<div class="phx-topic abstract-wrapper">While its rivals target acquisitions that fit an integrated end-to-end logistics strategy, Hapag-Lloyd has instead focused on expanding its core container shipping network. </div>

While its rivals target acquisitions that fit an integrated end-to-end logistics strategy, Hapag-Lloyd has instead focused on expanding its core container shipping network.

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<div><a>Hugely profitable Hapag-Lloyd</a> will continue to invest in container terminals and expand its global network, ruling out following the integrated logistics footsteps of rivals Maersk and CMA CGM. “The likelihood we will start investing in the areas our competitors have done, such as forwarding, warehousing, or air freight, is very slim,” Rolf Habben Jansen, CEO of Hapag-Lloyd, told reporters Thursday. “That’s not to say their strategy is wrong, just that it is different, and is not something we intend to follow. We still see liner shipping as the core of our business.” While its rivals make targeted acquisitions to <a>expand...

Hugely profitable Hapag-Lloyd will continue to invest in container terminals and expand its global network, ruling out following the integrated logistics footsteps of rivals Maersk and CMA CGM. “The likelihood we will start investing in the areas our competitors have done, such as forwarding, warehousing, or air freight, is very slim,” Rolf Habben Jansen, CEO of Hapag-Lloyd, told reporters Thursday. “That’s not to say their strategy is wrong, just that it is different, and is not something we intend to follow. We still see liner shipping as the core of our business.” While its rivals make targeted acquisitions to expand their end-to-end logistics offerings , Hapag-Lloyd has been focusing its investment on areas that strengthen its container shipping network, such as acquiring terminal stakes or takeovers of other shipping lines. “We announced the acquisition of a 30 percent stake in Wilhelmshaven in September, we completed the Tanger transaction that has been operational since the beginning of this year, and I wouldn’t rule out there being more of that in the months and years to come,” Habben Jansen said. Hapag-Lloyd in September acquired a 30 percent stake in Container Terminal Wilhelmshaven (CTW) and 50 percent of Rail Terminal Wilhelmshaven (RTW) at Germany’s JadeWeserPort. The remaining shares are held by terminal operator Eurogate. In 2020, the carrier acquired a 10 percent stake in container terminal 3 (TC3) at the port of Tanger-Med in Morocco. Active carrier acquisition strategy Hapag-Lloyd has also been active over the past decade in the container shipping line takeover business, with its most recent acquisition — the buyout of African specialist NileDutch — closing in July. CSAV was acquired in 2014, expanding access to the Latin American market, and then Hapag-Lloyd completed a merger with United Arab Shipping Company (UASC) in 2017 to become one of the largest carriers in the Middle East. “We have become more efficient as a result because we have been able to deploy on average bigger ships and reduce the number of services,” Habben Jansen said. “We are targeting a double-digit reduction in unit costs and to increase the average number of ships deployed also by a double-digit percentage to make us more competitive,” he added. “It won’t come from a merger, but from new ships that we order.” The Hapag-Lloyd orderbook currently stands at 20 percent of its active fleet of about 1.7 million TEU. Among the ships on order are 12 vessels of 23,000 TEU, and 10 13,000 TEU vessels, according to data from IHS Markit, the parent company of JOC.com. No 'new normal' before end of 2022 Habben Jansen said he did not see any “material easing” of the port congestion in the US, Europe, and Asia until Chinese New Year at the end of January, and the container shipping environment would not be “fully back to normal” until the end of 2022. “When we look at our products, we are doing our utmost to simplify them,” he said. “That’s why where we have 12 port calls in a service, we are trying to bring that down to 10, or maybe eight. Yes, the port calls become bigger, but there is a lower chance of disruption.” Other carriers are also shortening port rotations in Europe to recover schedules, and there is concern that increasing the container exchanges made per ship call is adding pressure to an already maxed-out logistics system. Lennart Verstappen, a spokesperson for the Port of Antwerp, said both the average and peak call sizes were increasing at the port, with the peak call sizes also becoming more frequent, which was a particular concern. “Container vessels arriving out-of-window causing too-long dwell times for export containers, combined with peak call sizes causing large inflows of import containers, put massive strain on container terminals and exert downward pressure on terminal capacity,” he told JOC.com. Contact Greg Knowler at greg.knowler@ihsmarkit.com and follow him on Twitter: @greg_knowler .

Maritime

Hapag-Lloyd to focus M&A on terminals: CEO

<div class="phx-topic abstract-wrapper">Disentangling FedEx’s LTL and parcel units will take time, but it will rearrange the less-than-truckload market -- and most likely raise LTL shipping costs.</div>

Disentangling FedEx’s LTL and parcel units will take time, but it will rearrange the less-than-truckload market -- and most likely raise LTL shipping costs.

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<div class="phx-topic">The US less-than-truckload (LTL) market is about to undergo another convulsion, this time caused not by a bankruptcy or merger but the emergence of a “new” LTL provider. The creation of a standalone FedEx Freight will upend a strategic LTL puzzle that competing carriers have been vying to complete since the demise of Yellow in 2023. Among the likely results are increased consolidation across the LTL landscape, an accelerated drive toward dimensional pricing and higher LTL shipping costs. With $10.2 billion in revenue in 2023, FedEx Freight is already the largest LTL provider in North America by far. The <a href="https://www.joc.com/article/fedex-to-spin-off-industry-leading-fedex-freight-ltl-division-5909135">spinoff by FedEx</a>, announced Thursday, will make it even bigger. The new FedEx Freight will be an independent, public company. As a division of FedEx, it has increased operating profit on average 25% each year for the past five years. The standalone carrier could have a market cap as high as $40 billion to $50 billion on Wall Street, various sources estimate. Its next-largest competitor, Old Dominion Freight Line (ODFL) has a market cap of $38 billion with about $6 billion in annual revenue. Shippers will benefit from service improvements and pricing innovation, according to Satish Jindel, president of SJ Consulting Group. But he expects a harder push for “price correction” from an independent FedEx Freight. That means shippers who are “underpaying” -- perhaps because of the bundling of LTL and parcel services or incorrect classification of freight – will have to pony up and pay more. The spinoff is the latest development reshaping LTL networks while helping to broaden the LTL sector’s role in supply chains from ports to last-mile delivery. LTL carriers are adding more <a href="https://www.joc.com/article/estes-express-plans-near-port-expansion-as-new-generation-takes-charge-5220656">port transloading business</a> to their portfolios, but also are broadening their retail, warehousing and specialized services. As shippers work to shorten distances between distribution centers, suppliers and end-customers, LTL carriers see more opportunity to expand beyond their industrial base. Carriers and shippers will have time to adjust to Thursday’s news. Unraveling FedEx Freight from parcel carriers FedEx Express and FedEx Ground will take until mid-2026. And FedEx plans to continue to invest in its LTL arm over the next 18 months, Raj Subramaniam, FedEx president and CEO, told Wall Street analysts Thursday. The spinoff news came as FedEx released its earnings for the fiscal quarter that ended Nov. 30. “We expect to add more than 300 LTL (sales) specialists by the time of separation,” Subramaniam said. Also on his list are an enhanced, LTL-specific pricing and invoicing system and LTL-focused automation that will improve operational efficiency and reduce costs. ”We’re excited to create a leading LTL pure-play, the largest carrier by revenue with the broadest network and the fastest transit times,” Subramaniam said. At the same time, “it’s very important to note that FedEx Freight benefits a lot from the association with FedEx,” he added. <h3>Ties that bind </h3>The new “pure-play” carrier won’t cut all ties to its former parent, Subramaniam said. For one, it will still be known as FedEx Freight and remain connected through technology. And FedEx Freight will continue to support its package delivery sister divisions, providing linehaul runs, peak season service and drayage hauls to the parcel operation. “This requires minimal change as (FedEx) Freight already receives a direct financial benefit from supporting Federal Express via intercompany agreements,” the CEO told analysts. Lance Moll will continue as CEO of FedEx Freight through the separation process, the company said. FedEx veteran Thomas Connolly will be vice president of LTL sales. “Business continuity” for customers is the goal, Subramaniam said. “(But) no one knows the specifics about how FedEx Freight’s network is impacted by the requirements of FedEx,” shipper consultant Mike Regan told the Journal of Commerce. “I think no one understands how intertwined FedEx Freight is in supporting the operations of FedEx,” said Regan, who is chief relationship officer of TranzAct Technologies. The majority of FedEx Freight volume is negotiated through independent contracts, Brie Carere, FedEx’s chief customer officer, said during Thursday’s call. Most small shippers access FedEx Freight through bundling with parcel services, however. <h3>A new order </h3>The spinoff will force FedEx’s LTL competitors to respond, likely by hastening consolidation within the LTL market in 2025 and 2026. That consolidation is already under way, as the largest LTL providers rush to acquire terminals and build out freight networks. <a href="https://www.joc.com/article/transportation-ma-activity-seen-ready-to-rebound-as-value-of-deals-rises-5905255">Mergers and acquisitions</a>, large and <a href="https://www.joc.com/article/smaller-us-ltl-carriers-increasingly-merging-in-sink-or-swim-market-5783875">small</a>, are driving a new wave of consolidation. The 10 largest US LTL providers have been pursuing a land rush since late 2023, following the Yellow bankruptcy. Estes Express Lines, the fourth-largest LTL provider, recently <a href="https://www.joc.com/article/new-terminal-sales-by-yellow-raising-stakes-for-us-ltl-carriers-5903607">acquired 11 terminals with 1,310 doors</a>from Yellow. The wave of terminal acquisitions helps carriers build denser freight networks but also positions them to compete against an independent and bigger FedEx Freight. The addition of LTL doors is considered a “long-term” investment in capacity, as doors once purchased may be opened or closed as demand rises and falls. When FedEx Freight finally stands on its own, it will still be at the top of the Journal of Commerce / SJ Consulting Group rankings of largest LTL trucking companies. But there may be changes in the rankings below. The 10 largest carriers in 2023 controlled 62% of total LTL revenue of $62.2 billion. As FedEx Freight and its competitors battle for more revenue, that share is expected to grow. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a></div>

The US less-than-truckload (LTL) market is about to undergo another convulsion, this time caused not by a bankruptcy or merger but the emergence of a “new” LTL provider. The creation of a standalone FedEx Freight will upend a strategic LTL puzzle that competing carriers have been vying to complete since the demise of Yellow in 2023. Among the likely results are increased consolidation across the LTL landscape, an accelerated drive toward dimensional pricing and higher LTL shipping costs. With $10.2 billion in revenue in 2023, FedEx Freight is already the largest LTL provider in North America by far. The spinoff by FedEx , announced Thursday, will make it even bigger. The new FedEx Freight will be an independent, public company. As a division of FedEx, it has increased operating profit on average 25% each year for the past five years. The standalone carrier could have a market cap as high as $40 billion to $50 billion on Wall Street, various sources estimate. Its next-largest competitor, Old Dominion Freight Line (ODFL) has a market cap of $38 billion with about $6 billion in annual revenue. Shippers will benefit from service improvements and pricing innovation, according to Satish Jindel, president of SJ Consulting Group. But he expects a harder push for “price correction” from an independent FedEx Freight. That means shippers who are “underpaying” -- perhaps because of the bundling of LTL and parcel services or incorrect classification of freight – will have to pony up and pay more. The spinoff is the latest development reshaping LTL networks while helping to broaden the LTL sector’s role in supply chains from ports to last-mile delivery. LTL carriers are adding more port transloading business to their portfolios, but also are broadening their retail, warehousing and specialized services. As shippers work to shorten distances between distribution centers, suppliers and end-customers, LTL carriers see more opportunity to expand beyond their industrial base. Carriers and shippers will have time to adjust to Thursday’s news. Unraveling FedEx Freight from parcel carriers FedEx Express and FedEx Ground will take until mid-2026. And FedEx plans to continue to invest in its LTL arm over the next 18 months, Raj Subramaniam, FedEx president and CEO, told Wall Street analysts Thursday. The spinoff news came as FedEx released its earnings for the fiscal quarter that ended Nov. 30. “We expect to add more than 300 LTL (sales) specialists by the time of separation,” Subramaniam said. Also on his list are an enhanced, LTL-specific pricing and invoicing system and LTL-focused automation that will improve operational efficiency and reduce costs. ”We’re excited to create a leading LTL pure-play, the largest carrier by revenue with the broadest network and the fastest transit times,” Subramaniam said. At the same time, “it’s very important to note that FedEx Freight benefits a lot from the association with FedEx,” he added. Ties that bind The new “pure-play” carrier won’t cut all ties to its former parent, Subramaniam said. For one, it will still be known as FedEx Freight and remain connected through technology. And FedEx Freight will continue to support its package delivery sister divisions, providing linehaul runs, peak season service and drayage hauls to the parcel operation. “This requires minimal change as (FedEx) Freight already receives a direct financial benefit from supporting Federal Express via intercompany agreements,” the CEO told analysts. Lance Moll will continue as CEO of FedEx Freight through the separation process, the company said. FedEx veteran Thomas Connolly will be vice president of LTL sales. “Business continuity” for customers is the goal, Subramaniam said. “(But) no one knows the specifics about how FedEx Freight’s network is impacted by the requirements of FedEx,” shipper consultant Mike Regan told the Journal of Commerce. “I think no one understands how intertwined FedEx Freight is in supporting the operations of FedEx,” said Regan, who is chief relationship officer of TranzAct Technologies. The majority of FedEx Freight volume is negotiated through independent contracts, Brie Carere, FedEx’s chief customer officer, said during Thursday’s call. Most small shippers access FedEx Freight through bundling with parcel services, however. A new order The spinoff will force FedEx’s LTL competitors to respond, likely by hastening consolidation within the LTL market in 2025 and 2026. That consolidation is already under way, as the largest LTL providers rush to acquire terminals and build out freight networks. Mergers and acquisitions , large and small , are driving a new wave of consolidation. The 10 largest US LTL providers have been pursuing a land rush since late 2023, following the Yellow bankruptcy. Estes Express Lines, the fourth-largest LTL provider, recently acquired 11 terminals with 1,310 doors from Yellow. The wave of terminal acquisitions helps carriers build denser freight networks but also positions them to compete against an independent and bigger FedEx Freight. The addition of LTL doors is considered a “long-term” investment in capacity, as doors once purchased may be opened or closed as demand rises and falls. When FedEx Freight finally stands on its own, it will still be at the top of the Journal of Commerce / SJ Consulting Group rankings of largest LTL trucking companies. But there may be changes in the rankings below. The 10 largest carriers in 2023 controlled 62% of total LTL revenue of $62.2 billion. As FedEx Freight and its competitors battle for more revenue, that share is expected to grow. Contact William B. Cassidy at bill.cassidy@spglobal.com

Trucking News

Surface

FedEx Freight spinoff is latest move to reshape US LTL market

<div class="phx-topic abstract-wrapper">Imports are likely to remain robust into January as shippers attempt to beat new tariffs expected to be imposed by the incoming Trump administration while also navigating an early Lunar New Year that begins Jan. 29.</div>

Imports are likely to remain robust into January as shippers attempt to beat new tariffs expected to be imposed by the incoming Trump administration while also navigating an early Lunar New Year that begins Jan. 29.

<div class="phx-topic">Average dwell times for import containers leaving marine terminals in Southern California by rail have fallen markedly in recent weeks, though that improvement could be challenged by an expected surge in imports in the coming weeks. Terminal managers at the ports of Los Angeles and Long Beach say dwell times averaged about 4.5 days this week. “We’re operating as we should be,” said Anthony Otto, president of the automated Long Beach Container Terminal. “Our dwell is now 2.5 days.” The container backlog at Yusen Terminals in Los Angeles began to dissipate in mid-November and is not an issue today, according to terminal management. “The bottom line is we’re cleared up,” Yusen President Alan McCorkle told the Journal of Commerce. The improvement in rail dwells began in November, with average dwells for the month falling to 7.67 days from the 9.86 days seen in October, a two-year high, according to data from the Pacific Merchant Shipping Association (PMSA). Still, November’s figure is essentially double the rail dwell of 3.9 days for the same month last year. “Cargo today is flowing well. I think a four- to six-day dwell is likely soon,” Michele Grubbs, PMSA’s vice president, said. “The railroads are really working to get those numbers down.” <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="155dedc1-99f2-4adf-a449-1c9ab2510f95"></dynamic-object></div><h3>Import bump coming </h3>Further improving the dwell number will not be easy. The ports of Los Angeles and Long Beach expect to handle a combined 272,354 TEUs in imports next week, up from the 200,000 to 210,000 TEUs they have averaged in recent weeks. And imports are likely to remain robust into January as shippers attempt to beat <a href="https://www.joc.com/article/new-year-heralds-triple-threat-to-us-container-shipping-5908327">new tariffs expected to be imposed by the incoming Trump administration while also navigating an early Lunar New Year that begins Jan. 29.</a> That makes some forwarders uneasy about where rail dwells could be headed, particularly those who aren’t personally experiencing the gains that have been documented. “What we’re seeing is closer to a seven- to nine-day dwell,” said one forwarder who did not want to be identified. Rail container dwell times in Southern California can vary considerably from terminal to terminal. Terminal operators say they can manage their rail container volumes if inland point intermodal (IPI) containers are about 20% to 30% of their total cargo mix. If that mix varies widely, so too can the rail dwell times at individual terminals. Especially important factors that must be considered are the size and configuration of a terminal’s on-dock railyard, said Dan Smith, a partner in the consulting firm Tioga Group. Smith said on-dock rail yards that were added to older terminals oftentimes are more difficult for the terminal operator to manage than new terminals with the on-dock railyard included in the original design “If it was not developed with a purpose-built on-dock railyard, (the terminal) is inevitably less efficient,” Smith said. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a></div>

Average dwell times for import containers leaving marine terminals in Southern California by rail have fallen markedly in recent weeks, though that improvement could be challenged by an expected surge in imports in the coming weeks. Terminal managers at the ports of Los Angeles and Long Beach say dwell times averaged about 4.5 days this week. “We’re operating as we should be,” said Anthony Otto, president of the automated Long Beach Container Terminal. “Our dwell is now 2.5 days.” The container backlog at Yusen Terminals in Los Angeles began to dissipate in mid-November and is not an issue today, according to terminal management. “The bottom line is we’re cleared up,” Yusen President Alan McCorkle told the Journal of Commerce. The improvement in rail dwells began in November, with average dwells for the month falling to 7.67 days from the 9.86 days seen in October, a two-year high, according to data from the Pacific Merchant Shipping Association (PMSA). Still, November’s figure is essentially double the rail dwell of 3.9 days for the same month last year. “Cargo today is flowing well. I think a four- to six-day dwell is likely soon,” Michele Grubbs, PMSA’s vice president, said. “The railroads are really working to get those numbers down.” Import bump coming Further improving the dwell number will not be easy. The ports of Los Angeles and Long Beach expect to handle a combined 272,354 TEUs in imports next week, up from the 200,000 to 210,000 TEUs they have averaged in recent weeks. And imports are likely to remain robust into January as shippers attempt to beat new tariffs expected to be imposed by the incoming Trump administration while also navigating an early Lunar New Year that begins Jan. 29. That makes some forwarders uneasy about where rail dwells could be headed, particularly those who aren’t personally experiencing the gains that have been documented. “What we’re seeing is closer to a seven- to nine-day dwell,” said one forwarder who did not want to be identified. Rail container dwell times in Southern California can vary considerably from terminal to terminal. Terminal operators say they can manage their rail container volumes if inland point intermodal (IPI) containers are about 20% to 30% of their total cargo mix. If that mix varies widely, so too can the rail dwell times at individual terminals. Especially important factors that must be considered are the size and configuration of a terminal’s on-dock railyard, said Dan Smith, a partner in the consulting firm Tioga Group. Smith said on-dock rail yards that were added to older terminals oftentimes are more difficult for the terminal operator to manage than new terminals with the on-dock railyard included in the original design “If it was not developed with a purpose-built on-dock railyard, (the terminal) is inevitably less efficient,” Smith said. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com

Container Shipping News

Port News

Container lines

North American ports

Marine terminals

LA-LB rail dwells show improvement, but import bump could reverse gains

<div class="phx-topic abstract-wrapper">Continuing the steady slide from a late-July peak, average spot rates from West India to the US East Coast have dropped about 20% from the end of November.</div>

Continuing the steady slide from a late-July peak, average spot rates from West India to the US East Coast have dropped about 20% from the end of November.

<div class="phx-topic">While volume declines typically leave ocean carriers adjusting rates to retain customer support, the huge capacity injection into the India-US trades since the pandemic era is seriously undermining their ability to hold prices up, let alone attempt moderate hikes. Continuing the steady slide from a late-July peak, average spot rates from West India to the US East Coast have dropped about 20% from end-November levels, according to new data obtained by the Journal of Commerce from local freight forwarders. Sources reported quotes of $1,500 per FEU from some carriers for bookings from Nhava Sheva to New York. Platts, a sister company of the Journal of Commerce within S&amp;P Global, pegged the market at $1,700 per FEU as of Dec. 19, down from $2,140 at the end of November. “Even the big mainliners are willing to align rates with co-loaders, who have been overly aggressive in managing their slot allocations,” a Mumbai-based forwarder who didn’t want to be identified told the Journal of Commerce. “There is no sign of pricing discipline.” <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="893ffa5c-0a69-45c7-a555-425e44318711"></dynamic-object></div>Most carriers on the trade lane have put all rate hike efforts on the backburner through the end of the year after they kept rescheduling peak season surcharges and general rate increases. “If the rate pressure persists with no significant demand improvements in the foreseeable future, one of the services may be forced to exit the market or regroup itself with another one,” said a container shipping industry observer. In the normal course of events, the West India-North America trade has six weekly sailings. Still, available capacity remains “a moving thing” because of sporadic void calls and unsettled schedules linked to the longer transits around the Cape of Good Hope. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e4740cee-e00c-4254-8216-5ed1bb48d192"></dynamic-object></div>There are indications that 2025 will see a further influx of capacity on the larger headhaul trades out of India as major carriers settle into new alliance networks. Maersk is reportedly set to increase space out of West India on its MECL1 service (India-Middle East-North America) from March as part of a broader schedule resetting plan by dropping an existing call at Algeciras in Spain. “The wild card is demand,” said a carrier source. “It’s reasonable to predict that demand will indeed pick up to cover enhanced supply, but the question making the industry rounds is how soon?” Contact Bency Mathew at <a href="mailto:bencyvmathew@gmail.com">bencyvmathew@gmail.com</a></div>

While volume declines typically leave ocean carriers adjusting rates to retain customer support, the huge capacity injection into the India-US trades since the pandemic era is seriously undermining their ability to hold prices up, let alone attempt moderate hikes. Continuing the steady slide from a late-July peak, average spot rates from West India to the US East Coast have dropped about 20% from end-November levels, according to new data obtained by the Journal of Commerce from local freight forwarders. Sources reported quotes of $1,500 per FEU from some carriers for bookings from Nhava Sheva to New York. Platts, a sister company of the Journal of Commerce within S&P Global, pegged the market at $1,700 per FEU as of Dec. 19, down from $2,140 at the end of November. “Even the big mainliners are willing to align rates with co-loaders, who have been overly aggressive in managing their slot allocations,” a Mumbai-based forwarder who didn’t want to be identified told the Journal of Commerce. “There is no sign of pricing discipline.” Most carriers on the trade lane have put all rate hike efforts on the backburner through the end of the year after they kept rescheduling peak season surcharges and general rate increases. “If the rate pressure persists with no significant demand improvements in the foreseeable future, one of the services may be forced to exit the market or regroup itself with another one,” said a container shipping industry observer. In the normal course of events, the West India-North America trade has six weekly sailings. Still, available capacity remains “a moving thing” because of sporadic void calls and unsettled schedules linked to the longer transits around the Cape of Good Hope. There are indications that 2025 will see a further influx of capacity on the larger headhaul trades out of India as major carriers settle into new alliance networks. Maersk is reportedly set to increase space out of West India on its MECL1 service (India-Middle East-North America) from March as part of a broader schedule resetting plan by dropping an existing call at Algeciras in Spain. “The wild card is demand,” said a carrier source. “It’s reasonable to predict that demand will indeed pick up to cover enhanced supply, but the question making the industry rounds is how soon?” Contact Bency Mathew at bencyvmathew@gmail.com

International ports

Capacity glut drives further rate declines on India-US trade

<div class="phx-topic abstract-wrapper">As the supply-demand imbalance drives air freight rates to levels not seen in two years, forwarders are trying to balance the contractual requirements of airlines while securing capacity at reasonable rates for customers.</div>

As the supply-demand imbalance drives air freight rates to levels not seen in two years, forwarders are trying to balance the contractual requirements of airlines while securing capacity at reasonable rates for customers.

<div class="phx-topic">The role of freight forwarders in air cargo is becoming more complex as ongoing capacity constraints and high demand challenges their ability to access space out of Asia, especially on spot market-heavy trade lanes such as Asia-Europe. As the supply-demand imbalance drives rates to levels not seen in two years, forwarders are trying to <a href="https://www.joc.com/article/air-freight-users-forced-to-better-manage-heavily-imbalanced-market-5877101">balance the contractual requirements of their airline partners while securing capacity</a> at reasonable rates for their cargo-owning customers. With no sign of a slowdown in demand heading into 2025, shippers already taxed by soaring prices should be prepared to pay even more for their air freight next year, according to Niall van de Wouw, chief air freight officer at rate benchmarking platform Xeneta. “If I was a shipper, I would start managing expectations of the CFO that the spend on air will be higher in 2025 than it was in 2024,” van de Wouw said during an industry outlook webinar this week. Also on the Xeneta-organized webinar was Glyn Hughes, director-general of The International Air Cargo Association (Tiaca). Hughes said the scenario now playing out was the opposite of what was seen in 2023 when the excess capacity in the market meant forwarders could get access to space at good prices. “For the past 13 months, the capacity gap between what has been pre-booked, pre-sold (or) secured for a block space agreement and <a href="https://www.joc.com/article/trans-atlantic-carriers-cue-fresh-surcharges-for-early-2025-risks-5908990">what is available on the spot market has become smaller</a>,” Hughes said. "But as load factors get even higher, it will be challenging for forwarders to access short term rates at reasonable levels versus the longer-term commitment with the shippers.” That was reflected globally in the contractual agreements between forwarders and airlines, with the global load factor of 63% in November at a two-year high, according to Xeneta. The analyst’s data shows shorter-term deals of three months or less fell from 29% of the market in the first quarter to 19% in Q4, while contracts with 12-month validity increased from 37% of the market in Q1 to 50% in Q4. <h3>Rates at two-year high </h3>Air freight demand rose 10% year over year in November, fueled by the continued boom in e-commerce, while capacity increased by a marginal 2%. That pushed spot rates in November to their highest level in almost two years, Xeneta noted. The average Shanghai-North Europe spot rate in the first three weeks of December was $5.2 per kilogram, a level that has not been seen since late 2022, according to the Baltic Air Index (BAI). Kathy Liu, vice president of global sales and marketing at Taiwan-based Dimerco Express Group, said there was <a href="https://www.joc.com/article/peak-of-peak-season-lifts-rates-demand-in-global-air-freight-market-5874197">no sign of a slowdown in the solid growth in volume out of Asia</a> as the end of the year neared. “Starting mid-December, we’ve seen a significant uptick in cargo volumes, particularly for consumer electronics,” she wrote in an air freight outlook. “This is unusual, as the market typically slows down after Dec. 5. However, this year, the peak is expected to extend all the way to late January, just ahead of Chinese New Year.” One of the Asia-based airlines benefiting from high demand is Cathay Pacific, which has the added advantage of being based at Hong Kong, the world’s largest air freight airport. In November, Cathay Cargo carried 142,601 kilograms, a 15% increase in volume compared to the same month last year, with the 11-month volume of 1.4 million kilograms up 11% year over year. Several Asian airlines have announced a 10% increase in 2025 contract rates for both long-haul and intra-Asia routes, according to Dimerco. <h3>Tariff-driven bonus for Asian airlines </h3>While no slowdown is expected in the e-commerce-driven boom on trade lanes out of Asia, another air freight-friendly factor for airlines in 2025 will be the tariffs the incoming Trump administration has promised to impose on Chinese imports. Liu noted that many shippers were rushing to move stock via air freight from China to the US, hoping to beat potential tariff increases before Jan. 20 when Donald Trump takes office. She predicted this would lead to significant growth on the China-Taiwan trade lane as more semiconductors and consumer electronics are shipped from China to Taiwan for assembly, then on to the US to avoid potential tariffs. Hughes also highlighted the potential upside for air cargo from <a href="https://www.joc.com/article/new-year-heralds-triple-threat-to-us-container-shipping-5908327">an increase in US tariffs on products made in China</a>. “If President Trump is putting in 60% or 70% tariffs on a lot more Chinese products, two things will happen. We might see retaliatory measures, which would have an inflationary impact, but we also may see an acceleration of the China-plus-one manufacturing strategy,” Hughes told the webinar. “If Chinese manufacturers shift more of their final assembly to Vietnam, Malaysia or other parts of Southeast Asia, that could create even more air cargo volumes as production sites are proliferated across Asia,” he added. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

The role of freight forwarders in air cargo is becoming more complex as ongoing capacity constraints and high demand challenges their ability to access space out of Asia, especially on spot market-heavy trade lanes such as Asia-Europe. As the supply-demand imbalance drives rates to levels not seen in two years, forwarders are trying to balance the contractual requirements of their airline partners while securing capacity at reasonable rates for their cargo-owning customers. With no sign of a slowdown in demand heading into 2025, shippers already taxed by soaring prices should be prepared to pay even more for their air freight next year, according to Niall van de Wouw, chief air freight officer at rate benchmarking platform Xeneta. “If I was a shipper, I would start managing expectations of the CFO that the spend on air will be higher in 2025 than it was in 2024,” van de Wouw said during an industry outlook webinar this week. Also on the Xeneta-organized webinar was Glyn Hughes, director-general of The International Air Cargo Association (Tiaca). Hughes said the scenario now playing out was the opposite of what was seen in 2023 when the excess capacity in the market meant forwarders could get access to space at good prices. “For the past 13 months, the capacity gap between what has been pre-booked, pre-sold (or) secured for a block space agreement and what is available on the spot market has become smaller ,” Hughes said. "But as load factors get even higher, it will be challenging for forwarders to access short term rates at reasonable levels versus the longer-term commitment with the shippers.” That was reflected globally in the contractual agreements between forwarders and airlines, with the global load factor of 63% in November at a two-year high, according to Xeneta. The analyst’s data shows shorter-term deals of three months or less fell from 29% of the market in the first quarter to 19% in Q4, while contracts with 12-month validity increased from 37% of the market in Q1 to 50% in Q4. Rates at two-year high Air freight demand rose 10% year over year in November, fueled by the continued boom in e-commerce, while capacity increased by a marginal 2%. That pushed spot rates in November to their highest level in almost two years, Xeneta noted. The average Shanghai-North Europe spot rate in the first three weeks of December was $5.2 per kilogram, a level that has not been seen since late 2022, according to the Baltic Air Index (BAI). Kathy Liu, vice president of global sales and marketing at Taiwan-based Dimerco Express Group, said there was no sign of a slowdown in the solid growth in volume out of Asia as the end of the year neared. “Starting mid-December, we’ve seen a significant uptick in cargo volumes, particularly for consumer electronics,” she wrote in an air freight outlook. “This is unusual, as the market typically slows down after Dec. 5. However, this year, the peak is expected to extend all the way to late January, just ahead of Chinese New Year.” One of the Asia-based airlines benefiting from high demand is Cathay Pacific, which has the added advantage of being based at Hong Kong, the world’s largest air freight airport. In November, Cathay Cargo carried 142,601 kilograms, a 15% increase in volume compared to the same month last year, with the 11-month volume of 1.4 million kilograms up 11% year over year. Several Asian airlines have announced a 10% increase in 2025 contract rates for both long-haul and intra-Asia routes, according to Dimerco. Tariff-driven bonus for Asian airlines While no slowdown is expected in the e-commerce-driven boom on trade lanes out of Asia, another air freight-friendly factor for airlines in 2025 will be the tariffs the incoming Trump administration has promised to impose on Chinese imports. Liu noted that many shippers were rushing to move stock via air freight from China to the US, hoping to beat potential tariff increases before Jan. 20 when Donald Trump takes office. She predicted this would lead to significant growth on the China-Taiwan trade lane as more semiconductors and consumer electronics are shipped from China to Taiwan for assembly, then on to the US to avoid potential tariffs. Hughes also highlighted the potential upside for air cargo from an increase in US tariffs on products made in China . “If President Trump is putting in 60% or 70% tariffs on a lot more Chinese products, two things will happen. We might see retaliatory measures, which would have an inflationary impact, but we also may see an acceleration of the China-plus-one manufacturing strategy,” Hughes told the webinar. “If Chinese manufacturers shift more of their final assembly to Vietnam, Malaysia or other parts of Southeast Asia, that could create even more air cargo volumes as production sites are proliferated across Asia,” he added. Contact Greg Knowler at greg.knowler@spglobal.com .

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<div class="phx-topic abstract-wrapper">The largest US less-than-truckload provider is set to become a separate, independent company as FedEx pivots to focus on its parcel delivery business.</div>

The largest US less-than-truckload provider is set to become a separate, independent company as FedEx pivots to focus on its parcel delivery business.

<div class="phx-topic">FedEx on Thursday said it will spin off its less-than-truckload (LTL) division as an independent company, setting the stage for increased competition in the US LTL sector. The separation of FedEx’s parcel and LTL freight divisions, to be completed over the next 18 months, will create a new publicly traded company that will already be the <a href="https://www.joc.com/article/journal-of-commerce-rankings-ltl-sector-revenue-drops-despite-yellow-distortion-5199865">largest LTL provider</a> in North America ranked by revenue.“This is the right time to pursue a separation as we respond to the unique dynamics of the LTL market,” Raj Subramaniam, FedEx president and CEO, said in a statement. “Through this process, we will unlock value for our freight business and position FedEx to create even greater value for stockholders,” Subramaniam said. FedEx Freight will continue to cooperate and maintain commercial ties with FedEx and its parcel divisions — FedEx Express and FedEx Ground, Subramaniam said. FedEx Freight had $9.4 billion in revenue in its fiscal year that ended May 31. For calendar year 2023, the revenue figure was $10.2 billion. The next-largest LTL provider, Old Dominion Freight Line, had $6.2 billion in revenue last year, while the third-largest carrier, XPO, had $4.7 billion in 2023 revenue. <h3>Revenue growth expected </h3>As a separate company, FedEx Freight will be able to grow that revenue and increase its industry dominance, according to Satish Jindel, president of SJ Consulting Group. “This spinoff will bring more investment money from hedge funds and institutional investors into the LTL segment, [specifically to FedEx Freight],” Jindel said. “They’ll be able to shed overhead costs connected with the parcel business and invest in what makes sense from an LTL point of view, and that’s good for shippers,” he said. Competing carriers among the largest LTL providers have been bracing for a FedEx Freight spinoff, in part by <a href="https://www.joc.com/article/new-terminal-sales-by-yellow-raising-stakes-for-us-ltl-carriers-5903607">rushing to acquire terminals</a> from bankrupt Yellow. “FedEx Freight as an independent company will be a much stronger competitor,” said an LTL executive who did not want to be identified. “The shackles are off now.” Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

FedEx on Thursday said it will spin off its less-than-truckload (LTL) division as an independent company, setting the stage for increased competition in the US LTL sector. The separation of FedEx’s parcel and LTL freight divisions, to be completed over the next 18 months, will create a new publicly traded company that will already be the largest LTL provider in North America ranked by revenue. “This is the right time to pursue a separation as we respond to the unique dynamics of the LTL market,” Raj Subramaniam, FedEx president and CEO, said in a statement. “Through this process, we will unlock value for our freight business and position FedEx to create even greater value for stockholders,” Subramaniam said. FedEx Freight will continue to cooperate and maintain commercial ties with FedEx and its parcel divisions — FedEx Express and FedEx Ground, Subramaniam said. FedEx Freight had $9.4 billion in revenue in its fiscal year that ended May 31. For calendar year 2023, the revenue figure was $10.2 billion. The next-largest LTL provider, Old Dominion Freight Line, had $6.2 billion in revenue last year, while the third-largest carrier, XPO, had $4.7 billion in 2023 revenue. Revenue growth expected As a separate company, FedEx Freight will be able to grow that revenue and increase its industry dominance, according to Satish Jindel, president of SJ Consulting Group. “This spinoff will bring more investment money from hedge funds and institutional investors into the LTL segment, [specifically to FedEx Freight],” Jindel said. “They’ll be able to shed overhead costs connected with the parcel business and invest in what makes sense from an LTL point of view, and that’s good for shippers,” he said. Competing carriers among the largest LTL providers have been bracing for a FedEx Freight spinoff, in part by rushing to acquire terminals from bankrupt Yellow. “FedEx Freight as an independent company will be a much stronger competitor,” said an LTL executive who did not want to be identified. “The shackles are off now.” Contact William B. Cassidy at bill.cassidy@spglobal.com .

FedEx to spin off industry-leading FedEx Freight LTL division

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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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