<div class="phx-topic abstract-wrapper">The Port Authority of New York and New Jersey is looking for additional land well ahead of dredging that would bring larger ships and double the freight coming into the busiest US East Coast port over the coming two decades.</div>

The Port Authority of New York and New Jersey is looking for additional land well ahead of dredging that would bring larger ships and double the freight coming into the busiest US East Coast port over the coming two decades.

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<div>Marine terminal operators in the Port of New York and New Jersey are planning new capacity for ultra-large container ships once new dredging is approved that would make New York-New Jersey one of the deepest seaports on the US East Coast. But landside capacity remains tight as shippers tie up existing terminal space with long-dwelling imports and new yard space means reclaiming brownfield sites, including an old Ivory Soap plant, that are part of the industrial legacy surrounding the port. The US Army Corps of Engineers is seeking authorization from the US Congress for dredging the port’s waterways down to...

Marine terminal operators in the Port of New York and New Jersey are planning new capacity for ultra-large container ships once new dredging is approved that would make New York-New Jersey one of the deepest seaports on the US East Coast. But landside capacity remains tight as shippers tie up existing terminal space with long-dwelling imports and new yard space means reclaiming brownfield sites, including an old Ivory Soap plant, that are part of the industrial legacy surrounding the port. The US Army Corps of Engineers is seeking authorization from the US Congress for dredging the port’s waterways down to 55 feet, down from their current 50 feet depth, Bethann Rooney, port director for the Port Authority of New York and New Jersey (PANYNJ), said at Baruch College's World Trade Week NYC event held in Manhattan in early May. Rooney said at the time it could be released within a month or so. If approved, the dredging would make it possible for “super” post-Panamax ships of 20,000 TEU to call New York-New Jersey. So far, the largest ship that called the US East Coast was the 16,000 TEU CMA CGM Marco Polo. “Ocean carriers are asking us today about an 18,000 and a 21,000 TEU ship coming in,” Rooney said. “Hopefully, we will have the authorization shortly to deepen the channels even further to 55 feet to handle the current and future generation of ships.” There is no timeline on when the dredging would be complete. Rooney said, though, it took two decades to dredge 38 miles of New York-New Jersey waterways to the current 50-foot depth, which started when the largest ships to call New York-New Jersey was 6,500-TEU. But once the dredging was done, the largest ship on the water was 14,000-TEU, Rooney said. “As soon as we were done dredging, even before they were done, they were too shallow,” she added. Other ports up and down the East Coast are also planning for the arrival of super-post-Panamax ships. The Port of Charleston is expected to finish dredging its inner harbor to 52 feet and its outer channel to 54 feet this year. Last year, the Port of Virginia received a down payment from Congress on its dredging project that could bring its depth to 55 feet by 2024 . Terminals to add berths, cranes Along with the dredging, Rooney said the port’s marine terminal operators are investing in new cranes and other projects that will be needed for larger ships. Maher Terminals applied to the New Jersey Department of Environmental Protection in March 2022 for a permit to install new cranes at Berth 82 on the terminal’s eastern edge along Newark Bay. Maher will install three cranes capable of handling ships up to 20,000 TEU, an October 2021 press release from industrial manufacturer Liebherr said. A NJDEP spokesperson said approval of the permit is still pending. GCT Bayonne, which started dredging in October 2021 for a new berth that can handle 18,000-TEU ships , also plans to redevelop an existing 70-acre container storage yard, according to its application with the NJDEP. After completing a capacity expansion in 2020, Port Newark Container Terminal received a permit last year from PANYNJ for accessing one of the port’s public berths, which has no container cranes, for studying a future capacity increase. Long-dwelling imports take up port space Container yard space at New York-New Jersey is another challenge ahead of handling large ships. Port wide, imports have been dwelling about 10 to 14 days on average, which is double the typical dwell time seen last year. Those imports tie up valuable space at marine terminals and result in berth delays for arriving vessels. A maritime industry rule of thumb is that each additional day of dwell translates approximately into the need for 25 percent more space for containers. Rooney said spiraling warehousing costs in the region mean some large shippers would rather pay demurrage for keeping their goods at the port. “Containers are cheap warehousing,” Rooney said. “It’s not unusual to see thousands of containers sitting more than a month.” As a short-term solution for long-dwelling imports, eight acres of additional space split between an off-dock container yard and chassis depot were made available in May to shippers that want to move containers out of the marine terminals, according to a statement from the Association of Bi-State Motor Carriers. Likewise, PANYNJ sought interest in redeveloping a 4.4-acre, unpaved gravel site along the north side of the Port Newark terminal for the storage of containers, according to a notice soliciting bids for the site. The port authority’s notice said that the site is part of a “BP-Marine spill petroleum clean-up … arising from historic operations.” In addition to fencing and lighting, the site will require that any paving plans accord with the NJDEP’s plan for site remediation. Port Ivory offers large, undeveloped space PANYNJ hopes to open another 66 acres for terminal space at the Port Ivory site on Staten Island, so called because it is part of a former Procter & Gamble property where Ivory Soap and other products were made until the company abandoned the property in 1991. The port authority took over the land in 2000. The New York State Department of Environmental Conservation (NYSDEC) certified in 2002 that the site did not contain “a consequential amount of hazardous waste,” according to an engineering report on the site. However, the “presence of contaminants at concentrations in excess of current NYSDEC guidelines” required a voluntary clean-up program and ongoing monitoring, the report said. Port Ivory consists of two parts known as Parcel B and Parcel C. The 27-acre Parcel B didn’t require further remediation after the NYSDEC certified it as contaminant free in 2017. But the site requires extensive redevelopment, including demolishing two abandoned warehouses and repaving, before it can handle container truck traffic. Following a solicitation of interest issued last year for Parcel B, PANYNJ expected to receive proposed bids for the site in January 2022. The port authority declined to comment on whether it received any bidders or proposals for redeveloping Parcel B, which abuts the western edge of the GCT New York container terminal. Parcel C, which is close to 39 acres, encompasses a dirt field and tidal marshland along the Arthur Kill waterway that separates Staten Island from New Jersey, along the northern side of CGT New York. The site, which includes a groundwater monitoring well, is under a management plan from the NYSDEC that requires the agency’s approval before any further development takes place. In November 2021, PANYNJ applied to the NYSDEC for a change-in-use permit for Parcel C, which an NYSDEC spokesperson said is being reviewed. Although specific plans for the site were not listed in the application, Port Ivory is currently storing a limited number of empty containers, according to one source. Rooney didn't address any specific projects during her address in May, but she noted that the port expects to see annual volumes rise to 17 million TEU by 2050, almost double its throughput in 2021, necessitating to start projects that will provide the capacity needed for those volumes. “We are preparing for that and ... have to plan for that because infrastructure doesn’t get built overnight,” she said. Contact Michael Angell at michael.angell@ihsmarkit.com and follow him on Twitter: @michael_angell . 

North American ports

NY-NJ port lays groundwork for larger ships ahead of dredging

<div class="phx-topic abstract-wrapper">The comments by Louis Sola during a Senate hearing come amid rising US scrutiny of Chinese influence over the crucial waterway. </div>

The comments by Louis Sola during a Senate hearing come amid rising US scrutiny of Chinese influence over the crucial waterway.

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<div class="phx-topic">The new head of the US Federal Maritime Commission on Tuesday told a Senate hearing he questions whether a Hong Kong-based terminal operator that runs ports on both ends of the Panama Canal was contributing revenue to the Panamanian government like other terminal operators do. The comments by FMC Chairman Louis Sola come amid <a href="https://www.joc.com/article/bolder-trump-injects-new-volatility-into-container-shipping-5927954">rising US scrutiny of Chinese influence</a> over the canal. While the Panama Canal Authority (ACP) “has done a fantastic job” running the canal in the 25 years since the US handed over control of the critical waterway -- contributing $28 billion to Panamanian government coffers during that time -- Sola said the two ports at Balboa and Cristobal that are operated by Hutchison Port Holdings haven’t provided revenue to the government. ”What I don’t understand is why Panama would allow those two ports to operate [and] put [other canal operations] into jeopardy,” said Sola, who was tapped by Donald Trump on Jan. 20 to serve as FMC chair. “I don’t believe we’re on a level playing field.” The Panamanian government, in response to Trump’s recent ire about China’s presence at the canal, launched an audit of Hutchison offices in Panama last week. Hutchison wasn’t immediately available to respond to Sola’s comments. Sola told the Senate hearing, which was called specifically to examine the canal’s operations and the impact on US national security, that the two Hutchison ports have justified not contributing to the Panamanian government by claiming they’re not making money. But Sola – having worked himself on the development of the SSA Marine-operated terminal in Colon, Panama -- questioned how the Hutchison ports could not be making money after 20 years in operation. SSA has a smaller terminal on the Atlantic side of the canal. Sola stressed he was confident the ACP could continue to efficiently operate the canal’s locks, and said the authority’s independence must be defended. “Any effort by other interests in Panama to diminish the independence or professionalism of the authority must be stopped,” he said. Sola noted the Panamanian government has a history of corruption, pointing to the state flagging of sanctioned vessels by Panama. <h3>FMC will monitor tolls, transit slot auction</h3>Sola told the Senate Committee on Commerce, Science and Transportation that the FMC would continue to monitor toll pricing implemented by the ACP and how it auctions off transit slots during drought restrictions. Deeming China’s influence on the Panama Canal “a national security risk,” Committee Chair Sen. Ted Cruz (R-Texas) said the waterway’s profits regularly exceed $3 billion annually at the expense of US taxpayers. He criticized the canal for raising its tolls in 2023 while imposing drought restrictions. “Chinese companies are building a bridge across the canal – at a slow pace so as to take nearly a decade – and control container ports at either end,” Cruz said. “The partially completed bridge gives China the ability to block the canal without warning, and the ports give China ready observation posts to time that action.” The treaty underpinning the handover of canal control to Panama allows for the US to reclaim it by force if the neutrality of the waterway is threatened, according to Eugene Kontorovich, a George Mason University professor and fellow at the conservative think tank Heritage Foundation. Such a move would require Congressional authorization, depending on the circumstances, Kontorovich told the committee. Contact Mark Szakonyi at <a href="mark.szakonyi@spglobal.com">mark.szakonyi@spglobal.com</a>.</div>

The new head of the US Federal Maritime Commission on Tuesday told a Senate hearing he questions whether a Hong Kong-based terminal operator that runs ports on both ends of the Panama Canal was contributing revenue to the Panamanian government like other terminal operators do. The comments by FMC Chairman Louis Sola come amid rising US scrutiny of Chinese influence over the canal. While the Panama Canal Authority (ACP) “has done a fantastic job” running the canal in the 25 years since the US handed over control of the critical waterway -- contributing $28 billion to Panamanian government coffers during that time -- Sola said the two ports at Balboa and Cristobal that are operated by Hutchison Port Holdings haven’t provided revenue to the government. ”What I don’t understand is why Panama would allow those two ports to operate [and] put [other canal operations] into jeopardy,” said Sola, who was tapped by Donald Trump on Jan. 20 to serve as FMC chair. “I don’t believe we’re on a level playing field.” The Panamanian government, in response to Trump’s recent ire about China’s presence at the canal, launched an audit of Hutchison offices in Panama last week. Hutchison wasn’t immediately available to respond to Sola’s comments. Sola told the Senate hearing, which was called specifically to examine the canal’s operations and the impact on US national security, that the two Hutchison ports have justified not contributing to the Panamanian government by claiming they’re not making money. But Sola – having worked himself on the development of the SSA Marine-operated terminal in Colon, Panama -- questioned how the Hutchison ports could not be making money after 20 years in operation. SSA has a smaller terminal on the Atlantic side of the canal. Sola stressed he was confident the ACP could continue to efficiently operate the canal’s locks, and said the authority’s independence must be defended. “Any effort by other interests in Panama to diminish the independence or professionalism of the authority must be stopped,” he said. Sola noted the Panamanian government has a history of corruption, pointing to the state flagging of sanctioned vessels by Panama. FMC will monitor tolls, transit slot auction Sola told the Senate Committee on Commerce, Science and Transportation that the FMC would continue to monitor toll pricing implemented by the ACP and how it auctions off transit slots during drought restrictions. Deeming China’s influence on the Panama Canal “a national security risk,” Committee Chair Sen. Ted Cruz (R-Texas) said the waterway’s profits regularly exceed $3 billion annually at the expense of US taxpayers. He criticized the canal for raising its tolls in 2023 while imposing drought restrictions. “Chinese companies are building a bridge across the canal – at a slow pace so as to take nearly a decade – and control container ports at either end,” Cruz said. “The partially completed bridge gives China the ability to block the canal without warning, and the ports give China ready observation posts to time that action.” The treaty underpinning the handover of canal control to Panama allows for the US to reclaim it by force if the neutrality of the waterway is threatened, according to Eugene Kontorovich, a George Mason University professor and fellow at the conservative think tank Heritage Foundation. Such a move would require Congressional authorization, depending on the circumstances, Kontorovich told the committee. Contact Mark Szakonyi at mark.szakonyi@spglobal.com .

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Trans-Pacific

FMC chair questions ‘level playing field’ in Panama Canal operations

<div class="phx-topic abstract-wrapper">The former Wisconsin congressman and Fox Business host was confirmed by a 77-22 vote on Tuesday. </div>

The former Wisconsin congressman and Fox Business host was confirmed by a 77-22 vote on Tuesday.

<div class="phx-topic">Former Wisconsin congressman Sean Duffy received US Senate confirmation Tuesday to serve as Secretary of Transportation in the new Trump administration. Duffy, also a former Fox Business host, was confirmed by a 77-22 vote.Duffy represented Wisconsin in Congress from 2011 to 2019, during which time he introduced two bills directly related to transportation, neither of which advanced.Duffy showed interest in issues linked to the trucking industry during his time in Congress and co-sponsored several pieces of maritime-related legislation.Donald Trump <a href="https://www.joc.com/article/former-congressman-tv-host-gets-trumps-nod-to-lead-dot-5820698">nominated Duffy for the lead role at the Department of Transportation in mid-November</a>.Contact Laura Robb at <a href="mailto:laura.robb@spglobal.com. ">laura.robb@spglobal.com</a>.</div>

Former Wisconsin congressman Sean Duffy received US Senate confirmation Tuesday to serve as Secretary of Transportation in the new Trump administration. Duffy, also a former Fox Business host, was confirmed by a 77-22 vote. Duffy represented Wisconsin in Congress from 2011 to 2019, during which time he introduced two bills directly related to transportation, neither of which advanced. Duffy showed interest in issues linked to the trucking industry during his time in Congress and co-sponsored several pieces of maritime-related legislation. Donald Trump nominated Duffy for the lead role at the Department of Transportation in mid-November . Contact Laura Robb at laura.robb@spglobal.com .

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North-American rail

Senate confirms Sean Duffy as Secretary of Transportation

<div class="phx-topic abstract-wrapper">Liners believe they left money on the table in 2024–25 service contracts, sources tell the Journal of Commerce, and are putting up opening quotes about 25% higher than a year ago in their initial talks with customers.</div>

Liners believe they left money on the table in 2024–25 service contracts, sources tell the Journal of Commerce, and are putting up opening quotes about 25% higher than a year ago in their initial talks with customers.

<div class="phx-topic">Ocean carriers plying the trans-Pacific are quoting initial rates for the 2025–26 contract year about 25% higher than the current year on the belief they underpriced their services from Asia to the US a year ago, sources with knowledge of the early-stage talks say. Those sources say carriers are trying to use this year’s talks with shippers to essentially recoup money they believe they left on the table in the current 2024–25 contracts. “They are certainly starting this year higher,” James Caradonna, executive vice president at the forwarder M&amp;R Spedag Group, said of the carriers. According to sources that include non-vessel-operating common carriers (NVOs) and industry consultants, trans-Pacific carriers in the opening round of discussions with their larger core customers for the 2025–26 service year have quoted contract rates of $2,500 per FEU to the West Coast and $3,500 per FEU to the East Coast. Those sources told the Journal of Commerce that for the current contract year that, for most deals, wraps up at the end of April, initial quotes from carriers were approximately $1,800 to $2,000 per FEU to the West Coast and in the high $2,000s per FEU to the East Coast. Those levels eventually settled at or below $1,600 and $2,500, respectively, the sources said. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e7a65aab-9aac-4f07-9b74-1793746c01ef"></dynamic-object></div>Kurt McElroy, executive vice president of the NVO Kerry Apex, said that in his conversations with several customers, any anxiety they are expressing is not about price, but rather about securing the vessel space they will need in the coming year, even if that involves paying higher contract rates to lock in the space commitments. With the spot rate from Asia to the West Coast at $3,800 per FEU as of Jan. 27, according to Platts, a Journal of Commerce sister company within S&amp;P Global, a $2,500 per FEU contract rate “is still pretty good,” McElroy said. <h3>Forecast of overcapacity in 2024 drove contract rates lower </h3>Carriers underpriced their services last spring because they bought into the prevailing view of the trade that there would be huge overcapacity in 2024, a carrier source told the Journal of Commerce. This year, however, carriers want to take control of the narrative and set the “perception” of what supply and demand will look like for the 2025–26 contract year, the source said. Most contracts for the upcoming service year take effect on May 1. “What is the market’s perception of 2025? Shipping lines want to take the initiative,” the carrier source said. Forwarders appear to be equally divided as to what rate levels the market will support, given the uncertainties over whether vessels will resume normal transits through the Suez Canal and Red Sea at some point this year. A shift back to the Suez would mean a flood of capacity — now being absorbed by the longer transits around southern Africa — returning to the market, thus softening rates. Another unknown hanging over the market is around potential new tariffs that may be implemented by the Trump administration. “Everything that is happening is exerting downward pressure [on rates],” said Robert Fredman, principal at the consulting firm SF Global Insights and a former logistics manager at a national retailer. “My gut tells me the rate will be below $2,000 [to the West Coast].” An importer in the automotive sector said he has heard the rates carriers are now quoting, and how carriers feel they must charge compensatory rates to make up for falling short a year ago. “Carriers have told us the story about setting contract rates that did not cover their costs last year and they are determined not to make the same mistake again this year,” the source said. Still, with spot rates dropping steadily during the Lunar New Year lull and the uncertainty around US tariffs, there is apparently no rush to sign up for the rates carriers are quoting at present. “We will probably wait until late April to sign just because of so much uncertainty with the tariffs,” the importer said. <h3>Trump tariffs could be a market disrupter </h3>Given the uncertainties linked to the Red Sea and the Trump tariffs, Jon Monroe, who serves as a consultant to NVOs, said it is difficult at this time to determine what the capacity situation in the trans-Pacific will be. However, carrier costs have risen in recent years, so if they remain determined to hold the line on contract rates, which is not out of the question, service contract rates will go up. “I think $2,000 to $2,500 [per FEU to the West Coast] is where the rates should end up,” Monroe said. A second industry consultant who once served as the logistics manager at two national retailers said he believes West Coast rates will end up “closer” to $2,000, with East Coast rates about $800 to $1,000 higher than that. If import volumes and spot rates do not recover quickly in March in the aftermath of the Lunar New Year factory shutdowns in Asia, some importers say they will likely delay signing service contracts until April. “Our strategy, at least today, is to drag our feet,” an importer in the home furnishings sector said. If it appears capacity is readily available, “that will drive the market lower,” the source said. One thing that could cause a spike in US import volumes is if the Trump administration announces large tariffs on key trading partners that take effect later in the spring, said another NVO. “Then you’ll see a bunch more front loading,” he said. “Otherwise, I think this year is going to be like a traditional year with a normal peak,” the NVO said. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>.Contact Laura Robb at <a href="mailto:laura.robb@spglobal.com">laura.robb@spglobal.com</a>.</div>

Ocean carriers plying the trans-Pacific are quoting initial rates for the 2025–26 contract year about 25% higher than the current year on the belief they underpriced their services from Asia to the US a year ago, sources with knowledge of the early-stage talks say. Those sources say carriers are trying to use this year’s talks with shippers to essentially recoup money they believe they left on the table in the current 2024–25 contracts. “They are certainly starting this year higher,” James Caradonna, executive vice president at the forwarder M&R Spedag Group, said of the carriers. According to sources that include non-vessel-operating common carriers (NVOs) and industry consultants, trans-Pacific carriers in the opening round of discussions with their larger core customers for the 2025–26 service year have quoted contract rates of $2,500 per FEU to the West Coast and $3,500 per FEU to the East Coast. Those sources told the Journal of Commerce that for the current contract year that, for most deals, wraps up at the end of April, initial quotes from carriers were approximately $1,800 to $2,000 per FEU to the West Coast and in the high $2,000s per FEU to the East Coast. Those levels eventually settled at or below $1,600 and $2,500, respectively, the sources said. Kurt McElroy, executive vice president of the NVO Kerry Apex, said that in his conversations with several customers, any anxiety they are expressing is not about price, but rather about securing the vessel space they will need in the coming year, even if that involves paying higher contract rates to lock in the space commitments. With the spot rate from Asia to the West Coast at $3,800 per FEU as of Jan. 27, according to Platts, a Journal of Commerce sister company within S&P Global, a $2,500 per FEU contract rate “is still pretty good,” McElroy said. Forecast of overcapacity in 2024 drove contract rates lower Carriers underpriced their services last spring because they bought into the prevailing view of the trade that there would be huge overcapacity in 2024, a carrier source told the Journal of Commerce. This year, however, carriers want to take control of the narrative and set the “perception” of what supply and demand will look like for the 2025–26 contract year, the source said. Most contracts for the upcoming service year take effect on May 1. “What is the market’s perception of 2025? Shipping lines want to take the initiative,” the carrier source said. Forwarders appear to be equally divided as to what rate levels the market will support, given the uncertainties over whether vessels will resume normal transits through the Suez Canal and Red Sea at some point this year. A shift back to the Suez would mean a flood of capacity — now being absorbed by the longer transits around southern Africa — returning to the market, thus softening rates. Another unknown hanging over the market is around potential new tariffs that may be implemented by the Trump administration. “Everything that is happening is exerting downward pressure [on rates],” said Robert Fredman, principal at the consulting firm SF Global Insights and a former logistics manager at a national retailer. “My gut tells me the rate will be below $2,000 [to the West Coast].” An importer in the automotive sector said he has heard the rates carriers are now quoting, and how carriers feel they must charge compensatory rates to make up for falling short a year ago. “Carriers have told us the story about setting contract rates that did not cover their costs last year and they are determined not to make the same mistake again this year,” the source said. Still, with spot rates dropping steadily during the Lunar New Year lull and the uncertainty around US tariffs, there is apparently no rush to sign up for the rates carriers are quoting at present. “We will probably wait until late April to sign just because of so much uncertainty with the tariffs,” the importer said. Trump tariffs could be a market disrupter Given the uncertainties linked to the Red Sea and the Trump tariffs, Jon Monroe, who serves as a consultant to NVOs, said it is difficult at this time to determine what the capacity situation in the trans-Pacific will be. However, carrier costs have risen in recent years, so if they remain determined to hold the line on contract rates, which is not out of the question, service contract rates will go up. “I think $2,000 to $2,500 [per FEU to the West Coast] is where the rates should end up,” Monroe said. A second industry consultant who once served as the logistics manager at two national retailers said he believes West Coast rates will end up “closer” to $2,000, with East Coast rates about $800 to $1,000 higher than that. If import volumes and spot rates do not recover quickly in March in the aftermath of the Lunar New Year factory shutdowns in Asia, some importers say they will likely delay signing service contracts until April. “Our strategy, at least today, is to drag our feet,” an importer in the home furnishings sector said. If it appears capacity is readily available, “that will drive the market lower,” the source said. One thing that could cause a spike in US import volumes is if the Trump administration announces large tariffs on key trading partners that take effect later in the spring, said another NVO. “Then you’ll see a bunch more front loading,” he said. “Otherwise, I think this year is going to be like a traditional year with a normal peak,” the NVO said. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .Contact Laura Robb at laura.robb@spglobal.com .

Container lines

Trans-Pacific carriers determined to win higher contract rates this year: sources

<div class="phx-topic abstract-wrapper">The arrangement allows international carriers to transship domestic import and export cargoes at Shanghai’s Yangshan deepwater port from selected ports in northern China.</div>

The arrangement allows international carriers to transship domestic import and export cargoes at Shanghai’s Yangshan deepwater port from selected ports in northern China.

<div class="phx-topic">China’s Transport Ministry has extended Maersk’s domestic cabotage trial for an additional two years while also further liberalizing the cabotage rules, the carrier said Tuesday. “The pilot with China’s Transport Ministry has been extended until Dec. 31, 2027, and Maersk is continuing its cabotage business in China,” a Maersk spokesperson told the Journal of Commerce. The pilot arrangement allows international carriers to transship domestic import and export cargoes at Shanghai’s Yangshan deepwater port from selected ports in northern China. “The benefits for our customers include faster transit time and more efficient supply chain management,” the Maersk spokesperson said. Maersk said Lianyungang, in the northern Jiangsu province, has been added as a designated port as part of the pilot renewal. The port joins the three existing ports — Dalian, Tianjin and Qingdao — that were originally chosen when the pilot was launched in May 2022. The Transport Ministry also made further concessions under the renewal. These include defining ships that operate extended intra-Asia routes, including those between China and India, as long-haul vessels, thus making them eligible to participate in the pilot. The ministry is also allowing vessel-sharing partners to carry each other’s transshipped cargo provided the carriers have received permits from the ministry. This could potentially open the pilot to Gemini Cooperation services when the Maersk/Hapag-Lloyd partnership launches Feb. 1. Maersk is the only foreign carrier to acknowledge it is taking part in the China cabotage scheme. Hapag-Lloyd declined to comment on the pilot when contacted by the Journal of Commerce. Maersk estimated that import cargoes handled through Shanghai could arrive at the four designated Chinese ports about two days faster compared with being transshipped via South Korea’s Busan or Maersk’s other hubs. The carrier said it has handled more than 100,000 TEUs since the first inbound consignment of containers was transshipped via Shanghai bound for Tianjin in May 2022. The latest pilot renewal continues a process to liberalize China’s cabotage trade that started more than 12 years ago when foreign-registered ships were allowed to carry containers between Shanghai and other Chinese ports, although they still had to be Chinese-owned. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>.</div>

China’s Transport Ministry has extended Maersk’s domestic cabotage trial for an additional two years while also further liberalizing the cabotage rules, the carrier said Tuesday. “The pilot with China’s Transport Ministry has been extended until Dec. 31, 2027, and Maersk is continuing its cabotage business in China,” a Maersk spokesperson told the Journal of Commerce. The pilot arrangement allows international carriers to transship domestic import and export cargoes at Shanghai’s Yangshan deepwater port from selected ports in northern China. “The benefits for our customers include faster transit time and more efficient supply chain management,” the Maersk spokesperson said. Maersk said Lianyungang, in the northern Jiangsu province, has been added as a designated port as part of the pilot renewal. The port joins the three existing ports — Dalian, Tianjin and Qingdao — that were originally chosen when the pilot was launched in May 2022. The Transport Ministry also made further concessions under the renewal. These include defining ships that operate extended intra-Asia routes, including those between China and India, as long-haul vessels, thus making them eligible to participate in the pilot. The ministry is also allowing vessel-sharing partners to carry each other’s transshipped cargo provided the carriers have received permits from the ministry. This could potentially open the pilot to Gemini Cooperation services when the Maersk/Hapag-Lloyd partnership launches Feb. 1. Maersk is the only foreign carrier to acknowledge it is taking part in the China cabotage scheme. Hapag-Lloyd declined to comment on the pilot when contacted by the Journal of Commerce. Maersk estimated that import cargoes handled through Shanghai could arrive at the four designated Chinese ports about two days faster compared with being transshipped via South Korea’s Busan or Maersk’s other hubs. The carrier said it has handled more than 100,000 TEUs since the first inbound consignment of containers was transshipped via Shanghai bound for Tianjin in May 2022. The latest pilot renewal continues a process to liberalize China’s cabotage trade that started more than 12 years ago when foreign-registered ships were allowed to carry containers between Shanghai and other Chinese ports, although they still had to be Chinese-owned. Contact Keith Wallis at keithwallis@hotmail.com .

China extends Maersk’s domestic cabotage pilot to December 2027

<div class="phx-topic abstract-wrapper">China celebrates the Year of the Snake Tuesday, and while there is always a move to get export orders on the water before the holidays, the push this year came earlier than expected.</div>

China celebrates the Year of the Snake Tuesday, and while there is always a move to get export orders on the water before the holidays, the push this year came earlier than expected.

<div class="phx-topic">Forwarders and carriers are competing aggressively for market share in the Asia-Europe trade lane as rates fall sharply through January and demand slows into the Lunar New Year holidays in China. The Year of the Snake begins Tuesday, and factories can be closed for more than two weeks as China celebrates its most important holiday. While there are always moves to ship out orders before the holidays, the rush this year came earlier than usual, according to Kathy Liu, vice president of global sales and marketing at Taiwan-based Dimerco Express Group. “Many factories in China had already moved their export orders out before the end of December and it has been very quiet on Asia-Europe since Jan. 10,” Liu told the Journal of Commerce Tuesday. The weakening demand has sparked fierce competition for business by forwarders and carriers preparing for the alliance reshuffling on Feb. 1, with short-term Asia-North Europe rates losing $2,000 in value since the end of December. “Global companies opened their [request for quotations from carriers] early in the first quarter and the competition from forwarders has been very strong this year,” Liu said. “With demand slowing, everybody is hungry for the goods and shipping lines need to fill their capacity, so there will for sure be a price war.” <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="730bbdfd-e50b-4bef-8a82-8007ba8d81e9"></dynamic-object></div>The average Asia-North Europe short-term rate has fallen 21% since the end of December to settle at $3,963 per FEU on Jan. 28, according to rate benchmarking platform Xeneta. While the decline has not been so acute on the Asia-Mediterranean trade, the rate of $5,209/FEU was down more than 10% compared with the end of December. <h3>Red Sea front and center in shipper contracts </h3>There is little clarity into how rates will perform after the Lunar New Year and widespread uncertainty into <a href="https://www.joc.com/article/carriers-eye-red-sea-transits-after-houthi-rebels-pledge-restraint-5925939">when carriers will resume shorter Suez Canal transits</a>, but the Red Sea was very much on the minds of Asia-Europe cargo owners who spoke to the Journal of Commerce this week. “Our annual contracts are not yet closed, but for sure there is a sentence in the agreements that in case of a significant market change, both parties must go into renegotiations,” according to the logistics director at a European retailer. An Asia-based supply chain manager said the contracts being entered into on Asia-Europe were high considering the expectations for weak demand this year. He estimated the annual rates were about 30% above those being signed last year. “But once Suez Canal transits are back, every shipper on that trade lane will renegotiate the rate down to the old levels before the Africa diversions,” he said. “There are still a lot of unknowns out there and Asia-Europe will be a buyers' market this year. The base case from global bank HSBC is for Red Sea transits to resume from mid-2025, which it said implied 10.5% effective capacity growth in 2025 compared with 2.7% volume growth, thus placing heavy downward pressure on prices. “With little incentive for liners to revert to the Red Sea, we think liners could still see decent first-half 2025 earnings, but profits should deteriorate in [the second half],” the bank noted in its Global Freight Monitor report released Tuesday. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Forwarders and carriers are competing aggressively for market share in the Asia-Europe trade lane as rates fall sharply through January and demand slows into the Lunar New Year holidays in China. The Year of the Snake begins Tuesday, and factories can be closed for more than two weeks as China celebrates its most important holiday. While there are always moves to ship out orders before the holidays, the rush this year came earlier than usual, according to Kathy Liu, vice president of global sales and marketing at Taiwan-based Dimerco Express Group. “Many factories in China had already moved their export orders out before the end of December and it has been very quiet on Asia-Europe since Jan. 10,” Liu told the Journal of Commerce Tuesday. The weakening demand has sparked fierce competition for business by forwarders and carriers preparing for the alliance reshuffling on Feb. 1, with short-term Asia-North Europe rates losing $2,000 in value since the end of December. “Global companies opened their [request for quotations from carriers] early in the first quarter and the competition from forwarders has been very strong this year,” Liu said. “With demand slowing, everybody is hungry for the goods and shipping lines need to fill their capacity, so there will for sure be a price war.” The average Asia-North Europe short-term rate has fallen 21% since the end of December to settle at $3,963 per FEU on Jan. 28, according to rate benchmarking platform Xeneta. While the decline has not been so acute on the Asia-Mediterranean trade, the rate of $5,209/FEU was down more than 10% compared with the end of December. Red Sea front and center in shipper contracts There is little clarity into how rates will perform after the Lunar New Year and widespread uncertainty into when carriers will resume shorter Suez Canal transits , but the Red Sea was very much on the minds of Asia-Europe cargo owners who spoke to the Journal of Commerce this week. “Our annual contracts are not yet closed, but for sure there is a sentence in the agreements that in case of a significant market change, both parties must go into renegotiations,” according to the logistics director at a European retailer. An Asia-based supply chain manager said the contracts being entered into on Asia-Europe were high considering the expectations for weak demand this year. He estimated the annual rates were about 30% above those being signed last year. “But once Suez Canal transits are back, every shipper on that trade lane will renegotiate the rate down to the old levels before the Africa diversions,” he said. “There are still a lot of unknowns out there and Asia-Europe will be a buyers' market this year. The base case from global bank HSBC is for Red Sea transits to resume from mid-2025, which it said implied 10.5% effective capacity growth in 2025 compared with 2.7% volume growth, thus placing heavy downward pressure on prices. “With little incentive for liners to revert to the Red Sea, we think liners could still see decent first-half 2025 earnings, but profits should deteriorate in [the second half],” the bank noted in its Global Freight Monitor report released Tuesday. Contact Greg Knowler at greg.knowler@spglobal.com .

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Asia-Europe ocean rates fall as weak demand sparks battle for market share

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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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