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<div class="phx-topic abstract-wrapper">The union representing 45,000 longshore workers along the East and Gulf coasts is seeking to block technology that management says is critical for land-constrained ports to handle larger ships. </div>

The union representing 45,000 longshore workers along the East and Gulf coasts is seeking to block technology that management says is critical for land-constrained ports to handle larger ships.

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<div class="phx-topic">Rail-mounted gantry cranes (RMGs) at container terminals have emerged as the deciding factor for the International Longshoremen’s Association (ILA) in whether they will agree to a new master contract that avoids another port strike in January. The union was unable to block the introduction of RMGs at two East Coast ports under three previous contracts but sees their further usage as a line in the sand in current contract talks. The semi-automated RMGs — which have been in use in the US since 2007 — are seen as the key method for land-constrained terminals, particularly those near urban East Coast ports, to expand. And now they are at the heart of another longshore labor dispute in North America. In a statement Monday, ILA Executive Vice President Dennis Daggett singled out RMGs for being “at the center of this [current] impasse” with the US Maritime Alliance (USMX) over resuming talks for <a href="https://www.joc.com/article/ila-usmx-agree-on-new-wage-offer-and-contract-extension-that-reopens-ports-5741882">a new master contract before a Jan. 15 deadline when the existing contract extension expires</a>. <a href="https://www.joc.com/article/ila-breaks-off-contract-talks-accuses-usmx-of-semi-automation-push-5810392">The union broke off talks with the USMX</a> over what it said was the employer group’s push for “semi automation” language in the new contract. Daggett said the equipment has failed to show it can outperform individual longshore machine operators. And in addition to taking away jobs, the RMGs, he said, are a target for hacking. He cast the fight against RMGs as existential for a union that under two previous administrations did not challenge the equipment’s rollout at the ports of Norfolk, Virginia, and Bayonne, New Jersey. “The ILA is not against progress, innovation, or modernization, but we cannot support technology that jeopardizes jobs, threatens national security, and puts the future of the workforce at risk,” Daggett said. “This is a pivotal moment in our history,” he added. “The decisions we make today will determine the future for generations to come.” No talks between the ILA and USMX are currently scheduled. <h3>‘Sold the ILA a vision’ </h3>RMGs, two of which will straddle a long row of stacked containers, move boxes forward and backward between the berth and truck lanes. As truckers enter the terminal, the RMG picks out the box from each stack and delivers it to the front of the row for mounting on chassis, or in reverse for loading operations. Stacks can also be “groomed” by RMGs overnight to push containers for morning delivery to the front of the row. RMGs allow for much denser container yards as less space is required for the operation of straddle carriers or rubber tire gantry cranes, which require an individual operator on the machine. In contrast, the RMG is operated remotely from an office, with an operator also capable of operating several RMGs at once depending on volume. RMG operations are considered safer as fewer workers are required in the yard around rolling machinery. Breaks and shift changes can also be done faster as RMG operators just move away from desks rather than yard equipment. Maersk’s APM Terminals subsidiary was the first to roll out RMG technology in the US when it began developing the Portsmouth marine terminal in Norfolk. Opened in 2007, APM Portsmouth, which had design capacity of 1.5 million TEUs on 291 acres of land, originally had 30 RMG cranes and six ship-to-shore cranes. The Portsmouth terminal was developed years earlier under the then-current 1996–2001 master contract between the USMX and ILA under its previous president John Bowers. That contract had no language about technology. Daggett said in his Monday statement that “under a different ILA administration, the employers introduced semi-automated RMGs at a greenfield terminal on the East Coast.” “They sold the ILA a vision that this new terminal would create thousands of jobs,” Daggett said. “It was a loophole that came at a cost to ILA members and their families.” Increasingly aware of the potential for job losses, the union’s 2004–2010 master contract was the first to contain terms addressing technology usage at container terminals. Those original contract terms did not outright bar marine terminals from implementing new technology but require management to notify the affected local and the international longshore union about the new technology and work with the unions to mitigate any job losses. The ILA has the right to contest any technology implementation through a grievance process before a three-member panel comprised of ILA and USMX representatives and an arbitrator. <h3>Canal expansion drove RMG growth on East Coast </h3>APM eventually sold Portsmouth in 2014 to Alinda Capital Partners and a UK-based pension fund, which renamed it the Virginia International Gateway (VIG). The buyers said at the time the acquisition of the VIG was due to its “<a href="https://www.joc.com/article/apm-terminals-facility-in-virginia-to-be-sold-5195342">modern design and high levels of automation, which ensure that the facility will be a key component of the port’s infrastructure now and in the future</a>.” In 2016, as the Panama Canal’s expansion opened up the East Coast to larger ships, the Virginia Port Authority, which operates the VIG, began installing another 26 RMGs and four new ship-to-shore cranes that increased its capacity by another 500,000 TEUs. About that time, Virginia also began to convert the south berth of the nearby Norfolk International Terminal into an RMG operation. In 2014, Global Container Terminals (GCT) debuted the installation of 20 RMGs as part of a $325 million expansion of its Bayonne container terminal that also added 70 acres to its 100-acre footprint. The expansion more than doubled Bayonne’s effective capacity from 435,000 container lifts to 1.1 million container lifts per year, making what Bayonne’s executives called the most “<a href="https://www.joc.com/article/nys-global-terminal-ila-in-arbitration-5219271">technologically advanced terminal in the United States.</a>” The rollout at Bayonne was not entirely without controversy, though. The ILA and GCT had to enter arbitration over whether <a href="https://www.joc.com/article/nys-global-terminal-ila-in-arbitration-5219271">the union had jurisdiction over an RMG safety device that required truckers to press a button that they were in a safe area when a container was being loaded</a>. The 2012–2018 master contract negotiated by ILA President Harold Daggett, Dennis’ father, did not contain an outright ban on any type of automation at marine terminals or the RMGs at Bayonne. However, the language around technology implementation became stricter, requiring that any automation project at a marine terminal go before a 10-member committee of ILA and USMX members that would study the workforce effects of automation. By the time of the 2018–2024 contract, the ILA negotiated a prohibition on full automation at ports but still left the question of semi-automation technology open to collective bargaining. “We had learned from these mistakes,” Dennis Daggett said. “Under new leadership, the ILA secured workforce protections and guarantees, ensuring that automation would no longer be implemented without consideration of its impact on jobs. These agreements set clear limits on how far technology could go in replacing human labor.” <h3>Ports ‘must evolve’ </h3>The USMX, however, has laid out an opposite stance, seeing the ability to implement new technology as critical for land-constrained US ports and their workers to remain competitive. It, too, noted that RMGs were allowed under previous agreements and allowed one unidentified terminal to double its container throughput. “Port operations must evolve, and embracing modern technology is critical to this evolution,” the USMX said in a statement Tuesday in response to the ILA’s statement. “Due to the lack of available new land in most ports, the only way for US East and Gulf coast ports to handle more volume is to densify terminals.” “USMX is not, nor has it ever been, seeking to eliminate jobs, but to simply implement and maintain the use of equipment and technology already allowed under the current contract agreement and already widely in use, including at some USMX ports,” it added. Daggett said that the densification argument is designed to deflect from the job losses stemming from RMGs, which still require longshore workers at either end to move containers from the ship or onto chassis. Daggett said there’s no evidence that terminals with RMG technology are more efficient, adding that RMGs face the risk of hacking attacks due to their reliance on communications networks rather than longshore workers inside an operator’s cab. “This isn’t about safety or productivity, it’s about job elimination,” he said. “The ILA has proven through data and real-world operations that RMGs are not more productive than traditional equipment operated by human workers.” Since their rollout, the VIG now has 56 RMGs and can handle 2.2 million TEUs per year on approximately the same amount of land it had since 2007. Virginia’s NIT now has 96 RMGs that allow it to handle 3.6 million TEUs per year on some 378 acres of land. GCT Bayonne handles about 1 million TEUs per year with its 20 RMGs. <a href="https://www.joc.com/article/gct-adding-berth-for-ultra-large-ships-to-new-jersey-terminal-5224198">A third berth that will open in 2025</a> also means additional RMGs at the site that will further increase its capacity. <a href="https://www.joc.com/article/cma-cgms-ny-nj-home-offers-it-southeast-asia-trade-growth-saade-5226190">CMA CGM purchased GCT Bayonne last year, citing its efficiency</a>. A New Jersey terminal management source who asked not to be identified said that it’s not a matter of RMG operations being more efficient, but rather that it allows them to make the best use of available land and keep up with other operators. Maher Terminals, the largest privately operated marine terminal on the East Coast, uses over 200 straddle carriers operated individually to move over 3 million TEUs per year. But it has 450 acres of land to do so. The Bayonne terminal only moves one-third of that volume, but it does so on one-third of the land mass. “If you look at man-hours per lift, there’s very little difference,” the source said. RMGs have also been implemented at <a href="https://www.joc.com/article/us-ports-eye-more-automation-as-discharges-from-large-vessels-intensify-5213519">the fully automated Long Beach Container Terminal on the US West Coast</a>, which has been the target of longshore union criticisms over productivity. <a href="https://www.joc.com/article/centerm-terminal-expansion-gives-vancouver-critical-boost-in-capacity-5227056">DP World has also rolled out RMG technology at its Centerm facility in Vancouver</a>, following a similar rollout of RMGs at the nearby GCT Deltaport facility in 2020. Longshore foremen at the Port of Vancouver, however, <a href="https://www.joc.com/article/dp-worlds-centerm-project-at-heart-of-employer-union-dispute-in-vancouver-5225162">have unsuccessfully tried to negotiate a new staffing agreement with DP World</a> over the RMG introduction, resulting in a port-wide lockout that ended as <a href="https://www.joc.com/article/bc-ports-to-reopen-but-longshore-union-plans-challenge-to-back-to-work-order-5810473">both sides have been forced by Canada’s government into arbitration</a>. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com ">michael.angell@spglobal.com</a>.</div>

Rail-mounted gantry cranes (RMGs) at container terminals have emerged as the deciding factor for the International Longshoremen’s Association (ILA) in whether they will agree to a new master contract that avoids another port strike in January. The union was unable to block the introduction of RMGs at two East Coast ports under three previous contracts but sees their further usage as a line in the sand in current contract talks. The semi-automated RMGs — which have been in use in the US since 2007 — are seen as the key method for land-constrained terminals, particularly those near urban East Coast ports, to expand. And now they are at the heart of another longshore labor dispute in North America. In a statement Monday, ILA Executive Vice President Dennis Daggett singled out RMGs for being “at the center of this [current] impasse” with the US Maritime Alliance (USMX) over resuming talks for a new master contract before a Jan. 15 deadline when the existing contract extension expires . The union broke off talks with the USMX over what it said was the employer group’s push for “semi automation” language in the new contract. Daggett said the equipment has failed to show it can outperform individual longshore machine operators. And in addition to taking away jobs, the RMGs, he said, are a target for hacking. He cast the fight against RMGs as existential for a union that under two previous administrations did not challenge the equipment’s rollout at the ports of Norfolk, Virginia, and Bayonne, New Jersey. “The ILA is not against progress, innovation, or modernization, but we cannot support technology that jeopardizes jobs, threatens national security, and puts the future of the workforce at risk,” Daggett said. “This is a pivotal moment in our history,” he added. “The decisions we make today will determine the future for generations to come.” No talks between the ILA and USMX are currently scheduled. ‘Sold the ILA a vision’ RMGs, two of which will straddle a long row of stacked containers, move boxes forward and backward between the berth and truck lanes. As truckers enter the terminal, the RMG picks out the box from each stack and delivers it to the front of the row for mounting on chassis, or in reverse for loading operations. Stacks can also be “groomed” by RMGs overnight to push containers for morning delivery to the front of the row. RMGs allow for much denser container yards as less space is required for the operation of straddle carriers or rubber tire gantry cranes, which require an individual operator on the machine. In contrast, the RMG is operated remotely from an office, with an operator also capable of operating several RMGs at once depending on volume. RMG operations are considered safer as fewer workers are required in the yard around rolling machinery. Breaks and shift changes can also be done faster as RMG operators just move away from desks rather than yard equipment. Maersk’s APM Terminals subsidiary was the first to roll out RMG technology in the US when it began developing the Portsmouth marine terminal in Norfolk. Opened in 2007, APM Portsmouth, which had design capacity of 1.5 million TEUs on 291 acres of land, originally had 30 RMG cranes and six ship-to-shore cranes. The Portsmouth terminal was developed years earlier under the then-current 1996–2001 master contract between the USMX and ILA under its previous president John Bowers. That contract had no language about technology. Daggett said in his Monday statement that “under a different ILA administration, the employers introduced semi-automated RMGs at a greenfield terminal on the East Coast.” “They sold the ILA a vision that this new terminal would create thousands of jobs,” Daggett said. “It was a loophole that came at a cost to ILA members and their families.” Increasingly aware of the potential for job losses, the union’s 2004–2010 master contract was the first to contain terms addressing technology usage at container terminals. Those original contract terms did not outright bar marine terminals from implementing new technology but require management to notify the affected local and the international longshore union about the new technology and work with the unions to mitigate any job losses. The ILA has the right to contest any technology implementation through a grievance process before a three-member panel comprised of ILA and USMX representatives and an arbitrator. Canal expansion drove RMG growth on East Coast APM eventually sold Portsmouth in 2014 to Alinda Capital Partners and a UK-based pension fund, which renamed it the Virginia International Gateway (VIG). The buyers said at the time the acquisition of the VIG was due to its “ modern design and high levels of automation, which ensure that the facility will be a key component of the port’s infrastructure now and in the future .” In 2016, as the Panama Canal’s expansion opened up the East Coast to larger ships, the Virginia Port Authority, which operates the VIG, began installing another 26 RMGs and four new ship-to-shore cranes that increased its capacity by another 500,000 TEUs. About that time, Virginia also began to convert the south berth of the nearby Norfolk International Terminal into an RMG operation. In 2014, Global Container Terminals (GCT) debuted the installation of 20 RMGs as part of a $325 million expansion of its Bayonne container terminal that also added 70 acres to its 100-acre footprint. The expansion more than doubled Bayonne’s effective capacity from 435,000 container lifts to 1.1 million container lifts per year, making what Bayonne’s executives called the most “ technologically advanced terminal in the United States. ” The rollout at Bayonne was not entirely without controversy, though. The ILA and GCT had to enter arbitration over whether the union had jurisdiction over an RMG safety device that required truckers to press a button that they were in a safe area when a container was being loaded . The 2012–2018 master contract negotiated by ILA President Harold Daggett, Dennis’ father, did not contain an outright ban on any type of automation at marine terminals or the RMGs at Bayonne. However, the language around technology implementation became stricter, requiring that any automation project at a marine terminal go before a 10-member committee of ILA and USMX members that would study the workforce effects of automation. By the time of the 2018–2024 contract, the ILA negotiated a prohibition on full automation at ports but still left the question of semi-automation technology open to collective bargaining. “We had learned from these mistakes,” Dennis Daggett said. “Under new leadership, the ILA secured workforce protections and guarantees, ensuring that automation would no longer be implemented without consideration of its impact on jobs. These agreements set clear limits on how far technology could go in replacing human labor.” Ports ‘must evolve’ The USMX, however, has laid out an opposite stance, seeing the ability to implement new technology as critical for land-constrained US ports and their workers to remain competitive. It, too, noted that RMGs were allowed under previous agreements and allowed one unidentified terminal to double its container throughput. “Port operations must evolve, and embracing modern technology is critical to this evolution,” the USMX said in a statement Tuesday in response to the ILA’s statement. “Due to the lack of available new land in most ports, the only way for US East and Gulf coast ports to handle more volume is to densify terminals.” “USMX is not, nor has it ever been, seeking to eliminate jobs, but to simply implement and maintain the use of equipment and technology already allowed under the current contract agreement and already widely in use, including at some USMX ports,” it added. Daggett said that the densification argument is designed to deflect from the job losses stemming from RMGs, which still require longshore workers at either end to move containers from the ship or onto chassis. Daggett said there’s no evidence that terminals with RMG technology are more efficient, adding that RMGs face the risk of hacking attacks due to their reliance on communications networks rather than longshore workers inside an operator’s cab. “This isn’t about safety or productivity, it’s about job elimination,” he said. “The ILA has proven through data and real-world operations that RMGs are not more productive than traditional equipment operated by human workers.” Since their rollout, the VIG now has 56 RMGs and can handle 2.2 million TEUs per year on approximately the same amount of land it had since 2007. Virginia’s NIT now has 96 RMGs that allow it to handle 3.6 million TEUs per year on some 378 acres of land. GCT Bayonne handles about 1 million TEUs per year with its 20 RMGs. A third berth that will open in 2025 also means additional RMGs at the site that will further increase its capacity. CMA CGM purchased GCT Bayonne last year, citing its efficiency . A New Jersey terminal management source who asked not to be identified said that it’s not a matter of RMG operations being more efficient, but rather that it allows them to make the best use of available land and keep up with other operators. Maher Terminals, the largest privately operated marine terminal on the East Coast, uses over 200 straddle carriers operated individually to move over 3 million TEUs per year. But it has 450 acres of land to do so. The Bayonne terminal only moves one-third of that volume, but it does so on one-third of the land mass. “If you look at man-hours per lift, there’s very little difference,” the source said. RMGs have also been implemented at the fully automated Long Beach Container Terminal on the US West Coast , which has been the target of longshore union criticisms over productivity. DP World has also rolled out RMG technology at its Centerm facility in Vancouver , following a similar rollout of RMGs at the nearby GCT Deltaport facility in 2020. Longshore foremen at the Port of Vancouver, however, have unsuccessfully tried to negotiate a new staffing agreement with DP World over the RMG introduction, resulting in a port-wide lockout that ended as both sides have been forced by Canada’s government into arbitration . Contact Michael Angell at michael.angell@spglobal.com .

ILA targets rail-mounted gantry cranes amid impasse in port labor talks

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

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

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

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

Broker automation vendor lands funding round in increasingly competitive market

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

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

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

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

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

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

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

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

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

Canadian investigation again raises questions of Chinese chassis origin

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

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

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

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

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

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

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

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

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

ONE adds to terminal holdings with stake in Indonesian operator

<div class="phx-topic abstract-wrapper">It’s hard to see a world where AI isn’t a necessary component for financial durability in a sector that will always grapple with the volatility of freight rates and the ebbs and flows of demand and volumes. </div>

It’s hard to see a world where AI isn’t a necessary component for financial durability in a sector that will always grapple with the volatility of freight rates and the ebbs and flows of demand and volumes.

<div class="phx-topic">The last two years have been characterized by flat demand, volatile rates and increased costs in the logistics industry. But executives looking at data and comparing it with the pre-COVID era should bear in mind that one thing is vastly different this time around: We’re in the throes of a new technological wave around artificial intelligence (AI) that sets the stage for a meaningfully different environment of business building. AI has dominated discussions across industries in the last two years as buyers seek to separate signal from noise. This has sparked both enthusiasm and skepticism. Is AI in supply chain management merely a temporary trend, or does it possess the potential for lasting impact? Moreover, which AI applications are most likely to transform supply chain operations in the long run? At a supply chain conference earlier this year, I asked a room of about 200 executives how many were using generative AI in their everyday jobs. Almost every single hand went up. What was once a new, scary technology is proving to provide operational leverage in a period where margins are under secular pressure. Among service-intensive logistics services providers (LSPs) such as forwarders and freight brokers, AI is proving to be a valuable asset for coping with a litany of freight operations and back-office tasks. It turns out this tooling can help increase productivity in a way that reduces the cost to serve, or the expense required to execute a shipment. While it’s early days, we’re seeing harsh skepticism now turning into praise as early indicators of AI’s return on investment (ROI) are hard to ignore in an environment where companies have typically managed long-term margins through phases of retrenching and expansion. Given the service orientation of the supply chain, sales enablement is a key area of focus. We know of one upstart who has developed their own AI voice agent to handle preliminary sales calls on behalf of insurance brokers placing trucking liability policies. That is expected to improve sales conversions by at least 25% when rolled out across the organization. In another instance, a large freight broker mentioned cost reductions of 20% by having a voice agent qualify inbound calls from truckers looking for freight. This helps carrier sales professionals focus only on the higher-value carriers they believe fit their network and the needs of their shipper-clients. <h3>Understanding the promise of AI </h3>Lastly, emerging new business models are galvanizing the disruptive nature of AI. The adage among investors is to dub this new business model as “service-as-software.” It simply means that software now does the work rather than enabling it. Business models reflect that by simply “charging for the work,” allowing companies to bill directly for automated processes. That’s a shift akin to the previous migration to software-as-a-service (SaaS), but with an operational twist. Take customs brokerage and trade compliance, for example. Regardless of your politics, it’s clear that trade regulation will increase in complexity in the years to come. But the supply of customs brokers has been relatively flat, with more than 5,000 retirements expected by the end of the decade. Customs brokerage businesses are hard to manage to profitability and are often a loss-leader to cross-sell other freight services given how loyal customers can be to their customs broker. We’ve seen several startups develop an AI-native ability to broker customs at gross margins in excess of 50% and handle volumes per employee two to three times greater than incumbents. They’re also able to tie that to trade compliance workflows so organizations can make more informed decisions around sourcing and distribution to manage expenses while staying within the parameters of the law. We’re still in the early innings of understanding the promise AI brings to the supply chain, as well as how to develop and scale key processes around its capabilities. The thing that’s clear to me is that we cannot view the business environment and operational best practices of a bygone era as the baseline for the future. AI is something that’s here to stay and brings with it a large promise for an industry as service-heavy as supply chain. Data from these early deployments suggests that smaller teams can handle more volume without forsaking customer outcomes. If this continues, it’s hard to see a world where AI isn’t a necessary component for financial durability in a sector that will always grapple with the volatility of rates and the ebbs and flows of demand and freight volumes. Contact Santosh Sankar at <a href="mailto:santosh@dynamo.vc ">santosh@dynamo.vc</a>.</div>

The last two years have been characterized by flat demand, volatile rates and increased costs in the logistics industry. But executives looking at data and comparing it with the pre-COVID era should bear in mind that one thing is vastly different this time around: We’re in the throes of a new technological wave around artificial intelligence (AI) that sets the stage for a meaningfully different environment of business building. AI has dominated discussions across industries in the last two years as buyers seek to separate signal from noise. This has sparked both enthusiasm and skepticism. Is AI in supply chain management merely a temporary trend, or does it possess the potential for lasting impact? Moreover, which AI applications are most likely to transform supply chain operations in the long run? At a supply chain conference earlier this year, I asked a room of about 200 executives how many were using generative AI in their everyday jobs. Almost every single hand went up. What was once a new, scary technology is proving to provide operational leverage in a period where margins are under secular pressure. Among service-intensive logistics services providers (LSPs) such as forwarders and freight brokers, AI is proving to be a valuable asset for coping with a litany of freight operations and back-office tasks. It turns out this tooling can help increase productivity in a way that reduces the cost to serve, or the expense required to execute a shipment. While it’s early days, we’re seeing harsh skepticism now turning into praise as early indicators of AI’s return on investment (ROI) are hard to ignore in an environment where companies have typically managed long-term margins through phases of retrenching and expansion. Given the service orientation of the supply chain, sales enablement is a key area of focus. We know of one upstart who has developed their own AI voice agent to handle preliminary sales calls on behalf of insurance brokers placing trucking liability policies. That is expected to improve sales conversions by at least 25% when rolled out across the organization. In another instance, a large freight broker mentioned cost reductions of 20% by having a voice agent qualify inbound calls from truckers looking for freight. This helps carrier sales professionals focus only on the higher-value carriers they believe fit their network and the needs of their shipper-clients. Understanding the promise of AI Lastly, emerging new business models are galvanizing the disruptive nature of AI. The adage among investors is to dub this new business model as “service-as-software.” It simply means that software now does the work rather than enabling it. Business models reflect that by simply “charging for the work,” allowing companies to bill directly for automated processes. That’s a shift akin to the previous migration to software-as-a-service (SaaS), but with an operational twist. Take customs brokerage and trade compliance, for example. Regardless of your politics, it’s clear that trade regulation will increase in complexity in the years to come. But the supply of customs brokers has been relatively flat, with more than 5,000 retirements expected by the end of the decade. Customs brokerage businesses are hard to manage to profitability and are often a loss-leader to cross-sell other freight services given how loyal customers can be to their customs broker. We’ve seen several startups develop an AI-native ability to broker customs at gross margins in excess of 50% and handle volumes per employee two to three times greater than incumbents. They’re also able to tie that to trade compliance workflows so organizations can make more informed decisions around sourcing and distribution to manage expenses while staying within the parameters of the law. We’re still in the early innings of understanding the promise AI brings to the supply chain, as well as how to develop and scale key processes around its capabilities. The thing that’s clear to me is that we cannot view the business environment and operational best practices of a bygone era as the baseline for the future. AI is something that’s here to stay and brings with it a large promise for an industry as service-heavy as supply chain. Data from these early deployments suggests that smaller teams can handle more volume without forsaking customer outcomes. If this continues, it’s hard to see a world where AI isn’t a necessary component for financial durability in a sector that will always grapple with the volatility of rates and the ebbs and flows of demand and freight volumes. Contact Santosh Sankar at santosh@dynamo.vc .

Supply chains embrace the AI takeover to slash costs

<div class="phx-topic abstract-wrapper">The large fuel tanks needed for low-density alternative fuels could make them a non-starter for multipurpose vessels.</div>

The large fuel tanks needed for low-density alternative fuels could make them a non-starter for multipurpose vessels.

<div class="phx-topic">The “future fuel” dilemma is a 21st century conundrum for shipowners of every type of ship, but perhaps more so for the multipurpose (MPV) and heavy-lift fleet. With their heavy and outsized cargoes, finding room for the larger fuel tanks needed for low-density fuels is a real challenge, which makes emerging fuels hydrogen and ammonia a much tougher option for MPV newbuilds today. Green methanol has potential, but there are caveats to that choice, too. The market is coming to terms with the time it will take to scale up the production and distribution of green methanol. While supplies can and are being secured for some pioneering ship operators, it is likely to be much harder to procure green methanol supplies for tramping MPVs with their variable routings and port calls. However, some carriers are choosing methanol from the newbuild stage, having implemented a “ready” approach with plans to convert. These include AAL with a series of eight 32,000-deadweight ton (dwt) liner-type MPVs, three of which have been delivered; Griegstar and Gearbulk with eight ammonia/methanol-ready 82,300-dwt open-hatch general cargo newbuilds; Skarv with four 7,000-dwt ammonia/methanol-ready project cargo carriers; and SAL’s methanol-ready heavy-lift MPV Orca class. Biofuels offer a more immediate solution for MPV operators, especially for those operating in European Union waters, where from next year FuelEU Maritime regulations will heavily penalize vessels that cannot comply with the requirements for using alternative fuels with lower fossil carbon content. Many owners and operators in the sector have already tested different kinds of biofuels with various “drop-in” ratios. A steep increase in demand for biofuels is expected in the coming years. At DNV, we see benefits in the pooling mechanism allowed in the EU’s FuelEU Maritime regulation to encourage future fuel procurement at scale. This could serve the MPV sector well as an emissions-reduction strategy. This novel approach gives MPV shipowners the option to pool well-to-wake greenhouse gas fuel intensity (GFI) compliance across several ships from the same or different companies. This means that a non-compliant vessel could rely on others in a pool to achieve a compliant combined GFI. This cooperative approach could provide a pathway for MPV operators to secure the benefits of using low- or zero-carbon fuels. <h3>‘New nuclear’ a long-term possibility </h3>Nuclear propulsion as an alternative fuel for MPVs falls in a much longer-term window, in my view. Small modular reactors (SMRs) are still in the testing stage on land for power generation, and it will be many years before they will be ready for commercial use in shipping. Expect to see SMR testing for ultra-large container carriers well before MPVs are ready for new nuclear. The industry is looking closely at the possibilities, however, so at DNV, we have recently joined with companies and stakeholders in the maritime and nuclear sector to explore the technology as part of the new Nuclear Energy Maritime Organization (NEMO). Batteries, as part of hybrid propulsion solutions, are on the rise. We estimate that some 900 ships are operating with batteries systems — from a few fully electric vessels, mainly in operation on short-sea point-to point ferry trades, to varying degrees of hybridization where batteries are combined with generators or fuel cells. Batteries as part of hybrid solutions are a relatively mature technology. Combine this with energy efficiency improvements, improved battery and charging technology, and a decrease in costs, and the economics of hybridization are likely to continue to improve. No matter the fuels, a greener choice will mean higher costs for MPVs. This puts an even greater premium on reducing losses through energy efficiency. Operational and technical energy-efficiency measures we can deploy today can reduce fuel consumption by up to 16%. The business case for these technologies, including wind-assisted propulsion, waste heat recovery, and hybrid systems is very strong compared with the cost of alternative fuels. Carbon capture and storage is a potential — but niche — option for emissions reduction for MPVs, but again the room required on board to store the CO2 is the sticking point. This takes us back to the key limitation of MPVs when switching to lower-density fuels: a lack of onboard space. For now, the most likely solution is that the MPV sector will need to rely on biofuels, dual-fuel and future fuel-ready notations, perhaps with demand aggregation and GFI pooling as we move ahead on the path to zero. Contact Jost Bergmann at <a href="mailto:jost.bergmann@dnv.com">jost.bergmann@dnv.com</a>. DNV is a Norway-based classification society. </div>

The “future fuel” dilemma is a 21st century conundrum for shipowners of every type of ship, but perhaps more so for the multipurpose (MPV) and heavy-lift fleet. With their heavy and outsized cargoes, finding room for the larger fuel tanks needed for low-density fuels is a real challenge, which makes emerging fuels hydrogen and ammonia a much tougher option for MPV newbuilds today. Green methanol has potential, but there are caveats to that choice, too. The market is coming to terms with the time it will take to scale up the production and distribution of green methanol. While supplies can and are being secured for some pioneering ship operators, it is likely to be much harder to procure green methanol supplies for tramping MPVs with their variable routings and port calls. However, some carriers are choosing methanol from the newbuild stage, having implemented a “ready” approach with plans to convert. These include AAL with a series of eight 32,000-deadweight ton (dwt) liner-type MPVs, three of which have been delivered; Griegstar and Gearbulk with eight ammonia/methanol-ready 82,300-dwt open-hatch general cargo newbuilds; Skarv with four 7,000-dwt ammonia/methanol-ready project cargo carriers; and SAL’s methanol-ready heavy-lift MPV Orca class. Biofuels offer a more immediate solution for MPV operators, especially for those operating in European Union waters, where from next year FuelEU Maritime regulations will heavily penalize vessels that cannot comply with the requirements for using alternative fuels with lower fossil carbon content. Many owners and operators in the sector have already tested different kinds of biofuels with various “drop-in” ratios. A steep increase in demand for biofuels is expected in the coming years. At DNV, we see benefits in the pooling mechanism allowed in the EU’s FuelEU Maritime regulation to encourage future fuel procurement at scale. This could serve the MPV sector well as an emissions-reduction strategy. This novel approach gives MPV shipowners the option to pool well-to-wake greenhouse gas fuel intensity (GFI) compliance across several ships from the same or different companies. This means that a non-compliant vessel could rely on others in a pool to achieve a compliant combined GFI. This cooperative approach could provide a pathway for MPV operators to secure the benefits of using low- or zero-carbon fuels. ‘New nuclear’ a long-term possibility Nuclear propulsion as an alternative fuel for MPVs falls in a much longer-term window, in my view. Small modular reactors (SMRs) are still in the testing stage on land for power generation, and it will be many years before they will be ready for commercial use in shipping. Expect to see SMR testing for ultra-large container carriers well before MPVs are ready for new nuclear. The industry is looking closely at the possibilities, however, so at DNV, we have recently joined with companies and stakeholders in the maritime and nuclear sector to explore the technology as part of the new Nuclear Energy Maritime Organization (NEMO). Batteries, as part of hybrid propulsion solutions, are on the rise. We estimate that some 900 ships are operating with batteries systems — from a few fully electric vessels, mainly in operation on short-sea point-to point ferry trades, to varying degrees of hybridization where batteries are combined with generators or fuel cells. Batteries as part of hybrid solutions are a relatively mature technology. Combine this with energy efficiency improvements, improved battery and charging technology, and a decrease in costs, and the economics of hybridization are likely to continue to improve. No matter the fuels, a greener choice will mean higher costs for MPVs. This puts an even greater premium on reducing losses through energy efficiency. Operational and technical energy-efficiency measures we can deploy today can reduce fuel consumption by up to 16%. The business case for these technologies, including wind-assisted propulsion, waste heat recovery, and hybrid systems is very strong compared with the cost of alternative fuels. Carbon capture and storage is a potential — but niche — option for emissions reduction for MPVs, but again the room required on board to store the CO2 is the sticking point. This takes us back to the key limitation of MPVs when switching to lower-density fuels: a lack of onboard space. For now, the most likely solution is that the MPV sector will need to rely on biofuels, dual-fuel and future fuel-ready notations, perhaps with demand aggregation and GFI pooling as we move ahead on the path to zero. Contact Jost Bergmann at jost.bergmann@dnv.com . DNV is a Norway-based classification society.

MPV fuel challenge complicated by heavy and outsized cargoes

Container spot rates are produced by S&P Global Platts editors who are engaging with market participants to assess the current value of freight-of-all-kinds (FAK) rates on major container trades. The rates include bunker adjustment factors, general rate increases and emergency rare restoration. They also include low-sulfur, equipment imbalance, and repositioning surcharges. The rates exclude terminal handling, port security, overweight container, delivery, and detention and demurrage charges. [Platts](https://www.spglobal.com/commodityinsights)

North Asia to UK and Mediterranean container spot rates (Platts)

Platts North Asia to Mediterranean and UK Continent Weekly Gateway

<div class="phx-topic abstract-wrapper">A host of factors can raise transit times on the 11,000-plus-kilometer rail network, undermining the trust of cargo owners that is a crucial selling point of the Asia-Europe connection.</div>

A host of factors can raise transit times on the 11,000-plus-kilometer rail network, undermining the trust of cargo owners that is a crucial selling point of the Asia-Europe connection.

<div class="phx-topic">VIENNA — The ability to deliver on promised schedules remains one of the main challenges facing rail transport providers on the so-called middle corridor connecting China and Europe, according to executives at an intercontinental rail conference here last week. But on-time performance was the point of an iceberg of underlying reliability challenges, attendees at the European Silk Road Summit in Vienna were told. ”As long as everything goes well, the customer is happy, but if something goes wrong, the customer will start to doubt rail more than they would do for sea freight,” said Alona Toprak, managing director at DB Cargo Eurasia. Containerized freight on the middle corridor uses multiple cargo handovers — from rail to ferry to road and back to rail — with delays at key modal change points. Cross-border customs issues can add to delays, with volatile rates and equipment imbalances all placing service level promises under pressure. Still, meeting those promises is a selling point for the intercontinental rail network that cannot be compromised, logistics executives warned delegates. Thomas Kargl, director of Eurasian logistics provider Smartlog, told the summit that rail services from China to Europe had always suffered from a lack of reliability and it took much consulting time with shippers to change that impression. “If I say we are running between 12 and 15 days, we must hold that time,” Kargl said. “To attract customers, they must recognize that rail is available and is reliable. We are talking about containers valued at hundreds of thousands of dollars, so an increase of the transit time by a few days will tie up a lot of capital.” Toprak agreed and said customers of high-value products moving by rail had high expectations and were “very demanding.” DB Cargo Eurasia introduced an express rail service from China to Europe at the end of 2023 and expanded the offering this year. Toprak said it was now possible to offer shippers a nine-day transit time from China to the Malaszewicze rail hub in Poland via the northern corridor that was attractive to e-commerce, but it also raised the reliability bar even higher. ”The lead time of nine days is a real option for e-commerce, but if we promise nine days, we must stick to it because if not the customer will be penalized, lose money and then the service will not be trusted,” she said. <h3>Peak time delays </h3>There are several hurdles that must be overcome by service providers offering fast rail transit times, especially on the middle corridor with the intermodal requirements and the repeated border crossings, Kargl noted. China’s railways have a different gauge to those used in Europe that requires cargo to be transhipped at the China-Kazakhstan border and again at European entry points. At peak times, that can lead to delays. The service providers must also manage other factors, including the documentation for shipments and ensuring it is communicated electronically to all customs authorities along the route. In addition, sufficient equipment and access to rolling stock need to be guaranteed, while the provision of advance bookings and cargo closing times need to be ensured. “If you manage this all in a smooth way, the nine days transit will be reachable 80% of the time,” Kargl said. Following the Russian invasion of Ukraine in February 2022, containerized trade on the northern route from China to North Europe largely dried up. Most of the cargo was moved to ocean, but forwarders and rail freight operators began testing the middle corridor that runs from China through Central Asia, across the Caspian and Black seas, and on into Turkey or Eastern Europe. While some cargo has returned to the northern route through Russia, concerns over sanctions breaches and moral opposition to contributing revenue to Russian Railways is limiting volume. However, Kelvin Tang, the head of global cross-border business and multimodal leader at CEVA Logistics, said shipping containerized cargo on the middle corridor was not just a political solution, it was a product offering. “If customers can accept 60 days transit, they will choose ocean, but if they want 30 days or less, they need to choose rail,” Tang told the summit. “If rail service becomes more stable with reliable lead times and competitive prices, it will become more attractive.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

VIENNA — The ability to deliver on promised schedules remains one of the main challenges facing rail transport providers on the so-called middle corridor connecting China and Europe, according to executives at an intercontinental rail conference here last week. But on-time performance was the point of an iceberg of underlying reliability challenges, attendees at the European Silk Road Summit in Vienna were told. ”As long as everything goes well, the customer is happy, but if something goes wrong, the customer will start to doubt rail more than they would do for sea freight,” said Alona Toprak, managing director at DB Cargo Eurasia. Containerized freight on the middle corridor uses multiple cargo handovers — from rail to ferry to road and back to rail — with delays at key modal change points. Cross-border customs issues can add to delays, with volatile rates and equipment imbalances all placing service level promises under pressure. Still, meeting those promises is a selling point for the intercontinental rail network that cannot be compromised, logistics executives warned delegates. Thomas Kargl, director of Eurasian logistics provider Smartlog, told the summit that rail services from China to Europe had always suffered from a lack of reliability and it took much consulting time with shippers to change that impression. “If I say we are running between 12 and 15 days, we must hold that time,” Kargl said. “To attract customers, they must recognize that rail is available and is reliable. We are talking about containers valued at hundreds of thousands of dollars, so an increase of the transit time by a few days will tie up a lot of capital.” Toprak agreed and said customers of high-value products moving by rail had high expectations and were “very demanding.” DB Cargo Eurasia introduced an express rail service from China to Europe at the end of 2023 and expanded the offering this year. Toprak said it was now possible to offer shippers a nine-day transit time from China to the Malaszewicze rail hub in Poland via the northern corridor that was attractive to e-commerce, but it also raised the reliability bar even higher. ”The lead time of nine days is a real option for e-commerce, but if we promise nine days, we must stick to it because if not the customer will be penalized, lose money and then the service will not be trusted,” she said. Peak time delays There are several hurdles that must be overcome by service providers offering fast rail transit times, especially on the middle corridor with the intermodal requirements and the repeated border crossings, Kargl noted. China’s railways have a different gauge to those used in Europe that requires cargo to be transhipped at the China-Kazakhstan border and again at European entry points. At peak times, that can lead to delays. The service providers must also manage other factors, including the documentation for shipments and ensuring it is communicated electronically to all customs authorities along the route. In addition, sufficient equipment and access to rolling stock need to be guaranteed, while the provision of advance bookings and cargo closing times need to be ensured. “If you manage this all in a smooth way, the nine days transit will be reachable 80% of the time,” Kargl said. Following the Russian invasion of Ukraine in February 2022, containerized trade on the northern route from China to North Europe largely dried up. Most of the cargo was moved to ocean, but forwarders and rail freight operators began testing the middle corridor that runs from China through Central Asia, across the Caspian and Black seas, and on into Turkey or Eastern Europe. While some cargo has returned to the northern route through Russia, concerns over sanctions breaches and moral opposition to contributing revenue to Russian Railways is limiting volume. However, Kelvin Tang, the head of global cross-border business and multimodal leader at CEVA Logistics, said shipping containerized cargo on the middle corridor was not just a political solution, it was a product offering. “If customers can accept 60 days transit, they will choose ocean, but if they want 30 days or less, they need to choose rail,” Tang told the summit. “If rail service becomes more stable with reliable lead times and competitive prices, it will become more attractive.” Contact Greg Knowler at greg.knowler@spglobal.com .

Schedule reliability remains key challenge for China-Europe rail

<div class="phx-topic abstract-wrapper">Hapag-Lloyd has contracted with a Chinese energy producer for green methanol to power five 10,100-TEU chartered ships with methanol dual-fuel propulsion systems.</div>

Hapag-Lloyd has contracted with a Chinese energy producer for green methanol to power five 10,100-TEU chartered ships with methanol dual-fuel propulsion systems.

<div class="phx-topic">Chinese energy producer Goldwind will be supplying both members of the <a href="https://www.joc.com/article/hapag-lloyd-says-gemini-alliance-cargo-bookings-to-open-dec-3-5846853">Gemini Cooperation</a> with green methanol from 2026. Hapag-Lloyd will receive 250,000 tons per year in a deal signed this week while its partner <a href="https://www.joc.com/article/maersk-inks-new-methanol-sourcing-deal-with-chinese-supplier-5234419">Maersk will get 500,000 tons a year</a> according to an agreement made last year. The green methanol will consist of a blend of bio- and e-methanol and enable a greenhouse gas (GHG) emissions reduction of at least 70%, Hapag-Lloyd said in a statement Thursday. “With the agreement, we are securing a significant proportion of our requirements for green fuels,” said Hapag-Lloyd CEO Rolf Habben Jansen. “This will bring us an important step closer to our goal of achieving net-zero fleet operations by 2045.” Hapag-Lloyd and Seaspan are converting five 10,100-TEU charter ships to a methanol dual-fuel propulsion system that will be ready in 2026. The carrier also made a recent order for 24 dual-fuel vessels capable of sailing on liquefied natural gas (LNG). By 2030, Hapag-Lloyd aims to reduce the absolute GHG emissions of the fleet by about one-third compared with 2022. Compared with conventional fuels, the ordered quantity of green methanol can save a total of up to 400,000 metric tons of CO2e emissions in fleet operations per year. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="1a054077-7728-4ffd-abb8-b7aff17c3235"></dynamic-object></div>Hapag-Lloyd’s decarbonization credentials were burnished by its recent <a href="https://www.joc.com/article/hapag-lloyd-wins-asia-europe-green-shipping-tender-to-launch-next-year-5240949">winning of a tender from the Zero Emission Maritime Buyers Alliance</a> (ZEMBA) aimed at fast-tracking commercial deployment of green shipping services at scale to create a competitive market for those services. About 70% of the total 1.7 million TEUs of ship orders made so far this year were for ships capable of sailing on methanol, LNG or hydrogen, according to Sea-web, a sister company of the Journal of Commerce within S&amp;P Global. The need to keep fuel options open and avoid being locked into one pathway was illustrated <a href="https://www.joc.com/article/maersks-lng-order-hedges-bet-on-green-fuel-technology-ceo-5703200">in a recent Maersk order for dual-fuel vessels totaling 800,000 TEUs</a> capable of sailing on methanol as well as LNG. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Chinese energy producer Goldwind will be supplying both members of the Gemini Cooperation with green methanol from 2026. Hapag-Lloyd will receive 250,000 tons per year in a deal signed this week while its partner Maersk will get 500,000 tons a year according to an agreement made last year. The green methanol will consist of a blend of bio- and e-methanol and enable a greenhouse gas (GHG) emissions reduction of at least 70%, Hapag-Lloyd said in a statement Thursday. “With the agreement, we are securing a significant proportion of our requirements for green fuels,” said Hapag-Lloyd CEO Rolf Habben Jansen. “This will bring us an important step closer to our goal of achieving net-zero fleet operations by 2045.” Hapag-Lloyd and Seaspan are converting five 10,100-TEU charter ships to a methanol dual-fuel propulsion system that will be ready in 2026. The carrier also made a recent order for 24 dual-fuel vessels capable of sailing on liquefied natural gas (LNG). By 2030, Hapag-Lloyd aims to reduce the absolute GHG emissions of the fleet by about one-third compared with 2022. Compared with conventional fuels, the ordered quantity of green methanol can save a total of up to 400,000 metric tons of CO2e emissions in fleet operations per year. Hapag-Lloyd’s decarbonization credentials were burnished by its recent winning of a tender from the Zero Emission Maritime Buyers Alliance (ZEMBA) aimed at fast-tracking commercial deployment of green shipping services at scale to create a competitive market for those services. About 70% of the total 1.7 million TEUs of ship orders made so far this year were for ships capable of sailing on methanol, LNG or hydrogen, according to Sea-web, a sister company of the Journal of Commerce within S&P Global. The need to keep fuel options open and avoid being locked into one pathway was illustrated in a recent Maersk order for dual-fuel vessels totaling 800,000 TEUs capable of sailing on methanol as well as LNG. Contact Greg Knowler at greg.knowler@spglobal.com .

Hapag-Lloyd joins Maersk in Chinese methanol supply deal

<div class="phx-topic abstract-wrapper">NYSHEX is making a renewed effort to solve the fundamental problem of ocean container supply chains, promoting the use of index-linked contracts to build contract integrity and certainty. </div>

NYSHEX is making a renewed effort to solve the fundamental problem of ocean container supply chains, promoting the use of index-linked contracts to build contract integrity and certainty.

<div class="phx-topic">From its origins over a decade ago, NYSHEX, founded and led by Gordon Downes, has always aimed to advance a simple yet stubbornly elusive concept in container shipping: integrity of contracts. Incomprehensible to outsiders, signed contracts — many pages long and vetted by lawyers — are unenforceable when confronted by the real-world forces of supply and demand and volatile pricing. “The big problem that prompted us to start NYSHEX is contracts in our industry don’t perform,” Downes told the Journal of Commerce. In many cases, the shipper or carrier fails to live up to the contract terms, whether that be a carrier unwilling to provide vessel space or a shipper steering cargo to other carriers or non-vessel-operating common carriers (NVOs) to obtain a lower rate, thus failing to deliver the agreed-upon volumes. Triggers for failed contracts occur when spot rates deviate significantly from contract rates and carriers blank sailings or omit ports on short notice due to changes in demand, creating shortfalls in available capacity. Downes said ocean container contracts have just a 65% fulfillment rate. Although such practices undermine trust and stress relationships to the breaking point, no scenario results in serious consequences for the offending party. Litigation or government enforcement remain rare outside of a tiny handful of highly publicized cases. Originally, NYSHEX, founded by Downes in 2015 “to solve the problem of poor contract fulfillment,” aimed to create an exchange whereby mutually committed — meaning enforceable — contracts could be executed by shippers, NVOs and carriers under full approval of the US Federal Maritime Commission (FMC) and the auspices of the NYSHEX brand. To the limited extent the market availed itself of such contracts, they worked: in the vast majority of cases, both parties lived up to what they committed to. Still, the penalties meant to ensure compliance “can put a lot of strain on relationships, especially when the spot rates are so volatile,” Downes said. But while the concept found some uptake, demand was cyclical and could not overcome at scale the market forces that, in peculiar container shipping mentality, frequently lead each side to seek near-term pricing gain, if it is to be had, at the expense of longer-term certainty of space or volumes. Whether it’s an obsessively procurement-based mindset on the part of shippers in seeking to drive prices lower whenever possible, or carriers seeing better opportunities on the spot market, sacrifices in pursuit of certainty have yet to take hold on an industrywide level. If there was ever a moment for that mentality to be challenged, it was the pandemic, which showed shippers how quickly and painfully vessel space can dry up in a crisis. And yet the problem remains. <h3>New technology and products</h3>But NYSHEX persevered with its original vision, even if that meant applying it in new ways. The company developed technology that enables parties to monitor contract performance, drawing them into a real-time collaborative environment where issues can be identified and resolved on the spot, versus after the fact during increasingly infrequent quarterly performance reviews. In other words, if contracts can be mutually monitored in real time, the odds are better the parties will comply. Now NYSHEX is delving yet further into solving the fundamental problem: promoting the use of index-linked contracts as a way to build contract integrity and certainty into ocean container supply chains. In announcing a Series C funding round last week, NYSHEX made a strong statement that there is traction in the idea, however long it may have been around. The funding round attracted participation from existing investors, including Goldman Sachs, and new ones, including the Intercontinental Exchange (NYSE:ICE), a leading exchange operator which will calculate the new indices based on actual rates paid by shippers. Other container freight rate indices tend to be based on traditional price discovery performed by analysts. It said it will launch a new series of indices and tools to administer index-linked contracts. The question, then, is whether index-linked contracts are able to move the industry forward in addressing the continuing core problem of a lack of contract integrity. Linking pricing to an index means shippers’ rates face less risk of falling out of the range of prevailing rates and cargo being left behind at origin. But there is less budget certainty which clashes with annual budgeting cycles at beneficial cargo owners (BCOs). And while there are futures contracts traded, such as an active market of day traders on the Shanghai International Energy Exchange (INE China), which launched trading in a Containerized Freight Index Futures Contract in 2023, they haven’t built the liquidity or credibility to be of interest to BCO finance teams who would engage in hedging against adverse movements in ocean rates. And carriers have been outspoken about their declining interest in container freight futures. Index-linked contracts have a history of going in and out of fashion; they fell into fashion during the pandemic when shippers were desperate for space but fell out once the extremes of the disruptions were over. Also holding back index-linked contracts are shipper and carrier lawyers needing to come to agree on terms and conditions, frequently a difficult hurdle to overcome. Now, amid a continuing tight market fueled by Red Sea reroutings and robust 2024 volumes, there is more talk of using index-linked contracts. But just as it was before, that could just be cyclical. Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>.</div>

From its origins over a decade ago, NYSHEX, founded and led by Gordon Downes, has always aimed to advance a simple yet stubbornly elusive concept in container shipping: integrity of contracts. Incomprehensible to outsiders, signed contracts — many pages long and vetted by lawyers — are unenforceable when confronted by the real-world forces of supply and demand and volatile pricing. “The big problem that prompted us to start NYSHEX is contracts in our industry don’t perform,” Downes told the Journal of Commerce. In many cases, the shipper or carrier fails to live up to the contract terms, whether that be a carrier unwilling to provide vessel space or a shipper steering cargo to other carriers or non-vessel-operating common carriers (NVOs) to obtain a lower rate, thus failing to deliver the agreed-upon volumes. Triggers for failed contracts occur when spot rates deviate significantly from contract rates and carriers blank sailings or omit ports on short notice due to changes in demand, creating shortfalls in available capacity. Downes said ocean container contracts have just a 65% fulfillment rate. Although such practices undermine trust and stress relationships to the breaking point, no scenario results in serious consequences for the offending party. Litigation or government enforcement remain rare outside of a tiny handful of highly publicized cases. Originally, NYSHEX, founded by Downes in 2015 “to solve the problem of poor contract fulfillment,” aimed to create an exchange whereby mutually committed — meaning enforceable — contracts could be executed by shippers, NVOs and carriers under full approval of the US Federal Maritime Commission (FMC) and the auspices of the NYSHEX brand. To the limited extent the market availed itself of such contracts, they worked: in the vast majority of cases, both parties lived up to what they committed to. Still, the penalties meant to ensure compliance “can put a lot of strain on relationships, especially when the spot rates are so volatile,” Downes said. But while the concept found some uptake, demand was cyclical and could not overcome at scale the market forces that, in peculiar container shipping mentality, frequently lead each side to seek near-term pricing gain, if it is to be had, at the expense of longer-term certainty of space or volumes. Whether it’s an obsessively procurement-based mindset on the part of shippers in seeking to drive prices lower whenever possible, or carriers seeing better opportunities on the spot market, sacrifices in pursuit of certainty have yet to take hold on an industrywide level. If there was ever a moment for that mentality to be challenged, it was the pandemic, which showed shippers how quickly and painfully vessel space can dry up in a crisis. And yet the problem remains. New technology and products But NYSHEX persevered with its original vision, even if that meant applying it in new ways. The company developed technology that enables parties to monitor contract performance, drawing them into a real-time collaborative environment where issues can be identified and resolved on the spot, versus after the fact during increasingly infrequent quarterly performance reviews. In other words, if contracts can be mutually monitored in real time, the odds are better the parties will comply. Now NYSHEX is delving yet further into solving the fundamental problem: promoting the use of index-linked contracts as a way to build contract integrity and certainty into ocean container supply chains. In announcing a Series C funding round last week, NYSHEX made a strong statement that there is traction in the idea, however long it may have been around. The funding round attracted participation from existing investors, including Goldman Sachs, and new ones, including the Intercontinental Exchange (NYSE:ICE), a leading exchange operator which will calculate the new indices based on actual rates paid by shippers. Other container freight rate indices tend to be based on traditional price discovery performed by analysts. It said it will launch a new series of indices and tools to administer index-linked contracts. The question, then, is whether index-linked contracts are able to move the industry forward in addressing the continuing core problem of a lack of contract integrity. Linking pricing to an index means shippers’ rates face less risk of falling out of the range of prevailing rates and cargo being left behind at origin. But there is less budget certainty which clashes with annual budgeting cycles at beneficial cargo owners (BCOs). And while there are futures contracts traded, such as an active market of day traders on the Shanghai International Energy Exchange (INE China), which launched trading in a Containerized Freight Index Futures Contract in 2023, they haven’t built the liquidity or credibility to be of interest to BCO finance teams who would engage in hedging against adverse movements in ocean rates. And carriers have been outspoken about their declining interest in container freight futures. Index-linked contracts have a history of going in and out of fashion; they fell into fashion during the pandemic when shippers were desperate for space but fell out once the extremes of the disruptions were over. Also holding back index-linked contracts are shipper and carrier lawyers needing to come to agree on terms and conditions, frequently a difficult hurdle to overcome. Now, amid a continuing tight market fueled by Red Sea reroutings and robust 2024 volumes, there is more talk of using index-linked contracts. But just as it was before, that could just be cyclical. Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

NYSHEX keeps core vision while evolving in volatile container shipping market

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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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<div class="phx-topic abstract-wrapper">The selection of Oregon Rep. Lori Chavez-DeRemer is seen as favorable to unions, with the new administration potentially facing the need to intervene if ILA contract talks aren’t settled before Trump takes office.</div>

The selection of Oregon Rep. Lori Chavez-DeRemer is seen as favorable to unions, with the new administration potentially facing the need to intervene if ILA contract talks aren’t settled before Trump takes office.

<div class="phx-topic">The incoming Trump administration’s pick for US labor secretary has drawn mixed reactions from the logistics industry, with the International Longshoremen’s Association (ILA) and Teamsters viewing Rep. Lori Chavez-DeRemer as solidly behind unions while trucking groups see a foe of the owner-operator driver model used widely by motor carriers. Last week’s announcement from President-elect Donald Trump that he would nominate the Oregon congresswoman drew praise from the ILA, which said in a statement, “Rep. Chavez-DeRemer built a strong pro-worker record protecting their rights to organize.” “We look forward to working with Ms. Chavez-DeRemer and [the Trump] administration on legislation and policies that protect workers’ rights, safety and honors their commitment to building a strong economy...,” ILA President Harold Daggett said in the statement. The ILA, of course, may have to draw on the incoming administration’s support in the event it’s not able to successfully settle on a new contract with maritime employers by the Jan. 15 expiration of the contract extension that ended October’s three-day port strike along the US East and Gulf coasts. While the ILA did not outright endorse either candidate in the 2024 presidential election, Daggett, who met with Trump last year, said the incoming president “<a href="https://www.joc.com/article/ila-looking-for-local-ports-to-bring-in-more-union-foremen-5244993">is looking to take care of things for the unions</a>.” The ILA also praised <a href="https://www.joc.com/article/behind-the-scenes-white-house-arm-twisting-got-ila-wage-deal-done-5747241">the Biden administration and acting Labor Secretary Julie Su</a> for helping settle wage discussions with maritime employers back in October. Sean O’Brien, president of the 1.3-million-member International Brotherhood of Teamsters, congratulated Chavez-DeRemer shortly after her nomination, saying in a statement that Trump “pledged to listen to workers and find common ground to protect and respect labor in America.” <h3>First term in Congress </h3>Chavez-DeRemer, who is serving her first term in Congress, co-sponsored 12 House bills that touched on labor and employment policy. Among union-focused activities, she co-sponsored a bill that would enshrine the rights of state public sector employees to organize and bargain collectively and another bill to ensure similar rights for state public safety employees. She has also supported the Protecting the Right to Organize (PRO) Act, which has drawn some 218 co-sponsors in the House. The PRO Act expands federal protections for unions by preventing employers from requiring attendance at meetings designed to dissuade union organizing or making workers sign pledges against union organizing. It also prohibits retaliation against employees for union organizing. PRO also allows union members to participate in secondary strikes and prohibits claims against unions that conduct such strikes. More controversially, though, the PRO Act makes it more difficult for employers to classify a worker as an independent contractor rather than a full-time employee. The PRO Act will limit the independent contractor definition to those workers who are not under an employer’s direct control for how the service is performed, or when the service is not part of the employer’s regular course of work Those criteria mirror <a href="https://www.joc.com/article/proposed-federal-rule-threatens-independent-contractor-model-in-trucking-opponents-5242331">the so-called ABC test that is used in states including California</a> and <a href="https://www.joc.com/article/stg-shifting-from-drayage-carrier-to-broker-after-new-jersey-legal-challenge-5703212">New Jersey</a> to classify independent contractors and has been widely criticized for forcing motor carriers to drop owner-operator drivers in favor of employee drivers. The PRO Act also creates the new category of a “joint employer” that determines or controls how an employee of another firm performs their job. Critics have said that it could create a condition where a marine terminal can be classified as a joint employer of a port trucker due to the instructions and requirements for drivers entering their facility. The American Trucking Associations said in a statement following Chavez-DeRemer’s nomination that her “anti-trucking policies undermine our essential workforce, threaten the right of independent truckers to choose their own career path, and impede the efficiency of the supply chain.” Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com ">michael.angell@spglobal.com</a>. </div>

The incoming Trump administration’s pick for US labor secretary has drawn mixed reactions from the logistics industry, with the International Longshoremen’s Association (ILA) and Teamsters viewing Rep. Lori Chavez-DeRemer as solidly behind unions while trucking groups see a foe of the owner-operator driver model used widely by motor carriers. Last week’s announcement from President-elect Donald Trump that he would nominate the Oregon congresswoman drew praise from the ILA, which said in a statement, “Rep. Chavez-DeRemer built a strong pro-worker record protecting their rights to organize.” “We look forward to working with Ms. Chavez-DeRemer and [the Trump] administration on legislation and policies that protect workers’ rights, safety and honors their commitment to building a strong economy...,” ILA President Harold Daggett said in the statement. The ILA, of course, may have to draw on the incoming administration’s support in the event it’s not able to successfully settle on a new contract with maritime employers by the Jan. 15 expiration of the contract extension that ended October’s three-day port strike along the US East and Gulf coasts. While the ILA did not outright endorse either candidate in the 2024 presidential election, Daggett, who met with Trump last year, said the incoming president “ is looking to take care of things for the unions .” The ILA also praised the Biden administration and acting Labor Secretary Julie Su for helping settle wage discussions with maritime employers back in October. Sean O’Brien, president of the 1.3-million-member International Brotherhood of Teamsters, congratulated Chavez-DeRemer shortly after her nomination, saying in a statement that Trump “pledged to listen to workers and find common ground to protect and respect labor in America.” First term in Congress Chavez-DeRemer, who is serving her first term in Congress, co-sponsored 12 House bills that touched on labor and employment policy. Among union-focused activities, she co-sponsored a bill that would enshrine the rights of state public sector employees to organize and bargain collectively and another bill to ensure similar rights for state public safety employees. She has also supported the Protecting the Right to Organize (PRO) Act, which has drawn some 218 co-sponsors in the House. The PRO Act expands federal protections for unions by preventing employers from requiring attendance at meetings designed to dissuade union organizing or making workers sign pledges against union organizing. It also prohibits retaliation against employees for union organizing. PRO also allows union members to participate in secondary strikes and prohibits claims against unions that conduct such strikes. More controversially, though, the PRO Act makes it more difficult for employers to classify a worker as an independent contractor rather than a full-time employee. The PRO Act will limit the independent contractor definition to those workers who are not under an employer’s direct control for how the service is performed, or when the service is not part of the employer’s regular course of work Those criteria mirror the so-called ABC test that is used in states including California and New Jersey to classify independent contractors and has been widely criticized for forcing motor carriers to drop owner-operator drivers in favor of employee drivers. The PRO Act also creates the new category of a “joint employer” that determines or controls how an employee of another firm performs their job. Critics have said that it could create a condition where a marine terminal can be classified as a joint employer of a port trucker due to the instructions and requirements for drivers entering their facility. The American Trucking Associations said in a statement following Chavez-DeRemer’s nomination that her “anti-trucking policies undermine our essential workforce, threaten the right of independent truckers to choose their own career path, and impede the efficiency of the supply chain.” Contact Michael Angell at michael.angell@spglobal.com .

Trump’s labor pick draws longshore and Teamster praise but trucker ire

<div class="phx-topic abstract-wrapper">Rising regional trade along the old Silk Road between China and Europe is driving up containerized rail volume on the middle corridor and the logistics infrastructure is struggling to keep up. </div>

Rising regional trade along the old Silk Road between China and Europe is driving up containerized rail volume on the middle corridor and the logistics infrastructure is struggling to keep up.

<div class="phx-topic">VIENNA — Geopolitics shaped the middle corridor rail network between China and Europe, but the route has evolved in the past two years from an alternative to the heavily sanctioned northern route through Russia into a critical lifeline for the booming economies of Central Asia. Huge investments are being made across the region as the logistics infrastructure struggles to catch up with demand, attendees at the European Silk Road Summit were told this week. “We see a future for the middle corridor, and we are putting our money where our mouths are and investing billions in projects in Central Asia,” said Luis Blancas, senior transport and logistics specialist at the World Bank. “The middle corridor is an entirely discretionary connection for China, but for Central Asia it is a lifeline connection to the world. It’s a lifeline for Turkey, Azerbaijan, Georgia. They want to trade more with Central Asia and the middle corridor is very important for that.” That the middle corridor was a viable trade route, as well as an improving option for China-Europe shippers, was a theme expressed time and again by speakers at the summit. Emil Mammadov, advisor to the chairman of Azerbaijan Railways, said the future of the middle corridor was “fully related” to the economies of Central Asia where demand was developing fast and rail capacity had to match that growth. “The middle corridor is not just an alternative, it is a working corridor,” he told the summit. “This year to date, we have had more than 260 block trains from China going through Azerbaijan and by the end of December that will have increased to 300 trains, more than 10 times higher than in 2023. “We are in discussions with China and with our counterparts in Central Asia to reach a minimum of 1,000 block trains next year,” he added. <h3>China attention moves to middle corridor </h3>Also under way is the development of the southern part of the middle corridor that will improve rail connections through Turkmenistan, Uzbekistan, Kyrgyzstan and Tajikistan, with significant investment being made by China in construction of the routes. “China’s participation in the middle corridor is making a huge difference,” Blancas told the summit. “China was primarily focused on the northern corridor for a long time, but over the last couple of years, with what’s going on in Ukraine, the China ‘Belt and Road Initiative’ is really targeting the middle corridor.” But the increase in rail volume flowing across Central Asian countries is placing growing pressure on key transit points. For instance, the Georgian port of Poti on the Black Sea where rail freight is transferred to ships is 99% utilized, according to Blancas. “We are one of the bottlenecks,” acknowledged Mario Escobar, business development manager for APM Terminals Poti. “It’s important that we accept that and work towards fixing it. Today, we have a port that can handle 600,000 TEUs per year, and in 2023 we handled 592,000 TEUs. It is a small port for the cargo that needs to transit this region, and the rail infrastructure is not sufficient to move all that cargo.” APM Terminals is planning to expand the capacity of its Poti terminals to 1.2 million TEUs, but Escobar said the improvement in infrastructure must be accompanied by investment from rail companies into locomotives, wagons and platforms to handle the rising volume. <h3>Reopening Red Sea will see cargo shift to ocean </h3>Martin Koubek, head of the Silk Road for intermodal operator Metrans, said the middle corridor would not be the choice for cargo from China to Europe once most container traffic returned to routing through the Red Sea. “It takes 21 days via the Suez from Shenzhen to Piraeus, so when the Red Sea is again used, why would you send rail cargo on the middle corridor that is longer and more expensive?” he told the Journal of Commerce on the sidelines of the summit. While the shift of cargo from rail to ocean would have a significant impact on the rail business, it would be barely noticed by container shipping with less than 1% of containerized trade between Asia and Europe transported by rail. But Koubek agreed that the middle corridor would be crucial for the Central Asian economies. “They are all growing, and the route will serve their increasing trade with China,” he said. Following the Russian invasion of Ukraine in February 2022, <a href="https://www.joc.com/article/rapid-rail-transit-via-sanctions-hit-russia-has-limited-appeal-for-european-shippers-5220672">containerized trade on the northern route from China to North Europe largely dried up</a>. Most of the cargo was moved to ocean but forwarders and rail freight operators began testing the middle corridor that runs from China, through Central Asia, the Caspian Sea, Black Sea and on into Turkey or eastern Europe. There remain significant hurdles to overcome, such as cross border customs issues, multiple cargo handovers from rail to ferry to road and back to rail, high rates and unreliable transit times. Those issues are being addressed by service providers, and the average transit time from Xian to Duisburg in southern Germany is now about 30 days. When the northern route is again fully utilized, most of the China to Europe containerized rail cargo using the middle corridor or ocean will quickly return to the Russian transit route, said Alona Toprak, director at DB Cargo Eurasia. “That means it is really important all the countries in Central Asia work together to address the issues still facing the middle route and increase volume travelling both ways, otherwise the rates will be high, and it won’t make sense,” she said. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

VIENNA — Geopolitics shaped the middle corridor rail network between China and Europe, but the route has evolved in the past two years from an alternative to the heavily sanctioned northern route through Russia into a critical lifeline for the booming economies of Central Asia. Huge investments are being made across the region as the logistics infrastructure struggles to catch up with demand, attendees at the European Silk Road Summit were told this week. “We see a future for the middle corridor, and we are putting our money where our mouths are and investing billions in projects in Central Asia,” said Luis Blancas, senior transport and logistics specialist at the World Bank. “The middle corridor is an entirely discretionary connection for China, but for Central Asia it is a lifeline connection to the world. It’s a lifeline for Turkey, Azerbaijan, Georgia. They want to trade more with Central Asia and the middle corridor is very important for that.” That the middle corridor was a viable trade route, as well as an improving option for China-Europe shippers, was a theme expressed time and again by speakers at the summit. Emil Mammadov, advisor to the chairman of Azerbaijan Railways, said the future of the middle corridor was “fully related” to the economies of Central Asia where demand was developing fast and rail capacity had to match that growth. “The middle corridor is not just an alternative, it is a working corridor,” he told the summit. “This year to date, we have had more than 260 block trains from China going through Azerbaijan and by the end of December that will have increased to 300 trains, more than 10 times higher than in 2023. “We are in discussions with China and with our counterparts in Central Asia to reach a minimum of 1,000 block trains next year,” he added. China attention moves to middle corridor Also under way is the development of the southern part of the middle corridor that will improve rail connections through Turkmenistan, Uzbekistan, Kyrgyzstan and Tajikistan, with significant investment being made by China in construction of the routes. “China’s participation in the middle corridor is making a huge difference,” Blancas told the summit. “China was primarily focused on the northern corridor for a long time, but over the last couple of years, with what’s going on in Ukraine, the China ‘Belt and Road Initiative’ is really targeting the middle corridor.” But the increase in rail volume flowing across Central Asian countries is placing growing pressure on key transit points. For instance, the Georgian port of Poti on the Black Sea where rail freight is transferred to ships is 99% utilized, according to Blancas. “We are one of the bottlenecks,” acknowledged Mario Escobar, business development manager for APM Terminals Poti. “It’s important that we accept that and work towards fixing it. Today, we have a port that can handle 600,000 TEUs per year, and in 2023 we handled 592,000 TEUs. It is a small port for the cargo that needs to transit this region, and the rail infrastructure is not sufficient to move all that cargo.” APM Terminals is planning to expand the capacity of its Poti terminals to 1.2 million TEUs, but Escobar said the improvement in infrastructure must be accompanied by investment from rail companies into locomotives, wagons and platforms to handle the rising volume. Reopening Red Sea will see cargo shift to ocean Martin Koubek, head of the Silk Road for intermodal operator Metrans, said the middle corridor would not be the choice for cargo from China to Europe once most container traffic returned to routing through the Red Sea. “It takes 21 days via the Suez from Shenzhen to Piraeus, so when the Red Sea is again used, why would you send rail cargo on the middle corridor that is longer and more expensive?” he told the Journal of Commerce on the sidelines of the summit. While the shift of cargo from rail to ocean would have a significant impact on the rail business, it would be barely noticed by container shipping with less than 1% of containerized trade between Asia and Europe transported by rail. But Koubek agreed that the middle corridor would be crucial for the Central Asian economies. “They are all growing, and the route will serve their increasing trade with China,” he said. Following the Russian invasion of Ukraine in February 2022, containerized trade on the northern route from China to North Europe largely dried up . Most of the cargo was moved to ocean but forwarders and rail freight operators began testing the middle corridor that runs from China, through Central Asia, the Caspian Sea, Black Sea and on into Turkey or eastern Europe. There remain significant hurdles to overcome, such as cross border customs issues, multiple cargo handovers from rail to ferry to road and back to rail, high rates and unreliable transit times. Those issues are being addressed by service providers, and the average transit time from Xian to Duisburg in southern Germany is now about 30 days. When the northern route is again fully utilized, most of the China to Europe containerized rail cargo using the middle corridor or ocean will quickly return to the Russian transit route, said Alona Toprak, director at DB Cargo Eurasia. “That means it is really important all the countries in Central Asia work together to address the issues still facing the middle route and increase volume travelling both ways, otherwise the rates will be high, and it won’t make sense,” she said. Contact Greg Knowler at greg.knowler@spglobal.com .

Intermodal providers

Booming Central Asian economies lend lifeline to China-Europe rail

<div class="phx-topic abstract-wrapper">The news from Gemini came as MSC released the latest update to its standalone east-west network that will also launch in February. </div>

The news from Gemini came as MSC released the latest update to its standalone east-west network that will also launch in February.

<div class="phx-topic">Gemini Cooperation, the new Maersk/Hapag-Lloyd alliance, will open cargo bookings beginning Dec. 3, two months before the official Feb. 1 launch of the network, Hapag-Lloyd confirmed Wednesday. February voyages will be available when the booking portal opens, the carrier said in a customer advisory. “As our 2025 network will be fully phased in only after the transition from our current THE Alliance network during 2025, not all Gemini Cooperation voyages might be reflected in our schedule yet,” Hapag-Lloyd said. The carrier’s online schedules only cover vessel arrivals at the destination port up to the end of January, just before Hapag-Lloyd’s membership in THE Alliance ends. Gemini will provide 56 mainline and shuttle services covering seven east-west trades on a hub-and-spoke network and utilizing about 340 vessels with a total capacity of 3.7 million TEUs. The Gemini carriers have continued to tweak the network after releasing the final schedule on Oct. 9, which reflected their decision to choose the Cape of Good Hope option for vessel routings to avoid the threat of militant attacks in the Red Sea. The latest change, announced on Nov. 18, was to shift calls from the UK’s Felixstowe port to London Gateway on three Asia-Europe services. <h3>MSC updates east-west network </h3>The news from Gemini came as Mediterranean Shipping Co. released on Wednesday the latest update to its standalone east-west network that will launch in February. The changes feature extra port calls to “optimize our Asia to Europe, US and Canada connectivity,” the carrier said in a customer advisory. The biggest difference is MSC’s Mustang service connecting Asia to the Northwest US and Canada will be added to its standalone east-west network. The new rotation will be Xiamen–Yantian–Ningbo–Shanghai–Busan–Seattle–Vancouver–Portland–Busan. Other changes include the addition of calls at Vung Tau and Haiphong in Vietnam on MSC’s Pearl and Chinook services; Nansha on its Asia-Europe Lion and Dragon services; Yantian (westbound) and Yokohama in place of Busan on its Swan-Sentosa service; and Busan (westbound) on its Asia-US Orient and Lonestar services. MSC has also added a call at Vizhinjam in India on its Asia-Europe Jade service, with Colombo also added to both its Britannia service connecting Asia and North Europe and its eastbound America service between the US East Coast and Asia. MSC’s Albatross service will now feature two calls in the UK, with London Gateway added after Felixstowe, which will remain the first call in Europe from Asia. MSC said its standalone east-west network together with its existing Asia export services will “provide unmatched continental trade connectivity with Asia through a vast array of loops, competitive transit times and a high frequency of direct port calls.” Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

Gemini Cooperation, the new Maersk/Hapag-Lloyd alliance, will open cargo bookings beginning Dec. 3, two months before the official Feb. 1 launch of the network, Hapag-Lloyd confirmed Wednesday. February voyages will be available when the booking portal opens, the carrier said in a customer advisory. “As our 2025 network will be fully phased in only after the transition from our current THE Alliance network during 2025, not all Gemini Cooperation voyages might be reflected in our schedule yet,” Hapag-Lloyd said. The carrier’s online schedules only cover vessel arrivals at the destination port up to the end of January, just before Hapag-Lloyd’s membership in THE Alliance ends. Gemini will provide 56 mainline and shuttle services covering seven east-west trades on a hub-and-spoke network and utilizing about 340 vessels with a total capacity of 3.7 million TEUs. The Gemini carriers have continued to tweak the network after releasing the final schedule on Oct. 9, which reflected their decision to choose the Cape of Good Hope option for vessel routings to avoid the threat of militant attacks in the Red Sea. The latest change, announced on Nov. 18, was to shift calls from the UK’s Felixstowe port to London Gateway on three Asia-Europe services. MSC updates east-west network The news from Gemini came as Mediterranean Shipping Co. released on Wednesday the latest update to its standalone east-west network that will launch in February. The changes feature extra port calls to “optimize our Asia to Europe, US and Canada connectivity,” the carrier said in a customer advisory. The biggest difference is MSC’s Mustang service connecting Asia to the Northwest US and Canada will be added to its standalone east-west network. The new rotation will be Xiamen–Yantian–Ningbo–Shanghai–Busan–Seattle–Vancouver–Portland–Busan. Other changes include the addition of calls at Vung Tau and Haiphong in Vietnam on MSC’s Pearl and Chinook services; Nansha on its Asia-Europe Lion and Dragon services; Yantian (westbound) and Yokohama in place of Busan on its Swan-Sentosa service; and Busan (westbound) on its Asia-US Orient and Lonestar services. MSC has also added a call at Vizhinjam in India on its Asia-Europe Jade service, with Colombo also added to both its Britannia service connecting Asia and North Europe and its eastbound America service between the US East Coast and Asia. MSC’s Albatross service will now feature two calls in the UK, with London Gateway added after Felixstowe, which will remain the first call in Europe from Asia. MSC said its standalone east-west network together with its existing Asia export services will “provide unmatched continental trade connectivity with Asia through a vast array of loops, competitive transit times and a high frequency of direct port calls.” Contact Keith Wallis at keithwallis@hotmail.com .

Hapag-Lloyd says Gemini alliance cargo bookings to open Dec. 3

<div class="phx-topic abstract-wrapper">The agreement was set in motion by Evergreen just weeks after Singapore experienced unprecedented congestion in May and June, with vessel delays of up to 10 days.</div>

The agreement was set in motion by Evergreen just weeks after Singapore experienced unprecedented congestion in May and June, with vessel delays of up to 10 days.

<div class="phx-topic">Taiwan’s Evergreen Marine Asia and PSA Singapore on Tuesday signed a deal to form a joint venture terminal operation that will become Evergreen’s Southeast Asia transshipment center. Evergreen said the Singapore hub will strengthen its operational efficiency and bolster the competitiveness of its fleet. Evergreen will invest up to $57 million for a 49% stake in the venture, called Evergreen-PSA Terminal Ltd, the carrier said in a filing to the Taiwan stock exchange.Terminal operations are expected to start by the end of this year.Evergreen said the move will allow the carrier’s ships in Singapore to “obtain priority berthing rights [and] have exclusive loading and unloading resources to reduce waiting time for berthing operations.”The terminal is the first joint venture facility between Evergreen and PSA.”As the company’s business expands, we are always looking for like-minded partners to build high-efficiency terminals in important locations,” Evergreen Marine Chairman Chang Yan Yi said in the statement.The deal adds to PSA Singapore’s growing stable of similar joint venture terminals with other carriers, notably Cosco Shipping, CMA CGM, HMM, Mediterranean Shipping Co. and Ocean Network Express.Evergreen directors decided in August to set up a joint venture company with PSA just weeks after Singapore experienced unprecedented congestion in May and June, with vessel delays of up to eight to 10 days.At the time, Singapore’s Maritime and Port Authority (MPA) said the problems were the culmination of months of disruption as carriers curtailed or blanked services and discharged cargo in Singapore as vessels diverted around southern Africa to avoid the Red Sea. The situation was exacerbated due to strong east-west cargo volumes as shippers consigned cargo early to offset delays.Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>.</div>

Taiwan’s Evergreen Marine Asia and PSA Singapore on Tuesday signed a deal to form a joint venture terminal operation that will become Evergreen’s Southeast Asia transshipment center. Evergreen said the Singapore hub will strengthen its operational efficiency and bolster the competitiveness of its fleet. Evergreen will invest up to $57 million for a 49% stake in the venture, called Evergreen-PSA Terminal Ltd, the carrier said in a filing to the Taiwan stock exchange. Terminal operations are expected to start by the end of this year. Evergreen said the move will allow the carrier’s ships in Singapore to “obtain priority berthing rights [and] have exclusive loading and unloading resources to reduce waiting time for berthing operations.” The terminal is the first joint venture facility between Evergreen and PSA. ”As the company’s business expands, we are always looking for like-minded partners to build high-efficiency terminals in important locations,” Evergreen Marine Chairman Chang Yan Yi said in the statement. The deal adds to PSA Singapore’s growing stable of similar joint venture terminals with other carriers, notably Cosco Shipping, CMA CGM, HMM, Mediterranean Shipping Co. and Ocean Network Express. Evergreen directors decided in August to set up a joint venture company with PSA just weeks after Singapore experienced unprecedented congestion in May and June, with vessel delays of up to eight to 10 days. At the time, Singapore’s Maritime and Port Authority (MPA) said the problems were the culmination of months of disruption as carriers curtailed or blanked services and discharged cargo in Singapore as vessels diverted around southern Africa to avoid the Red Sea. The situation was exacerbated due to strong east-west cargo volumes as shippers consigned cargo early to offset delays. Contact Keith Wallis at keithwallis@hotmail.com .

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