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<div class="phx-topic abstract-wrapper">With less-than-truckload demand high and capacity tight, TFI International is clawing back its US LTL network to improve freight and lane density and profitability. 
 
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With less-than-truckload demand high and capacity tight, TFI International is clawing back its US LTL network to improve freight and lane density and profitability.

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<div>With less-than-truckload (LTL) freight demand at historic highs, LTL carriers are using their terminal networks like a spigot, adding or subtracting terminals to control freight flow and improve profitability. TForce Freight, is in the less-is-more camp. The <a>fifth-largest US LTL operator by annual revenue</a> plans to close four smaller terminals, while others are adding sites. When it comes to LTL terminals, “we got way too many,” Alain Bedard, chairman, president, and CEO of Montreal-based TFI International, told investment analysts in an <a>earnings conference call</a> Friday. “We will have to adjust that, get rid of all these fixed costs, and change...

With less-than-truckload (LTL) freight demand at historic highs, LTL carriers are using their terminal networks like a spigot, adding or subtracting terminals to control freight flow and improve profitability. TForce Freight, is in the less-is-more camp. The fifth-largest US LTL operator by annual revenue plans to close four smaller terminals, while others are adding sites. When it comes to LTL terminals, “we got way too many,” Alain Bedard, chairman, president, and CEO of Montreal-based TFI International, told investment analysts in an earnings conference call Friday. “We will have to adjust that, get rid of all these fixed costs, and change this network,” Bedard said. The former UPS Freight, which was acquired by TFI International in February , though the acquisition didn't close until the end of April, has a network of about 225 terminals handling 30,000 bills of lading a day. One of those terminals, Bedard said, handles about 40 bills of lading a day. “So, if you're a 30,000-bills-a-day company running a terminal in a 60,000-people city, does that make sense?” he said. TForce Freight will close terminals in the Chicago area and in West Virginia, Bedard said. At issue is the amount of business that moves through those terminals and how that affects network density. “We need to operate terminals where we have density of population and density of customers,” he said. “When we work on the freight that fits, we have to work also on the network that fits.” Right-sizing the network LTL operations throughout the United States are in flux as trucking companies both expand and prune their networks as shippers push unprecedented amounts of freight toward their terminals. Old Dominion Freight Line (ODFL) said Tuesday it plans to add three or four more terminals before the end of the year. “We’re still at about 15 to 20 percent excess capacity, and that’s in the service center network, which is the most important in the LTL business,” Adam Satterfield, senior vice president and CFO of ODFL told investment analysts. “That’s the longest-term form of capacity and the hardest to put in place.” Multiregional LTL carrier Saia opened terminals in Connecticut, Ohio, and Virginia during the third quarter, and plans to open two more before the end of the year. “As we get closer to our customers, we’re in a position to offer differentiated service,” Frederick Holzgrefe, said Thursday. Holzgrefe told investment analysts in a conference call that Saia plans to follow seven terminal openings in 2021 with 10 to 15 openings in 2022. “With each new terminal opening, we get closer to our customer base and doing so, we give the customer the opportunity to choose our value proposition.” ODFL and Saia are in a far different position from TForce Freight. They’ve been expanding rapidly over the past decade, with ODFL climbing to the No. 2 spot in terms of US revenue. TForce, then UPS Freight, was ranked fifth in 2020, while Saia ranked ninth. ODFL passed UPS Freight in revenue, dropping the Richmond, Virginia-based carrier from fourth to fifth place in the JOC.com/SJ Consulting Group Top 25 LTL Carrier rankings, in 2014. The rechristened TForce Freight is among the few larger carriers trimming its network to reduce costs and improve density and profitability. Improving profit margins To date, TFI has had some success in improving its profitability. TForce Freight had an adjusted operating ratio (OR) of 90.7 percent in the third quarter. For the full year in 2020, UPS Freight had a 98.8 percent OR, which translates to a 1.2 percent operating margin. TForce’s largest US competitors have operating ratios in the 80s. In the third quarter, TFI reported $989.3 million in LTL revenue, with $614 million from its US operations, almost all TForce Freight. Prior to the acquisition, TFI, Canada’s largest trucking operator, had eight LTL vehicles in the US. Now, it has 4,952, according to its third-quarter earnings report. TFI’s Canadian LTL carriers had $136.4 million in revenue, a 2.4 percent year-over-year increase, and an adjusted operating ratio of 80.3 percent. That’s the type of operating ratio TFI would like to see at its US LTL carrier, but it has a long way to go. “This is not the goal, to be a 91 percent OR company,” Bedard said. The goal is to get closer to a 20 percent operating margin and 80 percent OR. “Will that happen in 2022? Probably not. Are we going to be heading in the right direction in 2022? I think so,” said Bedard. It’s not just the network that has to be adjusted. TForce Freight is rebalancing its freight mix. “We're pleased to say that probably 50 to 60 percent of what we do today fits the network and also fits the freight profile that we want at TForce Freight," Bedard said. And at a time when many LTL carriers are expanding their retail business as e-commerce booms, Bedard wants TForce Freight to carrier more traditional industrial shipments. “We have too much of this light freight,” he said. “We need more of this industrial LTL that still exists in the US.” Contact William B. Cassidy at bill.cassidy@ihsmarkit.com and follow him on Twitter: @willbcassidy .

LTL carriers ‘right size’ networks for higher profitability

<div class="phx-topic abstract-wrapper">Freight brokers large and small are testing software, like the tools developed by Vooma, that automate core functions like quoting, load building and tracking. </div>

Freight brokers large and small are testing software, like the tools developed by Vooma, that automate core functions like quoting, load building and tracking.

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<div class="phx-topic">A software provider developing automation tools for North American truckload brokers has landed $16 million over two funding rounds from venture capital groups and existing strategic investors. San Francisco-based Vooma builds so-called “agents” that automate repetitive processes by extracting and structuring data from emails, texts and voice channels. The company’s products are focused on automating three broad functional areas for brokers: quoting, load building and communication around appointment scheduling and load status. Founded in 2023, Vooma already has a number of large brokers as customers, including Echo Global Logistics, MODE Transportation, Arrive Logistics and NFI. The company is also partnering with widely used communication, pricing and transportation management systems (TMSs) including Front, Greenscreens.ai, McLeod and Turvo. NFI uses Vooma for manual load tender conversion via a web browser plug-in that turns tenders that arrive in PDF, Excel spreadsheet or email form into electronic data interchange (EDI) or application programming interface (API) data feeds for automated load entry. ”We are converting more than 500 shipments a week using this tool and it’s saving us hours of operation,” Dave Broering, president of integrated logistics at NFI, told the Journal of Commerce. Vooma competes in an increasingly crowded market of technology providers building automation tools for domestic third-party logistics companies. That landscape includes vendors like Everest, Levity, FleetWorks, and Happy Robots. Everest and Levity specialize in converting email information into structured data for quoting, load building and appointment scheduling, while Fleetworks and Happy Robots focus on voice agents to automate communications around truckload shipments. Beyond that, other technology providers are building automated tools for specific functions, like Qued and Bigger Picture in the appointment scheduling arena. A technology provider in the brokerage industry, who did not want to be identified, told the Journal of Commerce that the competition in the automation space is likely to put price pressure on vendors, who generally charge a per-transaction fee. Additionally, more competition could soon come from general purpose artificial intelligence developers like Google, Meta and Amazon, with brokers using tools from those companies to automate some of the core workflows Vooma and others are targeting. The counter to that argument is that the tools of Vooma and other freight-specific providers are built with the needs of logistics and transportation professionals in mind. Vooma’s funding round was led by venture capital firm Craft Ventures and adds to an earlier seed round of $3.6 million led by Index Ventures that included participation from executives at project44, Ryder and Uber Freight. Contact Eric Johnson at eric.johnson@spglobal.com. </div>

A software provider developing automation tools for North American truckload brokers has landed $16 million over two funding rounds from venture capital groups and existing strategic investors. San Francisco-based Vooma builds so-called “agents” that automate repetitive processes by extracting and structuring data from emails, texts and voice channels. The company’s products are focused on automating three broad functional areas for brokers: quoting, load building and communication around appointment scheduling and load status. Founded in 2023, Vooma already has a number of large brokers as customers, including Echo Global Logistics, MODE Transportation, Arrive Logistics and NFI. The company is also partnering with widely used communication, pricing and transportation management systems (TMSs) including Front, Greenscreens.ai, McLeod and Turvo. NFI uses Vooma for manual load tender conversion via a web browser plug-in that turns tenders that arrive in PDF, Excel spreadsheet or email form into electronic data interchange (EDI) or application programming interface (API) data feeds for automated load entry. ”We are converting more than 500 shipments a week using this tool and it’s saving us hours of operation,” Dave Broering, president of integrated logistics at NFI, told the Journal of Commerce. Vooma competes in an increasingly crowded market of technology providers building automation tools for domestic third-party logistics companies. That landscape includes vendors like Everest, Levity, FleetWorks, and Happy Robots. Everest and Levity specialize in converting email information into structured data for quoting, load building and appointment scheduling, while Fleetworks and Happy Robots focus on voice agents to automate communications around truckload shipments. Beyond that, other technology providers are building automated tools for specific functions, like Qued and Bigger Picture in the appointment scheduling arena. A technology provider in the brokerage industry, who did not want to be identified, told the Journal of Commerce that the competition in the automation space is likely to put price pressure on vendors, who generally charge a per-transaction fee. Additionally, more competition could soon come from general purpose artificial intelligence developers like Google, Meta and Amazon, with brokers using tools from those companies to automate some of the core workflows Vooma and others are targeting. The counter to that argument is that the tools of Vooma and other freight-specific providers are built with the needs of logistics and transportation professionals in mind. Vooma’s funding round was led by venture capital firm Craft Ventures and adds to an earlier seed round of $3.6 million led by Index Ventures that included participation from executives at project44, Ryder and Uber Freight. Contact Eric Johnson at eric.johnson@spglobal.com.

Broker automation vendor lands funding round in increasingly competitive market

<div class="phx-topic abstract-wrapper">There is no guarantee we will see the same market shifts in early 2025 that we saw during the last big alliance shakeup in 2017, but the operational realities faced by carriers are essentially the same, writes Lars Jensen.</div>

There is no guarantee we will see the same market shifts in early 2025 that we saw during the last big alliance shakeup in 2017, but the operational realities faced by carriers are essentially the same, writes Lars Jensen.

<div class="phx-topic">We are now only two months away from the end of the 2M and THE shipping alliances and the start of the <a href="https://www.joc.com/article/premier-alliance-enhances-network-ahead-of-february-launch-5751123">Premier Alliance</a> and <a href="https://www.joc.com/article/hapag-lloyd-says-gemini-alliance-cargo-bookings-to-open-dec-3-5846853">Gemini Cooperation</a>, as well as a standalone network from Mediterranean Shipping Co. The only constellation that will not change is the Ocean Alliance. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5874626_0.1.jpg"></img></div>The situation to some degree resembles the spring of 2017, in which the G6 and Ocean 3 Alliance were disbanded in favor of the creation of THE and Ocean Alliance while 2M was already established and continued unchanged. The slight difference being that HMM, which left the G6 alliance, became associated with 2M at the time. Phasing in entire new networks is a major undertaking and can certainly have an impact on capacity as well as operational performance such as reliability. It is therefore of interest to look at the impact seen in the market in the spring of 2017 as the new alliances came into being to get a sense of the level of operational disruption we once again face in early 2025. From a spot rate perspective, we saw a temporary dip in freight rates on the main head-haul trades from Asia to Europe and North America. The data only tells us there was a dip but not the reason why, although it does appear to be a reasonable hypothesis that the phase-in of new networks had a role to play. As new networks are phased in, there is a risk of mismatching supply and demand temporarily. At the same time, carriers might be expected to place a high priority on maintaining their market share going into a new collaboration with other carriers. In 2017, we also saw a temporary and very sharp spike in freight rates on the backhaul from Europe to Asia. The World Container Index (WCI) spot rate from Drewry had a stable rate on this backhaul near $600 per FEU in the months before the alliance switch. Increases then began from February 2017 and spiked in April 2017 at more than $1,700 per FEU, an almost tripling in a backhaul trade that was unprecedented. And for a brief moment in time, the backhaul spot rate index exceeded the head-haul. This was clearly a significant problem for backhaul shippers. The underlying driver of this temporary spike was very likely to be found in the carriers’ prioritization of their equipment flows. Not only did the new networks have to be phased in, but there was also a general slowdown of the vessels in the new services. This slowdown mainly took place on the backhaul. As a consequence, for the Europe-Asia trade it became logical for the carriers to prioritize getting empty equipment to the right locations in Asia in order to not create a capacity shortage out there by the time the peak season rolled around. This meant curtailing export bookings out of Europe, leading to a rapid increase in export spot rates. <h3>Backhaul shippers should prepare for ‘operational ripples’ </h3>In terms of reliability, the phase-in of the new networks did not have any adverse effects on the head-haul trades. But there was clearly a temporary drop in reliability on the backhaul trades from Europe and North America back to Asia. There is certainly no guarantee we will see the same phenomenon this time around, but the operational realities faced by the carriers are essentially the same. Hence the baseline expectation for the immediate aftermath of the new alliances in 2025 should be for a temporary decline in the head-haul spot rates, which shippers on these trades would certainly not mind. However, backhaul shippers should already be in close contact with their carriers in order not to be blindsided by operational ripples that lead to a short but sharp spike in rates. They should also plan for potentially longer delays in the supply chain, similar to that seen in 2017. Contact Lars Jensen at <a href="mailto:lars.jensen@vespucci-maritime.com">lars.jensen@vespucci-maritime.com.</a></div>

We are now only two months away from the end of the 2M and THE shipping alliances and the start of the Premier Alliance and Gemini Cooperation , as well as a standalone network from Mediterranean Shipping Co. The only constellation that will not change is the Ocean Alliance. The situation to some degree resembles the spring of 2017, in which the G6 and Ocean 3 Alliance were disbanded in favor of the creation of THE and Ocean Alliance while 2M was already established and continued unchanged. The slight difference being that HMM, which left the G6 alliance, became associated with 2M at the time. Phasing in entire new networks is a major undertaking and can certainly have an impact on capacity as well as operational performance such as reliability. It is therefore of interest to look at the impact seen in the market in the spring of 2017 as the new alliances came into being to get a sense of the level of operational disruption we once again face in early 2025. From a spot rate perspective, we saw a temporary dip in freight rates on the main head-haul trades from Asia to Europe and North America. The data only tells us there was a dip but not the reason why, although it does appear to be a reasonable hypothesis that the phase-in of new networks had a role to play. As new networks are phased in, there is a risk of mismatching supply and demand temporarily. At the same time, carriers might be expected to place a high priority on maintaining their market share going into a new collaboration with other carriers. In 2017, we also saw a temporary and very sharp spike in freight rates on the backhaul from Europe to Asia. The World Container Index (WCI) spot rate from Drewry had a stable rate on this backhaul near $600 per FEU in the months before the alliance switch. Increases then began from February 2017 and spiked in April 2017 at more than $1,700 per FEU, an almost tripling in a backhaul trade that was unprecedented. And for a brief moment in time, the backhaul spot rate index exceeded the head-haul. This was clearly a significant problem for backhaul shippers. The underlying driver of this temporary spike was very likely to be found in the carriers’ prioritization of their equipment flows. Not only did the new networks have to be phased in, but there was also a general slowdown of the vessels in the new services. This slowdown mainly took place on the backhaul. As a consequence, for the Europe-Asia trade it became logical for the carriers to prioritize getting empty equipment to the right locations in Asia in order to not create a capacity shortage out there by the time the peak season rolled around. This meant curtailing export bookings out of Europe, leading to a rapid increase in export spot rates. Backhaul shippers should prepare for ‘operational ripples’ In terms of reliability, the phase-in of the new networks did not have any adverse effects on the head-haul trades. But there was clearly a temporary drop in reliability on the backhaul trades from Europe and North America back to Asia. There is certainly no guarantee we will see the same phenomenon this time around, but the operational realities faced by the carriers are essentially the same. Hence the baseline expectation for the immediate aftermath of the new alliances in 2025 should be for a temporary decline in the head-haul spot rates, which shippers on these trades would certainly not mind. However, backhaul shippers should already be in close contact with their carriers in order not to be blindsided by operational ripples that lead to a short but sharp spike in rates. They should also plan for potentially longer delays in the supply chain, similar to that seen in 2017. Contact Lars Jensen at lars.jensen@vespucci-maritime.com.

As alliance changes loom, a look back provides guidance for the future

<div class="phx-topic abstract-wrapper">A dispute in Canada has all the hallmarks of a similar case in the US over what qualifies as a chassis made in China.</div>

A dispute in Canada has all the hallmarks of a similar case in the US over what qualifies as a chassis made in China.

<div class="phx-topic">Canada’s Border Services Agency (CBSA) will launch an “anti-circumvention” investigation into whether British Columbia-based chassis manufacturer Ocean Trailer violated trade regulations meant to protect Canadian manufacturers against chassis subsidized by the Chinese government. The move, announced last week, comes after Canadian chassis manufacturer Max-Atlas International filed a complaint against rival Ocean Trailer with the BSA, which is Canada’s version of the US Customs and Border Protection (CBP). Max-Atlas alleges that Ocean Trailer purchased chassis from a Vietnamese manufacturer that sourced key components from China and failed to pay the necessary countervailing and antidumping duties. The Max-Atlas complaint is reminiscent of a recent case in the US against <a href="https://www.joc.com/article/us-commerce-department-rejects-pitts-appeal-in-marine-chassis-case-5200425">Dorsey Intermodal</a>, which was found to have evaded countervailing and antidumping duties. The same Vietnamese company, Truong Hai Group Corporation (THACO), is involved in both cases. The US CBP investigation found that Dorsey Intermodal chassis used Chinese parts for between 59% and 69% of the finished unit and thus it should have been considered Chinese-made, not Vietnamese. The Canadian government enacted antidumping tariffs and duties similar to those of the US government <a href="https://www.joc.com/article/crippling-duty-on-chinese-chassis-upheld-in-final-ruling-5249958">in 2021</a> to prevent China from flooding the market with chassis sold at below-market rates, thus harming Canadian domestic manufacturers such as Max-Atlas. Max-Atlas identified 1,330 chassis of Ocean Trailer marketed as built in Vietnam with as many as 10 subcomponents from China, including axles, lights, mudflaps, steel, suspension systems and tires. Ocean Trailer sold 500 chassis to Canadian Pacific Kansas City (CPKC) and 300 to Medlog Transport and Logistics, a subsidiary of Mediterranean Shipping Co., according to the complaint. “Ocean Trailer has sold THACO chassis to Canadian Pacific, one of Max-Atlas’s most important customers — and one of the three largest customers in the Canadian market, the other two being Canadian National and Canadian Tire,” Max-Atlas wrote in its complaint to Canada’s BSA. “Max-Atlas also has significant evidence that demonstrates that Vietnamese chassis are made predominantly from Chinese steel, components or subassemblies.” <h3>Complaint ‘without merit’ </h3>Ocean Trailer told the Journal of Commerce that its case and the Dorsey case involve “different applicable laws, different legal tests, and different relevant facts” due to variations between US and Canadian regulations. Ocean Trailer said that all container chassis were properly accounted for and did not circumvent Canada’s existing antidumping and countervailing duty orders on China. “Ocean Trailer believes in the strength of its position and that Max-Atlas’ complaint is wholly without merit,” the company said in a statement. “Consequently, Ocean Trailer intends to participate fully in the CBSA’s ongoing investigation.” CPKC declined to comment on the ongoing case but referred the Journal of Commerce to a company statement outlining <a href="https://www.cpkcr.com/en/suppliers/non-information-technology-policies-and-guidelines/supplier-expectations">expectations for all its suppliers</a>, including “upholding strong standards of business ethics in accordance with applicable laws.” Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>. </div>

Canada’s Border Services Agency (CBSA) will launch an “anti-circumvention” investigation into whether British Columbia-based chassis manufacturer Ocean Trailer violated trade regulations meant to protect Canadian manufacturers against chassis subsidized by the Chinese government. The move, announced last week, comes after Canadian chassis manufacturer Max-Atlas International filed a complaint against rival Ocean Trailer with the BSA, which is Canada’s version of the US Customs and Border Protection (CBP). Max-Atlas alleges that Ocean Trailer purchased chassis from a Vietnamese manufacturer that sourced key components from China and failed to pay the necessary countervailing and antidumping duties. The Max-Atlas complaint is reminiscent of a recent case in the US against Dorsey Intermodal , which was found to have evaded countervailing and antidumping duties. The same Vietnamese company, Truong Hai Group Corporation (THACO), is involved in both cases. The US CBP investigation found that Dorsey Intermodal chassis used Chinese parts for between 59% and 69% of the finished unit and thus it should have been considered Chinese-made, not Vietnamese. The Canadian government enacted antidumping tariffs and duties similar to those of the US government in 2021 to prevent China from flooding the market with chassis sold at below-market rates, thus harming Canadian domestic manufacturers such as Max-Atlas. Max-Atlas identified 1,330 chassis of Ocean Trailer marketed as built in Vietnam with as many as 10 subcomponents from China, including axles, lights, mudflaps, steel, suspension systems and tires. Ocean Trailer sold 500 chassis to Canadian Pacific Kansas City (CPKC) and 300 to Medlog Transport and Logistics, a subsidiary of Mediterranean Shipping Co., according to the complaint. “Ocean Trailer has sold THACO chassis to Canadian Pacific, one of Max-Atlas’s most important customers — and one of the three largest customers in the Canadian market, the other two being Canadian National and Canadian Tire,” Max-Atlas wrote in its complaint to Canada’s BSA. “Max-Atlas also has significant evidence that demonstrates that Vietnamese chassis are made predominantly from Chinese steel, components or subassemblies.” Complaint ‘without merit’ Ocean Trailer told the Journal of Commerce that its case and the Dorsey case involve “different applicable laws, different legal tests, and different relevant facts” due to variations between US and Canadian regulations. Ocean Trailer said that all container chassis were properly accounted for and did not circumvent Canada’s existing antidumping and countervailing duty orders on China. “Ocean Trailer believes in the strength of its position and that Max-Atlas’ complaint is wholly without merit,” the company said in a statement. “Consequently, Ocean Trailer intends to participate fully in the CBSA’s ongoing investigation.” CPKC declined to comment on the ongoing case but referred the Journal of Commerce to a company statement outlining expectations for all its suppliers , including “upholding strong standards of business ethics in accordance with applicable laws.” Contact Ari Ashe at ari.ashe@spglobal.com .

Canadian investigation again raises questions of Chinese chassis origin

<div class="phx-topic abstract-wrapper">The first week of December is traditionally when demand for air cargo reaches its highest level, and this year a wide imbalance between demand and available space is pushing up already elevated prices.</div>

The first week of December is traditionally when demand for air cargo reaches its highest level, and this year a wide imbalance between demand and available space is pushing up already elevated prices.

<div class="phx-topic">Air cargo on the major east-west trade lanes flew into its peak shipping period this week with demand outstripping available capacity and driving rates to fresh 2024 highs on Asian export routes and the trans-Atlantic. The average Shanghai to North Europe spot rate of $5.07 per kilogram is the highest in almost two years, while the Shanghai-North America rate of $6.61/kg is the highest so far this year, according to the Baltic Air Index (BAI). BAI data shows trans-Atlantic westbound rates reached $2.64/kg this week, a level that has not been seen for 18 months. “Global air freight rates rose strongly again last week as the market headed into what is traditionally the highest point of peak season,” air freight pricing provider TAC Index reported in a rate update this week. While spot rates rose sharply, TAC noted that the index averages were lagging because a large amount of capacity has <a href="https://www.joc.com/article/savvy-air-cargo-shippers-use-strategic-rate-space-deals-to-offset-capacity-constraints-5751658">been booked in advance by freight forwarders</a> anxious to secure capacity for their customers. Chinese e-commerce platforms contract capacity directly with airlines, and the demand is so high that forwarders have struggled to find enough space for their regular customers. The International Air Transport Association (IATA) reported “exceptional traffic levels” on international routes in October for the fifth consecutive month, up 10.3% year over year. IATA attributed that to <a href="https://www.joc.com/article/air-cargo-peak-season-elevates-as-chinese-export-rates-hit-2024-high-5787362">rising e-commerce demand in the US and Europe</a> amid ongoing capacity constraints in ocean shipping because of the longer transits around southern Africa. The sharply rising rate levels are unsurprising considering the wide imbalance between strong demand and available capacity, with IATA data showing demand outstripping capacity on all major trade lanes except Africa. Asia-Pacific airlines saw 13.4% year-over-year demand growth for air cargo in October while capacity increased 9.3%. Demand grew 9.5% for North American carriers while capacity increased 5.8%, and European carriers saw 7.6% demand growth for air cargo in October with capacity up 3.9% year over year, IATA said. October is the latest data available. Demand growth for Middle Eastern carriers was up 4.5% as capacity rose just 0.8%, while Latin American carriers saw huge 18.5% year-over-year demand growth in October as capacity increased 5.8%. <h3>Trump tariffs will test airlines </h3>IATA Director-General Willie Walsh warned that air cargo’s ability to adapt to rapidly evolving geopolitical and economic situations was about to be severely tested. “While 2024 is shaping up to be a banner year for air cargo, we must look to 2025 with some caution,” Walsh noted in IATA’s latest monthly update. “The incoming Trump administration’s announced intention to <a href="https://www.joc.com/article/us-importers-dabbling-in-frontloading-ahead-of-new-tariff-threat-5821448">impose significant tariffs on its top trading partners</a> — Canada, China and Mexico — has the potential to upend global supply chains and undermine consumer confidence.” For now, though, air cargo’s bull rush shows no signs of slowing, led by Asia-Pacific origin markets that have contributed an outsized share of worldwide air cargo growth this year, generating 56% of the global 12% year-over-year increase in tonnage through the first 10 months of 2024, according to an analysis by WorldACD Market Data. The Netherlands-based analyst noted in its latest weekly report that among the top five origin growth markets, the world’s busiest air cargo gateway of Hong Kong remained the biggest single generator of year-over-year outbound growth in October, as it has for much of this year. Hong Kong’s 15% increase in tonnage in October generated twice the growth in chargeable weight of second-placed Miami, even though the Florida hub recorded 31% growth in tonnage compared with October last year. Dubai was the third-biggest outbound growth market, thanks to its 45% increase in October tonnage, WorldACD reported. Hong Kong commissioned its third runway last week that will increase the annual capacity of the airport to 10 million tons of air freight over the next 10 years. On a 12-month rolling basis, by the end of September, Hong Kong International Airport had handled 4.8 million tons of air cargo. Hong Kong-based carrier Cathay Pacific will have all its pre-pandemic flights operating from January, five years after most of the fleet was grounded following the COVID-19 outbreak in early 2020. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Air cargo on the major east-west trade lanes flew into its peak shipping period this week with demand outstripping available capacity and driving rates to fresh 2024 highs on Asian export routes and the trans-Atlantic. The average Shanghai to North Europe spot rate of $5.07 per kilogram is the highest in almost two years, while the Shanghai-North America rate of $6.61/kg is the highest so far this year, according to the Baltic Air Index (BAI). BAI data shows trans-Atlantic westbound rates reached $2.64/kg this week, a level that has not been seen for 18 months. “Global air freight rates rose strongly again last week as the market headed into what is traditionally the highest point of peak season,” air freight pricing provider TAC Index reported in a rate update this week. While spot rates rose sharply, TAC noted that the index averages were lagging because a large amount of capacity has been booked in advance by freight forwarders anxious to secure capacity for their customers. Chinese e-commerce platforms contract capacity directly with airlines, and the demand is so high that forwarders have struggled to find enough space for their regular customers. The International Air Transport Association (IATA) reported “exceptional traffic levels” on international routes in October for the fifth consecutive month, up 10.3% year over year. IATA attributed that to rising e-commerce demand in the US and Europe amid ongoing capacity constraints in ocean shipping because of the longer transits around southern Africa. The sharply rising rate levels are unsurprising considering the wide imbalance between strong demand and available capacity, with IATA data showing demand outstripping capacity on all major trade lanes except Africa. Asia-Pacific airlines saw 13.4% year-over-year demand growth for air cargo in October while capacity increased 9.3%. Demand grew 9.5% for North American carriers while capacity increased 5.8%, and European carriers saw 7.6% demand growth for air cargo in October with capacity up 3.9% year over year, IATA said. October is the latest data available. Demand growth for Middle Eastern carriers was up 4.5% as capacity rose just 0.8%, while Latin American carriers saw huge 18.5% year-over-year demand growth in October as capacity increased 5.8%. Trump tariffs will test airlines IATA Director-General Willie Walsh warned that air cargo’s ability to adapt to rapidly evolving geopolitical and economic situations was about to be severely tested. “While 2024 is shaping up to be a banner year for air cargo, we must look to 2025 with some caution,” Walsh noted in IATA’s latest monthly update. “The incoming Trump administration’s announced intention to impose significant tariffs on its top trading partners — Canada, China and Mexico — has the potential to upend global supply chains and undermine consumer confidence.” For now, though, air cargo’s bull rush shows no signs of slowing, led by Asia-Pacific origin markets that have contributed an outsized share of worldwide air cargo growth this year, generating 56% of the global 12% year-over-year increase in tonnage through the first 10 months of 2024, according to an analysis by WorldACD Market Data. The Netherlands-based analyst noted in its latest weekly report that among the top five origin growth markets, the world’s busiest air cargo gateway of Hong Kong remained the biggest single generator of year-over-year outbound growth in October, as it has for much of this year. Hong Kong’s 15% increase in tonnage in October generated twice the growth in chargeable weight of second-placed Miami, even though the Florida hub recorded 31% growth in tonnage compared with October last year. Dubai was the third-biggest outbound growth market, thanks to its 45% increase in October tonnage, WorldACD reported. Hong Kong commissioned its third runway last week that will increase the annual capacity of the airport to 10 million tons of air freight over the next 10 years. On a 12-month rolling basis, by the end of September, Hong Kong International Airport had handled 4.8 million tons of air cargo. Hong Kong-based carrier Cathay Pacific will have all its pre-pandemic flights operating from January, five years after most of the fleet was grounded following the COVID-19 outbreak in early 2020. Contact Greg Knowler at greg.knowler@spglobal.com .

‘Peak’ of peak season lifts rates, demand in global air freight market

<div class="phx-topic abstract-wrapper">The ocean carrier looks to secure berth slots and yard space ahead of 2025 as container lines and new alliances plan to leverage terminal ownership stakes. </div>

The ocean carrier looks to secure berth slots and yard space ahead of 2025 as container lines and new alliances plan to leverage terminal ownership stakes.

<div class="phx-topic">Ocean Network Express (ONE) has taken a minority stake in an Indonesian container terminal, adding to the carrier’s global terminal portfolio. The acquisition comes as carriers tout their control of terminals as a service differentiator ahead of new alliances coming in 2025. ONE said in a statement that it completed the acquisition of a minority stake in the New Priok Container Terminal One in Jakarta. The terminal, which has nominal capacity of 1.5 million TEUs per year, has two berths capable of handling post-Panamax ships. The terminal is a joint venture of Indonesian state-owned port operator Pelindo II, Singapore’s PSA International and Japanese conglomerate Mitsui &amp; Co. ONE said that Jakarta is its third-busiest port in Southeast Asia, while the acquisition “helps safeguard the company’s access to terminal capacity in an important region.” Terms of the deal were not disclosed. New Priok was built due to the capacity constraints at the Jakarta International Container Terminal, which can berth up to eight post-Panamax vessels. ONE’s intra-Asia services primarily call the Jakarta terminal, with only two of its vessels having called on the New Priok terminal in the last six months, according to Sea-web, a sister product of the Journal of Commerce within S&amp;P Global. The acquisition of the New Priok stake comes almost a year after ONE completed acquisitions of controlling and minority stakes in terminal assets across the globe, including Yusen Terminals and Trapac on the US West Coast, Rotterdam’s World Gateway terminal and the Magenta Singapore terminal. Control of terminal assets has been a critical issue for ocean carriers going into 2025, especially with the debut of new container alliance and service networks. The Gemini Cooperation of Maersk and Hapag-Lloyd has pointed to ownership of container terminals as underpinning their goal of 90% schedule reliability for the new alliance’s transshipment model. In southeast Asia, Gemini will be relying on the performance of Malaysia’s Port Tanjung Pelepas terminal, which is 30% owned by Maersk’s APM Terminals subsidiary. Hapag-Lloyd, too, has been rounding out its terminal network with deals for port operators in South America, India and Italy. CMA CGM has boosted its North American terminal presence with deals on both the US West and East coasts. Its Ocean Alliance partner, Evergreen Marine, also entered a joint venture with PSA for building a new transshipment hub in Singapore. Meanwhile, Mediterranean Shipping Co. is building out the capacity of its Terminal International Limited subsidiary with expansion projects for its existing terminal assets and the development of new terminals along the US East and Gulf coasts. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>.</div>

Ocean Network Express (ONE) has taken a minority stake in an Indonesian container terminal, adding to the carrier’s global terminal portfolio. The acquisition comes as carriers tout their control of terminals as a service differentiator ahead of new alliances coming in 2025. ONE said in a statement that it completed the acquisition of a minority stake in the New Priok Container Terminal One in Jakarta. The terminal, which has nominal capacity of 1.5 million TEUs per year, has two berths capable of handling post-Panamax ships. The terminal is a joint venture of Indonesian state-owned port operator Pelindo II, Singapore’s PSA International and Japanese conglomerate Mitsui & Co. ONE said that Jakarta is its third-busiest port in Southeast Asia, while the acquisition “helps safeguard the company’s access to terminal capacity in an important region.” Terms of the deal were not disclosed. New Priok was built due to the capacity constraints at the Jakarta International Container Terminal, which can berth up to eight post-Panamax vessels. ONE’s intra-Asia services primarily call the Jakarta terminal, with only two of its vessels having called on the New Priok terminal in the last six months, according to Sea-web, a sister product of the Journal of Commerce within S&P Global. The acquisition of the New Priok stake comes almost a year after ONE completed acquisitions of controlling and minority stakes in terminal assets across the globe, including Yusen Terminals and Trapac on the US West Coast, Rotterdam’s World Gateway terminal and the Magenta Singapore terminal. Control of terminal assets has been a critical issue for ocean carriers going into 2025, especially with the debut of new container alliance and service networks. The Gemini Cooperation of Maersk and Hapag-Lloyd has pointed to ownership of container terminals as underpinning their goal of 90% schedule reliability for the new alliance’s transshipment model. In southeast Asia, Gemini will be relying on the performance of Malaysia’s Port Tanjung Pelepas terminal, which is 30% owned by Maersk’s APM Terminals subsidiary. Hapag-Lloyd, too, has been rounding out its terminal network with deals for port operators in South America, India and Italy. CMA CGM has boosted its North American terminal presence with deals on both the US West and East coasts. Its Ocean Alliance partner, Evergreen Marine, also entered a joint venture with PSA for building a new transshipment hub in Singapore. Meanwhile, Mediterranean Shipping Co. is building out the capacity of its Terminal International Limited subsidiary with expansion projects for its existing terminal assets and the development of new terminals along the US East and Gulf coasts. Contact Michael Angell at michael.angell@spglobal.com .

ONE adds to terminal holdings with stake in Indonesian operator

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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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