<div class="phx-topic abstract-wrapper">Talk of a port-wide interoperable chassis pool no longer dominates discussions about how to increase efficiency in supplying chassis at the Port of New York and New Jersey, where a series of smaller measures have helped provide fluidity for truckers.
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Talk of a port-wide interoperable chassis pool no longer dominates discussions about how to increase efficiency in supplying chassis at the Port of New York and New Jersey, where a series of smaller measures have helped provide fluidity for truckers.

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<div>Despite a mid-single-digit rise in cargo through the Port of New York and New Jersey this year, stakeholders say the port has experienced little of the disruption securing chassis seen in past years, helped in large part by a sizable number of trucker-owned or leased chassis.Aside from a <a>chassis shortage at the start of the year </a>when shippers sent a surge of cargo through the port to beat tariff deadlines, there have been no major problems in the chassis flow in NY-NJ this year, truckers and intermodal equipment providers (IEP) say. That contrasts with a few years ago, when congestion...

Despite a mid-single-digit rise in cargo through the Port of New York and New Jersey this year, stakeholders say the port has experienced little of the disruption securing chassis seen in past years, helped in large part by a sizable number of trucker-owned or leased chassis. Aside from a chassis shortage at the start of the year when shippers sent a surge of cargo through the port to beat tariff deadlines, there have been no major problems in the chassis flow in NY-NJ this year, truckers and intermodal equipment providers (IEP) say. That contrasts with a few years ago, when congestion and delays in picking up a chassis were common occurrences, and truckers routinely complained of poor quality and aging chassis. The removal of chassis depots from inside the marine terminals, improved productivity inside the depots, higher-quality chassis, and the arrival of a new pool and new IEP in the port have combined to give truckers and shippers more options and provide easier access to chassis, stakeholders said. “It seems like it’s working,” Tom Adamski, agent for First Coast Logistics, said of the port’s chassis system. “Quite frankly, you are not hearing a lot of craziness” about the difficulty of getting a chassis, he added. ‘Evolution’ in chassis supply The fluidity of the chassis system was maintained even as cargo volumes increased 4.9 percent in the first seven months of 2019, to 3.03 million loaded TEU, over the same period in 2018, according to PIERS, a JOC.com sister company within IHS Markit. One reason is that 50 percent or more of the chassis in the port are now leased or owned by truckers, according to a commonly cited estimate that is accepted by many truckers and the Port Authority of New York and New Jersey. That enables operators to avoid the potential congestion and delays of chassis depots. In addition, IEPs say they have responded to past trucker complaints by creating more efficient pools with new or refurbished chassis. Click to enlarge “There has been an evolution of more trucker or drayage owned wheels in New York [and] New Jersey,” Van T. Noel, executive vice president and chief operations officer for TRAC Intermodal, said. “And I think to some extent that was the result of the inferior product that we, as the IEPs, provided to the end user. I think what you've seen now is the investment strategy of going off dock by many of the IEPs, and we're trying to bring value back to the drayage community.” Gray pool talk declines The shift has removed from the front burner talk of the benefits of a port-wide gray — or interoperable — chassis pool, which would enable truckers to pick up and drop off chassis from different IEPs at multiple locations. While some truckers and IEPs still see it as desirable, especially if cargo volumes continue to grow at a high rate, the issue has receded after several unsuccessful attempts to create one. The possibility of creating a gray pool is still discussed at meetings of the Port Performance Council, a stakeholder group created to improve efficiency in the port. But while the council’s July minutes say the body is “continuing to evaluate the idea of a pool model,” the Port Authority of New York and New Jersey and IEPs say no meaningful talks in that direction are under way. The most recent step, the creation of the OPEN Choice Equipment Agreement - Northeast (OCEA-N) pool in the spring of 2018, has yet to yield a true gray pool. Operated from one location by North American Chassis Pool Cooperative (NACPC) and Flexi-Van Leasing, which provide the chassis, the pool sought unsuccessfully in September 2018 to add a second IEP, Milestone Equipment Holdings, which would have added true interoperability with chassis from two IEPs. Milestone balked at a management structure that would have given too much management authority to Flexi-Van, said Douglas D. Hoehn, executive vice president of Milestone. “We feel strongly that it needs to be managed by a third party, not one of the leasing companies,” Hoehn said. Those concerns echoed those of Flexi-Van and Direct ChassisLink Inc. (DCLI), whose effort to create a gray pool with TRAC Intermodal foundered in 2016, in part over questions of management control. Fleet upgrades Hoehn said the removal of chassis depots from the terminals, with APM being the last of the four main terminals to do so, in 2017 improved access to chassis in the port. That made it possible for a new arrival such as Milestone, which began serving New York-New Jersey in earnest in 2017, to compete with established providers, he said. Truckers complain that moving the chassis out of the terminal adds a trip for the driver, who in the past could deliver a box and drop off the chassis, or pick up a box and a chassis, at the same time. But TRAC Intermodal's Noel said the company and other IEPs have been able to improve efficiency in the off-dock depots and cut the truck visit time enough that it could now be faster than going to the terminal even if it requires an additional trip. Improved chassis quality speeds the pickup by cutting the time needed to check an outgoing chassis for roadworthiness and exchange it for another chassis if the first one has problems, he said. TRAC has refurbished 50 percent of its 16,000 chassis in the port, replacing everything on the chassis except the steel, he said. Other IEPs have upgraded their fleet. Milestone provides new chassis, and DCLI has increased the size of its New York-New Jersey fleet slightly to 5,000 chassis in the last two years, and has spent millions of dollars buying new chassis, refurbishing old ones, or putting radial tires on existing chassis, Ron Joseph, executive vice president and chief operating officer of DCLI, said. Contact Hugh R. Morley at hugh.morley@ihsmarkit.com and follow him on Twitter: @HughRMorley1 .

North American ports

Evolving NY-NJ chassis pool maintains port flow

<div class="phx-topic abstract-wrapper">It would be the 10th consecutive year the carrier has reported a profit as it capitalized on increasing demand supported by elevated rates.</div>

It would be the 10th consecutive year the carrier has reported a profit as it capitalized on increasing demand supported by elevated rates.

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<div class="phx-topic">Hapag-Lloyd expects to book 2024 revenue of $20.7 billion and a pre-tax profit of $2.8 billion, with earnings lifted by rising volumes and stable rate levels through much of the year, according to preliminary results released by the carrier Thursday. The Hamburg-based liner will release its annual report on March 20. It will show a 6.7% year-over-year increase in revenue generated by volume that rose 5% to 12.5 million TEUs and average rate levels of $1,492 per TEU, just $9 below 2023. Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 4.1% to $5 billion, while the $2.8 billion EBIT was up 3.7%, extending the profitable annual pre-tax run of Hapag-Lloyd to 10 years. The carrier said both EBITDA and EBIT were in the upper range of the adjusted earnings forecast it published in October. “The increases can primarily be attributed to higher transport volumes combined with a stable average freight rate...despite the rerouting of ships via the Cape of Good Hope due to the security situation in the Red Sea and the associated longer voyage times,” it said. The annual results reporting season for ocean carriers is about to begin, with Hapag-Lloyd following Cosco Shipping Holdings, which provided its estimated results earlier this month. While Hapag-Lloyd's preliminary results for 2024 were solid, Cosco <a href="https://www.joc.com/article/cosco-forecasts-95-jump-in-2024-net-profit-on-robust-volumes-freight-rates-5920588">Shipping is expecting its annual net profit to soar 95%</a> year over year to $7.5 billion, with Cosco subsidiary OOCL reporting a 30% increase in revenue in its 2024 operational result. Maersk last October significantly upgraded its guidance for 2024 after reporting a strong third-quarter result, raising its expected full-year EBIT by $2 billion to between $5.2 billion and $5.7 billion. The carrier will publish its 2024 annual report on Feb. 6. <h3>Profitable bull run ending, banks say </h3>Still, the bull run of carrier profitability is coming to an end, according to analysts. In a recent report titled Exceptional Profits Period Drawing to a Close, investment bank Jefferies noted that ocean rates were expected to weaken through 2025, with slowing demand and <a href="https://www.joc.com/article/carriers-eye-red-sea-transits-after-houthi-rebels-pledge-restraint-5925939">a return to Red Sea transits</a> the leading factors in the pricing decline. A report from HSBC called 2025 “a year of two halves” for container shipping, with a profitable H1 followed by rates deteriorating through second six months when the global bank also expects carriers to resume transits through the Suez Canal and Red Sea. Driving the analyst sentiment is excess capacity within container shipping that has been masked by the longer voyages around southern Africa, which have absorbed an estimated 10% to 12% of available global capacity. When carriers return to Red Sea transits, that will release the absorbed capacity back into an Asia-Europe trade lane already facing slowing demand as economic weakness in major importing countries shows little signs of recovery. Carriers have been <a href="https://www.joc.com/article/container-shipping-still-has-an-overcapacity-problem-but-its-far-from-insurmountable-5234357">downplaying the impact of overcapacity</a> once transits through the Suez resume, pointing to an increase in scrapping — which has been close to zero for the last few years — and the ability to slow-steam ships that have been at full speed since the Africa diversions began. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Hapag-Lloyd expects to book 2024 revenue of $20.7 billion and a pre-tax profit of $2.8 billion, with earnings lifted by rising volumes and stable rate levels through much of the year, according to preliminary results released by the carrier Thursday. The Hamburg-based liner will release its annual report on March 20. It will show a 6.7% year-over-year increase in revenue generated by volume that rose 5% to 12.5 million TEUs and average rate levels of $1,492 per TEU, just $9 below 2023. Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 4.1% to $5 billion, while the $2.8 billion EBIT was up 3.7%, extending the profitable annual pre-tax run of Hapag-Lloyd to 10 years. The carrier said both EBITDA and EBIT were in the upper range of the adjusted earnings forecast it published in October. “The increases can primarily be attributed to higher transport volumes combined with a stable average freight rate...despite the rerouting of ships via the Cape of Good Hope due to the security situation in the Red Sea and the associated longer voyage times,” it said. The annual results reporting season for ocean carriers is about to begin, with Hapag-Lloyd following Cosco Shipping Holdings, which provided its estimated results earlier this month. While Hapag-Lloyd's preliminary results for 2024 were solid, Cosco Shipping is expecting its annual net profit to soar 95% year over year to $7.5 billion, with Cosco subsidiary OOCL reporting a 30% increase in revenue in its 2024 operational result. Maersk last October significantly upgraded its guidance for 2024 after reporting a strong third-quarter result, raising its expected full-year EBIT by $2 billion to between $5.2 billion and $5.7 billion. The carrier will publish its 2024 annual report on Feb. 6. Profitable bull run ending, banks say Still, the bull run of carrier profitability is coming to an end, according to analysts. In a recent report titled Exceptional Profits Period Drawing to a Close, investment bank Jefferies noted that ocean rates were expected to weaken through 2025, with slowing demand and a return to Red Sea transits the leading factors in the pricing decline. A report from HSBC called 2025 “a year of two halves” for container shipping, with a profitable H1 followed by rates deteriorating through second six months when the global bank also expects carriers to resume transits through the Suez Canal and Red Sea. Driving the analyst sentiment is excess capacity within container shipping that has been masked by the longer voyages around southern Africa, which have absorbed an estimated 10% to 12% of available global capacity. When carriers return to Red Sea transits, that will release the absorbed capacity back into an Asia-Europe trade lane already facing slowing demand as economic weakness in major importing countries shows little signs of recovery. Carriers have been downplaying the impact of overcapacity once transits through the Suez resume, pointing to an increase in scrapping — which has been close to zero for the last few years — and the ability to slow-steam ships that have been at full speed since the Africa diversions began. Contact Greg Knowler at greg.knowler@spglobal.com .

Container Shipping News

Container lines

Maritime

Strong volume, high rates to lift Hapag-Lloyd's 2024 earnings

<div class="phx-topic abstract-wrapper">The planned development in Eastern Canada marks the latest stage in a nearly two-year-old partnership between the company and the Class I railroad.</div>

The planned development in Eastern Canada marks the latest stage in a nearly two-year-old partnership between the company and the Class I railroad.

<div class="phx-topic">Americold Realty Trust plans to build a cold-storage warehouse near Port Saint John in New Brunswick, Canada, its first import-export hub under its ongoing partnership with Canadian Pacific Kansas City (CPKC) to expand intermodal reefer throughout North America. Americold said Tuesday it plans to spend between US$75 million and $80 million on a warehouse that can handle up to 22,000 pallets, approximating 300,000 square feet of space. The company said the warehouse will handle refrigerated cargoes between the DP World container terminal at Port St. John and CPKC. After the merger that created the first Class I railroad spanning the United States, Mexico and Canada, CPKC added <a href="https://www.joc.com/article/cpkc-adds-new-reefer-containers-to-mexico-us-service-5216882">1,000 temperature-controlled intermodal containers</a> and launched an <a href="https://www.joc.com/article/mexico-intermodal-market-heats-cpkc-deals_20230425.html">intermodal reefer service between central Mexico and Chicago</a>. Americold became part of that service in June 2023 with plans to build <a href="https://www.joc.com/article/cpkc-americold-team-up-on-temperature-controlled-intermodal-warehouses-5221164">a cold-storage warehouse in Kansas City</a> along the CPKC route. Ocean carrier Hapag-Lloyd also entered into an agreement with CPKC for reefer capacity between the <a href="https://www.joc.com/article/cpkc-inks-deal-with-hapag-lloyd-to-boost-mexico-intermodal-play-5216590">US and Mexico’s Lazaro Cardenas port</a>. Americold has also signaled interest in building <a href="https://www.joc.com/article/cpkc-americold-say-to-expand-cold-chain-partnership-into-mexico-5904275">cold-storage capacity in Mexico</a>. Americold also entered a partnership with DP World in November 2022. The Port Saint John warehouse will be Americold’s third in Canada, joining other facilities in Halifax and Calgary.Port Saint John primarily serves trans-Atlantic and North-South services. Those include Hapag-Lloyd’s standalone Caribbean Express, Mediterranean Canada, and Atlantic Loop 5 export service. Mediterranean Shipping Co.’s Canada Gulf service and CMA CGM’s Caribbean service also call the port. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>.</div>

Americold Realty Trust plans to build a cold-storage warehouse near Port Saint John in New Brunswick, Canada, its first import-export hub under its ongoing partnership with Canadian Pacific Kansas City (CPKC) to expand intermodal reefer throughout North America. Americold said Tuesday it plans to spend between US$75 million and $80 million on a warehouse that can handle up to 22,000 pallets, approximating 300,000 square feet of space. The company said the warehouse will handle refrigerated cargoes between the DP World container terminal at Port St. John and CPKC. After the merger that created the first Class I railroad spanning the United States, Mexico and Canada, CPKC added 1,000 temperature-controlled intermodal containers and launched an intermodal reefer service between central Mexico and Chicago . Americold became part of that service in June 2023 with plans to build a cold-storage warehouse in Kansas City along the CPKC route. Ocean carrier Hapag-Lloyd also entered into an agreement with CPKC for reefer capacity between the US and Mexico’s Lazaro Cardenas port . Americold has also signaled interest in building cold-storage capacity in Mexico . Americold also entered a partnership with DP World in November 2022. The Port Saint John warehouse will be Americold’s third in Canada, joining other facilities in Halifax and Calgary. Port Saint John primarily serves trans-Atlantic and North-South services. Those include Hapag-Lloyd’s standalone Caribbean Express, Mediterranean Canada, and Atlantic Loop 5 export service. Mediterranean Shipping Co.’s Canada Gulf service and CMA CGM’s Caribbean service also call the port. Contact Michael Angell at michael.angell@spglobal.com .

Industrial Real Estate News

Port infrastructure

North-American rail

Intermodal providers

Cool Cargo News

Americold adding Port Saint John warehouse as part of CPKC alliance

<div class="phx-topic abstract-wrapper">Ports in the UK are already seeing rising operational delays as a string of storms moves in from the Atlantic and major ports in Europe issue high wind warnings. </div>

Ports in the UK are already seeing rising operational delays as a string of storms moves in from the Atlantic and major ports in Europe issue high wind warnings.

<div class="phx-topic">Ocean carriers are warning of schedule disruptions in North Europe as extreme weather hits the English Channel and Bay of Biscay, with UK ports already heavily disrupted by a string of storms. The seven-day average vessel waiting time at the UK’s largest port of Felixstowe is about four days, while delays at Southampton port are up to 4.25 days, according to Kuehne + Nagel’s supply chain visibility tool SeaExplorer. The extreme weather will move across the English Channel to mainland Europe with multiple high wind warnings in Hamburg, Antwerp, Rotterdam, Le Havre and Dunkirk in addition to Felixstowe and Southampton. “The passage of several storms from the Atlantic into European waters in recent and upcoming days will see disruptions across the port landscape in North Europe,” CMA CGM told customers in an advisory Wednesday. “High winds and a large swell will see passages across the Bay of Biscay disrupted until Friday,” the advisory noted. Maersk issued a similar warning, noting that vessel movement and port operations will be “severely impacted” and might cause delays to South Africa-bound vessels and vessels sailing north to Rotterdam and London. Winter storms regularly affect ocean shipping at both ends of the Asia-Europe trade lane, with <a href="https://www.joc.com/article/shippers-carriers-face-wave-of-port-congestion-vessel-delays-in-asia-europe-5913827">a series of typhoons late last year shutting ports in China</a> and creating significant delays. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Ocean carriers are warning of schedule disruptions in North Europe as extreme weather hits the English Channel and Bay of Biscay, with UK ports already heavily disrupted by a string of storms. The seven-day average vessel waiting time at the UK’s largest port of Felixstowe is about four days, while delays at Southampton port are up to 4.25 days, according to Kuehne + Nagel’s supply chain visibility tool SeaExplorer. The extreme weather will move across the English Channel to mainland Europe with multiple high wind warnings in Hamburg, Antwerp, Rotterdam, Le Havre and Dunkirk in addition to Felixstowe and Southampton. “The passage of several storms from the Atlantic into European waters in recent and upcoming days will see disruptions across the port landscape in North Europe,” CMA CGM told customers in an advisory Wednesday. “High winds and a large swell will see passages across the Bay of Biscay disrupted until Friday,” the advisory noted. Maersk issued a similar warning, noting that vessel movement and port operations will be “severely impacted” and might cause delays to South Africa-bound vessels and vessels sailing north to Rotterdam and London. Winter storms regularly affect ocean shipping at both ends of the Asia-Europe trade lane, with a series of typhoons late last year shutting ports in China and creating significant delays. Contact Greg Knowler at greg.knowler@spglobal.com .

Trans-Atlantic

Asia-Europe

International ports

Ocean carriers warn of disruption as storms bear down on Europe

<div class="phx-topic abstract-wrapper">The effort coincides with UP’s plans to open a new terminal in Kansas City, Kansas, in the third quarter of this year that would alleviate pressure on the railroad’s existing terminal across the border in Missouri.</div>

The effort coincides with UP’s plans to open a new terminal in Kansas City, Kansas, in the third quarter of this year that would alleviate pressure on the railroad’s existing terminal across the border in Missouri.

<div class="phx-topic">Union Pacific Railroad (UP) is making an aggressive push during the annual bid season to attract customers shipping freight between Los Angeles and the Kansas City market, a route traditionally dominated by competitor BNSF Railway and the trucking sector. The effort coincides with UP’s plans to open a new terminal in Kansas City, Kansas, in the third quarter of this year. The facility, which would be located in the Armourdale neighborhood near Interstate 70, is expected to alleviate pressure on UP’s existing Neff Yard, a smaller terminal across the Missouri River in Kansas City, Missouri. Reed Janousek, UP’s assistant vice president of intermodal sales, said the investment is based on data showing population in the Kansas City metro area is growing faster than the US overall. And UP, he said, is aiming to convert truckload freight to rail, not necessarily target BNSF. “Our consistent message to beneficial cargo owners has been we are now ready to make some noise on domestic intermodal on this lane,” Janousek told the Journal of Commerce on Tuesday. “The beauty of Armourdale is it allows us to double our current Kansas City capacity compared with today. We won’t push it to that maximum immediately, but it’ll provide an incremental boost on day one. If we need to double the capacity, we have the capability.” Kansas City has been a hot topic with UP’s channel partners — companies that sell the railroad’s intermodal service to shippers. “That’s been a big topic of conversation. They’ve been asking us a lot about Kansas City,” said one non-asset intermodal executive who did not want to be identified. “They want any Kansas City opportunity we can give them. It’s a big point of emphasis for them.” <h3>Intermodal saves money, but it’s a tough fight </h3>To boost its Los Angeles-Kansas City business, UP must address several hurdles regarding price and service. According to the Journal of Commerce Intermodal Savings Index, shippers can easily save more than $1,000 per container on the route by opting for intermodal rail. On average, shippers saved nearly $1,400 per container under an intermodal contract, excluding accessorial fees and assuming short-haul local drayage at origin and destination. For a shipper moving 20 loads per week, that could yield more than $1 million in annual savings. However, BNSF’s existing investment in its Logistics Park Kansas City terminal gives it a pricing advantage. J.B. Hunt Transport Services, the largest US intermodal carrier and a BNSF partner, wields significant leverage due to its extensive container fleet, which rivals the combined pool of Hub Group, Schneider National and railroad-owned containers. Additionally, most of UP’s channel partners can also access BNSF through COFC Logistics, a wholesaler with 10,000 to 15,000 containers. UP also faces pricing challenges from the $20 per container <a href="https://www.up.com/customers/announcements/premium/allpremium/PR2024-119.html">Alameda Corridor User Fee</a> because shipments originate or terminate at the Intermodal Container Transfer Facility (ICTF) in Long Beach. <h3>Need better transit times, consistency </h3>Beyond cost, UP must also address transit times and service reliability. A second non-asset intermodal executive said UP’s service between Los Angeles and Kansas City/St. Louis was “horrific” at times last summer. Inconsistent transit times complicate the planning of drayage trips to deliver the cargo in the Kansas City area. Transit times are also a concern. BNSF trains take about 72 hours from Los Angeles to Kansas City and 65 hours on the return trip, with 90% of trains arriving on time, according to data from one BNSF partner. By contrast, UP trains take about 96 hours from west to east on the lane and 74 hours east to west, according to Janousek. “Historically, Kansas City is a stop on the way from LA to Chicago or a stop on the way from Chicago back to LA,” Janousek said. “We’re now looking at Kansas City to say, ‘hey, this is its own market,’ and making the necessary changes to ensure trains have capacity and run on schedule.” In the near term, UP trains on the route will continue to run through ICTF Long Beach. However, as UP’s terminal capacity is expanded in San Bernardino’s Inland Empire, it’s possible that traffic may shift to that area. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>.</div>

Union Pacific Railroad (UP) is making an aggressive push during the annual bid season to attract customers shipping freight between Los Angeles and the Kansas City market, a route traditionally dominated by competitor BNSF Railway and the trucking sector. The effort coincides with UP’s plans to open a new terminal in Kansas City, Kansas, in the third quarter of this year. The facility, which would be located in the Armourdale neighborhood near Interstate 70, is expected to alleviate pressure on UP’s existing Neff Yard, a smaller terminal across the Missouri River in Kansas City, Missouri. Reed Janousek, UP’s assistant vice president of intermodal sales, said the investment is based on data showing population in the Kansas City metro area is growing faster than the US overall. And UP, he said, is aiming to convert truckload freight to rail, not necessarily target BNSF. “Our consistent message to beneficial cargo owners has been we are now ready to make some noise on domestic intermodal on this lane,” Janousek told the Journal of Commerce on Tuesday. “The beauty of Armourdale is it allows us to double our current Kansas City capacity compared with today. We won’t push it to that maximum immediately, but it’ll provide an incremental boost on day one. If we need to double the capacity, we have the capability.” Kansas City has been a hot topic with UP’s channel partners — companies that sell the railroad’s intermodal service to shippers. “That’s been a big topic of conversation. They’ve been asking us a lot about Kansas City,” said one non-asset intermodal executive who did not want to be identified. “They want any Kansas City opportunity we can give them. It’s a big point of emphasis for them.” Intermodal saves money, but it’s a tough fight To boost its Los Angeles-Kansas City business, UP must address several hurdles regarding price and service. According to the Journal of Commerce Intermodal Savings Index, shippers can easily save more than $1,000 per container on the route by opting for intermodal rail. On average, shippers saved nearly $1,400 per container under an intermodal contract, excluding accessorial fees and assuming short-haul local drayage at origin and destination. For a shipper moving 20 loads per week, that could yield more than $1 million in annual savings. However, BNSF’s existing investment in its Logistics Park Kansas City terminal gives it a pricing advantage. J.B. Hunt Transport Services, the largest US intermodal carrier and a BNSF partner, wields significant leverage due to its extensive container fleet, which rivals the combined pool of Hub Group, Schneider National and railroad-owned containers. Additionally, most of UP’s channel partners can also access BNSF through COFC Logistics, a wholesaler with 10,000 to 15,000 containers. UP also faces pricing challenges from the $20 per container Alameda Corridor User Fee because shipments originate or terminate at the Intermodal Container Transfer Facility (ICTF) in Long Beach. Need better transit times, consistency Beyond cost, UP must also address transit times and service reliability. A second non-asset intermodal executive said UP’s service between Los Angeles and Kansas City/St. Louis was “horrific” at times last summer. Inconsistent transit times complicate the planning of drayage trips to deliver the cargo in the Kansas City area. Transit times are also a concern. BNSF trains take about 72 hours from Los Angeles to Kansas City and 65 hours on the return trip, with 90% of trains arriving on time, according to data from one BNSF partner. By contrast, UP trains take about 96 hours from west to east on the lane and 74 hours east to west, according to Janousek. “Historically, Kansas City is a stop on the way from LA to Chicago or a stop on the way from Chicago back to LA,” Janousek said. “We’re now looking at Kansas City to say, ‘hey, this is its own market,’ and making the necessary changes to ensure trains have capacity and run on schedule.” In the near term, UP trains on the route will continue to run through ICTF Long Beach. However, as UP’s terminal capacity is expanded in San Bernardino’s Inland Empire, it’s possible that traffic may shift to that area. Contact Ari Ashe at ari.ashe@spglobal.com .

Union Pacific makes push to grab more Los Angeles-to-Kansas City freight

<div class="phx-topic abstract-wrapper">EPCs say that tariffs enforced after project costs are finalized not only impact the bottom line but in some cases destroy the viability of a project, hitting volumes in the breakbulk trade.</div>

EPCs say that tariffs enforced after project costs are finalized not only impact the bottom line but in some cases destroy the viability of a project, hitting volumes in the breakbulk trade.

<div class="phx-topic">The uncertainty around the Trump administration’s tariff policy is playing havoc with the project cargo sector, with shippers warning of disruption down the line for projects already committed. Engineering, procurement and construction (EPC) companies speaking to the Journal of Commerce say that tariffs that are enforced after project costs are finalized not only impact the bottom line, but in some cases destroy the viability of a project, hitting volumes in the breakbulk trade. On his first day in office, President Donald Trump gave numerous directives to the heads of government agencies charged with shaping US trade policy. While new tariffs were not announced, a Presidential Memorandum defining an “America First Trade Policy” published Jan. 20 laid the groundwork for wide-ranging tariffs that will impact the global trade landscape. EPCs work many years in advance and lock in prices for products and provisions well ahead of project delivery. “We have suppliers in Mexico, Canada and all over so it is definitely affecting our choices and our selection, Geanean Ordonez, project logistics manager/procurement at EPC Technip Energies, said on a Journal of Commerce webcast on Jan 23. She added that the enforcement of tariffs will “definitely affect how we purchase in the future.” The real difficulty comes for projects that are ongoing with purchase orders already in place, Ordonez said. “Then, all of a sudden, there are additional tariffs for the countries that we’ve selected,” she said. <h3>Preparing for ‘ramifications’</h3>The initial focus for the Trump administration’s tariff interest are Mexico, Canada and China. Trump has threatened 25% tariffs on Canada and Mexico from Feb. 1, with higher amounts on imports from China. But that could just be the start of issues from the project cargo sector.“We have to think about retaliatory tariffs,” John Hark, director of Bertling Logistics and adjunct professor at Texas A&amp;M Galveston, said on the webcast.“We need to be prepared now in case these tariffs are enacted and start thinking about what the ramifications are,” he said.Hark also pointed to the threat associated with the renegotiation of trade agreements, such as the US-Mexico-Canada Agreement (USMCA), passed in Trump’s first term to replace the longstanding North American Free Trade Agreement (NAFTA). During his campaign last year, Trump said he would invoke the renegotiation clause of USMCA if elected.Notwithstanding the outcome of the US’s trade policy investigation, Hark said that projects would not switch to America builds overnight. Likewise, “tariffs are probably coming, but it’s not as sudden and immediate as we expected.”“It’s plan for the worst, hope for the best,” Andrew Young, corporate logistics manager at Bechtel, said on the webcast. While he acknowledged some of the tariff talk is “bluster,” from a project perspective shippers have got to “chase down everything” to see how that affects their supply chains. “We know tariffs are complex, depending on your market, your equipment and where your suppliers are based,” Young said. “But 25% for products from Mexico and Canada from Feb. 1, 10% rest of the world? That’s something that we've really got to scrutinize.” Contact Carly Fields at <a href="mailto:carly.fields@spglobal.com">carly.fields@spglobal.com</a>.</div>

The uncertainty around the Trump administration’s tariff policy is playing havoc with the project cargo sector, with shippers warning of disruption down the line for projects already committed. Engineering, procurement and construction (EPC) companies speaking to the Journal of Commerce say that tariffs that are enforced after project costs are finalized not only impact the bottom line, but in some cases destroy the viability of a project, hitting volumes in the breakbulk trade. On his first day in office, President Donald Trump gave numerous directives to the heads of government agencies charged with shaping US trade policy. While new tariffs were not announced, a Presidential Memorandum defining an “America First Trade Policy” published Jan. 20 laid the groundwork for wide-ranging tariffs that will impact the global trade landscape. EPCs work many years in advance and lock in prices for products and provisions well ahead of project delivery. “We have suppliers in Mexico, Canada and all over so it is definitely affecting our choices and our selection, Geanean Ordonez, project logistics manager/procurement at EPC Technip Energies, said on a Journal of Commerce webcast on Jan 23. She added that the enforcement of tariffs will “definitely affect how we purchase in the future.” The real difficulty comes for projects that are ongoing with purchase orders already in place, Ordonez said. “Then, all of a sudden, there are additional tariffs for the countries that we’ve selected,” she said. Preparing for ‘ramifications’ The initial focus for the Trump administration’s tariff interest are Mexico, Canada and China. Trump has threatened 25% tariffs on Canada and Mexico from Feb. 1, with higher amounts on imports from China. But that could just be the start of issues from the project cargo sector. “We have to think about retaliatory tariffs,” John Hark, director of Bertling Logistics and adjunct professor at Texas A&M Galveston, said on the webcast. “We need to be prepared now in case these tariffs are enacted and start thinking about what the ramifications are,” he said. Hark also pointed to the threat associated with the renegotiation of trade agreements, such as the US-Mexico-Canada Agreement (USMCA), passed in Trump’s first term to replace the longstanding North American Free Trade Agreement (NAFTA). During his campaign last year, Trump said he would invoke the renegotiation clause of USMCA if elected. Notwithstanding the outcome of the US’s trade policy investigation, Hark said that projects would not switch to America builds overnight. Likewise, “tariffs are probably coming, but it’s not as sudden and immediate as we expected.” “It’s plan for the worst, hope for the best,” Andrew Young, corporate logistics manager at Bechtel, said on the webcast. While he acknowledged some of the tariff talk is “bluster,” from a project perspective shippers have got to “chase down everything” to see how that affects their supply chains. “We know tariffs are complex, depending on your market, your equipment and where your suppliers are based,” Young said. “But 25% for products from Mexico and Canada from Feb. 1, 10% rest of the world? That’s something that we've really got to scrutinize.” Contact Carly Fields at carly.fields@spglobal.com .

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

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Shippers save money, time with automated transportation bidding tools

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

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