<div class="phx-topic abstract-wrapper">Despite a slower-moving U.S. economy, truckload operator Werner Enterprises </div>

Despite a slower-moving U.S. economy, truckload operator Werner Enterprises

<div>As the U.S. economy softened last year, <a>Werner Enterprise’s</a> profits strengthened. The $2.1 billion truckload carrier increased net profit 12 percent in the fourth quarter to $36.6 million and 25 percent for the full year to a record $123.7 million, despite “less robust” demand.The increase in fourth-quarter profit followed a 24 percent leap in net income in the <a>third quarter</a> to $32.1 million. Werner also increased net profit 24 percent <a>in the second quarter</a>, when it earned $31.8 million. Over the course of 2015, the way the Omaha, Nebraska, trucking company characterized the U.S. freight market changed, shifting from “strong...

As the U.S. economy softened last year, Werner Enterprise’s profits strengthened. The $2.1 billion truckload carrier increased net profit 12 percent in the fourth quarter to $36.6 million and 25 percent for the full year to a record $123.7 million, despite “less robust” demand. The increase in fourth-quarter profit followed a 24 percent leap in net income in the third quarter to $32.1 million. Werner also increased net profit 24 percent in the second quarter , when it earned $31.8 million. Over the course of 2015, the way the Omaha, Nebraska, trucking company characterized the U.S. freight market changed, shifting from “strong but not stellar” to “less robust” as U.S. inventories bulged and economic growth lagged a much more muscular 2014. In the first of three estimates, the Department of Commerce today said U.S. gross domestic product expanded only 0.7 percent in the fourth quarter, after rising 2 percent in the third quarter. That compares with third- and fourth-quarter GDP expansion of 4.3 and 2.1 percent in 2014. “2014 and 2015 were cyclically contrasting years,” the company noted in comments released with its fourth-quarter earnings report yesterday. In early 2016, Werner sees some signs the cycle is closer to closing, with freight demand falling in line with 2011 to 2013 levels. “Compared to the same periods in January 2015 and January 2014, freight demand is not as strong” in January 2016, the company said. However, the 2014 and 2015 first quarters were both marred by crises: the widespread storms of 2014 and the West Coast port crisis last year. Those crises disrupted supply chains, temporarily boosting demand for trucking and logistics services far beyond normal levels in what is typically a seasonally quiescent quarter. Shippers and carriers might welcome a year that starts with a bit less supply chain excitement. One of the biggest problems for U.S. carriers, and shippers in the 2016 first quarter is the high level of inventory . The retail inventory-to-sales ratio, which shot up during the West Coast port crisis of late 2014 and early 2015, was 1.48 in November, flat with October and up from 1.42 in November 2014. Stockpiles of unsold goods may mean "less robust" freight demand in early 2016 for Werner and other U.S. carriers. The ability of Werner, the fifth-largest U.S. truckload carrier , and companies such as J.B. Hunt Transport Services and Swift Transportation , to increase their profitability in a “less robust” business climate underscores the resiliency that large trucking operators, at least, have gained since the 2009 recession. Smaller carriers with less ability to scale operations, a less diversified business model and mix of customers and fewer financial resources may see the market much differently. For example, EZ Worldwide Express, a $50 million company, filed for bankruptcy protection earlier this month. The Newark, New Jersey-based logistics company and its trucking subsidiary, United Business Xpress, depended largely on brick-and-mortar retailers, especially, Forever 21, the Wall Street Journal reported Jan. 15. That proved a liability in a season of stronger online sales. Werner increased profits in 2015 — exceeding Wall Street’s earnings expectations for the fourth quarter by 5 cents per share — despite the combined pressures of rising driver wages, falling freight demand and fuel surcharges and higher new equipment purchasing costs. The company succeeded in sustaining profits in the face of higher costs and falling revenue by raising rates and keeping a tight grip on the expenses it could manage, aided by a 43 percent reduction in fuel costs in the fourth quarter and a 41 percent full-year drop in fuel costs. Werner’s bottom line also got a boost from its ongoing investment in dedicated trucking, which now accounts for 49 percent of the capacity of Werner’s 7,450 tractor fleet. The carrier's Value Added Services division, which offers non-asset brokerage, intermodal and logistics services, also increased its gross margin from 290 basis points year-over-year to 16.5 percent as operating profit rose 84 percent to $4.4 million. A significant fall-off in fuel surcharges took its toll on total revenue, however, pushing it down 4 percent in the quarter year-over-year to $528.8 million and 2 percent for the full year to $2.1 billion. The drop in fuel surcharges siphoned revenue from trucking firms. Werner’s truckload fuel surcharge revenue plunged 41.2 percent to $50.6 million in the fourth quarter, and was down 36.7 percent for the full year to $233.8 million. Lower fuel prices cost Werner’s Value Added Services division $6 billion in revenue, the company said. Excluding fuel surcharges, a better picture of Werner’s growth emerges. Trucking revenue sans surcharges rose 4 percent to $368.8 million. VAS revenue, which dropped 2 percent to $96.7 million when the impact of fuel prices is included, would have risen 4 percent otherwise. But not all the decline could be attributed to the loss of surcharge revenue. Werner’s average revenue per tractor per week, excluding surcharges, decreased 2.3 percent in the fourth quarter, and the carrier’s average miles per truck declined 2.8 percent, the company said. That indicates there was simply less freight to haul than in late 2014, a decline that reflects retail sales and a drop in manufacturing output. “We continue to focus on securing driver friendly, highly productive freight in a market with fewer surge and project opportunities,” Werner said. The carrier is also focused on modernizing its tractors, now 1.9 years old on average, buying new vehicles and trading in older equipment. After spending $351.5 million on capital expenditures in 2015 and adding 400 tractors, Werner will spend another $400 million to $450 million this year, expanding its fleet by a mid-single-digit percentage. “However, if the freight market shows significant weakness during 2016, we will consider adjusting our capital expenditures accordingly,” the company said. Werner will also ask shippers for rate increases to “recoup the cost increases associated with more expensive equipment, a shrinking supply of qualified drivers and an increasingly challenging regulatory environment,” the carrier said. That means aligning more closely with “strategic customers” seeking “sustainable solutions,” and sustainable partners. Contact William B. Cassidy at bill.cassidy@ihs.com and follow him on Twitter: @wbcassidy_joc

Truckload

Werner wins robust profit in 'less robust' US freight market

<div class="phx-topic abstract-wrapper">A cautious approach to investment in network and terminal infrastructure is not keeping pace with market growth.</div>

A cautious approach to investment in network and terminal infrastructure is not keeping pace with market growth.

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<div class="phx-topic">A growing mismatch at North European ocean gateways between available capacity and demand has left deep-sea container terminals struggling with high utilization levels and likely facing years of port bottlenecks. For much of 2025, persistent congestion across the region’s largest ports has delayed ship turnarounds and dragged down schedule reliability. After reaching a 2025 high of 45%, on-time performance on the trade lane in July was a dismal 28%, according to visibility provider eeSea. Congestion in Europe’s ports was likely to be an issue “for a few years,” Maersk CEO Vincent Clerc said <a href="https://www.joc.com/article/high-gemini-reliability-lays-groundwork-for-premium-rate-discussions-maersk-ceo-6059343">during a second quarter earnings call with analysts</a> last week. “There is a general undercapacity in ports in Europe where we're starting to feel more and more points of congestions that are impeding the networks,” he explained. “This is the result of terminal capacity being added over the last 15, 20 years at a slower pace than the market has been growing.” Clerc said Maersk was significantly expanding its terminal capacity in Rotterdam and was about to open a terminal in Croatia. ”There’s some definite points where we’re looking at expanding and others are doing something similar, but it will take time for all of that to come online,” he said. Europe’s second busiest container port of Antwerp-Bruges highlighted the lack of space in its first half results in July, noting that <a href="https://www.joc.com/article/strong-h1-volumes-space-crunch-keep-antwerp-terminals-under-pressure-6043917">marine terminals were under “heavy strain”</a> with landside space at critically low levels. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="7041fe54-edf1-4d59-9d82-94781e7a7eb1"></dynamic-object></div>On top of the terminal undercapacity, several other factors are adding to the bottlenecks. Europe’s hub ports across the Northern Range have seen carriers shift towards deploying larger vessels on mainline Asia–North Europe routes, increasing the average container exchange and generating higher cargo peaks at terminal yards. Disruption on the maritime leg of voyages, such as making greater use of blank sailings to manage capacity and taking a longer route around southern Africa to avoid the Red Sea also has an impact yard operations. <h3>Landside capacity restricted </h3>Another contributing factor to the congestion is restricted landside transport capacity with low water levels on the Rhine limiting barge capacity and poor rail capacity and reliability. “Modal shift initiatives (such as road) will likely put further pressure on landside transport linkages, but perhaps there needs to be a period of demand push to activate the required investments to improve the intermodal connectivity at key ports,” Eleanor Hadland, senior associate for ports and terminals at Drewry, told the Journal of Commerce Tuesday. The ongoing port congestion is absorbing a significant amount of Asia–Europe capacity deployed on the trade lane, constraining capacity by extending vessel turnaround times and reducing effective service frequency, according to C.H. Robinson. Instead of a typical two-or three-day port stay, vessels were now hanging around longer due to berth delays and slower cargo handling, the forwarder wrote in an August market update. ”This means a ship that normally completes 12 round trips per year can now complete only eight or nine trips, reducing the total shipping capacity available to the market by roughly 25%-30%,” C.H. Robinson noted. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="eebb48eb-ad03-4e0f-a647-67693692edb4"></dynamic-object></div>Michael Aldwell, executive vice president of sea logistics at Kuehne + Nagel, said capacity reduction has been between 15% and 20% on both Asia-North Europe and Asia-Mediterranean for the last two months. “The reduction in capacity is a combination of where there are still not enough vessels to entirely cover the Cape of Good Hope routing, the replacement of larger vessels with smaller ones (on the trans-Pacific eastbound and Africa trade), and the European port congestion, which started in February and which indeed does not show sign of improvement,” Aldwell told the Journal of Commerce. The congestion in European gateways could be different by terminal of the same port and by carrier, and even within the same alliance, he said. “What K+N does to circumvent the unpredictable and uncontrollable European port congestion is to work with collect on delivery (COD) or with dynamic ETA planning, depending on customer preference and needs.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

A growing mismatch at North European ocean gateways between available capacity and demand has left deep-sea container terminals struggling with high utilization levels and likely facing years of port bottlenecks. For much of 2025, persistent congestion across the region’s largest ports has delayed ship turnarounds and dragged down schedule reliability. After reaching a 2025 high of 45%, on-time performance on the trade lane in July was a dismal 28%, according to visibility provider eeSea. Congestion in Europe’s ports was likely to be an issue “for a few years,” Maersk CEO Vincent Clerc said during a second quarter earnings call with analysts last week. “There is a general undercapacity in ports in Europe where we're starting to feel more and more points of congestions that are impeding the networks,” he explained. “This is the result of terminal capacity being added over the last 15, 20 years at a slower pace than the market has been growing.” Clerc said Maersk was significantly expanding its terminal capacity in Rotterdam and was about to open a terminal in Croatia. ”There’s some definite points where we’re looking at expanding and others are doing something similar, but it will take time for all of that to come online,” he said. Europe’s second busiest container port of Antwerp-Bruges highlighted the lack of space in its first half results in July, noting that marine terminals were under “heavy strain” with landside space at critically low levels. On top of the terminal undercapacity, several other factors are adding to the bottlenecks. Europe’s hub ports across the Northern Range have seen carriers shift towards deploying larger vessels on mainline Asia–North Europe routes, increasing the average container exchange and generating higher cargo peaks at terminal yards. Disruption on the maritime leg of voyages, such as making greater use of blank sailings to manage capacity and taking a longer route around southern Africa to avoid the Red Sea also has an impact yard operations. Landside capacity restricted Another contributing factor to the congestion is restricted landside transport capacity with low water levels on the Rhine limiting barge capacity and poor rail capacity and reliability. “Modal shift initiatives (such as road) will likely put further pressure on landside transport linkages, but perhaps there needs to be a period of demand push to activate the required investments to improve the intermodal connectivity at key ports,” Eleanor Hadland, senior associate for ports and terminals at Drewry, told the Journal of Commerce Tuesday. The ongoing port congestion is absorbing a significant amount of Asia–Europe capacity deployed on the trade lane, constraining capacity by extending vessel turnaround times and reducing effective service frequency, according to C.H. Robinson. Instead of a typical two-or three-day port stay, vessels were now hanging around longer due to berth delays and slower cargo handling, the forwarder wrote in an August market update. ”This means a ship that normally completes 12 round trips per year can now complete only eight or nine trips, reducing the total shipping capacity available to the market by roughly 25%-30%,” C.H. Robinson noted. Michael Aldwell, executive vice president of sea logistics at Kuehne + Nagel, said capacity reduction has been between 15% and 20% on both Asia-North Europe and Asia-Mediterranean for the last two months. “The reduction in capacity is a combination of where there are still not enough vessels to entirely cover the Cape of Good Hope routing, the replacement of larger vessels with smaller ones (on the trans-Pacific eastbound and Africa trade), and the European port congestion, which started in February and which indeed does not show sign of improvement,” Aldwell told the Journal of Commerce. The congestion in European gateways could be different by terminal of the same port and by carrier, and even within the same alliance, he said. “What K+N does to circumvent the unpredictable and uncontrollable European port congestion is to work with collect on delivery (COD) or with dynamic ETA planning, depending on customer preference and needs.” Contact Greg Knowler at greg.knowler@spglobal.com .

Maritime

Port News

Port infrastructure

Marine terminals

International ports

Underinvestment exposes European ports to systematic bottlenecks

<div class="phx-topic abstract-wrapper">The fifth largest freight broker in the US will absorb FreightSaver, which like Echo, focuses on managed transportation services for shippers. </div>

The fifth largest freight broker in the US will absorb FreightSaver, which like Echo, focuses on managed transportation services for shippers.

<div class="phx-topic">Freight broker Echo Global Logistics on Monday acquired Southern California-based third-party logistics (3PL) provider FreightSaver for an undisclosed sum, broadening Echo’s West Coast and Midwest presence amid a long-term malaise in the US domestic freight market. The deal will see Echo incorporate FreightSaver’s offices in Utah, Michigan, Ohio, and California. Founded in 2014 by logistics veterans Ryan Renne and Buster Schwab, FreightSaver offers truckload, less-than-truckload (LTL), expedited, specialized freight and managed transportation services. ”FreightSaver has built a customer-centric, tech-enabled business that complements our strengths and accelerates our ability to deliver value through managed transportation,“ Echo CEO Doug Waggoner said in a statement. Echo is the fifth largest US freight broker, with roughly $3 billion in revenue in 2024, according to analyst Armstrong &amp; Associates. It was <a href="https://www.joc.com/article/echo-deal-pushes-private-equity-deeper-into-logistics-5248085">taken private in 2021</a> by private equity group The Jordan Company in a $1.3 billion transaction. Merger and acquisition activity in the brokerage market has slowed since a feverish period in the pandemic, culminating in <a href="https://www.joc.com/article/rxo-purchase-of-coyote-logistics-highlights-us-brokerage-market-pressures-5192296">RXO’s $1 billion purchase of Coyote Logistics</a> in June 2024. <a href="https://www.joc.com/article/jb-hunt-brokerage-acquisition-deepens-partnership-with-bnsf-5215664">J.B. Hunt acquired BNSF Logistics’ brokerage division</a> in June 2023, while <a href="https://www.joc.com/article/uber-freight-to-buy-transplace-for-225-billion-5249247">Uber Freight acquired Transplace</a> and <a href="https://www.joc.com/article/molo-wants-to-catch-ch-robinson-via-arcbest-ramp-5247241">ArcBest Acquired MoLo Solutions</a> in 2021. Both truckload and LTL pricing have been under long-term pressure, due in part to overcapacity in the truckload market and diminished demand in the LTL market. Brokers are also <a href="https://www.joc.com/article/truckload-brokers-eye-human-technology-balance-as-ai-takes-hold-5876340">under pressure to use technology</a> — and, in particular, automation — to be more operationally efficient to preserve margin amid that low rate environment. "Echo brings the scale, resources, and vision to expand the value we deliver to our clients,” Schwab, FreightSaver’s president, said in the statement. "Together, we're positioned to deliver smarter logistics with a powerful combination of people and technology." Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. </div>

Freight broker Echo Global Logistics on Monday acquired Southern California-based third-party logistics (3PL) provider FreightSaver for an undisclosed sum, broadening Echo’s West Coast and Midwest presence amid a long-term malaise in the US domestic freight market. The deal will see Echo incorporate FreightSaver’s offices in Utah, Michigan, Ohio, and California. Founded in 2014 by logistics veterans Ryan Renne and Buster Schwab, FreightSaver offers truckload, less-than-truckload (LTL), expedited, specialized freight and managed transportation services. ”FreightSaver has built a customer-centric, tech-enabled business that complements our strengths and accelerates our ability to deliver value through managed transportation,“ Echo CEO Doug Waggoner said in a statement. Echo is the fifth largest US freight broker, with roughly $3 billion in revenue in 2024, according to analyst Armstrong & Associates. It was taken private in 2021 by private equity group The Jordan Company in a $1.3 billion transaction. Merger and acquisition activity in the brokerage market has slowed since a feverish period in the pandemic, culminating in RXO’s $1 billion purchase of Coyote Logistics in June 2024. J.B. Hunt acquired BNSF Logistics’ brokerage division in June 2023, while Uber Freight acquired Transplace and ArcBest Acquired MoLo Solutions in 2021. Both truckload and LTL pricing have been under long-term pressure, due in part to overcapacity in the truckload market and diminished demand in the LTL market. Brokers are also under pressure to use technology — and, in particular, automation — to be more operationally efficient to preserve margin amid that low rate environment. "Echo brings the scale, resources, and vision to expand the value we deliver to our clients,” Schwab, FreightSaver’s president, said in the statement. "Together, we're positioned to deliver smarter logistics with a powerful combination of people and technology." Contact Eric Johnson at eric.johnson@spglobal.com .

Surface

Trucking News

Truck brokers

Echo acquires California 3PL amid flagging US freight market

<div class="phx-topic abstract-wrapper">Taiwan-based ocean carriers say US tariffs are taking a toll on trans-Pacific volumes.</div>

Taiwan-based ocean carriers say US tariffs are taking a toll on trans-Pacific volumes.

<div class="phx-topic">Two of Taiwan’s big three carriers, Yang Ming Marine Transport and Wan Hai Lines, saw a second-quarter net profit slump due to weaker cargo volumes amid uncertainty over ongoing trade negotiations. Yang Ming’s second-quarter profitability was also hit by a tax on undistributed earnings, the carrier said in a statement announcing its results Tuesday. Analysts estimated the tax liability at about $100 million based on pre-tax figures in previous quarters. Commenting on current market conditions, Yang Ming said there are wide variations across different trade lanes. The trans-Pacific has been negatively impacted by uncertainty over US tariffs, despite the traditional summer peak season, the carrier said in the results statement. Asia-Europe and Asia-Mediterranean trades are expected to remain positive. Intra-Asia demand is steady, whereas Asia-Australia, Asia-Latin America, and other segments require close monitoring for market volatility, Yang Ming said. Vessel diversions via the Cape of Good Hope are partially absorbing excess container ship capacity, which is expected grow 6% this year, the carrier said quoting Drewry and Alphaliner figures. Drewry is forecasting demand growth of 2%, while Alphaliner is estimating 2.7% growth, Yang Ming added. “Drewry also foresees softer market conditions in the second half due to front-loaded shipments in the first half,” Yang Ming’s statement added. Yang Ming, Taiwan’s second-largest carrier behind Evergreen and ranked 10th largest globally by Alphaliner, saw net profit slump to $31 million in the second quarter, down from $259 million in the first quarter and $436 million in the second quarter last year. Second-quarter revenues dropped 27% to $1.2 billion from $1.7 billion in the year prior. Figures show revenues also fell 16% quarter over quarter from $1.4 billion in the first quarter. Separately, intra-Asia-focused Wan Hai Lines also saw second-quarter net profit slump to $41 million compared with $286 million in the first quarter and $142 million in the second quarter last year, based on an analysis of a Taiwan stock exchange filing Monday. Quarter-over-quarter revenue was unchanged at $1.2 billion, although second quarter revenue increased 9% compared with $1.1 billion in the prior year. Evergreen will file its interim results with the Taiwan stock exchange Wednesday. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

Two of Taiwan’s big three carriers, Yang Ming Marine Transport and Wan Hai Lines, saw a second-quarter net profit slump due to weaker cargo volumes amid uncertainty over ongoing trade negotiations. Yang Ming’s second-quarter profitability was also hit by a tax on undistributed earnings, the carrier said in a statement announcing its results Tuesday. Analysts estimated the tax liability at about $100 million based on pre-tax figures in previous quarters. Commenting on current market conditions, Yang Ming said there are wide variations across different trade lanes. The trans-Pacific has been negatively impacted by uncertainty over US tariffs, despite the traditional summer peak season, the carrier said in the results statement. Asia-Europe and Asia-Mediterranean trades are expected to remain positive. Intra-Asia demand is steady, whereas Asia-Australia, Asia-Latin America, and other segments require close monitoring for market volatility, Yang Ming said. Vessel diversions via the Cape of Good Hope are partially absorbing excess container ship capacity, which is expected grow 6% this year, the carrier said quoting Drewry and Alphaliner figures. Drewry is forecasting demand growth of 2%, while Alphaliner is estimating 2.7% growth, Yang Ming added. “Drewry also foresees softer market conditions in the second half due to front-loaded shipments in the first half,” Yang Ming’s statement added. Yang Ming, Taiwan’s second-largest carrier behind Evergreen and ranked 10th largest globally by Alphaliner, saw net profit slump to $31 million in the second quarter, down from $259 million in the first quarter and $436 million in the second quarter last year. Second-quarter revenues dropped 27% to $1.2 billion from $1.7 billion in the year prior. Figures show revenues also fell 16% quarter over quarter from $1.4 billion in the first quarter. Separately, intra-Asia-focused Wan Hai Lines also saw second-quarter net profit slump to $41 million compared with $286 million in the first quarter and $142 million in the second quarter last year, based on an analysis of a Taiwan stock exchange filing Monday. Quarter-over-quarter revenue was unchanged at $1.2 billion, although second quarter revenue increased 9% compared with $1.1 billion in the prior year. Evergreen will file its interim results with the Taiwan stock exchange Wednesday. Contact Keith Wallis at keithwallis@hotmail.com .

Container Shipping News

Container lines

Yang Ming, Wan Hai profits drop on weaker volumes

<div class="phx-topic abstract-wrapper">US tariffs are fuel cost-cutting mandates, heaping pressure on cargo owners to push for lower ocean shipping rates even if at the expense of carrier relations. </div>

US tariffs are fuel cost-cutting mandates, heaping pressure on cargo owners to push for lower ocean shipping rates even if at the expense of carrier relations.

<div class="phx-topic">A combination of factors that includes shippers’ hunger to lower costs in the face of the highest US tariffs in decades and a growing supply-demand imbalance are raising the specter of worsening shipper-carrier relations. In the near term, shippers operating under strict cost-cutting mandates could, for example, begin diverting contracted cargo to a lower-priced spot market. In the long term, this dynamic could result in shippers walking away from established carrier and forwarder partnerships in pursuit of marginally lower rates. “The pressure is immense already,” Mark Chadwick, president of the Global Shippers Association, told the Journal of Commerce. “With margins squeezed because of tariffs and nearshoring expenses, many CFOs are pushing their procurement teams to lower other costs, with logistics certainly on the list.” M. Can Fidan, executive vice president at forwarder MTS Logistics, said some shippers are still motivated in part by the record rates seen during the COVID-19 pandemic. “[Some] importers are always looking for lower prices, but I think now they have the appetite to push carriers, or maybe to switch to other carriers, after experiencing what they saw as unfair price increases during COVID-19 from longstanding carrier partners,” Fidan said. Those opportunities to drive down costs may well present themselves; analysts expect new vessel arrivals to tip the market into overcapacity next year, despite factors such as Red Sea diversions, port congestion in Asia and Europe, and alliance reshuffling that worked in carriers’ favor this year. JP Morgan said on Aug. 11 that “steep losses into 2026–27 [are] unavoidable” for Maersk, reflecting a deteriorating freight rate environment for the wider industry. It’s a familiar dynamic in container shipping. One party takes advantage of favorable market forces but in doing so sets itself up for future retaliation when the market turns against them. “The same bosses who are demanding a 10% reduction in your ocean spend now are the ones who are going to be screaming when you can’t get space on a ship,” Chadwick said. “There are many companies for whom air cargo is not a viable alternative, so if they can’t get access to ocean freight, it could be game over.” Shippers will no doubt recall that, in tight markets over the five-plus years since the beginning of the pandemic, carriers sought to maximize revenue, leaving lower-priced yet contracted cargo behind, improving their profitability but hurting customers’ supply chains in the process. They will remember how carriers aggressively use blank sailings and other capacity-restricting tools to support the market, the effect of which for shippers is longer transit times, higher inventory costs and revenue impact. “Even if you tell a customer today, ‘You know this x carrier took care of us during that time,’ they’ll say, ‘Yeah, I know, but they didn’t do it because they love me. They do it because I paid them the highest rate, right? So now, why do I need to support them when they need me?,’” Fidan said. <h3>History, repeated </h3>Shippers, for their part, had the opportunity to turn the tables in 2022 and 2024, when the market collapsed, and they are poised to do it again. Trans-Pacific spot rates have plunged more than 70% to the West Coast and 61% to the East Coast since mid-June, when China cargo was unleashed after the temporary easing of 145% tariffs. There are early signs that cost pressures are leading some shippers to seek out lower spot rates, even when failing to fulfill contracted minimum quantity commitments (MQCs). In other words, market forces may yet again overwhelm relationships, partnerships and any semblance of win-win value creation in the container supply chain. Even some shippers are warning that overly aggressive cost-cutting could come back to bite them when the market tightens. This is seen as inevitable given the current environment, characterized by repeated capacity shocks due to external forces and a consolidated carrier industry ready to take advantage. “It’s important for shippers to avoid the temptation of compromising commitments to their carrier partners in exchange for these relatively small, short-term gains,” Chadwick said. “Given the turmoil in international trade, some shippers won’t have the volume to meet their MQCs and should be upfront with the carriers about this, so that they can plan space utilization accordingly. But it’s a different story when that MQC’s missed because the shipper’s chasing an off contract alternative that’s slightly lower cost. “We need to protect the goodwill that we’ve been earning with the carriers, standing by our commitments so that we can expect the same when the market flips again,” he added. <h3>Lessons learned? </h3>But market forces will, as they have many times in the past, exert powerful pressures that undermine partnership. These include the intense margin pressure shippers are under when attempting to mitigate the impact of US tariffs, which are above 18% now on average, up from 2.4% last year and the highest level since the 1930s. Those pressures also include the wave of new vessels currently being delivered to carriers that will result in increasingly attractive rates being shopped to beneficial cargo owners. “We expect [rates] to continue to decline on a widening demand-supply imbalance,” JP Morgan wrote following Maersk’s second-quarter earnings report on Aug. 7. Chadwick said carriers are already floating “low-ball offers,” and this trend will likely accelerate through the end of 2025 and into 2026 as carriers and forwarders look to maintain volumes. “We know to expect the unexpected, so a lot could happen that could quickly reverse this trend, another reason to stay focused on being good partners to our carriers,” he said. Shippers will try different tactics to get away with shipping under lower spot rates while preserving carrier relationships, an increasingly important priority for them given there are fewer carriers available due to consolidation. They will argue, for example, that manufacturing or other delays prevent them fulfilling MQCs, an excuse carriers may accept to the extent the market is weak, and the carrier itself wants to preserve the relationship with the shipper in the upcoming contract cycle. A question hanging over the market is how much carriers learned over the past five years to maximize their advantage, specifically about limiting capacity in various ways when facing soft market conditions, or whether carriers will return to predatory practices of raiding each other’s cargo base just to fill their ships. “For the next few months, you will see carriers blanking capacity because I do think they realize the party is over and they brought in too much capacity this spring,” said Sanjay Tejwani, CEO of consulting firm 365 Logistics. “But that said, they have been pretty good in reacting, and they will react again, pulling capacity out and creating a stable market. Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>. </div>

A combination of factors that includes shippers’ hunger to lower costs in the face of the highest US tariffs in decades and a growing supply-demand imbalance are raising the specter of worsening shipper-carrier relations. In the near term, shippers operating under strict cost-cutting mandates could, for example, begin diverting contracted cargo to a lower-priced spot market. In the long term, this dynamic could result in shippers walking away from established carrier and forwarder partnerships in pursuit of marginally lower rates. “The pressure is immense already,” Mark Chadwick, president of the Global Shippers Association, told the Journal of Commerce. “With margins squeezed because of tariffs and nearshoring expenses, many CFOs are pushing their procurement teams to lower other costs, with logistics certainly on the list.” M. Can Fidan, executive vice president at forwarder MTS Logistics, said some shippers are still motivated in part by the record rates seen during the COVID-19 pandemic. “[Some] importers are always looking for lower prices, but I think now they have the appetite to push carriers, or maybe to switch to other carriers, after experiencing what they saw as unfair price increases during COVID-19 from longstanding carrier partners,” Fidan said. Those opportunities to drive down costs may well present themselves; analysts expect new vessel arrivals to tip the market into overcapacity next year, despite factors such as Red Sea diversions, port congestion in Asia and Europe, and alliance reshuffling that worked in carriers’ favor this year. JP Morgan said on Aug. 11 that “steep losses into 2026–27 [are] unavoidable” for Maersk, reflecting a deteriorating freight rate environment for the wider industry. It’s a familiar dynamic in container shipping. One party takes advantage of favorable market forces but in doing so sets itself up for future retaliation when the market turns against them. “The same bosses who are demanding a 10% reduction in your ocean spend now are the ones who are going to be screaming when you can’t get space on a ship,” Chadwick said. “There are many companies for whom air cargo is not a viable alternative, so if they can’t get access to ocean freight, it could be game over.” Shippers will no doubt recall that, in tight markets over the five-plus years since the beginning of the pandemic, carriers sought to maximize revenue, leaving lower-priced yet contracted cargo behind, improving their profitability but hurting customers’ supply chains in the process. They will remember how carriers aggressively use blank sailings and other capacity-restricting tools to support the market, the effect of which for shippers is longer transit times, higher inventory costs and revenue impact. “Even if you tell a customer today, ‘You know this x carrier took care of us during that time,’ they’ll say, ‘Yeah, I know, but they didn’t do it because they love me. They do it because I paid them the highest rate, right? So now, why do I need to support them when they need me?,’” Fidan said. History, repeated Shippers, for their part, had the opportunity to turn the tables in 2022 and 2024, when the market collapsed, and they are poised to do it again. Trans-Pacific spot rates have plunged more than 70% to the West Coast and 61% to the East Coast since mid-June, when China cargo was unleashed after the temporary easing of 145% tariffs. There are early signs that cost pressures are leading some shippers to seek out lower spot rates, even when failing to fulfill contracted minimum quantity commitments (MQCs). In other words, market forces may yet again overwhelm relationships, partnerships and any semblance of win-win value creation in the container supply chain. Even some shippers are warning that overly aggressive cost-cutting could come back to bite them when the market tightens. This is seen as inevitable given the current environment, characterized by repeated capacity shocks due to external forces and a consolidated carrier industry ready to take advantage. “It’s important for shippers to avoid the temptation of compromising commitments to their carrier partners in exchange for these relatively small, short-term gains,” Chadwick said. “Given the turmoil in international trade, some shippers won’t have the volume to meet their MQCs and should be upfront with the carriers about this, so that they can plan space utilization accordingly. But it’s a different story when that MQC’s missed because the shipper’s chasing an off contract alternative that’s slightly lower cost. “We need to protect the goodwill that we’ve been earning with the carriers, standing by our commitments so that we can expect the same when the market flips again,” he added. Lessons learned? But market forces will, as they have many times in the past, exert powerful pressures that undermine partnership. These include the intense margin pressure shippers are under when attempting to mitigate the impact of US tariffs, which are above 18% now on average, up from 2.4% last year and the highest level since the 1930s. Those pressures also include the wave of new vessels currently being delivered to carriers that will result in increasingly attractive rates being shopped to beneficial cargo owners. “We expect [rates] to continue to decline on a widening demand-supply imbalance,” JP Morgan wrote following Maersk’s second-quarter earnings report on Aug. 7. Chadwick said carriers are already floating “low-ball offers,” and this trend will likely accelerate through the end of 2025 and into 2026 as carriers and forwarders look to maintain volumes. “We know to expect the unexpected, so a lot could happen that could quickly reverse this trend, another reason to stay focused on being good partners to our carriers,” he said. Shippers will try different tactics to get away with shipping under lower spot rates while preserving carrier relationships, an increasingly important priority for them given there are fewer carriers available due to consolidation. They will argue, for example, that manufacturing or other delays prevent them fulfilling MQCs, an excuse carriers may accept to the extent the market is weak, and the carrier itself wants to preserve the relationship with the shipper in the upcoming contract cycle. A question hanging over the market is how much carriers learned over the past five years to maximize their advantage, specifically about limiting capacity in various ways when facing soft market conditions, or whether carriers will return to predatory practices of raiding each other’s cargo base just to fill their ships. “For the next few months, you will see carriers blanking capacity because I do think they realize the party is over and they brought in too much capacity this spring,” said Sanjay Tejwani, CEO of consulting firm 365 Logistics. “But that said, they have been pretty good in reacting, and they will react again, pulling capacity out and creating a stable market. Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

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Shipper cost pressures risk further fraying carrier relationships

<div class="phx-topic abstract-wrapper">OOCL’s newest express shuttle service from China to Mexico joins other carrier services linking the two and underscores the ongoing growth in trade between the two countries. </div>

OOCL’s newest express shuttle service from China to Mexico joins other carrier services linking the two and underscores the ongoing growth in trade between the two countries.

<div class="phx-topic">Orient Overseas Container Line (OOCL) later this month will begin offering a trans-Pacific express service to Mexico’s West Coast, adding to the list of new ocean services that have sprung up as China reorients its trade networks. OOCL said Monday that its Trans-Pacific Latin Pacific 8 (TLP8) service will start with an Aug. 20 departure from Shanghai. The TLP8’s Asia rotation covers Shanghai and Qingdao, and the eastbound voyage includes Mexico’s Ensenada and Manzanillo, along with a westbound call at Yokohama. The TLP8 is offering 17-day transit between Qingdao and Ensenada. The Port of Ensenada has one berth capable of handling post-Panamax ships up to 6,000 TEUs in capacity. The TLP8 joins three other OOCL trans-Pacific services that connect Mexico, along with the West Coast of South America, to Asia. OOCL added its last Asia-Mexico-South America service, TLP5, back in May 2024. Last year also saw <a href="https://www.joc.com/article/msc-adds-to-growing-asia-mexico-service-launches-5192264">Mediterranean Shipping Co. and CMA CGM add new trans-Pacific services between Asia, Mexico and South America</a>. Mexico saw a surge of foreign direct investment last year from China, reaching $710 million, according to Mexico’s economic secretary. Mexico imported $129 billion worth of goods from China in 2024, according to data from the country’s economy secretary, the highest in two decades. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

Orient Overseas Container Line (OOCL) later this month will begin offering a trans-Pacific express service to Mexico’s West Coast, adding to the list of new ocean services that have sprung up as China reorients its trade networks. OOCL said Monday that its Trans-Pacific Latin Pacific 8 (TLP8) service will start with an Aug. 20 departure from Shanghai. The TLP8’s Asia rotation covers Shanghai and Qingdao, and the eastbound voyage includes Mexico’s Ensenada and Manzanillo, along with a westbound call at Yokohama. The TLP8 is offering 17-day transit between Qingdao and Ensenada. The Port of Ensenada has one berth capable of handling post-Panamax ships up to 6,000 TEUs in capacity. The TLP8 joins three other OOCL trans-Pacific services that connect Mexico, along with the West Coast of South America, to Asia. OOCL added its last Asia-Mexico-South America service, TLP5, back in May 2024. Last year also saw Mediterranean Shipping Co. and CMA CGM add new trans-Pacific services between Asia, Mexico and South America . Mexico saw a surge of foreign direct investment last year from China, reaching $710 million, according to Mexico’s economic secretary. Mexico imported $129 billion worth of goods from China in 2024, according to data from the country’s economy secretary, the highest in two decades. Contact Michael Angell at michael.angell@spglobal.com .

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OOCL adds service to tap China-to-Mexico trade boom

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At SSA Marine Mexico, we firmly believe that business development must go hand in hand with social and environmental well-being. Our vision is not solely focused on operating efficiently, but also on creating a meaningful and positive impact in the communities where we are present. Since 1995, we have reaffirmed this commitment through tangible actions that reflect our core values of responsibility, solidarity, and sustainability. <span class="joc_admin__inline-image joc_admin__inline-image-aspect-ratio-3_2 joc_admin__inline-image-position-left joc_admin__inline-image-size-medium" data-figure-size="medium" data-figure-position="left" data-figure-aspect-ratio="3:2"><img src="/content-assets/1752584535914_Photo%201.jpg" alt="" class="joc_admin__inline-image-inherit"> A Year of Major Achievements Over the past year, we allocated more than $107,000 USD to the implementation of 60 social and environmental projects, positively impacting over 7,800 people across various regions of Mexico. Each initiative was designed with a holistic approach, addressing key areas that contribute to long-term community development. Education: Laying the Foundation for the Future Education is one of the most powerful tools to promote social mobility and equitable development. At SSA Marine Mexico, we support academic initiatives that inspire and empower the next generation of leaders. One of our most impactful partnerships was with the University of Colima, where we sponsored the “Reto Camp” program. This initiative encourages university students to develop innovative solutions in the fields of sustainability, logistics, and port operations, offering them mentorship, tools, and real-world challenges to solve. In addition, we donated microscopes, school supplies, and educational materials to institutions in underserved communities, helping to improve the learning environment and provide students with the resources they need to succeed. Health and Sports: Promoting Wellness We believe that healthy communities are strong communities. We have supported several local sporting events and provided direct assistance to talented athletes, enabling them to pursue their passions and represent their regions with pride. Beyond sports, we also strengthened our collaboration with critical emergency response organizations such as the Mexican Red Cross and Civil Protection. Our contributions helped enhance their readiness and capabilities in times of crisis, ensuring better outcomes for those affected by emergencies. Supporting Vulnerable Groups: Reaching Those Who Need It Most A core part of our social responsibility efforts is directed toward supporting vulnerable populations. We have contributed to a range of initiatives focused on children, migrants, and at-risk families. These efforts included donations to orphanages and shelters, as well as support for the National Institute of Migration and grassroots organizations dedicated to protecting and empowering people facing adversity. By standing with those in need, we reinforce our commitment to inclusion and social justice, values that are central to our identity as a responsible company. <span class="joc_admin__inline-image joc_admin__inline-image-aspect-ratio-3_2 joc_admin__inline-image-position-left joc_admin__inline-image-size-medium" data-figure-size="medium" data-figure-position="left" data-figure-aspect-ratio="3:2"><img src="/content-assets/1752584944645_Photo%202.png" alt="" class="joc_admin__inline-image-inherit">Culture: Strengthening Community Identity Cultural identity is a key element in building resilient and united communities. At SSA Marine Mexico, we actively participate in the organization and sponsorship of cultural events that celebrate local traditions and foster civic pride. Working alongside port authorities and municipal governments, we helped bring music, art, and heritage to the forefront, creating spaces for community engagement and intercultural dialogue. Environment: Investing in the Planet Our commitment to sustainability goes beyond operations—it’s a philosophy that drives every decision we make. We have partnered with environmental institutions to carry out reforestation campaigns, beach cleanups, and conservation efforts. In collaboration with the Institute for the Environment, we supported initiatives aimed at decarbonization, biodiversity protection, and environmental education. By involving our employees and local volunteers in these actions, we also foster a culture of environmental stewardship throughout our organization and our surrounding communities. Innovation for a Sustainable Future Sustainability is not just about doing good—it’s also about doing things better. In 2024, we invested $22 million USD in the acquisition of 11 state-of-the-art E-RTG cranes. These electric rubber-tired gantry cranes represent a significant technological advancement in port equipment. Seven of them are already operating on clean electric energy, resulting in a reduction of nearly 4,000 tons of CO₂ emissions and improving operational efficiency by 7%. The remaining four cranes are fully compatible with future electrification, underscoring our long-term strategy to modernize our operations in an environmentally responsible way. This investment is part of a broader innovation roadmap that includes digitalization, automation, and cleaner energy sources—all designed to ensure that our ports continue to grow without compromising the health of our planet. Building a Better Tomorrow, Together At SSA Marine Mexico, we understand that sustainability is a shared and ongoing responsibility. True impact requires collaboration across sectors, long-term vision, and unwavering commitment. That is why we continue to work hand-in-hand with local authorities, non-profit organizations, universities, and our own employees to create solutions that are both scalable and sustainable. Our journey is far from over. In the years ahead, we will continue to deepen our community engagement, explore cleaner technologies, and strengthen the social fabric of the regions where we operate. Each initiative, no matter the size, is a step toward building a future where business success goes hand-in-hand with human and environmental prosperity. We are proud of what we have achieved in 2024, but we are even more excited about what lies ahead. SSA Marine Mexico — Moving the World, Caring for People and Planet. LINK: https://www.ssamarine.mx/

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