<div class="phx-topic abstract-wrapper">The Vancouver-Fraser Port Authority’s scheduling system is aimed at helping marine terminals better prepare labor and equipment planning to mitigate import surges. </div>

The Vancouver-Fraser Port Authority’s scheduling system is aimed at helping marine terminals better prepare labor and equipment planning to mitigate import surges.

Feature image

<div class="phx-topic">The completion of a centralized scheduling system at the Port of Vancouver will provide marine terminals with at least four days of advance notice of container ship arrivals, allowing for better labor and equipment planning to mitigate import surges. The system, launched two years ago by the Vancouver Fraser Port Authority, helps coordinate the five different types of vessels, ranging from bulk to cruise ships, that call on some 29 marine terminals in three different districts. The port also presents unique navigational challenges, from confined waters to changing river flow conditions, said Capt. Gord Cooper, chair of the Fraser River Pilots Committee. Through the centralized scheduling system, the roughly 450 port stakeholders now have a “port-wide view” of vessel arrivals, said Sean Baxter, the port’s harbor master and director of marine operations. Like other North American West Coast ports, Vancouver experiences seasonal container cargo surges tied to the pre-Lunar New Year and holiday shipping seasons. Baxter said the centralized scheduling system will allow vessel operators to optimize vessel speeds when moving to berth or anchorage, terminal operators will have greater visibility to vessel arrivals and Canadian National Railway will be better able to handle CN trains run over the Second Narrows Rail Bridge, which must be raised regularly to allow vessels to pass underneath. “This helps us to meet the moment,” he said. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>. </div>

The completion of a centralized scheduling system at the Port of Vancouver will provide marine terminals with at least four days of advance notice of container ship arrivals, allowing for better labor and equipment planning to mitigate import surges. The system, launched two years ago by the Vancouver Fraser Port Authority, helps coordinate the five different types of vessels, ranging from bulk to cruise ships, that call on some 29 marine terminals in three different districts. The port also presents unique navigational challenges, from confined waters to changing river flow conditions, said Capt. Gord Cooper, chair of the Fraser River Pilots Committee. Through the centralized scheduling system, the roughly 450 port stakeholders now have a “port-wide view” of vessel arrivals, said Sean Baxter, the port’s harbor master and director of marine operations. Like other North American West Coast ports, Vancouver experiences seasonal container cargo surges tied to the pre-Lunar New Year and holiday shipping seasons. Baxter said the centralized scheduling system will allow vessel operators to optimize vessel speeds when moving to berth or anchorage, terminal operators will have greater visibility to vessel arrivals and Canadian National Railway will be better able to handle CN trains run over the Second Narrows Rail Bridge, which must be raised regularly to allow vessels to pass underneath. “This helps us to meet the moment,” he said. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .

Port News

Logistics Technology News

Trans-Pacific

Container Shipping News

Maritime

Vancouver’s new scheduling system gives 96-hour advance notice of vessel arrivals

<div class="phx-topic abstract-wrapper">The import gateways have faced ongoing congestion this year amid strong demand on the Asia-Europe trade and limited buffer capacity at ports will be quickly overwhelmed. </div>

The import gateways have faced ongoing congestion this year amid strong demand on the Asia-Europe trade and limited buffer capacity at ports will be quickly overwhelmed.

<div class="phx-topic">The wave of inbound volume driven by a potential return of container shipping to Red Sea transits in 2026 would hit a European port network already struggling with maxed out capacity following a year of solid volume growth. It’s a hypothetical scenario forwarders say is increasingly possible, pointing to how the bottlenecks will take months to unravel and trigger equipment shortages in Asia while inbound volume from ships sailing around Africa and others cutting through Suez will fill yards and warehousing space. Although container lines have been reluctant to lay out a timeline for their return, industry optimism for a significant rerouting of major carriers to the waterway next year has grown since the fragile Gaza ceasefire was reached in October. Roughly two years ago when diversions away from the Red Sea began due to Houthi rebel attacks, import volumes from Asia to Europe were modest and the likes of Rotterdam, Antwerp and Hamburg were able to avoid severe vessel bunching. Things are different now. “Demand growth in Asia–Europe this year is up between 10% and 14%, depending on the market,” said Michael Aldwell, executive vice president of sea logistics at Kuehne + Nagel. “We haven't seen growth like that on the Far East westbound trade since before the global financial crisis.” <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="0460c499-cb7d-49c5-a239-5ff3853ede32"></dynamic-object></div>There is <a href="https://www.joc.com/article/europe-ports-lack-buffer-space-to-handle-demand-surges-6121393">limited buffer capacity in Europe’s terminals</a> to handle existing demand and a sudden surge in import containers will quickly lead to cargo backing up. ”There is not a lot of idle capacity in facilities, and you better be ready for that,” Aldwell told the Journal of Commerce. “If everything’s full, when (Red Sea transits return) you will have a problem.” Some carriers have been testing the Red Sea waters recently by sending ships on their eastbound backhaul legs to India, the Middle East and Asia through the Suez Canal. Although a large scale return to the Red Sea is not imminent, “at some point, this is going to end,” Evangelos Chatzis, CFO at Danaos Corporation, told a Capital Link webcast Tuesday. “By ‘at some point’, I’m not referring to the distant future. I believe that in 2026, the Suez will normalize,” Chatzis added. <h3>Safety of crew, ships paramount </h3>That point might be a little closer with news this week that CMA CGM’s Indamex service will transit Suez on both front- and backhaul voyages between India/Pakistan and US East Coast. “Until now, these transits via Suez Canal have been on a case-by-case basis, diverting voyages originally scheduled to sail around Cape of Good Hope,” Peter Sand, chief analyst at rate benchmarking platform Xeneta, noted in a market update Friday. “CMA CGM’s announcement this week is important because it is a structural change with a service proforma to transit Suez Canal on every sailing,” he said. Despite the positive signs, there remains no clarity on when the mainline Asia–Europe services will resume voyages through the Suez. Carriers are assessing the risk profile of returning to the Red Sea, which revolves around the safety of the crew, ship and cargo, Aldwell noted. "There are clear statements from the industry that this is about safe passage and not about passage no matter what,” he said, pointing to a Maersk missive issued in November that swiftly corrected an announcement by the Suez Canal Authority that the carrier was returning to the route this month. Maersk said transits through the Red Sea would only normalize "as soon as conditions allow, with safety of our crew as the top priority.” Aldwell said once safe passage was assured, and once multiple carriers transited the route with larger capacity, “that will quickly give way to the majority of services running back through Suez, and that is going to have an impact.” Andy Gillespie, senior logistics advisor at supply chain managers WOWL, said the real story was not the shorter transit times that will result from a return to the Red Sea, but the chaos that will accompany the switchover. “For a few months we’ll have Suez and Cape routes running side by side, ships suddenly gaining back 12–18 days and waves of vessels hitting Europe, the Mediterranean, North Africa and parts of the US East Coast in the same arrival windows,” he noted <a href="https://www.linkedin.com/feed/update/7401449611854323712">in a LinkedIn post</a> this week. <h3>Potential equipment shortages </h3>Aldwell said the delays at terminals in Europe will impact carrier schedules and take time to normalize, which could spell trouble for capacity and equipment availability in Asia. ”There will be a metering out of capacity that has to go back to Asia, which means for a time there will likely be a shortage of equipment and a shortage of capacity in Asia until the shipping system gets back into a normal rotation,” he said. While North Europe ports will battle to handle the additional volume on top of ongoing congestion challenges, Helge Neuman-Lezius, global head of full container loads (FCL) at Hellmann Worldwide Logistics, said a mass move back to Suez will have significant implications for Mediterranean trade flows, particularly at ports handling transshipment cargo. “From a congestion perspective, you are a bit better off in the Mediterranean because there are so many small ports compared to the large ones in the north, but when it comes to transshipment ports, that is different,” he told the Journal of Commerce. When the Houthi attacks forced ships to divert around Africa two years ago, carriers moved their Asia–Mediterranean transshipment calls away from the eastern Mediterranean hubs of Port Said in Egypt, Piraeus in Greece and Ambarli in Turkey to ports in the west, such as Morocco’s Tanger Med and Algeciras in Spain. “Egyptian transshipment is nearly gone with no one transshipping in Egypt and Piraeus has lost a lot of transsshipment in cargo,” Neuman-Lezius told the Journal of Commerce. “But when the Red Sea route returns, carriers will move transshipment port calls from the west to the east, basically reverting to where we were two years ago. “When that shift happens there will be a lot of disruption, because it is not just one or two carriers that will be moving; it is all carriers and all alliances and the entire service offering that has been bypassing the Red Sea,” he noted. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

The wave of inbound volume driven by a potential return of container shipping to Red Sea transits in 2026 would hit a European port network already struggling with maxed out capacity following a year of solid volume growth. It’s a hypothetical scenario forwarders say is increasingly possible, pointing to how the bottlenecks will take months to unravel and trigger equipment shortages in Asia while inbound volume from ships sailing around Africa and others cutting through Suez will fill yards and warehousing space. Although container lines have been reluctant to lay out a timeline for their return, industry optimism for a significant rerouting of major carriers to the waterway next year has grown since the fragile Gaza ceasefire was reached in October. Roughly two years ago when diversions away from the Red Sea began due to Houthi rebel attacks, import volumes from Asia to Europe were modest and the likes of Rotterdam, Antwerp and Hamburg were able to avoid severe vessel bunching. Things are different now. “Demand growth in Asia–Europe this year is up between 10% and 14%, depending on the market,” said Michael Aldwell, executive vice president of sea logistics at Kuehne + Nagel. “We haven't seen growth like that on the Far East westbound trade since before the global financial crisis.” There is limited buffer capacity in Europe’s terminals to handle existing demand and a sudden surge in import containers will quickly lead to cargo backing up. ”There is not a lot of idle capacity in facilities, and you better be ready for that,” Aldwell told the Journal of Commerce. “If everything’s full, when (Red Sea transits return) you will have a problem.” Some carriers have been testing the Red Sea waters recently by sending ships on their eastbound backhaul legs to India, the Middle East and Asia through the Suez Canal. Although a large scale return to the Red Sea is not imminent, “at some point, this is going to end,” Evangelos Chatzis, CFO at Danaos Corporation, told a Capital Link webcast Tuesday. “By ‘at some point’, I’m not referring to the distant future. I believe that in 2026, the Suez will normalize,” Chatzis added. Safety of crew, ships paramount That point might be a little closer with news this week that CMA CGM’s Indamex service will transit Suez on both front- and backhaul voyages between India/Pakistan and US East Coast. “Until now, these transits via Suez Canal have been on a case-by-case basis, diverting voyages originally scheduled to sail around Cape of Good Hope,” Peter Sand, chief analyst at rate benchmarking platform Xeneta, noted in a market update Friday. “CMA CGM’s announcement this week is important because it is a structural change with a service proforma to transit Suez Canal on every sailing,” he said. Despite the positive signs, there remains no clarity on when the mainline Asia–Europe services will resume voyages through the Suez. Carriers are assessing the risk profile of returning to the Red Sea, which revolves around the safety of the crew, ship and cargo, Aldwell noted. "There are clear statements from the industry that this is about safe passage and not about passage no matter what,” he said, pointing to a Maersk missive issued in November that swiftly corrected an announcement by the Suez Canal Authority that the carrier was returning to the route this month. Maersk said transits through the Red Sea would only normalize "as soon as conditions allow, with safety of our crew as the top priority.” Aldwell said once safe passage was assured, and once multiple carriers transited the route with larger capacity, “that will quickly give way to the majority of services running back through Suez, and that is going to have an impact.” Andy Gillespie, senior logistics advisor at supply chain managers WOWL, said the real story was not the shorter transit times that will result from a return to the Red Sea, but the chaos that will accompany the switchover. “For a few months we’ll have Suez and Cape routes running side by side, ships suddenly gaining back 12–18 days and waves of vessels hitting Europe, the Mediterranean, North Africa and parts of the US East Coast in the same arrival windows,” he noted in a LinkedIn post this week. Potential equipment shortages Aldwell said the delays at terminals in Europe will impact carrier schedules and take time to normalize, which could spell trouble for capacity and equipment availability in Asia. ”There will be a metering out of capacity that has to go back to Asia, which means for a time there will likely be a shortage of equipment and a shortage of capacity in Asia until the shipping system gets back into a normal rotation,” he said. While North Europe ports will battle to handle the additional volume on top of ongoing congestion challenges, Helge Neuman-Lezius, global head of full container loads (FCL) at Hellmann Worldwide Logistics, said a mass move back to Suez will have significant implications for Mediterranean trade flows, particularly at ports handling transshipment cargo. “From a congestion perspective, you are a bit better off in the Mediterranean because there are so many small ports compared to the large ones in the north, but when it comes to transshipment ports, that is different,” he told the Journal of Commerce. When the Houthi attacks forced ships to divert around Africa two years ago, carriers moved their Asia–Mediterranean transshipment calls away from the eastern Mediterranean hubs of Port Said in Egypt, Piraeus in Greece and Ambarli in Turkey to ports in the west, such as Morocco’s Tanger Med and Algeciras in Spain. “Egyptian transshipment is nearly gone with no one transshipping in Egypt and Piraeus has lost a lot of transsshipment in cargo,” Neuman-Lezius told the Journal of Commerce. “But when the Red Sea route returns, carriers will move transshipment port calls from the west to the east, basically reverting to where we were two years ago. “When that shift happens there will be a lot of disruption, because it is not just one or two carriers that will be moving; it is all carriers and all alliances and the entire service offering that has been bypassing the Red Sea,” he noted. Contact Greg Knowler at greg.knowler@spglobal.com .

Asia-Europe

International ports

Stretched logistics capacity in Europe threatened by Red Sea return

<div class="phx-topic abstract-wrapper">High-value megaproject activity in the US is propping up heavy-lift cargo volumes, while also generating breakbulk shipments.</div>

High-value megaproject activity in the US is propping up heavy-lift cargo volumes, while also generating breakbulk shipments.

<div class="phx-topic">Data center megaprojects are driving a surge of non-residential and industrial construction in the US, mounting a wave of breakbulk and project cargo activity to come as those projects advance. Total construction starts in the US rose by 21.1% in October to $1.53 trillion over the previous month, according to Dodge Construction Network (DCN), an industry data provider. Non-residential construction, which includes offices and data centers, rose by 17.9%, while non-building construction — defined as projects that are not buildings, such as infrastructure and utility projects — expanded 59.4% in that period. For the 12 months ending October 2025, total construction starts were up 8.1% from the previous year, while non-building construction grew 22.9% and non-residential projects starts increased 7.5% over the same period, according to DCN Construction growth has been propped up by “high-value megaproject activity,” said Sarah Martin, associate director of forecasting at Dodge Construction Network. “Specifically, 10 projects valued at $1 billion and over broke ground, largely within data center, manufacturing and LNG construction,” Martin said of October construction activity in a Nov. 21 report. The largest non-building projects to break ground in October included the $15.1 billion first phase of Venture Global’s Calcasieu Pass 2 (CP2) liquefied natural gas (LNG) export terminal and pipeline in southwest Louisiana and the $9 billion second phase of the Rio Grande LNG facility in Brownsville, Texas. Meanwhile, one of the largest non-residential building projects to break ground in October was a $7.5 billion segment of the Meta Hyperion Data Center in northeast Louisiana. <a href="https://www.joc.com/article/increased-capital-investment-to-accelerate-project-cargo-demand-6111274">The development of LNG facilities</a> has emerged as a potential opportunity to provide natural gas to fuel power-hungry data centers amid the rapid expansion of artificial intelligence (AI). North America continues to progress with a multibillion-dollar round of LNG terminal construction, including the Calcasieu Pass project. Janine Mansour, director of trade development for the Port of New Orleans, told the Journal of Commerce that the CP2 LNG terminal, projected to cost $28 billion overall, is the single-largest project bringing heavy-lift cargo to the port, while also generating breakbulk shipments such as bagged cement. “Venture Global dominates the conversation in terms of LNG and driving cargo opportunities,” she said. The port has also been moving significant amounts of cargo for the $27 billion, 4-million-square-foot Meta campus project, set to become the largest data center in the Western Hemisphere upon its targeted completion in 2030. Mansour said the port has been moving more project cargo related to power generation, as well as working with companies that are exploring ways to provide resources for these facilities. “Projects like the data center create opportunities for the creation of new inland yards or infrastructure near the project,” she said. <h3>Data centers trigger plant projects </h3>Key project cargo shippers have been taking steps to support data center development while also reaping bottom-line benefits from the boom. For the first nine months of 2025, data center revenues shot up 140% to $331 million for oilfield services major SLB, formerly Schlumberger Ltd., compared with the same period a year earlier, according to the company’s Oct. 17 earnings results. Construction and mining equipment maker Caterpillar, considered a bellwether global manufacturer of high-and-heavy cargo, is planning a $725 million expansion of its large-engine facility in Lafayette, Indiana, to increase production of power generators for data centers. And Air Liquide, one of the world’s largest industrial gas suppliers, is investing over $50 million in the US semiconductor industry by building an ultra-pure gas production plant in the southeastern US on the site of the world’s largest manufacturer for advanced chip design. With data centers requiring tremendous amounts of energy, water and resources such as semiconductor chips, the rapid development of these facilities will rely on the extensive buildout of infrastructure such as utility plants and manufacturing facilities. On Dec. 1, Louisiana utility Entergy broke ground on a pair of gas-fired power plants to power the Meta Hyperion data center. Global investments in data center infrastructure are on pace to reach over $1.5 trillion by 2030, according to projections by consultant McKinsey. “Semiconductor chip facilities clearly classify as mega projects,” said Kristin Homsi, Bechtel Manufacturing &amp; Technology’s supply chain manager. “Think the world’s largest airports, a new generation of small modular nuclear reactors, and landmarks like the Hoover Dam or the Channel Tunnel” linking Great Britain and mainland Europe. “Semiconductor projects have recently grown in scale to the level of signature projects” Bechtel has historically taken on, she said. John Lu, global sector head of semiconductor fabrications for the industrial projects unit of DHL Global Forwarding, told the Journal of Commerce that buildouts of chip fabrication facilities, or fabs, will require more end-to-end support from specialized service providers such as logistics companies. “That means every part of this value chain that it takes to construct a fab or data center — moving equipment, warehousing, consulting, customs clearance, anything. It’s going to put a lot more stress on us to perform for our customers, but I think we’re well positioned to do that,” he said. Contact Autumn Cafiero Giusti at autumn@autumngiusti.com. </div>

Data center megaprojects are driving a surge of non-residential and industrial construction in the US, mounting a wave of breakbulk and project cargo activity to come as those projects advance. Total construction starts in the US rose by 21.1% in October to $1.53 trillion over the previous month, according to Dodge Construction Network (DCN), an industry data provider. Non-residential construction, which includes offices and data centers, rose by 17.9%, while non-building construction — defined as projects that are not buildings, such as infrastructure and utility projects — expanded 59.4% in that period. For the 12 months ending October 2025, total construction starts were up 8.1% from the previous year, while non-building construction grew 22.9% and non-residential projects starts increased 7.5% over the same period, according to DCN Construction growth has been propped up by “high-value megaproject activity,” said Sarah Martin, associate director of forecasting at Dodge Construction Network. “Specifically, 10 projects valued at $1 billion and over broke ground, largely within data center, manufacturing and LNG construction,” Martin said of October construction activity in a Nov. 21 report. The largest non-building projects to break ground in October included the $15.1 billion first phase of Venture Global’s Calcasieu Pass 2 (CP2) liquefied natural gas (LNG) export terminal and pipeline in southwest Louisiana and the $9 billion second phase of the Rio Grande LNG facility in Brownsville, Texas. Meanwhile, one of the largest non-residential building projects to break ground in October was a $7.5 billion segment of the Meta Hyperion Data Center in northeast Louisiana. The development of LNG facilities has emerged as a potential opportunity to provide natural gas to fuel power-hungry data centers amid the rapid expansion of artificial intelligence (AI). North America continues to progress with a multibillion-dollar round of LNG terminal construction, including the Calcasieu Pass project. Janine Mansour, director of trade development for the Port of New Orleans, told the Journal of Commerce that the CP2 LNG terminal, projected to cost $28 billion overall, is the single-largest project bringing heavy-lift cargo to the port, while also generating breakbulk shipments such as bagged cement. “Venture Global dominates the conversation in terms of LNG and driving cargo opportunities,” she said. The port has also been moving significant amounts of cargo for the $27 billion, 4-million-square-foot Meta campus project, set to become the largest data center in the Western Hemisphere upon its targeted completion in 2030. Mansour said the port has been moving more project cargo related to power generation, as well as working with companies that are exploring ways to provide resources for these facilities. “Projects like the data center create opportunities for the creation of new inland yards or infrastructure near the project,” she said. Data centers trigger plant projects Key project cargo shippers have been taking steps to support data center development while also reaping bottom-line benefits from the boom. For the first nine months of 2025, data center revenues shot up 140% to $331 million for oilfield services major SLB, formerly Schlumberger Ltd., compared with the same period a year earlier, according to the company’s Oct. 17 earnings results. Construction and mining equipment maker Caterpillar, considered a bellwether global manufacturer of high-and-heavy cargo, is planning a $725 million expansion of its large-engine facility in Lafayette, Indiana, to increase production of power generators for data centers. And Air Liquide, one of the world’s largest industrial gas suppliers, is investing over $50 million in the US semiconductor industry by building an ultra-pure gas production plant in the southeastern US on the site of the world’s largest manufacturer for advanced chip design. With data centers requiring tremendous amounts of energy, water and resources such as semiconductor chips, the rapid development of these facilities will rely on the extensive buildout of infrastructure such as utility plants and manufacturing facilities. On Dec. 1, Louisiana utility Entergy broke ground on a pair of gas-fired power plants to power the Meta Hyperion data center. Global investments in data center infrastructure are on pace to reach over $1.5 trillion by 2030, according to projections by consultant McKinsey. “Semiconductor chip facilities clearly classify as mega projects,” said Kristin Homsi, Bechtel Manufacturing & Technology’s supply chain manager. “Think the world’s largest airports, a new generation of small modular nuclear reactors, and landmarks like the Hoover Dam or the Channel Tunnel” linking Great Britain and mainland Europe. “Semiconductor projects have recently grown in scale to the level of signature projects” Bechtel has historically taken on, she said. John Lu, global sector head of semiconductor fabrications for the industrial projects unit of DHL Global Forwarding, told the Journal of Commerce that buildouts of chip fabrication facilities, or fabs, will require more end-to-end support from specialized service providers such as logistics companies. “That means every part of this value chain that it takes to construct a fab or data center — moving equipment, warehousing, consulting, customs clearance, anything. It’s going to put a lot more stress on us to perform for our customers, but I think we’re well positioned to do that,” he said. Contact Autumn Cafiero Giusti at autumn@autumngiusti.com.

Energy projects

Project cargo

Breakbulk News

Data center buildout fuels construction boom, project cargo windfall

<div class="phx-topic abstract-wrapper">The Transportation Intermediaries Association launched a hotline that its members can use to report suspected occurrences of cargo fraud and theft, regardless of the dollar value involved. </div>

The Transportation Intermediaries Association launched a hotline that its members can use to report suspected occurrences of cargo fraud and theft, regardless of the dollar value involved.

<div class="phx-topic">The Transportation Intermediaries Association (TIA) has established a partnership with the Federal Bureau of Investigation to aggregate truckload cargo theft and fraud incident information from its nearly 2,000 members. TIA this week launched a hotline that its members — freight brokers and other domestic intermediaries — can use to report suspected occurrences of cargo fraud and theft, regardless of the dollar value involved. The hotline is meant to give members a direct channel to report incidents in situations where a broker doesn’t know whom to contact at a local, state or federal level. TIA President and CEO Chris Burroughs told the Journal of Commerce Thursday that the association has long worked with the six-person cargo theft team at the FBI’s Philadelphia field office to combat theft and fraud. But after discovering that members lacked clarity about where to turn, TIA leadership decided it could take a role in aggregating incident report data on behalf of federal law enforcement. “We get calls on a daily basis from members with situations,” Burroughs said. “We’re not going to have 2,000 companies calling [the FBI field office]. Let us be the intermediary for that information.” TIA will use the hotline to field calls and gather 15 data points the FBI told TIA it needs to build cases against alleged criminal actors. Burroughs emphasized that an incident need not rise to a specific dollar amount to be reported to the hotline, a common roadblock that prevents brokers, carriers and shippers from reporting suspected theft or fraud. “The FBI is building a RICO [Racketeer Influenced and Corrupt Organizations] case, and so they don’t care about the dollar amount,” he said. “In aggregate, it’s billions of dollars.” <h3>Combating a rising threat </h3>The FBI’s cargo theft information website lists data-sharing platforms CargoNet and the Transported Asset Protection Association (TAPA) as partners in its battle against rising levels of fraud, much of which is coordinated by entities outside the US. Private sector freight marketplaces, notably DAT Freight &amp; Analytics and Truckstop.com, have made it a recent priority to eliminate fraud and theft facilitated on their platforms. And software providers built to vet truckload carriers, such as Highway, have focused intently on the issue. In addition, brokers and shippers can use risk management tools, such as Overhaul, to identify theft and report it directly to law enforcement. Burroughs said the broad threat of lost freight has hurt brokers as a whole, with shippers on their advisory board saying as much. Some shippers have told the Journal of Commerce that they are avoiding the use of brokers until the fraud and theft problems are under control. “We see this as a huge threat, which is why we’re spending so much time on this,” Burroughs said. “This is something keeping us up at night.” Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. </div>

The Transportation Intermediaries Association (TIA) has established a partnership with the Federal Bureau of Investigation to aggregate truckload cargo theft and fraud incident information from its nearly 2,000 members. TIA this week launched a hotline that its members — freight brokers and other domestic intermediaries — can use to report suspected occurrences of cargo fraud and theft, regardless of the dollar value involved. The hotline is meant to give members a direct channel to report incidents in situations where a broker doesn’t know whom to contact at a local, state or federal level. TIA President and CEO Chris Burroughs told the Journal of Commerce Thursday that the association has long worked with the six-person cargo theft team at the FBI’s Philadelphia field office to combat theft and fraud. But after discovering that members lacked clarity about where to turn, TIA leadership decided it could take a role in aggregating incident report data on behalf of federal law enforcement. “We get calls on a daily basis from members with situations,” Burroughs said. “We’re not going to have 2,000 companies calling [the FBI field office]. Let us be the intermediary for that information.” TIA will use the hotline to field calls and gather 15 data points the FBI told TIA it needs to build cases against alleged criminal actors. Burroughs emphasized that an incident need not rise to a specific dollar amount to be reported to the hotline, a common roadblock that prevents brokers, carriers and shippers from reporting suspected theft or fraud. “The FBI is building a RICO [Racketeer Influenced and Corrupt Organizations] case, and so they don’t care about the dollar amount,” he said. “In aggregate, it’s billions of dollars.” Combating a rising threat The FBI’s cargo theft information website lists data-sharing platforms CargoNet and the Transported Asset Protection Association (TAPA) as partners in its battle against rising levels of fraud, much of which is coordinated by entities outside the US. Private sector freight marketplaces, notably DAT Freight & Analytics and Truckstop.com, have made it a recent priority to eliminate fraud and theft facilitated on their platforms. And software providers built to vet truckload carriers, such as Highway, have focused intently on the issue. In addition, brokers and shippers can use risk management tools, such as Overhaul, to identify theft and report it directly to law enforcement. Burroughs said the broad threat of lost freight has hurt brokers as a whole, with shippers on their advisory board saying as much. Some shippers have told the Journal of Commerce that they are avoiding the use of brokers until the fraud and theft problems are under control. “We see this as a huge threat, which is why we’re spending so much time on this,” Burroughs said. “This is something keeping us up at night.” Contact Eric Johnson at eric.johnson@spglobal.com .

Transport, Trade and Regulation News

Truck brokers

Truckload

Broker association to aggregate truckload theft, fraud information for FBI

<div class="phx-topic abstract-wrapper">A group of Zim employees is said to object to a deal with Hapag-Lloyd due to the significant ownership stakes that the sovereign wealth funds of Saudi Arabia and Qatar have in the Hamburg-based carrier.</div>

A group of Zim employees is said to object to a deal with Hapag-Lloyd due to the significant ownership stakes that the sovereign wealth funds of Saudi Arabia and Qatar have in the Hamburg-based carrier.

<div class="phx-topic">Zim Integrated Shipping Services is reportedly fielding offers from other ocean carriers for a buyout, but the Israeli government’s stake in Zim and the partial Arabic state ownership of one potential suitor are complicating a possible deal. Israeli business newspaper Globes <a href="https://en.globes.co.il/en/article-hapag-lloyd-bids-for-zim-1001528325">reported Wednesday</a> that Zim received a buyout offer from Hapag-Lloyd as part of <a href="https://www.joc.com/article/zim-says-reviewing-buyout-offers-including-one-from-ceo-6123362">the strategic review its board of directors is undertaking</a>. Zim’s board is considering offers to sell the company, including one from its own Chief Executive Eli Glickman. A group of Zim employees is said to object to a deal with Hapag-Lloyd due to the significant ownership stakes that the sovereign wealth funds of Saudi Arabia and Qatar have in the Hamburg-based carrier, Globes reported. The two funds own a combined 22% of Hapag-Lloyd after its 2016 acquisition of United Arab Shipping Company. A Hapag-Lloyd spokesperson, asked to comment on the Globes report, told the Journal of Commerce, “We do not comment on market rumors.” Zim could not be reached for comment. Globes reported that Mediterranean Shipping Co. and Maersk have also expressed interest in Zim. A US-based Zim executive told the Journal of Commerce a deal with Hapag-Lloyd has about a “zero percent chance of happening” due to the Saudi and Qatari ownership stakes. “I believe with their ownership structure it makes such a relationship impossible,” said the executive, who did not want to be identified. “I don’t think anything other than Eli buying the company is likely.” Zim’s own governance structure complicates any potential deal. As part of the carrier’s privatization in 2004, Israel was granted a “special share” in the company that ensures the government can access Zim’s fleet in an emergency. The government, due to the special share, also “imposes certain limitations on our operating and managing activities,” Zim said in its last annual report. Those limitations include government approval for any merger or sale transaction, a requirement that the majority of Zim’s directors and its chief executive be Israeli citizens, and that the carrier remains incorporated in Israel. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

Zim Integrated Shipping Services is reportedly fielding offers from other ocean carriers for a buyout, but the Israeli government’s stake in Zim and the partial Arabic state ownership of one potential suitor are complicating a possible deal. Israeli business newspaper Globes reported Wednesday that Zim received a buyout offer from Hapag-Lloyd as part of the strategic review its board of directors is undertaking . Zim’s board is considering offers to sell the company, including one from its own Chief Executive Eli Glickman. A group of Zim employees is said to object to a deal with Hapag-Lloyd due to the significant ownership stakes that the sovereign wealth funds of Saudi Arabia and Qatar have in the Hamburg-based carrier, Globes reported. The two funds own a combined 22% of Hapag-Lloyd after its 2016 acquisition of United Arab Shipping Company. A Hapag-Lloyd spokesperson, asked to comment on the Globes report, told the Journal of Commerce, “We do not comment on market rumors.” Zim could not be reached for comment. Globes reported that Mediterranean Shipping Co. and Maersk have also expressed interest in Zim. A US-based Zim executive told the Journal of Commerce a deal with Hapag-Lloyd has about a “zero percent chance of happening” due to the Saudi and Qatari ownership stakes. “I believe with their ownership structure it makes such a relationship impossible,” said the executive, who did not want to be identified. “I don’t think anything other than Eli buying the company is likely.” Zim’s own governance structure complicates any potential deal. As part of the carrier’s privatization in 2004, Israel was granted a “special share” in the company that ensures the government can access Zim’s fleet in an emergency. The government, due to the special share, also “imposes certain limitations on our operating and managing activities,” Zim said in its last annual report. Those limitations include government approval for any merger or sale transaction, a requirement that the majority of Zim’s directors and its chief executive be Israeli citizens, and that the carrier remains incorporated in Israel. Contact Michael Angell at michael.angell@spglobal.com .

Container lines

Hapag-Lloyd buyout offer for Zim unlikely to get far: report

<div class="phx-topic abstract-wrapper">COO Noel Hacegaba’s elevation to the top executive job would appear to be fait accompli after serving in senior management positions at the port for the past 15 years. </div>

COO Noel Hacegaba’s elevation to the top executive job would appear to be fait accompli after serving in senior management positions at the port for the past 15 years.

<div class="phx-topic">Noel Hacegaba, chief operating officer of the Port of Long Beach, has been nominated to be the port’s new executive director effective Jan. 1. Hacegaba’s nomination was made Wednesday by the Long Beach Board of Harbor Commissioners; the harbor commission will formally vote on his appointment at a board meeting Monday. Hacegaba would replace current Executive Director Mario Cordero, <a href="https://www.joc.com/article/cordero-to-retire-at-end-of-2025-after-eight-years-as-long-beach-executive-director-6091741">who announced in October he would retire at year’s end</a>. Hacegaba’s elevation to be Long Beach’s top executive would appear to be fait accompli. He has served in senior management positions at the port for the past 15 years, rising to his current role as chief operating officer. As COO, he oversees daily operations including commercial services, engineering, finance and administration, planning, environmental affairs and strategic advocacy. Harbor Commission President Frank Colonna called Hacegaba the “ideal choice” for the port’s top job. “Noel brings extensive experience managing all key port functions, deep knowledge of the goods movement industry and a collaborative leadership style that will serve the port well as we navigate future challenges and opportunities,” Colonna said in a statement. As COO, Hacegaba has negotiated several major business transactions, including the multibillion-dollar sales of Long Beach Container Terminal (LBCT) and Total Terminals International (TTI). “I am looking forward to working with our mayor, harbor commission and partners to accelerate our economic engine as we elevate the port’s profile internationally...” Hacegaba said in the statement. A graduate of the University of Southern California, Hacegaba holds undergraduate and graduate degrees in economics, business administration and planning. He earned a doctorate in public administration from the University of La Verne in California. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>. </div>

Noel Hacegaba, chief operating officer of the Port of Long Beach, has been nominated to be the port’s new executive director effective Jan. 1. Hacegaba’s nomination was made Wednesday by the Long Beach Board of Harbor Commissioners; the harbor commission will formally vote on his appointment at a board meeting Monday. Hacegaba would replace current Executive Director Mario Cordero, who announced in October he would retire at year’s end . Hacegaba’s elevation to be Long Beach’s top executive would appear to be fait accompli. He has served in senior management positions at the port for the past 15 years, rising to his current role as chief operating officer. As COO, he oversees daily operations including commercial services, engineering, finance and administration, planning, environmental affairs and strategic advocacy. Harbor Commission President Frank Colonna called Hacegaba the “ideal choice” for the port’s top job. “Noel brings extensive experience managing all key port functions, deep knowledge of the goods movement industry and a collaborative leadership style that will serve the port well as we navigate future challenges and opportunities,” Colonna said in a statement. As COO, Hacegaba has negotiated several major business transactions, including the multibillion-dollar sales of Long Beach Container Terminal (LBCT) and Total Terminals International (TTI). “I am looking forward to working with our mayor, harbor commission and partners to accelerate our economic engine as we elevate the port’s profile internationally...” Hacegaba said in the statement. A graduate of the University of Southern California, Hacegaba holds undergraduate and graduate degrees in economics, business administration and planning. He earned a doctorate in public administration from the University of La Verne in California. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .

North American ports

Hacegaba nominated to be Port of Long Beach executive director

<div class="phx-topic abstract-wrapper">Until the whole container shipping industry improves its reliability, the scope for any form of premium/bonus for above-target performance is low, writes John McCauley. </div>

Until the whole container shipping industry improves its reliability, the scope for any form of premium/bonus for above-target performance is low, writes John McCauley.

<div class="phx-topic">We are a strange bunch we logisticians. One of our self-designed millstones is our key definition of success, and it is always unattainable either at an individual or aggregate level. For container shipping, I refer to on-time arrival (OTA), although for other modes this is usually on-time delivery. We measure on-time arrival as a percentage, with the only feasible outcome to fail; the only question is by how much. Those odds aren’t acceptable outside of shipping. The analogy frequently used is patient operation success in a hospital. If a patient operation is successful 999 times out of 1,000, do we want to be the one that didn’t make it? But seriously, as pertains to container shipping, there are factors beyond the control of the carrier, including severe weather at ports and on the water, and strikes and other labor disruptions. That means a 100% on-time arrival within 24 hours of schedule is unachievable on a volume and consistent basis. However, levels of 60% to 65% at the industry level, with no historical precedent for greater achievement nor likelihood of ever getting there, mean we are in a doom loop of trying, other than hoping, to make it better. This is despite <a href="https://www.joc.com/article/value-unlocked-by-gemini-will-clear-path-for-premium-charge-maersk-ceo-6111339">the admirable efforts of the Gemini Cooperation alliance</a> of Maersk and Hapag-Lloyd to achieve superior reliability. Which leads to my observations about the suggestions of a premium for higher reliability levels, and particularly that carriers would want to claw back some of the benefits of lower inventory costs for beneficial cargo owners (BCOs). <h3>A few obstacles </h3>Firstly, all BCOs will keep a mix of carriers (dual or multi-sourcing) for multiple reasons, including schedule, risk of losing space, price, etc., which means that while one carrier may achieve above-market reliability, their benefit to BCOs will be dragged down by the performance of their other choices in the industry. As an example, Carrier A achieves 90% reliability, Carrier B 60%. You have to program your planning systems for one, not multiple, delivery durations. Which do you choose? None are ideal, too long and you unnecessarily extend inventory carry, but if those same shipments arrive early, you need warehousing. Secondly, what about all the other problems caused by poor reliability? Stock-outs, air freight, extra staffing, warehousing and more. Focusing on inventory highlights a cash flow problem; many of the others are either opportunity costs (stock-outs, lost sales) or real costs (additional warehousing, staffing, sales contract non-compliance). I am not at all saying that container shipping is responsible for all of this, but it is an important contributor to the problem. Thirdly, any premium/bonus for above-target performance must surely have an offset for under-performance. And by this I don’t mean adjusted performance taking account of externalities. The non-performance must be explanation/excuse agnostic, meaning if the one-time arrival is not met, then this is a fail. In other modes of transport, this is the norm and why targets are never set at 100% even for best-in-class. Finally, I am all for improved reliability; most actors in container shipping share that view. How to get there is tricky and requires strategic intent. Many carriers will see it as unachievable and not worth the effort given the likelihood of high uncertainty of any reward other than some degree of customer stickiness. Until the whole industry improves its reliability, the scope for any form of premium/bonus for above-target performance is low. The only way I can see it working is to have a premium attached to index-linked contracts, and even then that must be linked to performance against an agreed target level with penalties. Given the favorable buy-side economics in current contracting, this may be one for carriers to put on the backburner. John McCauley, formerly a vice president of transportation and logistics at Cargill, now consults for shippers. Contact him at <a href="mailto:john-mccauley1@outlook.com">john-mccauley1@outlook.com</a>. </div>

We are a strange bunch we logisticians. One of our self-designed millstones is our key definition of success, and it is always unattainable either at an individual or aggregate level. For container shipping, I refer to on-time arrival (OTA), although for other modes this is usually on-time delivery. We measure on-time arrival as a percentage, with the only feasible outcome to fail; the only question is by how much. Those odds aren’t acceptable outside of shipping. The analogy frequently used is patient operation success in a hospital. If a patient operation is successful 999 times out of 1,000, do we want to be the one that didn’t make it? But seriously, as pertains to container shipping, there are factors beyond the control of the carrier, including severe weather at ports and on the water, and strikes and other labor disruptions. That means a 100% on-time arrival within 24 hours of schedule is unachievable on a volume and consistent basis. However, levels of 60% to 65% at the industry level, with no historical precedent for greater achievement nor likelihood of ever getting there, mean we are in a doom loop of trying, other than hoping, to make it better. This is despite the admirable efforts of the Gemini Cooperation alliance of Maersk and Hapag-Lloyd to achieve superior reliability. Which leads to my observations about the suggestions of a premium for higher reliability levels, and particularly that carriers would want to claw back some of the benefits of lower inventory costs for beneficial cargo owners (BCOs). A few obstacles Firstly, all BCOs will keep a mix of carriers (dual or multi-sourcing) for multiple reasons, including schedule, risk of losing space, price, etc., which means that while one carrier may achieve above-market reliability, their benefit to BCOs will be dragged down by the performance of their other choices in the industry. As an example, Carrier A achieves 90% reliability, Carrier B 60%. You have to program your planning systems for one, not multiple, delivery durations. Which do you choose? None are ideal, too long and you unnecessarily extend inventory carry, but if those same shipments arrive early, you need warehousing. Secondly, what about all the other problems caused by poor reliability? Stock-outs, air freight, extra staffing, warehousing and more. Focusing on inventory highlights a cash flow problem; many of the others are either opportunity costs (stock-outs, lost sales) or real costs (additional warehousing, staffing, sales contract non-compliance). I am not at all saying that container shipping is responsible for all of this, but it is an important contributor to the problem. Thirdly, any premium/bonus for above-target performance must surely have an offset for under-performance. And by this I don’t mean adjusted performance taking account of externalities. The non-performance must be explanation/excuse agnostic, meaning if the one-time arrival is not met, then this is a fail. In other modes of transport, this is the norm and why targets are never set at 100% even for best-in-class. Finally, I am all for improved reliability; most actors in container shipping share that view. How to get there is tricky and requires strategic intent. Many carriers will see it as unachievable and not worth the effort given the likelihood of high uncertainty of any reward other than some degree of customer stickiness. Until the whole industry improves its reliability, the scope for any form of premium/bonus for above-target performance is low. The only way I can see it working is to have a premium attached to index-linked contracts, and even then that must be linked to performance against an agreed target level with penalties. Given the favorable buy-side economics in current contracting, this may be one for carriers to put on the backburner. John McCauley, formerly a vice president of transportation and logistics at Cargill, now consults for shippers. Contact him at john-mccauley1@outlook.com .

Premium pricing linked to vessel schedule reliability faces rough waters

<div class="phx-topic abstract-wrapper">With the proposed Union Pacific-Norfolk Southern merger, the US rail industry finds itself facing a new future but the same historical set of challenges.</div>

With the proposed Union Pacific-Norfolk Southern merger, the US rail industry finds itself facing a new future but the same historical set of challenges.

<div class="phx-topic">Oct. 14 marked the 45th anniversary of President Jimmy Carter signing The Harley O. Staggers Rail Act of 1980, named for the chairman of the House Committee on Interstate and Foreign Commerce (today the Committee on Energy and Commerce). However, the real “heavy lifting” to get the bill passed was by Rep. Jim Florio, the New Jersey Democrat who chaired the House Subcommittee on Commerce, Transportation, and Tourism. The Association of American Railroads (AAR) frequently points out how, by 1980, the railroad industry was on the brink of collapse until Congress passed bipartisan legislation to partially deregulate the industry, thereby allowing market-driven pricing, customer-specific contracts and the ability to shed unprofitable routes. However, this neglects the tortured decade of the 1970s when Congress was repeatedly drawn into legislating railroad matters. It started with The Rail Passenger Service Act of 1970, creating Amtrak. This relieved private railroads from their losses operating passenger service. But it was not enough to save Penn Central, so Congress passed the Regional Rail Reorganization Act of 1973 (the “3R Act”) to salvage viable freight operations from Penn Central and other failing rail lines in the Northeast, mid-Atlantic and Midwest. It created the United States Railway Association (USRA) to develop a “Final System Plan” for the reorganization into a single entity — Conrail. Finally, The Railroad Revitalization and Regulatory Reform Act of 1976 (The “4R Act”) approved the Final System Plan, enabling Conrail to start operations on April 1, 1976. It provided what it thought was sufficient funding — an initial federal “investment” of $2.026 billion for Conrail to acquire the assets of bankrupt Northeast and Midwest railroads and get its operations started. This funding turned out to be insufficient. Conrail subsequently sought and received an additional $3 billion. However, by 1979, it had almost exhausted that amount. Under the leadership of a new CEO, L. Stanley Crane, Conrail claimed that it could succeed as a private entity if the rail marketplace was deregulated. <h3>Regulation intended to perpetuate monopolies </h3>Railroads had been operating under a regulated system since the Interstate Commerce Act of 1887. This legislation was an early initiative of the Progressive era and preceded other efforts at regulation, such as the Sherman Antitrust Act three years later. The Interstate Commerce Commission (ICC) became the model for rate-of-return regulation of public utilities. The microeconomic theory is that a monopoly business can be regulated by having the government control the prices charged by the market to a level equal to the efficient costs of production, plus a government-permitted rate of return on capital. This model became the norm for oversight of many asset-based, network-operating businesses such as communications, utilities, and other transportation modes. What is overlooked by many is that — by design — regulation was intended to perpetuate monopolies because it ensured that excess capacity would be available in the event of war or other national emergencies. The monopoly license was maintained through a series of operating authorities that determined which providers could serve which markets. Consumers paid more — but hopefully not too much more. This legislation was passed when railroads were the primary means of freight and passenger transportation. However, the subsequent development of the Interstate Highway System and air traffic changed that dominant position. Meanwhile, the onset of persistent stagflation during the 1970s encouraged deregulatory efforts in many regulated industries. The Airline Deregulation Act of 1978 was a predecessor. However, the Interstate Commerce Commission, under Chairman Dan O’Neal, had already taken initiatives, permitted by the 4R Act, to deregulate certain rail sectors, such as intermodal. <h3>Key components of Staggers Act </h3>The Staggers Act had three key components: Railroads were able to negotiate contracts with a customer at market-based rates; reduced regulatory oversight over mergers and abandonments was enacted; and a regulatory backstop was established to protect shippers lacking effective competition. These legislative efforts completely inverted the commercial process. Regulation was cost-based pricing. Shippers were price takers. Deregulation begat price-based costing. The market determined the competitive price, and the carrier needed to find a way to produce the service so as to be profitable. This was accomplished in numerous ways: Railroad mergers enabled increased economies of scale and reduced overhead; technology supported cost reductions (e.g., end of train devices replacing the caboose); significant amounts of the networks were spun off to short line operations; and a reduction in train crew size from five to two and extending crew districts reduced costs significantly. The final step of this reduction required Congressional help in 1991, with the imposition of Presidential Emergency Board 219. But downsizing could only do so much. Topline growth was necessary. Into this opportunity stepped intermodal. As international traffic grew with globalization, a large part of the volume growth came from ocean carriers. Traditional domestic customers increased their volume, and major new customers, such as J.B. Hunt, entered as well. It was a win-win situation for everyone. Railroads filled excess capacity, and intermodal customers enjoyed reliable and cost-effective service. Everything went well until the summer of 1993. The weather that summer caused terrible service problems. As an industry, we missed the wakeup call. We were too eager to attribute the problems to a fluke weather condition, not recognizing that capacity utilization was nearing maximum. Since then, the industry has been dealing with the challenge of increasing the top and bottom lines simultaneously. This has frequently proven elusive. The advent of activist investors has only raised the stakes. With the proposed Union Pacific-Norfolk Southern merger, the industry finds itself facing a new future but the same historical set of challenges. In retrospect, it is clear to see how we got here, but it is less clear where we are going. Contact Ted Prince at <a href="mailto:ted@tricitiesintermodal.com">ted@tricitiesintermodal.com</a>.</div>

Oct. 14 marked the 45th anniversary of President Jimmy Carter signing The Harley O. Staggers Rail Act of 1980, named for the chairman of the House Committee on Interstate and Foreign Commerce (today the Committee on Energy and Commerce). However, the real “heavy lifting” to get the bill passed was by Rep. Jim Florio, the New Jersey Democrat who chaired the House Subcommittee on Commerce, Transportation, and Tourism. The Association of American Railroads (AAR) frequently points out how, by 1980, the railroad industry was on the brink of collapse until Congress passed bipartisan legislation to partially deregulate the industry, thereby allowing market-driven pricing, customer-specific contracts and the ability to shed unprofitable routes. However, this neglects the tortured decade of the 1970s when Congress was repeatedly drawn into legislating railroad matters. It started with The Rail Passenger Service Act of 1970, creating Amtrak. This relieved private railroads from their losses operating passenger service. But it was not enough to save Penn Central, so Congress passed the Regional Rail Reorganization Act of 1973 (the “3R Act”) to salvage viable freight operations from Penn Central and other failing rail lines in the Northeast, mid-Atlantic and Midwest. It created the United States Railway Association (USRA) to develop a “Final System Plan” for the reorganization into a single entity — Conrail. Finally, The Railroad Revitalization and Regulatory Reform Act of 1976 (The “4R Act”) approved the Final System Plan, enabling Conrail to start operations on April 1, 1976. It provided what it thought was sufficient funding — an initial federal “investment” of $2.026 billion for Conrail to acquire the assets of bankrupt Northeast and Midwest railroads and get its operations started. This funding turned out to be insufficient. Conrail subsequently sought and received an additional $3 billion. However, by 1979, it had almost exhausted that amount. Under the leadership of a new CEO, L. Stanley Crane, Conrail claimed that it could succeed as a private entity if the rail marketplace was deregulated. Regulation intended to perpetuate monopolies Railroads had been operating under a regulated system since the Interstate Commerce Act of 1887. This legislation was an early initiative of the Progressive era and preceded other efforts at regulation, such as the Sherman Antitrust Act three years later. The Interstate Commerce Commission (ICC) became the model for rate-of-return regulation of public utilities. The microeconomic theory is that a monopoly business can be regulated by having the government control the prices charged by the market to a level equal to the efficient costs of production, plus a government-permitted rate of return on capital. This model became the norm for oversight of many asset-based, network-operating businesses such as communications, utilities, and other transportation modes. What is overlooked by many is that — by design — regulation was intended to perpetuate monopolies because it ensured that excess capacity would be available in the event of war or other national emergencies. The monopoly license was maintained through a series of operating authorities that determined which providers could serve which markets. Consumers paid more — but hopefully not too much more. This legislation was passed when railroads were the primary means of freight and passenger transportation. However, the subsequent development of the Interstate Highway System and air traffic changed that dominant position. Meanwhile, the onset of persistent stagflation during the 1970s encouraged deregulatory efforts in many regulated industries. The Airline Deregulation Act of 1978 was a predecessor. However, the Interstate Commerce Commission, under Chairman Dan O’Neal, had already taken initiatives, permitted by the 4R Act, to deregulate certain rail sectors, such as intermodal. Key components of Staggers Act The Staggers Act had three key components: Railroads were able to negotiate contracts with a customer at market-based rates; reduced regulatory oversight over mergers and abandonments was enacted; and a regulatory backstop was established to protect shippers lacking effective competition. These legislative efforts completely inverted the commercial process. Regulation was cost-based pricing. Shippers were price takers. Deregulation begat price-based costing. The market determined the competitive price, and the carrier needed to find a way to produce the service so as to be profitable. This was accomplished in numerous ways: Railroad mergers enabled increased economies of scale and reduced overhead; technology supported cost reductions (e.g., end of train devices replacing the caboose); significant amounts of the networks were spun off to short line operations; and a reduction in train crew size from five to two and extending crew districts reduced costs significantly. The final step of this reduction required Congressional help in 1991, with the imposition of Presidential Emergency Board 219. But downsizing could only do so much. Topline growth was necessary. Into this opportunity stepped intermodal. As international traffic grew with globalization, a large part of the volume growth came from ocean carriers. Traditional domestic customers increased their volume, and major new customers, such as J.B. Hunt, entered as well. It was a win-win situation for everyone. Railroads filled excess capacity, and intermodal customers enjoyed reliable and cost-effective service. Everything went well until the summer of 1993. The weather that summer caused terrible service problems. As an industry, we missed the wakeup call. We were too eager to attribute the problems to a fluke weather condition, not recognizing that capacity utilization was nearing maximum. Since then, the industry has been dealing with the challenge of increasing the top and bottom lines simultaneously. This has frequently proven elusive. The advent of activist investors has only raised the stakes. With the proposed Union Pacific-Norfolk Southern merger, the industry finds itself facing a new future but the same historical set of challenges. In retrospect, it is clear to see how we got here, but it is less clear where we are going. Contact Ted Prince at ted@tricitiesintermodal.com .

North-American rail

Surface

A look back at the ‘Staggers Act’ and where the US rail industry is today

 Actual capacity

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Planned capacity

Blanked capacity

eeSea collects and centralizes liner network data from dozens of public sources including carriers’ vessel tracking portals, long-term schedules, customer advisories, port and terminal operator schedules, and pilot schedules. These disparate datasets are continually inspected, cleaned, and carefully structured. eeSea synthesizes this refined public data with AIS positions from a third-party provider and its datasets spanning schedule reliability, transit times, trade capacity evolution, and 60-day vessel forecasts. Capacity is measured based on the last load port in Europe. [eeSea](https://www.eesea.com)

North Europe to US East and Gulf coasts container capacity (eeSea)

Northern Europe to US East and Gulf Coasts Container Capacity and Deployment (eeSea) Gateway

<div class="phx-topic abstract-wrapper">The conflicting interests became apparent last week when the Suez Canal Authority issued a statement indicating that Maersk planned to resume normal transits in December, triggering a quick response from the carrier that no timeline had been set. </div>

The conflicting interests became apparent last week when the Suez Canal Authority issued a statement indicating that Maersk planned to resume normal transits in December, triggering a quick response from the carrier that no timeline had been set.

<div class="phx-topic">Geopolitical forces favoring the resumption of container trade through the Red Sea and the corresponding commercial reluctance to do so are converging after nearly two years of most ships diverting around southern Africa to avoid attacks by Houthi militants. The conflicting interests became apparent in late November when the Suez Canal Authority (SCA) issued a statement indicating that Maersk planned to resume normal transits in December, triggering a quick response from the carrier that no timeline had been set. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6126957_0.1.jpg"></img></div>But the contours of a clash are taking shape. Facing monthly losses of $800 million, Egypt President Abdel Fattah El-Sisi said earlier this year the country desperately wants full use of the canal to resume without further delay. After exerting little influence to reopen the Canal, Egypt saw fresh hope after the Oct. 13 Israel-Hamas peace summit in Sharm El-Sheikh, Egypt, attended by Sisi, US President Donald Trump and representatives of 20 countries. The SCA on Nov. 25 said the event “succeeded in paving the way for restoring the rates of traffic in the region back to normal.” Despite the pushback by Maersk and its Gemini partner Hapag-Lloyd, the peace conference was potentially significant regarding the Suez. The conference endorsed the October agreement between Hamas and Israel to end the war in Gaza, the hostilities that led the Houthis to start firing on shipping in late 2023. So, in theory, the end of active fighting between Israel and Hamas should end the attacks and fully reopen the waterway. But it’s not so simple. Mideast analysts have little confidence that hostilities have truly ended, and thus say the pause in attacks by the Houthis disclosed in early November is in fact not permanent. The tenuous nature of Mideast peace was reflected in ships failing to return to the Red Sea following a May announcement by Trump of a deal with the Houthis, under which the US would stop bombing the Iran-aligned group and the militants would stop menacing ships seeking to transit the Red Sea and Suez Canal. <h3>Carriers’ views are complex </h3>Carriers say they believe the Suez is the natural route connecting Asia and Europe. CMA CGM Egypt &amp; Sudan Cluster CEO Tariq Zaghloul was quoted by the Canal authority in early November saying “there is no alternative to the Suez.” But carriers are also disinclined to resume normal transits and perform extensive reworking of their networks, including transshipment points, only to have to re-divert if shipping were to come under renewed attack. ”We need to see consistent stability and tangible progress before routing vessels back through the Suez Canal,” Hapag-Lloyd said on Nov. 19.Thus, in assessing the real situation, carriers have thus far concluded that not enough has changed to warrant resumption of normal routings between Asia and Europe and Asia and the North American East Coast. “The Houthi decision to pause attacks is probably a tactical decision to allow the group to rearm and rebuild damaged infrastructure,” Jack Kennedy, head of Middle East and North Africa country risk at S&amp;P Global Market Intelligence, wrote on Nov. 12 in an assessment he said is unchanged as of Nov. 26. “Although it reduces the likelihood of attacks on shipping while the Gaza ceasefire holds, there remains a severe risk of attacks on vessels in transit in the one-year outlook if, as is likely, the ceasefire between Hamas and Israel breaks down permanently without progressing to its later stages,” Kennedy said. There are reasons why it is to the Houthi’s advantage to continue the attacks, he said. “The Houthis have incentive to continue some level of attack activity in the Red Sea and against Israel in the one-year outlook in order to secure external financial and military support and to continue to generate domestic support within Yemen,” Kennedy said. S&amp;P Global is the parent company of the Journal of Commerce. With the ongoing diversions serving as stark evidence that Mideast peace is tenuous, Egypt — in citing the peace conference as having cleared the way to normal transits — is hoping to draw a straight line between geopolitics and the ongoing diversions. And they are hoping the US draws the same line, seeing the issue in big picture terms and rejecting obstacles tied to the operational realities of shipping. “If the [Trump] administration links the canal disruption directly to their broader peace deal efforts in the Middle East, they could ramp up the regulatory or diplomatic playbook,” said Andrew Petrisin, who served as deputy assistant secretary for multimodal freight within the US Department of Transportation from June 2024 to January 2025 and is now CEO of Laneway, an online platform that enables the trading of guaranteed container space. Petrisin told the Journal of Commerce the White House, in an effort to pressure carriers to resume transits through the Suez, could try to frame the vessel diversions as causing rising costs for consumers. “If they decide that avoiding the Suez is driving inflation, given the recent election results and the focus on affordability, they may try to frame the carriers’ safety decisions as raising prices,” Petrisin said. “Politically, this angle is an easier sell than a complex argument about how commercial shipping impacts a peace treaty.” Economists have previously told the Journal of Commerce they see no evidence in data that the diversions are impacting inflation in the US. Any effort to point the finger at ocean carriers would echo the Biden administration’s rhetoric blaming carriers for price gouging during the pandemic. <h3>US security guarantees? </h3>From the point of view of carriers, their reluctance to resume Suez transits remains high due to safety risks. The financial advantage of vessel diversions, never mentioned by carriers, is a consideration in the background given that resumption of Suez transits would dump about 10% of global capacity back into the market and soften freight rates, although the effect would be muted over several months by the extensive port congestion many believe would result from a massive realignment of East-West networks. “There are many pieces to fall in place before they can [resume Suez transits], and insurance is one factor,” said Patrick Fay, CEO of BOC International. Thus, according to industry sources, resuming Suez transits would likely require more than mere rhetoric from the US administration. For example, the US would likely have to put security guarantees in place beyond what it has already done, perhaps increasing its naval presence in the region, industry sources say. But that would run into a view expressed by Mideast analysts that the Houthis are too agile and dug in within Yemen to be eliminated as a military threat to shipping. And if efforts were made by the US to impose fines on carriers for not using the Suez, were it to come to that, carriers would resist, Petrisin believes. “I don’t see a world where they risk the safety of their people and fleets for fear of a port fee,” he said. Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>. </div>

Geopolitical forces favoring the resumption of container trade through the Red Sea and the corresponding commercial reluctance to do so are converging after nearly two years of most ships diverting around southern Africa to avoid attacks by Houthi militants. The conflicting interests became apparent in late November when the Suez Canal Authority (SCA) issued a statement indicating that Maersk planned to resume normal transits in December, triggering a quick response from the carrier that no timeline had been set. But the contours of a clash are taking shape. Facing monthly losses of $800 million, Egypt President Abdel Fattah El-Sisi said earlier this year the country desperately wants full use of the canal to resume without further delay. After exerting little influence to reopen the Canal, Egypt saw fresh hope after the Oct. 13 Israel-Hamas peace summit in Sharm El-Sheikh, Egypt, attended by Sisi, US President Donald Trump and representatives of 20 countries. The SCA on Nov. 25 said the event “succeeded in paving the way for restoring the rates of traffic in the region back to normal.” Despite the pushback by Maersk and its Gemini partner Hapag-Lloyd, the peace conference was potentially significant regarding the Suez. The conference endorsed the October agreement between Hamas and Israel to end the war in Gaza, the hostilities that led the Houthis to start firing on shipping in late 2023. So, in theory, the end of active fighting between Israel and Hamas should end the attacks and fully reopen the waterway. But it’s not so simple. Mideast analysts have little confidence that hostilities have truly ended, and thus say the pause in attacks by the Houthis disclosed in early November is in fact not permanent. The tenuous nature of Mideast peace was reflected in ships failing to return to the Red Sea following a May announcement by Trump of a deal with the Houthis, under which the US would stop bombing the Iran-aligned group and the militants would stop menacing ships seeking to transit the Red Sea and Suez Canal. Carriers’ views are complex Carriers say they believe the Suez is the natural route connecting Asia and Europe. CMA CGM Egypt & Sudan Cluster CEO Tariq Zaghloul was quoted by the Canal authority in early November saying “there is no alternative to the Suez.” But carriers are also disinclined to resume normal transits and perform extensive reworking of their networks, including transshipment points, only to have to re-divert if shipping were to come under renewed attack. ”We need to see consistent stability and tangible progress before routing vessels back through the Suez Canal,” Hapag-Lloyd said on Nov. 19. Thus, in assessing the real situation, carriers have thus far concluded that not enough has changed to warrant resumption of normal routings between Asia and Europe and Asia and the North American East Coast. “The Houthi decision to pause attacks is probably a tactical decision to allow the group to rearm and rebuild damaged infrastructure,” Jack Kennedy, head of Middle East and North Africa country risk at S&P Global Market Intelligence, wrote on Nov. 12 in an assessment he said is unchanged as of Nov. 26. “Although it reduces the likelihood of attacks on shipping while the Gaza ceasefire holds, there remains a severe risk of attacks on vessels in transit in the one-year outlook if, as is likely, the ceasefire between Hamas and Israel breaks down permanently without progressing to its later stages,” Kennedy said. There are reasons why it is to the Houthi’s advantage to continue the attacks, he said. “The Houthis have incentive to continue some level of attack activity in the Red Sea and against Israel in the one-year outlook in order to secure external financial and military support and to continue to generate domestic support within Yemen,” Kennedy said. S&P Global is the parent company of the Journal of Commerce. With the ongoing diversions serving as stark evidence that Mideast peace is tenuous, Egypt — in citing the peace conference as having cleared the way to normal transits — is hoping to draw a straight line between geopolitics and the ongoing diversions. And they are hoping the US draws the same line, seeing the issue in big picture terms and rejecting obstacles tied to the operational realities of shipping. “If the [Trump] administration links the canal disruption directly to their broader peace deal efforts in the Middle East, they could ramp up the regulatory or diplomatic playbook,” said Andrew Petrisin, who served as deputy assistant secretary for multimodal freight within the US Department of Transportation from June 2024 to January 2025 and is now CEO of Laneway, an online platform that enables the trading of guaranteed container space. Petrisin told the Journal of Commerce the White House, in an effort to pressure carriers to resume transits through the Suez, could try to frame the vessel diversions as causing rising costs for consumers. “If they decide that avoiding the Suez is driving inflation, given the recent election results and the focus on affordability, they may try to frame the carriers’ safety decisions as raising prices,” Petrisin said. “Politically, this angle is an easier sell than a complex argument about how commercial shipping impacts a peace treaty.” Economists have previously told the Journal of Commerce they see no evidence in data that the diversions are impacting inflation in the US. Any effort to point the finger at ocean carriers would echo the Biden administration’s rhetoric blaming carriers for price gouging during the pandemic. US security guarantees? From the point of view of carriers, their reluctance to resume Suez transits remains high due to safety risks. The financial advantage of vessel diversions, never mentioned by carriers, is a consideration in the background given that resumption of Suez transits would dump about 10% of global capacity back into the market and soften freight rates, although the effect would be muted over several months by the extensive port congestion many believe would result from a massive realignment of East-West networks. “There are many pieces to fall in place before they can [resume Suez transits], and insurance is one factor,” said Patrick Fay, CEO of BOC International. Thus, according to industry sources, resuming Suez transits would likely require more than mere rhetoric from the US administration. For example, the US would likely have to put security guarantees in place beyond what it has already done, perhaps increasing its naval presence in the region, industry sources say. But that would run into a view expressed by Mideast analysts that the Houthis are too agile and dug in within Yemen to be eliminated as a military threat to shipping. And if efforts were made by the US to impose fines on carriers for not using the Suez, were it to come to that, carriers would resist, Petrisin believes. “I don’t see a world where they risk the safety of their people and fleets for fear of a port fee,” he said. Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

Complexity of resumption of Suez transits beginning to take shape

<div class="phx-topic abstract-wrapper">The National Association of Waterfront Employers said intermodal service from ports could degrade further unless service commitments are made in the proposed $85 billion deal. </div>

The National Association of Waterfront Employers said intermodal service from ports could degrade further unless service commitments are made in the proposed $85 billion deal.

<div class="phx-topic">The National Association of Waterfront Employers (NAWE) became the first group in ocean freight to weigh in on the proposed merger of Union Pacific and Norfolk Southern, arguing a combined railroad could mean less competition and further erosion in intermodal service reliability at US ports.In a Dec. 1 letter to the US Surface Transportation Board (STB), NAWE said its members are concerned that reducing the number of Class I railroads through UP’s $85 billion acquisition of NS will further degrade intermodal service at ports. “Marine terminals need an intermodal rail service to handle increasing volumes of trade in order to provide streamlined imports and exports from increasingly strained port complexes,” NAWE’s letter said. “We are greatly concerned as to whether a reduction of two of the four major remaining competitors offering intermodal rail service will serve to benefit our industry.” NAWE, which represents marine terminals and stevedoring companies, said that Class I railroads, in general, are only taking a “best efforts” approach to providing intermodal service at ports. The group said the railroad industry’s focus on maintaining high operating ratios and “precision scheduled railroading” means less reliable intermodal service. Instead, railroads are leaving it to port operators and marine terminals to invest in rail operations “while the railroad usually takes more of an ‘if you build it, I may carry your cargo, if I see fit,’ approach,” NAWE’s letter said. “This results in a situation where the marine terminal industry finances and manages all the placement of intermodal on-dock rail transport, sometimes with very little in return on commitments in level of service,” the group wrote to STB, the federal regulator who will ultimately decide the fate of the proposed merger.<h3>Argues for intermodal growth at smaller ports</h3>Ocean carriers and ports have generally avoided public comments on the merger plans. NAWE said many of its members have good working relationships with the railroads, but it sees more potential for intermodal services to expand outside of larger ports by offering shippers more reach through less crowded gateways. The combination of two Class I railroads serving both coasts will further concentrate international intermodal freight at already busy ports, it said. “We need intermodal railroad services that expand the reach and capacity of medium-sized ports so they grow, but more fundamentally, we need to build a stronger business partnership with the railroads,” NAWE said. “Other port areas of the nation continue to struggle for commitment of service and greater level of investment to help spur growth.” Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>.</div>

The National Association of Waterfront Employers (NAWE) became the first group in ocean freight to weigh in on the proposed merger of Union Pacific and Norfolk Southern, arguing a combined railroad could mean less competition and further erosion in intermodal service reliability at US ports. In a Dec. 1 letter to the US Surface Transportation Board (STB), NAWE said its members are concerned that reducing the number of Class I railroads through UP’s $85 billion acquisition of NS will further degrade intermodal service at ports. “Marine terminals need an intermodal rail service to handle increasing volumes of trade in order to provide streamlined imports and exports from increasingly strained port complexes,” NAWE’s letter said. “We are greatly concerned as to whether a reduction of two of the four major remaining competitors offering intermodal rail service will serve to benefit our industry.” NAWE, which represents marine terminals and stevedoring companies, said that Class I railroads, in general, are only taking a “best efforts” approach to providing intermodal service at ports. The group said the railroad industry’s focus on maintaining high operating ratios and “precision scheduled railroading” means less reliable intermodal service. Instead, railroads are leaving it to port operators and marine terminals to invest in rail operations “while the railroad usually takes more of an ‘if you build it, I may carry your cargo, if I see fit,’ approach,” NAWE’s letter said. “This results in a situation where the marine terminal industry finances and manages all the placement of intermodal on-dock rail transport, sometimes with very little in return on commitments in level of service,” the group wrote to STB, the federal regulator who will ultimately decide the fate of the proposed merger. Argues for intermodal growth at smaller ports Ocean carriers and ports have generally avoided public comments on the merger plans. NAWE said many of its members have good working relationships with the railroads, but it sees more potential for intermodal services to expand outside of larger ports by offering shippers more reach through less crowded gateways. The combination of two Class I railroads serving both coasts will further concentrate international intermodal freight at already busy ports, it said. “We need intermodal railroad services that expand the reach and capacity of medium-sized ports so they grow, but more fundamentally, we need to build a stronger business partnership with the railroads,” NAWE said. “Other port areas of the nation continue to struggle for commitment of service and greater level of investment to help spur growth.” Contact Michael Angell at michael.angell@spglobal.com .

Intermodal providers

Ports urge strict review of intermodal impacts from UP-NS merger

<div class="phx-topic abstract-wrapper">The railroad says the appointment system will create more “predictable operations” by controlling the number of containers that are in-gated each day.</div>

The railroad says the appointment system will create more “predictable operations” by controlling the number of containers that are in-gated each day.

<div class="phx-topic">Norfolk Southern Railway (NS) has begun requiring truck drivers to make reservations to drop off domestic intermodal loads, with a system-wide rollout of the program scheduled to continue through March. As of Dec. 1, drivers must secure a reservation to deliver domestic containers to the NS terminal in Charlotte, North Carolina. Reservations are now also required in Atlanta; Columbus, Ohio; Jacksonville, Florida.; Kansas City, Missouri; Memphis and St. Louis after a “soft” rollout of the appointment system over the past few months, NS said, adding that one additional terminal will be added each week for the next 16 weeks. “We softly rolled [our mandatory appointment system] out for domestic [intermodal] in a handful of lanes, mostly between Chicago and New England,” Norfolk Southern said in a statement to intermodal partners that was seen by the Journal of Commerce. “After a year’s worth of testing and systems enhancements, we will be rolling [it] out systemwide.” The railroad says the reservation system will create more “predictable operations.” By controlling the number of containers that are in-gated each day, NS says it can reduce so-called origin dwell, or how long a container sits before being loaded on a train. Lower dwell times prevent terminals from becoming congested and preserve capacity to unload inbound trains quickly, according to the railroad. “By reducing variability and enhancing operational predictability, we aim to deliver better service and support to our customers,” NS said in the advisory. Key rollout dates ahead include Dec. 8 in Philadelphia; Feb. 2 in Harrisburg, Pennsylvania; Feb. 9 in Newark (Croxton), New Jersey; and Feb. 23 at Chicago’s 47th Street terminal. International intermodal customers already use a reservation system at several NS hubs, including Atlanta, Memphis and Chicago. BNSF Railway is now the only Class I North American railroad that does not require reservations for domestic intermodal drop-offs. <h3>Extra step for IMCs </h3>NS will host information sessions across its network to brief motor carriers and intermodal marketing companies (IMCs) on the new requirements. Sessions are scheduled in Cincinnati on Dec. 10 and Louisville on Dec. 11, ahead of those markets adopting the reservations system in mid-January. The change adds a planning step for IMCs to ensure loads depart on time by booking and providing reservation numbers to third-party drayage carriers. During peak periods, NS may also cap how many containers an IMC can ingate daily, potentially delaying some shipments. High-volume IMCs will receive a daily allocation of reservation slots per terminal. Once that allotment is exceeded, IMCs must use an open pool of remaining slots on a first-come, first-served basis. CSX Transportation — NS’ chief competitor in the eastern US domestic market — has used a similar reservation system since 2019. During the pandemic-era freight surge, reservation slots at times filled for days in Chicago and other hubs, leaving IMCs waiting to ingate containers. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>.</div>

Norfolk Southern Railway (NS) has begun requiring truck drivers to make reservations to drop off domestic intermodal loads, with a system-wide rollout of the program scheduled to continue through March. As of Dec. 1, drivers must secure a reservation to deliver domestic containers to the NS terminal in Charlotte, North Carolina. Reservations are now also required in Atlanta; Columbus, Ohio; Jacksonville, Florida.; Kansas City, Missouri; Memphis and St. Louis after a “soft” rollout of the appointment system over the past few months, NS said, adding that one additional terminal will be added each week for the next 16 weeks. “We softly rolled [our mandatory appointment system] out for domestic [intermodal] in a handful of lanes, mostly between Chicago and New England,” Norfolk Southern said in a statement to intermodal partners that was seen by the Journal of Commerce. “After a year’s worth of testing and systems enhancements, we will be rolling [it] out systemwide.” The railroad says the reservation system will create more “predictable operations.” By controlling the number of containers that are in-gated each day, NS says it can reduce so-called origin dwell, or how long a container sits before being loaded on a train. Lower dwell times prevent terminals from becoming congested and preserve capacity to unload inbound trains quickly, according to the railroad. “By reducing variability and enhancing operational predictability, we aim to deliver better service and support to our customers,” NS said in the advisory. Key rollout dates ahead include Dec. 8 in Philadelphia; Feb. 2 in Harrisburg, Pennsylvania; Feb. 9 in Newark (Croxton), New Jersey; and Feb. 23 at Chicago’s 47th Street terminal. International intermodal customers already use a reservation system at several NS hubs, including Atlanta, Memphis and Chicago. BNSF Railway is now the only Class I North American railroad that does not require reservations for domestic intermodal drop-offs. Extra step for IMCs NS will host information sessions across its network to brief motor carriers and intermodal marketing companies (IMCs) on the new requirements. Sessions are scheduled in Cincinnati on Dec. 10 and Louisville on Dec. 11, ahead of those markets adopting the reservations system in mid-January. The change adds a planning step for IMCs to ensure loads depart on time by booking and providing reservation numbers to third-party drayage carriers. During peak periods, NS may also cap how many containers an IMC can ingate daily, potentially delaying some shipments. High-volume IMCs will receive a daily allocation of reservation slots per terminal. Once that allotment is exceeded, IMCs must use an open pool of remaining slots on a first-come, first-served basis. CSX Transportation — NS’ chief competitor in the eastern US domestic market — has used a similar reservation system since 2019. During the pandemic-era freight surge, reservation slots at times filled for days in Chicago and other hubs, leaving IMCs waiting to ingate containers. Contact Ari Ashe at ari.ashe@spglobal.com .

Rail News

Norfolk Southern to roll out reservation system on domestic intermodal

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

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Shippers save money, time with automated transportation bidding tools

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

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Filling the Supply Chain Education Gap with LTL Education Courses

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<div class="phx-topic abstract-wrapper">Forwarders are bemoaning pricing changes WiseTech made this week to its CargoWise products, saying their technology costs will rise markedly because shippers will be unwilling to accept the pass-through costs. </div>

Forwarders are bemoaning pricing changes WiseTech made this week to its CargoWise products, saying their technology costs will rise markedly because shippers will be unwilling to accept the pass-through costs.

<div class="phx-topic">WiseTech Global this week unveiled a pricing model change to the forwarding industry’s most widely used software platform, triggering sharp backlash from customers who say the move will raise their costs between 20% and 50%. The change implemented on Monday by WiseTech is stirring market debate about pricing transparency and whether technology costs incurred by third-party logistics providers (3PLs) can be passed on to shippers. The new pricing model, called Value Pack Community Pricing, is for WiseTech’s flagship CargoWise set of products. The logistics software provider said the change is meant to simplify pricing for its customers and drive broader use of its other products. WiseTech CEO Zubin Appoo told the Journal of Commerce the shift is “not a pricing change, but a totally different commercial model.” The old pricing model was based on the number of users within a customer, with additional fees charged for certain features and set fees associated with cloud hosting and other infrastructure costs. The new model rolls all those fees into a single transaction cost based on the type of activity a forwarder chooses. For instance, management of a full import container with an associated inland leg would cost $19.95; a standalone import customs entry would cost $9.95. WiseTech’s intent is to get forwarders to use more of the products the company has developed and to help forwarders defray the cost of those products by passing the cost on to shippers. <h3>Forwarders see their costs rising </h3>But a variety of forwarders say the pricing change will increase their costs significantly — by 20% on the low end and 50% or more on the high end. That would, by default, cut their margins unless they are able to pass those additional costs on to customers. Most forwarders who spoke with the Journal of Commerce were skeptical that shippers would accept a technology line item on an invoice from a forwarder, especially in a competitive market where shippers can easily shop around for better rates. There was also unease at the rollout itself, with some US forwarders bemoaning the change happening over the Thanksgiving holiday weekend, and others suggesting that WiseTech should have made the shift on Jan. 1 so that accounting for the 2025 calendar year would have been more straightforward. One forwarder said the change this late in the year would affect its forecast costs for technology made at the start of the year. The forwarder generally projects a 10% increase annually for its cost of using CargoWise but expects the pricing change made Monday will drive its costs up between 25% and 35%. WiseTech announced to customers on Oct. 31 that the pricing change would go into effect Dec. 1, but some customers were still caught unaware. One forwarder described the rollout as “bananas.” “Everyone I know opened a ticket [with WiseTech] and got a response saying, ‘we’ll let you know when we release the new pricing,’” said another forwarder source. “Then we got the pricing information on Wednesday, and the upgrades got pushed Thursday.” Appoo, in a memo to customers Monday, said WiseTech would be pushing upgrades and patches in real time. <h3>CEO expects gradual acceptance </h3>WiseTech’s CEO said the pass-through costs would take time to be accepted in an industry that is generally reluctant to change but would eventually be thought of in the same vein as other costs that forwarders make on behalf of their customers and later recover. “The industry we work in operates in a disbursement model,” Appoo said. “There are customs fees, gate fees, port fees that 3PLs incur on behalf of the customer, and some are absorbed by the forwarder,” he said. “Standalone jobs [in the Value Pack pricing bundles] are $2 to $20. We’re talking a small number, a 0.1% charge added to customers and one of the smallest, if not the smallest, disbursements to the customer.” Appoo added that giving all its customers the ability to pass on technology costs to customers democratizes access to CargoWise because smaller players won’t experience the pricing “friction” of paying per seat, while larger customers will be able to scale WiseTech’s investments in artificial intelligence (AI) in a way smaller players might not. Another undercurrent at play is WiseTech’s ongoing deployment of AI to automate a range of individual processes and connected workflows within CargoWise, a development occurring amid broader use of AI across the forwarding industry. Appoo contends that AI will change the size of the workforce using CargoWise across its customers, and the old pricing model didn’t reflect the investment the technology provider devotes annually to maintaining and upgrading its product. That includes the development of AI agents to help CargoWise users get more value from their investment in the product. “We see how rapidly AI has progressed,” Appoo said. “It will cause labor reduction over the next year. That’s the more urgent motivation.” Still, industry participants are skeptical about the changes. “You’re introducing fees to a price-sensitive market that doesn’t have a track record for paying this fee,” said Robert Petti, CEO of logistics technology provider Prompt Global and a former CargoWise service partner. “Automatically there is going to be reluctance because of that. People are looking to ship for the lowest possible price. This [cost] will likely be eaten by forwarders. The choice of using CargoWise is the forwarder’s, not the [beneficial cargo owner’s].” The CEO of another logistics technology provider who did not want to be identified said the WiseTech change is the equivalent of going “to Taco Bell and they charge me a fee for their use of SAP.” “Every dollar counts for a forwarder’s bottom line,” said a third logistics technology provider CEO. Appoo is confident the industry will adapt, and learn to appreciate, WiseTech’s new model. “We have, over time, introduced things that customers haven’t necessarily asked for, and over time they see the value,” he said. “We’re not just a software vendor, we’re the operating system that runs their supply chain, the partner that makes sure they’re compliant, and the solution that gives them levels of efficiency they wouldn’t have access to before.” Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. </div>

WiseTech Global this week unveiled a pricing model change to the forwarding industry’s most widely used software platform, triggering sharp backlash from customers who say the move will raise their costs between 20% and 50%. The change implemented on Monday by WiseTech is stirring market debate about pricing transparency and whether technology costs incurred by third-party logistics providers (3PLs) can be passed on to shippers. The new pricing model, called Value Pack Community Pricing, is for WiseTech’s flagship CargoWise set of products. The logistics software provider said the change is meant to simplify pricing for its customers and drive broader use of its other products. WiseTech CEO Zubin Appoo told the Journal of Commerce the shift is “not a pricing change, but a totally different commercial model.” The old pricing model was based on the number of users within a customer, with additional fees charged for certain features and set fees associated with cloud hosting and other infrastructure costs. The new model rolls all those fees into a single transaction cost based on the type of activity a forwarder chooses. For instance, management of a full import container with an associated inland leg would cost $19.95; a standalone import customs entry would cost $9.95. WiseTech’s intent is to get forwarders to use more of the products the company has developed and to help forwarders defray the cost of those products by passing the cost on to shippers. Forwarders see their costs rising But a variety of forwarders say the pricing change will increase their costs significantly — by 20% on the low end and 50% or more on the high end. That would, by default, cut their margins unless they are able to pass those additional costs on to customers. Most forwarders who spoke with the Journal of Commerce were skeptical that shippers would accept a technology line item on an invoice from a forwarder, especially in a competitive market where shippers can easily shop around for better rates. There was also unease at the rollout itself, with some US forwarders bemoaning the change happening over the Thanksgiving holiday weekend, and others suggesting that WiseTech should have made the shift on Jan. 1 so that accounting for the 2025 calendar year would have been more straightforward. One forwarder said the change this late in the year would affect its forecast costs for technology made at the start of the year. The forwarder generally projects a 10% increase annually for its cost of using CargoWise but expects the pricing change made Monday will drive its costs up between 25% and 35%. WiseTech announced to customers on Oct. 31 that the pricing change would go into effect Dec. 1, but some customers were still caught unaware. One forwarder described the rollout as “bananas.” “Everyone I know opened a ticket [with WiseTech] and got a response saying, ‘we’ll let you know when we release the new pricing,’” said another forwarder source. “Then we got the pricing information on Wednesday, and the upgrades got pushed Thursday.” Appoo, in a memo to customers Monday, said WiseTech would be pushing upgrades and patches in real time. CEO expects gradual acceptance WiseTech’s CEO said the pass-through costs would take time to be accepted in an industry that is generally reluctant to change but would eventually be thought of in the same vein as other costs that forwarders make on behalf of their customers and later recover. “The industry we work in operates in a disbursement model,” Appoo said. “There are customs fees, gate fees, port fees that 3PLs incur on behalf of the customer, and some are absorbed by the forwarder,” he said. “Standalone jobs [in the Value Pack pricing bundles] are $2 to $20. We’re talking a small number, a 0.1% charge added to customers and one of the smallest, if not the smallest, disbursements to the customer.” Appoo added that giving all its customers the ability to pass on technology costs to customers democratizes access to CargoWise because smaller players won’t experience the pricing “friction” of paying per seat, while larger customers will be able to scale WiseTech’s investments in artificial intelligence (AI) in a way smaller players might not. Another undercurrent at play is WiseTech’s ongoing deployment of AI to automate a range of individual processes and connected workflows within CargoWise, a development occurring amid broader use of AI across the forwarding industry. Appoo contends that AI will change the size of the workforce using CargoWise across its customers, and the old pricing model didn’t reflect the investment the technology provider devotes annually to maintaining and upgrading its product. That includes the development of AI agents to help CargoWise users get more value from their investment in the product. “We see how rapidly AI has progressed,” Appoo said. “It will cause labor reduction over the next year. That’s the more urgent motivation.” Still, industry participants are skeptical about the changes. “You’re introducing fees to a price-sensitive market that doesn’t have a track record for paying this fee,” said Robert Petti, CEO of logistics technology provider Prompt Global and a former CargoWise service partner. “Automatically there is going to be reluctance because of that. People are looking to ship for the lowest possible price. This [cost] will likely be eaten by forwarders. The choice of using CargoWise is the forwarder’s, not the [beneficial cargo owner’s].” The CEO of another logistics technology provider who did not want to be identified said the WiseTech change is the equivalent of going “to Taco Bell and they charge me a fee for their use of SAP.” “Every dollar counts for a forwarder’s bottom line,” said a third logistics technology provider CEO. Appoo is confident the industry will adapt, and learn to appreciate, WiseTech’s new model. “We have, over time, introduced things that customers haven’t necessarily asked for, and over time they see the value,” he said. “We’re not just a software vendor, we’re the operating system that runs their supply chain, the partner that makes sure they’re compliant, and the solution that gives them levels of efficiency they wouldn’t have access to before.” Contact Eric Johnson at eric.johnson@spglobal.com .

Supply chain

WiseTech pricing change tests shippers’ willingness to absorb tech costs

<div class="phx-topic abstract-wrapper">Despite lower volumes and elevated capacity, carriers have managed to keep rates at acceptable levels of late in part by favoring shorter, more frequent general rate increases. </div>

Despite lower volumes and elevated capacity, carriers have managed to keep rates at acceptable levels of late in part by favoring shorter, more frequent general rate increases.

<div class="phx-topic">Container lines over the past two months have been able to keep spot rates from crashing in the eastbound trans-Pacific despite US imports from Asia falling and while they deployed significantly more tonnage in the same period. But that high-wire act will become increasingly precarious over the next two months. Import volume declines are expected to accelerate over the next 60 days as forwarders bemoan a deep lull in new bookings due to shipper uncertainty. Yet carriers plan to keep capacity elevated, with tonnage from Asia to the US West Coast set to rise almost 13% year over year in January to hit what would be close to a 37-month high, according to data from Xeneta’s eeSea. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6127952_0.1.jpg"></img></div>The additional tonnage comes ahead of Lunar New Year in mid-February, but forwarders are skeptical that the historical shipping rush before Chinese factories slow or halt production for the celebrations will have much oomph. Ocean tonnage from Asia to the US East and Gulf coasts is set to hit a two-year high in January, up 14% from a year ago, according to eeSea. The spot rate from China to the US West Coast hit its 2025 low point on Oct. 3 at $1,300 per FEU, according to Platts, a sister company of the Journal of Commerce within S&amp;P Global. In the two months since, carriers have been able to hold that line, with the rate bouncing as high as $2,220 in early November before retreating. It was at $1,500 per FEU as of Tuesday. Carriers have been able to avoid a sub-$1,300 market by resisting old urges to slash freight-all-kinds (FAK) rates. Instead, carriers have watched prices drift down and then reacted by adding some pep via general rate increases (GRIs) that were just successful enough to keep spot and FAK rates from collapsing. At the same time, liners have been protecting their individual market shares by offering so-called bullet rates to non-vessel-operating common carriers (NVOs). <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e5c8a2a0-9aa5-4787-bbed-bf4b7a9f9677"></dynamic-object></div>Rather than announcing a large $1,000 GRI on the first and 15th of each month, only to see the rate deteriorate within days, some carriers are coming in with smaller, rapid-fire GRIs almost weekly. They are able to do that under filing requirements of the Federal Maritime Commission (FMC). The FMC requires that carriers file a GRI with 30-day advance notice when attempting to raise spot rates. However, when dropping the intended GRI, the lower rate takes effect immediately upon filing, several forwarders said. For example, one alliance carrier that had filed for a large GRI effective Dec. 1 informed customers through its rate sheet of the following staggered schedule of smaller increases: Dec. 1, a $200 GRI to raise the spot rate to $1,900 per FEU to the West Coast, expiring Dec. 7; a second $200 GRI on Dec. 8, raising the rate to $2,100, expiring Dec. 14; another $200 GRI on Dec. 15, expiring Dec. 25, that raises the spot rate to $2,300. In that way, the carrier did not attempt to implement the $1,000 GRI that was supposed to take effect on Dec. 1, but rather is attempting to secure a series of $200 GRIs through the end of the month. “It’s crazy,” a carrier executive told the Journal of Commerce Tuesday. “It used to be a GRI every two weeks. Now [some carriers] are taking a week-to-week approach.” Trans-Pacific container lines are “conflicted,” the carrier source said. As a group, they want to minimize pricing damage in the current soft market, which many industry sources are forecasting will last into early 2026. But at the same time, they don’t want to individually lose market share, he said. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e8c13a3e-9f5a-412f-8741-adbf5e1a7779"></dynamic-object></div>Most carriers, be they alliance members or independents, continue to post GRIs twice each month, while at the same time they are offering discounted, or bullet, rates several hundred dollars lower on the same trade lanes. The bullet rates, also known as special commodity rates or voyage-specific rates, are available primarily for carriers’ largest customers, a forwarder told the Journal of Commerce. For example, while the posted spot/FAK rate from China to the West Coast on Tuesday was $1,500 per FEU, according to Platts, a forwarder told the Journal of Commerce, “I’ve got bullet rates of $1,350.” While carriers generally reserve bullet rates for their larger forwarder customers, there is a way around that barrier as well. A number of smaller forwarders participate in co-loading arrangements with a master co-loader, so they also have access to the lowest bullet rates. “We have co-loader rates that every day defy the GRIs,” said Ben Coleman, president of the forwarder Teampower Logistics. “We get far better rates from co-loaders than the posted rates.” The need for carriers to keep some semblance of a pricing floor will become increasingly urgent as trans-Pacific service contract negotiations intensify though the winter. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>. Executive Editor Mark Szakonyi contributed to this report. </div>

Container lines over the past two months have been able to keep spot rates from crashing in the eastbound trans-Pacific despite US imports from Asia falling and while they deployed significantly more tonnage in the same period. But that high-wire act will become increasingly precarious over the next two months. Import volume declines are expected to accelerate over the next 60 days as forwarders bemoan a deep lull in new bookings due to shipper uncertainty. Yet carriers plan to keep capacity elevated, with tonnage from Asia to the US West Coast set to rise almost 13% year over year in January to hit what would be close to a 37-month high, according to data from Xeneta’s eeSea. The additional tonnage comes ahead of Lunar New Year in mid-February, but forwarders are skeptical that the historical shipping rush before Chinese factories slow or halt production for the celebrations will have much oomph. Ocean tonnage from Asia to the US East and Gulf coasts is set to hit a two-year high in January, up 14% from a year ago, according to eeSea. The spot rate from China to the US West Coast hit its 2025 low point on Oct. 3 at $1,300 per FEU, according to Platts, a sister company of the Journal of Commerce within S&P Global. In the two months since, carriers have been able to hold that line, with the rate bouncing as high as $2,220 in early November before retreating. It was at $1,500 per FEU as of Tuesday. Carriers have been able to avoid a sub-$1,300 market by resisting old urges to slash freight-all-kinds (FAK) rates. Instead, carriers have watched prices drift down and then reacted by adding some pep via general rate increases (GRIs) that were just successful enough to keep spot and FAK rates from collapsing. At the same time, liners have been protecting their individual market shares by offering so-called bullet rates to non-vessel-operating common carriers (NVOs). Rather than announcing a large $1,000 GRI on the first and 15th of each month, only to see the rate deteriorate within days, some carriers are coming in with smaller, rapid-fire GRIs almost weekly. They are able to do that under filing requirements of the Federal Maritime Commission (FMC). The FMC requires that carriers file a GRI with 30-day advance notice when attempting to raise spot rates. However, when dropping the intended GRI, the lower rate takes effect immediately upon filing, several forwarders said. For example, one alliance carrier that had filed for a large GRI effective Dec. 1 informed customers through its rate sheet of the following staggered schedule of smaller increases: Dec. 1, a $200 GRI to raise the spot rate to $1,900 per FEU to the West Coast, expiring Dec. 7; a second $200 GRI on Dec. 8, raising the rate to $2,100, expiring Dec. 14; another $200 GRI on Dec. 15, expiring Dec. 25, that raises the spot rate to $2,300. In that way, the carrier did not attempt to implement the $1,000 GRI that was supposed to take effect on Dec. 1, but rather is attempting to secure a series of $200 GRIs through the end of the month. “It’s crazy,” a carrier executive told the Journal of Commerce Tuesday. “It used to be a GRI every two weeks. Now [some carriers] are taking a week-to-week approach.” Trans-Pacific container lines are “conflicted,” the carrier source said. As a group, they want to minimize pricing damage in the current soft market, which many industry sources are forecasting will last into early 2026. But at the same time, they don’t want to individually lose market share, he said. Most carriers, be they alliance members or independents, continue to post GRIs twice each month, while at the same time they are offering discounted, or bullet, rates several hundred dollars lower on the same trade lanes. The bullet rates, also known as special commodity rates or voyage-specific rates, are available primarily for carriers’ largest customers, a forwarder told the Journal of Commerce. For example, while the posted spot/FAK rate from China to the West Coast on Tuesday was $1,500 per FEU, according to Platts, a forwarder told the Journal of Commerce, “I’ve got bullet rates of $1,350.” While carriers generally reserve bullet rates for their larger forwarder customers, there is a way around that barrier as well. A number of smaller forwarders participate in co-loading arrangements with a master co-loader, so they also have access to the lowest bullet rates. “We have co-loader rates that every day defy the GRIs,” said Ben Coleman, president of the forwarder Teampower Logistics. “We get far better rates from co-loaders than the posted rates.” The need for carriers to keep some semblance of a pricing floor will become increasingly urgent as trans-Pacific service contract negotiations intensify though the winter. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com . Executive Editor Mark Szakonyi contributed to this report.

Trans-Pacific carriers tweak pricing strategy to keep rates from collapsing

<div class="phx-topic abstract-wrapper">The French carrier plans to enter the long-crimped trade lane via subsidiary brand CNC Line, with a targeted launch in January, market sources say.</div>

The French carrier plans to enter the long-crimped trade lane via subsidiary brand CNC Line, with a targeted launch in January, market sources say.

<div class="phx-topic">CMA CGM is in the final stages of laying out the operational framework to begin accepting container bookings from India to Russia as carriers search for incremental cargo opportunities to lift revenue and profitability amid multiple market challenges. The French carrier plans to enter the long-crimped trade lane via subsidiary brand CNC Line, with a targeted launch in January, market sources say. The strategy behind operating on a group arm bill of lading system instead of CMA CGM’s own contract of carriage/instrument is to limit potential operational and compliance risks from ongoing Western sanctions against Russia due to Moscow’s almost four-year-long war against Ukraine, sources believe. Founded in 1971, Singapore-headquartered CNC (formerly Cheng Lie Navigation Company) — a predominant intra-Asia operator — was acquired by CMA CGM in 2007. CMA CGM declined to comment on the matter when contacted by the Journal of Commerce. <h3>Transshipment options </h3>Current indications are that space will be allocated on CMA CGM’s India-Europe “Epic” service for Russian loading out of Nhava Sheva and Mundra with likely transshipment options over Hamburg. To that end, the carrier is said to be considering expanding its Finland Express (FLX) service with a new call to St. Petersburg, Russia’s main gateway port. The Baltic feeder now rotates Bremerhaven, Hamburg, Rauma, Tallinn, Kotka, Helsinki and Bremerhaven, available data shows. Mediterranean Shipping Co. is the only mainline carrier that has continued to provide coverage for Indian shipments to Russia on the back of multiple feeder networks between North Europe and Russia, including the Baltic Loop 02 that shuttles between Antwerp, Klaipeda, Kotka and St. Petersburg. Corten Shipping is one emerging secondary carrier on the India-Russia trade lane, offering two fortnightly direct connections out of Nhava Sheva/Kandla with three 1,500-TEU ships that boast transit times of 25 days to St. Petersburg and 18 days to Novorossiysk. Considering the typical limitations of sanctioned trades, pharmaceutical products as well as food and agricultural items are generally shipped to Russia, although some construction materials, mainly tiles, are also carried by ad-hoc vessel operators. Anecdotal industry data puts India-Russia container volumes at 8,000 TEUs a week. The freight yield is admittedly lucrative for capacity participants — pegged at $3,000 per TEU and $4,000 per FEU for dry cargo and $9,000 per FEU for reefer loads from Nhava Sheva to St. Petersburg. As US tariff-stricken Indian exporters and policy makers seek trade diversification, Russian volume gains are one option on the table. Contact Bency Mathew at <a href="mailto:bencyvmathew@gmail.com">bencyvmathew@gmail.com</a>.</div>

CMA CGM is in the final stages of laying out the operational framework to begin accepting container bookings from India to Russia as carriers search for incremental cargo opportunities to lift revenue and profitability amid multiple market challenges. The French carrier plans to enter the long-crimped trade lane via subsidiary brand CNC Line, with a targeted launch in January, market sources say. The strategy behind operating on a group arm bill of lading system instead of CMA CGM’s own contract of carriage/instrument is to limit potential operational and compliance risks from ongoing Western sanctions against Russia due to Moscow’s almost four-year-long war against Ukraine, sources believe. Founded in 1971, Singapore-headquartered CNC (formerly Cheng Lie Navigation Company) — a predominant intra-Asia operator — was acquired by CMA CGM in 2007. CMA CGM declined to comment on the matter when contacted by the Journal of Commerce. Transshipment options Current indications are that space will be allocated on CMA CGM’s India-Europe “Epic” service for Russian loading out of Nhava Sheva and Mundra with likely transshipment options over Hamburg. To that end, the carrier is said to be considering expanding its Finland Express (FLX) service with a new call to St. Petersburg, Russia’s main gateway port. The Baltic feeder now rotates Bremerhaven, Hamburg, Rauma, Tallinn, Kotka, Helsinki and Bremerhaven, available data shows. Mediterranean Shipping Co. is the only mainline carrier that has continued to provide coverage for Indian shipments to Russia on the back of multiple feeder networks between North Europe and Russia, including the Baltic Loop 02 that shuttles between Antwerp, Klaipeda, Kotka and St. Petersburg. Corten Shipping is one emerging secondary carrier on the India-Russia trade lane, offering two fortnightly direct connections out of Nhava Sheva/Kandla with three 1,500-TEU ships that boast transit times of 25 days to St. Petersburg and 18 days to Novorossiysk. Considering the typical limitations of sanctioned trades, pharmaceutical products as well as food and agricultural items are generally shipped to Russia, although some construction materials, mainly tiles, are also carried by ad-hoc vessel operators. Anecdotal industry data puts India-Russia container volumes at 8,000 TEUs a week. The freight yield is admittedly lucrative for capacity participants — pegged at $3,000 per TEU and $4,000 per FEU for dry cargo and $9,000 per FEU for reefer loads from Nhava Sheva to St. Petersburg. As US tariff-stricken Indian exporters and policy makers seek trade diversification, Russian volume gains are one option on the table. Contact Bency Mathew at bencyvmathew@gmail.com .

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