<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.

Feature image

<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. 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 .

Trucking News

Surface

ODFL ‘cautiously optimistic’ about LTL demand despite lackluster Q4

<div class="phx-topic abstract-wrapper">The decision by the Panama Supreme Court has provoked angry responses from both the Chinese and Hong Kong governments, with Beijing warning that Panama would “pay a heavy price both politically and economically.”</div>

The decision by the Panama Supreme Court has provoked angry responses from both the Chinese and Hong Kong governments, with Beijing warning that Panama would “pay a heavy price both politically and economically.”

<div class="phx-topic">Panama Ports Company (PPC) is seeking “extensive damages” after launching arbitration proceedings against the government of Panama following the decision of the country’s Supreme Court last week to void the company’s concessions to operate the Cristobal and Balboa ports. PPC had held the concessions for 28 years. The port company, 90% controlled by Hutchison Port Holdings, a subsidiary of Hong Kong-listed conglomerate CK Hutchison, said Wednesday the Panamanian government has already started to take control of the terminals that bookend the Panama Canal even though the court decision has yet to be published and finalized. “The steps taken by the state have included unexpected site visits and instructions that PPC provide unrestricted access to physical, commercial, and intellectual property and information, as well as to employees, on the basis that the state is systematizing and executing a port transition plan through coordinated actions of state authorities,” PPC said in a statement. APM Terminals (AMPT), which was appointed by the Panama Maritime Authority <a href="https://www.joc.com/article/apmt-to-run-hutchisons-panama-terminals-on-interim-basis-after-court-ruling-6161534">as interim administrator of the two terminals a day after the court’s decision</a>, would not comment on whether it had taken part in the site visits or other actions following the court ruling. “At this moment, we have no further comments to share other than what we have released on our website,” an APMT spokesperson said. “For any next steps we refer to the relevant authorities in Panama.” CK Hutchison on Wednesday said it “continues to consult with its legal counsel and reserves all rights, including recourse to additional national and international legal proceedings.” <h3>Beijing says Panama will ‘pay a heavy price’ </h3>The Supreme Court decision can only be delayed, not overturned, and legal proceedings such as those launched by PPC can linger for years and often go nowhere. The move appears to be more of an effort by Hutchison to show investors that it is exhausting all options even if there is no path forward. The decision by the Panamanian court has provoked an angry response from both the Chinese and Hong Kong governments, with Beijing’s Hong Kong and Macao Affairs Office warning Panama would “pay a heavy price both politically and economically.” The Hong Kong government said the Panama government “should respect the spirit of contracts and provide a fair and just business environment for companies operating legally there, ensuring that the legitimate rights of enterprises are free from any interference.” Interestingly, in a separate case, a ruling three years ago by Panama’s Supreme Court resulted in the closure of a major copper mine in the country, although there seems to be <a href="https://nam11.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.msn.com%2Fen-us%2Fmoney%2Fother%2Fpanama-and-canada-are-caught-in-a-dispute-over-a-copper-mine%2Far-AA1UL4T1%3Focid%3DBingNewsSerp&amp;data=05%7C02%7Ckevin.saville2%40spglobal.com%7C4a5fd62251cd4285f25808de63f3221d%7C8f3e36ea80394b4081a77dc0599e8645%7C1%7C0%7C639058093052350394%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&amp;sdata=8gpwQrSg12fJdYx5%2FwrCwv4DiH9wtV%2B7213f6JROaOE%3D&amp;reserved=0">developments underway that could result in the mine’s reopening</a>. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>.</div>

Panama Ports Company (PPC) is seeking “extensive damages” after launching arbitration proceedings against the government of Panama following the decision of the country’s Supreme Court last week to void the company’s concessions to operate the Cristobal and Balboa ports. PPC had held the concessions for 28 years. The port company, 90% controlled by Hutchison Port Holdings, a subsidiary of Hong Kong-listed conglomerate CK Hutchison, said Wednesday the Panamanian government has already started to take control of the terminals that bookend the Panama Canal even though the court decision has yet to be published and finalized. “The steps taken by the state have included unexpected site visits and instructions that PPC provide unrestricted access to physical, commercial, and intellectual property and information, as well as to employees, on the basis that the state is systematizing and executing a port transition plan through coordinated actions of state authorities,” PPC said in a statement. APM Terminals (AMPT), which was appointed by the Panama Maritime Authority as interim administrator of the two terminals a day after the court’s decision , would not comment on whether it had taken part in the site visits or other actions following the court ruling. “At this moment, we have no further comments to share other than what we have released on our website,” an APMT spokesperson said. “For any next steps we refer to the relevant authorities in Panama.” CK Hutchison on Wednesday said it “continues to consult with its legal counsel and reserves all rights, including recourse to additional national and international legal proceedings.” Beijing says Panama will ‘pay a heavy price’ The Supreme Court decision can only be delayed, not overturned, and legal proceedings such as those launched by PPC can linger for years and often go nowhere. The move appears to be more of an effort by Hutchison to show investors that it is exhausting all options even if there is no path forward. The decision by the Panamanian court has provoked an angry response from both the Chinese and Hong Kong governments, with Beijing’s Hong Kong and Macao Affairs Office warning Panama would “pay a heavy price both politically and economically.” The Hong Kong government said the Panama government “should respect the spirit of contracts and provide a fair and just business environment for companies operating legally there, ensuring that the legitimate rights of enterprises are free from any interference.” Interestingly, in a separate case, a ruling three years ago by Panama’s Supreme Court resulted in the closure of a major copper mine in the country, although there seems to be developments underway that could result in the mine’s reopening . Contact Keith Wallis at keithwallis@hotmail.com .

Port News

Marine terminals

International ports

Container Shipping News

Maritime

Panama Ports seeks ‘extensive damages’ after terminal concessions canceled

<div class="phx-topic abstract-wrapper">Spot intermodal savings reached record levels in the fourth quarter, but railroads might hold back on raising rates as the disruptive winter weather has skewed trucking rates. </div>

Spot intermodal savings reached record levels in the fourth quarter, but railroads might hold back on raising rates as the disruptive winter weather has skewed trucking rates.

<div class="phx-topic">US shippers saved 25.6% on spot market freight — a record— and 25.4% on contract loads in the fourth quarter by using domestic intermodal instead of long-haul trucking amid a rise in truckload spot rates, according to the latest Journal of Commerce <a href="https://www.joc.com/resources/special-reports/intermodal-savings-index">Intermodal Savings Index</a> (ISI). It’s the first time in the history of the ISI, dating back to 2016, that the spot market index was higher than the contract index. The driver was unusually frigid weather and snowstorms in the US in December that caused spot truckload rates to jump, while railroads have continued to keep spot market rates low. Railroads tend to lag truckload rates, jacking up pricing only after there is strong enough evidence that truckload markets have inflected toward motor carriers. Given the severe winter weather in January, it remains to be seen whether railroads take the opportunity to increase spot rates in the first quarter or hold back until normal weather conditions return and gauge the trucking market only then. North American railroads hauled 2.29 million domestic containers in the fourth quarter, up 2.2% compared with a year earlier, according to the Intermodal Association of North America (IANA). The results were slightly higher than the Journal of Commerce forecast of 2.26 million loads for the fourth quarter. There was an additional 1.5 working days in the fourth quarter compared with the same quarter of 2024, according to a Journal of Commerce calculation, which assigns weightings to each day of the week, and holidays, based on historical data from the US Surface Transportation Board. The Spot ISI averaged 125.6 in the fourth quarter, up from 120.2 a year earlier. The Contract ISI slipped to 125.4 from 126.4 a year earlier. Index values above 100 indicate intermodal is the more cost-effective mode; the higher the index number, the greater the savings. A spot ISI of 125.6 translates to a 25.6% savings on intermodal versus truckload, while a contract ISI of 125.4 implies a 25.4% savings. All calculations assume local drayage at origin and destination, so shippers with distribution centers more than 30 minutes from the terminal will save less than the index values. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="9f0dff14-0731-4ad3-859c-d093757d1ed4"></dynamic-object></div>Per-mile rates show how the trucking market impacted results. Spot truckload rates jumped 20 cents to $2.15 per mile on indexed lanes between Sept. 30 and Dec. 31, while spot intermodal rates on the same lanes were unchanged. Contract truckload rates increased by a penny per mile during the quarter, while contract intermodal rates rose by a half-cent in the same period. In terms of raw dollars, intermodal shippers saved an average of $800 per container on the spot market in the fourth quarter compared with truckload, and $870 per container on the contract market. In the fourth quarter of 2024, the average spot intermodal load saved $700 per container, with the contract load saving $925 per container. <h3>Intermodal will follow truckload recovery </h3>Two of the top US domestic intermodal providers said the market did not turn around enough in the fourth quarter to give them pricing leverage, but it will once the truckload market rebounds. Based on past cycles, truckload spot markets tend to move first, followed by truckload contract rates, and then intermodal prices shift higher once shippers begin to feel capacity constraints or budget pressure. “[It’ll take] a little more time before we see intermodal prices catch up to what we expect in truckload,” said Mark Rourke, CEO of Schneider, on a Jan. 29 earnings call. Jim Filter, executive vice president of Schneider, said the company will capitalize on intermodal opportunities when the truckload market improves and “inventory levels are starting to be replenished.” The top US intermodal provider, J.B. Hunt, also did not call for an immediate rise in intermodal prices. “We’re a little bit hesitant to suggest that we think there’s some big pricing opportunity, but we will be quick to identify when we see the market shift,” Darren Field, president of J.B. Hunt’s intermodal division, said on a Jan. 15 earnings call. Shippers have told the Journal of Commerce that there are some minor rate increases on west-to-east rail freight, particularly originating in Southern California, but pricing remains flattish in other origins such as the Pacific Northwest and Mexico. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>. The data behind the Contract ISI and Spot ISI is available to Journal of Commerce subscribers with a Gold-tier subscription. </div>

US shippers saved 25.6% on spot market freight — a record— and 25.4% on contract loads in the fourth quarter by using domestic intermodal instead of long-haul trucking amid a rise in truckload spot rates, according to the latest Journal of Commerce Intermodal Savings Index (ISI). It’s the first time in the history of the ISI, dating back to 2016, that the spot market index was higher than the contract index. The driver was unusually frigid weather and snowstorms in the US in December that caused spot truckload rates to jump, while railroads have continued to keep spot market rates low. Railroads tend to lag truckload rates, jacking up pricing only after there is strong enough evidence that truckload markets have inflected toward motor carriers. Given the severe winter weather in January, it remains to be seen whether railroads take the opportunity to increase spot rates in the first quarter or hold back until normal weather conditions return and gauge the trucking market only then. North American railroads hauled 2.29 million domestic containers in the fourth quarter, up 2.2% compared with a year earlier, according to the Intermodal Association of North America (IANA). The results were slightly higher than the Journal of Commerce forecast of 2.26 million loads for the fourth quarter. There was an additional 1.5 working days in the fourth quarter compared with the same quarter of 2024, according to a Journal of Commerce calculation, which assigns weightings to each day of the week, and holidays, based on historical data from the US Surface Transportation Board. The Spot ISI averaged 125.6 in the fourth quarter, up from 120.2 a year earlier. The Contract ISI slipped to 125.4 from 126.4 a year earlier. Index values above 100 indicate intermodal is the more cost-effective mode; the higher the index number, the greater the savings. A spot ISI of 125.6 translates to a 25.6% savings on intermodal versus truckload, while a contract ISI of 125.4 implies a 25.4% savings. All calculations assume local drayage at origin and destination, so shippers with distribution centers more than 30 minutes from the terminal will save less than the index values. Per-mile rates show how the trucking market impacted results. Spot truckload rates jumped 20 cents to $2.15 per mile on indexed lanes between Sept. 30 and Dec. 31, while spot intermodal rates on the same lanes were unchanged. Contract truckload rates increased by a penny per mile during the quarter, while contract intermodal rates rose by a half-cent in the same period. In terms of raw dollars, intermodal shippers saved an average of $800 per container on the spot market in the fourth quarter compared with truckload, and $870 per container on the contract market. In the fourth quarter of 2024, the average spot intermodal load saved $700 per container, with the contract load saving $925 per container. Intermodal will follow truckload recovery Two of the top US domestic intermodal providers said the market did not turn around enough in the fourth quarter to give them pricing leverage, but it will once the truckload market rebounds. Based on past cycles, truckload spot markets tend to move first, followed by truckload contract rates, and then intermodal prices shift higher once shippers begin to feel capacity constraints or budget pressure. “[It’ll take] a little more time before we see intermodal prices catch up to what we expect in truckload,” said Mark Rourke, CEO of Schneider, on a Jan. 29 earnings call. Jim Filter, executive vice president of Schneider, said the company will capitalize on intermodal opportunities when the truckload market improves and “inventory levels are starting to be replenished.” The top US intermodal provider, J.B. Hunt, also did not call for an immediate rise in intermodal prices. “We’re a little bit hesitant to suggest that we think there’s some big pricing opportunity, but we will be quick to identify when we see the market shift,” Darren Field, president of J.B. Hunt’s intermodal division, said on a Jan. 15 earnings call. Shippers have told the Journal of Commerce that there are some minor rate increases on west-to-east rail freight, particularly originating in Southern California, but pricing remains flattish in other origins such as the Pacific Northwest and Mexico. Contact Ari Ashe at ari.ashe@spglobal.com . The data behind the Contract ISI and Spot ISI is available to Journal of Commerce subscribers with a Gold-tier subscription.

Rail News

North-American rail

Intermodal providers

Spot intermodal savings spiked in Q4, but providers remain cautious

<div class="phx-topic abstract-wrapper">Multiple local sources told the Journal of Commerce the escalating unrest that entered its fifth day Wednesday has brought all port operations, including vessel berthing and cargo clearance, to a halt. </div>

Multiple local sources told the Journal of Commerce the escalating unrest that entered its fifth day Wednesday has brought all port operations, including vessel berthing and cargo clearance, to a halt. 

<div class="phx-topic">Mainline and feeder operators covering trades out of Bangladesh are reporting serious supply chain disruptions from near week-long strike action and protests by dockers and employees at Chittagong Port, the country's chief gateway. The workforce is pushing back against a recent government decision to hand over Chittagong’s busiest box terminal, the New Mooring Container Terminal (NCL), to DP World under a long-term lease deal. Multiple local sources told the Journal of Commerce the escalating unrest that entered its fifth day Wednesday has brought all port operations, including vessel berthing and cargo clearance, to a halt. “There is a full operational standstill at the moment and it’s going to be chaotic for some time even after resumption of services,” said a feeder line executive who did not want to be identified. <h3>Approximately 40 ships said to be at anchorage </h3>Mainline carriers, including Maersk and Ocean Network Express (ONE), have warned customers about potential shipping risks for their freight as the situation remains in a state of flux. “Operations within the port, including the movement of trucks between terminals, have been completely suspended,” a spokesperson for Maersk told the Journal of Commerce. “Maersk is closely monitoring the ongoing strike at Chittagong [Chattogram] Port and is in constant communication with the relevant port and government to understand the situation and its implications for cargo operations.” Maersk commands about 30% of Bangladeshi containerized trade, according to anecdotal industry data. Singapore-based ONE said in a customer advisory the deteriorating situation could hobble export and import trade through Chittagong, adding “it is keeping an eye on the developing port situation.” A Chittagong-based ship agent who spoke with the Journal of Commerce estimated the number of ships waiting at anchorage to enter the port at about 40 as of Wednesday afternoon local time and cargo stranded at the dock at approximately 10,000 TEUs. The agent also noted that off-dock storage yards are holding large export volumes as freight vehicles continue to accumulate in queues outside the port to drop off boxes. Chittagong handled 3.4 million TEUs in 2025, up 4% year over year, according to available data. Contact Bency Mathew at <a href="mailto:bencyvmathew@gmail.com">bencyvmathew@gmail.com</a>. </div>

Mainline and feeder operators covering trades out of Bangladesh are reporting serious supply chain disruptions from near week-long strike action and protests by dockers and employees at Chittagong Port, the country's chief gateway. The workforce is pushing back against a recent government decision to hand over Chittagong’s busiest box terminal, the New Mooring Container Terminal (NCL), to DP World under a long-term lease deal. Multiple local sources told the Journal of Commerce the escalating unrest that entered its fifth day Wednesday has brought all port operations, including vessel berthing and cargo clearance, to a halt. “There is a full operational standstill at the moment and it’s going to be chaotic for some time even after resumption of services,” said a feeder line executive who did not want to be identified. Approximately 40 ships said to be at anchorage Mainline carriers, including Maersk and Ocean Network Express (ONE), have warned customers about potential shipping risks for their freight as the situation remains in a state of flux. “Operations within the port, including the movement of trucks between terminals, have been completely suspended,” a spokesperson for Maersk told the Journal of Commerce. “Maersk is closely monitoring the ongoing strike at Chittagong [Chattogram] Port and is in constant communication with the relevant port and government to understand the situation and its implications for cargo operations.” Maersk commands about 30% of Bangladeshi containerized trade, according to anecdotal industry data. Singapore-based ONE said in a customer advisory the deteriorating situation could hobble export and import trade through Chittagong, adding “it is keeping an eye on the developing port situation.” A Chittagong-based ship agent who spoke with the Journal of Commerce estimated the number of ships waiting at anchorage to enter the port at about 40 as of Wednesday afternoon local time and cargo stranded at the dock at approximately 10,000 TEUs. The agent also noted that off-dock storage yards are holding large export volumes as freight vehicles continue to accumulate in queues outside the port to drop off boxes. Chittagong handled 3.4 million TEUs in 2025, up 4% year over year, according to available data. Contact Bency Mathew at bencyvmathew@gmail.com .

Longshore labor

Labor strike at Chittagong Port cripples Bangladesh container flows

<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 .

Container lines

Forwarding

Trans-Pacific

North American ports

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

<div class="phx-topic abstract-wrapper">Just days after last week’s storm shut terminals and disrupted shipping schedules, Maersk warned that weather in the region has “deteriorated beyond initial expectations.”</div>

Just days after last week’s storm shut terminals and disrupted shipping schedules, Maersk warned that weather in the region has “deteriorated beyond initial expectations.”

<div class="phx-topic">Severe Atlantic storms continue to batter the Bay of Biscay and Western Mediterranean, with container terminals in Morocco and southern Spain forced to shut for the second time in a week. CMA CGM has even announced an “emergency operational recovery” surcharge of $100 per container beginning Feb. 5 for all cargo to the port of Casablanca, which has been heavily impacted by the weather conditions. “Casablanca has been forced to close for almost half of the days in January — an unprecedented situation,” CMA CGM told customers in an advisory this week. “New closures have already been announced for February, driven by the same extreme swell and wind patterns that continue to make safe operations impossible.” Vessel crossings resumed through the Bay of Biscay on Saturday and Sunday and terminal operations were restarted, but Maersk warned customers in an advisory Wednesday that the weather in the region has now “deteriorated beyond initial expectations.” “This means that terminals are expected to close for longer than anticipated, and vessels will be leaving their berths for safety at the latest [Feb. 3],” the carrier said. “This unfortunately also means that vessel schedules will be further delayed, again impacting operations in the Western Mediterranean, Northern Europe and beyond.” The main transshipment terminals affected at the entrance to the Mediterranean are Tanger-Med in Morocco and Algeciras in Spain. A series of extreme winter storms have hammered Europe this year, bringing huge swells and gale force winds to the Western Mediterranean and <a href="https://www.joc.com/article/severe-winter-storm-disrupts-north-europe-port-inland-operations-6148334">freezing temperatures hampering terminal and yard operations</a> in North Europe ports. Contact Greg Knowler at <a href="">greg.knowler@spglobal.com</a>.    </div>

Severe Atlantic storms continue to batter the Bay of Biscay and Western Mediterranean, with container terminals in Morocco and southern Spain forced to shut for the second time in a week. CMA CGM has even announced an “emergency operational recovery” surcharge of $100 per container beginning Feb. 5 for all cargo to the port of Casablanca, which has been heavily impacted by the weather conditions. “Casablanca has been forced to close for almost half of the days in January — an unprecedented situation,” CMA CGM told customers in an advisory this week. “New closures have already been announced for February, driven by the same extreme swell and wind patterns that continue to make safe operations impossible.” Vessel crossings resumed through the Bay of Biscay on Saturday and Sunday and terminal operations were restarted, but Maersk warned customers in an advisory Wednesday that the weather in the region has now “deteriorated beyond initial expectations.” “This means that terminals are expected to close for longer than anticipated, and vessels will be leaving their berths for safety at the latest [Feb. 3],” the carrier said. “This unfortunately also means that vessel schedules will be further delayed, again impacting operations in the Western Mediterranean, Northern Europe and beyond.” The main transshipment terminals affected at the entrance to the Mediterranean are Tanger-Med in Morocco and Algeciras in Spain. A series of extreme winter storms have hammered Europe this year, bringing huge swells and gale force winds to the Western Mediterranean and freezing temperatures hampering terminal and yard operations in North Europe ports. Contact Greg Knowler at  greg.knowler@spglobal.com .    

Trans-Atlantic

Asia-Europe

Atlantic storms force terminals in Western Mediterranean to close again

<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 .

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 .

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

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 .    

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 .

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">Amid new threats from Houthi militants and the arrival of a US carrier strike group in the region, carriers — and their customers — are once again wondering when they will be able to safely transit the Red Sea/Suez route.</div>

Amid new threats from Houthi militants and the arrival of a US carrier strike group in the region, carriers — and their customers — are once again wondering when they will be able to safely transit the Red Sea/Suez route.

<div class="phx-topic">Shippers on the trades linking Asia to Europe and the US East Coast hoping for a resumption of Red Sea and Suez Canal transits remain at the mercy of factors out of their control as the regional security situation deteriorates anew. A US carrier strike group has arrived in the Gulf of Oman to back up another threat by President Donald Trump to take military action against Iran, this time over the lack of progress in a nuclear deal. Tehran has vowed to respond to any attacks, which may spill over into the southern Red Sea controlled by Iran-supported Houthi militants. And that leaves carriers, and their customers, once again wondering when they will be able to safely transit the Red Sea/Suez route, more than two years after the Houthis began their attacks on commercial shipping. “Shippers are faced with the greatest challenges out there right now,” said Destine Ozuygur, senior market analyst at rate benchmarking platform Xeneta. “They’re at the bottom of the operational decision funnel, which leaves them more vulnerable to shocks or setbacks than any other stakeholder in the equation.” Shippers, Ozuygur told the Journal of Commerce, are forced to create a procurement strategy that “rests on their ability to surmise the behavior of carriers, insurers, politicians [and] militias.” “Even with a complex framework of decision-making tools, operational insights and the best data visibility out there, we can’t confidently predict the next six weeks, let alone the next six days in a scenario like this,” she said. The complexity that confounds shipping analysis was illustrated in developments this month. After two years of diversions around southern Africa, expectations that head-haul Suez voyages would likely resume after the Lunar New Year gathered momentum when Maersk on Jan. 15 announced that <a href="https://www.joc.com/article/maersk-set-to-resume-regular-suez-transits-on-india-usec-mecl-loop-sources-6152441">a Middle East-US East Coast service would be routed through the Red Sea</a>. But the ink was barely dry on that announcement when CMA CGM, one of the main Red Sea users over the past two years, said it would <a href="https://www.joc.com/article/cma-cgm-backs-off-plans-to-resume-suez-transits-for-asia-europe-services-6155264">scale back plans to send three Asia-Europe westbound services through the Suez</a>, citing the “complex and uncertain international context.” A week later, the Iran-backed Houthi released two videos warning that <a href="https://www.joc.com/article/latest-houthi-threat-renews-questions-about-suez-route-as-us-iran-tensions-rise-6158709">ship attacks could resume “soon,”</a> just days before the US carrier strike group led by the USS Abraham Lincoln arrived with Trump’s new attack threat on Tehran. <h3>Frustrating turn of events </h3>It has been a frustrating turn of events for shippers eager to return to the shorter Suez route. The Asia-based supply chain director for a European retailer said his company was planning for the resumption of Suez transits after Lunar New Year, which begins Feb. 17, following talks with carriers that were confident head-haul services would gradually increase. That confidence was fueled by the absence of any Houthi attacks since November, following the Israel-Hamas ceasefire the month before. “But the situation has changed again, and we are now not ready to put cargo through the Suez,” the source told the Journal of Commerce, adding that their insurance broker said cargo on ships routed through the Red Sea would not be covered in the event of an attack. Another European importer said his cargo was covered for Red Sea transits, but the high cost of premiums was prohibitive, something that remains a significant hurdle for both carriers and shippers. Marine insurance provider Allianz Commercial told the Journal of Commerce this week that cost increases for ships transiting areas requiring war insurance depended on the assessment of the Joint War Committee in London, comprised of underwriting representatives from Lloyd’s and the International Underwriting Association. “The amount of the additional premiums can be very dynamic and is evaluated by individual underwriters, typically per vessel per voyage, and reflects current developments in individual shipping areas,” a spokesperson for Allianz said. But insurance issues extend beyond costs, according to Andy Gillespie, senior logistics advisor for supply chain management firm WOWL. Shippers sending cargo through the Red Sea would need to alert insurers and obtain specific rider coverage for shipments, but he said carrier alliance networks muddied the waters. “Think of this: The carrier I book and ship with is not transiting Suez but my container with them is on a partner’s vessel that is transiting Suez,” Gillespie said. “It shouldn’t be an issue to get the riders, but shippers better be alert to which shipments will be impacted. Carriers should be communicating the routings to customers.” <h3>Security concerns make visibility difficult </h3>But that kind of visibility from carriers would be difficult to provide under the fluid security situation, believes James Hookham, director of the Global Shippers Forum. “Whether shippers and forwarders will be able to pick a ship that transits the Suez will depend on the lines publishing a schedule of their intended routes, and that might be too much information in the public domain at this time,” he said. Ozuygur also had her doubts that shippers would have the visibility they need over voyages to establish their preferred strategies of shorter transit times/high risk compared with longer transits and lower risks. “Then they must reconcile that against whether they believe the carrier will follow through on that promise, and then finally have a plan B and a plan C in place if things go sideways,” she said. “That means having a close eye on service and voyage-level data across the entire network, access to expert analysis, and visibility into carriers’ track records of transparency, communication and reliability,” Ozuygur added. According to Drewry’s Red Sea Diversion Tracker, the number of container ships sailing via the Suez Canal jumped 69% to 61 in the two-week period ending Jan. 25, from a low base of 36 transits in the previous two-week period, as large carriers and smaller niche liners balanced the changing safety risk and the potential commercial benefit of the shorter route. Contact Greg Knowler at <a href="">greg.knowler@spglobal.com</a>. </div>

Shippers on the trades linking Asia to Europe and the US East Coast hoping for a resumption of Red Sea and Suez Canal transits remain at the mercy of factors out of their control as the regional security situation deteriorates anew. A US carrier strike group has arrived in the Gulf of Oman to back up another threat by President Donald Trump to take military action against Iran, this time over the lack of progress in a nuclear deal. Tehran has vowed to respond to any attacks, which may spill over into the southern Red Sea controlled by Iran-supported Houthi militants. And that leaves carriers, and their customers, once again wondering when they will be able to safely transit the Red Sea/Suez route, more than two years after the Houthis began their attacks on commercial shipping. “Shippers are faced with the greatest challenges out there right now,” said Destine Ozuygur, senior market analyst at rate benchmarking platform Xeneta. “They’re at the bottom of the operational decision funnel, which leaves them more vulnerable to shocks or setbacks than any other stakeholder in the equation.” Shippers, Ozuygur told the Journal of Commerce, are forced to create a procurement strategy that “rests on their ability to surmise the behavior of carriers, insurers, politicians [and] militias.” “Even with a complex framework of decision-making tools, operational insights and the best data visibility out there, we can’t confidently predict the next six weeks, let alone the next six days in a scenario like this,” she said. The complexity that confounds shipping analysis was illustrated in developments this month. After two years of diversions around southern Africa, expectations that head-haul Suez voyages would likely resume after the Lunar New Year gathered momentum when Maersk on Jan. 15 announced that a Middle East-US East Coast service would be routed through the Red Sea . But the ink was barely dry on that announcement when CMA CGM, one of the main Red Sea users over the past two years, said it would scale back plans to send three Asia-Europe westbound services through the Suez , citing the “complex and uncertain international context.” A week later, the Iran-backed Houthi released two videos warning that ship attacks could resume “soon,” just days before the US carrier strike group led by the USS Abraham Lincoln arrived with Trump’s new attack threat on Tehran. Frustrating turn of events It has been a frustrating turn of events for shippers eager to return to the shorter Suez route. The Asia-based supply chain director for a European retailer said his company was planning for the resumption of Suez transits after Lunar New Year, which begins Feb. 17, following talks with carriers that were confident head-haul services would gradually increase. That confidence was fueled by the absence of any Houthi attacks since November, following the Israel-Hamas ceasefire the month before. “But the situation has changed again, and we are now not ready to put cargo through the Suez,” the source told the Journal of Commerce, adding that their insurance broker said cargo on ships routed through the Red Sea would not be covered in the event of an attack. Another European importer said his cargo was covered for Red Sea transits, but the high cost of premiums was prohibitive, something that remains a significant hurdle for both carriers and shippers. Marine insurance provider Allianz Commercial told the Journal of Commerce this week that cost increases for ships transiting areas requiring war insurance depended on the assessment of the Joint War Committee in London, comprised of underwriting representatives from Lloyd’s and the International Underwriting Association. “The amount of the additional premiums can be very dynamic and is evaluated by individual underwriters, typically per vessel per voyage, and reflects current developments in individual shipping areas,” a spokesperson for Allianz said. But insurance issues extend beyond costs, according to Andy Gillespie, senior logistics advisor for supply chain management firm WOWL. Shippers sending cargo through the Red Sea would need to alert insurers and obtain specific rider coverage for shipments, but he said carrier alliance networks muddied the waters. “Think of this: The carrier I book and ship with is not transiting Suez but my container with them is on a partner’s vessel that is transiting Suez,” Gillespie said. “It shouldn’t be an issue to get the riders, but shippers better be alert to which shipments will be impacted. Carriers should be communicating the routings to customers.” Security concerns make visibility difficult But that kind of visibility from carriers would be difficult to provide under the fluid security situation, believes James Hookham, director of the Global Shippers Forum. “Whether shippers and forwarders will be able to pick a ship that transits the Suez will depend on the lines publishing a schedule of their intended routes, and that might be too much information in the public domain at this time,” he said. Ozuygur also had her doubts that shippers would have the visibility they need over voyages to establish their preferred strategies of shorter transit times/high risk compared with longer transits and lower risks. “Then they must reconcile that against whether they believe the carrier will follow through on that promise, and then finally have a plan B and a plan C in place if things go sideways,” she said. “That means having a close eye on service and voyage-level data across the entire network, access to expert analysis, and visibility into carriers’ track records of transparency, communication and reliability,” Ozuygur added. According to Drewry’s Red Sea Diversion Tracker, the number of container ships sailing via the Suez Canal jumped 69% to 61 in the two-week period ending Jan. 25, from a low base of 36 transits in the previous two-week period, as large carriers and smaller niche liners balanced the changing safety risk and the potential commercial benefit of the shorter route. Contact Greg Knowler at  greg.knowler@spglobal.com . 

Shippers shoulder burden of Red Sea uncertainty as regional tensions rise again

<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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