<div class="phx-topic abstract-wrapper">The port will berth vessels at its smaller Ocean Terminal two miles downriver from the main Garden City terminal in order to cut waiting times outside the port and reduce ship backlogs. </div>

The port will berth vessels at its smaller Ocean Terminal two miles downriver from the main Garden City terminal in order to cut waiting times outside the port and reduce ship backlogs.

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<div class="phx-topic">The Port of Savannah is using underutilized berth space at its smaller terminal to park ships ahead of their unloading at the port’s main container terminal. The port is doing so to reduce the number of ships idling at anchor, an issue that hit the port hard during a particularly tough winter but will also require long-term improvements in navigating the Savannah River. The Georgia Ports Authority (GPA) said in late February it would open a lay berth at its Ocean Terminal as a place to stage large ships prior to their arrival at GPA’s main Garden City marine terminal two miles upriver. GPA Chief Executive Griff Lynch told the Journal of Commerce last week that the opening of the Ocean Terminal lay berth means a ship can be immediately ready to dock at Garden City when there is an open berth. Currently, ships wait at anchor outside the port for a berth to open at Garden City, then make the 13-mile transit up the Savannah River when the navigation conditions are right. “It’s a parking spot at Ocean Terminal where a ship can be docked,” Lynch said. Having the lay berth will allow GPA to handle two more post-Panamax ships per week than it can currently, he added. GPA will also get more utilization out of Garden City as the idle time between ship calls for berths will go from 12 hours to three hours. The plans to open the lay berth at Ocean Terminal — part of the GPA’s broader strategy to increase container handling at the facility that serves a variety of cargoes — comes after the port faced a rare snowstorm in late January that contributed to a backlog of ships at anchor to start 2025. Winter storm Enzo dropped three to four inches of snow at Savannah, which closed Garden City for four days, Lynch said. The warming trend following Enzo caused heavy fog conditions during early February that also periodically closed the Savannah River to navigation. Lynch said the port lost 143 work hours due to the January snowstorm, which he said was among the “worse months for weather” that he has ever seen at Savannah. While the port had little backlog during December, the terminal closure and the fog led to a backlog of anchored vessels outside the port that reached as many as 20 to 25 ships on some days, Lynch said. <h3>Limits of Savannah River </h3>For shippers, the backlog meant further delays on receiving cargo. The median delay between the estimated time of arrival and the actual time of arrival for container ships calling Savannah reached over 10 days in February, according to data from visibility provider p44. That compares with a median delay of around four days for other major East Coast ports. Lynch, who said customers asked about delays during TPM25, said the worst is well past Savannah. The port is seeing about eight or nine ships at anchor at a time now, he said, adding that the wait time for an open berth at Garden City is only about three days, which is close to typical at most East Coast ports. Outside of weather events, the Ocean Terminal lay berth also offers GPA a workaround for the capacity limits of the Savannah River. The river is only wide enough for post-Panamax ships to travel in one direction at a time, further limiting arrivals and departures at Garden City. The Savannah River also has one of the largest tidal shifts along the Eastern seaboard that can impact the berthing window for ships coming into the port. The river, which is dredged to 47 feet, sees an average tidal shift of seven feet. That shift can impact the air clearance for large ships under the Talmadge Bridge just downriver from Garden City. The Georgia Department of Transportation is in the early stages of coming up with a new bridge design as it plans to demolish the Talmadge Bridge. The US Army Corps of Engineers is also looking at modifications to Savannah’s lower harbor that would allow for two-way ship traffic in some spots. But those projects will take time, Lynch said. “We have a challenge with the shipping channel,” he said. “A harbor modification that would enable passing zones will take a number of years. In the meantime, we have a solution for that through developing Ocean Terminal for container handling.” Lynch said a second lay berth for large ships will open at Ocean Terminal by mid-2026, something that will allow another two big ships per week to call Garden City. By 2027, Ocean Terminal is expected to start capital improvements that will enable it to become a dedicated container terminal for handling up to 1.5 million TEUs per year, Lynch said. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

The Port of Savannah is using underutilized berth space at its smaller terminal to park ships ahead of their unloading at the port’s main container terminal. The port is doing so to reduce the number of ships idling at anchor, an issue that hit the port hard during a particularly tough winter but will also require long-term improvements in navigating the Savannah River. The Georgia Ports Authority (GPA) said in late February it would open a lay berth at its Ocean Terminal as a place to stage large ships prior to their arrival at GPA’s main Garden City marine terminal two miles upriver. GPA Chief Executive Griff Lynch told the Journal of Commerce last week that the opening of the Ocean Terminal lay berth means a ship can be immediately ready to dock at Garden City when there is an open berth. Currently, ships wait at anchor outside the port for a berth to open at Garden City, then make the 13-mile transit up the Savannah River when the navigation conditions are right. “It’s a parking spot at Ocean Terminal where a ship can be docked,” Lynch said. Having the lay berth will allow GPA to handle two more post-Panamax ships per week than it can currently, he added. GPA will also get more utilization out of Garden City as the idle time between ship calls for berths will go from 12 hours to three hours. The plans to open the lay berth at Ocean Terminal — part of the GPA’s broader strategy to increase container handling at the facility that serves a variety of cargoes — comes after the port faced a rare snowstorm in late January that contributed to a backlog of ships at anchor to start 2025. Winter storm Enzo dropped three to four inches of snow at Savannah, which closed Garden City for four days, Lynch said. The warming trend following Enzo caused heavy fog conditions during early February that also periodically closed the Savannah River to navigation. Lynch said the port lost 143 work hours due to the January snowstorm, which he said was among the “worse months for weather” that he has ever seen at Savannah. While the port had little backlog during December, the terminal closure and the fog led to a backlog of anchored vessels outside the port that reached as many as 20 to 25 ships on some days, Lynch said. Limits of Savannah River For shippers, the backlog meant further delays on receiving cargo. The median delay between the estimated time of arrival and the actual time of arrival for container ships calling Savannah reached over 10 days in February, according to data from visibility provider p44. That compares with a median delay of around four days for other major East Coast ports. Lynch, who said customers asked about delays during TPM25, said the worst is well past Savannah. The port is seeing about eight or nine ships at anchor at a time now, he said, adding that the wait time for an open berth at Garden City is only about three days, which is close to typical at most East Coast ports. Outside of weather events, the Ocean Terminal lay berth also offers GPA a workaround for the capacity limits of the Savannah River. The river is only wide enough for post-Panamax ships to travel in one direction at a time, further limiting arrivals and departures at Garden City. The Savannah River also has one of the largest tidal shifts along the Eastern seaboard that can impact the berthing window for ships coming into the port. The river, which is dredged to 47 feet, sees an average tidal shift of seven feet. That shift can impact the air clearance for large ships under the Talmadge Bridge just downriver from Garden City. The Georgia Department of Transportation is in the early stages of coming up with a new bridge design as it plans to demolish the Talmadge Bridge. The US Army Corps of Engineers is also looking at modifications to Savannah’s lower harbor that would allow for two-way ship traffic in some spots. But those projects will take time, Lynch said. “We have a challenge with the shipping channel,” he said. “A harbor modification that would enable passing zones will take a number of years. In the meantime, we have a solution for that through developing Ocean Terminal for container handling.” Lynch said a second lay berth for large ships will open at Ocean Terminal by mid-2026, something that will allow another two big ships per week to call Garden City. By 2027, Ocean Terminal is expected to start capital improvements that will enable it to become a dedicated container terminal for handling up to 1.5 million TEUs per year, Lynch said. Contact Michael Angell at michael.angell@spglobal.com .

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Savannah’s ‘parking spot’ targets idle time for ships, main terminal

<div class="phx-topic abstract-wrapper">Ports across the continent are struggling to clear bottlenecks as containers stack up in terminals and delay inland and feeder connections.</div>

Ports across the continent are struggling to clear bottlenecks as containers stack up in terminals and delay inland and feeder connections.

<div class="phx-topic">Severe congestion continues to plague ports across Europe with new alliance vessel plans combining with strikes, bad weather and fully occupied container yards to delay ships and disrupt terminal operations. The bottlenecks are being felt in both North Europe and the Mediterranean, with carriers, terminals and forwarders reporting lengthy delays in some ports. Maersk said in its latest Europe advisory that all terminals in Antwerp were congested “due to the phase-in and phase-out of vessel plans,” a factor that was being exacerbated by late vessel arrivals from delays in previous ports. Maersk and Hapag-Lloyd are phasing in Gemini Cooperation services, with the new network expected to be fully deployed by the end of the second quarter. Likewise, Mediterranean Shipping Co. is moving services from its 2M Alliance with Maersk to a standalone network, and the Premier Alliance is adjusting to services without Hapag-Lloyd. Carrier executives have warned customers that operational disruptions to port schedules will be experienced, with some old and new services running in parallel. The new networks will require two full cycles from Asia to Europe and back to Asia before they will be fully rolled out. Maersk also reported delays in Bremerhaven, where several services were arriving late due to bad weather en route to the German port. In Rotterdam, the carrier said the Hutchinson Ports Delta II terminal was back to full operational productivity <a href="https://www.joc.com/article/strikes-storms-and-record-volumes-adding-to-north-europe-port-delays-5942119">after a month of slowdowns</a> following a tentative agreement between the company and dockworkers, but a backlog of inland cargo was still being cleared. South Korean carrier HMM warned customers it was taking an average of three days to secure a berth at Hamburg that was experiencing a strike by boat pilots, while berth waiting times at Le Havre were up to 5.7 days because of recurring strikes in the French hub. French unions are holding four-hour stoppages in Le Havre on eight separate days in March, in addition to a three-day strike planned this week from March 18–20. Significant disruption is already being experienced from the rolling industrial action, and the full-day strikes are set to bring container operations in France to a standstill this week. Spillover effects of the Le Havre strike are also affecting Rotterdam, according to HMM, which said the average berth waiting time at Europe’s largest container port was 5.6 days. <h3>Yards and berths fully occupied </h3>Kuehne + Nagel’s SeaExplorer visibility platform reported heavily disrupted operations at Rotterdam, Hamburg, Antwerp and Le Havre, with full container yards and most berths fully occupied. Although SeaExplorer put the average waiting time at Hamburg at 1.25 days, it said the port was experiencing “heavily disrupted operations.” The bottlenecks saw Hamburg terminal operator HHLA imposing container delivery restrictions from Monday at Container Terminal Burchardkai (CTB) and Container Terminal Tollerort (CTT). Export container deliveries will be managed on a ship-by-ship basis, “potentially causing delays and complicating daily operations,” HHLA noted. At Rotterdam’s ECT Euromax terminal, Hutchison Ports has announced that container stacks are so high it will not be able to accept empty containers delivered by road ​​from​March 23 “​​to prevent an unworkable situation.” The port bottlenecks are also impacting inland connections from Rotterdam and nearby Antwerp. Intermodal operator Contargo on Monday reported average waiting times for the handling of its barges have reached 75 hours in Antwerp and 72 hours in Rotterdam. Adding to the port congestion issues are seasonal low water levels in the Rhine River that restrict the loading of containers for inland destinations and are generating surcharges of about €50 ($54) per box. The low-water surcharges will rise as water levels drop further through the summer, with shifting cargo putting pressure on road and rail services. In the Mediterranean, HMM noted that the Greek hub of Piraeus has a berth waiting time of 4.4 days and six days for feeder vessels, while average berth wait times at Genoa and La Spezia were four days. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>.</div>

Severe congestion continues to plague ports across Europe with new alliance vessel plans combining with strikes, bad weather and fully occupied container yards to delay ships and disrupt terminal operations. The bottlenecks are being felt in both North Europe and the Mediterranean, with carriers, terminals and forwarders reporting lengthy delays in some ports. Maersk said in its latest Europe advisory that all terminals in Antwerp were congested “due to the phase-in and phase-out of vessel plans,” a factor that was being exacerbated by late vessel arrivals from delays in previous ports. Maersk and Hapag-Lloyd are phasing in Gemini Cooperation services, with the new network expected to be fully deployed by the end of the second quarter. Likewise, Mediterranean Shipping Co. is moving services from its 2M Alliance with Maersk to a standalone network, and the Premier Alliance is adjusting to services without Hapag-Lloyd. Carrier executives have warned customers that operational disruptions to port schedules will be experienced, with some old and new services running in parallel. The new networks will require two full cycles from Asia to Europe and back to Asia before they will be fully rolled out. Maersk also reported delays in Bremerhaven, where several services were arriving late due to bad weather en route to the German port. In Rotterdam, the carrier said the Hutchinson Ports Delta II terminal was back to full operational productivity after a month of slowdowns following a tentative agreement between the company and dockworkers, but a backlog of inland cargo was still being cleared. South Korean carrier HMM warned customers it was taking an average of three days to secure a berth at Hamburg that was experiencing a strike by boat pilots, while berth waiting times at Le Havre were up to 5.7 days because of recurring strikes in the French hub. French unions are holding four-hour stoppages in Le Havre on eight separate days in March, in addition to a three-day strike planned this week from March 18–20. Significant disruption is already being experienced from the rolling industrial action, and the full-day strikes are set to bring container operations in France to a standstill this week. Spillover effects of the Le Havre strike are also affecting Rotterdam, according to HMM, which said the average berth waiting time at Europe’s largest container port was 5.6 days. Yards and berths fully occupied Kuehne + Nagel’s SeaExplorer visibility platform reported heavily disrupted operations at Rotterdam, Hamburg, Antwerp and Le Havre, with full container yards and most berths fully occupied. Although SeaExplorer put the average waiting time at Hamburg at 1.25 days, it said the port was experiencing “heavily disrupted operations.” The bottlenecks saw Hamburg terminal operator HHLA imposing container delivery restrictions from Monday at Container Terminal Burchardkai (CTB) and Container Terminal Tollerort (CTT). Export container deliveries will be managed on a ship-by-ship basis, “potentially causing delays and complicating daily operations,” HHLA noted. At Rotterdam’s ECT Euromax terminal, Hutchison Ports has announced that container stacks are so high it will not be able to accept empty containers delivered by road ​​from​March 23 “​​to prevent an unworkable situation.” The port bottlenecks are also impacting inland connections from Rotterdam and nearby Antwerp. Intermodal operator Contargo on Monday reported average waiting times for the handling of its barges have reached 75 hours in Antwerp and 72 hours in Rotterdam. Adding to the port congestion issues are seasonal low water levels in the Rhine River that restrict the loading of containers for inland destinations and are generating surcharges of about €50 ($54) per box. The low-water surcharges will rise as water levels drop further through the summer, with shifting cargo putting pressure on road and rail services. In the Mediterranean, HMM noted that the Greek hub of Piraeus has a berth waiting time of 4.4 days and six days for feeder vessels, while average berth wait times at Genoa and La Spezia were four days. Contact Greg Knowler at greg.knowler@spglobal.com .

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Maritime

New alliance vessel plans add to ongoing port congestion in Europe

<div class="phx-topic abstract-wrapper">Multiple sources who spoke with the Journal of Commerce have confirmed ongoing negotiations between the two liners covering India’s larger westbound trades to the US East Coast and North Europe. </div>

Multiple sources who spoke with the Journal of Commerce have confirmed ongoing negotiations between the two liners covering India’s larger westbound trades to the US East Coast and North Europe.

<div class="phx-topic">The growing pressure of overcapacity on trades out of India is pushing major container lines to re-strategize their network operations. Those regrouping signals conspicuously surround services led by CMA CGM and Ocean Network Express (ONE), market updates reveal. Multiple industry sources who spoke with the Journal of Commerce have confirmed ongoing negotiations between the two liners on new vessel-sharing agreements (VSAs) covering India’s larger westbound trades to the US East Coast and North Europe. “Two rounds of talks are over and they could strike a deal on at least one trade lane soon,” said an industry insider who didn’t want to be identified. “A realignment or reconsolidation is critical for them as the market has descended into a vicious price war.” Sources also added that CMA CGM likely will join forces with ONE to open a South India-Europe direct string to rival the Gemini Cooperation network that calls at Ennore Port, near Chennai. Currently, CMA CGM and ONE operate standalone services on the West India-US East Coast trade but have fewer vessels to guarantee weekly sailings via the longer Cape of Good Hope route. Ongoing void calls have made schedule reliability a serious challenge for their services. Moreover, the French liner now has significantly higher allocations to fill on its West India-North Europe “Epic” routing after Hapag-Lloyd’s Gemini-linked exit from the consortium. Last month, ONE began a new India-Europe string (IOX) as part of the Premier Alliance, which includes HMM and Yang Ming, spoiling an already oversupplied market and pushing rates to levels profoundly unattractive to carriers. Local carrier sources also generally believe with current supply and demand dynamics unlikely to improve anytime soon, the westbound trade lane is becoming increasingly unviable without a full strategic review. But a Mumbai-based freight forwarder holds the view that major liners could continue “staying put” until they have clarity on tariff and geopolitical issues. Meanwhile, many carriers have adjusted West India-Europe spot rates downward yet again, a second revision over the past week, as they desperately push for bookings. Forwarders also anticipate India-USEC rates to drop in April with most sailings on track, following some rate recovery signs during the month because of lower capacity from an array of sailing cuts. Rates were $2,250 per FEU as of March 13, up 54% in just one week. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="56199e2b-5df4-468f-a149-b18ae7c32e51"></dynamic-object></div>There are other factors hurting mainliner interests, sources say. “On top of excess mainline tonnage, several smaller opportunistic newcomers willing to ply over the Suez Canal/Red Sea have now entered the market,” a source at a European carrier told the Journal of Commerce. “This [influx] poses systemic risks for mega carriers.” As competition builds, Mediterranean Shipping Co. and Maersk recently reorganized their India-US networks with port call changes to boost market share. “On our Indus and Indusa services, we could not compete in terms of transit times and schedule reliability,” MSC India said. “Going ahead, we have better coverage to USEC/Gulf ports and a stable product to service our clients.” Similarly, Maersk’s enhanced MECL loop is reporting higher loads out of West India at the expense, in particular, of CMA CGM’s Indamex service. Contact Bency Mathew at <a href="mailto:bencyvmathew@gmail.com">bencyvmathew@gmail.com</a>.</div>

The growing pressure of overcapacity on trades out of India is pushing major container lines to re-strategize their network operations. Those regrouping signals conspicuously surround services led by CMA CGM and Ocean Network Express (ONE), market updates reveal. Multiple industry sources who spoke with the Journal of Commerce have confirmed ongoing negotiations between the two liners on new vessel-sharing agreements (VSAs) covering India’s larger westbound trades to the US East Coast and North Europe. “Two rounds of talks are over and they could strike a deal on at least one trade lane soon,” said an industry insider who didn’t want to be identified. “A realignment or reconsolidation is critical for them as the market has descended into a vicious price war.” Sources also added that CMA CGM likely will join forces with ONE to open a South India-Europe direct string to rival the Gemini Cooperation network that calls at Ennore Port, near Chennai. Currently, CMA CGM and ONE operate standalone services on the West India-US East Coast trade but have fewer vessels to guarantee weekly sailings via the longer Cape of Good Hope route. Ongoing void calls have made schedule reliability a serious challenge for their services. Moreover, the French liner now has significantly higher allocations to fill on its West India-North Europe “Epic” routing after Hapag-Lloyd’s Gemini-linked exit from the consortium. Last month, ONE began a new India-Europe string (IOX) as part of the Premier Alliance, which includes HMM and Yang Ming, spoiling an already oversupplied market and pushing rates to levels profoundly unattractive to carriers. Local carrier sources also generally believe with current supply and demand dynamics unlikely to improve anytime soon, the westbound trade lane is becoming increasingly unviable without a full strategic review. But a Mumbai-based freight forwarder holds the view that major liners could continue “staying put” until they have clarity on tariff and geopolitical issues. Meanwhile, many carriers have adjusted West India-Europe spot rates downward yet again, a second revision over the past week, as they desperately push for bookings. Forwarders also anticipate India-USEC rates to drop in April with most sailings on track, following some rate recovery signs during the month because of lower capacity from an array of sailing cuts. Rates were $2,250 per FEU as of March 13, up 54% in just one week. There are other factors hurting mainliner interests, sources say. “On top of excess mainline tonnage, several smaller opportunistic newcomers willing to ply over the Suez Canal/Red Sea have now entered the market,” a source at a European carrier told the Journal of Commerce. “This [influx] poses systemic risks for mega carriers.” As competition builds, Mediterranean Shipping Co. and Maersk recently reorganized their India-US networks with port call changes to boost market share. “On our Indus and Indusa services, we could not compete in terms of transit times and schedule reliability,” MSC India said. “Going ahead, we have better coverage to USEC/Gulf ports and a stable product to service our clients.” Similarly, Maersk’s enhanced MECL loop is reporting higher loads out of West India at the expense, in particular, of CMA CGM’s Indamex service. Contact Bency Mathew at bencyvmathew@gmail.com .

CMA CGM, ONE in India VSA talks as standalone capacity pressures rise

<div class="phx-topic abstract-wrapper">Freight rate declines coupled with ship supply and cargo demand worries are rippling through the MPV sector. </div>

Freight rate declines coupled with ship supply and cargo demand worries are rippling through the MPV sector.

<div class="phx-topic">Increasing geopolitical unpredictability and the apparent onset of economic warfare via import tariffs are being blamed by brokers for a significant weakening of the current multipurpose ship market and forward-looking market sentiment. In its March multipurpose vessel (MPV) market briefing, shipbroker Toepfer said that recent developments regarding Russia’s war against Ukraine “are adding further uncertainty,” all the while triggering huge increases in investment in defense and infrastructure in the EU. “Such investment initiatives tend to create future demand for MPV tonnage,” said Toepfer.The broker cautioned that the uncertainty would cause both the demand and supply sides of the market to exercise extreme caution when making mid-term or long-term decisions.The March Toepfer Multipurpose Index (TMI) dropped 0.88% month over month to settle at $12,800 per day for March, although that is up 1.31% year over year. Toepfer’s TMI is based on expected average rates for six- to 12-month time charters for 12,500 deadweight-ton (dwt) “F-Type” vessels with safe working loads of 240-360 metric tons, as reported to Toepfer by owners and operators.<div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="ea382181-08cd-4298-912f-87c79836bcf7"></dynamic-object></div>An analysis by the Journal of Commerce of data from shippers revealed there was a healthy amount of spot tonnage for general cargo and heavy lift in February and that there was capacity available in the market. However, it was a different picture for niche deck carriers. Increasing demand coupled with a smaller fleet meant that more than three months were needed to secure specialist deck carriers for project cargoes.The data also showed there was an increasing trend of chartering MPVs with less than 240-metric-ton lifts in February. As a result, supply is expected to contract in the coming months.On the demand side, a global engineering, procurement and construction (EPC) source confirmed to the Journal of Commerce it had increased imports ahead of the Mar. 11 implementation date for breakbulk import commodity tariffs under the US government’s Section 301. “We asked, ‘what’s ready, what can we bring in early and pay storage fees on?’” the source said. Longer term, the EPC is pushing out deliveries where it can until there is more certainty on breakbulk cargo tariffs. However, the source raised concerns about the “stuff in the middle,” especially in lump sum project contracts where costs are locked in. “That is the problem,” the source said. “For certain volatile items, we can lock in fluctuation relief clauses, but not all.”Contact Carly Fields at <a href="mailto:carly.fields@spglobal.com">carly.fields@spglobal.com</a>.</div>

Increasing geopolitical unpredictability and the apparent onset of economic warfare via import tariffs are being blamed by brokers for a significant weakening of the current multipurpose ship market and forward-looking market sentiment. In its March multipurpose vessel (MPV) market briefing, shipbroker Toepfer said that recent developments regarding Russia’s war against Ukraine “are adding further uncertainty,” all the while triggering huge increases in investment in defense and infrastructure in the EU. “Such investment initiatives tend to create future demand for MPV tonnage,” said Toepfer. The broker cautioned that the uncertainty would cause both the demand and supply sides of the market to exercise extreme caution when making mid-term or long-term decisions. The March Toepfer Multipurpose Index (TMI) dropped 0.88% month over month to settle at $12,800 per day for March, although that is up 1.31% year over year. Toepfer’s TMI is based on expected average rates for six- to 12-month time charters for 12,500 deadweight-ton (dwt) “F-Type” vessels with safe working loads of 240-360 metric tons, as reported to Toepfer by owners and operators. An analysis by the Journal of Commerce of data from shippers revealed there was a healthy amount of spot tonnage for general cargo and heavy lift in February and that there was capacity available in the market. However, it was a different picture for niche deck carriers. Increasing demand coupled with a smaller fleet meant that more than three months were needed to secure specialist deck carriers for project cargoes. The data also showed there was an increasing trend of chartering MPVs with less than 240-metric-ton lifts in February. As a result, supply is expected to contract in the coming months. On the demand side, a global engineering, procurement and construction (EPC) source confirmed to the Journal of Commerce it had increased imports ahead of the Mar. 11 implementation date for breakbulk import commodity tariffs under the US government’s Section 301. “We asked, ‘what’s ready, what can we bring in early and pay storage fees on?’” the source said. Longer term, the EPC is pushing out deliveries where it can until there is more certainty on breakbulk cargo tariffs. However, the source raised concerns about the “stuff in the middle,” especially in lump sum project contracts where costs are locked in. “That is the problem,” the source said. “For certain volatile items, we can lock in fluctuation relief clauses, but not all.” Contact Carly Fields at carly.fields@spglobal.com .

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Breakbulk News

Geopolitical uncertainty, tariffs start to weigh on MPV market

<div class="phx-topic abstract-wrapper">Despite banking a collective operating profit of about $60 billion in 2024, a worsening supply-demand imbalance could make the next three years difficult for the container shipping industry.</div>

Despite banking a collective operating profit of about $60 billion in 2024, a worsening supply-demand imbalance could make the next three years difficult for the container shipping industry.

<div class="phx-topic">Container shipping is plunging into another downcycle with an oversupply of capacity and weakening demand hanging over the industry, leaving little to slow the slide in rates on major trades that analysts say has declined beyond seasonal norms. Despite reporting a highly profitable 2024 — operating profit will be near $60 billion across the industry, according to estimates from Sea-Intelligence Maritime Analysis — analysts are predicting a sharp downturn beginning this year. “We think we are entering a multi-year period of losses as the industry grapples with overcapacity,” J.P. Morgan wrote in a market update Monday, noting that the losses will likely emerge even if capacity does not fully return to the Red Sea this year. “Our demand-supply analysis now points to a 30% reduction in freight rates year over year in 2025 [down from the previous estimate of negative 15%],” the bank’s transport analysts wrote. “This leads to ocean EBIT [earnings before interest and taxes] losses emerging during 2025 and in our view persisting into the next three years, as vessel deliveries re-accelerate in 2027.” On the trans-Pacific, North Asia-US West Coast rates are down 65% since early January, falling an additional $400 last week to $1,800 per FEU. North Asia-US East Coast rates of $2,800/FEU lost $500 in the past week and are down 58% so far this year, according to Platts, a sister company of the Journal of Commerce within S&amp;P Global. Similarly, Asia-North Europe spot rates are down 50% since the beginning of January at $2,549/FEU and are now $148/FEU below the long-term contract rate, according to rate benchmarking platform Xeneta. <h3>Short-lived rate increases </h3>Carriers levied freight-all-kinds (FAK) increases on Asia-North Europe on March 1, but it had little effect on the oversupplied market, according to Peter Sand, Xeneta’s chief analyst. “The short-lived uptick in spot rates at the start of March suggests a weakness in the market and demonstrates the difficulties carriers will face in capacity management during 2025,” Sand said in a market update, adding that a similar weakening of rates can be seen on the Asia-to-US West and East coast trades despite a series of general rate increases (GRIs). Maersk CEO Vincent Clerc <a href="https://www.joc.com/article/excess-capacity-hangs-over-recovering-container-market-maersk-ceo-5214234">said during the carrier’s earnings call</a> earlier this month that no matter how long the Red Sea disruption lasted, the fundamentals of increasing overcapacity in container shipping would “eventually” prevail and could start hitting the market as early as the third quarter. “Even if the situation on the Red Sea was to endure for two years, three years or four years, the current orderbook would eventually be bigger than what we expect market growth to be,” Clerc said. <h3>Flurry of air strikes on Houthi positions </h3>The container shipping order book is currently just over 7 million TEUs, representing 25% of the existing fleet, according to S&amp;P Global’s Sea-web, sister company of the Journal of Commerce, with the supply-demand imbalance expected to be particularly acute over the next two years. Niels Rasmussen, chief shipping analyst at shipping association BIMCO, had forecast cargo volume growth at 3% to 4% in both 2024 and 2025, which will be easily outstripped by fleet growth that was due to top 9.5% in 2024 and is forecast for 4.9% in 2025. An estimated 10% of global capacity has been absorbed by the longer transits around southern Africa to avoid the Red Sea. The Houthi’s move last week to renew attacks on Israeli-linked ships and a flurry of air strikes from US warplanes on the militants’ positions in Yemen over the weekend highlighted the ongoing volatility in the region. “The next incremental addition in capacity will result near term from the reopening of the Red Sea, which we think will likely happen in 2026 as it will take time for the full capacity to return,” J.P. Morgan noted in its update. The bank has forecast 2% growth in global volume this year, with volume rising 5% in the first quarter before falling to 1% growth for the remaining quarters of 2025. “We continue to see the freight backdrop as challenging and it remains subject to heightened demand risks as we enter a global trade war, given recent announcements of reciprocal tariffs with business confidence subject to downside risks,” J.P. Morgan said. John McCown, founder of private equity firm Blue Alpha Capital, agreed in his McCown Report released earlier this month. “The year 2025 could be a return to the roller coaster volume swings that most of us had hoped were in the past,” he wrote. “Whether it’s the Panama Canal situation, the complex reciprocal tariffs or the initiative <a href="https://www.joc.com/article/us-port-tax-would-scramble-ocean-services-raise-shipper-costs-drewry-5952046">to tax ships with a Chinese connection</a> each time they call on a US port, these initiatives inject chaos, uncertainty and unnecessary costs into the container supply chain.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Container shipping is plunging into another downcycle with an oversupply of capacity and weakening demand hanging over the industry, leaving little to slow the slide in rates on major trades that analysts say has declined beyond seasonal norms. Despite reporting a highly profitable 2024 — operating profit will be near $60 billion across the industry, according to estimates from Sea-Intelligence Maritime Analysis — analysts are predicting a sharp downturn beginning this year. “We think we are entering a multi-year period of losses as the industry grapples with overcapacity,” J.P. Morgan wrote in a market update Monday, noting that the losses will likely emerge even if capacity does not fully return to the Red Sea this year. “Our demand-supply analysis now points to a 30% reduction in freight rates year over year in 2025 [down from the previous estimate of negative 15%],” the bank’s transport analysts wrote. “This leads to ocean EBIT [earnings before interest and taxes] losses emerging during 2025 and in our view persisting into the next three years, as vessel deliveries re-accelerate in 2027.” On the trans-Pacific, North Asia-US West Coast rates are down 65% since early January, falling an additional $400 last week to $1,800 per FEU. North Asia-US East Coast rates of $2,800/FEU lost $500 in the past week and are down 58% so far this year, according to Platts, a sister company of the Journal of Commerce within S&P Global. Similarly, Asia-North Europe spot rates are down 50% since the beginning of January at $2,549/FEU and are now $148/FEU below the long-term contract rate, according to rate benchmarking platform Xeneta. Short-lived rate increases Carriers levied freight-all-kinds (FAK) increases on Asia-North Europe on March 1, but it had little effect on the oversupplied market, according to Peter Sand, Xeneta’s chief analyst. “The short-lived uptick in spot rates at the start of March suggests a weakness in the market and demonstrates the difficulties carriers will face in capacity management during 2025,” Sand said in a market update, adding that a similar weakening of rates can be seen on the Asia-to-US West and East coast trades despite a series of general rate increases (GRIs). Maersk CEO Vincent Clerc said during the carrier’s earnings call earlier this month that no matter how long the Red Sea disruption lasted, the fundamentals of increasing overcapacity in container shipping would “eventually” prevail and could start hitting the market as early as the third quarter. “Even if the situation on the Red Sea was to endure for two years, three years or four years, the current orderbook would eventually be bigger than what we expect market growth to be,” Clerc said. Flurry of air strikes on Houthi positions The container shipping order book is currently just over 7 million TEUs, representing 25% of the existing fleet, according to S&P Global’s Sea-web, sister company of the Journal of Commerce, with the supply-demand imbalance expected to be particularly acute over the next two years. Niels Rasmussen, chief shipping analyst at shipping association BIMCO, had forecast cargo volume growth at 3% to 4% in both 2024 and 2025, which will be easily outstripped by fleet growth that was due to top 9.5% in 2024 and is forecast for 4.9% in 2025. An estimated 10% of global capacity has been absorbed by the longer transits around southern Africa to avoid the Red Sea. The Houthi’s move last week to renew attacks on Israeli-linked ships and a flurry of air strikes from US warplanes on the militants’ positions in Yemen over the weekend highlighted the ongoing volatility in the region. “The next incremental addition in capacity will result near term from the reopening of the Red Sea, which we think will likely happen in 2026 as it will take time for the full capacity to return,” J.P. Morgan noted in its update. The bank has forecast 2% growth in global volume this year, with volume rising 5% in the first quarter before falling to 1% growth for the remaining quarters of 2025. “We continue to see the freight backdrop as challenging and it remains subject to heightened demand risks as we enter a global trade war, given recent announcements of reciprocal tariffs with business confidence subject to downside risks,” J.P. Morgan said. John McCown, founder of private equity firm Blue Alpha Capital, agreed in his McCown Report released earlier this month. “The year 2025 could be a return to the roller coaster volume swings that most of us had hoped were in the past,” he wrote. “Whether it’s the Panama Canal situation, the complex reciprocal tariffs or the initiative to tax ships with a Chinese connection each time they call on a US port, these initiatives inject chaos, uncertainty and unnecessary costs into the container supply chain.” Contact Greg Knowler at greg.knowler@spglobal.com .

Forwarding

Asia-Europe

Trans-Pacific

Oversupplied ocean carriers sailing into new downcycle: analysts

<div class="phx-topic abstract-wrapper">The country’s competition watchdog is reviewing whether DP World’s acquisition of the logistics provider could lead to higher costs for shippers.</div>

The country’s competition watchdog is reviewing whether DP World’s acquisition of the logistics provider could lead to higher costs for shippers.

<div class="phx-topic">Shippers in Australia are backing a probe by the country’s competition authority into DP World’s planned US$110 million acquisition of leading forwarder Silk Logistics, saying the deal could lead to higher charges and anti-competitive behavior. “[The deal] has major implications for competition in Australia’s container freight sector, with potential impacts on supply chain costs for importers, exporters and transport operators,” said Paul Zalai, director of the shippers group Freight &amp; Trade Alliance (FTA). Zalai said the FTA has urged the Australian Competition and Consumer Commission (ACCC) “to oppose the acquisition due to the significant risk of market concentration, potential discrimination against rival transport providers, and misuse of sensitive commercial data.” This comes at a time when landside charges levied by terminal operators, including terminal access charges and container park fees, rose more than 11% to $627 million last year despite declining operating costs, according to ACCC data. Highlighting its main concerns about the DP World-Silk Logistics deal, the commission said it would result in DP World Australia owning a national container transport provider. Silk is the only national door-to-door container logistic provider in Australia. ACCC also said DP World-Silk could leverage its stevedoring dominance to increase charges or degrade service quality for competing transport providers at four key ports — Sydney’s Port Botany, Melbourne, Brisbane and Fremantle. “We are also assessing whether DP World Australia, after acquiring Silk, is likely to offer below-cost transportation prices to importers and exporters if their containers are also picked up and dropped off at DP World Australia’s stevedoring terminals,” ACCC Commissioner Philip Williams said in a statement. That could undercut independent transport operators, forcing them out of the market and allowing DP World to increase prices once market dominance was secured, the commission added. The competition watchdog said it was also concerned the acquisition would give both DP World and Silk access to commercially sensitive information, including volumes and delivery routes, about their rivals’ operations and customers. Given these concerns, the ACCC said it asked the industry to comment on the deal by March 27. DP World announced its intention to acquire Silk Logistics last November, saying the move would strengthen its integrated logistics capabilities. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>.</div>

Shippers in Australia are backing a probe by the country’s competition authority into DP World’s planned US$110 million acquisition of leading forwarder Silk Logistics, saying the deal could lead to higher charges and anti-competitive behavior. “[The deal] has major implications for competition in Australia’s container freight sector, with potential impacts on supply chain costs for importers, exporters and transport operators,” said Paul Zalai, director of the shippers group Freight & Trade Alliance (FTA). Zalai said the FTA has urged the Australian Competition and Consumer Commission (ACCC) “to oppose the acquisition due to the significant risk of market concentration, potential discrimination against rival transport providers, and misuse of sensitive commercial data.” This comes at a time when landside charges levied by terminal operators, including terminal access charges and container park fees, rose more than 11% to $627 million last year despite declining operating costs, according to ACCC data. Highlighting its main concerns about the DP World-Silk Logistics deal, the commission said it would result in DP World Australia owning a national container transport provider. Silk is the only national door-to-door container logistic provider in Australia. ACCC also said DP World-Silk could leverage its stevedoring dominance to increase charges or degrade service quality for competing transport providers at four key ports — Sydney’s Port Botany, Melbourne, Brisbane and Fremantle. “We are also assessing whether DP World Australia, after acquiring Silk, is likely to offer below-cost transportation prices to importers and exporters if their containers are also picked up and dropped off at DP World Australia’s stevedoring terminals,” ACCC Commissioner Philip Williams said in a statement. That could undercut independent transport operators, forcing them out of the market and allowing DP World to increase prices once market dominance was secured, the commission added. The competition watchdog said it was also concerned the acquisition would give both DP World and Silk access to commercially sensitive information, including volumes and delivery routes, about their rivals’ operations and customers. Given these concerns, the ACCC said it asked the industry to comment on the deal by March 27. DP World announced its intention to acquire Silk Logistics last November, saying the move would strengthen its integrated logistics capabilities. Contact Keith Wallis at keithwallis@hotmail.com .

Transport, Trade and Regulation News

Australian shippers back competition probe into DP World’s deal for Silk Logistics

<div class="phx-topic abstract-wrapper">No matter what changes occur, a FedEx Freight spinoff as a standalone LTL carrier will be good for the entire industry, writes Satish Jindel.</div>

No matter what changes occur, a FedEx Freight spinoff as a standalone LTL carrier will be good for the entire industry, writes Satish Jindel.

<div class="phx-topic">On June 25, 2024, during an earnings call, FedEx leaders announced that the company’s board had authorized management to explore options for a sale or spinoff of FedEx Freight, and that a decision would be announced by the end of the year. On Dec. 19, <a href="https://www.joc.com/article/fedex-freight-spinoff-is-latest-move-to-reshape-us-ltl-market-5909683">the leadership announced that a spinoff</a> was the best option and would be completed over 18 months. Why tell the shareholders and the less-than-truckload (LTL) market of this move if it is not happening for many months? Now, competitors and shippers can prepare for the various changes that could result from the FedEx Freight spinoff. Competing carriers and shippers should benefit from FedEx’s Priority and Economy services getting merged for a number of reasons. While the parcel market supports express and ground services, the FedEx Express volume has been shrinking for many years, with FedEx Ground now representing over 80% of total parcel volume. So, if there is a rationale to merge the Express and Ground parcel networks, FedEx Freight’s Priority and Economy services should also be merged. The premium for the Priority service price is so small that it does not make up for the various costs related to offering two services. If the two services were so appealing and financially rewarding, other LTL carriers would have done the same. Yet after 12 years, no other LTL carrier has followed suit. Many LTL carriers with just one service are generating operating margins better than 14.5% of FedEx Freight. As the LTL industry speeds up the transit times on high-volume lanes, the gap between Priority and Economy services will shrink. <h3>Greater role for technology </h3>While the parent company wants to spin it off as FedEx Freight, expect the new board to rename it American Freightways. With relief from intercompany charges of $528 million during fiscal year 2024 paid to FedEx Corporation for marketing, sales, technology and billing support, the spinoff will save FedEx Freight a few hundred million dollars by handling those corporate support functions itself. If it uses that money to go for greater market share with pricing initiatives, it could be good news for shippers. Shippers should get ready for a greater role of technology. With the National Motor Freight Traffic Association finally adopting dimensional pricing, there will be a greater need by shippers and carriers to capture shipment dimensions. This change should ensure more accurate billing and reduce the cost for auditing all freight bills for proper classification. With shippers being required to pay greater attention to the dimensions of the pallets, they can expect FedEx Freight support to improve their palletizing just as FedEx helps parcel customers improve their packaging. Because there are practically no appointment deliveries in the parcel business, expect FedEx Freight to embrace opportunities with AI to reduce the number of appointment deliveries, which should help shippers avoid charges for such service. We can also expect FedEx Freight to take greater interest in participating in LTL industry conferences and contributing its shipment data to SMC3’s national LTL database. No matter which of these changes occur, a FedEx Freight spinoff as a standalone LTL carrier will be good for the entire industry. And for those wondering why FedEx needs 18 months to spin off Freight, just imagine the pressure on the board and leadership that may find that investors are valuing its LTL business at a higher market cap than its parcel business, which is generating just a 5.5% margin compared with 14.5% for LTL business. Contact Satish Jindel at <a href="mailto:info@shipmatrix.com">info@shipmatrix.com</a>. </div>

On June 25, 2024, during an earnings call, FedEx leaders announced that the company’s board had authorized management to explore options for a sale or spinoff of FedEx Freight, and that a decision would be announced by the end of the year. On Dec. 19, the leadership announced that a spinoff was the best option and would be completed over 18 months. Why tell the shareholders and the less-than-truckload (LTL) market of this move if it is not happening for many months? Now, competitors and shippers can prepare for the various changes that could result from the FedEx Freight spinoff. Competing carriers and shippers should benefit from FedEx’s Priority and Economy services getting merged for a number of reasons. While the parcel market supports express and ground services, the FedEx Express volume has been shrinking for many years, with FedEx Ground now representing over 80% of total parcel volume. So, if there is a rationale to merge the Express and Ground parcel networks, FedEx Freight’s Priority and Economy services should also be merged. The premium for the Priority service price is so small that it does not make up for the various costs related to offering two services. If the two services were so appealing and financially rewarding, other LTL carriers would have done the same. Yet after 12 years, no other LTL carrier has followed suit. Many LTL carriers with just one service are generating operating margins better than 14.5% of FedEx Freight. As the LTL industry speeds up the transit times on high-volume lanes, the gap between Priority and Economy services will shrink. Greater role for technology While the parent company wants to spin it off as FedEx Freight, expect the new board to rename it American Freightways. With relief from intercompany charges of $528 million during fiscal year 2024 paid to FedEx Corporation for marketing, sales, technology and billing support, the spinoff will save FedEx Freight a few hundred million dollars by handling those corporate support functions itself. If it uses that money to go for greater market share with pricing initiatives, it could be good news for shippers. Shippers should get ready for a greater role of technology. With the National Motor Freight Traffic Association finally adopting dimensional pricing, there will be a greater need by shippers and carriers to capture shipment dimensions. This change should ensure more accurate billing and reduce the cost for auditing all freight bills for proper classification. With shippers being required to pay greater attention to the dimensions of the pallets, they can expect FedEx Freight support to improve their palletizing just as FedEx helps parcel customers improve their packaging. Because there are practically no appointment deliveries in the parcel business, expect FedEx Freight to embrace opportunities with AI to reduce the number of appointment deliveries, which should help shippers avoid charges for such service. We can also expect FedEx Freight to take greater interest in participating in LTL industry conferences and contributing its shipment data to SMC3’s national LTL database. No matter which of these changes occur, a FedEx Freight spinoff as a standalone LTL carrier will be good for the entire industry. And for those wondering why FedEx needs 18 months to spin off Freight, just imagine the pressure on the board and leadership that may find that investors are valuing its LTL business at a higher market cap than its parcel business, which is generating just a 5.5% margin compared with 14.5% for LTL business. Contact Satish Jindel at info@shipmatrix.com .

Surface

How the LTL market could evolve as the FedEx Freight spinoff plays out

<div class="phx-topic abstract-wrapper">What we have today in containerization is the opposite of Malcom McLean’s vision, writes Ted Prince — a vertically integrated enterprise of cost centers has been replaced by a network of profit centers that closely resembles the intermodal rail world.</div>

What we have today in containerization is the opposite of Malcom McLean’s vision, writes Ted Prince — a vertically integrated enterprise of cost centers has been replaced by a network of profit centers that closely resembles the intermodal rail world.

<div class="phx-topic">The Journal of Commerce’s roots extend back to 1827, when Samuel Morse and partners started a newspaper in New York. In 1844, Morse effectively started the telecommunications revolution. His first telegraph message asked, “What hath God wrought?” To many, the answer to that question might have been the development of containerization by Malcom McLean of Maxton, North Carolina. McLean’s transportation roots were in less-than-truckload (LTL). He was an early pioneer; McLean Trucking was founded in 1934 — the same year as the Motor Carrier Act of 1934 — and at one time was the fourth-largest motor carrier in the United States. This Motor Carrier Act followed traditional regulatory thinking. To ensure sufficient capacity, carriers were granted monopolies in the form of operating authorities. With tobacco a highly rated commodity, this was an incredibly lucrative business. These profits supported the acquisition of other motor carriers and the seed capital to start containerization. What the hagiography of McLean frequently omits is that he was not perfect. He twice “bet the company” on oil prices — and got it wrong both times. The development of high-speed container ships known as SL-7s were deployed in 1972 and 1973 during the first fuel shock. The ships’ high operating costs destroyed any profitability, and they were sold to the United States Navy in 1981 and 1982. In 1969, McLean sold Sea-Land to R.J. Reynolds Tobacco Company. In 1978, McLean purchased United States Lines and built a fleet of 4,400-TEU container ships. These were the largest ships at the time and were designed to operate in around-the-world services. Following the second oil shock of 1979, these vessels were designed to be fuel-efficient — albeit slow. When oil prices cratered five years later, so did US Lines. <h3>A ‘grander strategy’</h3>While the SL-7s and EconoShips are well-known aspects of McLean’s legacy, I think it is worthwhile exploring his grander strategy. SeaLand was vertically integrated — deploying his ships, calling his terminals, utilizing cranes of his specifications, carrying his containers, and moving on his chassis. While this model was emulated by many of those that followed, it is worthwhile to think about what has changed since then — and what it means today. Independent vessel strings are mostly a thing of the past. Vessel-sharing agreements (VSAs) have given way to global alliances — not to mention outright acquisitions. SeaLand–Maersk was an early VSA that ultimately led to Maersk acquiring SeaLand. This is a reflection of the need for economies of scope and scale — alongside density and service frequency — that are table stakes in today’s liner shipping world. By the early 1960s, McLean’s concept for standardized shipping containers gave rise to the container leasing industry. Sea Containers was an early entrant that was followed by others. This was a reflection that the capital-intensive nature of liner shipping made it almost impossible for a carrier to invest in everything. It was also a realization that economies of scale were sometimes beyond the reach of a single entity. While the chassis was necessary to provide pickup and delivery, carrier provision of chassis was limited to the United States. McLean was a trucker at heart and couldn’t imagine not having his own wheels. This decision haunted the industry for decades. Finally, in 2012, Maersk sold its chassis-leasing subsidiary, Direct ChassisLink, Inc. (DCLI), to a private equity firm. In an industry where most want to be second, almost every other line followed. Marine terminals were the last to be unbundled — perhaps because lines viewed them as their “crown jewels,” or perhaps because of their high price tags. These investments became popular with infrastructure funds and their pension fund investors. What we have today is the opposite of McLean’s vision. A vertically integrated enterprise of cost centers has been replaced by a network of profit centers that closely resembles the intermodal rail world. Whereas the former would inevitably cross-subsidize separate components through intricate transfer pricing, the latter has created a world of cutthroat capitalism. The impacts are not always clear. Container and chassis providers claim that they offer savings; however, their line customers may not agree — perhaps because they lack the sophistication to ascertain the true cost of ownership and operation. The impact on marine terminals is much more pervasive. Whereas an ocean carrier might have previously absorbed some additional costs (e.g., extra gates, third shifts, etc.) in a holistic service perspective, today’s terminals have owners that demand profitability across the spectrum. Our industry, despite its global scale, is still relatively young. We are living Joseph Schumpeter’s theory of creative destruction that he believed is essential for capitalism and economic growth. New innovations replace old ones. McLean’s innovations were essential, but not timeless. Our industry is essential, and the only certainty is change. Contact Ted Prince at <a href="mailto:ted@tricitiesintermodal.com">ted@tricitiesintermodal.com</a>.</div>

The Journal of Commerce’s roots extend back to 1827, when Samuel Morse and partners started a newspaper in New York. In 1844, Morse effectively started the telecommunications revolution. His first telegraph message asked, “What hath God wrought?” To many, the answer to that question might have been the development of containerization by Malcom McLean of Maxton, North Carolina. McLean’s transportation roots were in less-than-truckload (LTL). He was an early pioneer; McLean Trucking was founded in 1934 — the same year as the Motor Carrier Act of 1934 — and at one time was the fourth-largest motor carrier in the United States. This Motor Carrier Act followed traditional regulatory thinking. To ensure sufficient capacity, carriers were granted monopolies in the form of operating authorities. With tobacco a highly rated commodity, this was an incredibly lucrative business. These profits supported the acquisition of other motor carriers and the seed capital to start containerization. What the hagiography of McLean frequently omits is that he was not perfect. He twice “bet the company” on oil prices — and got it wrong both times. The development of high-speed container ships known as SL-7s were deployed in 1972 and 1973 during the first fuel shock. The ships’ high operating costs destroyed any profitability, and they were sold to the United States Navy in 1981 and 1982. In 1969, McLean sold Sea-Land to R.J. Reynolds Tobacco Company. In 1978, McLean purchased United States Lines and built a fleet of 4,400-TEU container ships. These were the largest ships at the time and were designed to operate in around-the-world services. Following the second oil shock of 1979, these vessels were designed to be fuel-efficient — albeit slow. When oil prices cratered five years later, so did US Lines. A ‘grander strategy’ While the SL-7s and EconoShips are well-known aspects of McLean’s legacy, I think it is worthwhile exploring his grander strategy. SeaLand was vertically integrated — deploying his ships, calling his terminals, utilizing cranes of his specifications, carrying his containers, and moving on his chassis. While this model was emulated by many of those that followed, it is worthwhile to think about what has changed since then — and what it means today. Independent vessel strings are mostly a thing of the past. Vessel-sharing agreements (VSAs) have given way to global alliances — not to mention outright acquisitions. SeaLand–Maersk was an early VSA that ultimately led to Maersk acquiring SeaLand. This is a reflection of the need for economies of scope and scale — alongside density and service frequency — that are table stakes in today’s liner shipping world. By the early 1960s, McLean’s concept for standardized shipping containers gave rise to the container leasing industry. Sea Containers was an early entrant that was followed by others. This was a reflection that the capital-intensive nature of liner shipping made it almost impossible for a carrier to invest in everything. It was also a realization that economies of scale were sometimes beyond the reach of a single entity. While the chassis was necessary to provide pickup and delivery, carrier provision of chassis was limited to the United States. McLean was a trucker at heart and couldn’t imagine not having his own wheels. This decision haunted the industry for decades. Finally, in 2012, Maersk sold its chassis-leasing subsidiary, Direct ChassisLink, Inc. (DCLI), to a private equity firm. In an industry where most want to be second, almost every other line followed. Marine terminals were the last to be unbundled — perhaps because lines viewed them as their “crown jewels,” or perhaps because of their high price tags. These investments became popular with infrastructure funds and their pension fund investors. What we have today is the opposite of McLean’s vision. A vertically integrated enterprise of cost centers has been replaced by a network of profit centers that closely resembles the intermodal rail world. Whereas the former would inevitably cross-subsidize separate components through intricate transfer pricing, the latter has created a world of cutthroat capitalism. The impacts are not always clear. Container and chassis providers claim that they offer savings; however, their line customers may not agree — perhaps because they lack the sophistication to ascertain the true cost of ownership and operation. The impact on marine terminals is much more pervasive. Whereas an ocean carrier might have previously absorbed some additional costs (e.g., extra gates, third shifts, etc.) in a holistic service perspective, today’s terminals have owners that demand profitability across the spectrum. Our industry, despite its global scale, is still relatively young. We are living Joseph Schumpeter’s theory of creative destruction that he believed is essential for capitalism and economic growth. New innovations replace old ones. McLean’s innovations were essential, but not timeless. Our industry is essential, and the only certainty is change. Contact Ted Prince at ted@tricitiesintermodal.com .

Supply chain

In appreciation of McLean’s essential, although not timeless, innovations

Notes: Data as of January 2025
Shaded areas indicate forecasts

MPV delivered

MPV demolished

HL capable delivered

HL capable demolished 

Net fleet loss/gain

The S&P Global multipurpose and heavy-lift fleet capacity database aggregates data for vessels that are in service, on order or have been demolished. The *Journal of Commerce* uses this database of current and historical data to forecast future newbuildings and demolitions.

Multipurpose and heavy-lift vessel deliveries and demolitions, with forecast (JOC)

MPV and HL Capable Fleet development Gateway

<div class="phx-topic abstract-wrapper">European governments and the European Commission will carry out regulatory reviews to assess the level of market concentration MSC will have with the planned takeover of Hutchison’s port assets, with divestitures likely on the table.</div>

European governments and the European Commission will carry out regulatory reviews to assess the level of market concentration MSC will have with the planned takeover of Hutchison’s port assets, with divestitures likely on the table.

<div class="phx-topic">Hutchison’s $22.8 billion disposal of most of its global terminal interests to a consortium of BlackRock Group and Mediterranean Shipping Co.’s Terminal Investment Limited (TiL) is likely to trigger a wave of terminal deals as MSC divests facilities to meet regulators’ anti-trust demands, Drewry’s leading port analyst says. These are expected to include terminals at Rotterdam, Le Havre, Antwerp, Hamburg and in Egypt, Eleanor Hadland, lead analyst for ports and terminals at Drewry Maritime Research, told the Journal of Commerce. The sale has also raised questions about the future of Hutchison’s port interests in China — which are not part of the BlackRock/TiL deal — and the 20% stake in Hutchison Port Holdings (HPH) held by Singapore-headquartered terminal operator PSA International, Hadland added. “Hutchison is not the most dynamic operator. Its ports portfolio has been chugging along since the COVID-19 pandemic,” Hadland said. “There has been growth, but it’s been organic, mainly expanding capacity at existing terminals rather than acquiring new ports.” CK Hutchison, the Hong Kong-listed parent of Hutchison Port Holdings, announced on Tuesday it had reached an agreement with BlackRock/TiL to sell its 80% stake in HPH, including the 90% HPH holds in the Panama Ports Company. The deal, subject to regulatory approval, will catapult MSC into pole position as the world’s largest terminal operator with annual throughput volumes of almost 120 million TEUs based on 2023 figures, leapfrogging the three existing top operators — Singapore’s PSA, China Merchants Port Holdings and Cosco Shipping Ports. Hadland said in Europe, national governments and the European Commission will carry out regulatory reviews to assess the level of market concentration MSC will have with the takeover of Hutchison’s port assets. She pointed out that in Rotterdam, MSC and Hutchison are among the largest terminal owners and operators, controlling more than 13 million TEUs of capacity. That includes MSC’s Delta Dedicated North Terminal operated under an agreement with ECT, which is 89.4% owned by Hutchison. ECT also operates the ECT Delta Terminal and holds a 60.8% stake in the Euromax Terminal, while Hutchison holds 100% of Hutchison Ports Delta II, she said. Euromax is likely to be among the divestment candidates, Hadland said. European Commission competition watchdogs are also likely to consider MSC’s dominant position in Antwerp and Hamburg when considering whether the Hutchison ports deal reduces competition at ports across Northern Europe. <h3>Future of PSA’s stake in Hutchison a question </h3>Commenting on PSA’s 20% stake in Hutchison Port Holdings, Hadland said there are two possible options. The first is for PSA to cash out, selling its interest to BlackRock/TiL or other investors. Or PSA can retain its shareholding in the hope its value increases as BlackRock/TiL rejuvenates Hutchison’s ports. PSA bought its stake for $4 billion in 2006 and made an unsuccessful attempt to dispose of its shareholding for a similar price tag in 2023 due to economic headwinds. PSA did not respond to Journal of Commerce questions about the future of its Hutchison ports stake. On the future of Hutchison’s port interests in China that are excluded from the BlackRock/TiL deal, Hadland speculated its stakes in terminals in Shanghai and Ningbo could be wrapped into Singapore-listed HPH Trust, which controls Hutchison’s port interests in Hong Kong and South China. She said an alternative option would be for Hutchison’s other shareholders — Shanghai International Port Group and Cosco Shipping Ports in Shanghai and Ningbo Port Group in Ningbo — to acquire them. The deal will bring significant benefits for MSC because the Hutchison portfolio is largely complementary to terminals controlled by TiL and opens new opportunities, such as in Australia, where MSC doesn’t have any terminals, while Hutchison has terminals in Sydney and Brisbane. “Operations in the high growth Southeast Asia and Mexican markets are seen to be particularly advantageous,” Hadland said. The deal could also prompt some shuffling of carriers between terminals as MSC moves operations to Hutchison terminals within ports. “Once the deal is done, which might be a year down the line, terminal operators could be worried about the business they are going to lose if or when MSC moves to Hutchison terminals,” Hadland said. <h3>Bank says Panama deal ‘understandable’ </h3>JPMorgan, meanwhile, said selling the Panama terminals was “understandable” given that Hutchison’s ownership has come under scrutiny from the Trump administration amid wider US concerns about alleged Chinese government control and influence on Panama Canal operations. But JPMorgan said the sale of Hutchison’s other terminals outside of China was a “surprise” and could be “an opportunistic deal.” “Based on our understanding of the management philosophy of CKH, any deal is possible as long as ‘the price is right,’” the bank said in a research note. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>.</div>

Hutchison’s $22.8 billion disposal of most of its global terminal interests to a consortium of BlackRock Group and Mediterranean Shipping Co.’s Terminal Investment Limited (TiL) is likely to trigger a wave of terminal deals as MSC divests facilities to meet regulators’ anti-trust demands, Drewry’s leading port analyst says. These are expected to include terminals at Rotterdam, Le Havre, Antwerp, Hamburg and in Egypt, Eleanor Hadland, lead analyst for ports and terminals at Drewry Maritime Research, told the Journal of Commerce. The sale has also raised questions about the future of Hutchison’s port interests in China — which are not part of the BlackRock/TiL deal — and the 20% stake in Hutchison Port Holdings (HPH) held by Singapore-headquartered terminal operator PSA International, Hadland added. “Hutchison is not the most dynamic operator. Its ports portfolio has been chugging along since the COVID-19 pandemic,” Hadland said. “There has been growth, but it’s been organic, mainly expanding capacity at existing terminals rather than acquiring new ports.” CK Hutchison, the Hong Kong-listed parent of Hutchison Port Holdings, announced on Tuesday it had reached an agreement with BlackRock/TiL to sell its 80% stake in HPH, including the 90% HPH holds in the Panama Ports Company. The deal, subject to regulatory approval, will catapult MSC into pole position as the world’s largest terminal operator with annual throughput volumes of almost 120 million TEUs based on 2023 figures, leapfrogging the three existing top operators — Singapore’s PSA, China Merchants Port Holdings and Cosco Shipping Ports. Hadland said in Europe, national governments and the European Commission will carry out regulatory reviews to assess the level of market concentration MSC will have with the takeover of Hutchison’s port assets. She pointed out that in Rotterdam, MSC and Hutchison are among the largest terminal owners and operators, controlling more than 13 million TEUs of capacity. That includes MSC’s Delta Dedicated North Terminal operated under an agreement with ECT, which is 89.4% owned by Hutchison. ECT also operates the ECT Delta Terminal and holds a 60.8% stake in the Euromax Terminal, while Hutchison holds 100% of Hutchison Ports Delta II, she said. Euromax is likely to be among the divestment candidates, Hadland said. European Commission competition watchdogs are also likely to consider MSC’s dominant position in Antwerp and Hamburg when considering whether the Hutchison ports deal reduces competition at ports across Northern Europe. Future of PSA’s stake in Hutchison a question Commenting on PSA’s 20% stake in Hutchison Port Holdings, Hadland said there are two possible options. The first is for PSA to cash out, selling its interest to BlackRock/TiL or other investors. Or PSA can retain its shareholding in the hope its value increases as BlackRock/TiL rejuvenates Hutchison’s ports. PSA bought its stake for $4 billion in 2006 and made an unsuccessful attempt to dispose of its shareholding for a similar price tag in 2023 due to economic headwinds. PSA did not respond to Journal of Commerce questions about the future of its Hutchison ports stake. On the future of Hutchison’s port interests in China that are excluded from the BlackRock/TiL deal, Hadland speculated its stakes in terminals in Shanghai and Ningbo could be wrapped into Singapore-listed HPH Trust, which controls Hutchison’s port interests in Hong Kong and South China. She said an alternative option would be for Hutchison’s other shareholders — Shanghai International Port Group and Cosco Shipping Ports in Shanghai and Ningbo Port Group in Ningbo — to acquire them. The deal will bring significant benefits for MSC because the Hutchison portfolio is largely complementary to terminals controlled by TiL and opens new opportunities, such as in Australia, where MSC doesn’t have any terminals, while Hutchison has terminals in Sydney and Brisbane. “Operations in the high growth Southeast Asia and Mexican markets are seen to be particularly advantageous,” Hadland said. The deal could also prompt some shuffling of carriers between terminals as MSC moves operations to Hutchison terminals within ports. “Once the deal is done, which might be a year down the line, terminal operators could be worried about the business they are going to lose if or when MSC moves to Hutchison terminals,” Hadland said. Bank says Panama deal ‘understandable’ JPMorgan, meanwhile, said selling the Panama terminals was “understandable” given that Hutchison’s ownership has come under scrutiny from the Trump administration amid wider US concerns about alleged Chinese government control and influence on Panama Canal operations. But JPMorgan said the sale of Hutchison’s other terminals outside of China was a “surprise” and could be “an opportunistic deal.” “Based on our understanding of the management philosophy of CKH, any deal is possible as long as ‘the price is right,’” the bank said in a research note. Contact Keith Wallis at keithwallis@hotmail.com .

Big Hutchison deal could reshuffle global ports network: Drewry

<div class="phx-topic abstract-wrapper">The carrier’s investment, announced while its chief executive met at the White House with President Donald Trump, comes amid heightened political sensitivities in the US as far as the container shipping industry is concerned.</div>

The carrier’s investment, announced while its chief executive met at the White House with President Donald Trump, comes amid heightened political sensitivities in the US as far as the container shipping industry is concerned.

<div class="phx-topic">CMA CGM announced Thursday it would spend $20 billion over the next four years to significantly bolster its logistics presence in the US, including expanding its US-flag fleet and increasing capacity at key US ports. The stunning announcement from the French shipping giant came as Rodolphe Saadé, chairman and CEO of CMA CGM Group, met at the White House with US President Donald Trump. The meeting between Trump and Saadé and the huge investment from the ocean carrier also comes amid heightened political sensitivities in the US as far as the container shipping industry is concerned. Trump’s US Trade Representative has <a href="https://www.joc.com/article/us-port-tax-would-scramble-ocean-services-raise-shipper-costs-drewry-5952046">proposed slamming Chinese-built and -operated ships calling US ports with huge fees</a>, while the administration is making a push to re-energize the US shipbuilding sector. “Over the next four years, we will significantly grow our US-flagged fleet, expand the capacity of key container ports on both coasts, develop state-of-the-art warehousing across the country, and establish a significant air cargo hub in Chicago,” Saadé said in a statement. “This will create 10,000 new American jobs and further strengthen our partnership with American customers and public authorities.” The US investment plan for CMA CGM includes adding 30 new vessels to the fleet of its US-flag carrier APL and deploying five new Boeing 777 freighters to serve a new air cargo hub it will build in Chicago. The carrier said it will also develop infrastructure at ports in New York/New Jersey, Los Angeles, Houston, Miami and Dutch Harbor in Alaska and build or expand 400 “state-of-the-art" warehouses across the US. It will also develop a new logistics research and development hub in Boston. In comments from the Oval Office, Trump praised Saadé, saying that “knowing him,” he wouldn’t be surprised if CMA CGM becomes the world’s top container line. CMA CGM is now the world’s third-largest carrier as measured by tonnage. “He’s going to be investing $20 billion into the United States because of the election,” Trump said. “...We lost our way. For many years we didn’t do anything. We used to build a ship a day.” Trump said in the coming weeks he would announce a massive US shipbuilding program as the White House <a href="https://www.joc.com/article/trumps-expansionist-worldview-puts-us-maritime-interests-in-spotlight-5946935">aims to galvanize an industry</a> that’s been in decline since World War II. <h3>Spending plan follows prior US terminal investments </h3>The CMA CGM investment follows the company acquiring two marine terminals at the Port of New York and New Jersey in 2023. It also acquired the <a href="https://www.joc.com/article/cma-cgm-flexes-financial-might-fenix-marine-acquisition_20211103.html">Fenix Marine Services container terminal in Los Angeles in late 2021.</a>Thanks to record-setting profits in 2021 and 2022, container lines have invested heavily in marine terminals. Mediterranean Shipping Co., the world’s largest container line as measured by tonnage, is on track to become the largest global terminal operator after its Terminal Investment Limited (TiL) arm and BlackRock Group <a href="https://www.joc.com/article/hutchison-inks-228-billion-deal-to-sell-majority-of-port-holdings-to-blackrock-til-5955819">on Tuesday announced</a> they would acquire the majority of Hutchison Port Holdings’ network outside of China and Hong Kong in a $22.8 billion deal. Contact Mark Szakonyi at <a href="mailto:mark.szakonyi@spglobal.com">mark.szakonyi@spglobal.com</a>.</div>

CMA CGM announced Thursday it would spend $20 billion over the next four years to significantly bolster its logistics presence in the US, including expanding its US-flag fleet and increasing capacity at key US ports. The stunning announcement from the French shipping giant came as Rodolphe Saadé, chairman and CEO of CMA CGM Group, met at the White House with US President Donald Trump. The meeting between Trump and Saadé and the huge investment from the ocean carrier also comes amid heightened political sensitivities in the US as far as the container shipping industry is concerned. Trump’s US Trade Representative has proposed slamming Chinese-built and -operated ships calling US ports with huge fees , while the administration is making a push to re-energize the US shipbuilding sector. “Over the next four years, we will significantly grow our US-flagged fleet, expand the capacity of key container ports on both coasts, develop state-of-the-art warehousing across the country, and establish a significant air cargo hub in Chicago,” Saadé said in a statement. “This will create 10,000 new American jobs and further strengthen our partnership with American customers and public authorities.” The US investment plan for CMA CGM includes adding 30 new vessels to the fleet of its US-flag carrier APL and deploying five new Boeing 777 freighters to serve a new air cargo hub it will build in Chicago. The carrier said it will also develop infrastructure at ports in New York/New Jersey, Los Angeles, Houston, Miami and Dutch Harbor in Alaska and build or expand 400 “state-of-the-art" warehouses across the US. It will also develop a new logistics research and development hub in Boston. In comments from the Oval Office, Trump praised Saadé, saying that “knowing him,” he wouldn’t be surprised if CMA CGM becomes the world’s top container line. CMA CGM is now the world’s third-largest carrier as measured by tonnage. “He’s going to be investing $20 billion into the United States because of the election,” Trump said. “...We lost our way. For many years we didn’t do anything. We used to build a ship a day.” Trump said in the coming weeks he would announce a massive US shipbuilding program as the White House aims to galvanize an industry that’s been in decline since World War II. Spending plan follows prior US terminal investments The CMA CGM investment follows the company acquiring two marine terminals at the Port of New York and New Jersey in 2023. It also acquired the Fenix Marine Services container terminal in Los Angeles in late 2021. Thanks to record-setting profits in 2021 and 2022, container lines have invested heavily in marine terminals. Mediterranean Shipping Co., the world’s largest container line as measured by tonnage, is on track to become the largest global terminal operator after its Terminal Investment Limited (TiL) arm and BlackRock Group on Tuesday announced they would acquire the majority of Hutchison Port Holdings’ network outside of China and Hong Kong in a $22.8 billion deal. Contact Mark Szakonyi at mark.szakonyi@spglobal.com .

Port infrastructure

CMA CGM to invest $20 billion in US shipping, ports and logistics

<div class="phx-topic abstract-wrapper">Spot rates soared as the deadline for US tariffs approached this week, and now many shipments are stranded in transit, according to logistics providers. </div>

Spot rates soared as the deadline for US tariffs approached this week, and now many shipments are stranded in transit, according to logistics providers.

<div class="phx-topic">Long Beach, California — Truck traffic in Laredo, Texas, surged for weeks until Tuesday, when the Trump administration’s 25% tariff on Mexican imports took effect. “Monday was just absolutely chaotic, and then yesterday was eerily slow,” Jordan Dewart, president of Redwood Mexico, told the Journal of Commerce Wednesday. “We had dozens and dozens of customers literally hit the pause button on all their northbound shipments from Mexico, wherever they were in transit,” Dewart said, speaking from Laredo. “They’ve all said, ‘Hey, let’s wait this out a few days to see what happens.’” <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5951880_0.1.jpg"></img></div>What’s happening is the collection of millions of dollars of duties that many shippers have never had to pay before when importing from Mexico or Canada, another US tariff target. “We have a customs broker partner here at the [Mexican] border, and they [took in] payments in excess of $1 million yesterday,” the first day tariffs were collected, Dewart said. Those payments came from multiple customers of Redwood Logistics “and every one of those customers had never paid” tariffs on Mexican goods previously, Dewart said. One customer had planned to bring a truckload shipment into the US Monday before the tariffs took effect, but a flat tire kept the drayage truck from crossing until Tuesday, he said. “A shipment that could have avoided the tariffs entirely instead was subject to $50,000 in duties,” said Dewart. <h3>Delays disrupting capacity </h3>Logistics providers expect to hear many similar stories as the Trump administration accelerates its trade wars with Mexico, Canada, China and other countries. Tariff threats and then the imposition of tariffs led to a surge in freight heading toward the US-Mexico border in January and February, causing congestion and delays. Now freight is being delayed as importers try to discern what twist the tariffs might take next. Late Wednesday, for example, the White House announced that cars and trucks produced in Mexico and Canada would be exempt from the 25% tariffs for one month. That’s likely to lead to a surge in high-value automotive imports in March. High-value shipments from Mexico and Canada surged in February, pushing up spot-market truckload rates in lanes between Canada, Mexico and the US by double digits. “We’ve seen easily 50% to 75% spot rate increases for some hot must-have type items [from Canada],” Paul Brashier, vice president of global logistics at ITS Logistics, said Wednesday. “It’s almost been similar to what we saw during COVID when shippers would say, ‘just let us know what it costs’ if we could cover a load — they were more worried about getting the shipment than what it would cost them,” Brashier told the Journal of Commerce. Earlier this week, US spot market load board operator DAT Freight &amp; Analytics reported surging spot rates and volumes in cross-border lanes connecting the US and Canada. Dry-van spot-market volumes from Toronto to Chicago rose 57% in the week ending Feb. 28, while rates in the cross-border lane rose 7%, according to DAT. Dewart noted that President Donald Trump plans to speak with Mexican President Claudia Sheinbaum Thursday, raising hopes that some tariff pressure may be relieved. “Frankly, the only trading partner that we have that knows how to handle [Trump] is Mexico’s Sheinbaum. She’s been able to work with him,” Peter Friedmann, executive director of the Agriculture Transportation Coalition (AgTC), said at the Journal of Commerce’s TPM25 conference here Wednesday. <h3>Redesigning supply chains </h3>But the uncertainty is costing US importers millions of dollars not only in tariff duties but in delays and last-minute changes in supply chains, logistics providers said. “Pretty much when Trump was inaugurated, we started fielding a lot more requests for [supply chain] design work, for heavy volume flows inbound to the US from Mexico and Canada,” said Brashier. Now with many shipments stuck in transit, especially between Mexico and the US, it’s unclear what the impact will be on volumes and pricing in the days and weeks ahead — but costs aren’t likely to go down as long as the disruption persists. “Contract rates are in a holding pattern, I’d say, to see what happens next,” Dewart said. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

Long Beach, California — Truck traffic in Laredo, Texas, surged for weeks until Tuesday, when the Trump administration’s 25% tariff on Mexican imports took effect. “Monday was just absolutely chaotic, and then yesterday was eerily slow,” Jordan Dewart, president of Redwood Mexico, told the Journal of Commerce Wednesday. “We had dozens and dozens of customers literally hit the pause button on all their northbound shipments from Mexico, wherever they were in transit,” Dewart said, speaking from Laredo. “They’ve all said, ‘Hey, let’s wait this out a few days to see what happens.’” What’s happening is the collection of millions of dollars of duties that many shippers have never had to pay before when importing from Mexico or Canada, another US tariff target. “We have a customs broker partner here at the [Mexican] border, and they [took in] payments in excess of $1 million yesterday,” the first day tariffs were collected, Dewart said. Those payments came from multiple customers of Redwood Logistics “and every one of those customers had never paid” tariffs on Mexican goods previously, Dewart said. One customer had planned to bring a truckload shipment into the US Monday before the tariffs took effect, but a flat tire kept the drayage truck from crossing until Tuesday, he said. “A shipment that could have avoided the tariffs entirely instead was subject to $50,000 in duties,” said Dewart. Delays disrupting capacity Logistics providers expect to hear many similar stories as the Trump administration accelerates its trade wars with Mexico, Canada, China and other countries. Tariff threats and then the imposition of tariffs led to a surge in freight heading toward the US-Mexico border in January and February, causing congestion and delays. Now freight is being delayed as importers try to discern what twist the tariffs might take next. Late Wednesday, for example, the White House announced that cars and trucks produced in Mexico and Canada would be exempt from the 25% tariffs for one month. That’s likely to lead to a surge in high-value automotive imports in March. High-value shipments from Mexico and Canada surged in February, pushing up spot-market truckload rates in lanes between Canada, Mexico and the US by double digits. “We’ve seen easily 50% to 75% spot rate increases for some hot must-have type items [from Canada],” Paul Brashier, vice president of global logistics at ITS Logistics, said Wednesday. “It’s almost been similar to what we saw during COVID when shippers would say, ‘just let us know what it costs’ if we could cover a load — they were more worried about getting the shipment than what it would cost them,” Brashier told the Journal of Commerce. Earlier this week, US spot market load board operator DAT Freight & Analytics reported surging spot rates and volumes in cross-border lanes connecting the US and Canada. Dry-van spot-market volumes from Toronto to Chicago rose 57% in the week ending Feb. 28, while rates in the cross-border lane rose 7%, according to DAT. Dewart noted that President Donald Trump plans to speak with Mexican President Claudia Sheinbaum Thursday, raising hopes that some tariff pressure may be relieved. “Frankly, the only trading partner that we have that knows how to handle [Trump] is Mexico’s Sheinbaum. She’s been able to work with him,” Peter Friedmann, executive director of the Agriculture Transportation Coalition (AgTC), said at the Journal of Commerce’s TPM25 conference here Wednesday. Redesigning supply chains But the uncertainty is costing US importers millions of dollars not only in tariff duties but in delays and last-minute changes in supply chains, logistics providers said. “Pretty much when Trump was inaugurated, we started fielding a lot more requests for [supply chain] design work, for heavy volume flows inbound to the US from Mexico and Canada,” said Brashier. Now with many shipments stuck in transit, especially between Mexico and the US, it’s unclear what the impact will be on volumes and pricing in the days and weeks ahead — but costs aren’t likely to go down as long as the disruption persists. “Contract rates are in a holding pattern, I’d say, to see what happens next,” Dewart said. Contact William B. Cassidy at bill.cassidy@spglobal.com .

Trucking News

TPM25: ‘Chaos’ erupts as US tariffs disrupt cross-border trucking with Mexico, Canada

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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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Filling the Supply Chain Education Gap with LTL Education Courses

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<div class="phx-topic abstract-wrapper">The National Retail Federation now says it expects a downward shift in the second quarter as importers face challenges from tariffs and elevated inventories in the wake of significant cargo frontloading.</div>

The National Retail Federation now says it expects a downward shift in the second quarter as importers face challenges from tariffs and elevated inventories in the wake of significant cargo frontloading.

<div class="phx-topic">US retailers have downgraded their import projections for the second quarter amid the tariff chaos playing out between the Trump administration and key trading partners. The National Retail Federation (NRF) and Hackett Associates, publishers of the monthly Global Port Tracker (GPT), now say they expect a downward shift in the spring as retailers face challenges from tariffs and elevated inventories in the wake of significant cargo frontloading. “Retailers are continuing to bring as much merchandise into the country ahead of rising tariffs as possible,” Jonathan Gold, NRF vice president for supply chain and customs policy, said in the GPT. While March import projections remained unchanged, the latest GPT released this week has lowered import expectations for April, May, June and July compared with projections made just last month. The new GPT forecasts April volumes at 2.18 million TEUs, up 5.7% over the year but down from February’s projection of 8.2% year-over-year growth. While May’s import projections call for 2.8% growth to 2.14 million TEUs, that is down from the 5.4% year-over-year gain expected last month. June’s volume projections slipped to 2.07 million TEUs, down 3.2% over the year and a larger drop than the initial 0.6% decline predicted last month. It would be the first year-over-year import drop for any month since September 2023. And in its first forecast for July, the GPT projects import levels of 1.99 million TEUs, down 13.9% year over year. President Donald Trump’s recent doubling of tariffs on Chinese goods from 10% to 20% raises significant concerns for the shipping industry, particularly as reciprocal tariffs loom on the horizon, the NRF said. While the on-again, off-again tariffs on goods from Canada and Mexico are expected to have minimal direct impact on port volumes because most goods from those countries are transported via truck or rail, the uncertainty surrounding tariffs is prompting some retailers to adjust their supply chain strategies, the NRF said. Hackett Associates founder Ben Hackett noted that <a href="https://www.joc.com/article/proposed-us-tax-on-chinese-ship-calls-could-pressure-intermodal-networks-5960849">the possible implementation of new fees</a> on Chinese tonnage docking at US ports could further complicate the situation, potentially leading to increased costs for both cargo owners and consumers. Contact Laura Robb at <a href="mailto:Laura.Robb@spglobal.com">laura.robb@spglobal.com</a>.  </div>

US retailers have downgraded their import projections for the second quarter amid the tariff chaos playing out between the Trump administration and key trading partners. The National Retail Federation (NRF) and Hackett Associates, publishers of the monthly Global Port Tracker (GPT), now say they expect a downward shift in the spring as retailers face challenges from tariffs and elevated inventories in the wake of significant cargo frontloading. “Retailers are continuing to bring as much merchandise into the country ahead of rising tariffs as possible,” Jonathan Gold, NRF vice president for supply chain and customs policy, said in the GPT. While March import projections remained unchanged, the latest GPT released this week has lowered import expectations for April, May, June and July compared with projections made just last month. The new GPT forecasts April volumes at 2.18 million TEUs, up 5.7% over the year but down from February’s projection of 8.2% year-over-year growth. While May’s import projections call for 2.8% growth to 2.14 million TEUs, that is down from the 5.4% year-over-year gain expected last month. June’s volume projections slipped to 2.07 million TEUs, down 3.2% over the year and a larger drop than the initial 0.6% decline predicted last month. It would be the first year-over-year import drop for any month since September 2023. And in its first forecast for July, the GPT projects import levels of 1.99 million TEUs, down 13.9% year over year. President Donald Trump’s recent doubling of tariffs on Chinese goods from 10% to 20% raises significant concerns for the shipping industry, particularly as reciprocal tariffs loom on the horizon, the NRF said. While the on-again, off-again tariffs on goods from Canada and Mexico are expected to have minimal direct impact on port volumes because most goods from those countries are transported via truck or rail, the uncertainty surrounding tariffs is prompting some retailers to adjust their supply chain strategies, the NRF said. Hackett Associates founder Ben Hackett noted that the possible implementation of new fees on Chinese tonnage docking at US ports could further complicate the situation, potentially leading to increased costs for both cargo owners and consumers. Contact Laura Robb at laura.robb@spglobal.com . 

Trans-Atlantic

Tariff uncertainty prompts US retailers to downgrade spring import forecast

<div class="phx-topic abstract-wrapper">Reshuffling port calls because of a potential Trump administration fee on Chinese-built and -operated ships would place additional strain on the US intermodal supply chain, railroad executives say.</div>

Reshuffling port calls because of a potential Trump administration fee on Chinese-built and -operated ships would place additional strain on the US intermodal supply chain, railroad executives say.

<div class="phx-topic">If a Trump administration proposal to <a href="https://www.joc.com/article/us-port-tax-would-scramble-ocean-services-raise-shipper-costs-drewry-5952046">tax Chinese-built and -operated ships</a> calling at US ports is enacted, the nation’s Class I railroads could face the challenge of attempting to move cargo through fewer entry points without disrupting service, railroad executives said Tuesday. Executives from CSX Transportation and Union Pacific Railroad (UP), speaking at the J.P. Morgan Industrials Conference, said while they could accommodate a shift toward larger ports, it would not come without “significant” disruption. “Certainly, this potential port fee that could come into play would have a significant disruptive impact,” said CSX CFO Sean Pelkey. “If there’s more consolidation at ports that we serve and there’s more volume that wants to come into those ports, that’s a good thing. We can be a part of the solution for that. But it could also result in more congestion as well, which could have significant disruptive effects.” Congestion on the rail network is a key concern. During last year’s peak shipping season, service disruptions on the US West Coast coincided with double-digit percentage growth in cargo volume. In October, 795 of UP’s loaded intermodal railcars sat idle for at least 48 hours, according to the US Surface Transportation Board. That same month, UP’s average intermodal train speed fell to 27.9 miles per hour during the week of Oct. 9–16, its slowest week since 2019. Mediterranean Shipping Co. CEO Soren Toft <a href="https://www.joc.com/article/tpm25-port-tax-on-chinese-ships-will-make-some-routes-unviable-mscs-toft-5954640">said at TPM25 last week</a> that it would no longer be economically viable for carriers to call smaller US ports if the Trump plan was implemented, something echoed by UP CEO Jennifer Hamann. “It does lend preference to the larger ports...,” Hamann said at the J.P. Morgan event. Eric Gehringer, Union Pacific’s executive vice president of operations, said recent capital investments have given the railroad the flexibility to absorb volume shifts from smaller ports such as Oakland to major gateways such as Los Angeles. “[In] Inland Empire, we’ve been able to add another 70,000 lifts last year and we’re going to add in even more than that this year,” Gehringer said at the J.P. Morgan event. “If you think about the whole intermodal network in total over the last handful of years, we’ve added in almost 1 million lifts across our network. We’ve been building in this capacity, and we’ll be able to handle that volume.” According to a Journal of Commerce analysis of data from the Intermodal Association of North America, approximately 10,000 to 15,000 ocean containers move by rail each year from Oakland to Chicago, similar to the volume from the Port of Mobile and the Port of Philadelphia to Chicago. By comparison, BNSF Railway and Union Pacific haul that same volume from Southern California to Chicago every 10 to 14 days. There are no other rail-served routes handling more than 10,000 international loads annually from ports in Jacksonville, Mobile, New Orleans, Philadelphia or Wilmington, North Carolina. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>.</div>

If a Trump administration proposal to tax Chinese-built and -operated ships calling at US ports is enacted, the nation’s Class I railroads could face the challenge of attempting to move cargo through fewer entry points without disrupting service, railroad executives said Tuesday. Executives from CSX Transportation and Union Pacific Railroad (UP), speaking at the J.P. Morgan Industrials Conference, said while they could accommodate a shift toward larger ports, it would not come without “significant” disruption. “Certainly, this potential port fee that could come into play would have a significant disruptive impact,” said CSX CFO Sean Pelkey. “If there’s more consolidation at ports that we serve and there’s more volume that wants to come into those ports, that’s a good thing. We can be a part of the solution for that. But it could also result in more congestion as well, which could have significant disruptive effects.” Congestion on the rail network is a key concern. During last year’s peak shipping season, service disruptions on the US West Coast coincided with double-digit percentage growth in cargo volume. In October, 795 of UP’s loaded intermodal railcars sat idle for at least 48 hours, according to the US Surface Transportation Board. That same month, UP’s average intermodal train speed fell to 27.9 miles per hour during the week of Oct. 9–16, its slowest week since 2019. Mediterranean Shipping Co. CEO Soren Toft said at TPM25 last week that it would no longer be economically viable for carriers to call smaller US ports if the Trump plan was implemented, something echoed by UP CEO Jennifer Hamann. “It does lend preference to the larger ports...,” Hamann said at the J.P. Morgan event. Eric Gehringer, Union Pacific’s executive vice president of operations, said recent capital investments have given the railroad the flexibility to absorb volume shifts from smaller ports such as Oakland to major gateways such as Los Angeles. “[In] Inland Empire, we’ve been able to add another 70,000 lifts last year and we’re going to add in even more than that this year,” Gehringer said at the J.P. Morgan event. “If you think about the whole intermodal network in total over the last handful of years, we’ve added in almost 1 million lifts across our network. We’ve been building in this capacity, and we’ll be able to handle that volume.” According to a Journal of Commerce analysis of data from the Intermodal Association of North America, approximately 10,000 to 15,000 ocean containers move by rail each year from Oakland to Chicago, similar to the volume from the Port of Mobile and the Port of Philadelphia to Chicago. By comparison, BNSF Railway and Union Pacific haul that same volume from Southern California to Chicago every 10 to 14 days. There are no other rail-served routes handling more than 10,000 international loads annually from ports in Jacksonville, Mobile, New Orleans, Philadelphia or Wilmington, North Carolina. Contact Ari Ashe at ari.ashe@spglobal.com .

North-American rail

Proposed US tax on Chinese ship calls could pressure intermodal networks

<div class="phx-topic abstract-wrapper">While strong e-commerce demand last year filled all available air freight capacity out of China and kept the industry in peak season mode, recent US moves to clamp down on low-value Chinese imports have rattled the market.</div>

While strong e-commerce demand last year filled all available air freight capacity out of China and kept the industry in peak season mode, recent US moves to clamp down on low-value Chinese imports have rattled the market.

<div class="phx-topic">Air freight rates from China to the US have fallen sharply since Lunar New Year as the traditional post-holiday slump combined with mounting uncertainty over the impact of a US clampdown on low-value products under the “de minimis” threshold. While the steep decline in spot prices has moderated into March, average rates from Shanghai to the US were down 29% in February compared with the previous month in response to the regulatory and political messages emanating from the White House, according to Niall van de Wouw, chief air freight officer at rate benchmarking platform Xeneta. “From the conversations we are hearing, some shippers are clearly looking for ways to minimize the impact of US tariffs, while others will be anticipating lower air freight rates if e-commerce volumes show a sustained dip,” van de Wouw noted in Xeneta’s latest market update. Strong e-commerce demand last year filled all available air freight capacity out of China and kept the industry in peak season mode, but recent US moves to clamp down on low-value Chinese imports have rattled the market. De minimis regulations in the US allow one shipment of less than $800 in value to move between a single shipper and single consignee per day, duty free. China accounted for two-thirds of the 1.36 billion de minimis imports last year. When the Trump administration removed low-value products from de minimis exemptions in February, the system immediately backed up, forcing the exemption of low-value imports to be restored until an appropriate inspection and duty collection system can be devised. Alan Beacham, managing director of global forwarder Toll Group, said the market experienced huge disruption when low-value shipments were excluded from the de minimis rules last month. “I don't think any of us were ready to experience what happened in those three or four days where a million and a half parcels were on the ground in Chicago and five to seven million parcels across the US,” Beacham told an air cargo panel last week at the Journal of Commerce’s TPM25 conference in Long Beach. “That was within three days. Imagine if it continued for a month and all that cargo would have to be cleared through US customs,” he said. “E-commerce will continue to grow, and the complexity around the intersection with tariffs and the intersection with customs is creating uncertainty as to how that will play out.” <h3>Shifting from air to ocean </h3>Kathy Liu, vice president of global sales and marketing at Taiwan-based Dimerco Express Group, said the air cargo market slowed significantly after Jan. 20 following the de minimis policy announcements from the Trump administration. "This led to e-commerce platforms canceling charters, disrupting the supply and demand balance,” she wrote in a March update. Liu said although e-commerce “will not disappear,” it is shifting from a business-to-consumer (B2C) model to a more traditional fulfilment model that will reduce air freight demand as more shipments move to ocean freight. Xeneta forecasts air freight growth of 4% to 6% in 2025 following the strong performance in 2024 when volume grew 12%. But the growing trade tensions have placed “a big question mark” over the outlook, van de Wouw noted in his market update. “This is a situation completely outside of the control of the air cargo market, and there’s a great deal of noise, which is adding to stakeholders’ anxiety,” he said. “The issue is no one knows what the end game is and what’s going to happen from a regulatory perspective and how this will impact consumer confidence.” While any dip in demand from a regulatory clampdown on low-value imports into the US may temporarily ease capacity pressures, long-term structural challenges — such as aging fleets, slow production and regulatory hurdles — will keep the market tight, according to air cargo consultancy Cargo Facts. “The near-term future of air cargo remains uncertain, with shifting trade policies and supply chain challenges shaping the industry,” Cargo Facts wrote this week in the latest Baltic Air Index market outlook. “On one side, rising trade tensions and new tariffs are slowing demand in key areas like trans-Pacific e-commerce,” the consultancy wrote. “On the other hand, delays in aircraft production and freighter conversions mean supply growth may not keep up, creating potential capacity shortages in the coming years.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Air freight rates from China to the US have fallen sharply since Lunar New Year as the traditional post-holiday slump combined with mounting uncertainty over the impact of a US clampdown on low-value products under the “de minimis” threshold. While the steep decline in spot prices has moderated into March, average rates from Shanghai to the US were down 29% in February compared with the previous month in response to the regulatory and political messages emanating from the White House, according to Niall van de Wouw, chief air freight officer at rate benchmarking platform Xeneta. “From the conversations we are hearing, some shippers are clearly looking for ways to minimize the impact of US tariffs, while others will be anticipating lower air freight rates if e-commerce volumes show a sustained dip,” van de Wouw noted in Xeneta’s latest market update. Strong e-commerce demand last year filled all available air freight capacity out of China and kept the industry in peak season mode, but recent US moves to clamp down on low-value Chinese imports have rattled the market. De minimis regulations in the US allow one shipment of less than $800 in value to move between a single shipper and single consignee per day, duty free. China accounted for two-thirds of the 1.36 billion de minimis imports last year. When the Trump administration removed low-value products from de minimis exemptions in February, the system immediately backed up, forcing the exemption of low-value imports to be restored until an appropriate inspection and duty collection system can be devised. Alan Beacham, managing director of global forwarder Toll Group, said the market experienced huge disruption when low-value shipments were excluded from the de minimis rules last month. “I don't think any of us were ready to experience what happened in those three or four days where a million and a half parcels were on the ground in Chicago and five to seven million parcels across the US,” Beacham told an air cargo panel last week at the Journal of Commerce’s TPM25 conference in Long Beach. “That was within three days. Imagine if it continued for a month and all that cargo would have to be cleared through US customs,” he said. “E-commerce will continue to grow, and the complexity around the intersection with tariffs and the intersection with customs is creating uncertainty as to how that will play out.” Shifting from air to ocean Kathy Liu, vice president of global sales and marketing at Taiwan-based Dimerco Express Group, said the air cargo market slowed significantly after Jan. 20 following the de minimis policy announcements from the Trump administration. "This led to e-commerce platforms canceling charters, disrupting the supply and demand balance,” she wrote in a March update. Liu said although e-commerce “will not disappear,” it is shifting from a business-to-consumer (B2C) model to a more traditional fulfilment model that will reduce air freight demand as more shipments move to ocean freight. Xeneta forecasts air freight growth of 4% to 6% in 2025 following the strong performance in 2024 when volume grew 12%. But the growing trade tensions have placed “a big question mark” over the outlook, van de Wouw noted in his market update. “This is a situation completely outside of the control of the air cargo market, and there’s a great deal of noise, which is adding to stakeholders’ anxiety,” he said. “The issue is no one knows what the end game is and what’s going to happen from a regulatory perspective and how this will impact consumer confidence.” While any dip in demand from a regulatory clampdown on low-value imports into the US may temporarily ease capacity pressures, long-term structural challenges — such as aging fleets, slow production and regulatory hurdles — will keep the market tight, according to air cargo consultancy Cargo Facts. “The near-term future of air cargo remains uncertain, with shifting trade policies and supply chain challenges shaping the industry,” Cargo Facts wrote this week in the latest Baltic Air Index market outlook. “On one side, rising trade tensions and new tariffs are slowing demand in key areas like trans-Pacific e-commerce,” the consultancy wrote. “On the other hand, delays in aircraft production and freighter conversions mean supply growth may not keep up, creating potential capacity shortages in the coming years.” Contact Greg Knowler at greg.knowler@spglobal.com .

Air Cargo Forwarder News

Air Cargo Carriers News

Air Cargo

Air cargo rates tumble as market adjusts to looming ‘de minimis’ changes

<div class="phx-topic abstract-wrapper">The dizzying pace of the Trump administration’s moves against longtime US trading partners is putting shippers at risk of facing hefty new costs as a result of tariff “stacking.” </div>

The dizzying pace of the Trump administration’s moves against longtime US trading partners is putting shippers at risk of facing hefty new costs as a result of tariff “stacking.”

<div class="phx-topic">The Trump administration’s flurry of threats against trading partners puts shippers at risk of tariff “stacking” as import duties compound on top of other charges, customs experts say. That flurry is adding to the increasing compliance burden on shippers who face what one expert called a “massive historic shift” in the cost of US import duties. On Tuesday, President Donald Trump’s executive order ending tariff exemptions on steel and aluminum imports from Canada, Mexico, the European Union and South Korea went into effect. The move essentially reinstates a 25% tariff from Trump’s first administration, but from which those countries had successfully negotiated exemptions. Cameron Roberts, partner at trade and customs law specialist Roberts &amp; Kehagiaras, said at the Journal of Commerce’s TPM25 conference in Long Beach, California, last week that complying with the steel and aluminum tariffs “is going to be a major headache for everybody when you are importing goods into the United States” as it will require calculating the non-US metal content of goods for their customs entry. “That will be an important one to watch,” Roberts said. “There has been a recent discussion and information from the US Customs messaging system about derivatives and figuring out how much of the steel in a product is made from non-US steel and paying the countervailing duty on those amounts.” Tariffs on copper imports could also rise under a pending US trade investigation. Those tariffs would come on top of the current 25% tariff rates on all goods from Canada and Mexico, along with the 20% tariffs on imports from China. The cornerstone of Trump’s “America First” trade policy, Roberts said, is removing the trade deficit between the US and its three largest trading partners. “The answer from the administration is we are going to make it extremely expensive to import into the United States of America,” Roberts said. “So, these [tariffs] are stacking. “Over the last two decades, tariff rates have averaged 2% to 3%,” he added. “We are seeing now, what, a [multiple of 10] change? This is a massive historic shift.” Also speaking at TPM25, Pete Mento, director of customs at forwarder DSV, said Trump’s threat of an across-the-board 10% tariff on all imports is also hanging over the heads of importers. “That would run roughshod on inflation,” Mento said. <h3>Tariff wildcards coming </h3>Trump implemented the country-specific tariffs under the International Emergency Economic Powers Act (IEEPA), which gives US presidents executive authority over parts of the economy due to a national emergency. Typically used to impose financial penalties on criminal and terrorist groups, IEEPA has only been used once before for tariffs, by President Richard Nixon in 1971. Roberts said the IEEPA tariffs, which are being justified to stem flows of illegal drugs and migrants into the US, offer the most latitude for new carveouts and exemptions because they are over negotiable issues. However, steel and aluminum tariffs, which were imposed under national security provisions of US trade law, are more likely to last due to Trump’s policy of building up US manufacturing and national defense capacity. Another tariff wildcard will come in April when the Trump administration is scheduled to release a wide-ranging report on what it sees as unfair practices of US trading partners. The report is expected to address how the US could enact “reciprocal” tariffs against countries based on the tariffs they charge US exports. That would upend the practice of most import duties being assessed based on the type of goods, not the country of origin. DSV’s Mento said the additional line items for country-specific goods will balloon the number of possible import classifications in the US tariff schedule. The retaliatory measures that China, Canada and the European Union enacted in response to Trump’s trade measures further risk spiraling reciprocal tariffs upward. “Trump said he’s going to put a 25% tariff on Japanese and European cars, but that’s far beyond reciprocal,” Mento said. “So now I’m worried that reciprocal tariffs will be far higher than imagined and more punitive.” The tariff escalations put further risk on importers who use a customs bond to release cargo prior to paying actual import duties, Roberts said. The increasing size of tariffs means importers will have to post additional bonds, raising their financial costs and increasing their credit risk. “This increase in duty will diminish your profit margin if you are an importer,” Roberts said. “If your financials don’t look as good, you will have a harder time qualifying for credit.” On top of the tariffs, Roberts said shippers need to know the makeup of the fleet carrying their imports due to <a href="https://www.joc.com/article/us-port-tax-would-scramble-ocean-services-raise-shipper-costs-drewry-5952046">Trump’s plan for a port tax on Chinese ocean carriers and ships</a>. The proposed order calls for fees of about $1 million per port call based on a mix of factors including the ship’s country of ownership, the number of newbuilds the carrier has at Chinese shipyards and the cargo capacity of the ships. “If you have a vessel, you could be responsible to pay the fee for bringing in the ship, plus being a Chinese firm, for having a majority of Chinese-built ships, plus a majority of Chinese-built ships in the order process,” Roberts said. “You could be looking at a $4 million to $5 million hit just for coming into the US.” Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

The Trump administration’s flurry of threats against trading partners puts shippers at risk of tariff “stacking” as import duties compound on top of other charges, customs experts say. That flurry is adding to the increasing compliance burden on shippers who face what one expert called a “massive historic shift” in the cost of US import duties. On Tuesday, President Donald Trump’s executive order ending tariff exemptions on steel and aluminum imports from Canada, Mexico, the European Union and South Korea went into effect. The move essentially reinstates a 25% tariff from Trump’s first administration, but from which those countries had successfully negotiated exemptions. Cameron Roberts, partner at trade and customs law specialist Roberts & Kehagiaras, said at the Journal of Commerce’s TPM25 conference in Long Beach, California, last week that complying with the steel and aluminum tariffs “is going to be a major headache for everybody when you are importing goods into the United States” as it will require calculating the non-US metal content of goods for their customs entry. “That will be an important one to watch,” Roberts said. “There has been a recent discussion and information from the US Customs messaging system about derivatives and figuring out how much of the steel in a product is made from non-US steel and paying the countervailing duty on those amounts.” Tariffs on copper imports could also rise under a pending US trade investigation. Those tariffs would come on top of the current 25% tariff rates on all goods from Canada and Mexico, along with the 20% tariffs on imports from China. The cornerstone of Trump’s “America First” trade policy, Roberts said, is removing the trade deficit between the US and its three largest trading partners. “The answer from the administration is we are going to make it extremely expensive to import into the United States of America,” Roberts said. “So, these [tariffs] are stacking. “Over the last two decades, tariff rates have averaged 2% to 3%,” he added. “We are seeing now, what, a [multiple of 10] change? This is a massive historic shift.” Also speaking at TPM25, Pete Mento, director of customs at forwarder DSV, said Trump’s threat of an across-the-board 10% tariff on all imports is also hanging over the heads of importers. “That would run roughshod on inflation,” Mento said. Tariff wildcards coming Trump implemented the country-specific tariffs under the International Emergency Economic Powers Act (IEEPA), which gives US presidents executive authority over parts of the economy due to a national emergency. Typically used to impose financial penalties on criminal and terrorist groups, IEEPA has only been used once before for tariffs, by President Richard Nixon in 1971. Roberts said the IEEPA tariffs, which are being justified to stem flows of illegal drugs and migrants into the US, offer the most latitude for new carveouts and exemptions because they are over negotiable issues. However, steel and aluminum tariffs, which were imposed under national security provisions of US trade law, are more likely to last due to Trump’s policy of building up US manufacturing and national defense capacity. Another tariff wildcard will come in April when the Trump administration is scheduled to release a wide-ranging report on what it sees as unfair practices of US trading partners. The report is expected to address how the US could enact “reciprocal” tariffs against countries based on the tariffs they charge US exports. That would upend the practice of most import duties being assessed based on the type of goods, not the country of origin. DSV’s Mento said the additional line items for country-specific goods will balloon the number of possible import classifications in the US tariff schedule. The retaliatory measures that China, Canada and the European Union enacted in response to Trump’s trade measures further risk spiraling reciprocal tariffs upward. “Trump said he’s going to put a 25% tariff on Japanese and European cars, but that’s far beyond reciprocal,” Mento said. “So now I’m worried that reciprocal tariffs will be far higher than imagined and more punitive.” The tariff escalations put further risk on importers who use a customs bond to release cargo prior to paying actual import duties, Roberts said. The increasing size of tariffs means importers will have to post additional bonds, raising their financial costs and increasing their credit risk. “This increase in duty will diminish your profit margin if you are an importer,” Roberts said. “If your financials don’t look as good, you will have a harder time qualifying for credit.” On top of the tariffs, Roberts said shippers need to know the makeup of the fleet carrying their imports due to Trump’s plan for a port tax on Chinese ocean carriers and ships . The proposed order calls for fees of about $1 million per port call based on a mix of factors including the ship’s country of ownership, the number of newbuilds the carrier has at Chinese shipyards and the cargo capacity of the ships. “If you have a vessel, you could be responsible to pay the fee for bringing in the ship, plus being a Chinese firm, for having a majority of Chinese-built ships, plus a majority of Chinese-built ships in the order process,” Roberts said. “You could be looking at a $4 million to $5 million hit just for coming into the US.” Contact Michael Angell at michael.angell@spglobal.com .

Escalating tariff costs are ‘massive’ financial shift for US importers: experts

<div class="phx-topic abstract-wrapper">Executives from CSX and Norfolk Southern say that while the market is no longer as strongly pro-shipper as it was a year ago, conditions have yet to shift in favor of rail carriers.</div>

Executives from CSX and Norfolk Southern say that while the market is no longer as strongly pro-shipper as it was a year ago, conditions have yet to shift in favor of rail carriers.

<div class="phx-topic">Two Class I railroads acknowledged this week they have been unable to raise rates on shippers as much as they had hoped, citing a persistently weak market in the competing truckload sector. Executives from CSX Transportation and Norfolk Southern Railway (NS), speaking at the J.P. Morgan Industrials Conference, said that while the market is no longer as strongly pro-shipper as it was a year ago, conditions have yet to shift in favor of rail carriers. “It’s less bad than it’s been in the last couple of years,” CSX CFO Sean Pelkey said. “We’re seeing pricing flat to up a little bit, which is encouraging. We have not seen that for a couple of years now … [but it’s] probably not what many had hoped going into the year.” Intermodal contract rates averaged $1.48 per mile in February, according to the Journal of Commerce Intermodal Savings Index, down from $1.54 per mile a year earlier. But when fuel surcharges were excluded, average contract rates remained flat year over year. Diesel prices in February were 36 cents per gallon lower than in the same month of 2024. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="ea6d4c62-90a1-4a5f-8fb1-9f00b53850b0"></dynamic-object></div>Industry analysts are growing <a href="https://www.joc.com/article/tariff-uncertainty-casts-shadow-on-us-trucking-demand-pricing-5962283">less optimistic</a> that the trucking market will strengthen in the second quarter, citing concerns that geopolitical tensions could lead to an economic downturn. Those concerns have also led to US retailers <a href="https://www.joc.com/article/tariff-uncertainty-prompts-us-retailers-to-downgrade-spring-import-forecast-5961648">downgrading</a> their forecasts for import volume this spring. CSX and Norfolk Southern face challenges in attracting business when trucking rates are depressed because they operate short-haul lanes where the cost difference between truck and rail is much narrower. “[When] you talk about truck pricing, we’re not really expecting a big rebound there anytime soon. That’s not in our base scenario,” NS CFO Jason Zampi said at the J.P. Morgan event. To win business, Zampi said Norfolk Southern must “provide consistent, reliable service that the customer can trust to be more truck-like.” <h3>New wave of annual bids coming </h3>It will soon become clear whether intermodal providers can secure rate increases across the US. After intermodal marketing companies were <a href="https://www.joc.com/article/intermodal-providers-navigate-tough-pricing-environment-at-start-of-year-5922679">disappointed</a> that first wave of contract bids fell short of expectations in January and February, a second group of shippers will negotiate and finalize annual agreements with carriers <a href="https://www.joc.com/article/jb-hunt-preparing-customers-for-boost-in-contract-rail-rates-in-2025-5925181">between April and June</a>. So far, intermodal carriers have proposed rate increases but have largely retreated following pushback during the bid process, according to several shippers who attended the Retail Industry Leaders Association conference in February and spoke with the Journal of Commerce at TPM25. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>. </div>

Two Class I railroads acknowledged this week they have been unable to raise rates on shippers as much as they had hoped, citing a persistently weak market in the competing truckload sector. Executives from CSX Transportation and Norfolk Southern Railway (NS), speaking at the J.P. Morgan Industrials Conference, said that while the market is no longer as strongly pro-shipper as it was a year ago, conditions have yet to shift in favor of rail carriers. “It’s less bad than it’s been in the last couple of years,” CSX CFO Sean Pelkey said. “We’re seeing pricing flat to up a little bit, which is encouraging. We have not seen that for a couple of years now … [but it’s] probably not what many had hoped going into the year.” Intermodal contract rates averaged $1.48 per mile in February, according to the Journal of Commerce Intermodal Savings Index, down from $1.54 per mile a year earlier. But when fuel surcharges were excluded, average contract rates remained flat year over year. Diesel prices in February were 36 cents per gallon lower than in the same month of 2024. Industry analysts are growing less optimistic that the trucking market will strengthen in the second quarter, citing concerns that geopolitical tensions could lead to an economic downturn. Those concerns have also led to US retailers downgrading their forecasts for import volume this spring. CSX and Norfolk Southern face challenges in attracting business when trucking rates are depressed because they operate short-haul lanes where the cost difference between truck and rail is much narrower. “[When] you talk about truck pricing, we’re not really expecting a big rebound there anytime soon. That’s not in our base scenario,” NS CFO Jason Zampi said at the J.P. Morgan event. To win business, Zampi said Norfolk Southern must “provide consistent, reliable service that the customer can trust to be more truck-like.” New wave of annual bids coming It will soon become clear whether intermodal providers can secure rate increases across the US. After intermodal marketing companies were disappointed that first wave of contract bids fell short of expectations in January and February, a second group of shippers will negotiate and finalize annual agreements with carriers between April and June . So far, intermodal carriers have proposed rate increases but have largely retreated following pushback during the bid process, according to several shippers who attended the Retail Industry Leaders Association conference in February and spoke with the Journal of Commerce at TPM25. Contact Ari Ashe at ari.ashe@spglobal.com .