<div class="phx-topic abstract-wrapper">Port users are concerned that if the technology and infrastructure needed to support a zero-emission environment is not built out, the industry’s only recourse will be to cap cargo volumes at Los Angeles and Long Beach.</div>

Port users are concerned that if the technology and infrastructure needed to support a zero-emission environment is not built out, the industry’s only recourse will be to cap cargo volumes at Los Angeles and Long Beach.

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<div class="phx-topic">Shippers, transportation interests and the International Longshore and Warehouse Union (ILWU) are urging the mayors of Los Angeles and Long Beach to lead the effort against the implementation of new regional air emissions rules they say will cap cargo growth at the largest US port complex. In a letter dated Sept. 17 and sent to Los Angeles Mayor Karen Bass and Long Beach Mayor Rex Richardson, some 200 port stakeholders said the ambitious plan by the regional South Coast Air Quality Management District (AQMD) to adopt a so-called Port Independent Source Rule (ISR) would fail to achieve the goal of a zero-emission port environment without first building the electric and hydrogen fuel infrastructure needed to fuel trucks, cargo-handling equipment and vessel operations. “There is broad agreement among stakeholders that it would be more effective and productive to forego a Port ISR and instead focus on an infrastructure and streamlined permitting program to support current and future needs related to zero-emission infrastructure and equipment,” the letter said. Port users are concerned that if the technology and infrastructure needed to support a zero-emission environment is not built out, the industry’s only recourse will be to cap cargo volumes, which would limit the annual number of vessel, truck and rail movements in the Los Angeles-Long Beach port complex and at warehouses throughout Southern California that are served by port traffic. That was echoed by the Pacific Merchant Shipping Association (PMSA), which represents terminal operators and shipping lines on the West Coast. “Without necessary infrastructure, the proposed Port ISR would result in a cap on cargo volumes and ultimately punish ports, marine terminal operators and supply chain workers who have already worked hard to reduce diesel pollution by 90%,” PMSA said in a statement Wednesday. An existing regulatory framework from the US Environmental Protection Agency and California Air Resources Board (CARB) already limits emissions from cargo-handling equipment, trucks, locomotives, vessels and other port users, said Thomas Jelenic, PMSA’s vice president. “We have the regulations in place,” Jelenic told the Journal of Commerce Wednesday. “It doesn’t make sense to duplicate the Rail ISR and existing CARB requirements.” The AQMD board last month approved the Rail ISR and the regulatory agency has said it will focus on the Port ISR in the first quarter of 2025, according to Michele Grubbs, another PMSA vice president. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>. </div>

Shippers, transportation interests and the International Longshore and Warehouse Union (ILWU) are urging the mayors of Los Angeles and Long Beach to lead the effort against the implementation of new regional air emissions rules they say will cap cargo growth at the largest US port complex. In a letter dated Sept. 17 and sent to Los Angeles Mayor Karen Bass and Long Beach Mayor Rex Richardson, some 200 port stakeholders said the ambitious plan by the regional South Coast Air Quality Management District (AQMD) to adopt a so-called Port Independent Source Rule (ISR) would fail to achieve the goal of a zero-emission port environment without first building the electric and hydrogen fuel infrastructure needed to fuel trucks, cargo-handling equipment and vessel operations. “There is broad agreement among stakeholders that it would be more effective and productive to forego a Port ISR and instead focus on an infrastructure and streamlined permitting program to support current and future needs related to zero-emission infrastructure and equipment,” the letter said. Port users are concerned that if the technology and infrastructure needed to support a zero-emission environment is not built out, the industry’s only recourse will be to cap cargo volumes, which would limit the annual number of vessel, truck and rail movements in the Los Angeles-Long Beach port complex and at warehouses throughout Southern California that are served by port traffic. That was echoed by the Pacific Merchant Shipping Association (PMSA), which represents terminal operators and shipping lines on the West Coast. “Without necessary infrastructure, the proposed Port ISR would result in a cap on cargo volumes and ultimately punish ports, marine terminal operators and supply chain workers who have already worked hard to reduce diesel pollution by 90%,” PMSA said in a statement Wednesday. An existing regulatory framework from the US Environmental Protection Agency and California Air Resources Board (CARB) already limits emissions from cargo-handling equipment, trucks, locomotives, vessels and other port users, said Thomas Jelenic, PMSA’s vice president. “We have the regulations in place,” Jelenic told the Journal of Commerce Wednesday. “It doesn’t make sense to duplicate the Rail ISR and existing CARB requirements.” The AQMD board last month approved the Rail ISR and the regulatory agency has said it will focus on the Port ISR in the first quarter of 2025, according to Michele Grubbs, another PMSA vice president. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .

Transport, Trade and Regulation News

Port infrastructure

North American ports

Marine terminals

Port News

LA-LB port stakeholders urge mayors to act against proposed emissions rules

<div class="phx-topic abstract-wrapper">The contingency plans by the ports come as some ocean carriers are cutting off new export bookings ahead of the possible work stoppage and issuing surcharges for cargo en route to ports that may be closed on Oct. 1. </div>

The contingency plans by the ports come as some ocean carriers are cutting off new export bookings ahead of the possible work stoppage and issuing surcharges for cargo en route to ports that may be closed on Oct. 1.

<div class="phx-topic">Some ports along the US East and Gulf coasts are going public with their contingency plans ahead of a planned strike by dockworkers on Oct. 1, including staying open for business on weekends. That comes as some ocean carriers are cutting off new export bookings ahead of the possible work stoppage and issuing surcharges for cargo en route to potentially closed ports. <a href="https://www.joc.com/article/maritime-employers-prep-for-wind-down-of-operations-as-longshore-strike-looms-5728724">The contingency plans</a> come amid the increasing likelihood that <a href="https://www.joc.com/article/port-employers-urge-ila-to-return-to-contract-talks-5723976">the International Longshoremen’s Association (ILA) will not reach an agreement with the United States Maritime Alliance (USMX) for a new master contract covering East and Gulf coast dockworkers</a>. ILA President Harold Daggett has told his members that the union will not agree to an extension once the current contract expires on Sept. 30. The Georgia Ports Authority (GPA) said in a customer advisory Wednesday that shippers should take delivery of cargo before Oct. 1, noting its Garden City Terminal in Savannah will be closed after that in the event of a strike. In addition to opening for the two Saturdays remaining in September, Garden City will open for a full day on Sunday, Sept. 29 for cargo retrieval. The GPA said it will take export containers until Sept. 30, including refrigerated containers. But it said that if a reefer box does not make it onto a ship by that day, “they will not be monitored and maintained if the port is closed due to a work stoppage.” The GPA added that it will not charge terminal demurrage to shippers during a work stoppage. A notice Wednesday from the Port of Houston said its two container terminals plan to open truck gates and work on vessels up until 7 pm on Sept. 30, with the cutoff for export drop-offs an hour earlier. The port said it is evaluating the need for extending regular work hours for the terminals next week, with plans to open Saturday, Sept. 28. “We encourage imports to be picked up as soon as possible, anything in the yard after 7 pm on September 30th, 2024, will be unavailable until the work stoppage ends,” the notice said. Houston said it would waive an import dwell fee for containers. The Port of Virginia said in an operations alert that it will open its two main container terminals and the Pinner’s Point Container Yard, which handles empties and chassis, for the next two Saturdays and the Sunday immediately before a strike. <h2>Cosco, ONE halt US export bookings </h2>Ocean carriers have not been as public about what they plan to do in the event of a strike. The ILA has warned USMX carriers that it will monitor any ships diverted from East and Gulf coast ports. For now, liner operators are also preparing to wind down some operations. Cosco Shipping and Ocean Network Express (ONE) are not accepting new export bookings from inland US destinations, according to several shipper sources familiar with the plans. Hapag-Lloyd notified customers it may speed up vessels and that import discharge will be prioritized once ships berth in the days before a possible strike begins. The carrier said it is also reviewing port rotation changes or which ports to omit in the event of a strike. Along with stopping some cargo bookings, some ocean carriers are levying new charges for handling any cargo that is currently en route to East and Gulf coast ports but may be affected by a port strike. Hapag-Lloyd announced Wednesday a “work disruption surcharge” of $1,000 per TEU that would apply to non-Asia exports headed to the US East and Gulf coasts. The surcharge goes into effect Oct. 18, <a href="https://www.joc.com/article/fmc-to-hold-february-hearing-on-carriers-red-sea-linked-surcharges-5200562">in accordance with the 30-day notice requirement under US shipping law</a>. CMA CGM announced last week that it would implement beginning Oct. 11 a “local port charge” of $1,500 per TEU for cargo destined to East and Gulf coast ports. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>.</div>

Some ports along the US East and Gulf coasts are going public with their contingency plans ahead of a planned strike by dockworkers on Oct. 1, including staying open for business on weekends. That comes as some ocean carriers are cutting off new export bookings ahead of the possible work stoppage and issuing surcharges for cargo en route to potentially closed ports. The contingency plans come amid the increasing likelihood that the International Longshoremen’s Association (ILA) will not reach an agreement with the United States Maritime Alliance (USMX) for a new master contract covering East and Gulf coast dockworkers . ILA President Harold Daggett has told his members that the union will not agree to an extension once the current contract expires on Sept. 30. The Georgia Ports Authority (GPA) said in a customer advisory Wednesday that shippers should take delivery of cargo before Oct. 1, noting its Garden City Terminal in Savannah will be closed after that in the event of a strike. In addition to opening for the two Saturdays remaining in September, Garden City will open for a full day on Sunday, Sept. 29 for cargo retrieval. The GPA said it will take export containers until Sept. 30, including refrigerated containers. But it said that if a reefer box does not make it onto a ship by that day, “they will not be monitored and maintained if the port is closed due to a work stoppage.” The GPA added that it will not charge terminal demurrage to shippers during a work stoppage. A notice Wednesday from the Port of Houston said its two container terminals plan to open truck gates and work on vessels up until 7 pm on Sept. 30, with the cutoff for export drop-offs an hour earlier. The port said it is evaluating the need for extending regular work hours for the terminals next week, with plans to open Saturday, Sept. 28. “We encourage imports to be picked up as soon as possible, anything in the yard after 7 pm on September 30th, 2024, will be unavailable until the work stoppage ends,” the notice said. Houston said it would waive an import dwell fee for containers. The Port of Virginia said in an operations alert that it will open its two main container terminals and the Pinner’s Point Container Yard, which handles empties and chassis, for the next two Saturdays and the Sunday immediately before a strike. Cosco, ONE halt US export bookings Ocean carriers have not been as public about what they plan to do in the event of a strike. The ILA has warned USMX carriers that it will monitor any ships diverted from East and Gulf coast ports. For now, liner operators are also preparing to wind down some operations. Cosco Shipping and Ocean Network Express (ONE) are not accepting new export bookings from inland US destinations, according to several shipper sources familiar with the plans. Hapag-Lloyd notified customers it may speed up vessels and that import discharge will be prioritized once ships berth in the days before a possible strike begins. The carrier said it is also reviewing port rotation changes or which ports to omit in the event of a strike. Along with stopping some cargo bookings, some ocean carriers are levying new charges for handling any cargo that is currently en route to East and Gulf coast ports but may be affected by a port strike. Hapag-Lloyd announced Wednesday a “work disruption surcharge” of $1,000 per TEU that would apply to non-Asia exports headed to the US East and Gulf coasts. The surcharge goes into effect Oct. 18, in accordance with the 30-day notice requirement under US shipping law . CMA CGM announced last week that it would implement beginning Oct. 11 a “local port charge” of $1,500 per TEU for cargo destined to East and Gulf coast ports. Contact Michael Angell at michael.angell@spglobal.com .

Container Shipping News

Container lines

Longshore labor

Some US ports extending gate hours ahead of strike deadline

<div class="phx-topic abstract-wrapper">Higher-than-expected retail sales in stores and online last month helped increase truckload shipments, but excess capacity is keeping rates in a holding pattern. </div>

Higher-than-expected retail sales in stores and online last month helped increase truckload shipments, but excess capacity is keeping rates in a holding pattern.

<div class="phx-topic">US truck and rail freight volumes appear to be increasing slowly, but those gains haven’t fueled an increase in truckload rates, according to new data. The Cass Freight Shipments Index rose 1% sequentially in August after <a href="https://www.joc.com/article/us-truckload-ltl-pricing-both-rise-in-july-along-with-shipments-5703055">increasing 3% in July</a>, Cass said in its monthly report, released Monday. Those gains track increases of 0.1% and 1.1% in total <a href="https://www.census.gov/retail/sales.html">US retail trade and food service</a> sales in August and July, respectively, data from the US Census Bureau showed Tuesday. Retail sales in August were up 2% year over year, according to advance estimates, and e-commerce sales were up 7.8% from August 2023, according to the monthly data. That’s a stronger showing than the Census Bureau expected. On Tuesday, S&amp;P Global Market Intelligence raised its forecast increase in third-quarter consumer spending to a “solid” 3.5%. “We estimate the price index for total retail sales fell 0.1% in August and is down 0.7% from a year ago,” S&amp;P Global, parent company of the Journal of Commerce, said in a statement. In the prior 12-month period that ended in July, the price index for total retail sales was up 1.3% year over year. The change in the index reflects the waning impact of inflation. Consumer price inflation fell to 2.5% in August, a three-year low, although still above the pre-pandemic norm. But the increase in retail and food and beverage purchases hasn’t moved the truckload pricing dial. The Cass Truckload Linehaul Index dropped 0.6% in August from July. That was the fourth straight month-to-month decline for the linehaul index, which tracks long-haul spot and contract rates. The index rose slightly from February through April. On an annualized basis, the linehaul index dropped 3.3% in August and 3.2% in July. Average dry-van truckload spot rates from DAT Freight &amp; Analytics continued to closely track last year’s prices through early September. The US average dry-van rate, excluding fuel surcharges, was up 3% at $1.61 per mile in the week ending Sept. 7. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="0af47842-6d93-4ff1-8e25-30fd8e2687ca"></dynamic-object></div>“Downward pressure on the larger contract market is lessening, but recent slight increases in spot rates are not yet enough to turn contract rates higher,” Cass said in its report. The US producer price index (PPI) for long-haul truckload transportation was almost unchanged from July to August, rising 0.3%. The truckload PPI was flat year over year. <h3>Capacity still plentiful </h3>Despite signs that truckload capacity may be tightening, the market remains soft and capacity is abundant, and the market’s route through late 2024 is uncertain. In what could be a preliminary good sign for freight demand, the US Federal Reserve’s monthly index of industrial production moved higher in August, rising 0.8% following a 0.9% decline in July. The pickup in US manufacturing reflected a 2.1% increase in durable goods production last month led by motor vehicles, offsetting a 0.2% decline in nondurable goods. Industrial freight connected to manufacturing accounts for nearly 70% of US truck shipments, according to Commerce Department surveys. The Federal Reserve is expected to cut interest rates for the first time in four years on Wednesday. Lower interest rates would reduce the cost of capital and potentially spark greater investment and spending on housing and durable goods. The impact on freight demand depends on how deeply the Fed cuts rates over time. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

US truck and rail freight volumes appear to be increasing slowly, but those gains haven’t fueled an increase in truckload rates, according to new data. The Cass Freight Shipments Index rose 1% sequentially in August after increasing 3% in July , Cass said in its monthly report, released Monday. Those gains track increases of 0.1% and 1.1% in total US retail trade and food service sales in August and July, respectively, data from the US Census Bureau showed Tuesday. Retail sales in August were up 2% year over year, according to advance estimates, and e-commerce sales were up 7.8% from August 2023, according to the monthly data. That’s a stronger showing than the Census Bureau expected. On Tuesday, S&P Global Market Intelligence raised its forecast increase in third-quarter consumer spending to a “solid” 3.5%. “We estimate the price index for total retail sales fell 0.1% in August and is down 0.7% from a year ago,” S&P Global, parent company of the Journal of Commerce, said in a statement. In the prior 12-month period that ended in July, the price index for total retail sales was up 1.3% year over year. The change in the index reflects the waning impact of inflation. Consumer price inflation fell to 2.5% in August, a three-year low, although still above the pre-pandemic norm. But the increase in retail and food and beverage purchases hasn’t moved the truckload pricing dial. The Cass Truckload Linehaul Index dropped 0.6% in August from July. That was the fourth straight month-to-month decline for the linehaul index, which tracks long-haul spot and contract rates. The index rose slightly from February through April. On an annualized basis, the linehaul index dropped 3.3% in August and 3.2% in July. Average dry-van truckload spot rates from DAT Freight & Analytics continued to closely track last year’s prices through early September. The US average dry-van rate, excluding fuel surcharges, was up 3% at $1.61 per mile in the week ending Sept. 7. “Downward pressure on the larger contract market is lessening, but recent slight increases in spot rates are not yet enough to turn contract rates higher,” Cass said in its report. The US producer price index (PPI) for long-haul truckload transportation was almost unchanged from July to August, rising 0.3%. The truckload PPI was flat year over year. Capacity still plentiful Despite signs that truckload capacity may be tightening, the market remains soft and capacity is abundant, and the market’s route through late 2024 is uncertain. In what could be a preliminary good sign for freight demand, the US Federal Reserve’s monthly index of industrial production moved higher in August, rising 0.8% following a 0.9% decline in July. The pickup in US manufacturing reflected a 2.1% increase in durable goods production last month led by motor vehicles, offsetting a 0.2% decline in nondurable goods. Industrial freight connected to manufacturing accounts for nearly 70% of US truck shipments, according to Commerce Department surveys. The Federal Reserve is expected to cut interest rates for the first time in four years on Wednesday. Lower interest rates would reduce the cost of capital and potentially spark greater investment and spending on housing and durable goods. The impact on freight demand depends on how deeply the Fed cuts rates over time. Contact William B. Cassidy at bill.cassidy@spglobal.com .

Trucking News

Truckload

Surface

Stronger US retail sales lifting truckload volumes, but not rates

<div class="phx-topic abstract-wrapper">The port, at the confluence of the Rhine and Rhur rivers, is in the industrial heartland of Germany and a key transshipment point for intermodal cargo in Northern Europe.</div>

The port, at the confluence of the Rhine and Rhur rivers, is in the industrial heartland of Germany and a key transshipment point for intermodal cargo in Northern Europe.

<div class="phx-topic">Duisburg Gateway Terminal (DGT) in Germany, Europe’s largest inland container facility, opened for business this week with train traffic to and from China already flowing across its busy railheads.The first phase of the new terminal covers 155,000 square meters, with plans to expand to 235,000 square meters over the next two years. No capacity was provided for the first phase, but in the long term the terminal will have an annual handling capacity of 850,000 TEUs, according to a Duisburg Port statement. “We are further expanding our position as one of the most important logistics hubs in Europe and strengthening our function as the backbone of the industry in North Rhine-Westphalia,” said Markus Bangen, CEO of Duisburg Port, or Duisport.Duisport has a strategic location on the Rhine River with access to Rotterdam and Antwerp, forming the crucial Rhine-Alpine corridor that connects the Mediterranean with Northern Europe and is a European hub for China-Europe rail freight. That attracted investment from PSA International in July 2023, when the Singapore-based terminal operator acquired 22% of DGT and is now using the inland port stake to expand its reach deeper into Europe.DGT is the 10th container terminal in the port and is built on the site of a former coal terminal. The new container handling facility is designed to be climate-neutral and will generate its own power through a sustainable energy system that combines renewable energies, energy storage and various hydrogen technologies.“An intelligent local energy network links the various energy systems and storage units to supply consumers at the terminal, including shore power, charging points and crane systems,” Duisport noted in the statement. “In addition, a future supply for neighboring districts is also being considered, in theory.”When fully operational, DGT will be able to handle 850,000 TEUs per year across its six cranes and 12 rail tracks and accommodate up to 20 trains, 400 trucks and six ships daily.<h3>Key transshipment point</h3>Duisport is a key transshipment point for ships and barges from deep-sea hubs such as Antwerp and Rotterdam, as well as for cargo transported by truck and rail. Before Russia invaded Ukraine in February 2022, Duisport was one of the main arrival and departure points for rail freight moving via the so-called northern corridor, the conduit that moves through Russia that handled 95% of all rail traffic between China and Europe.Rail freight from China declined significantly as international sanctions on Russia were imposed and sidelined the northern corridor. But following the Red Sea attacks on commercial shipping last year, the volume has been growing steadily on the northern route <a href="https://www.joc.com/article/bottlenecks-build-as-china-europe-rail-network-battles-rising-demand-5192232">with bottlenecks developing at key transit points</a>.Forwarders estimate China-Europe rail volume <a href="https://www.joc.com/article/red-sea-diversions-return-russia-transit-boosts-china-europe-rail-volume_20240415.html">increased by more than 50%</a> year over year in the first quarter of 2024 with strong demand for less-than-containerload freight.“Some European shippers are deciding to resume their use of rail and trucking solutions that transit through Russia,” Kelvin Tang, global cross-border and multimodal leader at forwarder CEVA Logistics told the Journal of Commerce <a href="https://www.joc.com/article/red-sea-diversions-return-to-russia-transit-boosts-china-europe-rail-volume-5241043">in a recent interview</a>.Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>.</div>

Duisburg Gateway Terminal (DGT) in Germany, Europe’s largest inland container facility, opened for business this week with train traffic to and from China already flowing across its busy railheads. The first phase of the new terminal covers 155,000 square meters, with plans to expand to 235,000 square meters over the next two years. No capacity was provided for the first phase, but in the long term the terminal will have an annual handling capacity of 850,000 TEUs, according to a Duisburg Port statement. “We are further expanding our position as one of the most important logistics hubs in Europe and strengthening our function as the backbone of the industry in North Rhine-Westphalia,” said Markus Bangen, CEO of Duisburg Port, or Duisport. Duisport has a strategic location on the Rhine River with access to Rotterdam and Antwerp, forming the crucial Rhine-Alpine corridor that connects the Mediterranean with Northern Europe and is a European hub for China-Europe rail freight. That attracted investment from PSA International in July 2023, when the Singapore-based terminal operator acquired 22% of DGT and is now using the inland port stake to expand its reach deeper into Europe. DGT is the 10th container terminal in the port and is built on the site of a former coal terminal. The new container handling facility is designed to be climate-neutral and will generate its own power through a sustainable energy system that combines renewable energies, energy storage and various hydrogen technologies. “An intelligent local energy network links the various energy systems and storage units to supply consumers at the terminal, including shore power, charging points and crane systems,” Duisport noted in the statement. “In addition, a future supply for neighboring districts is also being considered, in theory.” When fully operational, DGT will be able to handle 850,000 TEUs per year across its six cranes and 12 rail tracks and accommodate up to 20 trains, 400 trucks and six ships daily. Key transshipment point Duisport is a key transshipment point for ships and barges from deep-sea hubs such as Antwerp and Rotterdam, as well as for cargo transported by truck and rail. Before Russia invaded Ukraine in February 2022, Duisport was one of the main arrival and departure points for rail freight moving via the so-called northern corridor, the conduit that moves through Russia that handled 95% of all rail traffic between China and Europe. Rail freight from China declined significantly as international sanctions on Russia were imposed and sidelined the northern corridor. But following the Red Sea attacks on commercial shipping last year, the volume has been growing steadily on the northern route with bottlenecks developing at key transit points . Forwarders estimate China-Europe rail volume increased by more than 50% year over year in the first quarter of 2024 with strong demand for less-than-containerload freight. “Some European shippers are deciding to resume their use of rail and trucking solutions that transit through Russia,” Kelvin Tang, global cross-border and multimodal leader at forwarder CEVA Logistics told the Journal of Commerce in a recent interview . Contact Greg Knowler at greg.knowler@spglobal.com .

International ports

Maritime

Europe’s largest inland container terminal opens in Germany

<div class="phx-topic abstract-wrapper">The shippers were joined this time by a group of House Republicans, who in a separate letter warned of the “dire impacts” to the US economy from a possible port strike. </div>

The shippers were joined this time by a group of House Republicans, who in a separate letter warned of the “dire impacts” to the US economy from a possible port strike.

<div class="phx-topic">US shippers on Tuesday renewed their call for the Biden administration to directly intervene in stalled contract negotiations between maritime employers and the longshore union representing dockworkers along the East and Gulf coasts, saying the country is on the verge of another supply chain shock should a strike occur on Oct. 1. The shippers were joined this time by a group of House Republicans, who in a separate letter warned of the “dire impacts” to the US economy from a possible port strike. A group of 177 national and state trade associations signed the letter to President Joe Biden, urging his administration to help the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) “<a href="https://www.joc.com/article/ila-halts-talks-over-new-contract-until-maersk-apm-clarify-port-it-projects-5244243">return to the bargaining table to restart stalled negotiations</a>” over a new six-year master contract covering about 45,000 dockworkers. The letter — <a href="https://www.joc.com/article/us-trade-groups-urge-bidens-help-in-restarting-stalled-ila-usmx-talks-5192234">the group’s second in three months</a> — comes as the two sides have not formally met for talks on a master contract since June. “We call upon the administration to immediately work with both parties to resume contract negotiations and ensure there is no disruption to port operations and cargo fluidity if a new contract is not reached by the expiration date,” the letter said. At this point, <a href="https://www.joc.com/article/maritime-employers-prep-for-wind-down-of-operations-as-longshore-strike-looms-5728724">a strike looks inevitable</a> with <a href="https://www.joc.com/article/ila-locals-prepping-for-coordinated-strike-at-us-east-gulf-coast-ports-5721164">the union having received the support of its rank-and-file for a walkout during its wage-scale committee meetings in early September</a>. The ILA issued a statement Tuesday saying its members are “united as never before in their determination to win a new contract.” “A sleeping giant is ready to roar on Tuesday, Oct. 1, 2024,” ILA President Harold Daggett said in the statement. “My members have been preparing for over a year for the possibility of a strike.” The letter from the trade groups reminded the White House of its previous interventions in collective bargaining negotiations, including between UPS and the Teamsters, the Class I railroads and their unions, and <a href="https://www.joc.com/article/maritime-employers-seek-white-house-help-with-west-coast-contract-impasse-5241841">the Pacific Maritime Association (PMA) and the International Longshore and Warehouse Union</a>. Saying the Biden administration helped avoid major supply chain snarls in those situations, the groups said the time is now to do the same for the talks between the ILA and USMX. “It is imperative that the administration engage with the parties to quickly negotiate a new deal or agree to continue negotiations while keeping the ports open and the cargo flowing,” the letter said. The USMX, in response, said in a statement late Tuesday it is “in strong agreement” with the letter sent by the trade groups, but warned it appeared unlikely that talks would resume anytime soon. “We have tremendous respect for the ILA and its members, but it is disappointing that we have reached this point where the ILA is unwilling to reopen dialogue unless all of its demands are met,” the USMX said. “The only way to resolve this impasse is to resume negotiations, which we are willing to do at any time.” <h2>Republicans wade in on port strike </h2>Daggett has made no secret of the fact he wants the White House to stay out of the ILA-USMX talks, <a href="https://www.joc.com/article/ila-looking-for-local-ports-to-bring-in-more-union-foremen-5244993">claiming West Coast dockworkers received a lesser deal from the PMA last year due to the Biden administration’s intervention</a>. The timing of a possible strike is also a political minefield for Biden and Democratic presidential nominee Kamala Harris. While the optics of supply chain chaos along the East and Gulf coasts a month before the election would be terrible for Harris, the White House doesn’t want to alienate union workers across the country by appearing to coerce ILA dockworkers into a deal or forcing them back to the negotiating table via the Taft-Hartley Act. A separate letter signed by 25 House Republications, led by Transportation and Infrastructure Committee Chairman Sam Graves and Maritime Transportation Subcommittee Chairman Daniel Webster, warned that a port strike along the East and Gulf coasts “would result in delays and dire impacts to our supply chains, our economy, and the American consumer.” “Given the devastating economic consequences of a potential strike and the administration’s lack of engagement to date, we urge you to give immediate attention to this matter, to aid in these negotiations, and find a reasonable resolution to these contract disputes,” the Representatives’ letter said. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>.</div>

US shippers on Tuesday renewed their call for the Biden administration to directly intervene in stalled contract negotiations between maritime employers and the longshore union representing dockworkers along the East and Gulf coasts, saying the country is on the verge of another supply chain shock should a strike occur on Oct. 1. The shippers were joined this time by a group of House Republicans, who in a separate letter warned of the “dire impacts” to the US economy from a possible port strike. A group of 177 national and state trade associations signed the letter to President Joe Biden, urging his administration to help the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) “ return to the bargaining table to restart stalled negotiations ” over a new six-year master contract covering about 45,000 dockworkers. The letter — the group’s second in three months — comes as the two sides have not formally met for talks on a master contract since June. “We call upon the administration to immediately work with both parties to resume contract negotiations and ensure there is no disruption to port operations and cargo fluidity if a new contract is not reached by the expiration date,” the letter said. At this point, a strike looks inevitable with the union having received the support of its rank-and-file for a walkout during its wage-scale committee meetings in early September . The ILA issued a statement Tuesday saying its members are “united as never before in their determination to win a new contract.” “A sleeping giant is ready to roar on Tuesday, Oct. 1, 2024,” ILA President Harold Daggett said in the statement. “My members have been preparing for over a year for the possibility of a strike.” The letter from the trade groups reminded the White House of its previous interventions in collective bargaining negotiations, including between UPS and the Teamsters, the Class I railroads and their unions, and the Pacific Maritime Association (PMA) and the International Longshore and Warehouse Union . Saying the Biden administration helped avoid major supply chain snarls in those situations, the groups said the time is now to do the same for the talks between the ILA and USMX. “It is imperative that the administration engage with the parties to quickly negotiate a new deal or agree to continue negotiations while keeping the ports open and the cargo flowing,” the letter said. The USMX, in response, said in a statement late Tuesday it is “in strong agreement” with the letter sent by the trade groups, but warned it appeared unlikely that talks would resume anytime soon. “We have tremendous respect for the ILA and its members, but it is disappointing that we have reached this point where the ILA is unwilling to reopen dialogue unless all of its demands are met,” the USMX said. “The only way to resolve this impasse is to resume negotiations, which we are willing to do at any time.” Republicans wade in on port strike Daggett has made no secret of the fact he wants the White House to stay out of the ILA-USMX talks, claiming West Coast dockworkers received a lesser deal from the PMA last year due to the Biden administration’s intervention . The timing of a possible strike is also a political minefield for Biden and Democratic presidential nominee Kamala Harris. While the optics of supply chain chaos along the East and Gulf coasts a month before the election would be terrible for Harris, the White House doesn’t want to alienate union workers across the country by appearing to coerce ILA dockworkers into a deal or forcing them back to the negotiating table via the Taft-Hartley Act. A separate letter signed by 25 House Republications, led by Transportation and Infrastructure Committee Chairman Sam Graves and Maritime Transportation Subcommittee Chairman Daniel Webster, warned that a port strike along the East and Gulf coasts “would result in delays and dire impacts to our supply chains, our economy, and the American consumer.” “Given the devastating economic consequences of a potential strike and the administration’s lack of engagement to date, we urge you to give immediate attention to this matter, to aid in these negotiations, and find a reasonable resolution to these contract disputes,” the Representatives’ letter said. Contact Michael Angell at michael.angell@spglobal.com .

US shippers again ask White House to intervene in longshore contract talks

<div class="phx-topic abstract-wrapper">CSX and NS might see some more West Coast cargo routed through Chicago to Michigan and Ohio if there is an East Coast port strike, but trucking is likely to be the main beneficiary for cargo owners booking true coast-to-coast hauls. </div>

CSX and NS might see some more West Coast cargo routed through Chicago to Michigan and Ohio if there is an East Coast port strike, but trucking is likely to be the main beneficiary for cargo owners booking true coast-to-coast hauls.

<div class="phx-topic">US railroads are well-prepared if the International Longshoremen’s Association (ILA) strikes on Oct. 1 at ports along the East and Gulf coasts, according to the CEOs of CSX Transportation and Norfolk Southern (NS) Railway. At a Morgan Stanley conference last week, both companies said that because they already manage cargo from West Coast ports exchanged in Chicago and Memphis, they are able to manage disruptions on the East or Gulf coasts. ”There’s not a lot of risk for us over an extended period of time because if things move to the West, they’ve still got to get to the population in the East, so then it’s just a longer haul for us, actually,” CSX CEO Joe Hinrichs said Sept. 12. Much of the cargo arriving at East Coast ports is trucked directly to population centers, Hinrichs said, suggesting that any port closures might boost the West Coast volume needing to be railed to cities in the CSX intermodal network. The recent surge in West Coast import volumes, which has required <a href="https://www.joc.com/article/carriers-to-deploy-extra-loaders-to-los-angeles-long-beach-amid-import-surge-5714861">extra loaders</a>, indicates that cargo owners are already shifting shipments to protect themselves from labor disruption. “We’re somewhat neutral on it [because] we’ve always been largely geared towards moving the West Coast-oriented or originated product,” NS CEO Mark George said at the event on Sept. 13. “We’ve shown the nimbleness to when the product moves to the East Coast, we handle that just fine, too.” <h3>Rising rail dwells in Southern California </h3>A furniture importer who did not want to be identified told the Journal of Commerce that its shipments arriving in late September were booked to the West Coast to avoid potential delays. The cargo is being transloaded to trailers in Southern California and trucked to the company’s East Coast distribution centers. Rail container dwell times have risen at the ports of <a href="https://www.joc.com/article/la-lb-rail-dwells-on-the-rise-as-port-complex-enters-height-of-peak-season-5712900">Los Angeles and Long Beach</a> this summer, and congestion has been a persistent issue for Union Pacific Railroad customers in <a href="https://www.joc.com/article/tacoma-marine-terminals-grappling-with-heavy-import-rail-congestion-5706377">Tacoma</a> this year. “The best way to avoid rail congestion is to bypass inland rail legs altogether — dray off containers, cross-dock into one-way trucking, and send the freight on its way,” Paul Brashier, vice president of global supply chain for ITS Logistics, wrote in a LinkedIn post on Tuesday. According to a Journal of Commerce analysis, demand for true coast-to-coast international intermodal is far less than for domestic cargo. For example, more than 150,000 domestic containers move from Southern California to Atlanta annually versus only 25,000 ocean boxes. And more than 160,000 domestic containers per year travel from Southern California to either New Jersey or Pennsylvania — home to warehousing and population centers — compared with about 5,000 ocean boxes. East Coast ports are the primary feeders because, in general, ocean carriers are less willing to have their containers move from coast to coast. Carriers have more trouble booking exports from Georgia, New Jersey, and Pennsylvania to California when closer options are available on the East or Gulf coasts. Meanwhile, a domestic intermodal provider such as Hub Group, J.B. Hunt Transport Services or Schneider National handles more bi-directional freight. CSX and NS may reallocate railcars from East Coast ports to Chicago to service cargo owners with distribution centers in Michigan and Ohio. More than 225,000 ocean shipments are railed annually from the West Coast to Cincinnati, Cleveland, Columbus, and Detroit versus only 35,000 domestic containers, according to the Journal of Commerce analysis. To the extent cargo owners with distribution centers in Michigan or Ohio need their international cargo, CSX and NS would be critical on that final leg from Chicago. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>.</div>

US railroads are well-prepared if the International Longshoremen’s Association (ILA) strikes on Oct. 1 at ports along the East and Gulf coasts, according to the CEOs of CSX Transportation and Norfolk Southern (NS) Railway. At a Morgan Stanley conference last week, both companies said that because they already manage cargo from West Coast ports exchanged in Chicago and Memphis, they are able to manage disruptions on the East or Gulf coasts. ”There’s not a lot of risk for us over an extended period of time because if things move to the West, they’ve still got to get to the population in the East, so then it’s just a longer haul for us, actually,” CSX CEO Joe Hinrichs said Sept. 12. Much of the cargo arriving at East Coast ports is trucked directly to population centers, Hinrichs said, suggesting that any port closures might boost the West Coast volume needing to be railed to cities in the CSX intermodal network. The recent surge in West Coast import volumes, which has required extra loaders , indicates that cargo owners are already shifting shipments to protect themselves from labor disruption. “We’re somewhat neutral on it [because] we’ve always been largely geared towards moving the West Coast-oriented or originated product,” NS CEO Mark George said at the event on Sept. 13. “We’ve shown the nimbleness to when the product moves to the East Coast, we handle that just fine, too.” Rising rail dwells in Southern California A furniture importer who did not want to be identified told the Journal of Commerce that its shipments arriving in late September were booked to the West Coast to avoid potential delays. The cargo is being transloaded to trailers in Southern California and trucked to the company’s East Coast distribution centers. Rail container dwell times have risen at the ports of Los Angeles and Long Beach this summer, and congestion has been a persistent issue for Union Pacific Railroad customers in Tacoma this year. “The best way to avoid rail congestion is to bypass inland rail legs altogether — dray off containers, cross-dock into one-way trucking, and send the freight on its way,” Paul Brashier, vice president of global supply chain for ITS Logistics, wrote in a LinkedIn post on Tuesday. According to a Journal of Commerce analysis, demand for true coast-to-coast international intermodal is far less than for domestic cargo. For example, more than 150,000 domestic containers move from Southern California to Atlanta annually versus only 25,000 ocean boxes. And more than 160,000 domestic containers per year travel from Southern California to either New Jersey or Pennsylvania — home to warehousing and population centers — compared with about 5,000 ocean boxes. East Coast ports are the primary feeders because, in general, ocean carriers are less willing to have their containers move from coast to coast. Carriers have more trouble booking exports from Georgia, New Jersey, and Pennsylvania to California when closer options are available on the East or Gulf coasts. Meanwhile, a domestic intermodal provider such as Hub Group, J.B. Hunt Transport Services or Schneider National handles more bi-directional freight. CSX and NS may reallocate railcars from East Coast ports to Chicago to service cargo owners with distribution centers in Michigan and Ohio. More than 225,000 ocean shipments are railed annually from the West Coast to Cincinnati, Cleveland, Columbus, and Detroit versus only 35,000 domestic containers, according to the Journal of Commerce analysis. To the extent cargo owners with distribution centers in Michigan or Ohio need their international cargo, CSX and NS would be critical on that final leg from Chicago. Contact Ari Ashe at ari.ashe@spglobal.com .

North-American rail

Intermodal providers

Railroads say able to handle disruption from possible ILA port strike

<div class="phx-topic abstract-wrapper"> Alone among the modes, the railroads are not able to say “no” to the demands of interior point intermodal (IPI), most recently seen in the surge of imports through the US Pacific Northwest and the congestion that followed, writes intermodal analyst Larry Gross. </div>

Alone among the modes, the railroads are not able to say “no” to the demands of interior point intermodal (IPI), most recently seen in the surge of imports through the US Pacific Northwest and the congestion that followed, writes intermodal analyst Larry Gross.

<div class="phx-topic">Container dwell times are up in the Pacific Northwest (PNW) and the undertone of grumbling regarding the railroads’ inability to meet market demands can be heard. But is it reasonable to expect the railroads to be able to react to such giant swings in the market? There’s no doubt <a href="https://www.joc.com/article/rail-container-dwells-in-seattle-tacoma-still-high-but-relief-in-sight-5721796">that imports continue to run strong</a>. Loaded inbound TEUs arriving in the ports of the United States and Western Canada were up more than 18% in July versus 2023. The fact that we are not seeing similar increases in domestic truck demand suggests that there are some special factors at work driving imports. Most likely we are seeing the compound effect of strong retail sales (much more important for imports than for trucking in general) magnified by the desire of importers to get their goods in place earlier than normal. This is a sensible reaction to congestion concerns, the potential US East Coast port strike at the end of September, and the looming threat of big tariff increases, depending on the results of the presidential election. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="77c5d7bd-d3ce-4657-bd57-1af4e55919d8"></dynamic-object></div>But that’s not all, because the share of that import surge that is arriving in the PNW saw a huge spike in June, rising to 5.3% of all inbound loaded TEUs versus an average share over the past 12 months of 4.3%. It has since settled back to average in July but that big bump is still working its way through the system. <h3>Driving the shift </h3>There are good reasons why importers turned to the PNW as a preferred option for freight out of Asia bound for the North American interior. Neighboring Western Canadian ports, normally a sizeable player for freight bound for the US Midwest, were hampered by the prospect of a rail strike on both Canadian National Railway and Canadian Pacific Kansas City (CPKC). While the situation <a href="https://www.joc.com/article/canadian-rail-workers-back-on-job-after-failed-challenge-to-binding-arbitration-5712234">has recently been settled by government intervention</a> (at least for the moment, pending the resolution of legal challenges to the arbitration requirement by the union), from a routing perspective, the next month or two are already baked in. Importers have made their decisions, and the freight is inbound to alternative ports versus Vancouver and Prince Rupert. Things will eventually normalize but not before the bulk of peak season has passed. Southern California is another routing option, but Los Angeles and Long Beach have had their own share of congestion already. What this all means is that there has been a huge upswing in IPI volume moving east out of the Northwest region, as shown by the two charts below. Over the past 6 months, monthly international container originations out of the region have increased by 60%, with July coming in 41% above the prior year. Twenty-thousand more ISO boxes flowed out of the region in July than did in January, roughly 100 more 200-unit trains or about four or five per working day. Based on these numbers, I would say that the railroads have performed quite impressively. <h3>Take it or take it </h3>Alone among the modes, the railroads are not in a position to say ‘no’ to the demands of IPI. No-one seems surprised when the steamship lines roll cargo from one vessel to another during periods of peak demand. Sometimes extra loaders are scheduled, when the ocean carrier deems it to be profitable, but there is certainly not the expectation that the liner companies will automatically ramp up their sailing schedule when demand warrants. Similarly, truckers only accept the loads that they have the capacity to handle. This is normal, expected behavior and the BCO response typically is to start working their way down the company’s list of preferred carriers to place the overflow. But that’s not how IPI works for the railroads. They don’t have the opportunity or ability to say no. The cargo arrives in the port and the expectation is that the railroad will forward it inland without delay, no matter how much volatility or variation in demand. If there is some good news in all this, it’s that it appears that the pressure may be easing. TEUs arriving in PNW ports dropped over 15% from June to July. This has yet to be reflected in the IPI originations but likely we will see some relief when the August figures come out. Further, to the extent that a good chunk of this surge represents up-streamed volume, we should see a more rapid fall-off in demand in the coming months than the normal seasonal drop. Contact Larry Gross at <a href="mailto:lgross@iintermodalindepth.com">lgross@intermodalindepth.com</a>. </div>

Container dwell times are up in the Pacific Northwest (PNW) and the undertone of grumbling regarding the railroads’ inability to meet market demands can be heard. But is it reasonable to expect the railroads to be able to react to such giant swings in the market? There’s no doubt that imports continue to run strong . Loaded inbound TEUs arriving in the ports of the United States and Western Canada were up more than 18% in July versus 2023. The fact that we are not seeing similar increases in domestic truck demand suggests that there are some special factors at work driving imports. Most likely we are seeing the compound effect of strong retail sales (much more important for imports than for trucking in general) magnified by the desire of importers to get their goods in place earlier than normal. This is a sensible reaction to congestion concerns, the potential US East Coast port strike at the end of September, and the looming threat of big tariff increases, depending on the results of the presidential election. But that’s not all, because the share of that import surge that is arriving in the PNW saw a huge spike in June, rising to 5.3% of all inbound loaded TEUs versus an average share over the past 12 months of 4.3%. It has since settled back to average in July but that big bump is still working its way through the system. Driving the shift There are good reasons why importers turned to the PNW as a preferred option for freight out of Asia bound for the North American interior. Neighboring Western Canadian ports, normally a sizeable player for freight bound for the US Midwest, were hampered by the prospect of a rail strike on both Canadian National Railway and Canadian Pacific Kansas City (CPKC). While the situation has recently been settled by government intervention (at least for the moment, pending the resolution of legal challenges to the arbitration requirement by the union), from a routing perspective, the next month or two are already baked in. Importers have made their decisions, and the freight is inbound to alternative ports versus Vancouver and Prince Rupert. Things will eventually normalize but not before the bulk of peak season has passed. Southern California is another routing option, but Los Angeles and Long Beach have had their own share of congestion already. What this all means is that there has been a huge upswing in IPI volume moving east out of the Northwest region, as shown by the two charts below. Over the past 6 months, monthly international container originations out of the region have increased by 60%, with July coming in 41% above the prior year. Twenty-thousand more ISO boxes flowed out of the region in July than did in January, roughly 100 more 200-unit trains or about four or five per working day. Based on these numbers, I would say that the railroads have performed quite impressively. Take it or take it Alone among the modes, the railroads are not in a position to say ‘no’ to the demands of IPI. No-one seems surprised when the steamship lines roll cargo from one vessel to another during periods of peak demand. Sometimes extra loaders are scheduled, when the ocean carrier deems it to be profitable, but there is certainly not the expectation that the liner companies will automatically ramp up their sailing schedule when demand warrants. Similarly, truckers only accept the loads that they have the capacity to handle. This is normal, expected behavior and the BCO response typically is to start working their way down the company’s list of preferred carriers to place the overflow. But that’s not how IPI works for the railroads. They don’t have the opportunity or ability to say no. The cargo arrives in the port and the expectation is that the railroad will forward it inland without delay, no matter how much volatility or variation in demand. If there is some good news in all this, it’s that it appears that the pressure may be easing. TEUs arriving in PNW ports dropped over 15% from June to July. This has yet to be reflected in the IPI originations but likely we will see some relief when the August figures come out. Further, to the extent that a good chunk of this surge represents up-streamed volume, we should see a more rapid fall-off in demand in the coming months than the normal seasonal drop. Contact Larry Gross at lgross@intermodalindepth.com .

Rails have limited recourse to PNW import surge: analyst

<div class="phx-topic abstract-wrapper">The holy grail of end-to-end enablement within the container shipping booking process remains elusive, and automation can’t fix that, writes consultant John McCauley.</div>

The holy grail of end-to-end enablement within the container shipping booking process remains elusive, and automation can’t fix that, writes consultant John McCauley.

<div class="phx-topic">Don’t automate broken container processes, fix them first. That adage is as relevant now as ever as container shipping is swept up in the broader global AI fever. The fragmentation of shipping processes upstream and downstream is as equally problematic as the often-differing data standards across all actors, albeit with ongoing efforts to improve the data part through, for example, the Digital Container Shipping Association. That the standard booking process to place and receive confirmation of an order has improved significantly is a testimony to both the simplicity of the process and the advancement of multiple channels of access. (I am deliberately not addressing specialist booking processes for out of gauge or dangerous goods that require specific non-technology enabled processes). However, the booking process for most participants is a small part of wider processes and it is here that the process breaks down and the holy grail of end-to-end enablement remains elusive. Here is a typical example: Supplier A receives an order in its enterprise resource system (ERP) system from Customer B. The order has a unique reference set of characters, as does the automated purchase order generated toward the carrier either directly or through a non-vessel-operating common carrier (NVO). The order is placed with the carrier and acceptance is confirmed. If the ERP is not connected to the aggregated order process technology (e.g. CargoWise, Infor/GTN, et al.) then some form of interface mapping is required. If the data is incomplete or contains errors, then the flow stops, and A cannot confirm the order to B without intervention. If A is not using an aggregated technology and connects to each carrier individually, then the issues multiply. If any of these fail or are unreliable, manual monitoring and/or backup is needed. That this simple part of the process is broken does not include the major issues relating to reliability. Let’s assume the order placed by A is accepted. What percentage likelihood is there that the order will be shipped in full on the vessel nominated and/or on the ETA date scheduled and therefore with a likelihood of arrival at the next stage in the chain within an acceptable margin of on time to 48 hours’ delay? If you are lucky enough to be a last port load to first port arrival, then the transit time can be met but the other components are less likely to be achieved. If not, the reliability likelihood diminishes. The time for loading and discharging a vessel requires firm and reliable dates to plan at origin the production, storage, loading and domestic transportation, while at the receiving end, depending on the product, use receipt, inventory planning, sale, storage or any other number of dependent processes. <h3>Favoring other modes </h3>But here are the bigger points. Firstly, for many beneficial cargo owners (BCOs), movement of goods by container is a small part of their overall transportation volume. Far greater volume is sent by other modes, particularly road, and often this is the mode of transport directly interfacing with end-customers. So, for many BCOs, container shipping is at best a niche activity requiring specialist knowledge, and as with so much of logistics, only ever matters in a crisis such as a lack of space, rolled cargo, stratospheric price hikes, etc. For those that rely on container shipping for the functioning of their supply chain, such as retail customers, the profile is much higher. For me, there are the three main reasons why BCOs choose to favor other modes of transport when investing in a transportation management system (TMS). Firstly, the sheer volume of road transportation and its customer impact leads to this mode receiving top priority for TMS investment and enhancement. Secondly, the broken processes of container shipping (with its low likelihood of ever truly improving) will always play against any container TMS investment. Finally, people understand road, rail and air, but ocean shipping less so. So when we say that road transport “on time in full” is 95% and container shipping globally is about 60%, eyes glaze over as the logistics expert tries to summarize the difference. The typical investment criteria, aside from financial, will be “Does it help my customers, reliably and consistently?” and “Will it lead to efficiency in the end-to-end process?” Regrettably, the answer to both of these is “not enough.” Contact John McCauley at <a href="mailto:john-mccauley1@outlook.com">john-mccauley1@outlook.com</a>. John McCauley, formerly a long-standing vice president of transportation and logistics at Cargill, now consults for shippers. </div>

Don’t automate broken container processes, fix them first. That adage is as relevant now as ever as container shipping is swept up in the broader global AI fever. The fragmentation of shipping processes upstream and downstream is as equally problematic as the often-differing data standards across all actors, albeit with ongoing efforts to improve the data part through, for example, the Digital Container Shipping Association. That the standard booking process to place and receive confirmation of an order has improved significantly is a testimony to both the simplicity of the process and the advancement of multiple channels of access. (I am deliberately not addressing specialist booking processes for out of gauge or dangerous goods that require specific non-technology enabled processes). However, the booking process for most participants is a small part of wider processes and it is here that the process breaks down and the holy grail of end-to-end enablement remains elusive. Here is a typical example: Supplier A receives an order in its enterprise resource system (ERP) system from Customer B. The order has a unique reference set of characters, as does the automated purchase order generated toward the carrier either directly or through a non-vessel-operating common carrier (NVO). The order is placed with the carrier and acceptance is confirmed. If the ERP is not connected to the aggregated order process technology (e.g. CargoWise, Infor/GTN, et al.) then some form of interface mapping is required. If the data is incomplete or contains errors, then the flow stops, and A cannot confirm the order to B without intervention. If A is not using an aggregated technology and connects to each carrier individually, then the issues multiply. If any of these fail or are unreliable, manual monitoring and/or backup is needed. That this simple part of the process is broken does not include the major issues relating to reliability. Let’s assume the order placed by A is accepted. What percentage likelihood is there that the order will be shipped in full on the vessel nominated and/or on the ETA date scheduled and therefore with a likelihood of arrival at the next stage in the chain within an acceptable margin of on time to 48 hours’ delay? If you are lucky enough to be a last port load to first port arrival, then the transit time can be met but the other components are less likely to be achieved. If not, the reliability likelihood diminishes. The time for loading and discharging a vessel requires firm and reliable dates to plan at origin the production, storage, loading and domestic transportation, while at the receiving end, depending on the product, use receipt, inventory planning, sale, storage or any other number of dependent processes. Favoring other modes But here are the bigger points. Firstly, for many beneficial cargo owners (BCOs), movement of goods by container is a small part of their overall transportation volume. Far greater volume is sent by other modes, particularly road, and often this is the mode of transport directly interfacing with end-customers. So, for many BCOs, container shipping is at best a niche activity requiring specialist knowledge, and as with so much of logistics, only ever matters in a crisis such as a lack of space, rolled cargo, stratospheric price hikes, etc. For those that rely on container shipping for the functioning of their supply chain, such as retail customers, the profile is much higher. For me, there are the three main reasons why BCOs choose to favor other modes of transport when investing in a transportation management system (TMS). Firstly, the sheer volume of road transportation and its customer impact leads to this mode receiving top priority for TMS investment and enhancement. Secondly, the broken processes of container shipping (with its low likelihood of ever truly improving) will always play against any container TMS investment. Finally, people understand road, rail and air, but ocean shipping less so. So when we say that road transport “on time in full” is 95% and container shipping globally is about 60%, eyes glaze over as the logistics expert tries to summarize the difference. The typical investment criteria, aside from financial, will be “Does it help my customers, reliably and consistently?” and “Will it lead to efficiency in the end-to-end process?” Regrettably, the answer to both of these is “not enough.” Contact John McCauley at john-mccauley1@outlook.com . John McCauley, formerly a long-standing vice president of transportation and logistics at Cargill, now consults for shippers.

Supply chain

Solutions to the ‘broken processes’ of container shipping remain elusive: analyst

Positive inventory 

Neutral inventory

Negative inventory

Median inventory

The BlueGrace Logistics Confidence Index measures expected industry expansion or contraction based on revenue forecasts, inventory levels, and order volumes ahead of each quarter. Informed by shippers across various industries and reflects all modes of transport, the LCI comprises data related to customers’ expectations and confidence in their organization’s financial growth or stagnation, level of inventory and warehouse capacity. [BlueGrace Logistics](https://mybluegrace.com/report/bluegrace-logistics-confidence-index/)

US shipper inventory sentiment index (BlueGrace Logistics)

Shipper Inventory Sentiment (BlueGrace Logistics)

<div class="phx-topic abstract-wrapper">Mediterranean Shipping Co. is wasting no time utilizing its huge scale, striking major slot sharing agreements on the Asia-Europe with new Premiere alliance members.</div>

Mediterranean Shipping Co. is wasting no time utilizing its huge scale, striking major slot sharing agreements on the Asia-Europe with new Premiere alliance members.

<div class="phx-topic">Mediterranean Shipping Co. is teaming up with Ocean Network Express (ONE), HMM and Yang Ming Marine Transportation on the Asia-Europe trades with a slot exchange covering nine services from February 2025 when current alliance arrangements end, the carriers said Monday. The move comes as ONE and its partners confirmed their Premier Alliance would replace THE Alliance when Hapag-Lloyd leaves to join Maersk in the Gemini Cooperation in February. MSC also confirmed Monday that it would remain largely independent when Maersk departs their 2M tie-up. The Premier Alliance will initially operate for five years.The post-2M arrangement indicates MSC has lost no time using the huge scale it has built up in the past few years to land slot deals with the new Premier Alliance. In the past few years, MSC has ordered more than 2 million TEUs of newbuilding capacity and acquired almost 400 secondhand ships, overtaking Maersk as the world’s largest container shipping company.ONE said the Premier Alliance slot exchanges with MSC will enable the carriers to provide more direct coverage and more frequent sailings in the Asia-North Europe and Mediterranean container trades. The agreement takes effect in February. Both MSC and the Premier Alliance confirmed they would focus on direct port-to-port coverage in their statements Monday, in contrast to <a href="https://www.joc.com/article/geminis-hub-and-spoke-model-aims-to-eliminate-blank-sailings-hapag-lloyd-5241030">the hub-and-spoke service network proposed by Gemini Cooperation</a>. The Premier Alliance carriers said their co-operation will cover mainline services across the major East-West trade lanes: Asia-North America West Coast; Asia-North America East Coast; Asia-Mediterranean; Asia-North Europe; and Asia-Middle East. <h3>‘Full control of network’</h3>Separately, MSC said it will assume “full operational control of its network” that will have 34 loops across five trades covering Asia-North America, Asia-Europe and the Mediterranean and the trans-Atlantic.The carrier said it will offer customers separate routings via the Suez Canal and the Cape of Good Hope. These will provide over 1,900 direct port pairs on the Suez Canal option and over 1,800 on the southern Africa routing.Lars Jensen, CEO of Vespucci Maritime, <a href="https://www.linkedin.com/posts/larsjensenvespuccimaritime_facilitating-east-west-trade-exports-from-activity-7238839531997720576-gAcI?utm_source=share&amp;utm_medium=member_desktop">noted on LinkedIn</a> that MSC’s slot arrangement means that while it has some shared services on the Asia-Europe trade, there are some that are not.“Premier for example has two services, FP1 and FN2, connecting Japan to North Europe, whereas MSC does not. Overall, Premier and MSC share four services on Asia-North Europe. MSC’s Albatross, Britannia and Griffin services are not shared with Premier,” Jensen wrote.On Asia-Mediterranean, MSC has six services, whereas Premier has slots on four. MSC’s stand-alone services are Jade and Phoenix. Premier Alliance has no standalone services from the Far East. On the MD3/Tiger (service), only MSC has port calls in the Middle East on the backhaul. On the MD4/Dragon (service), only MSC has port calls in West Africa, India and Sri Lanka on the backhaul, Jensen explained.The Premier carriers said a comprehensive update for all the services covered in the major trade lanes will be announced separately. The alliance offers a wider array of services and enhanced coverage of more than 80 direct port calls, according to ONE. Contact Keith Wallis at <a href="mailto:keith.wallis@hotmail.com.">keith.wallis@hotmail.com</a>.</div>

Mediterranean Shipping Co. is teaming up with Ocean Network Express (ONE), HMM and Yang Ming Marine Transportation on the Asia-Europe trades with a slot exchange covering nine services from February 2025 when current alliance arrangements end, the carriers said Monday. The move comes as ONE and its partners confirmed their Premier Alliance would replace THE Alliance when Hapag-Lloyd leaves to join Maersk in the Gemini Cooperation in February. MSC also confirmed Monday that it would remain largely independent when Maersk departs their 2M tie-up. The Premier Alliance will initially operate for five years. The post-2M arrangement indicates MSC has lost no time using the huge scale it has built up in the past few years to land slot deals with the new Premier Alliance. In the past few years, MSC has ordered more than 2 million TEUs of newbuilding capacity and acquired almost 400 secondhand ships, overtaking Maersk as the world’s largest container shipping company. ONE said the Premier Alliance slot exchanges with MSC will enable the carriers to provide more direct coverage and more frequent sailings in the Asia-North Europe and Mediterranean container trades. The agreement takes effect in February. Both MSC and the Premier Alliance confirmed they would focus on direct port-to-port coverage in their statements Monday, in contrast to the hub-and-spoke service network proposed by Gemini Cooperation . The Premier Alliance carriers said their co-operation will cover mainline services across the major East-West trade lanes: Asia-North America West Coast; Asia-North America East Coast; Asia-Mediterranean; Asia-North Europe; and Asia-Middle East. ‘Full control of network’ Separately, MSC said it will assume “full operational control of its network” that will have 34 loops across five trades covering Asia-North America, Asia-Europe and the Mediterranean and the trans-Atlantic. The carrier said it will offer customers separate routings via the Suez Canal and the Cape of Good Hope. These will provide over 1,900 direct port pairs on the Suez Canal option and over 1,800 on the southern Africa routing. Lars Jensen, CEO of Vespucci Maritime, noted on LinkedIn that MSC’s slot arrangement means that while it has some shared services on the Asia-Europe trade, there are some that are not. “Premier for example has two services, FP1 and FN2, connecting Japan to North Europe, whereas MSC does not. Overall, Premier and MSC share four services on Asia-North Europe. MSC’s Albatross, Britannia and Griffin services are not shared with Premier,” Jensen wrote. On Asia-Mediterranean, MSC has six services, whereas Premier has slots on four. MSC’s stand-alone services are Jade and Phoenix. Premier Alliance has no standalone services from the Far East. On the MD3/Tiger (service), only MSC has port calls in the Middle East on the backhaul. On the MD4/Dragon (service), only MSC has port calls in West Africa, India and Sri Lanka on the backhaul, Jensen explained. The Premier carriers said a comprehensive update for all the services covered in the major trade lanes will be announced separately. The alliance offers a wider array of services and enhanced coverage of more than 80 direct port calls, according to ONE. Contact Keith Wallis at keith.wallis@hotmail.com .

Trans-Atlantic

Asia-Europe

Trans-Pacific

MSC strikes Asia-Europe slot share with former THEA members

<div class="phx-topic abstract-wrapper">Spot rates from Asia to the US East Coast are dropping faster than in past years as carriers route discretionary shipments to the West Coast to avoid getting caught up in a threatened dockworker strike on the East and Gulf coasts.</div>

Spot rates from Asia to the US East Coast are dropping faster than in past years as carriers route discretionary shipments to the West Coast to avoid getting caught up in a threatened dockworker strike on the East and Gulf coasts.

<div class="phx-topic">A front-loading of shipments ahead of a threatened port strike threat, coupled with intensified rate pressures, is sending Asia container spot rates to the East Coast plunging faster than usual on the trade lane. Container spot rates from Asia to the US East and Gulf coasts fell $2,300 per FEU this week, much faster than in past years, as peak-season shipments on all-water services drop off and retailers, fearing a dockworker strike on the East and Gulf coasts on Oct. 1, shift discretionary cargo to the West Coast. Furthermore, carriers this year are utilizing special or “bullet” rates to compete for cargo in what has become a slowing market from Asia to the East Coast. “It’s the bullet rates that are driving behavior,” a carrier executive speaking anonymously told the Journal of Commerce Monday. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e7a65aab-9aac-4f07-9b74-1793746c01ef"></dynamic-object></div>The East Coast spot rate paid by importers and the freight all kinds (FAK) rate paid by forwarders dropped to $6,200 per FEU from $8,500 last week, according to Platts, a Journal of Commerce sister company within S&amp;P Global. “Now the carriers are willing to wheel and deal,” Jon Monroe, who serves as an advisor to non-vessel-operating common carriers (NVOs), told the Journal of Commerce Monday. Monroe said some carriers, concerned about excess capacity emerging later this year, are approaching certain customers about locking these new rates into service contracts that would run through April 30, 2025. Many of the 2025–26 service contracts in the eastbound trans-Pacific will take effect on May 1 next year. Normally about 60% of the imports in the eastbound trans-Pacific <a href="https://www.joc.com/article/trans-pacific-rate-push-tests-health-of-early-peak-season-5704825">move under lower-cost contract rates</a>, although when space is tight, that percentage can drop as low as 45%. West Coast spot/FAK rates dropped $600 per FEU to $4,800, according to Platts. However, West Coast rates could stabilize or even move higher in the coming weeks as retailers ship holiday merchandise on the shorter trans-Pacific routings to the West Coast and retailers react to growing International Longshoremen’s Association (ILA) strike threats. “West Coast rates definitely could go up depending upon what goes on with the ILA,” Monroe said. In the past two years, East Coast spot rates by mid-September dropped by about $1,000 per FEU from late August, which marks the end of the traditional peak season to the East Coast. In 2021, when the US economy was recovering from COVID, spot rates increased by about $1,000 from late August. <h3>Bullet rates, new capacity, drive rates lower </h3>However, this year carriers have been offering a <a href="https://www.joc.com/article/capacity-boost-on-trans-pacific-pushes-carriers-to-compete-for-cargo-5711329">plethora of special rates</a> — bullet rates, commodity rates, voyage-specific rates and blended rates to secure business in what has become a highly competitive market in the trans-Pacific. “It’s so chaotic. Everyone keeps chasing the lower rates,” a second carrier executive told the Journal of Commerce Friday. Carriers last month signaled their intention to compete fiercely for business this peak season through their bullet rates to the West Coast, and now these special rates are flooding the East Coast trade lanes. “It’s nothing unexpected. We were already seeing signs of carriers not being able to hold the rates. Bullet discounts were already there,” said Christian Sur, executive vice president ocean freight/contract logistics at the NVO Unique Logistics International. Carriers this year launched or reinstated 10 services from Asia to the West Coast and have deployed dozens of “extra-loader” vessels in the trade. Except for smaller importers and NVOs, most shippers in the trans-Pacific have access to special rates that are offered by the large alliance carriers and discounted rates offered by the smaller non-alliance carriers. Although carriers did not enter any new services to the East Coast, retailers front-loaded holiday merchandise in June and July as the threat of an ILA strike intensified. Another NVO, speaking anonymously, said several carriers as of last week had posted bullet rates from Asia to the East Coast of $5,500 to $5,800 per FEU. West Coast bullet rates were in the range of $4,400 to $4,900 per FEU. Retailers forecast that US imports in September will be especially strong, increasing 14% over September 2023. Imports in October are forecast to be up 1.3% year over year, according to the Global Port Tracker released Monday by the National Retail Federation and Hackett Associates. October was the busiest month of 2023. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>.</div>

A front-loading of shipments ahead of a threatened port strike threat, coupled with intensified rate pressures, is sending Asia container spot rates to the East Coast plunging faster than usual on the trade lane. Container spot rates from Asia to the US East and Gulf coasts fell $2,300 per FEU this week, much faster than in past years, as peak-season shipments on all-water services drop off and retailers, fearing a dockworker strike on the East and Gulf coasts on Oct. 1, shift discretionary cargo to the West Coast. Furthermore, carriers this year are utilizing special or “bullet” rates to compete for cargo in what has become a slowing market from Asia to the East Coast. “It’s the bullet rates that are driving behavior,” a carrier executive speaking anonymously told the Journal of Commerce Monday. The East Coast spot rate paid by importers and the freight all kinds (FAK) rate paid by forwarders dropped to $6,200 per FEU from $8,500 last week, according to Platts, a Journal of Commerce sister company within S&P Global. “Now the carriers are willing to wheel and deal,” Jon Monroe, who serves as an advisor to non-vessel-operating common carriers (NVOs), told the Journal of Commerce Monday. Monroe said some carriers, concerned about excess capacity emerging later this year, are approaching certain customers about locking these new rates into service contracts that would run through April 30, 2025. Many of the 2025–26 service contracts in the eastbound trans-Pacific will take effect on May 1 next year. Normally about 60% of the imports in the eastbound trans-Pacific move under lower-cost contract rates , although when space is tight, that percentage can drop as low as 45%. West Coast spot/FAK rates dropped $600 per FEU to $4,800, according to Platts. However, West Coast rates could stabilize or even move higher in the coming weeks as retailers ship holiday merchandise on the shorter trans-Pacific routings to the West Coast and retailers react to growing International Longshoremen’s Association (ILA) strike threats. “West Coast rates definitely could go up depending upon what goes on with the ILA,” Monroe said. In the past two years, East Coast spot rates by mid-September dropped by about $1,000 per FEU from late August, which marks the end of the traditional peak season to the East Coast. In 2021, when the US economy was recovering from COVID, spot rates increased by about $1,000 from late August. Bullet rates, new capacity, drive rates lower However, this year carriers have been offering a plethora of special rates — bullet rates, commodity rates, voyage-specific rates and blended rates to secure business in what has become a highly competitive market in the trans-Pacific. “It’s so chaotic. Everyone keeps chasing the lower rates,” a second carrier executive told the Journal of Commerce Friday. Carriers last month signaled their intention to compete fiercely for business this peak season through their bullet rates to the West Coast, and now these special rates are flooding the East Coast trade lanes. “It’s nothing unexpected. We were already seeing signs of carriers not being able to hold the rates. Bullet discounts were already there,” said Christian Sur, executive vice president ocean freight/contract logistics at the NVO Unique Logistics International. Carriers this year launched or reinstated 10 services from Asia to the West Coast and have deployed dozens of “extra-loader” vessels in the trade. Except for smaller importers and NVOs, most shippers in the trans-Pacific have access to special rates that are offered by the large alliance carriers and discounted rates offered by the smaller non-alliance carriers. Although carriers did not enter any new services to the East Coast, retailers front-loaded holiday merchandise in June and July as the threat of an ILA strike intensified. Another NVO, speaking anonymously, said several carriers as of last week had posted bullet rates from Asia to the East Coast of $5,500 to $5,800 per FEU. West Coast bullet rates were in the range of $4,400 to $4,900 per FEU. Retailers forecast that US imports in September will be especially strong, increasing 14% over September 2023. Imports in October are forecast to be up 1.3% year over year, according to the Global Port Tracker released Monday by the National Retail Federation and Hackett Associates. October was the busiest month of 2023. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .

East Coast spot rates plunge as peak-season imports shift to West Coast

<div class="phx-topic abstract-wrapper">East and Gulf coast maritime employers laid out their terms for signing a new contract with longshore workers, but they warned the ‘signal’ to strike is clear. </div>

East and Gulf coast maritime employers laid out their terms for signing a new contract with longshore workers, but they warned the ‘signal’ to strike is clear.

<div class="phx-topic">Ocean carriers and marine terminal operators are calling on the International Longshoremen’s Association (ILA) to reopen contract talks, saying their latest offer aims to avert a strike across East and Gulf Coast ports. Despite this, maritime employers also signaled pessimism about avoiding a shutdown, as the union pointed to demands above what are on offer. On Friday, the United States Maritime Alliance (USMX), which represents maritime employers across East and Gulf coast ports, said it “remains committed and prepared to resume negotiations with the ILA on a new master contract before the current agreement expires and to avoid a strike” on Oct. 1, 2024. However, the ILA said in a statement Saturday that it turned down the USMX’s entry-level wage offer as inadequate, saying new workers cannot earn a decent living due to the uncertain hours of longshore work. The USMX said that its offer included “industry leading wage increases,” which it did not quantify. However, sources familiar with the talks have said that <a href="https://www.joc.com/article/ila-unmoved-by-latest-industry-leading-wage-offer-from-usmx-5703227">employers are offering a nearly 39% increase over the contract’s six-year term, or $2.50 per hour per year</a>. The ILA is said to be looking for an increase twice as large. In addition to overall wages, the USMX said it would increase entry-level wages, currently $20 per hour, for longshore workers by an unspecified amount. The USMX also pledged to increase retirement contributions and maintain existing healthcare plans. The offer also includes an extension of the current master contract’s language that bars the development of fully automated terminals and equipment and requires consulting the ILA for any implementation of semi-automation at marine terminals. Even while it laid its offer, the USMX said that the union “continues to strongly signal that <a href="https://www.joc.com/article/ila-locals-prepping-for-coordinated-strike-at-us-east-gulf-coast-ports-5721164">it has already made the decision to call a strike</a>.” “We hope the ILA will reopen dialogue and share its current contract demands so we can work together on a new deal,” the USMX said. “Our offer demonstrates a willingness by our members to reach a new deal before the end of this month.” <h2>‘We outright reject’ </h2>Maritime employers “have taken advantage of a low entry wage and a tiered progression system for 30 years,” the ILA said. “We outright reject their position on the new entry wage.” “We are at the beck and call of the ships,” the ILA said. “No ships mean no work. Our rank-and-file members are not on a salary, they work when the ships are docked at berth.” While acknowledging that the USMX offers to increase retirement benefits, the ILA specifically called for an increase in local pension benefits funded through higher container royalties on hours worked and tonnage handled. The union also called for enhanced health coverage, including the maintenance of benefits for members at risk of losing health coverage. The ILA also demanded even stricter language about automation in the new contract, calling for an outright ban on semi-automation as well. The union alleges that <a href="https://www.joc.com/article/ila-halts-talks-over-new-contract-until-maersk-apm-clarify-port-it-projects-5244243">marine terminals have been automating clerical functions and other work processes without notification</a>, violating the intent of the current contract’s workforce protections. “We don’t want any form of semi-automation or full automation,” the ILA said. “We want ironclad language, and we want the intent of that language in writing.” The union also called out terminal operators for the use of in-equipment cameras and other workplace surveillance equipment, saying such equipment is an intrusion on privacy, especially for female longshore workers. “These employers are creating a hostile work environment under the guise of safety, and we won’t stand for it,” the ILA said. Contact Michael Angell at <a href="michael.angell@spglobal.com">michael.angell@spglobal.com</a>.</div>

Ocean carriers and marine terminal operators are calling on the International Longshoremen’s Association (ILA) to reopen contract talks, saying their latest offer aims to avert a strike across East and Gulf Coast ports. Despite this, maritime employers also signaled pessimism about avoiding a shutdown, as the union pointed to demands above what are on offer. On Friday, the United States Maritime Alliance (USMX), which represents maritime employers across East and Gulf coast ports, said it “remains committed and prepared to resume negotiations with the ILA on a new master contract before the current agreement expires and to avoid a strike” on Oct. 1, 2024. However, the ILA said in a statement Saturday that it turned down the USMX’s entry-level wage offer as inadequate, saying new workers cannot earn a decent living due to the uncertain hours of longshore work. The USMX said that its offer included “industry leading wage increases,” which it did not quantify. However, sources familiar with the talks have said that employers are offering a nearly 39% increase over the contract’s six-year term, or $2.50 per hour per year . The ILA is said to be looking for an increase twice as large. In addition to overall wages, the USMX said it would increase entry-level wages, currently $20 per hour, for longshore workers by an unspecified amount. The USMX also pledged to increase retirement contributions and maintain existing healthcare plans. The offer also includes an extension of the current master contract’s language that bars the development of fully automated terminals and equipment and requires consulting the ILA for any implementation of semi-automation at marine terminals. Even while it laid its offer, the USMX said that the union “continues to strongly signal that it has already made the decision to call a strike .” “We hope the ILA will reopen dialogue and share its current contract demands so we can work together on a new deal,” the USMX said. “Our offer demonstrates a willingness by our members to reach a new deal before the end of this month.” ‘We outright reject’ Maritime employers “have taken advantage of a low entry wage and a tiered progression system for 30 years,” the ILA said. “We outright reject their position on the new entry wage.” “We are at the beck and call of the ships,” the ILA said. “No ships mean no work. Our rank-and-file members are not on a salary, they work when the ships are docked at berth.” While acknowledging that the USMX offers to increase retirement benefits, the ILA specifically called for an increase in local pension benefits funded through higher container royalties on hours worked and tonnage handled. The union also called for enhanced health coverage, including the maintenance of benefits for members at risk of losing health coverage. The ILA also demanded even stricter language about automation in the new contract, calling for an outright ban on semi-automation as well. The union alleges that marine terminals have been automating clerical functions and other work processes without notification , violating the intent of the current contract’s workforce protections. “We don’t want any form of semi-automation or full automation,” the ILA said. “We want ironclad language, and we want the intent of that language in writing.” The union also called out terminal operators for the use of in-equipment cameras and other workplace surveillance equipment, saying such equipment is an intrusion on privacy, especially for female longshore workers. “These employers are creating a hostile work environment under the guise of safety, and we won’t stand for it,” the ILA said. Contact Michael Angell at michael.angell@spglobal.com .

 Port employers urge ILA to return to contract talks

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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">Ports and ocean carriers are now figuring out the playbook for how to handle what would be the first strike to hit the US East and Gulf coasts in nearly half a century. </div>

Ports and ocean carriers are now figuring out the playbook for how to handle what would be the first strike to hit the US East and Gulf coasts in nearly half a century.

<div class="phx-topic">With talks stalled and more labor demands being put on the table, a dockworkers strike at ports along the US East and Gulf coasts looks increasingly inevitable with just two weeks remaining on the current contract between maritime employers and the International Longshoremen’s Association (ILA). And that means ports and ocean carriers are now figuring out the playbook for how to handle what would be the first strike to hit those coasts in nearly half a century. The United States Maritime Alliance (USMX), which represents maritime employers, said in a statement Friday “there has been no further progress” in negotiations with the ILA on a new master contract. The ILA said <a href="https://www.joc.com/article/ila-locals-prepping-for-coordinated-strike-at-us-east-gulf-coast-ports-5721164">its members will not work past the current contract’s Sept. 30 expiration if there is no new agreement in place</a>. More concerningly for employers, the USMX said the ILA has not been willing to meet for negotiations on a new contract. The USMX’s request for further meetings comes about <a href="https://www.joc.com/article/port-employers-urge-ila-to-return-to-contract-talks-5723976">a week after it said that the ILA “continues to strongly signal” that it has made the decision to strike</a>. “We need to sit down and negotiate a new agreement that avoids an unnecessary and costly strike that will be detrimental to both sides,” the USMX said in its statement. The Journal of Commerce spoke to marine terminal operators, port authorities, and employer representatives for this story. According to those sources, no further talks with the ILA have been scheduled. On the master contract, the gap over wages appears widest, with the union seeking a $5 per-hour increase for each year of the contract’s six-year term, while the USMX has proposed a $2.50 per-hour increase. Outside of wage increases for all dockworkers from Maine to Texas, the union has put out that it is seeking in the new contract <a href="https://www.joc.com/article/port-employers-urge-ila-to-return-to-contract-talks-5723976">an array of concessions from ocean carriers and terminal operators</a>, including a higher entry-level wage, increased employer contributions to pension and benefit funds, and stricter terms on the use of automation at marine terminals. For now, it appears that ocean carriers — which will bear most of the cost of a wage increase for longshore workers — <a href="https://www.joc.com/article/ocean-carriers-appear-willing-to-roll-the-dice-on-possible-us-port-strike-5728667">are taking a hard line on conceding to the ILA’s proposed wage increase</a>, much less its other demands. <h2>‘Not going in the right direction’ </h2>As required under federal labor law for collective bargaining agreements that could result in a strike, the ILA and USMX have alerted the US Federal Mediation and Conciliation Service that contract negotiations have stalled. The notification is procedural, however, with no mediator being appointed. Acting US Labor Secretary Julie Su called USMX President Dave Adam about progress on the ILA talks, according to sources familiar with matter, who said Adam characterized the talks as “not going in the right direction [and the] strike threat should be taken seriously.” The USMX declined to comment. The ILA’s executive leadership under President Harold Daggett, who is spearheading the union’s negotiations, drummed up <a href="">support for a strike from ILA’s coast-wide locals during two days of meetings of its wage-scale committees in New Jersey</a> earlier this month. This year’s event stood out from previous wage-scale meetings for not inviting a representative of the USMX to present its position, according to a source, underscoring the gulf between the two sides. Following the wage-scale meeting, delegates returned to their locals to garner support for a strike. According to a source familiar with the union’s bylaws, Daggett will not need a vote to call a strike, allowing one to go ahead quickly. Yet a strike will not mean port-wide closures. The ILA has pledged to keep handling military roll-on, roll-off cargo and cruise ships. Container operations will be affected, although it’s unclear how widespread the disruption will be. During the current contract talks, the ILA has largely targeted <a href="https://www.joc.com/article/ila-halts-talks-over-new-contract-until-maersk-apm-clarify-port-it-projects-5244243">Maersk for automation projects that it has undertaken at its APM Terminal’s facility at the Port of Mobile</a> in Alabama, leading some sources to speculate that its facilities will be specifically targeted for labor actions and slowdowns. However, if the union decides to target one member of the USMX for a labor action, the USMX’s bylaws require all its members to lock out the union, according to a source familiar with the issue, which would force the closure of all container operations. <h2>‘Preparing for a hurricane’ </h2>A port authority along the US East Coast that operates its own terminals has been meeting to discuss how it will handle an orderly wind down of its operations should a strike occur on Oct. 1, according to a source who asked that the agency not be identified. Any non-port operations, such as inland rail ramps, could remain open as they do not use ILA labor. But train service will be curtailed due to port closures. The discussions include the cut-off dates for receiving exports or empty containers and extending gate hours for picking up import boxes up until the strike, the source added. The source said the port authority is in discussions with the local union on how to maintain refrigerated containers at the port on a contingent basis. “It’s like we’re preparing for a hurricane,” the source said. It’s unclear what plans ocean carriers have for coast-wide container terminal shutdowns. CMA CGM’s North American President George Goldman told the Journal of Commerce that the carrier plans to step up empty container evacuations through the West Coast to ensure no backlog of empties sits at East and Gulf coast ports, taking “into account that there’s going to be a potential disruption.” An executive of a marine terminal operator told the Journal of Commerce that there is no contingency plan available other than an orderly shutdown. While shippers have raised questions about waiving terminal demurrage during a port strike, the source said it will be on a customer-by-customer basis. Other operations may also be affected, including container and chassis depots that employ ILA members. The East Coast port authority, which also operates its own chassis pool, said that it plans to waive any fees related to chassis returns affected by a strike. The Metropolitan Marine Maintenance Contractor’s Association, which represents container and chassis depot operators through the Port of New York and New Jersey, has an agreement with the local ILA union representing chassis and container maintenance workers that expires at the end of 2024. However, it’s unclear whether ILA maintenance workers will cross picket lines of ILA dockworkers, a source familiar with the issue said, adding that such an action could amount to a secondary boycott if operations outside of marine terminals were affected. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>.</div>

With talks stalled and more labor demands being put on the table, a dockworkers strike at ports along the US East and Gulf coasts looks increasingly inevitable with just two weeks remaining on the current contract between maritime employers and the International Longshoremen’s Association (ILA). And that means ports and ocean carriers are now figuring out the playbook for how to handle what would be the first strike to hit those coasts in nearly half a century. The United States Maritime Alliance (USMX), which represents maritime employers, said in a statement Friday “there has been no further progress” in negotiations with the ILA on a new master contract. The ILA said its members will not work past the current contract’s Sept. 30 expiration if there is no new agreement in place . More concerningly for employers, the USMX said the ILA has not been willing to meet for negotiations on a new contract. The USMX’s request for further meetings comes about a week after it said that the ILA “continues to strongly signal” that it has made the decision to strike . “We need to sit down and negotiate a new agreement that avoids an unnecessary and costly strike that will be detrimental to both sides,” the USMX said in its statement. The Journal of Commerce spoke to marine terminal operators, port authorities, and employer representatives for this story. According to those sources, no further talks with the ILA have been scheduled. On the master contract, the gap over wages appears widest, with the union seeking a $5 per-hour increase for each year of the contract’s six-year term, while the USMX has proposed a $2.50 per-hour increase. Outside of wage increases for all dockworkers from Maine to Texas, the union has put out that it is seeking in the new contract an array of concessions from ocean carriers and terminal operators , including a higher entry-level wage, increased employer contributions to pension and benefit funds, and stricter terms on the use of automation at marine terminals. For now, it appears that ocean carriers — which will bear most of the cost of a wage increase for longshore workers — are taking a hard line on conceding to the ILA’s proposed wage increase , much less its other demands. ‘Not going in the right direction’ As required under federal labor law for collective bargaining agreements that could result in a strike, the ILA and USMX have alerted the US Federal Mediation and Conciliation Service that contract negotiations have stalled. The notification is procedural, however, with no mediator being appointed. Acting US Labor Secretary Julie Su called USMX President Dave Adam about progress on the ILA talks, according to sources familiar with matter, who said Adam characterized the talks as “not going in the right direction [and the] strike threat should be taken seriously.” The USMX declined to comment. The ILA’s executive leadership under President Harold Daggett, who is spearheading the union’s negotiations, drummed up support for a strike from ILA’s coast-wide locals during two days of meetings of its wage-scale committees in New Jersey earlier this month. This year’s event stood out from previous wage-scale meetings for not inviting a representative of the USMX to present its position, according to a source, underscoring the gulf between the two sides. Following the wage-scale meeting, delegates returned to their locals to garner support for a strike. According to a source familiar with the union’s bylaws, Daggett will not need a vote to call a strike, allowing one to go ahead quickly. Yet a strike will not mean port-wide closures. The ILA has pledged to keep handling military roll-on, roll-off cargo and cruise ships. Container operations will be affected, although it’s unclear how widespread the disruption will be. During the current contract talks, the ILA has largely targeted Maersk for automation projects that it has undertaken at its APM Terminal’s facility at the Port of Mobile in Alabama, leading some sources to speculate that its facilities will be specifically targeted for labor actions and slowdowns. However, if the union decides to target one member of the USMX for a labor action, the USMX’s bylaws require all its members to lock out the union, according to a source familiar with the issue, which would force the closure of all container operations. ‘Preparing for a hurricane’ A port authority along the US East Coast that operates its own terminals has been meeting to discuss how it will handle an orderly wind down of its operations should a strike occur on Oct. 1, according to a source who asked that the agency not be identified. Any non-port operations, such as inland rail ramps, could remain open as they do not use ILA labor. But train service will be curtailed due to port closures. The discussions include the cut-off dates for receiving exports or empty containers and extending gate hours for picking up import boxes up until the strike, the source added. The source said the port authority is in discussions with the local union on how to maintain refrigerated containers at the port on a contingent basis. “It’s like we’re preparing for a hurricane,” the source said. It’s unclear what plans ocean carriers have for coast-wide container terminal shutdowns. CMA CGM’s North American President George Goldman told the Journal of Commerce that the carrier plans to step up empty container evacuations through the West Coast to ensure no backlog of empties sits at East and Gulf coast ports, taking “into account that there’s going to be a potential disruption.” An executive of a marine terminal operator told the Journal of Commerce that there is no contingency plan available other than an orderly shutdown. While shippers have raised questions about waiving terminal demurrage during a port strike, the source said it will be on a customer-by-customer basis. Other operations may also be affected, including container and chassis depots that employ ILA members. The East Coast port authority, which also operates its own chassis pool, said that it plans to waive any fees related to chassis returns affected by a strike. The Metropolitan Marine Maintenance Contractor’s Association, which represents container and chassis depot operators through the Port of New York and New Jersey, has an agreement with the local ILA union representing chassis and container maintenance workers that expires at the end of 2024. However, it’s unclear whether ILA maintenance workers will cross picket lines of ILA dockworkers, a source familiar with the issue said, adding that such an action could amount to a secondary boycott if operations outside of marine terminals were affected. Contact Michael Angell at michael.angell@spglobal.com .

Maritime employers prep for wind-down of operations as longshore strike looms

<div class="phx-topic abstract-wrapper">For shippers fending off one supply chain shock after another, all the while trying to keep inventory and other supply costs in control, what is happening on the carrier front for them is yet another headache, and one not likely curable any time soon.</div>

For shippers fending off one supply chain shock after another, all the while trying to keep inventory and other supply costs in control, what is happening on the carrier front for them is yet another headache, and one not likely curable any time soon.

<div class="phx-topic">It started when the pandemic swiftly <a href="https://www.joc.com/article/post-covid-market-shocks-challenge-long-held-container-shipping-truisms-5192158">disabused shippers of the assumed status quo</a> that supply chains are cost effective and consistent, even if this form of value creation for them came, through no fault of their own, at the expense of value destruction for carriers. It continued when out of the pandemic came not the respite shippers were hoping for, but rather a form of perpetual upheaval such that the next disruptive event is fully expected but the source, severity, onset and duration remains a mystery. Taken together, those factors have recast supply chains as chronically at risk, clashing with corporate leaders’ aversion to investing in resilience — an insurance policy of buffer stock, front-loading and technology that may all be for naught if the next expected shock were to somehow not materialize. But even then, the coast isn’t clear. Newly perilous terrain confronts shippers — not from the dangerous external world of geopolitics, climate, natural disaster or public health, but rather from within the industry itself. Those same carriers who could be reliably counted on to over-order on tonnage and then mercilessly raid each other’s cargo to fill those ships at whatever price have, many believe, emerged out of the pandemic as a different industry where this behavior can longer be taken as a given. Many industry sources were asked in recent months if they believe there are aspects of carrier behavior that are new and permanent, irrespective of the ebbs and flows of the market. Not universally, but overwhelmingly, the answer has been “yes.” <h3>Strained relationships </h3>The big context — but not the whole story — is consolidation and the refinement of alliances as able adjustors of short-term capacity. All those years of below-par profits led to wave after wave of mergers, acquisition and bankruptcy such that the top 10 carriers control over 84% of global capacity, according to maritime analyst Alphaliner. Heavy concentration for sure, but also leaving room for further consolidation that senior industry figures believe is still possible. But for shippers, the implications go beyond the simple reality of consolidation and alliances. Among other things, consolidation means what once was a big piece of business for a carrier has become progressively smaller as the customer’s share of a carrier’s book of business shrinks. A beneficial cargo owner (BCO) shipping 25,000 containers and spending $50 million on ocean freight annually sounds big, but it does not hold the level of importance it once did for the largest carriers. If even some of the largest shippers are less important than they once were, then hopefully the relationship could hang on other factors such as trust, win-win relationships and collaboration. (A pause here while the reader chokes back laughter) The shipper-carrier relationship has always been strained and confrontational at some level. That is freight transportation writ large. But veterans believe that within container shipping, it has sunk to a new low from which it will be hard to recover. How many truly strategic relationships does a carrier have, a senior executive at one of the largest lines was asked over the summer. The answer was none, or virtually none. <h3>Loyalty is rare </h3>With few exceptions, carriers and shippers are not riding the cyclical waves together. The zero-sum game where my gain is your loss and vice versa, is the default. A few large BCOs got stuck so badly during COVID-19 that they saw the light and became converts, but not many. The expectation at this point among carriers is simple and stark: Shippers will take full advantage when the opportunity presents itself. The expectation among shippers is — or should be — that carriers will do the same. Signed, legally vetted contracts are not at the end of the day enforceable, as inexplicable as that may sound. Can the government step in to change that? The answer will be a long time coming. Too many carriers walk away from signed agreements when space gets tight, denying space on ships to contracted customers in favor of spot market business. Too many customers — often directed from the C-suite — walk away from those same signed agreements when a better deal is to be had on the open market. Those carriers who thought they could “invest” in customer relationships during the height of the pandemic by honoring contracts that other carriers didn’t learned the costly lesson that loyalty is rare, a concept embraced by a much smaller segment of the shipping public than what was thought. For shippers fending off one supply chain shock after another, all the while trying to keep inventory and other supply costs in control, what is happening on the carrier front for them is yet another headache, and one not likely curable any time soon. Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>. </div>

It started when the pandemic swiftly disabused shippers of the assumed status quo that supply chains are cost effective and consistent, even if this form of value creation for them came, through no fault of their own, at the expense of value destruction for carriers. It continued when out of the pandemic came not the respite shippers were hoping for, but rather a form of perpetual upheaval such that the next disruptive event is fully expected but the source, severity, onset and duration remains a mystery. Taken together, those factors have recast supply chains as chronically at risk, clashing with corporate leaders’ aversion to investing in resilience — an insurance policy of buffer stock, front-loading and technology that may all be for naught if the next expected shock were to somehow not materialize. But even then, the coast isn’t clear. Newly perilous terrain confronts shippers — not from the dangerous external world of geopolitics, climate, natural disaster or public health, but rather from within the industry itself. Those same carriers who could be reliably counted on to over-order on tonnage and then mercilessly raid each other’s cargo to fill those ships at whatever price have, many believe, emerged out of the pandemic as a different industry where this behavior can longer be taken as a given. Many industry sources were asked in recent months if they believe there are aspects of carrier behavior that are new and permanent, irrespective of the ebbs and flows of the market. Not universally, but overwhelmingly, the answer has been “yes.” Strained relationships The big context — but not the whole story — is consolidation and the refinement of alliances as able adjustors of short-term capacity. All those years of below-par profits led to wave after wave of mergers, acquisition and bankruptcy such that the top 10 carriers control over 84% of global capacity, according to maritime analyst Alphaliner. Heavy concentration for sure, but also leaving room for further consolidation that senior industry figures believe is still possible. But for shippers, the implications go beyond the simple reality of consolidation and alliances. Among other things, consolidation means what once was a big piece of business for a carrier has become progressively smaller as the customer’s share of a carrier’s book of business shrinks. A beneficial cargo owner (BCO) shipping 25,000 containers and spending $50 million on ocean freight annually sounds big, but it does not hold the level of importance it once did for the largest carriers. If even some of the largest shippers are less important than they once were, then hopefully the relationship could hang on other factors such as trust, win-win relationships and collaboration. (A pause here while the reader chokes back laughter) The shipper-carrier relationship has always been strained and confrontational at some level. That is freight transportation writ large. But veterans believe that within container shipping, it has sunk to a new low from which it will be hard to recover. How many truly strategic relationships does a carrier have, a senior executive at one of the largest lines was asked over the summer. The answer was none, or virtually none. Loyalty is rare With few exceptions, carriers and shippers are not riding the cyclical waves together. The zero-sum game where my gain is your loss and vice versa, is the default. A few large BCOs got stuck so badly during COVID-19 that they saw the light and became converts, but not many. The expectation at this point among carriers is simple and stark: Shippers will take full advantage when the opportunity presents itself. The expectation among shippers is — or should be — that carriers will do the same. Signed, legally vetted contracts are not at the end of the day enforceable, as inexplicable as that may sound. Can the government step in to change that? The answer will be a long time coming. Too many carriers walk away from signed agreements when space gets tight, denying space on ships to contracted customers in favor of spot market business. Too many customers — often directed from the C-suite — walk away from those same signed agreements when a better deal is to be had on the open market. Those carriers who thought they could “invest” in customer relationships during the height of the pandemic by honoring contracts that other carriers didn’t learned the costly lesson that loyalty is rare, a concept embraced by a much smaller segment of the shipping public than what was thought. For shippers fending off one supply chain shock after another, all the while trying to keep inventory and other supply costs in control, what is happening on the carrier front for them is yet another headache, and one not likely curable any time soon. Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

Tale of woe for ocean container shippers going from bad to worse

<div class="phx-topic abstract-wrapper">As the threat of a US port strike approaches, the Biden administration must walk a particularly precarious line: Don’t upset union voters ahead of the presidential election while protecting the economy and an image of responsible economic stewardship. </div>

As the threat of a US port strike approaches, the Biden administration must walk a particularly precarious line: Don’t upset union voters ahead of the presidential election while protecting the economy and an image of responsible economic stewardship.

<div class="phx-topic">US labor secretaries have been key to breaking deadlocks in longshore labor negotiations, including on the West Coast in 2015 and 2023. But this latest impasse, threatening a strike at East and Gulf coast ports, forces the White House to walk particularly precarious line: Don’t upset union voters ahead of a presidential election while protecting the economy and an image of responsible economic stewardship. The slowing but still expanding US economy — voters’ top election concern — can hardly afford labor disruption impacting $588 billion in annual trade, according to S&amp;P Global Market Intelligence. Yet the White House can’t be seen not respecting the collective bargaining process or intervene before the International Longshoremen’s Association’s (ILA’s) contact expires at midnight on Sept. 30. The ILA, which has yet to endorse a presidential candidate, has pledged to strike Oct 1. if a new contract isn’t reached. The ILA and waterfront employers in past bargaining cycles have been able to reach agreement on a new contract or an extension before the deadline, with no strike since 1977. This <a href="https://www.joc.com/article/little-cause-for-optimism-as-clock-ticks-toward-ila-contract-expiration-5721695">time it’s looking less likely that one side will capitulate</a> in the final hour amid the waning peak season. The White House has, until recently, had to pay more attention to West Coast labor negotiations, where the ILA’s counterpart, the International Longshore and Warehouse Union (ILWU), is widely seen as more militant and can do more damage to supply chains from Asia. Unlike the ILWU, which kept working beyond its contract expiration — albeit slower due to tit-for-tat actions with employers — the ILA will not. There has been less outreach from the White House to the ILA and the employer group US Maritime Alliance (USMX) than with their West Coast counterparts during the past two bargaining cycles, according to two people familiar with negotiations. Then-Labor Secretary Marty Walsh began stressing the importance of a West Coast deal early on during visits to the ports of Los Angeles and Long Beach in November 2021, and later the ports of Seattle and Tacoma in April 2022. Commerce Secretary Gina Raimondo and Transportation Secretary Pete Buttigieg were also involved in West Coast talks. Importantly, Walsh’s successor, Julie Su, is credited with pushing both sides to reach a tentative agreement in June 2023. The Biden administration’s role in the West Coast negotiations didn’t go unnoticed by the ILA. President Harold Daggett told locals last November that President Joe Biden forced the ILWU’s hand in accepting a deal. That same month, Daggett met with former president Donald Trump to “hear what he had to say.” <h2>Ratcheting up the pressure </h2>During a longshore negotiating cycle, the While House has generally followed a familiar script in coaxing and then pressuring longshore labor and employers to reach a deal, according to one source involved in past bargaining on behalf of employers. The Labor Department first tells both sides it will be monitoring negotiations. If pressure needs to be ratcheted up, the Labor Department, with possibly their Commerce and Transportation counterparts in tow, calls a meeting with union and employer leaders to stress the importance of uninterrupted cargo flow to the national economy. The increased pressure the White House puts on both sides can give longshore labor negotiators cover to agree to contract elements the rank-and-file might not normally support without federal pressure. If that fails to break a deadlock, the White House can threaten to call leaders from both sides to Washington. Then-Labor Secretary Tom Perez did just that on Feb. 20, 2015, during a previous West Coast bargaining cycle; the ILWU and Pacific Maritime Association agreed to a tentative deal later that day. Federal officials can also put pressure on employers by warning it will call the CEOs of major lines to Washington if a deal isn’t reached. The federal government has not needed to press too hard on past ILA negotiations, nor has there been a suspension of negotiations so close to a presidential election. The nuclear option of invoking the Taft-Hartley Act to bring an immediate end to any strike by the ILA will be weighed against the political harm caused to the Democrats’ courting of union votes, the Retail Industry Leaders Association (RILA) said in a recent statement. Amid a slowing economy with stalled job growth and heightened unemployment, President George W. Bush invoked Taft-Hartley to end an 11-day lockout at West Coast ports in 2002.The Biden administration’s decision will “ultimately hinge on balancing the national economy against union interests,” according to the RILA. Biden, who has prided himself as the most pro-union president in modern times, has shown a willingness to avert transport labor disruption. In late September 2022, he stepped in during the final hours before union rail workers were set to launch a nationwide strike — less than two months before key mid-term elections — and brokered a tentative deal that was eventually approved by rank-and-file. The political stakes are only higher now. Contact Mark Szakonyi at <a href="mailto:mark.szakonyi@spglobal.com">mark.szakonyi@spglobal.com</a>. </div>

US labor secretaries have been key to breaking deadlocks in longshore labor negotiations, including on the West Coast in 2015 and 2023. But this latest impasse, threatening a strike at East and Gulf coast ports, forces the White House to walk particularly precarious line: Don’t upset union voters ahead of a presidential election while protecting the economy and an image of responsible economic stewardship. The slowing but still expanding US economy — voters’ top election concern — can hardly afford labor disruption impacting $588 billion in annual trade, according to S&P Global Market Intelligence. Yet the White House can’t be seen not respecting the collective bargaining process or intervene before the International Longshoremen’s Association’s (ILA’s) contact expires at midnight on Sept. 30. The ILA, which has yet to endorse a presidential candidate, has pledged to strike Oct 1. if a new contract isn’t reached. The ILA and waterfront employers in past bargaining cycles have been able to reach agreement on a new contract or an extension before the deadline, with no strike since 1977. This time it’s looking less likely that one side will capitulate in the final hour amid the waning peak season. The White House has, until recently, had to pay more attention to West Coast labor negotiations, where the ILA’s counterpart, the International Longshore and Warehouse Union (ILWU), is widely seen as more militant and can do more damage to supply chains from Asia. Unlike the ILWU, which kept working beyond its contract expiration — albeit slower due to tit-for-tat actions with employers — the ILA will not. There has been less outreach from the White House to the ILA and the employer group US Maritime Alliance (USMX) than with their West Coast counterparts during the past two bargaining cycles, according to two people familiar with negotiations. Then-Labor Secretary Marty Walsh began stressing the importance of a West Coast deal early on during visits to the ports of Los Angeles and Long Beach in November 2021, and later the ports of Seattle and Tacoma in April 2022. Commerce Secretary Gina Raimondo and Transportation Secretary Pete Buttigieg were also involved in West Coast talks. Importantly, Walsh’s successor, Julie Su, is credited with pushing both sides to reach a tentative agreement in June 2023. The Biden administration’s role in the West Coast negotiations didn’t go unnoticed by the ILA. President Harold Daggett told locals last November that President Joe Biden forced the ILWU’s hand in accepting a deal. That same month, Daggett met with former president Donald Trump to “hear what he had to say.” Ratcheting up the pressure During a longshore negotiating cycle, the While House has generally followed a familiar script in coaxing and then pressuring longshore labor and employers to reach a deal, according to one source involved in past bargaining on behalf of employers. The Labor Department first tells both sides it will be monitoring negotiations. If pressure needs to be ratcheted up, the Labor Department, with possibly their Commerce and Transportation counterparts in tow, calls a meeting with union and employer leaders to stress the importance of uninterrupted cargo flow to the national economy. The increased pressure the White House puts on both sides can give longshore labor negotiators cover to agree to contract elements the rank-and-file might not normally support without federal pressure. If that fails to break a deadlock, the White House can threaten to call leaders from both sides to Washington. Then-Labor Secretary Tom Perez did just that on Feb. 20, 2015, during a previous West Coast bargaining cycle; the ILWU and Pacific Maritime Association agreed to a tentative deal later that day. Federal officials can also put pressure on employers by warning it will call the CEOs of major lines to Washington if a deal isn’t reached. The federal government has not needed to press too hard on past ILA negotiations, nor has there been a suspension of negotiations so close to a presidential election. The nuclear option of invoking the Taft-Hartley Act to bring an immediate end to any strike by the ILA will be weighed against the political harm caused to the Democrats’ courting of union votes, the Retail Industry Leaders Association (RILA) said in a recent statement. Amid a slowing economy with stalled job growth and heightened unemployment, President George W. Bush invoked Taft-Hartley to end an 11-day lockout at West Coast ports in 2002. The Biden administration’s decision will “ultimately hinge on balancing the national economy against union interests,” according to the RILA. Biden, who has prided himself as the most pro-union president in modern times, has shown a willingness to avert transport labor disruption. In late September 2022, he stepped in during the final hours before union rail workers were set to launch a nationwide strike — less than two months before key mid-term elections — and brokered a tentative deal that was eventually approved by rank-and-file. The political stakes are only higher now. Contact Mark Szakonyi at mark.szakonyi@spglobal.com .

Anxious White House weighing options as ILA contract deadline nears

<div class="phx-topic abstract-wrapper">Carriers tell the Journal of Commerce they would prefer to avoid a strike and the lengthy operational upheaval a stoppage would cause along the East and Gulf coasts, but unlike in the past, they feel no urgency to get a deal done, writes Peter Tirschwell.</div>

Carriers tell the Journal of Commerce they would prefer to avoid a strike and the lengthy operational upheaval a stoppage would cause along the East and Gulf coasts, but unlike in the past, they feel no urgency to get a deal done, writes Peter Tirschwell.

<div class="phx-topic">For decades, a simple philosophy dictated how ocean carriers approached contract negotiations with US dockworkers: Keep the ports open. Even if it meant making major concessions on wages or benefits, carriers were primarily motivated to avoid disruption on the docks and were willing to pay handsomely to achieve that result. Carriers were “highly motivated to keep the ports open,” said a former management leader. <a href="https://www.joc.com/article/anxious-white-house-weighing-options-as-ila-contract-deadline-nears-5725622">But in the current showdown over labor at East and Gulf coast container ports</a>, that philosophy no longer applies. Yes, ocean carriers tell the Journal of Commerce, they would prefer to avoid a strike and the lengthy operational upheaval and chaos for supply chains that a stoppage would cause. But unlike in the past, they feel no urgency to get a deal done. Carriers appear unwilling — at least this time around — to make major concessions to the International Longshoremen’s Association and its president, Harold Daggett, in the interest of keeping the ports open. Unlike in prior negotiations, there is no urgency or sense of high alarm among the carriers that the burden is on them to solve the problem. Thus, with no talks scheduled and the existing contract expiring in two weeks, it means the odds of a strike are high and growing. Indeed, sources close to the negotiations say they now expect the union will go on strike on Oct. 1. How long it will last and whether the Biden administration will invoke the Taft-Hartley Act to force dockworkers back to work are currently unknown. <h3>Recent negativity in US for carriers </h3>There is no specific reason why the carriers who dominate the board of the United States Maritime Alliance are thinking about these negotiations differently than prior bargaining cycles. Rather, their point of view is colored by recent negative experiences in the US market, from being personally blamed by President Joe Biden and members of Congress for the high rates and lack of capacity experienced by shippers during the pandemic, to the Ocean Shipping Reform Act of 2022 becoming law over their objections, to the Federal Maritime Commission morphing from a traditionally carrier-friendly body into what some now call a consumer protection agency for shippers. Carriers also may find it difficult to imagine how in the event of a strike the Biden administration could find ways to pressure them to accept an agreement with the union they don’t like. There is no known leverage the White House could use to make carriers go higher than the reported 32% wage increase they have offered the union over a new six-year contract, or to get them to accept new rules for automation, as the union suggested it wanted in a Sept. 11 email. Contact Peter Tirschwell at <a href="peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>. </div>

For decades, a simple philosophy dictated how ocean carriers approached contract negotiations with US dockworkers: Keep the ports open. Even if it meant making major concessions on wages or benefits, carriers were primarily motivated to avoid disruption on the docks and were willing to pay handsomely to achieve that result. Carriers were “highly motivated to keep the ports open,” said a former management leader. But in the current showdown over labor at East and Gulf coast container ports , that philosophy no longer applies. Yes, ocean carriers tell the Journal of Commerce, they would prefer to avoid a strike and the lengthy operational upheaval and chaos for supply chains that a stoppage would cause. But unlike in the past, they feel no urgency to get a deal done. Carriers appear unwilling — at least this time around — to make major concessions to the International Longshoremen’s Association and its president, Harold Daggett, in the interest of keeping the ports open. Unlike in prior negotiations, there is no urgency or sense of high alarm among the carriers that the burden is on them to solve the problem. Thus, with no talks scheduled and the existing contract expiring in two weeks, it means the odds of a strike are high and growing. Indeed, sources close to the negotiations say they now expect the union will go on strike on Oct. 1. How long it will last and whether the Biden administration will invoke the Taft-Hartley Act to force dockworkers back to work are currently unknown. Recent negativity in US for carriers There is no specific reason why the carriers who dominate the board of the United States Maritime Alliance are thinking about these negotiations differently than prior bargaining cycles. Rather, their point of view is colored by recent negative experiences in the US market, from being personally blamed by President Joe Biden and members of Congress for the high rates and lack of capacity experienced by shippers during the pandemic, to the Ocean Shipping Reform Act of 2022 becoming law over their objections, to the Federal Maritime Commission morphing from a traditionally carrier-friendly body into what some now call a consumer protection agency for shippers. Carriers also may find it difficult to imagine how in the event of a strike the Biden administration could find ways to pressure them to accept an agreement with the union they don’t like. There is no known leverage the White House could use to make carriers go higher than the reported 32% wage increase they have offered the union over a new six-year contract, or to get them to accept new rules for automation, as the union suggested it wanted in a Sept. 11 email. Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

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