<div class="phx-topic abstract-wrapper">Marine terminals are using the new longshore contract to tackle one of the port’s recurring problems, with the union’s support, as they look to boost efficiency at the biggest port along the US East Coast. </div>

Marine terminals are using the new longshore contract to tackle one of the port’s recurring problems, with the union’s support, as they look to boost efficiency at the biggest port along the US East Coast.

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<div class="phx-topic">Marine terminals at the Port of New York and New Jersey have made the first — albeit very small — cuts of chronically absent employees under terms outlined in the new local longshore contract, one of the main concessions employers won under the deal to boost productivity at the port. John Nardi, president of the Shipping Association of New York and New Jersey, which represents maritime employers at the port, said this week five local longshore workers were fired in January under the new unexcused absentee policy his group negotiated in the local contract with the International Longshoremen’s Association (ILA). The cuts are miniscule in relation to the port’s 4,400 ILA workers. But Nardi said the new policy’s message has had an impact by cutting absenteeism at the port in half since the new contract, something that employers have “fought for years to improve.” “We worked very closely with the ILA to fix some longstanding challenges,” Nardi said. “We had the full support of the ILA at the highest level. We’re not fooling around on this.” The ILA did not respond to a request for comment from the Journal of Commerce. The local contract was officially ratified last year as part of the master contract between the ILA and the United States Maritime Alliance, with the union securing a 62% increase in its top wage tier through 2030. The first year of that wage increase, along with a higher entry-level wage and manning changes, have resulted in a nearly 20% increase in labor costs for marine terminals since March 2025, according to a source familiar with the deal’s economics. <h3>Monday popular for absenteeism </h3>The master contract required all East and Gulf coast ports to draw up absentee policies. But absenteeism is a particular problem for the NY-NJ port relative to other East Coast ports, where longshore workers use hiring halls or telephonic dispatch to take any daily jobs listed as available at any of a port’s various facilities. NY-NJ maritime employers rely on specific longshore workers due to the different layout and equipment at each of its six container terminals. Marine terminals put out orders the day prior for how many longshore workers they need. ILA members at those terminals can then accept the day’s work, or it gets offered to someone else. Absenteeism can be particularly acute on Mondays. An ILA member may have worked at a time-and-half wage rate on the weekend but not show up for a shift at a regular time wage rate on Monday, despite having committed to that day’s work. “You can take a couple of days off for unanticipated reasons, but if you leave yourself in the system and accept a job, you need to take that job,” Nardi said. “You can’t just not show up without repercussions.” Under the new policy, longshore workers are allowed three days of unexcused absences each month. But unexcused absences following a weekend or a holiday count as one-and-half of those days, as do consecutive days of unexcused absences. The disciplinary escalation to firing is shortened under the new contract from seven unexcused absences to four. While longshore workers had a pass until the second unexcused absence for a warning letter, the first unexcused absence now results in a warning letter. Under the old contract, longshore workers were relegated to lower-paying, dispatched jobs at the cruise and roll-on/roll-off terminals for several periods of time before a possible termination. But the new contract only offers one relegation period, followed by a two-week suspension and then firing. The new contract also has a stricter policy around longshore employees who unexpectedly leave work during their shift. <h3>Container move clause </h3>The new, local NY-NJ contract also has requirements that each longshore gang improve productivity by one container move each year, otherwise they lose seniority to another more productive gang. The number of longshore workers hired as standby relief went up under the new contract from three workers for every two jobs to two workers for every one job. However, Nardi said the additional relief has to be cost-neutral for employers and is contingent on productivity goals. Close to a year under the new contract, Nardi said the new absenteeism policy, along with the productivity measures, have resulted in a 7% increase in productivity at the port’s biggest terminals. He added that improved labor productivity aligns with the ILA’s goal of halting port automation. During contract negotiations, ILA President Harold Daggett also <a href="https://www.joc.com/article/ila-usmx-remain-at-odds-over-dockworker-wage-increases-daggett-5215515">appealed to the union’s rank-and-file</a> to improve their productivity due to the potential for job loss from automation. “If [the ILA is] focused on stemming the tide of automation, then people need to show up,” Nardi said. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>.</div>

Marine terminals at the Port of New York and New Jersey have made the first — albeit very small — cuts of chronically absent employees under terms outlined in the new local longshore contract, one of the main concessions employers won under the deal to boost productivity at the port. John Nardi, president of the Shipping Association of New York and New Jersey, which represents maritime employers at the port, said this week five local longshore workers were fired in January under the new unexcused absentee policy his group negotiated in the local contract with the International Longshoremen’s Association (ILA). The cuts are miniscule in relation to the port’s 4,400 ILA workers. But Nardi said the new policy’s message has had an impact by cutting absenteeism at the port in half since the new contract, something that employers have “fought for years to improve.” “We worked very closely with the ILA to fix some longstanding challenges,” Nardi said. “We had the full support of the ILA at the highest level. We’re not fooling around on this.” The ILA did not respond to a request for comment from the Journal of Commerce. The local contract was officially ratified last year as part of the master contract between the ILA and the United States Maritime Alliance, with the union securing a 62% increase in its top wage tier through 2030. The first year of that wage increase, along with a higher entry-level wage and manning changes, have resulted in a nearly 20% increase in labor costs for marine terminals since March 2025, according to a source familiar with the deal’s economics. Monday popular for absenteeism The master contract required all East and Gulf coast ports to draw up absentee policies. But absenteeism is a particular problem for the NY-NJ port relative to other East Coast ports, where longshore workers use hiring halls or telephonic dispatch to take any daily jobs listed as available at any of a port’s various facilities. NY-NJ maritime employers rely on specific longshore workers due to the different layout and equipment at each of its six container terminals. Marine terminals put out orders the day prior for how many longshore workers they need. ILA members at those terminals can then accept the day’s work, or it gets offered to someone else. Absenteeism can be particularly acute on Mondays. An ILA member may have worked at a time-and-half wage rate on the weekend but not show up for a shift at a regular time wage rate on Monday, despite having committed to that day’s work. “You can take a couple of days off for unanticipated reasons, but if you leave yourself in the system and accept a job, you need to take that job,” Nardi said. “You can’t just not show up without repercussions.” Under the new policy, longshore workers are allowed three days of unexcused absences each month. But unexcused absences following a weekend or a holiday count as one-and-half of those days, as do consecutive days of unexcused absences. The disciplinary escalation to firing is shortened under the new contract from seven unexcused absences to four. While longshore workers had a pass until the second unexcused absence for a warning letter, the first unexcused absence now results in a warning letter. Under the old contract, longshore workers were relegated to lower-paying, dispatched jobs at the cruise and roll-on/roll-off terminals for several periods of time before a possible termination. But the new contract only offers one relegation period, followed by a two-week suspension and then firing. The new contract also has a stricter policy around longshore employees who unexpectedly leave work during their shift. Container move clause The new, local NY-NJ contract also has requirements that each longshore gang improve productivity by one container move each year, otherwise they lose seniority to another more productive gang. The number of longshore workers hired as standby relief went up under the new contract from three workers for every two jobs to two workers for every one job. However, Nardi said the additional relief has to be cost-neutral for employers and is contingent on productivity goals. Close to a year under the new contract, Nardi said the new absenteeism policy, along with the productivity measures, have resulted in a 7% increase in productivity at the port’s biggest terminals. He added that improved labor productivity aligns with the ILA’s goal of halting port automation. During contract negotiations, ILA President Harold Daggett also appealed to the union’s rank-and-file to improve their productivity due to the potential for job loss from automation. “If [the ILA is] focused on stemming the tide of automation, then people need to show up,” Nardi said. Contact Michael Angell at michael.angell@spglobal.com .

Port News

North American ports

Longshore labor

Maritime

NY-NJ port’s stricter absentee policy results in first longshore cuts 

<div class="phx-topic abstract-wrapper">The shock in spot market rates after the recent snowstorm and frigid temperatures has rivaled the severe winter weather of February 2021, which kickstarted an entire year of rising rates for shippers.</div>

The shock in spot market rates after the recent snowstorm and frigid temperatures has rivaled the severe winter weather of February 2021, which kickstarted an entire year of rising rates for shippers.

<div class="phx-topic">Spot truckload rates jumped in the days following a snowstorm that disrupted large portions of the US two weeks ago, driving a 40% week-over-week increase in spot market load posts, according to DAT Freight &amp; Analytics. Dry-van spot rates climbed 11 cents after snow and ice blanketed much of the eastern US, the largest seven-day increase in more than three years, DAT said. Spot prices for temperature-controlled capacity jumped 15 cents week over week, as shippers increasingly lean on refrigerated trucks to provide freeze protection during frigid conditions. “This storm stood out because it had an impact that was very similar to February 2021 when key freight routes turned into a skating rink,” Dean Croke, principal analyst for DAT, told the Journal of Commerce. “The only difference right now is that there is much less spot market capacity to absorb the disruption. There is no question in my mind there is less latent capacity, less buffer in the system.” The market reaction to the most recent storm has been more severe than is typically seen following hurricanes. After Hurricane Helene in September 2024, dry-van and temperature-controlled spot market loads increased 17%, while rates rose 4 cents week over week, according to DAT. Following Hurricane Ian in September 2022, dry-van load posts increased 2% and temperature-controlled load posts rose 10% week over week, but rates were largely unchanged. During the February 2021 ice storms, which caused widespread power outages in Texas, spot rates jumped approximately 20 cents during the two weeks afterward and then continued to climb through the remainder of the year. The disruption reset the market with spot rates rising steadily until the freight downturn began in 2022. <h3>Could the 2021 market trajectory repeat in 2026? </h3>Whether the current disruption evolves into a broader shift remains unclear. The Institute for Supply Management (ISM) manufacturing data for January flipped into expansion territory after more than a year of being below the baseline index of 50. Knight-Swift Transportation said <a href="https://www.joc.com/article/shippers-will-see-rates-climb-as-truckload-capacity-tightens-knight-swift-6156695">on its earnings call last month</a> that federal enforcement actions tied to non-domiciled commercial driver’s licenses (CDLs) and English-language proficiency requirements are prompting shippers to rely more heavily on asset-based carriers with company drivers. According to the carrier, that shift could support volume growth and contract rate increases independent of broader economic conditions. Old Dominion Freight Line also said it is <a href="https://www.joc.com/article/odfl-cautiously-optimistic-about-ltl-demand-despite-lackluster-q4-6164259">more optimistic</a> than it was three months ago, citing ISM data and discussions with less-than-truckload shippers as indicators that freight conditions could improve this year. Croke said those signals could point to the end of the freight recession and the emergence of a more carrier-favorable market. “If there is any truth to this non-domiciled CDL and English language proficiency stuff, it’s going to bite us even harder when produce season begins in the spring,” he said. “If we see an absolute roller coaster for reefer [temperature-controlled trucks], then it trickles down to dry-van, and I think the 2021 [storm] comparison becomes more valid for the rest of this year.” <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="13499d91-a088-4824-b1c4-db0f2c552702"></dynamic-object></div>Jason Miller, associate professor of supply chain management at Michigan State University, said he remains skeptical that current conditions will mirror the red-hot carrier market of 2021. “Looking back, 2021 was an unusual year with incredible consumer stimulus,” Miller told the Journal of Commerce. “If housing starts to improve, then there will be an actual recovery in freight volumes taking place and an expansionary pricing cycle sticking.” Permits for new single-family homes were down about 9% year over year on a seasonally adjusted basis as of October, according to the US Census Bureau, reflecting continued weakness in residential construction. Existing home sales were up approximately 1% year over year in December on a seasonally adjusted basis, according to the National Association of Realtors, indicating modest improvement but not a broad housing recovery. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>. </div>

Spot truckload rates jumped in the days following a snowstorm that disrupted large portions of the US two weeks ago, driving a 40% week-over-week increase in spot market load posts, according to DAT Freight & Analytics. Dry-van spot rates climbed 11 cents after snow and ice blanketed much of the eastern US, the largest seven-day increase in more than three years, DAT said. Spot prices for temperature-controlled capacity jumped 15 cents week over week, as shippers increasingly lean on refrigerated trucks to provide freeze protection during frigid conditions. “This storm stood out because it had an impact that was very similar to February 2021 when key freight routes turned into a skating rink,” Dean Croke, principal analyst for DAT, told the Journal of Commerce. “The only difference right now is that there is much less spot market capacity to absorb the disruption. There is no question in my mind there is less latent capacity, less buffer in the system.” The market reaction to the most recent storm has been more severe than is typically seen following hurricanes. After Hurricane Helene in September 2024, dry-van and temperature-controlled spot market loads increased 17%, while rates rose 4 cents week over week, according to DAT. Following Hurricane Ian in September 2022, dry-van load posts increased 2% and temperature-controlled load posts rose 10% week over week, but rates were largely unchanged. During the February 2021 ice storms, which caused widespread power outages in Texas, spot rates jumped approximately 20 cents during the two weeks afterward and then continued to climb through the remainder of the year. The disruption reset the market with spot rates rising steadily until the freight downturn began in 2022. Could the 2021 market trajectory repeat in 2026? Whether the current disruption evolves into a broader shift remains unclear. The Institute for Supply Management (ISM) manufacturing data for January flipped into expansion territory after more than a year of being below the baseline index of 50. Knight-Swift Transportation said on its earnings call last month that federal enforcement actions tied to non-domiciled commercial driver’s licenses (CDLs) and English-language proficiency requirements are prompting shippers to rely more heavily on asset-based carriers with company drivers. According to the carrier, that shift could support volume growth and contract rate increases independent of broader economic conditions. Old Dominion Freight Line also said it is more optimistic than it was three months ago, citing ISM data and discussions with less-than-truckload shippers as indicators that freight conditions could improve this year. Croke said those signals could point to the end of the freight recession and the emergence of a more carrier-favorable market. “If there is any truth to this non-domiciled CDL and English language proficiency stuff, it’s going to bite us even harder when produce season begins in the spring,” he said. “If we see an absolute roller coaster for reefer [temperature-controlled trucks], then it trickles down to dry-van, and I think the 2021 [storm] comparison becomes more valid for the rest of this year.” Jason Miller, associate professor of supply chain management at Michigan State University, said he remains skeptical that current conditions will mirror the red-hot carrier market of 2021. “Looking back, 2021 was an unusual year with incredible consumer stimulus,” Miller told the Journal of Commerce. “If housing starts to improve, then there will be an actual recovery in freight volumes taking place and an expansionary pricing cycle sticking.” Permits for new single-family homes were down about 9% year over year on a seasonally adjusted basis as of October, according to the US Census Bureau, reflecting continued weakness in residential construction. Existing home sales were up approximately 1% year over year in December on a seasonally adjusted basis, according to the National Association of Realtors, indicating modest improvement but not a broad housing recovery. Contact Ari Ashe at ari.ashe@spglobal.com .

Trucking News

Truckload

Surface

Disruptive winter weather in US jolts spot truck rates to big gains

<div class="phx-topic abstract-wrapper">New Delhi has formed a consortium of six state-owned entities to push ahead with a plan to launch a large nationally-owned container carrier, to be known as the Bharat Container Shipping Line. </div>

New Delhi has formed a consortium of six state-owned entities to push ahead with a plan to launch a large nationally-owned container carrier, to be known as the Bharat Container Shipping Line.

<div class="phx-topic">India is making a formidable bid to counter the long-standing dominance of foreign-flagged container vessel fleets over its growing export/import trade, which arguably exposes domestic shippers to the vagaries of global supply/demand dynamics and shifting logistics patterns. New Delhi has formed a consortium of six state-owned entities, led by the national carrier Shipping Corporation of India (SCI), to advance a plan approved last October to launch the operation of a large nationally-owned container carrier that will be known as the Bharat Container Shipping Line (BCSL). The joint venture is primed to inject approximately $6.9 billion as an initial investment into the project, according to current indications. “This reinforces India’s strategic and commercial presence in global maritime trade,” a government statement said. “It strengthens India’s supply chains across maritime and logistics segments, reducing dependence on foreign operators.” Tentative plans call for acquiring 51 vessels in the initial phase and scaling tonnage capacity to over 400 ships in stages. The move was greeted with high optimism by local pro-export stakeholders who had been pushing Indian-flagged shipping capacity efforts, especially after the pandemic-linked supply chain mayhem. “The launch of BCSL is a timely and strategic step towards building India’s own maritime capacity,” Ajay Sahai, director general at the Federation of Indian Exports Organization (FIEO), told the Journal of Commerce. “Indian exporters have long faced challenges of freight volatility and capacity constraints. A domestic shipping line focused on India’s trade needs will enhance reliability, resilience and cost efficiency in our supply chains,” he said. <h3>Cabotage modification ended </h3>While the creation of BCSL is noteworthy and promises to stoke competition, it remains to be seen how the new entrant will be able to nurture network partnerships with large global carriers for long-haul services with end-to-end service reliability in a more consolidated industry. Currently, SCI, India’s only homegrown container line, has little to boast of as a long-haul operator due to a severely depleted box fleet — confined to just two 2008-built midsize vessels — and decades-long growth uncertainty caused by shifting government investment plans. With the exception of an India-Europe consortium deal with Mediterranean Shipping Co., the Indian liner’s trade participation is now largely relegated to short-sea or regional markets. Meanwhile, New Delhi has also signaled other protectionist postures. The 2018 <a href="https://www.joc.com/article/debate-over-india-cabotage-flares-again-5208366">cabotage modification</a> that allowed foreign-flag carriers to move containers intra-country freely was canceled last month because the reform failed to accomplish the policy objectives it had intended to advance, mainly domestic transshipment development and logistics cost improvements. “The withdrawal of cabotage relaxation does pose some challenges,” a Mumbai-based European carrier representative who didn’t want to be identified told the Journal of Commerce. “The [foreign] lines now need to ponder the consequences of altered operational fundamentals.” Contact Bency Mathew at <a href="mailto:bencyvmathew@gmail.com">bencyvmathew@gmail.com</a>. </div>

India is making a formidable bid to counter the long-standing dominance of foreign-flagged container vessel fleets over its growing export/import trade, which arguably exposes domestic shippers to the vagaries of global supply/demand dynamics and shifting logistics patterns. New Delhi has formed a consortium of six state-owned entities, led by the national carrier Shipping Corporation of India (SCI), to advance a plan approved last October to launch the operation of a large nationally-owned container carrier that will be known as the Bharat Container Shipping Line (BCSL). The joint venture is primed to inject approximately $6.9 billion as an initial investment into the project, according to current indications. “This reinforces India’s strategic and commercial presence in global maritime trade,” a government statement said. “It strengthens India’s supply chains across maritime and logistics segments, reducing dependence on foreign operators.” Tentative plans call for acquiring 51 vessels in the initial phase and scaling tonnage capacity to over 400 ships in stages. The move was greeted with high optimism by local pro-export stakeholders who had been pushing Indian-flagged shipping capacity efforts, especially after the pandemic-linked supply chain mayhem. “The launch of BCSL is a timely and strategic step towards building India’s own maritime capacity,” Ajay Sahai, director general at the Federation of Indian Exports Organization (FIEO), told the Journal of Commerce. “Indian exporters have long faced challenges of freight volatility and capacity constraints. A domestic shipping line focused on India’s trade needs will enhance reliability, resilience and cost efficiency in our supply chains,” he said. Cabotage modification ended While the creation of BCSL is noteworthy and promises to stoke competition, it remains to be seen how the new entrant will be able to nurture network partnerships with large global carriers for long-haul services with end-to-end service reliability in a more consolidated industry. Currently, SCI, India’s only homegrown container line, has little to boast of as a long-haul operator due to a severely depleted box fleet — confined to just two 2008-built midsize vessels — and decades-long growth uncertainty caused by shifting government investment plans. With the exception of an India-Europe consortium deal with Mediterranean Shipping Co., the Indian liner’s trade participation is now largely relegated to short-sea or regional markets. Meanwhile, New Delhi has also signaled other protectionist postures. The 2018 cabotage modification that allowed foreign-flag carriers to move containers intra-country freely was canceled last month because the reform failed to accomplish the policy objectives it had intended to advance, mainly domestic transshipment development and logistics cost improvements. “The withdrawal of cabotage relaxation does pose some challenges,” a Mumbai-based European carrier representative who didn’t want to be identified told the Journal of Commerce. “The [foreign] lines now need to ponder the consequences of altered operational fundamentals.” Contact Bency Mathew at bencyvmathew@gmail.com .

Container lines

Container Shipping News

India advances launch of state container line after cabotage rule rewind

<div class="phx-topic abstract-wrapper">The carrier’s solid interim earnings through 2025 ensured a positive full-year result, but red ink made its first appearance in two years on the company’s quarterly balance sheet. </div>

The carrier’s solid interim earnings through 2025 ensured a positive full-year result, but red ink made its first appearance in two years on the company’s quarterly balance sheet.

<div class="phx-topic">The positive impact of the Gemini Cooperation network with partner Hapag-Lloyd that has carried through into 2026 will run into growing overcapacity exacerbated by a return to Suez Canal transits, Maersk CEO Vincent Clerc said Thursday. While Gemini’s rollout one year ago drove up Maersk’s annual volume, delivered significant cost savings across the network, and generated a record 2025 performance in its terminals division, Clerc warned the industry was heading into a downturn driven by excess capacity. “Whether it is through new ships that are coming in or through the return to Suez, we’re going to have an overcapacity of anywhere from 4% to 8% in 2026,” the CEO said during an earnings call that followed the release of Maersk’s fourth-quarter and 2025 financial results. “If we return fast and full to Suez, we will see more pressure on the freight rate because there is a bigger gap that we need to close at once,” Clerc added. “If we have an orderly, slow, gradual return, we might be able to manage it better.” While Maersk’s solid interim earnings through 2025 ensured a positive full-year result, red ink made its first appearance in two years on the carrier’s quarterly balance sheet. The company also announced it will cut 1,000 jobs this year. Maersk for the fourth quarter reported a $153 million loss in its container shipping segment as average rates fell 23% year over year to $2,046 per FEU, offsetting an 8% gain in volume to 3.4 million FEUs. Revenue in the fourth quarter of $13.3 billion was down 8.7% year over year, and earnings before interest, taxes, amortization and depreciation (EBITDA) fell 49% to $1.8 billion. Earnings before interest and taxes (EBIT) were down 94% at $100 million, while the carrier recorded zero net profit in the fourth quarter. For the full year, revenue dropped 2.7% year over year to $54 billion, EBITDA was down 21% at $9.5 billion, EBIT of $3.5 billion fell 46%, and net profit of $2.9 billion was down 53% compared with 2024. <h3>Potential loss flagged for 2026 </h3>The severe impact of overcapacity on the market was illustrated in Maersk’s 2026 profitability forecast. Faced with a return to the Suez and new ship deliveries adding to industry overcapacity, the carrier has flagged a potential $1.5 billion loss in its full-year EBIT earnings for 2026. It would be the first operating loss Maersk has booked in 10 years. The top end of the profit guidance was set at $1 billion, $2.5 billion less than last year’s result. With profitability falling and huge pressure on cost savings, the significant cost benefits achieved by Gemini in 2025 will be welcome. “We have generated over $300 million in benefits in the fourth quarter, and we are now targeting $820 [million] to $1.1 billion in annual benefits,” Clerc told analysts. He said network savings are generated by more efficient use of vessels by sailing at slower speeds over shorter distances between hub ports, transporting more volume with the same capacity, and having shorter dwell times at berth. The lower bunker consumption from these measures translated to a cost saving of $150 million in the fourth quarter alone. Gemini’s increased volume also had a highly positive impact on Maersk’s APM Terminals division, with fourth-quarter revenue of $1.4 billion that was up 13% year over year and volume increasing 8.4%, mainly on the Europe, North America and Latin America trade lanes. <h3>Strong global container demand </h3>The industry might be facing a growing overcapacity problem, but demand in 2026 is expected to grow between 2% and 4%; Maersk expects to grow its volume in line with the market. “As we look ahead to 2026, we see a continuation of strong global container demand translating into a volume growth that we expect to land between 2% and 4% based on various scenarios,” Clerc said. Maersk’s executives are also confident they have the tools in place to handle the imbalance in supply and demand. “We have a strong balance sheet to weather the downturn in ocean, [but] the unknown is how deep and how long will it last,” Maersk CFO Patrick Jany said on the call, highlighting the significant number of old vessels that were not economically viable at current rate levels. Jany said at some point, the unviable capacity would be scrapped, returned to charterers or idled. “I would expect this to happen this year, particularly in scenarios where the Red Sea reopens fully and fast, that will trigger every reaction,” he said. “Our view is not that we’ll have three years of pain, but more that you will have one or two years of pain, and then the capacity will be taken out.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

The positive impact of the Gemini Cooperation network with partner Hapag-Lloyd that has carried through into 2026 will run into growing overcapacity exacerbated by a return to Suez Canal transits, Maersk CEO Vincent Clerc said Thursday. While Gemini’s rollout one year ago drove up Maersk’s annual volume, delivered significant cost savings across the network, and generated a record 2025 performance in its terminals division, Clerc warned the industry was heading into a downturn driven by excess capacity. “Whether it is through new ships that are coming in or through the return to Suez, we’re going to have an overcapacity of anywhere from 4% to 8% in 2026,” the CEO said during an earnings call that followed the release of Maersk’s fourth-quarter and 2025 financial results. “If we return fast and full to Suez, we will see more pressure on the freight rate because there is a bigger gap that we need to close at once,” Clerc added. “If we have an orderly, slow, gradual return, we might be able to manage it better.” While Maersk’s solid interim earnings through 2025 ensured a positive full-year result, red ink made its first appearance in two years on the carrier’s quarterly balance sheet. The company also announced it will cut 1,000 jobs this year. Maersk for the fourth quarter reported a $153 million loss in its container shipping segment as average rates fell 23% year over year to $2,046 per FEU, offsetting an 8% gain in volume to 3.4 million FEUs. Revenue in the fourth quarter of $13.3 billion was down 8.7% year over year, and earnings before interest, taxes, amortization and depreciation (EBITDA) fell 49% to $1.8 billion. Earnings before interest and taxes (EBIT) were down 94% at $100 million, while the carrier recorded zero net profit in the fourth quarter. For the full year, revenue dropped 2.7% year over year to $54 billion, EBITDA was down 21% at $9.5 billion, EBIT of $3.5 billion fell 46%, and net profit of $2.9 billion was down 53% compared with 2024. Potential loss flagged for 2026 The severe impact of overcapacity on the market was illustrated in Maersk’s 2026 profitability forecast. Faced with a return to the Suez and new ship deliveries adding to industry overcapacity, the carrier has flagged a potential $1.5 billion loss in its full-year EBIT earnings for 2026. It would be the first operating loss Maersk has booked in 10 years. The top end of the profit guidance was set at $1 billion, $2.5 billion less than last year’s result. With profitability falling and huge pressure on cost savings, the significant cost benefits achieved by Gemini in 2025 will be welcome. “We have generated over $300 million in benefits in the fourth quarter, and we are now targeting $820 [million] to $1.1 billion in annual benefits,” Clerc told analysts. He said network savings are generated by more efficient use of vessels by sailing at slower speeds over shorter distances between hub ports, transporting more volume with the same capacity, and having shorter dwell times at berth. The lower bunker consumption from these measures translated to a cost saving of $150 million in the fourth quarter alone. Gemini’s increased volume also had a highly positive impact on Maersk’s APM Terminals division, with fourth-quarter revenue of $1.4 billion that was up 13% year over year and volume increasing 8.4%, mainly on the Europe, North America and Latin America trade lanes. Strong global container demand The industry might be facing a growing overcapacity problem, but demand in 2026 is expected to grow between 2% and 4%; Maersk expects to grow its volume in line with the market. “As we look ahead to 2026, we see a continuation of strong global container demand translating into a volume growth that we expect to land between 2% and 4% based on various scenarios,” Clerc said. Maersk’s executives are also confident they have the tools in place to handle the imbalance in supply and demand. “We have a strong balance sheet to weather the downturn in ocean, [but] the unknown is how deep and how long will it last,” Maersk CFO Patrick Jany said on the call, highlighting the significant number of old vessels that were not economically viable at current rate levels. Jany said at some point, the unviable capacity would be scrapped, returned to charterers or idled. “I would expect this to happen this year, particularly in scenarios where the Red Sea reopens fully and fast, that will trigger every reaction,” he said. “Our view is not that we’ll have three years of pain, but more that you will have one or two years of pain, and then the capacity will be taken out.” Contact Greg Knowler at greg.knowler@spglobal.com .

Gemini benefits face looming challenge from oversupplied market: Maersk CEO

<div class="phx-topic abstract-wrapper">Power generation cargoes are on the rise amid surging demand linked to data centers, but cargo generated by oil projects will be on shakier ground in 2026. </div>

Power generation cargoes are on the rise amid surging demand linked to data centers, but cargo generated by oil projects will be on shakier ground in 2026.

<div class="phx-topic">A lumpy project cargo demand outlook through 2027 is creating a confused market, with a jagged split of “haves” and “have nots” when it comes to cargo commitments. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6164834_0.1.jpg"></img></div>According to data from S&amp;P Global Energy, global power demand is surging, impacted significantly by demand from data centers. The demand for power from these new installations has accelerated faster than most grids can accommodate, prompting demand not only for the equipment that will produce the extra power needed, but also for new infrastructure to renew the power grid in some regions, principally North America. Growth in demand for power from data centers is forecast to grow at an average annual rate of 13.5% through 2030 for the US alone, according to S&amp;P Global Energy. Growth in power demand from these installations for mainland China is forecast at a compound annual growth rate of 14.1% and at 10% for Europe. India is starting at a much lower base, but the forecast growth over the next five years is over 25% per year. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e4371a05-8ffc-4840-852c-9d7c41a4fb0c"></dynamic-object></div>Original equipment manufacturers have told the Journal of Commerce their factories are fully booked to produce turbines for the next few years. At the same time, ship operators with deck carriers and heavy-lift capability said they have fixed long-term contracts of affreightment for specialized tonnage. <h3>Mixed cargo demand picture </h3>Conversely, other sectors are not seeing the same levels of booming cargo demand. Crude oil prices are expected to remain at or below $60 per barrel for most of 2026, according to S&amp;P Global Energy, adversely impacting global exploration and production capital spending for 2026 and continuing the negative trend from 2024. Some of the largest decreases in expected spend for 2026 are in Europe (down 9.4%) North America (down 5%), and Asia-Pacific (down 5%). This is expected to lead to a drop in new rigs, both off and onshore, of almost 2% in 2026, according to S&amp;P Global Energy. The oil and gas sector is a significant driver of project cargo demand. Shippers and forwarders operating in this sector have confirmed to the Journal of Commerce that the cargo outlook is not as rosy as it is for the power generation sector. Some oil-related projects saw investors disappear in 2025, with little expectation that they will return in 2026, forwarders said. In the US, economic uncertainty persists, as do concerns over oil supply constraints and uncertainty regarding the latest round of US sanctions. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="a91a35c4-7675-4a37-9ee9-7c352444edc8"></dynamic-object></div>Inventory levels in 2026 are significantly above those seen in 2025 and production growth is forecast to outpace demand growth over the first quarter of 2026. S&amp;P Global Energy assumes that OPEC+ will halt production increases during 2026, but there is no expectation of a reduction in Russian production or exports. This has led S&amp;P Global Energy to forecast an average crude price for 2026 of $50-$60/barrel. Oil majors use an oil price benchmark closer to $70/barrel for investment commitments for exploration and production projects. <h3>MPV fleet supply remains tight </h3>Growth in the multipurpose vessel (MPV) fleet has been focused on the heavy-lift sector for the past few years, catering to those heavier power generation and wind cargoes. That sector of the fleet is expected to grow by an average annual rate of 4.1% through 2030, according to the Journal of Commerce. Newbuilding orders for the heavy-lift sector continue to trickle in and demolition levels remain low. For the MPV fleet, with heavy-lift capability below 250 tons, growth is projected at less than 1% per year over the same period. Demolition levels for this sector are marginally higher, mainly because this fleet is older, but there is also more competition for these cargoes, and rates are expected to remain at or below current levels for some time. In addition to the risk of falling oil and gas project investment, there are more unknowns that could destabilize parts of the MPV sector in 2026. When the Red Sea eventually reopens for all tonnage, there will be a 10% rise in MPV capacity, according to Journal of Commerce projections. Some of this may be mopped up by short-term port congestion upon reopening, but likely not enough to avoid overcapacity. The geopolitical outlook also remains uncertain, and tariffs continue to affect breakbulk and project cargo trade. That said, patchy cargo demand for some sectors of the fleet could work in shippers’ favor as there will be increased competition for the cargoes that are transported, forwarders say. Contact Susan Oatway at <a href="mailto:susan.oatway@spglobal.com">susan.oatway@spglobal.com</a>. </div>

A lumpy project cargo demand outlook through 2027 is creating a confused market, with a jagged split of “haves” and “have nots” when it comes to cargo commitments. According to data from S&P Global Energy, global power demand is surging, impacted significantly by demand from data centers. The demand for power from these new installations has accelerated faster than most grids can accommodate, prompting demand not only for the equipment that will produce the extra power needed, but also for new infrastructure to renew the power grid in some regions, principally North America. Growth in demand for power from data centers is forecast to grow at an average annual rate of 13.5% through 2030 for the US alone, according to S&P Global Energy. Growth in power demand from these installations for mainland China is forecast at a compound annual growth rate of 14.1% and at 10% for Europe. India is starting at a much lower base, but the forecast growth over the next five years is over 25% per year. Original equipment manufacturers have told the Journal of Commerce their factories are fully booked to produce turbines for the next few years. At the same time, ship operators with deck carriers and heavy-lift capability said they have fixed long-term contracts of affreightment for specialized tonnage. Mixed cargo demand picture Conversely, other sectors are not seeing the same levels of booming cargo demand. Crude oil prices are expected to remain at or below $60 per barrel for most of 2026, according to S&P Global Energy, adversely impacting global exploration and production capital spending for 2026 and continuing the negative trend from 2024. Some of the largest decreases in expected spend for 2026 are in Europe (down 9.4%) North America (down 5%), and Asia-Pacific (down 5%). This is expected to lead to a drop in new rigs, both off and onshore, of almost 2% in 2026, according to S&P Global Energy. The oil and gas sector is a significant driver of project cargo demand. Shippers and forwarders operating in this sector have confirmed to the Journal of Commerce that the cargo outlook is not as rosy as it is for the power generation sector. Some oil-related projects saw investors disappear in 2025, with little expectation that they will return in 2026, forwarders said. In the US, economic uncertainty persists, as do concerns over oil supply constraints and uncertainty regarding the latest round of US sanctions. Inventory levels in 2026 are significantly above those seen in 2025 and production growth is forecast to outpace demand growth over the first quarter of 2026. S&P Global Energy assumes that OPEC+ will halt production increases during 2026, but there is no expectation of a reduction in Russian production or exports. This has led S&P Global Energy to forecast an average crude price for 2026 of $50-$60/barrel. Oil majors use an oil price benchmark closer to $70/barrel for investment commitments for exploration and production projects. MPV fleet supply remains tight Growth in the multipurpose vessel (MPV) fleet has been focused on the heavy-lift sector for the past few years, catering to those heavier power generation and wind cargoes. That sector of the fleet is expected to grow by an average annual rate of 4.1% through 2030, according to the Journal of Commerce. Newbuilding orders for the heavy-lift sector continue to trickle in and demolition levels remain low. For the MPV fleet, with heavy-lift capability below 250 tons, growth is projected at less than 1% per year over the same period. Demolition levels for this sector are marginally higher, mainly because this fleet is older, but there is also more competition for these cargoes, and rates are expected to remain at or below current levels for some time. In addition to the risk of falling oil and gas project investment, there are more unknowns that could destabilize parts of the MPV sector in 2026. When the Red Sea eventually reopens for all tonnage, there will be a 10% rise in MPV capacity, according to Journal of Commerce projections. Some of this may be mopped up by short-term port congestion upon reopening, but likely not enough to avoid overcapacity. The geopolitical outlook also remains uncertain, and tariffs continue to affect breakbulk and project cargo trade. That said, patchy cargo demand for some sectors of the fleet could work in shippers’ favor as there will be increased competition for the cargoes that are transported, forwarders say. Contact Susan Oatway at susan.oatway@spglobal.com .

Energy projects

Project cargo

Breakbulk News

‘Lumpy’ project cargo demand to lead to two-tier MPV market

<div class="phx-topic abstract-wrapper">Still, the company’s CFO cautioned that no one should “get out over their skis” from the standpoint of freight recovery expectations.</div>

Still, the company’s CFO cautioned that no one should “get out over their skis” from the standpoint of freight recovery expectations.

<div class="phx-topic">Old Dominion Freight Lines (ODFL), one of the top US less-than-truckload (LTL) carriers, is “cautiously optimistic” about 2026 despite a decline in fourth-quarter revenue and volume, the company said Wednesday. The carrier believes the US economy and freight demand were showing signs of growth late in the fourth quarter, and that those trends continued through January. “We are better positioned than any other carrier to capitalize on an improving economy,” ODFL CEO Marty Freeman said during the company’s fourth-quarter earnings call. “We’ve seen some positive signs that we’ve been really pleased with over the past couple of months that have been developing and then the release this week of the ISM, was certainly very positive to see and maybe is an indication of how things will be hopefully for the rest of the year.” The ISM, or Institute for Supply Chain Management, reported a manufacturing index of 52.6 for January, up from 47.9 in December. Any figure above 50 indicates economic expansion, but the index had failed to do so for 26 consecutive months until last month. A manufacturing index greater than 47.5 over several months generally indicates an expansion of the overall economy, according to the ISM. Industrial freight is more likely to move via LTL, reflecting its higher density and lower cubic footprint. Retail shipments, by contrast, tend to be lighter and more voluminous, often filling a trailer before reaching weight limits. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="a2e61684-cd67-4f71-a46d-bab789387eb5"></dynamic-object></div>ODFL said its shippers have also begun to feel more optimistic. “We’ve had feedback that inventories are generally lower, and we are going to see some inventory replenishment,” Freeman said. “We move everything including the kitchen sink, so you got housing starts improving, you’ll [have] things like faucets and so forth with increased demand there.” ODFL CFO Adam Satterfield added that shippers have said that increased consumer confidence and buying patterns will eventually result in higher overall LTL demand and volume. “We’ve had some really good customer conversations in the sense of what they were anticipating their volumes might look like and the amount of business that they would tender to us,” he said on the call. “Then inventory needs to be replenished and those will all be good things that will find its way onto our trucks.” <h3>Q4 revenue down </h3>Total revenue for ODFL declined 5.7% year over year to nearly $1.3 billion in the fourth quarter. The company said the decrease was primarily due to a 10.7% decline in LTL tons per day. However, revenue per hundredweight — i.e. the revenue per 100 pounds of freight — rose 5.6% year over year, suggesting ODFL raised rates on shippers to grow its margins, sacrificing volume to do so. Satterfield said ODFL is well-positioned to take advantage of the freight recovery when it happens because it has maintained what the company called “cost discipline in a challenging environment.” ODFL closed the year with 21,304 full-time employees, down 5.4% year over year, and it still has excess capacity to absorb a surge in freight. Satterfield said ODFL is flexible enough to handle “significant volume growth” without disruption, which has caused the LTL carrier to win market share in previous freight rebounds. “We’re definitely prepared for the upcycle,” he said. “We’ve got a little over 35% capacity in our service center network. We’re handling a little over 40,000 shipments per day right now and our network is built to handle more like 55,000 and even more.” Still, Satterfield cautioned that no one should “get out over their skis” from the standpoint of recovery expectations. “It remains to be seen if this really is going to lead into that spring surge that we would typically see,” he said. “We certainly feel like the stars are coming into alignment, but we felt that way before, and in particular about February and March of last year. So that’s why we continue to say we’re cautiously optimistic about how things might develop for this year.” Contact Dan Ronan at <a href="mailto:contactdanronan@gmail.com">contactdanronan@gmail.com</a>.</div>

Old Dominion Freight Lines (ODFL), one of the top US less-than-truckload (LTL) carriers, is “cautiously optimistic” about 2026 despite a decline in fourth-quarter revenue and volume, the company said Wednesday. The carrier believes the US economy and freight demand were showing signs of growth late in the fourth quarter, and that those trends continued through January. “We are better positioned than any other carrier to capitalize on an improving economy,” ODFL CEO Marty Freeman said during the company’s fourth-quarter earnings call. “We’ve seen some positive signs that we’ve been really pleased with over the past couple of months that have been developing and then the release this week of the ISM, was certainly very positive to see and maybe is an indication of how things will be hopefully for the rest of the year.” The ISM, or Institute for Supply Chain Management, reported a manufacturing index of 52.6 for January, up from 47.9 in December. Any figure above 50 indicates economic expansion, but the index had failed to do so for 26 consecutive months until last month. A manufacturing index greater than 47.5 over several months generally indicates an expansion of the overall economy, according to the ISM. Industrial freight is more likely to move via LTL, reflecting its higher density and lower cubic footprint. Retail shipments, by contrast, tend to be lighter and more voluminous, often filling a trailer before reaching weight limits. ODFL said its shippers have also begun to feel more optimistic. “We’ve had feedback that inventories are generally lower, and we are going to see some inventory replenishment,” Freeman said. “We move everything including the kitchen sink, so you got housing starts improving, you’ll [have] things like faucets and so forth with increased demand there.” ODFL CFO Adam Satterfield added that shippers have said that increased consumer confidence and buying patterns will eventually result in higher overall LTL demand and volume. “We’ve had some really good customer conversations in the sense of what they were anticipating their volumes might look like and the amount of business that they would tender to us,” he said on the call. “Then inventory needs to be replenished and those will all be good things that will find its way onto our trucks.” Q4 revenue down Total revenue for ODFL declined 5.7% year over year to nearly $1.3 billion in the fourth quarter. The company said the decrease was primarily due to a 10.7% decline in LTL tons per day. However, revenue per hundredweight — i.e. the revenue per 100 pounds of freight — rose 5.6% year over year, suggesting ODFL raised rates on shippers to grow its margins, sacrificing volume to do so. Satterfield said ODFL is well-positioned to take advantage of the freight recovery when it happens because it has maintained what the company called “cost discipline in a challenging environment.” ODFL closed the year with 21,304 full-time employees, down 5.4% year over year, and it still has excess capacity to absorb a surge in freight. Satterfield said ODFL is flexible enough to handle “significant volume growth” without disruption, which has caused the LTL carrier to win market share in previous freight rebounds. “We’re definitely prepared for the upcycle,” he said. “We’ve got a little over 35% capacity in our service center network. We’re handling a little over 40,000 shipments per day right now and our network is built to handle more like 55,000 and even more.” Still, Satterfield cautioned that no one should “get out over their skis” from the standpoint of recovery expectations. “It remains to be seen if this really is going to lead into that spring surge that we would typically see,” he said. “We certainly feel like the stars are coming into alignment, but we felt that way before, and in particular about February and March of last year. So that’s why we continue to say we’re cautiously optimistic about how things might develop for this year.” Contact Dan Ronan at contactdanronan@gmail.com .

ODFL ‘cautiously optimistic’ about LTL demand despite lackluster Q4

<div class="phx-topic abstract-wrapper">The current market situation is favorable for BCOs, and the temptation will be great to drive down base rates because of internal cost pressures, writes John McCauley.</div>

The current market situation is favorable for BCOs, and the temptation will be great to drive down base rates because of internal cost pressures, writes John McCauley.

<div class="phx-topic">At this time of year, many have reflected on 2025 and made resolutions for 2026. I have adjusted this to make no resolutions, but a few predictions that, in most cases, I hope will not materialize. In addition, I want to give some advice to beneficial cargo owners (BCOs), many of whom are in various stages of negotiations for 2026–27 service contracts. Starting with the predictions, let’s consider some supply, capacity, and demand issues. <h3>Capacity </h3>I expect Red Sea transits will resume, but very slowly and primarily for East Med cargo and for the India sub-continent to the East Coast of the US. Asia-Europe transits will only resume if insurance premiums disappear. The Houthis are still present and will be volatile and unreliable, so they remain the wild card for this prediction. At best, Asia-Europe, if Suez passage resumes, would take six months to stabilize. The US port fees for Chinese-built and -owned vessels will be a non-event. However, for carriers, the sword of Damocles is hanging over this one, so don’t expect any major service reshuffles. Sadly, service reliability levels will stay stable at a horrible 60%, notwithstanding the herculean efforts of Gemini to drag the industry up. Most carriers won’t care enough to do something about it. Expect significant trucking and drayage disruption in the US. Bankruptcies will rise as seasonality gets more unpredictable. Driver shortages will get worse. The consequences will be price volatility, both up and down, with significant backlogs adding to detention and demurrage bills. Berthing and landside restrictions will continue to hinder moving larger vessels to north-south trades as few terminals are deep-sea; they are river or bay, at best, and are often hemmed in by towns and cities and tidal-constrained. <h3>Demand </h3>Many BCOs are under high internal pressure to contribute to reductions in overall supply chain costs as margins become thinner through higher input costs (somewhat largely driven by tariffs), downstream price squeezing, and weaker demand. Container freight downward trends will be an obvious target. Keep an eye on US credit card debt and defaults, which will rise significantly by the third quarter at the latest, thus further softening demand. Macro level indicators will prey on demand. US inflation will remain stubbornly near at least 2.5% to 3% while unemployment will remain at about 4.5% as immigration net deficits offset layoffs. Job creation will stagnate. Depending on the GDP trend, expect a high likelihood of stagflation toward the end of the fourth quarter (subject to the reliability of US government data). China will continue manufacturing export expansion and increase its proportion of global trade. <h3>Recommendation </h3>What does this mean for upcoming service contract negotiations? With the expectation of vessel oversupply continuing through the year, BCOs will push to the limit to reduce base rates. They will face several dilemmas, including how to get rid of unmerited and unjustifiable surcharges and which carriers to choose from in alliances and vessel-sharing agreements. Overall, the market situation is favorable for BCOs. The temptation to drive down base rates will be great because of internal cost pressures and/or wanting to make up for some years of carrier supply strength. This should be tempered with a caveat that many BCOs have been burnt in the past for being too empathetic to carriers’ financial difficulties. If I were in the shoes of a medium-size BCO of 30,000 TEUs and above, I would select a mix that would aim for base rates around the Xeneta/NYSHEX forecast average index levels, even if offered lower rates than those levels. It is important to keep in with Mediterranean Shipping Co. even if you don’t use them today. I would use index-linked contracts today and continue to do so with a maximum of 50% to leave yourself some volume for fixed rates and some spot prices. Of that remaining volume, I would leave about 25% for spot as the downside risk is still relatively low. Finally, the market situation should allow for BCOs to get into their contracts the exclusion of any non-explainable (by the carrier) and justifiable (judged and accepted by the BCO) surcharges. John McCauley, formerly a vice president of transportation and logistics at Cargill, now consults for shippers. Contact him at <a href="mailto:john-mccauley1@outlook.com">john-mccauley1@outlook.com</a>.</div>

At this time of year, many have reflected on 2025 and made resolutions for 2026. I have adjusted this to make no resolutions, but a few predictions that, in most cases, I hope will not materialize. In addition, I want to give some advice to beneficial cargo owners (BCOs), many of whom are in various stages of negotiations for 2026–27 service contracts. Starting with the predictions, let’s consider some supply, capacity, and demand issues. Capacity I expect Red Sea transits will resume, but very slowly and primarily for East Med cargo and for the India sub-continent to the East Coast of the US. Asia-Europe transits will only resume if insurance premiums disappear. The Houthis are still present and will be volatile and unreliable, so they remain the wild card for this prediction. At best, Asia-Europe, if Suez passage resumes, would take six months to stabilize. The US port fees for Chinese-built and -owned vessels will be a non-event. However, for carriers, the sword of Damocles is hanging over this one, so don’t expect any major service reshuffles. Sadly, service reliability levels will stay stable at a horrible 60%, notwithstanding the herculean efforts of Gemini to drag the industry up. Most carriers won’t care enough to do something about it. Expect significant trucking and drayage disruption in the US. Bankruptcies will rise as seasonality gets more unpredictable. Driver shortages will get worse. The consequences will be price volatility, both up and down, with significant backlogs adding to detention and demurrage bills. Berthing and landside restrictions will continue to hinder moving larger vessels to north-south trades as few terminals are deep-sea; they are river or bay, at best, and are often hemmed in by towns and cities and tidal-constrained. Demand Many BCOs are under high internal pressure to contribute to reductions in overall supply chain costs as margins become thinner through higher input costs (somewhat largely driven by tariffs), downstream price squeezing, and weaker demand. Container freight downward trends will be an obvious target. Keep an eye on US credit card debt and defaults, which will rise significantly by the third quarter at the latest, thus further softening demand. Macro level indicators will prey on demand. US inflation will remain stubbornly near at least 2.5% to 3% while unemployment will remain at about 4.5% as immigration net deficits offset layoffs. Job creation will stagnate. Depending on the GDP trend, expect a high likelihood of stagflation toward the end of the fourth quarter (subject to the reliability of US government data). China will continue manufacturing export expansion and increase its proportion of global trade. Recommendation What does this mean for upcoming service contract negotiations? With the expectation of vessel oversupply continuing through the year, BCOs will push to the limit to reduce base rates. They will face several dilemmas, including how to get rid of unmerited and unjustifiable surcharges and which carriers to choose from in alliances and vessel-sharing agreements. Overall, the market situation is favorable for BCOs. The temptation to drive down base rates will be great because of internal cost pressures and/or wanting to make up for some years of carrier supply strength. This should be tempered with a caveat that many BCOs have been burnt in the past for being too empathetic to carriers’ financial difficulties. If I were in the shoes of a medium-size BCO of 30,000 TEUs and above, I would select a mix that would aim for base rates around the Xeneta/NYSHEX forecast average index levels, even if offered lower rates than those levels. It is important to keep in with Mediterranean Shipping Co. even if you don’t use them today. I would use index-linked contracts today and continue to do so with a maximum of 50% to leave yourself some volume for fixed rates and some spot prices. Of that remaining volume, I would leave about 25% for spot as the downside risk is still relatively low. Finally, the market situation should allow for BCOs to get into their contracts the exclusion of any non-explainable (by the carrier) and justifiable (judged and accepted by the BCO) surcharges. John McCauley, formerly a vice president of transportation and logistics at Cargill, now consults for shippers. Contact him at john-mccauley1@outlook.com .

Trans-Pacific

A few market predictions and some advice for BCOs as contract season heats up

<div class="phx-topic abstract-wrapper">There are a lot of theories explaining the current freight recession, but there is no disputing that decreased demand, cutthroat competition, and plummeting rates have occurred simultaneously with inflationary cost components, writes Ted Prince.</div>

There are a lot of theories explaining the current freight recession, but there is no disputing that decreased demand, cutthroat competition, and plummeting rates have occurred simultaneously with inflationary cost components, writes Ted Prince.

<div class="phx-topic">In 1948, Gerald Hern, sports editor of the Boston Post, composed a brief poem describing the Boston Braves’ pitching en route to the 1948 National League pennant: First we’ll use Spahn then we’ll use Sain Then an off day, followed by rain Back will come Spahn, followed by Sain And followed, we hope, by two days of rain Warren Spahn and Johnny Sain were responsible for 39 of the Braves’ 91 victories that year. However, it was common to have a one-two punch at the top of a team’s pitching rotation. Intermodal has a similar duality: international and domestic — primarily dry 40- and 53-foot containers, respectively. While intermodal has a plethora of markets and equipment, the two segments have been carrying the industry for decades to constant new heights. They are also closely correlated in that a great deal of the domestic market is import cargo that was transloaded on the West Coast for movement inland. Hern’s work comes to mind when thinking about intermodal’s performance in 2025 and its prospects for 2026. Unlike the hoped-for two days of good rain, the industry has endured four years of painful rain since the halcyon volumes of 2021, the “good old days” of the COVID-19 pandemic. There are a lot of theories explaining the current freight “recession,” but there is no disputing that decreased demand, cutthroat competition, and plummeting rates have occurred simultaneously with inflationary cost components. As a result, intermodal has frequently found itself as a surface freight alternative that is slower and more expensive than trucking. And while there were some green shoots in 2024, the industry has been hoping for a second-half recovery — that has failed to materialize — in each of the past three years. The same seems true for 2026. <h3>Supply and demand drivers </h3>As we look forward, we need to consider supply and demand drivers. “Affordability” has taken the place of prominence in our political lexicon. As the costs of food and housing rise, discretionary income for other consumer products has shriveled and reduced demand. The same goes for increasing credit card, car, and student loan debt. Regardless of mortgage rates, there are long-term limitations on housing starts. This can further reduce consumer demand because so many purchases — e.g., furniture, home, electronics, etc. — are often associated with new homes. And although seven-year car loans have become more common, I don’t believe 50-year home mortgages will have the same penetration. With demand problematic, intermodal success will probably rely on supply changes. Many contend that the demand during the early days of COVID-19 created excess capacity that the truck market is still trying to absorb. However, it is unclear whether there was really an increase in overall capacity, or just realignment as many truckers decided to go out on their own. Regardless, there were a number of carriers that acquired capacity at historically high prices and must keep operating to just make their payments. The normal culling of unprofitable capacity was precluded by this inability to exit the market, ensuring a never-ending supply of zombie truckers. This capacity is getting older and more expensive to operate. Nevertheless, there is a feeling (or hope?) that 2026 will finally see marginal carriers leave the market and rate stability restored. <h3>Enhanced regulatory oversight </h3>The environmental green benefits of intermodal are not a priority for the current administration, so economic green will be paramount. Most likely that would come from increased regulatory oversight. Enhanced enforcement on non-domiciled commercial driver’s licenses is reducing driver supply. And there is still the unknown of hacked electronic logging devices allowing for illegal hours of service. What is unclear is whether these initiatives will impact truckload and drayage carriers equally, or whether one segment will suffer disproportionate opprobrium. If it is the former, intermodal will be advantaged; however, if it is the latter, maybe not. The former would be a rising tide that would raise all intermodal ships, whereas the latter could see the further ascendance of bimodal operations with integrated drayage overseen by robust safety regimens. In an attempt to increase demand, we can expect major players to assume prominent roles. Railroads and bimodals will seek to deploy equipment that has been stored for years. Ocean carriers will continue to consider their inland options. Finally, ports may become more involved as they explore inland options to attract more discretionary cargo. There are no historical comparisons for the last five years. It is unclear when the market will turn, but when it does, the recovery will follow Ernest Hemingway’s description: “Gradually, then suddenly.” We can then hope for the sun also to rise on intermodal. Ted Prince is founder and CEO of Tri-Cities Intermodal LLC. Contact him at <a href="mailto:ted@tricitiesintermodal.com">ted@tricitiesintermodal.com</a>.</div>

In 1948, Gerald Hern, sports editor of the Boston Post, composed a brief poem describing the Boston Braves’ pitching en route to the 1948 National League pennant: First we’ll use Spahn then we’ll use Sain Then an off day, followed by rain Back will come Spahn, followed by Sain And followed, we hope, by two days of rain Warren Spahn and Johnny Sain were responsible for 39 of the Braves’ 91 victories that year. However, it was common to have a one-two punch at the top of a team’s pitching rotation. Intermodal has a similar duality: international and domestic — primarily dry 40- and 53-foot containers, respectively. While intermodal has a plethora of markets and equipment, the two segments have been carrying the industry for decades to constant new heights. They are also closely correlated in that a great deal of the domestic market is import cargo that was transloaded on the West Coast for movement inland. Hern’s work comes to mind when thinking about intermodal’s performance in 2025 and its prospects for 2026. Unlike the hoped-for two days of good rain, the industry has endured four years of painful rain since the halcyon volumes of 2021, the “good old days” of the COVID-19 pandemic. There are a lot of theories explaining the current freight “recession,” but there is no disputing that decreased demand, cutthroat competition, and plummeting rates have occurred simultaneously with inflationary cost components. As a result, intermodal has frequently found itself as a surface freight alternative that is slower and more expensive than trucking. And while there were some green shoots in 2024, the industry has been hoping for a second-half recovery — that has failed to materialize — in each of the past three years. The same seems true for 2026. Supply and demand drivers As we look forward, we need to consider supply and demand drivers. “Affordability” has taken the place of prominence in our political lexicon. As the costs of food and housing rise, discretionary income for other consumer products has shriveled and reduced demand. The same goes for increasing credit card, car, and student loan debt. Regardless of mortgage rates, there are long-term limitations on housing starts. This can further reduce consumer demand because so many purchases — e.g., furniture, home, electronics, etc. — are often associated with new homes. And although seven-year car loans have become more common, I don’t believe 50-year home mortgages will have the same penetration. With demand problematic, intermodal success will probably rely on supply changes. Many contend that the demand during the early days of COVID-19 created excess capacity that the truck market is still trying to absorb. However, it is unclear whether there was really an increase in overall capacity, or just realignment as many truckers decided to go out on their own. Regardless, there were a number of carriers that acquired capacity at historically high prices and must keep operating to just make their payments. The normal culling of unprofitable capacity was precluded by this inability to exit the market, ensuring a never-ending supply of zombie truckers. This capacity is getting older and more expensive to operate. Nevertheless, there is a feeling (or hope?) that 2026 will finally see marginal carriers leave the market and rate stability restored. Enhanced regulatory oversight The environmental green benefits of intermodal are not a priority for the current administration, so economic green will be paramount. Most likely that would come from increased regulatory oversight. Enhanced enforcement on non-domiciled commercial driver’s licenses is reducing driver supply. And there is still the unknown of hacked electronic logging devices allowing for illegal hours of service. What is unclear is whether these initiatives will impact truckload and drayage carriers equally, or whether one segment will suffer disproportionate opprobrium. If it is the former, intermodal will be advantaged; however, if it is the latter, maybe not. The former would be a rising tide that would raise all intermodal ships, whereas the latter could see the further ascendance of bimodal operations with integrated drayage overseen by robust safety regimens. In an attempt to increase demand, we can expect major players to assume prominent roles. Railroads and bimodals will seek to deploy equipment that has been stored for years. Ocean carriers will continue to consider their inland options. Finally, ports may become more involved as they explore inland options to attract more discretionary cargo. There are no historical comparisons for the last five years. It is unclear when the market will turn, but when it does, the recovery will follow Ernest Hemingway’s description: “Gradually, then suddenly.” We can then hope for the sun also to rise on intermodal. Ted Prince is founder and CEO of Tri-Cities Intermodal LLC. Contact him at ted@tricitiesintermodal.com .

North-American rail

Intermodal providers

Supply chain

Pace of freight market recovery a matter of ‘gradually, then suddenly’

US East Coast

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US West Coast

Total US

Bookings represent shipments entered as booking requests during a given week, with a normalized assigned TEU value to these shipments. Original port of lading and port of discharge are used to map against given trade lanes. Vizion's Booking Trends insights and other details such as shipper, consignee, product value, and transit times are available via its Tradeview platform - sourcing from over 54% of all container booking transactions globally, with over 10 years of historical shipment data available. [Vizion](https://www.vizionapi.com/global-trade-monitoring/tradeview-global-trade-intelligence-platform)

China weekly import bookings to US index (Vizion)

Vizion Trade Index TEU booking volume China to US Coasts Gateway

<div class="phx-topic abstract-wrapper">Charleston’s total rail lifts for 2025 were about one-quarter of the planned capacity of Navy Base Intermodal Facility, prompting the port’s CEO to reset capital spending plans. </div>

Charleston’s total rail lifts for 2025 were about one-quarter of the planned capacity of Navy Base Intermodal Facility, prompting the port’s CEO to reset capital spending plans.

<div class="phx-topic">The Port of Charleston has paused work on its near-dock rail yard pending agreements with Class I railroads to service the facility, the port’s chief executive said, adding that shipper demand for more intermodal capacity may not be needed until 2028. South Carolina Ports Authority (SC Ports) Chief Executive Micah Mallace told state legislators last week Charleston has “slowed construction” of the Navy Base Intermodal Facility until it has finalized operating agreements with CSX Transportation and Norfolk Southern Railway (NS). “We are working on delivering operating agreements with the railroads,” Mallace said. “We aspire to finish that quickly. Upon successful completion of that, we will restart our delivery of the facility.” The last major work on the facility involves 80,000 feet of southbound track that would link Navy Base directly to both CSX and Norfolk Southern trackage. Navy Base has northern access that connects to CSX trackage, but the southern access is a preferred route for both railroads. Under previous chief executive Barbara Melvin, the port expected to announce <a href="https://www.joc.com/article/charlestons-navy-base-rail-yard-project-faces-delays-big-cost-overruns-6070926">a construction award for the project last October</a>, but that award has been paused. Mallace, <a href="https://www.joc.com/article/sc-ports-taps-former-commercial-executive-to-lead-6092988">who took over as CEO that month</a>, has been <a href="https://www.joc.com/article/new-charleston-ceo-seeks-to-regain-container-growth-momentum-6104583">reevaluating the port’s capital spending plans</a> in light of slower growth in cargo demand. “SC Ports continues to work with our partners at CSX and NS to deliver additional rail capacity and enhance intermodal competitiveness to support growth in the Southeast market,” the port said in a statement to the Journal of Commerce. Mallace appeared before the South Carolina legislators to ask that some $2 million in state funding previously appropriated to SC Ports for joint development of a container terminal with the Georgia Port Authority (GPA) on the South Carolina side of the Savannah River be redirected to a local economic development agency. The request stemmed from the GPA’s “wish to deliver capacity on the Georgia side of the river,” Mallace said. <h3>Navy Base start anticipated for 2028 </h3>SC Ports previously forecast a potential 2026 launch of Navy Base service with CSX and later adding NS access by 2027 once the southern access and other infrastructure was complete. While there is no specific target for Navy Base’s full completion, Mallace said “we estimate needing to bring it on in 2028.” Intermodal cargo at the port is currently trucked to the CSX and NS intermodal facilities under Charleston’s “Rapid Rail” program. Navy Base allows the port to handle containers faster via a one-mile dedicated drayage road connected to the Leatherman marine terminal. Navy Base is designed to handle 1 million container lifts per year. It connects Charleston directly to its inland ports at Dillon and Greer, which are served respectively by CSX and NS, as well as other destinations in the Southeast. Dillon handled 48,761 container lifts last year, a 33% increase from 2024 largely due to a state initiative to reroute soybean shipments to export markets after the closure of a nearby processing facility, as well as demand from Dillon’s retailer shippers, according to SC Ports. Greer, which serves some of the state’s manufacturers and other retail distributors and can handle 300,000 lifts annually, saw approximately two-thirds of that at 197,805 container lifts last year, up 2% from a year earlier. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>.</div>

The Port of Charleston has paused work on its near-dock rail yard pending agreements with Class I railroads to service the facility, the port’s chief executive said, adding that shipper demand for more intermodal capacity may not be needed until 2028. South Carolina Ports Authority (SC Ports) Chief Executive Micah Mallace told state legislators last week Charleston has “slowed construction” of the Navy Base Intermodal Facility until it has finalized operating agreements with CSX Transportation and Norfolk Southern Railway (NS). “We are working on delivering operating agreements with the railroads,” Mallace said. “We aspire to finish that quickly. Upon successful completion of that, we will restart our delivery of the facility.” The last major work on the facility involves 80,000 feet of southbound track that would link Navy Base directly to both CSX and Norfolk Southern trackage. Navy Base has northern access that connects to CSX trackage, but the southern access is a preferred route for both railroads. Under previous chief executive Barbara Melvin, the port expected to announce a construction award for the project last October , but that award has been paused. Mallace, who took over as CEO that month , has been reevaluating the port’s capital spending plans in light of slower growth in cargo demand. “SC Ports continues to work with our partners at CSX and NS to deliver additional rail capacity and enhance intermodal competitiveness to support growth in the Southeast market,” the port said in a statement to the Journal of Commerce. Mallace appeared before the South Carolina legislators to ask that some $2 million in state funding previously appropriated to SC Ports for joint development of a container terminal with the Georgia Port Authority (GPA) on the South Carolina side of the Savannah River be redirected to a local economic development agency. The request stemmed from the GPA’s “wish to deliver capacity on the Georgia side of the river,” Mallace said. Navy Base start anticipated for 2028 SC Ports previously forecast a potential 2026 launch of Navy Base service with CSX and later adding NS access by 2027 once the southern access and other infrastructure was complete. While there is no specific target for Navy Base’s full completion, Mallace said “we estimate needing to bring it on in 2028.” Intermodal cargo at the port is currently trucked to the CSX and NS intermodal facilities under Charleston’s “Rapid Rail” program. Navy Base allows the port to handle containers faster via a one-mile dedicated drayage road connected to the Leatherman marine terminal. Navy Base is designed to handle 1 million container lifts per year. It connects Charleston directly to its inland ports at Dillon and Greer, which are served respectively by CSX and NS, as well as other destinations in the Southeast. Dillon handled 48,761 container lifts last year, a 33% increase from 2024 largely due to a state initiative to reroute soybean shipments to export markets after the closure of a nearby processing facility, as well as demand from Dillon’s retailer shippers, according to SC Ports. Greer, which serves some of the state’s manufacturers and other retail distributors and can handle 300,000 lifts annually, saw approximately two-thirds of that at 197,805 container lifts last year, up 2% from a year earlier. Contact Michael Angell at michael.angell@spglobal.com .

Port infrastructure

Marine terminals

Charleston slows railyard development amid insufficient shipper demand

<div class="phx-topic abstract-wrapper">Momentum from robust growth on some Asian export trade lanes following the Christmas holidays has now slowed, with forwarders and analysts expecting muted demand over the coming two weeks.</div>

Momentum from robust growth on some Asian export trade lanes following the Christmas holidays has now slowed, with forwarders and analysts expecting muted demand over the coming two weeks.

<div class="phx-topic">Air cargo analysts and forwarders are expecting a modest pre-Lunar New Year uptick in exports on Asian trade lanes following solid demand growth in January from China to Europe and from Southeast Asia and Taiwan to the US. With the Lunar New Year beginning relatively late on Feb. 17, industry forecasts are for a gradual increase in volume and rates over the next two weeks before factories close for Asia’s main annual holiday. Capacity trends on the Asia-Europe lane suggest “robust” volume growth in January from China’s inland air freight hubs of Chongqing, Chengdu and Zhengzhou, according to Rotate analyst Ray Zedov. While Asia to US capacity was down year over year from all Asia-Pacific regions, “a deeper dive into the US market shows that capacity from Vietnam continues to grow as Chinese imports to the US are impacted by the new tariff policy in the US,” Zedov told the Journal of Commerce. The US removed its “de minimis” duty exemption on low-value goods from all its trading partners on Aug. 29 last year following the scrapping of duty-free access for low-value Chinese imports in May. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="33a72818-4d4c-4365-97ce-ccb39dab8dd8"></dynamic-object></div>Sou Ping Chee, regional head of air freight in Asia-Pacific for Hellmann Worldwide Logistics, said volume out of Asia had weakened by early February even with the holidays just two weeks away, which suggests muted demand this year. “However, there is still a general expectation that demand will pick up next week ahead of Lunar New Year from China, Hong Kong, Vietnam and Taiwan across industries before these markets close for the biggest festive season in this part of the world,” he said. An Asia-based executive at a global forwarder said he was not seeing any major uptick in demand on China-Europe and the wider Asia Pacific-North America market. “It remains rather flat and even prior to the Lunar New Year we are not seeing anything exceptional,” the source said. He added that although overall demand out of Asia-Pacific to North America has flattened out, demand out of Taipei and Vietnam has remained solid. “Taipei-US, Bangkok-US and Hanoi-US are busy,” he said. “Rates are holding steady at a higher level and demand remains strong, largely driven by AI-related components. Bangkok-Europe and Vietnam-Europe are also busy.” <h3>Rates rising on Asian export trade lanes </h3>Netherlands-based air cargo analyst WorldACD said after two weeks of strong sequential volume growth from Asia-Pacific to US and Europe markets, overall week-over-week growth came to a halt last week with flat volumes for both trade lanes. When compared with the same week last year, volume to the US was down 1% and volume to Europe was up 7%. While spot rates on the trans-Pacific and Asia-Europe in the last week of January were down 9% year over year, there were significant week-over-week increases on both trades, particularly from China origins, WorldACD data shows. Spot rates to the US last week rose 6% compared with the previous week to $4.02 per kilogram, while rates to Europe were up 7% at $3.80/kg as the market edged into the pre-Lunar New Year peak and capacity tightened on some airport pairings. Sou noted that rates on the Asian export trade lanes have remained at healthy levels in the first weeks of 2026 after softening over the Christmas period. “As such we do not expect as sharp an increase now, but rather spot rates are likely to creep up as we enter the last 10 days to Lunar New Year and pick up momentum from next week onwards,” he said. Willie Walsh, director general of the International Air Transport Association (IATA), said the moderate demand will extend to the full year, with global air freight demand in 2026 expected to grow 2.4% from 2025, although that would be down from last year’s 3.4% growth over 2024. “We can expect that demand will continue to be shaped by trade and geopolitical developments,” Walsh noted in a January market update, adding that carriers will continue to relocate capacity to support shifting trade patterns. Contact Greg Knowler at <a href="">greg.knowler@spglobal.com</a>.   </div>

Air cargo analysts and forwarders are expecting a modest pre-Lunar New Year uptick in exports on Asian trade lanes following solid demand growth in January from China to Europe and from Southeast Asia and Taiwan to the US. With the Lunar New Year beginning relatively late on Feb. 17, industry forecasts are for a gradual increase in volume and rates over the next two weeks before factories close for Asia’s main annual holiday. Capacity trends on the Asia-Europe lane suggest “robust” volume growth in January from China’s inland air freight hubs of Chongqing, Chengdu and Zhengzhou, according to Rotate analyst Ray Zedov. While Asia to US capacity was down year over year from all Asia-Pacific regions, “a deeper dive into the US market shows that capacity from Vietnam continues to grow as Chinese imports to the US are impacted by the new tariff policy in the US,” Zedov told the Journal of Commerce. The US removed its “de minimis” duty exemption on low-value goods from all its trading partners on Aug. 29 last year following the scrapping of duty-free access for low-value Chinese imports in May. Sou Ping Chee, regional head of air freight in Asia-Pacific for Hellmann Worldwide Logistics, said volume out of Asia had weakened by early February even with the holidays just two weeks away, which suggests muted demand this year. “However, there is still a general expectation that demand will pick up next week ahead of Lunar New Year from China, Hong Kong, Vietnam and Taiwan across industries before these markets close for the biggest festive season in this part of the world,” he said. An Asia-based executive at a global forwarder said he was not seeing any major uptick in demand on China-Europe and the wider Asia Pacific-North America market. “It remains rather flat and even prior to the Lunar New Year we are not seeing anything exceptional,” the source said. He added that although overall demand out of Asia-Pacific to North America has flattened out, demand out of Taipei and Vietnam has remained solid. “Taipei-US, Bangkok-US and Hanoi-US are busy,” he said. “Rates are holding steady at a higher level and demand remains strong, largely driven by AI-related components. Bangkok-Europe and Vietnam-Europe are also busy.” Rates rising on Asian export trade lanes Netherlands-based air cargo analyst WorldACD said after two weeks of strong sequential volume growth from Asia-Pacific to US and Europe markets, overall week-over-week growth came to a halt last week with flat volumes for both trade lanes. When compared with the same week last year, volume to the US was down 1% and volume to Europe was up 7%. While spot rates on the trans-Pacific and Asia-Europe in the last week of January were down 9% year over year, there were significant week-over-week increases on both trades, particularly from China origins, WorldACD data shows. Spot rates to the US last week rose 6% compared with the previous week to $4.02 per kilogram, while rates to Europe were up 7% at $3.80/kg as the market edged into the pre-Lunar New Year peak and capacity tightened on some airport pairings. Sou noted that rates on the Asian export trade lanes have remained at healthy levels in the first weeks of 2026 after softening over the Christmas period. “As such we do not expect as sharp an increase now, but rather spot rates are likely to creep up as we enter the last 10 days to Lunar New Year and pick up momentum from next week onwards,” he said. Willie Walsh, director general of the International Air Transport Association (IATA), said the moderate demand will extend to the full year, with global air freight demand in 2026 expected to grow 2.4% from 2025, although that would be down from last year’s 3.4% growth over 2024. “We can expect that demand will continue to be shaped by trade and geopolitical developments,” Walsh noted in a January market update, adding that carriers will continue to relocate capacity to support shifting trade patterns. Contact Greg Knowler at  greg.knowler@spglobal.com .   

Air Cargo Forwarder News

Air Cargo

Solid January demand to largely mute Lunar New Year air freight rush

<div class="phx-topic abstract-wrapper">The India/Middle East-Mediterranean service will be the first Gemini loop in two years to transit the Red Sea, with plans for other services to follow “where possible,” the alliance partners say.</div>

The India/Middle East-Mediterranean service will be the first Gemini loop in two years to transit the Red Sea, with plans for other services to follow “where possible,” the alliance partners say.

<div class="phx-topic">Gemini Cooperation partners Maersk and Hapag-Lloyd said Tuesday that the first vessels in their ME11/IMX service will be routed through the Suez Canal in mid-February, with plans by the carriers to send two other services through the waterway. The Journal of Commerce reported on Jan. 15 that the ME11/IMX service <a href="https://www.joc.com/article/gemini-india-med-service-the-next-to-plan-return-to-red-seasuez-passage-6152941">would resume the Suez route “shortly,”</a> citing a Maersk executive. It would be the first time in more than two years that a Gemini service has transited the Red Sea. “The service in scope is the ME11 service, which connects India and the Middle East with the Mediterranean,” Maersk said in a statement. “From mid-February, changes will be implemented on westbound sailings as of the vessel Albert Maersk and on eastbound sailings as of the vessel Astrid Maersk.” On the initial westbound sailing, the Albert Maersk will depart Mundra in India on Feb. 4 after arriving from Jebel Ali in the United Arab Emirates; on the eastbound sailing, the Astrid Maersk will depart Valencia in Spain on Feb. 3. A naval escort will ride shotgun during the Red Sea passages to guard against attacks by Yemen’s Houthi militants, the Gemini statement noted. Maersk and Hapag-Lloyd also said that “where possible,” they will redirect Gemini’s AE12 Asia-Mediterranean and AE15 Asia-Turkey services through the Red Sea and Suez “at a later stage.” The carriers said further information for customers will follow, but no further changes to the Gemini network related to the Red Sea were foreseen at this stage. “We see this announcement as another important milestone for the industry,” J.P. Morgan said Tuesday in a note to customers. “It demonstrates the willingness of container shipping lines to improve flows and increase sailings via the Suez Canal.” But the investment bank said the market has yet to price in a sustained return to the Suez, which will add up to 7% of effective capacity to the global fleet. Earlier this year, Maersk made its first structural move back into the Red Sea by <a href="https://www.joc.com/article/maersk-set-to-resume-regular-suez-transits-on-india-usec-mecl-loop-sources-6152441">rerouting its standalone MECL service</a>, which links the Middle East and India with the US East Coast via the Suez Canal. <h3>Regional unease over volatile US-Iran relations </h3>The regional situation remains tense, with a US carrier strike group now stationed in the Gulf of Oman to back up threats by President Donald Trump to launch military strikes on Iran. Tehran has vowed to respond to any attacks, which may spill over into the southern Red Sea controlled by Iran-backed Houthi militants. Gemini said switching the services from around the Cape of Good Hope to Suez would be carried out in a way that keeps disruption for customers to a minimum. But in a nod to the volatile regional security situation, the Gemini statement added: “Contingency plans are in place should the security situation deteriorate, which may necessitate reverting individual sailings or the wider structural change of the ME11 service back to the Cape of Good Hope route.” Carriers have been forced to divert vessels around southern Africa since late 2023, when the Houthis began their attacks against commercial shipping to protest Israel’s move into Gaza. Maersk and Hapag-Lloyd also warned shippers to review their bookings on the ME11 service and ensure they had sufficient insurance cover for their cargo being transported through the area. <a href="https://www.joc.com/article/shippers-shoulder-burden-of-red-sea-uncertainty-as-regional-tensions-rise-again-6160632">Cargo insurance is a significant hurdle for shippers</a> with freight transiting the Red Sea. Some shippers say their insurance brokers have refused to provide cover, while others say the high cost of premiums was prohibitive. Contact Greg Knowler at <a href="">greg.knowler@spglobal.com</a>.     </div>

Gemini Cooperation partners Maersk and Hapag-Lloyd said Tuesday that the first vessels in their ME11/IMX service will be routed through the Suez Canal in mid-February, with plans by the carriers to send two other services through the waterway. The Journal of Commerce reported on Jan. 15 that the ME11/IMX service would resume the Suez route “shortly,” citing a Maersk executive. It would be the first time in more than two years that a Gemini service has transited the Red Sea. “The service in scope is the ME11 service, which connects India and the Middle East with the Mediterranean,” Maersk said in a statement. “From mid-February, changes will be implemented on westbound sailings as of the vessel Albert Maersk and on eastbound sailings as of the vessel Astrid Maersk.” On the initial westbound sailing, the Albert Maersk will depart Mundra in India on Feb. 4 after arriving from Jebel Ali in the United Arab Emirates; on the eastbound sailing, the Astrid Maersk will depart Valencia in Spain on Feb. 3. A naval escort will ride shotgun during the Red Sea passages to guard against attacks by Yemen’s Houthi militants, the Gemini statement noted. Maersk and Hapag-Lloyd also said that “where possible,” they will redirect Gemini’s AE12 Asia-Mediterranean and AE15 Asia-Turkey services through the Red Sea and Suez “at a later stage.” The carriers said further information for customers will follow, but no further changes to the Gemini network related to the Red Sea were foreseen at this stage. “We see this announcement as another important milestone for the industry,” J.P. Morgan said Tuesday in a note to customers. “It demonstrates the willingness of container shipping lines to improve flows and increase sailings via the Suez Canal.” But the investment bank said the market has yet to price in a sustained return to the Suez, which will add up to 7% of effective capacity to the global fleet. Earlier this year, Maersk made its first structural move back into the Red Sea by rerouting its standalone MECL service , which links the Middle East and India with the US East Coast via the Suez Canal. Regional unease over volatile US-Iran relations The regional situation remains tense, with a US carrier strike group now stationed in the Gulf of Oman to back up threats by President Donald Trump to launch military strikes on Iran. Tehran has vowed to respond to any attacks, which may spill over into the southern Red Sea controlled by Iran-backed Houthi militants. Gemini said switching the services from around the Cape of Good Hope to Suez would be carried out in a way that keeps disruption for customers to a minimum. But in a nod to the volatile regional security situation, the Gemini statement added: “Contingency plans are in place should the security situation deteriorate, which may necessitate reverting individual sailings or the wider structural change of the ME11 service back to the Cape of Good Hope route.” Carriers have been forced to divert vessels around southern Africa since late 2023, when the Houthis began their attacks against commercial shipping to protest Israel’s move into Gaza. Maersk and Hapag-Lloyd also warned shippers to review their bookings on the ME11 service and ensure they had sufficient insurance cover for their cargo being transported through the area. Cargo insurance is a significant hurdle for shippers with freight transiting the Red Sea. Some shippers say their insurance brokers have refused to provide cover, while others say the high cost of premiums was prohibitive. Contact Greg Knowler at  greg.knowler@spglobal.com .    

Asia-Europe

Maersk, Hapag-Lloyd confirm they’ll route Gemini service through Suez

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<div class="phx-topic abstract-wrapper">The appointment of Maersk’s terminals arm came just hours after Panama’s Supreme Court nullified the concessions Hutchison had held at the Balboa and Cristobal ports for almost 30 years.</div>

The appointment of Maersk’s terminals arm came just hours after Panama’s Supreme Court nullified the concessions Hutchison had held at the Balboa and Cristobal ports for almost 30 years.

<div class="phx-topic">Maersk’s APM Terminals on Friday was appointed the interim administrator of the Balboa and Cristobal terminals that bookend the Panama Canal after the country’s Supreme Court nullified the operating concessions long held by the Panama Ports Company, a subsidiary of Hutchinson Port Holdings. The Panama Maritime Authority said it hoped for an orderly and coordinated transition from Panama Ports to APMT, noting Hong Kong conglomerate CK Hutchison Holdings is a “globally recognized organization known for its strong corporate reputation.” “In this context, we trust in their constructive collaboration during this phase, for the benefit of the port system’s stability,” the maritime authority said in a statement announcing the Maersk takeover. This came a day after Panama Ports Company (PPC) <a href="https://www.joc.com/article/panama-court-voids-ck-hutchison-canal-terminal-leases-6161145">angrily rejected the Supreme Court’s decision to cancel its concessions</a>, saying the ruling “lacks legal basis and jeopardizes not only PPC and its contract, but also the well-being and stability of thousands of Panamanian families who depend directly and indirectly on port activity, but also the rule of law and legal certainty in the country.” PPC also warned it could take national and international legal action against the Panamanian government in response to the court decision, which it said was the latest development in an ongoing campaign that included “a range of surprise actions” targeting the terminal concessions and PPC. PPC did not immediately respond to questions from the Journal of Commerce on whether it would allow APM Terminals to take over operational control of the terminals. PPC has operated the terminals at Balboa on the Pacific side of the canal and Cristobal on the Atlantic coast since 1997 following the award of an initial 25-year concession that was extended in 2021, deals the Supreme Court has now ruled unconstitutional. Hutchison had already agreed to sell the two terminals to a consortium of BlackRock’s Global Infrastructure Partners and Mediterranean Shipping Co. subsidiary Terminal Investments Limited (TiL) as part of a $22.8 billion sale of its 43 terminal operations worldwide. But the deal has run into opposition from Beijing over ties between US President Donald Trump and BlackRock leadership. The maritime authority did not say when APM Terminals would assume responsibility as temporary operator, how long its assignment would last or the process for appointing a new terminal operator. In a separate statement Friday, APM Terminals said it would begin “operations at the terminals in compliance with all legal formalities and procedures.” “This will only occur after the decision of the Supreme Court of Justice of Panama becomes final, a timeframe beyond the company’s control,” APMT said. The terminal operator said it “confirms its willingness” to temporarily assume operation of both terminals. “This aims to mitigate risks that could affect essential services for regional and global trade and to support Panama’s logistics hub,” it said. The maritime authority said Panama, as the owner of the ports, guarantees the operational continuity of the national port system, which it said were “proceeding normally, without interruption, and maintaining optimal levels of productivity, efficiency, and service quality for shipping lines and their clients.” <h3>ACP seeks developers for two new terminals </h3>The legal wrangle over PPC’s concession and APM Terminals interim appointment came as the Panama Canal Authority (ACP) announced Friday that it was asking international terminal operators to prequalify to develop two new container terminals at either end of the canal. Companies have to submit prequalification documents by April 8. The common-user terminals, estimated to cost a total of $2.6 billon, will be built in Corozal at the Pacific entrance of the canal, and Telfers lsland at the canal’s Atlantic entrance. APMT was one of the 12 terminal operators that had individual meetings in October with ACP officials to discuss the project. Others were Cosco Shipping Ports, CMA Terminals, DP World, Hanseatic Global Terminals, MOL, PSA International, SSA Marine-Grupo Carrix, Terminal Investment Limited (TiL), ONE, and Evergreen. Several already run existing terminals. SSA Marine operates Manzanillo International Terminals, while Evergreen is concessionaire for Colon Container Terminal, both on the Atlantic side of the canal. Singapore’s PSA operates its Panama International Terminal on the Pacific Coast. The two new terminals are specifically aimed at boosting Panama’s annual transshipment capacity to between 5 million TEUs and 6 million TEUs and strengthening Panama’s position as a globally competitive intermodal hub. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>.</div>

Maersk’s APM Terminals on Friday was appointed the interim administrator of the Balboa and Cristobal terminals that bookend the Panama Canal after the country’s Supreme Court nullified the operating concessions long held by the Panama Ports Company, a subsidiary of Hutchinson Port Holdings. The Panama Maritime Authority said it hoped for an orderly and coordinated transition from Panama Ports to APMT, noting Hong Kong conglomerate CK Hutchison Holdings is a “globally recognized organization known for its strong corporate reputation.” “In this context, we trust in their constructive collaboration during this phase, for the benefit of the port system’s stability,” the maritime authority said in a statement announcing the Maersk takeover. This came a day after Panama Ports Company (PPC) angrily rejected the Supreme Court’s decision to cancel its concessions , saying the ruling “lacks legal basis and jeopardizes not only PPC and its contract, but also the well-being and stability of thousands of Panamanian families who depend directly and indirectly on port activity, but also the rule of law and legal certainty in the country.” PPC also warned it could take national and international legal action against the Panamanian government in response to the court decision, which it said was the latest development in an ongoing campaign that included “a range of surprise actions” targeting the terminal concessions and PPC. PPC did not immediately respond to questions from the Journal of Commerce on whether it would allow APM Terminals to take over operational control of the terminals. PPC has operated the terminals at Balboa on the Pacific side of the canal and Cristobal on the Atlantic coast since 1997 following the award of an initial 25-year concession that was extended in 2021, deals the Supreme Court has now ruled unconstitutional. Hutchison had already agreed to sell the two terminals to a consortium of BlackRock’s Global Infrastructure Partners and Mediterranean Shipping Co. subsidiary Terminal Investments Limited (TiL) as part of a $22.8 billion sale of its 43 terminal operations worldwide. But the deal has run into opposition from Beijing over ties between US President Donald Trump and BlackRock leadership. The maritime authority did not say when APM Terminals would assume responsibility as temporary operator, how long its assignment would last or the process for appointing a new terminal operator. In a separate statement Friday, APM Terminals said it would begin “operations at the terminals in compliance with all legal formalities and procedures.” “This will only occur after the decision of the Supreme Court of Justice of Panama becomes final, a timeframe beyond the company’s control,” APMT said. The terminal operator said it “confirms its willingness” to temporarily assume operation of both terminals. “This aims to mitigate risks that could affect essential services for regional and global trade and to support Panama’s logistics hub,” it said. The maritime authority said Panama, as the owner of the ports, guarantees the operational continuity of the national port system, which it said were “proceeding normally, without interruption, and maintaining optimal levels of productivity, efficiency, and service quality for shipping lines and their clients.” ACP seeks developers for two new terminals The legal wrangle over PPC’s concession and APM Terminals interim appointment came as the Panama Canal Authority (ACP) announced Friday that it was asking international terminal operators to prequalify to develop two new container terminals at either end of the canal. Companies have to submit prequalification documents by April 8. The common-user terminals, estimated to cost a total of $2.6 billon, will be built in Corozal at the Pacific entrance of the canal, and Telfers lsland at the canal’s Atlantic entrance. APMT was one of the 12 terminal operators that had individual meetings in October with ACP officials to discuss the project. Others were Cosco Shipping Ports, CMA Terminals, DP World, Hanseatic Global Terminals, MOL, PSA International, SSA Marine-Grupo Carrix, Terminal Investment Limited (TiL), ONE, and Evergreen. Several already run existing terminals. SSA Marine operates Manzanillo International Terminals, while Evergreen is concessionaire for Colon Container Terminal, both on the Atlantic side of the canal. Singapore’s PSA operates its Panama International Terminal on the Pacific Coast. The two new terminals are specifically aimed at boosting Panama’s annual transshipment capacity to between 5 million TEUs and 6 million TEUs and strengthening Panama’s position as a globally competitive intermodal hub. Contact Keith Wallis at keithwallis@hotmail.com .

International ports

APMT to run Hutchison’s Panama terminals on interim basis after court ruling 

<div class="phx-topic abstract-wrapper">Both sides had been engaged in protracted negotiations to break the trade deadlock that had cut India’s imports to the US East Coast by more than 30% over the past six months.</div>

Both sides had been engaged in protracted negotiations to break the trade deadlock that had cut India’s imports to the US East Coast by more than 30% over the past six months.

<div class="phx-topic">The US and India on Monday said they reached a trade agreement after a months-long dispute, prompting Washington to cut tariffs on Indian goods to 18% from the 50% that went into effect last August. In a key concession, India said it would stop its purchases of Russian oil. “When two large economies and the world’s largest democracies work together, it benefits our people and unlocks immense opportunities for mutually beneficial cooperation,” Indian Prime Minister Narendra Modi said in a statement. Both sides had been engaged in protracted negotiations to break the trade deadlock that had cut India’s imports to the US East Coast (USEC) by more than 30%. Further details, including the timeline for when the lower tariffs go into effect, were not immediately available. But the US said it would lower a “reciprocal” tariff on Indian goods from 25% to 18%, while also eliminating a separate 25% punitive tariff linked to India’s purchases of Russian oil. The lower tariffs make several Indian-made products, particularly textiles and apparel, more competitive than rival Asian sourcing markets, which augurs well for a potential trade boost between India and the US. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="ae1df54b-4003-46b5-a8c3-e0d35707e941"></dynamic-object></div>“This is big news for the India-US trade,” an executive at a European ocean carrier told the Journal of Commerce. “We are hoping to see a rebound in capacity demand.” Westbound volumes on the trade lane have been under tremendous pressure since the tariff uncertainty, forcing carriers to push ocean rates down to recent lows. Carriers have also been strategically adjusting capacity through blank calls to keep supply-demand dynamics as balanced as possible. Imports from India to the USEC have fallen 32% since the trade dispute broke out, from 93,160 TEUs in August to 63,590 TEUs in December, according to PIERS, a sister product of the Journal of Commerce within S&amp;P Global. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="893ffa5c-0a69-45c7-a555-425e44318711"></dynamic-object></div>And spot rates from India to the USEC that were $2,640 per FEU on Aug. 1 have steadily fallen since to $1,212.50 as of Jan. 30, down 54%, according to Platts, a sister company of the Journal of Commerce within S&amp;P Global. Major carriers have been unable to hold on to their intended rate hikes over the past few months with little demand support emerging. Contact Bency Mathew at <a href="mailto:bencyvmathew@gmail.com">bencyvmathew@gmail.com</a>.</div>

The US and India on Monday said they reached a trade agreement after a months-long dispute, prompting Washington to cut tariffs on Indian goods to 18% from the 50% that went into effect last August. In a key concession, India said it would stop its purchases of Russian oil. “When two large economies and the world’s largest democracies work together, it benefits our people and unlocks immense opportunities for mutually beneficial cooperation,” Indian Prime Minister Narendra Modi said in a statement. Both sides had been engaged in protracted negotiations to break the trade deadlock that had cut India’s imports to the US East Coast (USEC) by more than 30%. Further details, including the timeline for when the lower tariffs go into effect, were not immediately available. But the US said it would lower a “reciprocal” tariff on Indian goods from 25% to 18%, while also eliminating a separate 25% punitive tariff linked to India’s purchases of Russian oil. The lower tariffs make several Indian-made products, particularly textiles and apparel, more competitive than rival Asian sourcing markets, which augurs well for a potential trade boost between India and the US. “This is big news for the India-US trade,” an executive at a European ocean carrier told the Journal of Commerce. “We are hoping to see a rebound in capacity demand.” Westbound volumes on the trade lane have been under tremendous pressure since the tariff uncertainty, forcing carriers to push ocean rates down to recent lows. Carriers have also been strategically adjusting capacity through blank calls to keep supply-demand dynamics as balanced as possible. Imports from India to the USEC have fallen 32% since the trade dispute broke out, from 93,160 TEUs in August to 63,590 TEUs in December, according to PIERS, a sister product of the Journal of Commerce within S&P Global. And spot rates from India to the USEC that were $2,640 per FEU on Aug. 1 have steadily fallen since to $1,212.50 as of Jan. 30, down 54%, according to Platts, a sister company of the Journal of Commerce within S&P Global. Major carriers have been unable to hold on to their intended rate hikes over the past few months with little demand support emerging. Contact Bency Mathew at bencyvmathew@gmail.com .

Transport, Trade and Regulation News

US agrees to slash tariffs on imports from India after reaching trade deal

<div class="phx-topic abstract-wrapper">Sources say sustained weak market fundamentals have caused this year to be atypical in terms of demand in the immediate run-up to Lunar New Year, which begins Feb. 17.</div>

Sources say sustained weak market fundamentals have caused this year to be atypical in terms of demand in the immediate run-up to Lunar New Year, which begins Feb. 17.

<div class="phx-topic">Softer spot rates, weak volume forecasts and poor consumer sentiment spell one thing in the tariff-weary trans-Pacific container market: The traditional pre-Lunar New Year rush of cargo is not happening in 2026. Sources say sustained weak market fundamentals have caused this year to be atypical in terms of demand in the immediate run-up to Lunar New Year, which begins Feb. 17. Factories in China will close for at least a week for the holiday, which normally causes a freight surge of some magnitude before the doors shut. But not this year. “I would say demand is muted. There’s still uncertainty among retailers about tariffs,” an ocean carrier executive told the Journal of Commerce. “There has already been frontloading of spring merchandise.” To the extent there was any so-called rush at all, even in January, it is “clearly behind us,” said Peter Sand, chief analyst for the rate benchmarking platform Xeneta. “[This year] is another year where supply growth exceeds demand growth,” Sand said. Downward movement in spot rates before the Lunar New Year factory closures is largely the result of the weak demand from retailers and other importers. North Asia to US West Coast spot rates that started January at $2,075 per FEU were at $1,900 as of Tuesday, according to Platts, a sister company of the Journal of Commerce within S&amp;P Global. Drewry had Shanghai-to-Los Angeles rates at $3,132 per FEU on Jan. 8, but those had fallen to $2,442 by month’s end. Shanghai-West Coast rates of $1,867 per FEU from the Shanghai Shipping Exchange as of Jan. 30 were down from $2,188 at the start of the month. According to all the indexes, current spot rates are about 50% lower than they were a year ago. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="7f641553-97ec-4014-8e54-fef6408538d9"></dynamic-object></div>A forwarder who spoke with the Journal of Commerce noted that the lower listed spot rates this week are only part of the story. Carriers are continuing to offer discount rates, known as bullet or voyage-specific rates, that are as much as several hundred dollars lower than the posted spot/freight-all-kinds (FAK) rates. For example, some lines are offering bullet rates of $1,750 per FEU to the West Coast and $2,500 per FEU to the East Coast, and they are readily available to shippers. “It’s the bullet rates that are moving cargo,” the source said. That pricing structure would seem to indicate that retailers and other importers will have leverage entering annual service contract negotiations that are already underway and will pick up in intensity in early March following the Journal of Commerce’s TPM26 conference in Long Beach. <h3>Blank sailings accelerating </h3>Meanwhile, blank sailings, another demand barometer, are accelerating in February. Data from eeSea shows that carriers intend thus far to blank 206,835 TEUs of capacity this month on the Asia-to-West Coast trade, up from 107,318 TEUs in January. From Asia to the East and Gulf coasts, the blanks so far in February are at 96,881 TEUs, according to eeSea, up from 77,339 TEUs in January. “Carriers are blanking extensively in the weeks commencing Feb. 23 and March 2 in classic response to the lower exports out of China as a result of the CNY festive days,” Xeneta’s Sand said. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e5c8a2a0-9aa5-4787-bbed-bf4b7a9f9677"></dynamic-object></div>US retailers have already forecast weaker cargo volumes over the next three months. Global Port Tracker, published monthly by the National Retail Federation (NRF), forecasts that US imports in February will be down 4.6% from the same month a year earlier, with March imports down 12.6% and April down 8.1% from the year-earlier months. US import volumes are also impacted by the confidence of consumers to spend. According to the Conference Board, a think tank, the consumer confidence index fell to 84.5 in January, well below market expectations and the lowest reading since May 2014. “Confidence collapsed in January as consumer concerns about both the present situation and expectations for the future deepened,” said Dana Peterson, chief economist at the Conference Board. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>.Contact Mark Szakonyi at <a href="https://www.joc.com/article/mark.szakonyi@spglobal.com">mark.szakonyi@spglobal.com</a>.</div>

Softer spot rates, weak volume forecasts and poor consumer sentiment spell one thing in the tariff-weary trans-Pacific container market: The traditional pre-Lunar New Year rush of cargo is not happening in 2026. Sources say sustained weak market fundamentals have caused this year to be atypical in terms of demand in the immediate run-up to Lunar New Year, which begins Feb. 17. Factories in China will close for at least a week for the holiday, which normally causes a freight surge of some magnitude before the doors shut. But not this year. “I would say demand is muted. There’s still uncertainty among retailers about tariffs,” an ocean carrier executive told the Journal of Commerce. “There has already been frontloading of spring merchandise.” To the extent there was any so-called rush at all, even in January, it is “clearly behind us,” said Peter Sand, chief analyst for the rate benchmarking platform Xeneta. “[This year] is another year where supply growth exceeds demand growth,” Sand said. Downward movement in spot rates before the Lunar New Year factory closures is largely the result of the weak demand from retailers and other importers. North Asia to US West Coast spot rates that started January at $2,075 per FEU were at $1,900 as of Tuesday, according to Platts, a sister company of the Journal of Commerce within S&P Global. Drewry had Shanghai-to-Los Angeles rates at $3,132 per FEU on Jan. 8, but those had fallen to $2,442 by month’s end. Shanghai-West Coast rates of $1,867 per FEU from the Shanghai Shipping Exchange as of Jan. 30 were down from $2,188 at the start of the month. According to all the indexes, current spot rates are about 50% lower than they were a year ago. A forwarder who spoke with the Journal of Commerce noted that the lower listed spot rates this week are only part of the story. Carriers are continuing to offer discount rates, known as bullet or voyage-specific rates, that are as much as several hundred dollars lower than the posted spot/freight-all-kinds (FAK) rates. For example, some lines are offering bullet rates of $1,750 per FEU to the West Coast and $2,500 per FEU to the East Coast, and they are readily available to shippers. “It’s the bullet rates that are moving cargo,” the source said. That pricing structure would seem to indicate that retailers and other importers will have leverage entering annual service contract negotiations that are already underway and will pick up in intensity in early March following the Journal of Commerce’s TPM26 conference in Long Beach. Blank sailings accelerating Meanwhile, blank sailings, another demand barometer, are accelerating in February. Data from eeSea shows that carriers intend thus far to blank 206,835 TEUs of capacity this month on the Asia-to-West Coast trade, up from 107,318 TEUs in January. From Asia to the East and Gulf coasts, the blanks so far in February are at 96,881 TEUs, according to eeSea, up from 77,339 TEUs in January. “Carriers are blanking extensively in the weeks commencing Feb. 23 and March 2 in classic response to the lower exports out of China as a result of the CNY festive days,” Xeneta’s Sand said. US retailers have already forecast weaker cargo volumes over the next three months. Global Port Tracker, published monthly by the National Retail Federation (NRF), forecasts that US imports in February will be down 4.6% from the same month a year earlier, with March imports down 12.6% and April down 8.1% from the year-earlier months. US import volumes are also impacted by the confidence of consumers to spend. According to the Conference Board, a think tank, the consumer confidence index fell to 84.5 in January, well below market expectations and the lowest reading since May 2014. “Confidence collapsed in January as consumer concerns about both the present situation and expectations for the future deepened,” said Dana Peterson, chief economist at the Conference Board. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .Contact Mark Szakonyi at  mark.szakonyi@spglobal.com .

Forwarding

Tariffs claim another victim on the trans-Pacific: the pre-LNY cargo surge

<div class="phx-topic abstract-wrapper">With few opportunities for large-scale consolidation and freight rates under growing pressure from slowing volumes and the largest-ever order book, liners will need to look elsewhere to save costs; it won’t be long before AI offers up ready solutions, writes Peter Tirschwell.</div>

With few opportunities for large-scale consolidation and freight rates under growing pressure from slowing volumes and the largest-ever order book, liners will need to look elsewhere to save costs; it won’t be long before AI offers up ready solutions, writes Peter Tirschwell.

<div class="phx-topic">Freight transportation companies, including ocean carriers, closely scrutinize the cost structure of their competitors. The reason is existential: In highly competitive and quasi-commodity markets, companies with lower costs can undercut the competition, walking away with customers, revenues and market share. With artificial intelligence (AI) entering the picture, offering the potential for mass-automation of human tasks, an ever-present focus on cost is set to be hyper-charged. The race is on to leverage AI to lower costs as quickly and aggressively as possible, with one forwarder telling the Journal of Commerce the urgency is more a matter of remaining competitive — and ultimately remaining in business — than improving profitability. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6162804_0.1.jpg"></img></div>“One issue that stands out is the opportunity to use AI to cut costs ... the supply chain sector is ripe for major cost savings,” Benjamin Gordon, managing partner of Cambridge Capital, <a href="https://www.linkedin.com/posts/bengordon18_bgsaconference-activity-7422998274158137344-KhAK?utm_source=share&amp;utm_medium=member_desktop&amp;rcm=ACoAAADfW-8BOfvVS8-hsN9U369b-ZDwYA85OWY">wrote in late January</a> following his annual BGSA Supply Chain Conference. Among ocean container carriers, blocks of cost were taken out over decades through a series of mergers and acquisitions that took the market share of the top 10 carriers from about 50% in the mid-1990s to nearly 85% today, according to Alphaliner. But with few further opportunities for large-scale consolidation and freight rates under growing pressure from slowing volumes and the largest-ever order book, carriers will need to look elsewhere. It won’t be long before AI offers up ready solutions. The reason, some way, is that big new pockets of cost are able to be removed by automating a range of core carrier processes including customer service, dispute resolution, scrutiny of vendor invoices, and the order-to-cash cycle. <h3>Customer service inquires primed for automation </h3>Customer service is a prime target. Customer inquiries regarding vessel ETA, last free day, extension on free time, whether a bill of lading (BoL) has been sent or if a draft BoL can be sent, all are standardized processes ripe for automation, said Siddharth Vijay, founder of New York-based Lynk Labs, which is building AI agents to automate core operational workflows at supply chain companies. Vijay estimates that 40% of ocean carrier customer service volume can be automated, with humans left to focus on exceptions. “I estimate this number can get up to 70% in the next two years,” he told the Journal of Commerce. Assuming a $30,000 fully loaded headcount cost per customer service representative, if a carrier has 2,000 staff, the savings would be about $24 million per year. If the staff count is 5,000, the savings could reach $60 million per year, Vijay estimated. Those numbers are too big to be ignored. “This only accounts for the headcount savings,” he said. “The other large value proposition is improving customer relationships with timely, rapid answers,” a key KPI for customer service teams. It is unlikely that ocean carriers, even though they tend to be conservative organizations, will not soon begin exploring such opportunities given the competitive implications. In the area of dispute resolution, to handle thousands of billing and service disputes, ocean carriers employ small armies to research history, exceptions and documentation required to resolve the dispute. Vijay said AI can make the process vastly more efficient by identifying root causes of disputes to enable carriers to proactively fix systemic issues, summarizing disputes and suggesting resolutions to improve handling time per dispute and reducing the number of disputes. <h3>AI and carrier decision-making a ‘very viable’ pairing </h3>For ocean carriers, there may be an even bigger prize from large-scale integration of AI. Could AI one day soon drive core carrier decision-making regarding when to accept or reject bookings, where to position empty containers, what ports to call, when to blank sailings, and where to deploy ships, all rolled up into running the business to maximize profit? Such a scenario is “very viable,” Vijay said. “I don’t think it is far-fetched at all,” he said. “At its core, this is what we call a constrained optimization problem. Given vessels, capacity, rates, port constraints, and customer commitments, etc., what is the profit-maximizing network?” “The hardest part isn’t the AI algorithm itself; it’s aggregating clean, operational data across the carrier and having enough representative historical examples to ‘train’ and validate the system,” Vijay added. “In other words, it’s fundamentally a data availability problem.” Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>.</div>

Freight transportation companies, including ocean carriers, closely scrutinize the cost structure of their competitors. The reason is existential: In highly competitive and quasi-commodity markets, companies with lower costs can undercut the competition, walking away with customers, revenues and market share. With artificial intelligence (AI) entering the picture, offering the potential for mass-automation of human tasks, an ever-present focus on cost is set to be hyper-charged. The race is on to leverage AI to lower costs as quickly and aggressively as possible, with one forwarder telling the Journal of Commerce the urgency is more a matter of remaining competitive — and ultimately remaining in business — than improving profitability. “One issue that stands out is the opportunity to use AI to cut costs ... the supply chain sector is ripe for major cost savings,” Benjamin Gordon, managing partner of Cambridge Capital, wrote in late January following his annual BGSA Supply Chain Conference. Among ocean container carriers, blocks of cost were taken out over decades through a series of mergers and acquisitions that took the market share of the top 10 carriers from about 50% in the mid-1990s to nearly 85% today, according to Alphaliner. But with few further opportunities for large-scale consolidation and freight rates under growing pressure from slowing volumes and the largest-ever order book, carriers will need to look elsewhere. It won’t be long before AI offers up ready solutions. The reason, some way, is that big new pockets of cost are able to be removed by automating a range of core carrier processes including customer service, dispute resolution, scrutiny of vendor invoices, and the order-to-cash cycle. Customer service inquires primed for automation Customer service is a prime target. Customer inquiries regarding vessel ETA, last free day, extension on free time, whether a bill of lading (BoL) has been sent or if a draft BoL can be sent, all are standardized processes ripe for automation, said Siddharth Vijay, founder of New York-based Lynk Labs, which is building AI agents to automate core operational workflows at supply chain companies. Vijay estimates that 40% of ocean carrier customer service volume can be automated, with humans left to focus on exceptions. “I estimate this number can get up to 70% in the next two years,” he told the Journal of Commerce. Assuming a $30,000 fully loaded headcount cost per customer service representative, if a carrier has 2,000 staff, the savings would be about $24 million per year. If the staff count is 5,000, the savings could reach $60 million per year, Vijay estimated. Those numbers are too big to be ignored. “This only accounts for the headcount savings,” he said. “The other large value proposition is improving customer relationships with timely, rapid answers,” a key KPI for customer service teams. It is unlikely that ocean carriers, even though they tend to be conservative organizations, will not soon begin exploring such opportunities given the competitive implications. In the area of dispute resolution, to handle thousands of billing and service disputes, ocean carriers employ small armies to research history, exceptions and documentation required to resolve the dispute. Vijay said AI can make the process vastly more efficient by identifying root causes of disputes to enable carriers to proactively fix systemic issues, summarizing disputes and suggesting resolutions to improve handling time per dispute and reducing the number of disputes. AI and carrier decision-making a ‘very viable’ pairing For ocean carriers, there may be an even bigger prize from large-scale integration of AI. Could AI one day soon drive core carrier decision-making regarding when to accept or reject bookings, where to position empty containers, what ports to call, when to blank sailings, and where to deploy ships, all rolled up into running the business to maximize profit? Such a scenario is “very viable,” Vijay said. “I don’t think it is far-fetched at all,” he said. “At its core, this is what we call a constrained optimization problem. Given vessels, capacity, rates, port constraints, and customer commitments, etc., what is the profit-maximizing network?” “The hardest part isn’t the AI algorithm itself; it’s aggregating clean, operational data across the carrier and having enough representative historical examples to ‘train’ and validate the system,” Vijay added. “In other words, it’s fundamentally a data availability problem.” Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

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