<div class="phx-topic abstract-wrapper">This stark rates dichotomy within the truckload industry is directly tied to shipping patterns.</div>

This stark rates dichotomy within the truckload industry is directly tied to shipping patterns.

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<div>As 2019 begins, the truckload market is a story of polar opposites with spot demand cooling off significantly since last summer while contract business continues to be strong.Small carriers — giddy as recently as last summer — are struggling today as brokers have regained pricing power. For midsized to large-sized carriers, frustrating times in 2016 and 2017 have given way to better fortunes since last spring.This stark dichotomy within the truckload industry is directly tied to shipping patterns. The impact of the electronic logging device (ELD) mandate in tandem with a strong US economy translated into a market in which...

As 2019 begins, the truckload market is a story of polar opposites with spot demand cooling off significantly since last summer while contract business continues to be strong. Small carriers — giddy as recently as last summer — are struggling today as brokers have regained pricing power. For midsized to large-sized carriers, frustrating times in 2016 and 2017 have given way to better fortunes since last spring. This stark dichotomy within the truckload industry is directly tied to shipping patterns. The impact of the electronic logging device (ELD) mandate in tandem with a strong US economy translated into a market in which shippers scrambled to find trucks. By applying strict enforcement of hours-of-service (HOS) regulations, drivers log fewer miles per day. The spot market felt the brunt of ELDs because smaller fleets were much less likely to have these devices beforehand, whereas large fleets were using the technology for years. With a sudden shift in capacity, dry van spot rates ballooned into $2.30 to $2.70 per mile, according to DAT Solutions and Truckstop.com. Sky high rates covered up fewer daily miles, so drivers didn’t see lower paychecks. Today drivers no longer can command the rates to maintain their income. Click to enlarge Shippers are the catalyst because they accepted double-digit rate hikes on contracts to hedge against spot market volatility. The deals were under the condition that carriers would have capacity without any excuses. Upon signing these agreements, shippers reduced their spot market exposure and shifted loads to contract carriers. This is a trend that should continue for much of 2019. The market will eventually flip when spot market rates drop so much that contract prices become too steep, but when this will happen is anyone’s guess. Contract markets decelerate, but still positive Truck tonnage increased 6.6 percent in 2018, according to American Trucking Associations (ATA). It was the largest year-over-year gain since 1998 and much stronger than the 3.8 percent increase in 2017. The index is heavily weighted towards contract freight, according to ATA economist Bob Costello. While spot rates are negative on a year-over-year basis, contract rates rose 8.7 percent in December, according to DAT. The Cass Truckload Linehaul Index was up 7.2 percent in December. J.B. Hunt Transportation Services, Covenant Transportation Group, and Knight-Swift Transportation Holdings forecast contract rates to rise in the mid-single digits in 2019. The bullish outlook is 5 percent to 7 percent, while the bearish analysts say it will be less than 5 percent. “From a customer perspective, there is more stabilization happening from a bid award. And so, if you look at what happened in 2018 and in 2017, the freight market was very volatile,” said Shelley Simpson, president of highway services for J.B. Hunt. Covenant Transportation estimated the US economy will expand between 2 percent and 2.5 percent in 2019, which is also not as strong as 2018 but is growth nonetheless. The company said January 2019 freight has been strong but not nearly as robust as January 2018. “We’re going from a 4 percent GDP to 2.5 percent. And is 2.5 percent bad? Let me tell you, for eight years [if we got] the 2.5 percent, we'd all been thrilled ... But when you get to a 4 and [then] you go to 2.5, it's going to be a slowdown,” said CEO David Parker. “[The] business environment is not bad. I'm happy about the freight environment, and we're bringing on new freight. We're getting rate increases, and I'm still a pretty happy camper.” Simpson and Parker spoke on fourth-quarter earnings calls with industry analysts. Noël Perry, chief economist of Truckstop.com, outlines two possibilities on contract freight in 2019. One scenario uses 2004 as a model and the other uses 2014. “The 2004 example says not until the first quarter of 2021! The 2014 data chronicles a lag of half that, suggesting a [first-quarter] 2019 slump, seasonally corrected. In a market that appears to be accelerating its responses, I vote for the more recent precedent, expecting a peak somewhere late this year. That would be roughly halfway between the 2004 and 2014 precedents,” Perry wrote in a note from investment bank Cowen & Co. If true, shippers will eventually jump for joy but not until the end of 2019 or 2020. Spot trucker frustration As happy as large carriers are today, smaller carriers depending upon the spot market are displeased with how the market turned. Volatility breeds higher spot rates, while stabilization translates into lower spot rates. “The significant price increases of 2018 have moderated, and while it is uncertain what the remainder of 2019 will bring, we are in a more balanced situation today,” said John Wiehoff, CEO of C.H. Robinson Worldwide. Click to enlarge Dry van spot rates are down 21 percent in the first four weeks of 2019, according to Truckstop.com. DAT’s data also show receding rates but at a slower clip. “The best way to look at these two segments of pricing is to consider spot prices as a flagman telling the approaching locomotive engineer what is around the next bend. Moreover, the brakeman waves the spot market flag very vigorously to get the approaching engineer’s attention,” Perry said. Because of the loose capacity, smaller fleets are no longer in a strong position to dictate rates to brokers. For shippers, this is not necessarily a bad thing. After a year in which transportation budgets were blown, pressure is on supply chain managers to keep freight costs manageable in 2019 . Negotiating reasonable rates and keeping an eye on spot market pricing are vital to meeting those goals. Contact Ari Ashe at ari.ashe@ihsmarkit.com and follow him on Twitter: @arijashe .

Truckload

US truckload contract and spot rates diverge

<div class="phx-topic abstract-wrapper">Shippers, brokers and trucking executives at a Traffic Club of Chicago forum all said the long freight downturn isn’t finished -- but are hopeful it’s nearing an end.</div>

Shippers, brokers and trucking executives at a Traffic Club of Chicago forum all said the long freight downturn isn’t finished -- but are hopeful it’s nearing an end.

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<div class="phx-topic">CHICAGO -- The so-called freight recession may be close to its end, but it is still very much alive, shippers, brokers and trucking executives told the Traffic Club of Chicago this week. Logistics executives don’t expect the US freight market to flip and expand until 2025, perhaps closer to mid-year, driven by increased manufacturing output and home sales. “We are in a transitionary period in the market,” Ryan Hammett, director of market intelligence and insights at C.H. Robinson Worldwide, told the Traffic Club’s Transportation &amp; Logistics Customer Forum on Wednesday. ”There are signs that things are changing, and we’re moving from a period of oversupply into a little bit more balance,” Hammett said, referring to <a href="https://www.joc.com/article/large-carrier-truckload-capacity-stabilizing-alongside-rates-5788958">truckload capacity</a>. But while supply in the form of trucks may be contracting, demand in the form of shipments hasn’t yet expanded significantly, Hammett and other speakers told the forum. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="dbbd4237-84d4-4708-a9bb-cde62ec92462"></dynamic-object></div>“There’s only a certain amount of freight out there,” said Mitch Morrin, North American outbound logistics lead for Owens Corning. “You can say the freight recession is over all you want, but if the freight doesn’t materialize in the marketplace, it’s not.” Morrin expressed concern that some trucking companies will push for rate increases based on premature claims the <a href="https://www.joc.com/article/mid-level-us-freight-recession-packs-larger-truck-rate-wallop-analyst-5225206">freight downcycle</a> that began in May 2022 is finished. “Are they going to talk expansion into existence? That’s going to be tough,” he said. <h3>Seasonality, regional growth </h3>There are “green shoots” that signal improvement in freight demand, other speakers said. Much of that improvement, however, has been seasonal and regional. “The experience right now between Southern California and the East Coast in terms of freight markets is drastically different,” Hammett said. “I think that we need to begin to expect regional tightness in certain places that you may not see across the rest of America. Regional tightness doesn’t mean a freight market shift.” In the Midwest, “We’re still very flat on our volumes, but what we have seen in the last three months is fewer companies are seeing drops in volume,” said Matt Hart, executive director of the Illinois Trucking Association. ”We know volumes have stopped declining, but they’re still very flat,” he said. “They haven’t taken off.” Other economic indicators support claims that a freight recovery is not yet under way, though spot and contract truckload rates have begun rising. The Cass Freight Shipments Index dropped 1.7% in September from August before seasonal adjustment. The American Trucking Associations For-Hire Freight Tonnage Index was 6.4% below its non-seasonally adjusted August reading in September. Routing guide depth metrics from C.H. Robinson Worldwide have dropped in recent months after rising toward July, Hammett said, indicating that primary carriers in contract routing guides are still picking up their customers’ freight most of the time. “A change in a freight recession is not a flat line,” Hammett said. <h3>Manufacturing malaise </h3>Hammett also noted that US manufacturing capacity utilization has dropped from its most recent peak in May 2022, the start of the freight recession. The seasonally adjusted S&amp;P Global US Manufacturing Purchasing Managers’ Index (PMI) was 48.5 in October, up from 47.3 in September but below the 50 “no-change” mark for a fourth consecutive month. The Institute for Supply Management (ISM) PMI <a href="https://www.reuters.com/markets/us/us-manufacturing-drops-15-month-low-october-2024-11-01/">also remained in contraction</a>, at 46.5 in October. “Industrial production is not doing well,” said Hammett. “(But) an upside is the consumer is still healthy.” Hammett sees consumer spending on goods and services becoming more balanced. ”To really say that the market is turned we’re going to have to see manufacturing come back, we have to see housing starts coming back,” said Vince Paperiello, senior vice president of intermodal at STG Logistics. For Paperiello, a key indicator that the freight recession is ending will be seeing intermodal containers “come down off the stacks” where they’ve piled up around the US over the past two years. “When you see that, we’ll be out of the freight recession,” he said. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a></div>

CHICAGO -- The so-called freight recession may be close to its end, but it is still very much alive, shippers, brokers and trucking executives told the Traffic Club of Chicago this week. Logistics executives don’t expect the US freight market to flip and expand until 2025, perhaps closer to mid-year, driven by increased manufacturing output and home sales. “We are in a transitionary period in the market,” Ryan Hammett, director of market intelligence and insights at C.H. Robinson Worldwide, told the Traffic Club’s Transportation & Logistics Customer Forum on Wednesday. ”There are signs that things are changing, and we’re moving from a period of oversupply into a little bit more balance,” Hammett said, referring to truckload capacity . But while supply in the form of trucks may be contracting, demand in the form of shipments hasn’t yet expanded significantly, Hammett and other speakers told the forum. “There’s only a certain amount of freight out there,” said Mitch Morrin, North American outbound logistics lead for Owens Corning. “You can say the freight recession is over all you want, but if the freight doesn’t materialize in the marketplace, it’s not.” Morrin expressed concern that some trucking companies will push for rate increases based on premature claims the freight downcycle that began in May 2022 is finished. “Are they going to talk expansion into existence? That’s going to be tough,” he said. Seasonality, regional growth There are “green shoots” that signal improvement in freight demand, other speakers said. Much of that improvement, however, has been seasonal and regional. “The experience right now between Southern California and the East Coast in terms of freight markets is drastically different,” Hammett said. “I think that we need to begin to expect regional tightness in certain places that you may not see across the rest of America. Regional tightness doesn’t mean a freight market shift.” In the Midwest, “We’re still very flat on our volumes, but what we have seen in the last three months is fewer companies are seeing drops in volume,” said Matt Hart, executive director of the Illinois Trucking Association. ”We know volumes have stopped declining, but they’re still very flat,” he said. “They haven’t taken off.” Other economic indicators support claims that a freight recovery is not yet under way, though spot and contract truckload rates have begun rising. The Cass Freight Shipments Index dropped 1.7% in September from August before seasonal adjustment. The American Trucking Associations For-Hire Freight Tonnage Index was 6.4% below its non-seasonally adjusted August reading in September. Routing guide depth metrics from C.H. Robinson Worldwide have dropped in recent months after rising toward July, Hammett said, indicating that primary carriers in contract routing guides are still picking up their customers’ freight most of the time. “A change in a freight recession is not a flat line,” Hammett said. Manufacturing malaise Hammett also noted that US manufacturing capacity utilization has dropped from its most recent peak in May 2022, the start of the freight recession. The seasonally adjusted S&P Global US Manufacturing Purchasing Managers’ Index (PMI) was 48.5 in October, up from 47.3 in September but below the 50 “no-change” mark for a fourth consecutive month. The Institute for Supply Management (ISM) PMI also remained in contraction , at 46.5 in October. “Industrial production is not doing well,” said Hammett. “(But) an upside is the consumer is still healthy.” Hammett sees consumer spending on goods and services becoming more balanced. ”To really say that the market is turned we’re going to have to see manufacturing come back, we have to see housing starts coming back,” said Vince Paperiello, senior vice president of intermodal at STG Logistics. For Paperiello, a key indicator that the freight recession is ending will be seeing intermodal containers “come down off the stacks” where they’ve piled up around the US over the past two years. “When you see that, we’ll be out of the freight recession,” he said. Contact William B. Cassidy at bill.cassidy@spglobal.com

Trucking News

Rail News

Intermodal providers

Surface

Prolonged US freight ‘recession’ to drag into 2025: transportation executives

<div class="phx-topic abstract-wrapper">Mounting congestion brought on by peak season volumes and port construction is making it difficult for exporters in Brazil to secure empty boxes.</div>

Mounting congestion brought on by peak season volumes and port construction is making it difficult for exporters in Brazil to secure empty boxes.

<div class="phx-topic">Key ports in Brazil are facing tightened capacity at the tail end of peak season, resulting in skipped calls, rerouted cargo and mounting vessel congestion. And as those ports work to clear the congestion, exporters are struggling to secure empty containers. Several sources said the Port of Santos has hit its operational capacity, forcing some ships to miss narrow berthing windows. Other vessels have opted to omit Santos entirely, as shippers report cargo rolls. Brazil exports are facing the brunt of the woes, sources say. As dockworkers are kept busy clearing the backlog, returning empties to exporters has taken a backseat. “It’s too busy and trucks are not being able to book the empties to return,” said a freight forwarder in Brazil. Sources said 20-foot containers, which are often used for sugar and other specialty commodities, are especially sparse. Platts, a sister company of the Journal of Commerce within S&amp;P Global, pegged the spot rate for Brazil exports to the US Gulf Coast at $5,800 per FEU as of Nov. 14, maintaining the record high it achieved almost a month ago and up from $1,800 per FEU in mid-June. <h3>Congestion hurdles </h3>Several terminals in Santos have expanded their berthing areas to accommodate the increased demand. Santos had 10 vessels anchored outside the port as of Nov. 14, down from 14 on Nov. 12, according to AIS Live, a sister product of the Journal of Commerce within S&amp;P Global. The congestion issues at Santos have been exacerbated by construction at other ports. “Navegantes is under renovation and a bit chaotic now,” said the freight forwarder source. “Itapoa is congested as well, so the vessels redirected to Santos are creating [a] domino effect.” The root of the congestion is largely attributed to increased import volumes associated with peak season. Still, the Port of Itajai has been able to absorb some of the cargo. Despite the increased volumes and tightened operating capacity, there is still vessel space available on ships from Asia and North America bound for Brazil. As of Nov. 14, Itajai had three ships anchored outside the port, while Itapoa had two. Navegantes did not have any ships anchored. The slowdowns in Brazil come in the wake of some earlier peak season <a href="https://www.joc.com/article/north-south-trade-facing-schedule-woes-congestion-in-wake-of-ila-strike-5772068">schedule interruptions made worse by vessel bunching</a> caused by the early October strike at ports along the US East and Gulf coasts. Contact Laura Robb at <a href="mailto:Laura.Robb@spglobal.com">laura.robb@spglobal.com</a>. </div>

Key ports in Brazil are facing tightened capacity at the tail end of peak season, resulting in skipped calls, rerouted cargo and mounting vessel congestion. And as those ports work to clear the congestion, exporters are struggling to secure empty containers. Several sources said the Port of Santos has hit its operational capacity, forcing some ships to miss narrow berthing windows. Other vessels have opted to omit Santos entirely, as shippers report cargo rolls. Brazil exports are facing the brunt of the woes, sources say. As dockworkers are kept busy clearing the backlog, returning empties to exporters has taken a backseat. “It’s too busy and trucks are not being able to book the empties to return,” said a freight forwarder in Brazil. Sources said 20-foot containers, which are often used for sugar and other specialty commodities, are especially sparse. Platts, a sister company of the Journal of Commerce within S&P Global, pegged the spot rate for Brazil exports to the US Gulf Coast at $5,800 per FEU as of Nov. 14, maintaining the record high it achieved almost a month ago and up from $1,800 per FEU in mid-June. Congestion hurdles Several terminals in Santos have expanded their berthing areas to accommodate the increased demand. Santos had 10 vessels anchored outside the port as of Nov. 14, down from 14 on Nov. 12, according to AIS Live, a sister product of the Journal of Commerce within S&P Global. The congestion issues at Santos have been exacerbated by construction at other ports. “Navegantes is under renovation and a bit chaotic now,” said the freight forwarder source. “Itapoa is congested as well, so the vessels redirected to Santos are creating [a] domino effect.” The root of the congestion is largely attributed to increased import volumes associated with peak season. Still, the Port of Itajai has been able to absorb some of the cargo. Despite the increased volumes and tightened operating capacity, there is still vessel space available on ships from Asia and North America bound for Brazil. As of Nov. 14, Itajai had three ships anchored outside the port, while Itapoa had two. Navegantes did not have any ships anchored. The slowdowns in Brazil come in the wake of some earlier peak season schedule interruptions made worse by vessel bunching caused by the early October strike at ports along the US East and Gulf coasts. Contact Laura Robb at laura.robb@spglobal.com .

Container Shipping News

Port News

Brazil exports feel impact of congestion woes as empty equipment remains limited

<div class="phx-topic abstract-wrapper">The order for the 14,000-TEU ships continues the tussle between methanol and liquefied natural gas (LNG) as the preferred fuel for the next generation of container ships.</div>

The order for the 14,000-TEU ships continues the tussle between methanol and liquefied natural gas (LNG) as the preferred fuel for the next generation of container ships.

<div class="phx-topic">Cosco Shipping Holdings is backing continued investment in methanol-fueled container ships after shareholders this week approved a $2.2 billion deal for 12 14,000-TEU dual-fuel vessels for delivery beginning in 2027. Cosco said in a statement the vessels “are well-suited for a wide range of routes, which could better meet the increasingly diverse transportation needs of our customers.” Contracts for the Cosco newbuild program — codenamed “Cosco Mercury” in company documents — have been placed with affiliated shipyard Cosco Shipping Heavy Industry (Yangzhou) in eastern China’s Jiangsu province. The ships will be delivered between May 2027 and March 2029, according to British shipbroking house Clarksons. Cosco Shipping said the order is part of its efforts to invest in clean energy-powered vessels either through orders for new ships or upgrading existing vessels to use cleaner fuels. The company operates 510 container ships totaling 3.3 million TEUs in capacity. The carrier said in May that it was upgrading four 16,180-TEU container ships now under construction at Cosco Shipping Heavy Industry (Yangzhou) from single-fuel to dual-fuel methanol power. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="9a6c3727-a34d-4589-aa4a-e7d495b101d4"></dynamic-object></div>The latest order from Cosco continues the tussle between methanol and liquefied natural gas (LNG) as the preferred fuel for the next generation of container ships. Hapag-Lloyd last week <a href="https://www.joc.com/article/hapag-lloyd-makes-4-billion-move-down-lng-path-with-24-ship-dual-fuel-order-5787368">announced its ongoing preference for LNG-powered vessels</a> with a $4 billion order for 12 9,200-TEU and 12 16,800-TEU ships, the latter dubbed its “new workhorses.” LNG has taken the lead over methanol as the preferred fuel by carriers ordering new container ships this year, reversing last year’s preference for methanol-fueled ships, according to data from Sea-web, a sister company of the Journal of Commerce within S&amp;P Global. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

Cosco Shipping Holdings is backing continued investment in methanol-fueled container ships after shareholders this week approved a $2.2 billion deal for 12 14,000-TEU dual-fuel vessels for delivery beginning in 2027. Cosco said in a statement the vessels “are well-suited for a wide range of routes, which could better meet the increasingly diverse transportation needs of our customers.” Contracts for the Cosco newbuild program — codenamed “Cosco Mercury” in company documents — have been placed with affiliated shipyard Cosco Shipping Heavy Industry (Yangzhou) in eastern China’s Jiangsu province. The ships will be delivered between May 2027 and March 2029, according to British shipbroking house Clarksons. Cosco Shipping said the order is part of its efforts to invest in clean energy-powered vessels either through orders for new ships or upgrading existing vessels to use cleaner fuels. The company operates 510 container ships totaling 3.3 million TEUs in capacity. The carrier said in May that it was upgrading four 16,180-TEU container ships now under construction at Cosco Shipping Heavy Industry (Yangzhou) from single-fuel to dual-fuel methanol power. The latest order from Cosco continues the tussle between methanol and liquefied natural gas (LNG) as the preferred fuel for the next generation of container ships. Hapag-Lloyd last week announced its ongoing preference for LNG-powered vessels with a $4 billion order for 12 9,200-TEU and 12 16,800-TEU ships, the latter dubbed its “new workhorses.” LNG has taken the lead over methanol as the preferred fuel by carriers ordering new container ships this year, reversing last year’s preference for methanol-fueled ships, according to data from Sea-web, a sister company of the Journal of Commerce within S&P Global. Contact Keith Wallis at keithwallis@hotmail.com .

Container lines

Maritime

Cosco shareholders back $2.2 billion order for 12 methanol-fueled ships

<div class="phx-topic abstract-wrapper">While intermodal providers increased pricing in Southern California, truckload carriers also raised rates as demand grew with surging port volumes, negating any modal shifts based on budgetary concerns, the latest Journal of Commerce Intermodal Savings Index showed.</div>

While intermodal providers increased pricing in Southern California, truckload carriers also raised rates as demand grew with surging port volumes, negating any modal shifts based on budgetary concerns, the latest Journal of Commerce Intermodal Savings Index showed.

<div class="phx-topic">Despite rising rail rates in Southern California, intermodal shippers saved more than 20% versus truckload on one-off business across the US in the third quarter, the second consecutive quarter in which spot market savings far exceeded historical norms, according to the latest Journal of Commerce <a href="https://www.joc.com/resources/special-reports/intermodal-savings-index">Intermodal Savings Index</a> (ISI). While intermodal providers increased pricing in Southern California, truckload carriers also raised rates as demand grew with surging port volumes, negating any modal shifts based on budgetary concerns. The Spot ISI averaged 122.3 for the third quarter, down slightly from the quarterly record of 123.5 in the second quarter but up from 116.4 in the third quarter of 2023. The Q3 2024 average is also significantly higher than the 10-year Spot ISI average of 114.5. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="96752230-a8c7-44e8-820d-cfd6066153af"></dynamic-object></div>Spot truckload rates fell to $1.94 per mile by the end of September from $2.03 per mile in June, while intermodal rates rose to $1.61 per mile from $1.56 per mile over the same period. The spot intermodal number in September was the lowest per-mile rate since July 2020, just before the pandemic-related freight surge jolted markets. Despite truck rates going down and intermodal rates rising, the Spot ISI was minimally impacted because the shift was almost entirely in Los Angeles, which represents less than 25% of the overall index value. Outside of Los Angeles, intermodal and truckload spot rates continued to decline. The Contract ISI, meanwhile, averaged 126.1 in the third quarter, up from 125.6 in the second quarter but unchanged compared with one year ago. Domestic intermodal shippers have saved between 25% and 28% across the US since January 2023 compared with truckload. There are no signs that will change until at least early 2025, if not later. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="38e73d5f-2412-49ab-a4ca-c5da3d2428d2"></dynamic-object></div>Contract truckload rates fell a penny to $1.95 per mile quarter over quarter, while contract intermodal rates fell 2 cents. Tepid rates in spot and contractual markets, excluding Los Angeles, have resulted in lower intermodal revenue and operating income for Hub Group, J.B. Hunt Transport Services, and Schneider National — the top three US intermodal providers. The ISIs measure how much money a shipper should save on 120 modally competitive US lanes. There are two indexes, one for the spot market and one for the contract market. Index values are measured from a neutral base of 100. Values greater than 100 indicate domestic intermodal is cheaper, while values less than 100 indicate trucking is cheaper. The higher the value, the more money intermodal saves an average shipper. All index values correspond to percentages, which means a value of 126.1 signifies an average US shipper saved 26.1% on a domestic intermodal contract versus a truckload contract. A value of 122.3 signifies savings of 22.3% comparing the spot intermodal and truckload markets. The index assumes distribution centers are located less than 20 to 30 minutes away from the rail terminal at origin and destination. If the distribution center is an hour or more away, then it could significantly reduce the savings calculated in the index or make long-haul trucking cheaper. The 10-year average is 128.2 for the Contract ISI and 114.5 for the Spot ISI. <h3>Bid season uncertainty </h3>How the current ISI translates into the bid season now underway for contracts going live in early 2025 is uncertain. Shippers, based on conversations with the Journal of Commerce, say they would like to negotiate flat rates in truckload and intermodal, noting that spot market rates, including fuel, do not show any signs of swinging toward the carriers. If rates needed to be adjusted, then shippers say they’d consider adjustments mid-contract. Trucking rates, excluding fuel, are higher than a year ago, but diesel prices are down about 20% over that time, according to the US Energy Information Administration, resulting in the average all-in invoice being lower than a year ago for both trucking and intermodal. Truckload carriers would like to secure low- to mid-single digit rate increases; historically, intermodal ends up a couple of percentage points below trucking. Hub Group CEO Phil Yeager said on an Oct. 30 earnings call that intermodal providers universally want rate increases. Providers believe a rate increase is warranted because volume was up 4.8% year over year between January and September, according to the Intermodal Association of North America, without any major domestic intermodal service disruptions. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>. The data behind the Contract ISI and Spot ISI is available to Journal of Commerce subscribers with a Gold-tier subscription. </div>

Despite rising rail rates in Southern California, intermodal shippers saved more than 20% versus truckload on one-off business across the US in the third quarter, the second consecutive quarter in which spot market savings far exceeded historical norms, according to the latest Journal of Commerce Intermodal Savings Index (ISI). While intermodal providers increased pricing in Southern California, truckload carriers also raised rates as demand grew with surging port volumes, negating any modal shifts based on budgetary concerns. The Spot ISI averaged 122.3 for the third quarter, down slightly from the quarterly record of 123.5 in the second quarter but up from 116.4 in the third quarter of 2023. The Q3 2024 average is also significantly higher than the 10-year Spot ISI average of 114.5. Spot truckload rates fell to $1.94 per mile by the end of September from $2.03 per mile in June, while intermodal rates rose to $1.61 per mile from $1.56 per mile over the same period. The spot intermodal number in September was the lowest per-mile rate since July 2020, just before the pandemic-related freight surge jolted markets. Despite truck rates going down and intermodal rates rising, the Spot ISI was minimally impacted because the shift was almost entirely in Los Angeles, which represents less than 25% of the overall index value. Outside of Los Angeles, intermodal and truckload spot rates continued to decline. The Contract ISI, meanwhile, averaged 126.1 in the third quarter, up from 125.6 in the second quarter but unchanged compared with one year ago. Domestic intermodal shippers have saved between 25% and 28% across the US since January 2023 compared with truckload. There are no signs that will change until at least early 2025, if not later. Contract truckload rates fell a penny to $1.95 per mile quarter over quarter, while contract intermodal rates fell 2 cents. Tepid rates in spot and contractual markets, excluding Los Angeles, have resulted in lower intermodal revenue and operating income for Hub Group, J.B. Hunt Transport Services, and Schneider National — the top three US intermodal providers. The ISIs measure how much money a shipper should save on 120 modally competitive US lanes. There are two indexes, one for the spot market and one for the contract market. Index values are measured from a neutral base of 100. Values greater than 100 indicate domestic intermodal is cheaper, while values less than 100 indicate trucking is cheaper. The higher the value, the more money intermodal saves an average shipper. All index values correspond to percentages, which means a value of 126.1 signifies an average US shipper saved 26.1% on a domestic intermodal contract versus a truckload contract. A value of 122.3 signifies savings of 22.3% comparing the spot intermodal and truckload markets. The index assumes distribution centers are located less than 20 to 30 minutes away from the rail terminal at origin and destination. If the distribution center is an hour or more away, then it could significantly reduce the savings calculated in the index or make long-haul trucking cheaper. The 10-year average is 128.2 for the Contract ISI and 114.5 for the Spot ISI. Bid season uncertainty How the current ISI translates into the bid season now underway for contracts going live in early 2025 is uncertain. Shippers, based on conversations with the Journal of Commerce, say they would like to negotiate flat rates in truckload and intermodal, noting that spot market rates, including fuel, do not show any signs of swinging toward the carriers. If rates needed to be adjusted, then shippers say they’d consider adjustments mid-contract. Trucking rates, excluding fuel, are higher than a year ago, but diesel prices are down about 20% over that time, according to the US Energy Information Administration, resulting in the average all-in invoice being lower than a year ago for both trucking and intermodal. Truckload carriers would like to secure low- to mid-single digit rate increases; historically, intermodal ends up a couple of percentage points below trucking. Hub Group CEO Phil Yeager said on an Oct. 30 earnings call that intermodal providers universally want rate increases. Providers believe a rate increase is warranted because volume was up 4.8% year over year between January and September, according to the Intermodal Association of North America, without any major domestic intermodal service disruptions. Contact Ari Ashe at ari.ashe@spglobal.com . The data behind the Contract ISI and Spot ISI is available to Journal of Commerce subscribers with a Gold-tier subscription.

North-American rail

US spot intermodal savings dipped in Q3 but remained above historical norms

<div class="phx-topic abstract-wrapper">The carrier, which reported $1 billion in net profit for the third quarter, says the potential boost in volumes could come as US importers seek to beat the possible implementation of new tariffs on Chinese goods by the incoming Trump administration.</div>

The carrier, which reported $1 billion in net profit for the third quarter, says the potential boost in volumes could come as US importers seek to beat the possible implementation of new tariffs on Chinese goods by the incoming Trump administration.

<div class="phx-topic">Hapag-Lloyd could see a cargo rush ahead of the Lunar New Year holidays in January partly due to shippers seeking to beat the possible imposition of new and increased US tariffs on Chinese products by the incoming Trump administration, its CEO said Thursday. That comes as demand remains strong in the fourth quarter, although Q4 profitability is set to slide compared with the carrier’s highly profitable third quarter, it said. “That we’re going to see a little bit of a rush going into Chinese New Year, I would certainly not rule it out,” Hapag-Lloyd CEO Rolf Habben Jansen said in an online briefing after the carrier released its third-quarter earnings. He said it was too soon to tell how big the potential boost in volumes could be. Habben Jansen said cargo demand returned quickly after the October holidays in China and was currently “robust.” “But how much of that is pre-loading, is difficult to judge,” he said. “We see, at the moment, demand is very healthy.” The CEO indicated that increased demand ahead of the Lunar New Year holiday would most likely have a positive impact on short-term freight rates. The Lunar New Year holiday starts on Jan. 29, just over a week after Donald Trump is inaugurated as the US president. Habben Jansen thought the introduction of more tariffs by the US could cause a further shift in trade flows, as happened during the first Trump administration in 2017–21 when manufacturers moved some production away from China. “I would not be surprised if there was going to be something similar this time,” he said. “I’m cautiously optimistic that in the end trade flows may change, but we’ll hopefully still see fairly decent global trade. If we want to grow wealth around the world, it’s important we have free trade.” Hapag-Lloyd is currently forecasting cargo demand growth of 3% next year. Habben Jansen said Hapag-Lloyd is not yet preparing for the possibility of renewed industrial action by dockworkers at ports on the US East and Gulf coasts when the current extended contract between the United States Maritime Alliance (USMX) and the International Longshoremen’s Association expires on Jan. 15. “I would still hope an amicable agreement is ... reached between USMX and the ILA,” he said. The ILA <a href="https://www.joc.com/article/ila-breaks-off-contract-talks-accuses-usmx-of-semi-automation-push-5810392">on Wednesday broke off talks with the USMX</a> scheduled for this week after it said maritime employers continued to push for automation and semi-automation in its proposed master contract in a move the ILA claimed would eliminate longshore jobs. Habben Jansen, meanwhile, confirmed that Gemini Cooperation, its coming alliance with Maersk, would open for cargo bookings in two weeks as it prepares for a Feb. 1 launch. He said while Hapag-Lloyd has signed up “a bit more volume” for next year from Asia to Europe in the current ongoing contract negotiations with shippers, it was “way too early to draw any conclusions” whether Gemini was responsible. Gemini hopes to grow its market share partly on the basis of having improved schedule reliability by having fewer port pairings, Habben Jansen added. “I would expect because of higher schedule reliability and better predictability in the supply chain people might be willing to pay a bit more,” he said. “But of course, we first need to implement that and demonstrate that schedule reliability week in, week out.” <h3>Q3 net profit soars </h3>Habben Jansen’s comments came after Hapag-Lloyd said third-quarter net profit surged 256% to $1 billion, up from $293 million in the prior year period. The quarterly figure was also 32% higher than the total $792 million in net profit reported for the first half of the year. But indicating lower earnings in the fourth quarter despite robust demand, the carrier estimated earnings before interest and taxes (EBIT) of between $460 million and $861 million for the fourth quarter based on full-year forecasts. Jefferies Equity Research said the carrier’s third-quarter results were in line with expectations. ”Hapag-Lloyd is in solid shape financially and benefiting from a strong underlying freight market,” Jefferies said in a research note Thursday. Hapag-Lloyd said group revenue climbed to $5.8 billion in the third quarter, up 29% from $4.5 billion a year earlier. That was driven by a 23% increase in average revenue per TEU, to $1,612 per TEU, plus a 3.8% increase in liftings to 3.2 million TEUs, fueled by volume gains on the trans-Pacific, trans-Atlantic and Far East trades. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

Hapag-Lloyd could see a cargo rush ahead of the Lunar New Year holidays in January partly due to shippers seeking to beat the possible imposition of new and increased US tariffs on Chinese products by the incoming Trump administration, its CEO said Thursday. That comes as demand remains strong in the fourth quarter, although Q4 profitability is set to slide compared with the carrier’s highly profitable third quarter, it said. “That we’re going to see a little bit of a rush going into Chinese New Year, I would certainly not rule it out,” Hapag-Lloyd CEO Rolf Habben Jansen said in an online briefing after the carrier released its third-quarter earnings. He said it was too soon to tell how big the potential boost in volumes could be. Habben Jansen said cargo demand returned quickly after the October holidays in China and was currently “robust.” “But how much of that is pre-loading, is difficult to judge,” he said. “We see, at the moment, demand is very healthy.” The CEO indicated that increased demand ahead of the Lunar New Year holiday would most likely have a positive impact on short-term freight rates. The Lunar New Year holiday starts on Jan. 29, just over a week after Donald Trump is inaugurated as the US president. Habben Jansen thought the introduction of more tariffs by the US could cause a further shift in trade flows, as happened during the first Trump administration in 2017–21 when manufacturers moved some production away from China. “I would not be surprised if there was going to be something similar this time,” he said. “I’m cautiously optimistic that in the end trade flows may change, but we’ll hopefully still see fairly decent global trade. If we want to grow wealth around the world, it’s important we have free trade.” Hapag-Lloyd is currently forecasting cargo demand growth of 3% next year. Habben Jansen said Hapag-Lloyd is not yet preparing for the possibility of renewed industrial action by dockworkers at ports on the US East and Gulf coasts when the current extended contract between the United States Maritime Alliance (USMX) and the International Longshoremen’s Association expires on Jan. 15. “I would still hope an amicable agreement is ... reached between USMX and the ILA,” he said. The ILA on Wednesday broke off talks with the USMX scheduled for this week after it said maritime employers continued to push for automation and semi-automation in its proposed master contract in a move the ILA claimed would eliminate longshore jobs. Habben Jansen, meanwhile, confirmed that Gemini Cooperation, its coming alliance with Maersk, would open for cargo bookings in two weeks as it prepares for a Feb. 1 launch. He said while Hapag-Lloyd has signed up “a bit more volume” for next year from Asia to Europe in the current ongoing contract negotiations with shippers, it was “way too early to draw any conclusions” whether Gemini was responsible. Gemini hopes to grow its market share partly on the basis of having improved schedule reliability by having fewer port pairings, Habben Jansen added. “I would expect because of higher schedule reliability and better predictability in the supply chain people might be willing to pay a bit more,” he said. “But of course, we first need to implement that and demonstrate that schedule reliability week in, week out.” Q3 net profit soars Habben Jansen’s comments came after Hapag-Lloyd said third-quarter net profit surged 256% to $1 billion, up from $293 million in the prior year period. The quarterly figure was also 32% higher than the total $792 million in net profit reported for the first half of the year. But indicating lower earnings in the fourth quarter despite robust demand, the carrier estimated earnings before interest and taxes (EBIT) of between $460 million and $861 million for the fourth quarter based on full-year forecasts. Jefferies Equity Research said the carrier’s third-quarter results were in line with expectations. ”Hapag-Lloyd is in solid shape financially and benefiting from a strong underlying freight market,” Jefferies said in a research note Thursday. Hapag-Lloyd said group revenue climbed to $5.8 billion in the third quarter, up 29% from $4.5 billion a year earlier. That was driven by a 23% increase in average revenue per TEU, to $1,612 per TEU, plus a 3.8% increase in liftings to 3.2 million TEUs, fueled by volume gains on the trans-Pacific, trans-Atlantic and Far East trades. Contact Keith Wallis at keithwallis@hotmail.com .

Hapag-Lloyd sees possible pre-LNY cargo rush amid ‘very healthy’ demand

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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

SSA Marine Mexico has made significant strides in modernizing its infrastructure at the Port of Manzanillo, investing $15 million to enhance operational efficiency and sustainability at its facilities. This move is part of the company's broader strategy to remain at the forefront of the shipping and logistics industry. •	Strengthening Sustainability with Advanced Technology <figure class="joc_admin__inline-image-position-left joc_admin__inline-image-size-medium" data-figure-size="medium" data-figure-position="left"><img src="/content-assets/1730488295264_Cranes%20arrival%20to%20TEC%20I.png" alt="Cranes arrival to TEC I" class="joc_admin__inline-image-inherit"></figure> In July, SSA Marine Mexico added seven state-of-the-art E-RTG (Electric Rubber-Tired Gantry) cranes to its fleet, valued at $14 million. These advanced cranes were distributed across its two terminals: four cranes were assigned to the Multipurpose Terminal, and three to the Specialized Container Terminal I. What sets these cranes apart is their dual-operation capability, allowing them to function either on electric power or diesel fuel. This innovation plays a critical role in reducing the environmental impact of operations, contributing to a 7% increase in energy efficiency. This efficiency improvement is equivalent to eliminating nearly 4,000 tons of CO2 emissions annually, underscoring SSA Marine Mexico's commitment to sustainability. Through this acquisition, SSA Marine Mexico not only enhances its cargo-handling capabilities but also reinforces its leadership in integrating cutting-edge, eco-friendly technology in the maritime industry. The company continues to push the boundaries of efficiency and sustainability, ensuring long-term value for both its customers and the environment. •	Upgraded Facilities to Meet Growing Demand <figure class="joc_admin__inline-image-position-left joc_admin__inline-image-size-medium" data-figure-size="medium" data-figure-position="left"><img src="/content-assets/1730488350634_Multipurpose%20terminal.png" alt="Multipurpose Terminal" class="joc_admin__inline-image-inherit"></figure> In addition to the new cranes, SSA Marine Mexico has completed crucial modernization and repair work across its Multipurpose Terminal and Specialized Facility at the Port of Manzanillo. This $1 million investment targeted critical infrastructure enhancements, focusing on both structural integrity and operational functionality. Key improvements included leveling approximately 12,000 square meters in the dock area, along with the removal of outdated concrete curbs and asphalt layers. The upgraded space now features high-resistance pavers designed to optimize water drainage and prevent pooling, ensuring safer and more efficient operations. Moreover, the Specialized Facility saw significant upgrades, including the leveling of key warehouse areas to facilitate smoother cargo handling processes. These infrastructure improvements directly enhance the handling of TEUS (Twenty-foot Equivalent Unit containers), further demonstrating SSA Marine Mexico's unwavering commitment to continuous modernization, operational safety, and efficiency. With these initiatives, SSA Marine Mexico is well-positioned to meet the growing demands of the global shipping industry while setting new standards in sustainable port operations. LINK:<a href="https://www.ssamarine.mx/ssa-ing/index" rel="noreferrer" class="joc_admin__link"> https://www.ssamarine.mx/ssa-ing/index</a>

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SSA Marine Mexico Modernizes Facilities with $15 Million Investment 

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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