety for ships, crew and cargo passing through the waterway, which means it would likely be out of bounds for the rest of the year, says CEO Vincent Clerc.</div>

There remains no guarantee of safety for ships, crew and cargo passing through the waterway, which means it would likely be out of bounds for the rest of the year, says CEO Vincent Clerc.

<div class="phx-topic">Maersk has ruled out a return to Red Sea transits this year despite an assertion from US President Donald Trump this week that Houthi militants in Yemen “have capitulated” and agreed to stop attacks on commercial shipping in the region. CEO Vincent Clerc told analysts on a first-quarter earnings call Thursday that it would not be responsible to return to the Red Sea and Suez Canal when there were no guarantees over the safety of crew, ships and cargo. That means Maersk vessels will continue to divert around southern Africa. “If the US will stop bombing (the Houthi), that's good,” Clerc said. “Whether this means there is not only safety today, but safety for the foreseeable future for us sending our colleagues, our assets and our customers’ cargo through the Red Sea again, we're pretty far from that threshold.” Trump on Tuesday said <a href="https://www.joc.com/article/apparent-houthi-ceasefire-raises-container-shipping-overcapacity-risk-5999930">the Houthi had “capitulated”</a> and that the US would suspend its aerial strikes on militant positions in Yemen. “They just don't want to fight,” Trump told reporters. “We will honor that, and we will stop the bombings. But, more importantly, we will take their word. They say they will not be blowing up ships anymore and that's what the purpose of what we were doing." Ocean carriers have been forced to divert around the Cape of Good Hope for the past 18 months to avoid missile and drone attacks launched by the Houthi from southern Yemen. The militants have said the attacks were a show of solidarity for Gaza amid the Israel-Hamas war. A Houthi official told Reuters the US and Houthis had agreed to "no longer target each other," but that attacks on Israel would continue. However, a Houthi media statement issued late Wednesday, just a day after the Trump ceasefire announcement, claimed the militants had conducted an attack against the US aircraft carrier Harry S. Truman and its support vessels. <h3>Red Sea return ‘not responsible’ </h3>Jack Kennedy, head of Middle East and North Africa country risk at S&amp;P Global Market Intelligence, said the US-Houthi ceasefire announcement represented “a pragmatic, limited de-escalation rather than a pathway toward comprehensive peace.” “The Houthis are likely to use any relative pause in US bombing to rearm and rebuild infrastructure that has been targeted over the course of the existing campaign that began on March 15,” Kennedy said in a customer brief this week. “Houthi targeting and identification of vessels it accuses of supporting Israel has previously, in our view, been inconsistent and based on incomplete information, maintaining severe risks for shipping in transit due to misidentification,” he added. An Israel-Hamas ceasefire and the Houthis’ pledge to not attack commercial vessels was announced in January, but did not provide enough certainty to most container lines to restart their Suez Canal sailings. Clerc said the strong link between Houthi attacks and the Gaza war, which he said was worsening, and the lack of any formal structure to this week’s US-Houthi ceasefire claim by the White House, rendered the chances of a return of shipping to the Red Sea this year "very, very low.” “Going through something as complex, costly and hard to reverse as a complete redeployment of our shipping networks back through the Red Sea based on news of a deal whose contour we don't understand, whose terms we don't understand, and which has been breached already, I think is really not responsible,” he said. The carrier’s Gemini Cooperation partner Hapag-Lloyd said its position on sailing through the Red Sea also remained unchanged following the comments by Trump. “There is not much we can say at this point other than that we will continue to closely monitor and analyze the latest developments and their impact on the security situation in the Red Sea,” Hapag-Lloyd spokesperson Tim Seifert told the Journal of Commerce. “Otherwise, the following applies unchanged: We will return to the Red Sea when it is safe to do so.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Maersk has ruled out a return to Red Sea transits this year despite an assertion from US President Donald Trump this week that Houthi militants in Yemen “have capitulated” and agreed to stop attacks on commercial shipping in the region. CEO Vincent Clerc told analysts on a first-quarter earnings call Thursday that it would not be responsible to return to the Red Sea and Suez Canal when there were no guarantees over the safety of crew, ships and cargo. That means Maersk vessels will continue to divert around southern Africa. “If the US will stop bombing (the Houthi), that's good,” Clerc said. “Whether this means there is not only safety today, but safety for the foreseeable future for us sending our colleagues, our assets and our customers’ cargo through the Red Sea again, we're pretty far from that threshold.” Trump on Tuesday said the Houthi had “capitulated” and that the US would suspend its aerial strikes on militant positions in Yemen. “They just don't want to fight,” Trump told reporters. “We will honor that, and we will stop the bombings. But, more importantly, we will take their word. They say they will not be blowing up ships anymore and that's what the purpose of what we were doing." Ocean carriers have been forced to divert around the Cape of Good Hope for the past 18 months to avoid missile and drone attacks launched by the Houthi from southern Yemen. The militants have said the attacks were a show of solidarity for Gaza amid the Israel-Hamas war. A Houthi official told Reuters the US and Houthis had agreed to "no longer target each other," but that attacks on Israel would continue. However, a Houthi media statement issued late Wednesday, just a day after the Trump ceasefire announcement, claimed the militants had conducted an attack against the US aircraft carrier Harry S. Truman and its support vessels. Red Sea return ‘not responsible’ Jack Kennedy, head of Middle East and North Africa country risk at S&P Global Market Intelligence, said the US-Houthi ceasefire announcement represented “a pragmatic, limited de-escalation rather than a pathway toward comprehensive peace.” “The Houthis are likely to use any relative pause in US bombing to rearm and rebuild infrastructure that has been targeted over the course of the existing campaign that began on March 15,” Kennedy said in a customer brief this week. “Houthi targeting and identification of vessels it accuses of supporting Israel has previously, in our view, been inconsistent and based on incomplete information, maintaining severe risks for shipping in transit due to misidentification,” he added. An Israel-Hamas ceasefire and the Houthis’ pledge to not attack commercial vessels was announced in January, but did not provide enough certainty to most container lines to restart their Suez Canal sailings. Clerc said the strong link between Houthi attacks and the Gaza war, which he said was worsening, and the lack of any formal structure to this week’s US-Houthi ceasefire claim by the White House, rendered the chances of a return of shipping to the Red Sea this year "very, very low.” “Going through something as complex, costly and hard to reverse as a complete redeployment of our shipping networks back through the Red Sea based on news of a deal whose contour we don't understand, whose terms we don't understand, and which has been breached already, I think is really not responsible,” he said. The carrier’s Gemini Cooperation partner Hapag-Lloyd said its position on sailing through the Red Sea also remained unchanged following the comments by Trump. “There is not much we can say at this point other than that we will continue to closely monitor and analyze the latest developments and their impact on the security situation in the Red Sea,” Hapag-Lloyd spokesperson Tim Seifert told the Journal of Commerce. “Otherwise, the following applies unchanged: We will return to the Red Sea when it is safe to do so.” Contact Greg Knowler at greg.knowler@spglobal.com .

Asia-Europe

US-Houthi ceasefire claim not sufficient for carrier return to Red Sea: Maersk

<div class="phx-topic abstract-wrapper">The tight supply of warehousing for frontloaded freight is diverting truck shipments as shippers reposition inventory.</div>

The tight supply of warehousing for frontloaded freight is diverting truck shipments as shippers reposition inventory.

<div class="phx-topic">Rising demand for bonded warehousing amid <a href="https://www.joc.com/article/tariff-related-disruption-spreading-as-us-shippers-pause-plans-5989017">high US tariffs</a> is disrupting the flow of freight by truck to inland US markets, drayage providers say. That and high volumes of freight frontloaded to avoid paying those tariffs are throwing some supply chains and inland distribution networks off-kilter as uncertainty deepens around US trade disputes and the potential for trade deals to lower tariffs. Frontloaded freight, first <a href="http://go.microsoft.com/fwlink/p/?LinkId=255141">from China</a> and now from other US trading partners facing reciprocal tariffs by July, is forcing US shippers to find new storage space for goods, whether bonded facilities, <a href="https://www.joc.com/article/us-importers-turning-to-foreign-trade-zones-amid-tariff-hikes-5999587">free trade zones</a> (FTZs) or any available warehouse. They’re looking for overflow space and a tariff-safe haven for their goods, and that is shifting shipments and inventory across the country, said Paul Brashier, vice president of global supply chain for ITS Logistics, a Reno, Nevada-based drayage and logistics provider. “Bonded storage, especially for Chinese goods, is something we’re seeing tons of demand for right now,” Brashier told the Journal of Commerce Wednesday. Demand is high for bonded trucking as well, in which a carrier moves goods in bond from a port. But bonded warehouses <a href="https://www.joc.com/article/us-importers-turn-to-canadian-bonded-storage-to-delay-payment-of-tariffs-5990113">are hard to find</a>. Shippers that can’t find bonded storage in the US are looking as far away as Canada. That means freight is shifting to new lanes and perhaps new trucking companies. “Let’s say you frontloaded a ton of goods and you get them into the best port you can as quickly as possible,” he said. “They’re not destined for their normal supply chain.” The situation underscores the need for what industrial real-estate developer Prologis calls “flexible inventory positioning in the evolving landscape.” “A disconnected world will require more warehouse space, not less,” Prologis CFO Timothy D. Arndt said during a first-quarter earnings call last month. Discussions between Prologis and more than 300 customers in April found many companies accelerating shipments, Arndt said, adding: “They’re also rerouting volumes and have urgent demand for overflow space.” What those shippers need is short-term flexibility, and they’re turning to third-party logistics providers (3PLs) to find it, he said. “3PLs’ space is getting more utilized, with one prominent name describing that they’ve increased their utilization from 83% to over 90%,” Arndt said. 3PLs are looking for more space for importers, including space at ITS Logistics, which has about 5 million square feet of warehousing at three campuses, Brashier said. “I was approached recently by a 3PL looking to onboard us for additional space,” he said. “Those conversations weren’t happening six months ago, and they are now.” ITS Logistics is also seeing more demand for cross-dock services and direct long-distance trucking or drayage to customers further in the US, skipping intermediate distribution centers. “There’s a lot of stuff moving between distribution centers,” Brashier said, a sign that inventory is being repositioned. Such deviation from “normal” supply chains — especially if it proves long lasting — leads to higher costs for shippers as goods they import move to markets farther from ports. Disruption likely will decline as tariffs take effect and shipments drop. “We’ve got to let everything from the China cut-off process through the system,” Brashier said. <h3>Going with the ‘overflow’ </h3>A Prologis study released this month found that 75% of US real estate demand is tied to regional distribution and local consumer consumption, not global trade. That, in turn, could mean less space available for the overflow of international goods. “Many of our customers source domestically and are relatively unaffected, while others have the capability to adapt or even stand to benefit,” Arndt said. Some Prologis customers are already making decisions, despite uncertainty over US trade policy. “Even in the last two weeks, we signed a lot of leases, and we’ve signed build-to-suits,” Hamid R. Moghadam, Prologis’ chairman and CEO, said during the company’s call. “These customers could have just said, ‘okay, let’s punt on those until we have clarity,’” he said. <h3>Spot market volumes soar </h3>The disruption caused by the diversion of freight is igniting the truckload spot market in terms of volumes. “We’re seeing record numbers of loads moved nationally, surpassing the highest numbers we saw during the pandemic,” Dean Croke, principal analyst at DAT Freight &amp; Analytics, told the Journal of Commerce Thursday. Spot loads moved out of Los Angeles are up 17% from February through May; in the previous two years, the number of loads went down in the same period. Spot loads moved from Los Angeles to Phoenix are up 52% in the February–May period, Croke said. Last week was the busiest week ever for DAT’s spot market load boards, with volumes 6% higher than the week ending Nov. 12, 2021 — the height of the COVID-19 pandemic retail freight surge, he said. In addition, “we’re seeing new lanes pop up because shippers are finding new suppliers,” Croke said. However, even with freight diversions and inventory repositioning, there’s little sign that excess truck capacity is being absorbed by the disruption. “This hasn’t affected spot market rates, which shows there’s enough capacity in the contract and spot markets,” Croke said. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

Rising demand for bonded warehousing amid high US tariffs is disrupting the flow of freight by truck to inland US markets, drayage providers say. That and high volumes of freight frontloaded to avoid paying those tariffs are throwing some supply chains and inland distribution networks off-kilter as uncertainty deepens around US trade disputes and the potential for trade deals to lower tariffs. Frontloaded freight, first from China and now from other US trading partners facing reciprocal tariffs by July, is forcing US shippers to find new storage space for goods, whether bonded facilities, free trade zones (FTZs) or any available warehouse. They’re looking for overflow space and a tariff-safe haven for their goods, and that is shifting shipments and inventory across the country, said Paul Brashier, vice president of global supply chain for ITS Logistics, a Reno, Nevada-based drayage and logistics provider. “Bonded storage, especially for Chinese goods, is something we’re seeing tons of demand for right now,” Brashier told the Journal of Commerce Wednesday. Demand is high for bonded trucking as well, in which a carrier moves goods in bond from a port. But bonded warehouses are hard to find . Shippers that can’t find bonded storage in the US are looking as far away as Canada. That means freight is shifting to new lanes and perhaps new trucking companies. “Let’s say you frontloaded a ton of goods and you get them into the best port you can as quickly as possible,” he said. “They’re not destined for their normal supply chain.” The situation underscores the need for what industrial real-estate developer Prologis calls “flexible inventory positioning in the evolving landscape.” “A disconnected world will require more warehouse space, not less,” Prologis CFO Timothy D. Arndt said during a first-quarter earnings call last month. Discussions between Prologis and more than 300 customers in April found many companies accelerating shipments, Arndt said, adding: “They’re also rerouting volumes and have urgent demand for overflow space.” What those shippers need is short-term flexibility, and they’re turning to third-party logistics providers (3PLs) to find it, he said. “3PLs’ space is getting more utilized, with one prominent name describing that they’ve increased their utilization from 83% to over 90%,” Arndt said. 3PLs are looking for more space for importers, including space at ITS Logistics, which has about 5 million square feet of warehousing at three campuses, Brashier said. “I was approached recently by a 3PL looking to onboard us for additional space,” he said. “Those conversations weren’t happening six months ago, and they are now.” ITS Logistics is also seeing more demand for cross-dock services and direct long-distance trucking or drayage to customers further in the US, skipping intermediate distribution centers. “There’s a lot of stuff moving between distribution centers,” Brashier said, a sign that inventory is being repositioned. Such deviation from “normal” supply chains — especially if it proves long lasting — leads to higher costs for shippers as goods they import move to markets farther from ports. Disruption likely will decline as tariffs take effect and shipments drop. “We’ve got to let everything from the China cut-off process through the system,” Brashier said. Going with the ‘overflow’ A Prologis study released this month found that 75% of US real estate demand is tied to regional distribution and local consumer consumption, not global trade. That, in turn, could mean less space available for the overflow of international goods. “Many of our customers source domestically and are relatively unaffected, while others have the capability to adapt or even stand to benefit,” Arndt said. Some Prologis customers are already making decisions, despite uncertainty over US trade policy. “Even in the last two weeks, we signed a lot of leases, and we’ve signed build-to-suits,” Hamid R. Moghadam, Prologis’ chairman and CEO, said during the company’s call. “These customers could have just said, ‘okay, let’s punt on those until we have clarity,’” he said. Spot market volumes soar The disruption caused by the diversion of freight is igniting the truckload spot market in terms of volumes. “We’re seeing record numbers of loads moved nationally, surpassing the highest numbers we saw during the pandemic,” Dean Croke, principal analyst at DAT Freight & Analytics, told the Journal of Commerce Thursday. Spot loads moved out of Los Angeles are up 17% from February through May; in the previous two years, the number of loads went down in the same period. Spot loads moved from Los Angeles to Phoenix are up 52% in the February–May period, Croke said. Last week was the busiest week ever for DAT’s spot market load boards, with volumes 6% higher than the week ending Nov. 12, 2021 — the height of the COVID-19 pandemic retail freight surge, he said. In addition, “we’re seeing new lanes pop up because shippers are finding new suppliers,” Croke said. However, even with freight diversions and inventory repositioning, there’s little sign that excess truck capacity is being absorbed by the disruption. “This hasn’t affected spot market rates, which shows there’s enough capacity in the contract and spot markets,” Croke said. Contact William B. Cassidy at bill.cassidy@spglobal.com .

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

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Shippers save money, time with automated transportation bidding tools

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

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