<div class="phx-topic abstract-wrapper">The widely used freight forwarding software vendor said artificial intelligence is enabling it to reduce staff in roles that include programming, product development and customer service.</div>

The widely used freight forwarding software vendor said artificial intelligence is enabling it to reduce staff in roles that include programming, product development and customer service.

Feature image

<div class="phx-topic">WiseTech Global will lay off approximately 2,000 of its employees — nearly 30% of its current workforce — over the next two years because of the efficiencies artificial intelligence will bring to its ability to develop products and interact with customers, the forwarding software vendor said Wednesday. The announcement overshadowed WiseTech’s earnings release for the first half of its fiscal year and sparked a double-digit spike in the company’s share price. WiseTech CEO Zubin Appoo explained in a pre-recorded video message that the workforce reduction was due to the progression of AI tools, those developed internally and by the largest AI model developers such as Anthropic, OpenAI and Google. Cuts will come from roles that include programming, product development, and customer service. “This decision was not taken lightly, but it was necessary to ensure we stay disciplined, nimble, competitive, and future-ready,” Appoo said in the video. “A transformation of this scale will fundamentally reshape our cost base while allowing for an uplift in productivity.” The move comes months after Australia-based WiseTech shook the market <a href="https://www.joc.com/article/cargowises-pricing-model-change-could-mark-final-milestone-in-market-ascent-6133279">with a pricing model change</a> that affected virtually all of its forwarder, customs brokers and third-party logistics provider customers. It also comes as WiseTech integrates its <a href="https://www.joc.com/article/wisetech-makes-2-billion-gamble-on-overturning-complicated-software-history-6013221">largest-ever acquisition</a>, a $2.1 billion purchase of E2open last May, one that expanded the company’s customer reach from 3PLs to shippers. Taken together, those moves could be seen as WiseTech prepping itself for a future where AI transforms how software is built, sold and used, rather than waiting for those changes to undermine its business. WiseTech’s planned layoffs and its emphasis on AI can also be seen as a warning shot to software providers that either act as agentic layers on top of CargoWise — WiseTech’s flagship product — or focus on automating processes inside of CargoWise. Either way, the news will surely reverberate around the market, with software companies that have a fraction of WiseTech’s revenue and a lower operating margin asking themselves if their headcount is optimal given the impact AI is having. The move to cut a significant portion of its workforce should also be viewed through the lens that WiseTech must juggle public market scrutiny in a way that privately-held logistics technology providers do not. The narrative around AI potentially eroding the value of publicly-traded software vendors and data providers has surely spooked companies into showing that they are indeed ready for what AI will do to their products, customers, market share and profit margin. <h3>Revenue growth </h3>The announcement of layoffs comes as WiseTech reported solid financials for the first half of its fiscal year. The company posted operating profits of $252.1 million for the period between July 1 and Dec. 31 on revenue of $672 million, an operating margin of 38%. Total revenue in the first half increased 76% year over year, but much of that growth was attributable to the addition of E2open revenue. Organic revenue growth in the period was 12% Additionally, the company said it has lessened its reliance on its biggest customers over the past year, with 23% of its revenue coming from its top 20 customers in the first half of its current fiscal year, down from 33% in the same period in 2025. Another development worth noting from WiseTech’s fiscal year first-half earnings is its continued focus around building a one-stop shop for logistics software, one that encompasses international and domestic freight procurement, execution, payment and analytics, alongside trade compliance and accounting. The company is not there yet, as most of its customer base is still tied to international forwarding or customs compliance, but the intent is to move in that direction. WiseTech’s share price rose 11% Wednesday on the Australian stock exchange after the planned layoffs were announced. Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. </div>

WiseTech Global will lay off approximately 2,000 of its employees — nearly 30% of its current workforce — over the next two years because of the efficiencies artificial intelligence will bring to its ability to develop products and interact with customers, the forwarding software vendor said Wednesday. The announcement overshadowed WiseTech’s earnings release for the first half of its fiscal year and sparked a double-digit spike in the company’s share price. WiseTech CEO Zubin Appoo explained in a pre-recorded video message that the workforce reduction was due to the progression of AI tools, those developed internally and by the largest AI model developers such as Anthropic, OpenAI and Google. Cuts will come from roles that include programming, product development, and customer service. “This decision was not taken lightly, but it was necessary to ensure we stay disciplined, nimble, competitive, and future-ready,” Appoo said in the video. “A transformation of this scale will fundamentally reshape our cost base while allowing for an uplift in productivity.” The move comes months after Australia-based WiseTech shook the market with a pricing model change that affected virtually all of its forwarder, customs brokers and third-party logistics provider customers. It also comes as WiseTech integrates its largest-ever acquisition , a $2.1 billion purchase of E2open last May, one that expanded the company’s customer reach from 3PLs to shippers. Taken together, those moves could be seen as WiseTech prepping itself for a future where AI transforms how software is built, sold and used, rather than waiting for those changes to undermine its business. WiseTech’s planned layoffs and its emphasis on AI can also be seen as a warning shot to software providers that either act as agentic layers on top of CargoWise — WiseTech’s flagship product — or focus on automating processes inside of CargoWise. Either way, the news will surely reverberate around the market, with software companies that have a fraction of WiseTech’s revenue and a lower operating margin asking themselves if their headcount is optimal given the impact AI is having. The move to cut a significant portion of its workforce should also be viewed through the lens that WiseTech must juggle public market scrutiny in a way that privately-held logistics technology providers do not. The narrative around AI potentially eroding the value of publicly-traded software vendors and data providers has surely spooked companies into showing that they are indeed ready for what AI will do to their products, customers, market share and profit margin. Revenue growth The announcement of layoffs comes as WiseTech reported solid financials for the first half of its fiscal year. The company posted operating profits of $252.1 million for the period between July 1 and Dec. 31 on revenue of $672 million, an operating margin of 38%. Total revenue in the first half increased 76% year over year, but much of that growth was attributable to the addition of E2open revenue. Organic revenue growth in the period was 12% Additionally, the company said it has lessened its reliance on its biggest customers over the past year, with 23% of its revenue coming from its top 20 customers in the first half of its current fiscal year, down from 33% in the same period in 2025. Another development worth noting from WiseTech’s fiscal year first-half earnings is its continued focus around building a one-stop shop for logistics software, one that encompasses international and domestic freight procurement, execution, payment and analytics, alongside trade compliance and accounting. The company is not there yet, as most of its customer base is still tied to international forwarding or customs compliance, but the intent is to move in that direction. WiseTech’s share price rose 11% Wednesday on the Australian stock exchange after the planned layoffs were announced. Contact Eric Johnson at eric.johnson@spglobal.com .

Logistics Technology News

Supply chain

WiseTech says to cut nearly 30% of workforce as it preps for AI era

<div class="phx-topic abstract-wrapper">Nixon, one of the most recognized executives in container shipping, led the transformation of legacy Japanese carriers K Line, MOL and NYK into a unified global company based in Singapore. </div>

Nixon, one of the most recognized executives in container shipping, led the transformation of legacy Japanese carriers K Line, MOL and NYK into a unified global company based in Singapore.

<div class="phx-topic">Ocean Network Express CEO Jeremy Nixon will step down on July 1 from the leadership position he has held since ONE’s inception in 2018 and turn over the helm to industry veteran Till Ole Barrelet. The change was part of a “planned leadership transition” and will not have any impact on customers, the carrier said in a statement Wednesday. Nixon is one of the most recognized executives in container shipping and will stay on with ONE as a senior advisor after Barrelet becomes CEO. “Leading ONE from day one has been the defining chapter of my career,” Nixon said in the statement. “Now is the right time for new leadership, and I am very confident in Till’s ability to lead ONE forward.” Barrelet has more than 20 years of maritime and logistics experience, most recently serving as CEO of Emirates Shipping Line. He has expertise in ship owning, financing, container shipping and trade development across Asia, the Middle East, Europe and Africa. In addition to a change at the top, ONE will transition to a new executive management team structure comprising the CEO and seven representatives from across all the carrier’s divisions. The new executive team, together with six regional leaders, will report into the CEO. “As our founding CEO, Jeremy has helped build ONE from the ground up, establishing our corporate culture and market position,” said Jotaro Tamura, representative director and chairman of Ocean Network Express Holdings. Nixon has been a regular presence at the Journal of Commerce’s TPM conference in Long Beach, and will speak at TPM26 next Monday. <h3>Transforming three Japanese carriers </h3>As CEO of ONE, Nixon presided over the transformation of the container segments of legacy Japanese carriers K Line, MOL and NYK into a unified global container shipping company based in Singapore. Prior to taking the top job at ONE, he headed up the container division at NYK and served in senior management positions at P&amp;O Nedlloyd and Maersk. Under his stewardship, ONE’s fleet grew from 1.5 million TEUs to more than 260 vessels with capacity exceeding 2 million TEUs. Another 1.15 million TEUs of capacity are on order. ONE recorded a loss in 2018–19, its first year of operation, but rode the massive profitability wave generated during the pandemic-impacted years that followed. That profitability came to an end in the fiscal third quarter of ONE’s 2025 financial year when <a href="https://www.joc.com/article/frontloading-drags-one-to-a-loss-in-its-fiscal-third-quarter-6161263">the carrier posted an $88 million net loss</a>. “ONE is well-positioned to navigate industry headwinds with an increasingly modern fleet, financial strength, and proven capabilities,” Till said in the statement. Contact Greg Knowler at <a href="https://www.joc.com/article/frontloading-drags-one-to-a-loss-in-its-fiscal-third-quarter-6161263">greg.knowler@spglobal.com</a>. </div>

Ocean Network Express CEO Jeremy Nixon will step down on July 1 from the leadership position he has held since ONE’s inception in 2018 and turn over the helm to industry veteran Till Ole Barrelet. The change was part of a “planned leadership transition” and will not have any impact on customers, the carrier said in a statement Wednesday. Nixon is one of the most recognized executives in container shipping and will stay on with ONE as a senior advisor after Barrelet becomes CEO. “Leading ONE from day one has been the defining chapter of my career,” Nixon said in the statement. “Now is the right time for new leadership, and I am very confident in Till’s ability to lead ONE forward.” Barrelet has more than 20 years of maritime and logistics experience, most recently serving as CEO of Emirates Shipping Line. He has expertise in ship owning, financing, container shipping and trade development across Asia, the Middle East, Europe and Africa. In addition to a change at the top, ONE will transition to a new executive management team structure comprising the CEO and seven representatives from across all the carrier’s divisions. The new executive team, together with six regional leaders, will report into the CEO. “As our founding CEO, Jeremy has helped build ONE from the ground up, establishing our corporate culture and market position,” said Jotaro Tamura, representative director and chairman of Ocean Network Express Holdings. Nixon has been a regular presence at the Journal of Commerce’s TPM conference in Long Beach, and will speak at TPM26 next Monday. Transforming three Japanese carriers As CEO of ONE, Nixon presided over the transformation of the container segments of legacy Japanese carriers K Line, MOL and NYK into a unified global container shipping company based in Singapore. Prior to taking the top job at ONE, he headed up the container division at NYK and served in senior management positions at P&O Nedlloyd and Maersk. Under his stewardship, ONE’s fleet grew from 1.5 million TEUs to more than 260 vessels with capacity exceeding 2 million TEUs. Another 1.15 million TEUs of capacity are on order. ONE recorded a loss in 2018–19, its first year of operation, but rode the massive profitability wave generated during the pandemic-impacted years that followed. That profitability came to an end in the fiscal third quarter of ONE’s 2025 financial year when the carrier posted an $88 million net loss . “ONE is well-positioned to navigate industry headwinds with an increasingly modern fleet, financial strength, and proven capabilities,” Till said in the statement. Contact Greg Knowler at greg.knowler@spglobal.com .

Container lines

Container Shipping News

Maritime

Jeremy Nixon to step down as ONE CEO after eight years at the helm

<div class="phx-topic abstract-wrapper">Forwarders say reefer-centric Indian grape exports combined with sporadic vessel schedule disruptions have enabled carriers to adjust rates upward on the trade lane.</div>

Forwarders say reefer-centric Indian grape exports combined with sporadic vessel schedule disruptions have enabled carriers to adjust rates upward on the trade lane.

<div class="phx-topic">Major container lines operating on the India-Europe/Mediterranean trades have pushed spot rates for February sailings noticeably higher while signaling that further increases are in the cards for March. Carrier spot rate asks are up by $400 to $500 per TEU/FEU from January, according to forwarder sources. Average spot pricing from Nhava Sheva/Mundra (West India) to Felixstowe/London Gateway/Rotterdam now stands at $1,300 to $1,400 per dry standard container, up from $800 to $900 a month ago. Sources reported similar spot gains for Indian loads to the Mediterranean, with February quotes hovering at $1,400 to $1,500 per TEU/FEU for Genoa (Italy) bookings and $2,000 to $2,200 per TEU/FEU for Egypt’s Port Said. Forwarders believe that seasonal reefer-centric Indian grape export bookings combined with sporadic vessel schedule disruptions have enabled carriers to adjust rates upward on the India-Europe trade lane. “Even some of the typically cargo-hungry Asian carriers have lifted spot rates as their slot allocations from network-leading capacity partners dropped,” a Mumbai-based forwarder executive who didn’t want to be identified told the Journal of Commerce. But lead carriers have chosen to hold quarterly contract rates firm because they seem to consider spot gains a temporary or seasonal blip and not a market shift, sources explained. Overall grape volumes in the current season will likely be lower than the historical pattern due to weaker harvest conditions. Available forward vessel schedules point to a few blankings across West India-North Europe networks in March, so forwarders expect tighter capacity to work in favor of the carriers in the spot market in the coming weeks. “Some space crunch is imminent for Europe,” said another executive at a niche reefer forwarder company. “Over the next six to eight weeks, close to 6,000 boxes of grapes have to be exported.” Contact Bency Mathew at <a href="mailto:bencyvmathew@gmail.com">bencyvmathew@gmail.com</a>. </div>

Major container lines operating on the India-Europe/Mediterranean trades have pushed spot rates for February sailings noticeably higher while signaling that further increases are in the cards for March. Carrier spot rate asks are up by $400 to $500 per TEU/FEU from January, according to forwarder sources. Average spot pricing from Nhava Sheva/Mundra (West India) to Felixstowe/London Gateway/Rotterdam now stands at $1,300 to $1,400 per dry standard container, up from $800 to $900 a month ago. Sources reported similar spot gains for Indian loads to the Mediterranean, with February quotes hovering at $1,400 to $1,500 per TEU/FEU for Genoa (Italy) bookings and $2,000 to $2,200 per TEU/FEU for Egypt’s Port Said. Forwarders believe that seasonal reefer-centric Indian grape export bookings combined with sporadic vessel schedule disruptions have enabled carriers to adjust rates upward on the India-Europe trade lane. “Even some of the typically cargo-hungry Asian carriers have lifted spot rates as their slot allocations from network-leading capacity partners dropped,” a Mumbai-based forwarder executive who didn’t want to be identified told the Journal of Commerce. But lead carriers have chosen to hold quarterly contract rates firm because they seem to consider spot gains a temporary or seasonal blip and not a market shift, sources explained. Overall grape volumes in the current season will likely be lower than the historical pattern due to weaker harvest conditions. Available forward vessel schedules point to a few blankings across West India-North Europe networks in March, so forwarders expect tighter capacity to work in favor of the carriers in the spot market in the coming weeks. “Some space crunch is imminent for Europe,” said another executive at a niche reefer forwarder company. “Over the next six to eight weeks, close to 6,000 boxes of grapes have to be exported.” Contact Bency Mathew at bencyvmathew@gmail.com .

Asia-Europe

India-Europe spot rates climb on seasonal booking demand, tighter capacity

<div class="phx-topic abstract-wrapper">A number of forwarders and software vendors are providing products, often for free, to help shippers and customs brokers calculate refunds they may have coming following Friday’s Supreme Court ruling. </div>

A number of forwarders and software vendors are providing products, often for free, to help shippers and customs brokers calculate refunds they may have coming following Friday’s Supreme Court ruling.

<div class="phx-topic">A range of software tools has emerged over the past few months that should help importers and customs brokers determine the level of refunds available to them as a result of Friday’s Supreme Court ruling rejecting the mechanism used by the Trump administration to collect tariffs over the past 10 months. The decision, which ruled the administration improperly assessed an estimated $175 billion in tariffs on importers by using the International Emergency Economic Powers Act (IEEPA), has set in motion a scramble to claw back refunds on those tariffs. But the process is far from clear. The Court made no determination on how the refund process should be handled and President Donald Trump suggested on Friday after the ruling that refunds might be tied up in legal disputes for two or more years. Trade experts have said the US Court of International Trade (CIT) will ultimately decide the refund process. While importers await word from the government about the process, or until a case is brought before the CIT that might provide clarity, most will be turning to an administrative filing called a post-summary correction (PSC) to get in line to claim their refund. A PSC is an electronic tool within the government’s Automated Commercial Environment (ACE) that allows importers to fix errors in their customs entries and claim refunds for any duty improperly collected. To calculate what those refunds might amount to, software vendors and forwarders have established products for customs brokers and importers to use. Digital forwarder Flexport, well-versed in marketing its services to shippers in trying times, has been front and center on the tariff issue by promoting its free-to-use tariff refund calculator. It has added an IEEPA tariff refund product that calculates the refund amount and starts the process for claiming refunds. <h3>Multiple tools available </h3>Flexport is far from the only refund tool on the market. Wove, an automation technology provider for forwarders, customs brokers and shippers, launched an IEEPA tariff refund calculator over the weekend that allows users to upload a spreadsheet into a web portal with the harmonized tariff schedule (HTS) code, country of origin, customs value and entry date information to determine their refunds. Amari AI, which last week landed a $4.5 million seed funding round from venture investors, also has a tariff calculator based on HTS code and shipment details. That’s aside from its core product, which automates the extraction of information from commercial invoices, packing lists, bills of lading and arrival notices to help customs brokers file entries more efficiently. Reform, yet another provider catering to customs brokers and importers, this week said a post-summary correction audit and filing tool that helps determine in minutes whether an entry error has occurred has seen demand increase significantly since the Supreme Court decision. “Brokers simply import their 7501 entry summaries and supporting commercial invoices, and the tool delivers results in a matter of minutes,” Reform said in a blog Tuesday. Reform said brokers can receive a corrected entry formatted for transmission to CBP through systems such as Descartes NetCHB or CargoWise or a detailed spreadsheet flagging missing HTS codes, provisional tariffs, and discrepancies between entries and invoices. Reform said the issue is particularly acute for importers and the customs brokers they use because CBP is itself using artificial intelligence and automation to better target incorrect entries. Pallet, another logistics automation specialist, said it has enabled forwarder Mallory Alexander to double the number of import filings its employees can handle while increasing the accuracy of those filings from about 80% to 97%. In addition, importers are turning to tax and trade compliance advisory specialists to ensure that the paperwork they need to apply for refunds is in order. All this comes as the Trump administration, seeking to pivot after the Court ruling, implemented on Monday a 10% tariff on all trade partners using so-called Section 122 authority. But there are myriad exemptions for specific products or countries covered by existing trade agreements, as well as legal questions about whether the market factors that would justify using Section 122 powers are even in place. Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. </div>

A range of software tools has emerged over the past few months that should help importers and customs brokers determine the level of refunds available to them as a result of Friday’s Supreme Court ruling rejecting the mechanism used by the Trump administration to collect tariffs over the past 10 months. The decision, which ruled the administration improperly assessed an estimated $175 billion in tariffs on importers by using the International Emergency Economic Powers Act (IEEPA), has set in motion a scramble to claw back refunds on those tariffs. But the process is far from clear. The Court made no determination on how the refund process should be handled and President Donald Trump suggested on Friday after the ruling that refunds might be tied up in legal disputes for two or more years. Trade experts have said the US Court of International Trade (CIT) will ultimately decide the refund process. While importers await word from the government about the process, or until a case is brought before the CIT that might provide clarity, most will be turning to an administrative filing called a post-summary correction (PSC) to get in line to claim their refund. A PSC is an electronic tool within the government’s Automated Commercial Environment (ACE) that allows importers to fix errors in their customs entries and claim refunds for any duty improperly collected. To calculate what those refunds might amount to, software vendors and forwarders have established products for customs brokers and importers to use. Digital forwarder Flexport, well-versed in marketing its services to shippers in trying times, has been front and center on the tariff issue by promoting its free-to-use tariff refund calculator. It has added an IEEPA tariff refund product that calculates the refund amount and starts the process for claiming refunds. Multiple tools available Flexport is far from the only refund tool on the market. Wove, an automation technology provider for forwarders, customs brokers and shippers, launched an IEEPA tariff refund calculator over the weekend that allows users to upload a spreadsheet into a web portal with the harmonized tariff schedule (HTS) code, country of origin, customs value and entry date information to determine their refunds. Amari AI, which last week landed a $4.5 million seed funding round from venture investors, also has a tariff calculator based on HTS code and shipment details. That’s aside from its core product, which automates the extraction of information from commercial invoices, packing lists, bills of lading and arrival notices to help customs brokers file entries more efficiently. Reform, yet another provider catering to customs brokers and importers, this week said a post-summary correction audit and filing tool that helps determine in minutes whether an entry error has occurred has seen demand increase significantly since the Supreme Court decision. “Brokers simply import their 7501 entry summaries and supporting commercial invoices, and the tool delivers results in a matter of minutes,” Reform said in a blog Tuesday. Reform said brokers can receive a corrected entry formatted for transmission to CBP through systems such as Descartes NetCHB or CargoWise or a detailed spreadsheet flagging missing HTS codes, provisional tariffs, and discrepancies between entries and invoices. Reform said the issue is particularly acute for importers and the customs brokers they use because CBP is itself using artificial intelligence and automation to better target incorrect entries. Pallet, another logistics automation specialist, said it has enabled forwarder Mallory Alexander to double the number of import filings its employees can handle while increasing the accuracy of those filings from about 80% to 97%. In addition, importers are turning to tax and trade compliance advisory specialists to ensure that the paperwork they need to apply for refunds is in order. All this comes as the Trump administration, seeking to pivot after the Court ruling, implemented on Monday a 10% tariff on all trade partners using so-called Section 122 authority. But there are myriad exemptions for specific products or countries covered by existing trade agreements, as well as legal questions about whether the market factors that would justify using Section 122 powers are even in place. Contact Eric Johnson at eric.johnson@spglobal.com .

Forwarding

Transport, Trade and Regulation News

IEEPA tariff decision prompts flood of correction tools for refunds, customs entries

<div class="phx-topic abstract-wrapper">The forwarder has contracted a total of 18,000 metric tons of CO₂ equivalent emission reductions on a well-to-wake basis that will be derived through the carrier’s Ship Green product.</div>

The forwarder has contracted a total of 18,000 metric tons of CO₂ equivalent emission reductions on a well-to-wake basis that will be derived through the carrier’s Ship Green product.

<div class="phx-topic">Hapag-Lloyd and forwarder DSV have extended their sustainable biofuels partnership for two years with an agreement signed Tuesday that increases the pool of alternative fuels that can be used across the carrier’s fleet. In addition to second-generation biofuels, the agreement now allows for the inclusion of other sustainable fuel sources, Hapag-Lloyd and DSV said in a joint statement. Under the new agreement, DSV has contracted a total of 18,000 metric tons of CO₂ equivalent emission reductions on a well-to-wake basis that will be derived through Hapag-Lloyd’s Ship Green product. “Sustainable marine fuels are a tangible and scalable solution to reducing CO₂ emissions, and through close collaboration with Hapag-Lloyd, we are enabling our customers to decarbonize their supply chains," Michael Hollstein, head of ocean product at DSV, said in the statement. Danny Smolders, Hapag-Lloyd’s managing director of global sales, said both companies shared a clear ambition to accelerate the decarbonization of global supply chains. “By working closely together, we can turn this ambition into action,” Smolders said. “This agreement demonstrates how carriers and forwarders can jointly drive meaningful progress and scale lower-emission shipping solutions.” Hapag-Lloyd aims to achieve net-zero fleet operations by 2045, while DSV has committed to reaching net-zero emissions across its own operations and value chain by 2050. Offering sustainable logistics solutions to customers was a key lever toward achieving those goals. The agreement is based on a book-and-claim chain-of-custody mechanism that allows customers to claim verified emission reductions, regardless of the physical fuel allocation to specific vessels or routes. Only emissions avoidance from biofuel that has already been used in Hapag-Lloyd’s owned and operated fleet is allocated to DSV. The model enables shippers to comply with emissions-reduction regulations, such as the European Union Emissions Trading System, while sustainable marine fuels remain limited in availability. Biofuels currently represent the most available and scalable option in sea freight, although the volume used across the Hapag-Lloyd fleet remains in the low single-digit percentages, according to a spokesperson for the carrier. <h3>Regulatory safeguards needed </h3>While biofuel usage increases across the fleets of several carriers, climate campaigner Environmental Defense Fund (EDF) has expressed concern over the absence of regulatory safeguards and careful management of the full value chain impacts. The EDF noted in a recent report that the popularity of biofuels was rising as a fast-track option for the transition to low-carbon shipping, raising fears that land use may be converted from food production to instead produce feedstock for biofuels. The components of direct or indirect land use have not yet been clearly defined as the International Maritime Organization is still developing methodological guidance on how to incorporate them. “How the IMO defines these terms and sets up safeguards will determine whether an increase in demand for certain biofuels results in deforestation, loss of wetlands, displaced communities and food insecurity,” the EDF report stated. The Hapag-Lloyd spokesperson told the Journal of Commerce the carrier supports the development of a global framework that regulates the sustainable criteria for alternative fuels worldwide. “What matters now is maintaining ambition and reaching agreement on a framework that combines environmental integrity, robust sustainability criteria and practical feasibility,” the spokesperson said. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Hapag-Lloyd and forwarder DSV have extended their sustainable biofuels partnership for two years with an agreement signed Tuesday that increases the pool of alternative fuels that can be used across the carrier’s fleet. In addition to second-generation biofuels, the agreement now allows for the inclusion of other sustainable fuel sources, Hapag-Lloyd and DSV said in a joint statement. Under the new agreement, DSV has contracted a total of 18,000 metric tons of CO₂ equivalent emission reductions on a well-to-wake basis that will be derived through Hapag-Lloyd’s Ship Green product. “Sustainable marine fuels are a tangible and scalable solution to reducing CO₂ emissions, and through close collaboration with Hapag-Lloyd, we are enabling our customers to decarbonize their supply chains," Michael Hollstein, head of ocean product at DSV, said in the statement. Danny Smolders, Hapag-Lloyd’s managing director of global sales, said both companies shared a clear ambition to accelerate the decarbonization of global supply chains. “By working closely together, we can turn this ambition into action,” Smolders said. “This agreement demonstrates how carriers and forwarders can jointly drive meaningful progress and scale lower-emission shipping solutions.” Hapag-Lloyd aims to achieve net-zero fleet operations by 2045, while DSV has committed to reaching net-zero emissions across its own operations and value chain by 2050. Offering sustainable logistics solutions to customers was a key lever toward achieving those goals. The agreement is based on a book-and-claim chain-of-custody mechanism that allows customers to claim verified emission reductions, regardless of the physical fuel allocation to specific vessels or routes. Only emissions avoidance from biofuel that has already been used in Hapag-Lloyd’s owned and operated fleet is allocated to DSV. The model enables shippers to comply with emissions-reduction regulations, such as the European Union Emissions Trading System, while sustainable marine fuels remain limited in availability. Biofuels currently represent the most available and scalable option in sea freight, although the volume used across the Hapag-Lloyd fleet remains in the low single-digit percentages, according to a spokesperson for the carrier. Regulatory safeguards needed While biofuel usage increases across the fleets of several carriers, climate campaigner Environmental Defense Fund (EDF) has expressed concern over the absence of regulatory safeguards and careful management of the full value chain impacts. The EDF noted in a recent report that the popularity of biofuels was rising as a fast-track option for the transition to low-carbon shipping, raising fears that land use may be converted from food production to instead produce feedstock for biofuels. The components of direct or indirect land use have not yet been clearly defined as the International Maritime Organization is still developing methodological guidance on how to incorporate them. “How the IMO defines these terms and sets up safeguards will determine whether an increase in demand for certain biofuels results in deforestation, loss of wetlands, displaced communities and food insecurity,” the EDF report stated. The Hapag-Lloyd spokesperson told the Journal of Commerce the carrier supports the development of a global framework that regulates the sustainable criteria for alternative fuels worldwide. “What matters now is maintaining ambition and reaching agreement on a framework that combines environmental integrity, robust sustainability criteria and practical feasibility,” the spokesperson said. Contact Greg Knowler at greg.knowler@spglobal.com .

Hapag-Lloyd inks new sustainable biofuel deal with DSV

<div class="phx-topic abstract-wrapper">Whatever measure is ultimately agreed to by member states, decarbonization experts agree the IMO’s revised emissions reduction targets set in 2023 will need to be pushed back.</div>

Whatever measure is ultimately agreed to by member states, decarbonization experts agree the IMO’s revised emissions reduction targets set in 2023 will need to be pushed back.

<div class="phx-topic">Decarbonization experts are running through different scenarios that will enable the International Maritime Organization’s delayed net-zero emissions framework to be formally adopted in November. A best-case scenario will see the IMO framework, <a href="https://www.joc.com/article/imo-punts-on-pivotal-net-zero-shipping-regulation-6099141">postponed for a year at a meeting last October</a>, entering into force in 2028, a year later than planned, and coming into effect in 2029. But a prolonged political deadlock could delay regulatory certainty on greenhouse gas (GHG) reductions for several years. The Global Maritime Forum and maritime classification society DNV looked separately at the different scenarios for net-zero implementation. And while the views of their decarbonization experts differed, there was consensus that whatever measure is ultimately agreed to this November, the IMO’s revised emissions reduction targets set in 2023 will need to be pushed back. A new report from the Global Maritime Forum was released this week and looked at the different plausible outcomes for the net-zero framework (NZF). “Uncertainty at the IMO: Three scenarios and their consequences for shipping’s transition,” was co-authored by Tristan Smith, associate professor at the UCL Energy Institute, and Femke Spiegelenberg, project manager of the Getting to Zero Coalition within the Global Maritime Forum. Three potential scenarios were covered by the report: adopting the NZF unchanged from the measures voted down last October, adopting a single-tier fuel standard with lower compliance costs, and removing the economic elements altogether. The report noted that each scenario would have materially different impacts on timelines, enforcement, investment signals, revenues, low-income countries, and regional policies. “At a minimum, the implementation dates in the text will need to be adjusted to reflect the postponed adoption,” the report said. “More fundamentally, the political dynamics that led to the NZF delay introduced new uncertainty not just about the timeline but also about the final shape and ambition of the framework. “At one extreme, the NZF could be adopted ‘as is’ later this year, entering into force in 2028 and coming into effect in 2029,” the report added. “At the other extreme, a prolonged political deadlock could delay regulatory certainty on GHG reductions for several years.” <h3>A battle to build consensus </h3>The motion to delay adoption of the IMO’s net-zero framework last October was made at a tense and combative session of its Marine Environment Protection Committee (MEPC) in London. Despite 80% approval for the NZF from member states voting last April, 34 countries switched positions between April and October to favor the deferment in the face of growing pressure from the US. The vote to delay was 57 in favor and 49 against, with 21 abstentions. Achieving the IMO target of full decarbonization by or around 2050 with benchmark targets set along the way will require narrowing the wide price gap that exists between fossil fuels and the low- or zero-emission alternatives, which by its very nature will require making fossil fuels more expensive. But the US believes putting a price on carbon emissions from ships will be passed on to its consumers, increasing costs by 10%. That position, centered around President Donald Trump’s view that a price on carbon emissions was a “global green new scam tax on shipping,” triggered extraordinary threats by the White House that included sanctions, port fees and visa refusals against member states voting to adopt the IMO net-zero framework. The IMO is now focused on building consensus around some version of the NZF this year before a reconvened MEPC meets in November to finalize the legally binding measures. With the US so fundamentally opposed to any economic measure that penalizes carbon emissions, one of the potential scenarios being suggested by some member states was to remove it completely from the NZF and focus instead on a technical measure. The Global Maritime Forum report warned that any removal of the economic element that is designed to make green technologies cheaper than high-emission alternatives would also remove the likelihood of effective enforcement. “A standalone global fuel standard with no economic elements would likely merely replicate what already exists in the Carbon Intensity Indicator (CII) mechanism, which requires ships with repeated non-compliance at a certain level to file a corrective action plan,” the report noted. <h3>Geopolitical hurdles ahead for net-zero framework </h3>Eirik Nyhus, director of environment at DNV, has also been looking at possible scenarios that would enable the NZF to be adopted by IMO member states. But he was not convinced that an unchanged measure would make it across the line. “Geopolitics being what they are, there are no reasons to expect the opponents of the NZF to shift their positions or their approach to negotiations by November this year, and therefore repeating the same process with the same proposal under the same circumstances, while hoping for a different outcome is not the best strategy,” Nyhus told a recent online conference. Pushing through the NZF unchanged would require the framework’s supporters to provide diplomatic surety and cover for the countries being pressured by the US. “This is a high-stakes approach, high-risk, and not very likely to succeed, though there may be parties thinking it’s worth a shot again,” Nyhus said. Also presenting a challenge would be the removal of the economic element in a restructuring of the existing proposal with only the technical element put forward. The technical element covers the fuel intensity regulation that mandates progressively lower GHG emissions over time. “The opposition to any economic element, whether deferred or delayed, is going to be so strong that only a purely technical regulation really has any chance of going forward under that scenario,” Nyhus said. “If all relevant alternative fuel options are on the table, [a purely technical measure] could contain incentives for a large cross section of countries around the world, and in theory, this could lead to adoption in November this year,” he added. “But all the stars will need to align, and I think it will be a challenge for that to happen.” Another very real scenario would be flag states representing most of the global tonnage rejecting any proposal that is put forward. The NZF can be blocked if one-third of countries representing over 50% of global tonnage formally object during the adoption process. “In all of these cases, the timeline has really been pushed back significantly,” Nyhus said. “Despite it being theoretically possible to have something in place by November 2028, I think the issues to be solved are so thorny that the IMO will need more time, if an outcome can be negotiated at all. “Entering into force of some version of the regulation in 2029 is optimistic and 2030 is more likely, but I would not be shocked to see things slide even further,” he added. Contact Greg Knowler at <a href="">greg.knowler@spglobal.com</a>. </div>

Decarbonization experts are running through different scenarios that will enable the International Maritime Organization’s delayed net-zero emissions framework to be formally adopted in November. A best-case scenario will see the IMO framework, postponed for a year at a meeting last October , entering into force in 2028, a year later than planned, and coming into effect in 2029. But a prolonged political deadlock could delay regulatory certainty on greenhouse gas (GHG) reductions for several years. The Global Maritime Forum and maritime classification society DNV looked separately at the different scenarios for net-zero implementation. And while the views of their decarbonization experts differed, there was consensus that whatever measure is ultimately agreed to this November, the IMO’s revised emissions reduction targets set in 2023 will need to be pushed back. A new report from the Global Maritime Forum was released this week and looked at the different plausible outcomes for the net-zero framework (NZF). “Uncertainty at the IMO: Three scenarios and their consequences for shipping’s transition,” was co-authored by Tristan Smith, associate professor at the UCL Energy Institute, and Femke Spiegelenberg, project manager of the Getting to Zero Coalition within the Global Maritime Forum. Three potential scenarios were covered by the report: adopting the NZF unchanged from the measures voted down last October, adopting a single-tier fuel standard with lower compliance costs, and removing the economic elements altogether. The report noted that each scenario would have materially different impacts on timelines, enforcement, investment signals, revenues, low-income countries, and regional policies. “At a minimum, the implementation dates in the text will need to be adjusted to reflect the postponed adoption,” the report said. “More fundamentally, the political dynamics that led to the NZF delay introduced new uncertainty not just about the timeline but also about the final shape and ambition of the framework. “At one extreme, the NZF could be adopted ‘as is’ later this year, entering into force in 2028 and coming into effect in 2029,” the report added. “At the other extreme, a prolonged political deadlock could delay regulatory certainty on GHG reductions for several years.” A battle to build consensus The motion to delay adoption of the IMO’s net-zero framework last October was made at a tense and combative session of its Marine Environment Protection Committee (MEPC) in London. Despite 80% approval for the NZF from member states voting last April, 34 countries switched positions between April and October to favor the deferment in the face of growing pressure from the US. The vote to delay was 57 in favor and 49 against, with 21 abstentions. Achieving the IMO target of full decarbonization by or around 2050 with benchmark targets set along the way will require narrowing the wide price gap that exists between fossil fuels and the low- or zero-emission alternatives, which by its very nature will require making fossil fuels more expensive. But the US believes putting a price on carbon emissions from ships will be passed on to its consumers, increasing costs by 10%. That position, centered around President Donald Trump’s view that a price on carbon emissions was a “global green new scam tax on shipping,” triggered extraordinary threats by the White House that included sanctions, port fees and visa refusals against member states voting to adopt the IMO net-zero framework. The IMO is now focused on building consensus around some version of the NZF this year before a reconvened MEPC meets in November to finalize the legally binding measures. With the US so fundamentally opposed to any economic measure that penalizes carbon emissions, one of the potential scenarios being suggested by some member states was to remove it completely from the NZF and focus instead on a technical measure. The Global Maritime Forum report warned that any removal of the economic element that is designed to make green technologies cheaper than high-emission alternatives would also remove the likelihood of effective enforcement. “A standalone global fuel standard with no economic elements would likely merely replicate what already exists in the Carbon Intensity Indicator (CII) mechanism, which requires ships with repeated non-compliance at a certain level to file a corrective action plan,” the report noted. Geopolitical hurdles ahead for net-zero framework Eirik Nyhus, director of environment at DNV, has also been looking at possible scenarios that would enable the NZF to be adopted by IMO member states. But he was not convinced that an unchanged measure would make it across the line. “Geopolitics being what they are, there are no reasons to expect the opponents of the NZF to shift their positions or their approach to negotiations by November this year, and therefore repeating the same process with the same proposal under the same circumstances, while hoping for a different outcome is not the best strategy,” Nyhus told a recent online conference. Pushing through the NZF unchanged would require the framework’s supporters to provide diplomatic surety and cover for the countries being pressured by the US. “This is a high-stakes approach, high-risk, and not very likely to succeed, though there may be parties thinking it’s worth a shot again,” Nyhus said. Also presenting a challenge would be the removal of the economic element in a restructuring of the existing proposal with only the technical element put forward. The technical element covers the fuel intensity regulation that mandates progressively lower GHG emissions over time. “The opposition to any economic element, whether deferred or delayed, is going to be so strong that only a purely technical regulation really has any chance of going forward under that scenario,” Nyhus said. “If all relevant alternative fuel options are on the table, [a purely technical measure] could contain incentives for a large cross section of countries around the world, and in theory, this could lead to adoption in November this year,” he added. “But all the stars will need to align, and I think it will be a challenge for that to happen.” Another very real scenario would be flag states representing most of the global tonnage rejecting any proposal that is put forward. The NZF can be blocked if one-third of countries representing over 50% of global tonnage formally object during the adoption process. “In all of these cases, the timeline has really been pushed back significantly,” Nyhus said. “Despite it being theoretically possible to have something in place by November 2028, I think the issues to be solved are so thorny that the IMO will need more time, if an outcome can be negotiated at all. “Entering into force of some version of the regulation in 2029 is optimistic and 2030 is more likely, but I would not be shocked to see things slide even further,” he added. Contact Greg Knowler at  greg.knowler@spglobal.com . 

No clear path to get IMO’s net-zero framework over the line: industry experts

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

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

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

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

Trans-Pacific

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

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

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

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

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

Surface

North-American rail

Intermodal providers

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

China to US

{date.formatDate('MMM dd, yyyy')}: ${valueY.formatNumber('###.##')} 
 w-o-w change:  {week_over_week.formatNumber("##.#%")} 
 y-o-y change: {year_over_year_percent.formatNumber("##.#%")}

The Freightos Air Index (FAX) is based on all-in spot rates for general cargo in US$ for weight category of 100 to 3,000 kilograms. The rates include the air freight fee, fuel, and security and seasonal surcharges. The per kg rate is calculated based on the standard chargeable weight (the greater of the actual gross weight and 166kgs, multiplied by the volume in cubic meters). [Freightos Air Index](https://www.freightos.com/enterprise/terminal/fax-global-freightos-air-index/?utm_source=terminal_embed&utm_medium=referral&utm_content=fax)

China to US air freight rates (Freightos)

China to US Air Freight Price Index by Weight Break 100–3000 kg (Freightos) Gateway

<div class="phx-topic abstract-wrapper">If trucking rates remain elevated into the spring, carriers will likely move to push prices higher on new and existing contracts in the second half of the year.</div>

If trucking rates remain elevated into the spring, carriers will likely move to push prices higher on new and existing contracts in the second half of the year.

<div class="phx-topic">US trucking executives are beginning to feel better about the state of the freight economy, hoping tighter capacity will lead to higher rates and, ultimately, an end to the long freight recession. The increasingly upbeat mood comes as spot dry-van rates, as compiled by DAT Freight and Analytics, remain elevated compared with a year ago, even after the disruptive winter weather of January subsided. The average rate, excluding fuel, on DAT’s top 50 US lanes has hovered near $2.30 per mile this month, up 18% to 20% compared with the same period a year ago. Adam Miller, CEO of Knight-Swift Transportation, told the Journal of Commerce that the market is balanced between carriers and shippers. He noted that the reaction to the winter storms and frigid temperatures last month were in stark contrast to January 2025, when a similar snowstorm had zero impact on spot market rates. “It kind of feels like a little bit of Goldilocks right now,” Miller said. “Inflation seems to be under control. I think it’s positioning for demand to see some life because it’s been relatively muted. While capacity continues to exit, I think that puts the supply-demand relationship in a much better position [for trucking companies].” The snow and ice from the heavy winter storm that blanketed a large portion of the US in late January are melting, and trucks that were sidelined are now back in business. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="f7dc31b8-1e1c-4a59-907f-2391c69d4e9f"></dynamic-object></div>Trucking executives say there is a feeling that the next two or three weeks will indicate whether this is really the beginning of the end of the three-year freight recession, something that could determine if trucking companies can push contract rate increases on shippers in the coming months. “The farther we can get from storms, if we continue to see that strength, then it’s going to feel a little bit different this year than the last few years,” Brad Hicks, president of Dedicated Contract Services at J.B. Hunt, said Tuesday at Barclays’ Annual Industrial Select Conference in Miami. “We have had a lot of disruptions from winter weather. We’ve had a lot of customer meetings over the last several weeks, and I would say it should be no surprise that no customer is raising their hands saying, ‘can’t wait to pay you more.’” <h3>Gain in Cass Index for January </h3>The Cass Freight Index suggests the changes taking place in the truckload market might be more than a weather disruption. The Cass Truckload Linehaul Index, a measurement of rates, rose 3.2% year over year in January. “This index is mostly comprised of contract rates, and anecdotally we hear about more shippers initiating one-year bids, suggesting movement in the cycle beyond just weather effects,” Tim Denoyer, author of the Cass Freight Index, wrote Tuesday. The 3.2% hike is consistent with what carrier Werner Enterprises is seeing. “Low to mid-single digits on our contract renewals would be really the starting point there,” Chris Neal, Werner’s senior vice president of pricing, said at the Citi Global Industrial Tech &amp; Mobility Conference Tuesday. "We’ve had some good success already early in the year with some of those renewals.” Werner CEO Derek Leathers admitted while the winter weather played a role, the recovery is also supply-driven <a href="https://www.joc.com/article/usdot-releases-interim-final-rule-on-non-domiciled-cdl-holders-6169023">as the federal government cracks down on non-domiciled commercial drivers’ licenses</a> and English language proficiency of truckers in the US. “You’re finally starting to see a cleansing of some of the capacity out there that needed to be addressed,” Leathers said at the Citi Global conference. “It’s been mostly supply-driven up until now, and with some signs now of a little bit of demand spark coupled with that, it puts us in a pretty optimistic position.” Contact Dan Ronan at <a href="mailto:contactdanronan@gmail.com">contactdanronan@gmail.com</a>.</div>

US trucking executives are beginning to feel better about the state of the freight economy, hoping tighter capacity will lead to higher rates and, ultimately, an end to the long freight recession. The increasingly upbeat mood comes as spot dry-van rates, as compiled by DAT Freight and Analytics, remain elevated compared with a year ago, even after the disruptive winter weather of January subsided. The average rate, excluding fuel, on DAT’s top 50 US lanes has hovered near $2.30 per mile this month, up 18% to 20% compared with the same period a year ago. Adam Miller, CEO of Knight-Swift Transportation, told the Journal of Commerce that the market is balanced between carriers and shippers. He noted that the reaction to the winter storms and frigid temperatures last month were in stark contrast to January 2025, when a similar snowstorm had zero impact on spot market rates. “It kind of feels like a little bit of Goldilocks right now,” Miller said. “Inflation seems to be under control. I think it’s positioning for demand to see some life because it’s been relatively muted. While capacity continues to exit, I think that puts the supply-demand relationship in a much better position [for trucking companies].” The snow and ice from the heavy winter storm that blanketed a large portion of the US in late January are melting, and trucks that were sidelined are now back in business. Trucking executives say there is a feeling that the next two or three weeks will indicate whether this is really the beginning of the end of the three-year freight recession, something that could determine if trucking companies can push contract rate increases on shippers in the coming months. “The farther we can get from storms, if we continue to see that strength, then it’s going to feel a little bit different this year than the last few years,” Brad Hicks, president of Dedicated Contract Services at J.B. Hunt, said Tuesday at Barclays’ Annual Industrial Select Conference in Miami. “We have had a lot of disruptions from winter weather. We’ve had a lot of customer meetings over the last several weeks, and I would say it should be no surprise that no customer is raising their hands saying, ‘can’t wait to pay you more.’” Gain in Cass Index for January The Cass Freight Index suggests the changes taking place in the truckload market might be more than a weather disruption. The Cass Truckload Linehaul Index, a measurement of rates, rose 3.2% year over year in January. “This index is mostly comprised of contract rates, and anecdotally we hear about more shippers initiating one-year bids, suggesting movement in the cycle beyond just weather effects,” Tim Denoyer, author of the Cass Freight Index, wrote Tuesday. The 3.2% hike is consistent with what carrier Werner Enterprises is seeing. “Low to mid-single digits on our contract renewals would be really the starting point there,” Chris Neal, Werner’s senior vice president of pricing, said at the Citi Global Industrial Tech & Mobility Conference Tuesday. "We’ve had some good success already early in the year with some of those renewals.” Werner CEO Derek Leathers admitted while the winter weather played a role, the recovery is also supply-driven as the federal government cracks down on non-domiciled commercial drivers’ licenses and English language proficiency of truckers in the US. “You’re finally starting to see a cleansing of some of the capacity out there that needed to be addressed,” Leathers said at the Citi Global conference. “It’s been mostly supply-driven up until now, and with some signs now of a little bit of demand spark coupled with that, it puts us in a pretty optimistic position.” Contact Dan Ronan at contactdanronan@gmail.com .

Trucking News

Truckload

Trucking executives buoyed by market signals as winter exit nears

<div class="phx-topic abstract-wrapper">The success of container lines in keeping vessel utilization high by removing functional capacity weakens the network and ups volatility in ocean reliability.</div>

The success of container lines in keeping vessel utilization high by removing functional capacity weakens the network and ups volatility in ocean reliability.

<div class="phx-topic">The high level of port-to-port ocean reliability the Gemini Cooperation has delivered since its launch a year ago is pressuring other carriers and alliances to up their game. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6172263_0.1.jpg"></img></div>Yet the obstacles for ocean carriers to remain profitable are only expanding as liners cycle deeper into overcapacity in the coming years. To protect their profitability, container lines have become better at managing short-term demand and supply and removing functional capacity. Their success in keeping utilization high, paradoxically, weakens the network, said Trine Nielsen, vice president of ocean/global at forwarder Flexport.“As ‘micro-events’ [e.g., localized port congestion, labor strikes] are expected to increase due to shifting trade patterns and introducing more mega-ships, we expect network instability to rise,” she said. “In fact, as more capacity enters the market, we anticipate even further instability because we should expect more aggressive capacity management actions by carriers to protect their profitability.” Facing congestion at Asia load centers such as Shanghai or Ningbo, ocean carriers may have the vessel omit the port entirely to not throw off the rest of their schedule. In some cases, vessels “swap” calls with one vessel covering Shanghai rather than Ningbo, and vice versa, Nielsen said. “While this maximizes asset utilization and prevents a vessel backlog, it triggers blank sailings and forces customers to deal with rolled cargo and unpredictable transit times,” she said. <h3>Obstacles to reliability ratchet up </h3>Port productivity globally is worsening, with S&amp;P Global’s Container Port Performance Index falling from a reading of 38 in 2020 to zero in 2024. The number of tropical storms has increased in recent years, and the intensity and unpredictability of cyclones has increased in the last decade, said Craig West, CEO/Europe at forecasting company Weathernews. “Volatility is not confined to extreme events. Conditions in the Central Atlantic have recently been practically impassable, with persistent weather patterns across the Bay of Biscay and English Channel leaving vessels drifting for multiple days,” West told the Journal of Commerce. “There is no headline-grabbing storm in these situations, yet the commercial damage to uptime and schedule reliability is significant.” Optimistically, the volatility from an overall shambolic network offers increased incentives for ocean carriers to improve their reliability, allowing them to stand out more in a volatile, oft-commoditized market and gain higher and more stable pricing in return. After launching in February 2025, Gemini members Maersk and Hapag-Lloyd are making the case that their joint network’s better than 90% reliability is giving customers enough certainty to reduce their inventories by two weeks. Vessels operated within the alliance hit 81% reliability in 2025, according to online benchmarking platform Xeneta’s eeSea data. Global ocean reliability for the entire industry has been falling since July, notching a reading of 25.4% thus far in February, according to eeSea. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="4abe02d4-ed18-461a-ac0b-87ef52e3192b"></dynamic-object></div>“Shippers are also telling us that one of their priorities for 2026 is service reliability,” said Kelly Buckley, deputy director of ocean procurement at Drewry Supply Chain advisors. “Gemini has really raised the profile of that topic, and we can expect shippers to assess much more carefully on-time performance and lead times as part of their [trans-Pacific service contracting] tender process this year.” <h3>Finding reliability in service contracts </h3>The last few years of shipping disruptions due to the pandemic, Suez Canal diversions, and then tariffs left small and medium-size shippers with little time to focus on reliability as they tried to keep their business afloat, Buckley said. Mounting overcapacity gives these shippers more leverage in service contract negotiations and allows them, she said, to “actually start to take a step back and ask questions without fear of the fact that your cargo then may not make it on the vessel the next week.” Transparency on schedule changes remains an issue, Buckley said. Shippers still struggle to keep up with nearly last-minute blank notice announcements, and she said some Drewry customers learned after that fact that their cargo was routed through the Suez Canal via the perilous waters of the Red Sea. Meanwhile, although transit time reliability is critical for Sanmar’s new product launches and deliveries from new vendors, it’s only one element of service, said John Janson, global logistics director at the apparel shipper. “Normally, transit reliability is not as important to us if it is within a reasonable timeframe,” he said. “Having the equipment and space is more critical as our origins are counting on being able to load as most do not have storage.” Janson noted that ocean carriers allowed Sanmar — the US’ 79th-largest importer, according to the Journal of Commerce’s 2024 rankings — to exceed forecast volumes for emergencies and guaranteed that shipments would beat tariffs deadlines, saving the company hundreds of thousands of dollars. “No surprise, the folks that stepped up were the ones where we have made the most serious investment in relationships,” he said. Contact Mark Szakonyi at <a href="mark.szakonyi@spglobal.com">mark.szakonyi@spglobal.com</a>. </div>

The high level of port-to-port ocean reliability the Gemini Cooperation has delivered since its launch a year ago is pressuring other carriers and alliances to up their game. Yet the obstacles for ocean carriers to remain profitable are only expanding as liners cycle deeper into overcapacity in the coming years. To protect their profitability, container lines have become better at managing short-term demand and supply and removing functional capacity. Their success in keeping utilization high, paradoxically, weakens the network, said Trine Nielsen, vice president of ocean/global at forwarder Flexport. “As ‘micro-events’ [e.g., localized port congestion, labor strikes] are expected to increase due to shifting trade patterns and introducing more mega-ships, we expect network instability to rise,” she said. “In fact, as more capacity enters the market, we anticipate even further instability because we should expect more aggressive capacity management actions by carriers to protect their profitability.” Facing congestion at Asia load centers such as Shanghai or Ningbo, ocean carriers may have the vessel omit the port entirely to not throw off the rest of their schedule. In some cases, vessels “swap” calls with one vessel covering Shanghai rather than Ningbo, and vice versa, Nielsen said. “While this maximizes asset utilization and prevents a vessel backlog, it triggers blank sailings and forces customers to deal with rolled cargo and unpredictable transit times,” she said. Obstacles to reliability ratchet up Port productivity globally is worsening, with S&P Global’s Container Port Performance Index falling from a reading of 38 in 2020 to zero in 2024. The number of tropical storms has increased in recent years, and the intensity and unpredictability of cyclones has increased in the last decade, said Craig West, CEO/Europe at forecasting company Weathernews. “Volatility is not confined to extreme events. Conditions in the Central Atlantic have recently been practically impassable, with persistent weather patterns across the Bay of Biscay and English Channel leaving vessels drifting for multiple days,” West told the Journal of Commerce. “There is no headline-grabbing storm in these situations, yet the commercial damage to uptime and schedule reliability is significant.” Optimistically, the volatility from an overall shambolic network offers increased incentives for ocean carriers to improve their reliability, allowing them to stand out more in a volatile, oft-commoditized market and gain higher and more stable pricing in return. After launching in February 2025, Gemini members Maersk and Hapag-Lloyd are making the case that their joint network’s better than 90% reliability is giving customers enough certainty to reduce their inventories by two weeks. Vessels operated within the alliance hit 81% reliability in 2025, according to online benchmarking platform Xeneta’s eeSea data. Global ocean reliability for the entire industry has been falling since July, notching a reading of 25.4% thus far in February, according to eeSea. “Shippers are also telling us that one of their priorities for 2026 is service reliability,” said Kelly Buckley, deputy director of ocean procurement at Drewry Supply Chain advisors. “Gemini has really raised the profile of that topic, and we can expect shippers to assess much more carefully on-time performance and lead times as part of their [trans-Pacific service contracting] tender process this year.” Finding reliability in service contracts The last few years of shipping disruptions due to the pandemic, Suez Canal diversions, and then tariffs left small and medium-size shippers with little time to focus on reliability as they tried to keep their business afloat, Buckley said. Mounting overcapacity gives these shippers more leverage in service contract negotiations and allows them, she said, to “actually start to take a step back and ask questions without fear of the fact that your cargo then may not make it on the vessel the next week.” Transparency on schedule changes remains an issue, Buckley said. Shippers still struggle to keep up with nearly last-minute blank notice announcements, and she said some Drewry customers learned after that fact that their cargo was routed through the Suez Canal via the perilous waters of the Red Sea. Meanwhile, although transit time reliability is critical for Sanmar’s new product launches and deliveries from new vendors, it’s only one element of service, said John Janson, global logistics director at the apparel shipper. “Normally, transit reliability is not as important to us if it is within a reasonable timeframe,” he said. “Having the equipment and space is more critical as our origins are counting on being able to load as most do not have storage.” Janson noted that ocean carriers allowed Sanmar — the US’ 79th-largest importer, according to the Journal of Commerce’s 2024 rankings — to exceed forecast volumes for emergencies and guaranteed that shipments would beat tariffs deadlines, saving the company hundreds of thousands of dollars. “No surprise, the folks that stepped up were the ones where we have made the most serious investment in relationships,” he said. Contact Mark Szakonyi at mark.szakonyi@spglobal.com .

Trans-Atlantic

Greater capacity control needs hinder ocean reliability efforts

<div class="phx-topic abstract-wrapper">The increase in volume that would result across the trans-Atlantic and trans-Pacific corridors was particularly welcome, according to Hapag-Lloyd’s CEO.</div>

The increase in volume that would result across the trans-Atlantic and trans-Pacific corridors was particularly welcome, according to Hapag-Lloyd’s CEO.

<div class="phx-topic">Hapag-Lloyd’s $4.2 billion acquisition of Zim Integrated Shipping Services that was announced Monday will significantly improve the Hamburg-based carrier’s position on several major trade lanes. While cementing the buyer’s position <a href="https://www.joc.com/article/hapag-lloyds-plan-to-acquire-zim-would-deepen-shipping-oligopoly-6170073">as the world’s fifth-largest container shipping company</a>, the takeover will grow Hapag-Lloyd’s volume share on the trans-Atlantic from 24% to 27%, on the trans-Pacific from 7% to 12%, in Asia from 9% to 11%, on Asia-Latin America from 11% to 14%, and from 2% to 7% on the intra-Europe trade, according to data from Container Trades Statistics (CTS) cited by Hapag-Lloyd. Hapag-Lloyd CEO Rolf Habben Jansen highlighted as particularly welcome the increase in volume that would result across the trans-Atlantic and trans-Pacific corridors. “When we look for a minute at the trade portfolios on the Atlantic and trans-Pacific, if we joined forces we would really get into very strong position,” he told reporters during an online briefing Monday shortly after signing the Zim deal in Tel Aviv. A 27% market share on the trans-Atlantic would put Hapag-Lloyd in second place behind Mediterranean Shipping Co. at 29%, according to the CTS figures cited by Hapag-Lloyd. According to PIERS, a sister company of the Journal of Commerce within S&amp;P Global, Hapag-Lloyd had a market share of 19.6% on the trans-Atlantic in January, behind MSC’s 22.6%. But Hapag-Lloyd held the top position throughout the fourth quarter of 2025 with a share that exceeded 25% in October and December. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="ce24ca8a-5149-4e8e-a00a-5743e4d2abba"></dynamic-object></div>On the trans-Pacific, the addition of Zim would put Hapag-Lloyd level with Ocean Network Express in third position behind MSC at 13%, according to CTS. Habben Jansen said the Asia-Latin America trade has long been a corridor he has wanted to expand. In 2023, Hapag-Lloyd strengthened its position with the acquisition of SM SAAM terminal business while growing dedicated service networks on the trade lane. “Zim has done really well on Asia-Latin America in the last couple of years and this would allow us to get closer to the 15%, 16% [volume share] that we’ve always aspired to,” Habben Jansen told reporters. MSC holds the largest market share on the trade at 21%. <h3>Intra-Europe share ‘too small’ </h3>The Zim volume added on the intra-Europe trade would put Hapag-Lloyd level with Cosco Shipping at 7%, although considering it is a home market for the Hamburg-based carrier, Habben Jansen indicated there is still room to grow. “Intra-Europe for Hapag-Lloyd is too small in my view,” he said. “We would like to get to a market share of around 10%, and this would help us make a good step in that direction.” The Zim deal is expected to be completed by the end of the year, subject to approval of the Israeli carrier’s shareholders and regulatory approval in several jurisdictions. The acquisition comes as container shipping moves into a supply-driven downcycle, with the declining market sharply illustrated in Hapag-Lloyd’s preliminary results for 2025 <a href="https://www.joc.com/article/fourth-quarter-rate-slump-drags-down-hapag-lloyds-2025-financials-6166755">that included a steep drop in profitability</a>. Zim’s earnings have yet to be announced. Hapag-Lloyd’s estimated 2025 revenue for the combined entity would be $28 billion, a $1.1 billion drop from 2024. In earnings before interest and taxes, the $5.3 billion reported in 2024 by both carriers is expected to plummet to $2 billion should Zim hit the higher end of its 2025 forecast. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Hapag-Lloyd’s $4.2 billion acquisition of Zim Integrated Shipping Services that was announced Monday will significantly improve the Hamburg-based carrier’s position on several major trade lanes. While cementing the buyer’s position as the world’s fifth-largest container shipping company , the takeover will grow Hapag-Lloyd’s volume share on the trans-Atlantic from 24% to 27%, on the trans-Pacific from 7% to 12%, in Asia from 9% to 11%, on Asia-Latin America from 11% to 14%, and from 2% to 7% on the intra-Europe trade, according to data from Container Trades Statistics (CTS) cited by Hapag-Lloyd. Hapag-Lloyd CEO Rolf Habben Jansen highlighted as particularly welcome the increase in volume that would result across the trans-Atlantic and trans-Pacific corridors. “When we look for a minute at the trade portfolios on the Atlantic and trans-Pacific, if we joined forces we would really get into very strong position,” he told reporters during an online briefing Monday shortly after signing the Zim deal in Tel Aviv. A 27% market share on the trans-Atlantic would put Hapag-Lloyd in second place behind Mediterranean Shipping Co. at 29%, according to the CTS figures cited by Hapag-Lloyd. According to PIERS, a sister company of the Journal of Commerce within S&P Global, Hapag-Lloyd had a market share of 19.6% on the trans-Atlantic in January, behind MSC’s 22.6%. But Hapag-Lloyd held the top position throughout the fourth quarter of 2025 with a share that exceeded 25% in October and December. On the trans-Pacific, the addition of Zim would put Hapag-Lloyd level with Ocean Network Express in third position behind MSC at 13%, according to CTS. Habben Jansen said the Asia-Latin America trade has long been a corridor he has wanted to expand. In 2023, Hapag-Lloyd strengthened its position with the acquisition of SM SAAM terminal business while growing dedicated service networks on the trade lane. “Zim has done really well on Asia-Latin America in the last couple of years and this would allow us to get closer to the 15%, 16% [volume share] that we’ve always aspired to,” Habben Jansen told reporters. MSC holds the largest market share on the trade at 21%. Intra-Europe share ‘too small’ The Zim volume added on the intra-Europe trade would put Hapag-Lloyd level with Cosco Shipping at 7%, although considering it is a home market for the Hamburg-based carrier, Habben Jansen indicated there is still room to grow. “Intra-Europe for Hapag-Lloyd is too small in my view,” he said. “We would like to get to a market share of around 10%, and this would help us make a good step in that direction.” The Zim deal is expected to be completed by the end of the year, subject to approval of the Israeli carrier’s shareholders and regulatory approval in several jurisdictions. The acquisition comes as container shipping moves into a supply-driven downcycle, with the declining market sharply illustrated in Hapag-Lloyd’s preliminary results for 2025 that included a steep drop in profitability . Zim’s earnings have yet to be announced. Hapag-Lloyd’s estimated 2025 revenue for the combined entity would be $28 billion, a $1.1 billion drop from 2024. In earnings before interest and taxes, the $5.3 billion reported in 2024 by both carriers is expected to plummet to $2 billion should Zim hit the higher end of its 2025 forecast. Contact Greg Knowler at greg.knowler@spglobal.com .

Zim deal to strengthen Hapag-Lloyd’s market share across key trade lanes

Use code GTT26W at checkout and save $900 on first year of an annual Gold subscription!

Upgrade Subscription - Gold Trials

Become a Gold Subscriber and Save!

Arm your team with the most trusted information portal for the international container shipping industry.

Group Subscriptions - Wide Box

Get into a group subscription today

Use code FTW25 at checkout to save 25% on a Silver or Silver Plus annual subscription! 

Subscribe Now - FT to S/SP - Wide Box

SUBSCRIBE AND SAVE 25%

Use code GW595 and upgrade to Gold for just $595! Valid for first year of subscription.

Upgrade Subscription - S/SP to Gold - Wide Box

SAVE $900 ON A GOLD SUBSCRIPTION

Choose a subscription plan that works best for you!

Subscribe Now - Anonymous to S/SP - Wide Box

SUBSCRIBE TODAY

Access Journal of Commerce content for 30 days

Free Trial - Wide Box

START A FREE TRIAL TODAY

Use code GW995 at checkout to save $500 on first year of a Gold subscription!

Subscribe Now - FT to Gold - Wide Box

SAVE $500 ON A GOLD SUBSCRIPTION

Subscribe Now - Anonymous to Gold - Wide Box

START A FREE TRIAL: Access Journal of Commerce content for 30 days

Free Trial - Offer Box

Free Trial

SUBSCRIBE AND SAVE 25%: Use code FTW25 to save 25% on first year of a Silver or Silver Plus annual subscription!


Subscribe Now - FT to S/SP - Offer Box

Subscribe and Save

GET INTO A GROUP SUBSCRIPTION: Arm your team with unlimited Journal of Commerce content

Group Subscriptions - Offer Box

Group Subscriptions

SUBSCRIBE TODAY: Choose a subscription plan that works best for you!

Subscribe Now - Anonymous to S/SP - Offer Box

UPGRADE TO GOLD AND SAVE: Use code GTT26W at checkout and save $900 on first year of a Gold subscription!

Upgrade Subscription

Subscribe Now - Anonymous to Gold - Offer Box

SAVE $900 ON A GOLD SUBSCRIPTION: Use code GW595 and upgrade to Gold for just $595! Valid on first year of subscription.

Upgrade Subscription - S/SP to Gold - Offer Box

SAVE $500 ON A GOLD SUBSCRIPTION: Use code GW995 and save $500 on the first year of a Gold subscription!

Subscribe Now - FT to Gold - Offer Box

SUBSCRIBE AND SAVE

Monthly publication providing an editorial deep dive into global supply chain news

Journal of Commerce Magazine - Rectangle Box

Journal of Commerce Magazine

A premium access index of savings using domestic intermodal vs. OTR 

ISI Report - Rectangle Box

Intermodal Savings Index

An in-depth analysis of transport trends in the multipurpose and heavy-lift fleet segment

Breakbulk Report - Rectangle Box

Breakbulk Quarterly

An extensive dashboard of charts organized by trade lane, mode, and topic

Gateway - Rectangle Box

Gateway

Customers scoring their intermodal partners to identify the best service providers

Intermodal Service Scorecard - Rectangle Box

Intermodal Service Scorecard

A premium access outlook critical to shippers and transportation providers

QI Report - Rectangle Box

Quarterly Intelligence

The premier conference for the global container shipping and supply chain community

TPM Conference - Rectangle Box

Attend TPM26

The only editorially independent conference for the breakbulk & project cargo industry

Breakbulk Conference - Rectangle Box

Attend Breakbulk26

<div class="phx-topic abstract-wrapper">The 6-3 decision by the nation’s highest court to declare as illegal the global tariffs implemented by the US since last April’s so-called “Liberation Day” is likely to throw the Trump administration’s tariff policy into disarray.</div>

The 6-3 decision by the nation’s highest court to declare as illegal the global tariffs implemented by the US since last April’s so-called “Liberation Day” is likely to throw the Trump administration’s tariff policy into disarray.

<div class="phx-topic">The US Supreme Court on Friday ruled that President Donald Trump <a href="https://www.supremecourt.gov/opinions/25pdf/24-1287_4gcj.pdf">did not have the authority</a> under the International Emergency Economic Powers Act (IEEPA) to implement his wide-ranging global tariffs against US trading partners, upending the cornerstone of his administration’s economic policy. The 6-3 decision by the nation’s highest court to essentially declare as illegal the tariffs implemented by the US since last April’s so-called “Liberation Day” is likely to throw the Trump administration’s tariff policy into disarray. Trump, during a press briefing at the White House after the ruling, said he was “ashamed” of the justices who voted to kill the tariffs, but vowed he would pursue new options to put them in place. “Other alternatives will be used to replace the ones the Court incorrectly suspended,” he said. That includes the immediate implementation of a 10% “global” tariff under so-called Section 122 action, presumably levied against all US trading partners. “We’ll go in a different direction, which is even stronger than our original choice,” Trump said. The ruling could potentially unlock US-bound ocean freight volumes that have been bogged down since the end of the 2025 peak season due to economic uncertainty and worries that tariff costs couldn’t be effectively passed on to consumers. IEEPA-based tariffs vary between 10% and 50%, depending on the country, although most were 15% or lower. Numerous importers have decried the cost of paying tariffs as a material drag on their businesses over the past year, either due to the impact of price increases or profit margin pressure. Companies have also had to undertake nearly constant scenario planning to account for rapid changes to tariff exposure and subsequent sourcing location changes. A paper <a href="https://libertystreeteconomics.newyorkfed.org/2026/02/who-is-paying-for-the-2025-u-s-tariffs/">published earlier this month by the New York Federal Reserve</a> found that 90% of the added costs of Trump’s tariffs were being passed on to consumers and businesses. <h3>What’s next? </h3>The Supreme Court ruling is likely to lead to a chain reaction of legislation and administrative actions involving the Trump administration, US Customs and Border Protection, US importers, and trade consultants and attorneys representing those importers. CBP will have to refund importers hundreds of billions of dollars of tariffs paid over the course of the last nine months, though the Supreme Court’s decision Friday did not specify how that process should take place. Pete Mento, director of global trade advisory services at accounting firm Baker Tilly, told the Journal of Commerce that the Court of International Trade will decide how the refund process will unfold, a decision he said will likely come quickly. In early January, CBP shared a new electronic refund process that trade experts saw as a foreshadowing of Friday’s decision. “The court said tariffs are taxes, taxes belong to Congress, and ‘regulating importation’ in a sanctions statue does not secretly mean ‘rewrite the HTS [Harmonized Tariff Schedule] because the trade deficit hurt your feelings,’” Mento wrote in a LinkedIn post Friday. The calls for refunds are coming fast. The National Retail Federation praised the Supreme Court’s decision and urged lower courts to “ensure a seamless process to refund the tariffs to US importers.” “[The Court’s decision] provides much-needed certainty for US businesses and manufacturers, enabling global supply chains to operate without ambiguity,” David French, the NRF’s executive vice president of government relations, said in a statement. Analysts at Global Trade Alert estimate that the trade-weighted average tariff will fall from 15.4% to 8.3% on US imports, notwithstanding the imminent imposition of 10% tariffs under the Section 122 provision. <h3>Other tariff mechanisms available </h3>In the meantime, the administration has previously signaled its intent to implement tariffs through other legislative mechanisms if the Court struck down its IEEPA tariffs. Levers that are available to the Trump administration include the aforementioned Section 122, a provision that allows the executive branch to assess tariffs on countries to address a “large and serious” balance-of-payments deficit through import surcharges of up to 15%, import quotas, or a combination of the two, according to a December blog from the American Enterprise Institute. The catch with actions under Section 122 is that while they don’t require Congressional approval, they expire after 150 days. The president could, theoretically, extend them for another 150 days, but that action would be seen to contravene the spirit of the section. Also notable is that Section 122 has never been used before specifically to impose trade restrictions. Another option is use of Section 338, a largely defunct provision that allows the president to impose tariffs of up to 50% on imports from countries that discriminate against US commerce compared with other nations, the AEI blog explained. Section 338 is largely thought to have been supplanted by Section 301, the unfair trading practices provision under which Trump instituted tariffs against China in his first term. Under 301, the US Trade Representative must conduct an investigation before deciding that tariffs are necessary. The administration could expand its use of Section 232 tariffs, also deployed widely in Trump’s first term, to target national security risks. Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>.</div>

The US Supreme Court on Friday ruled that President Donald Trump did not have the authority under the International Emergency Economic Powers Act (IEEPA) to implement his wide-ranging global tariffs against US trading partners, upending the cornerstone of his administration’s economic policy. The 6-3 decision by the nation’s highest court to essentially declare as illegal the tariffs implemented by the US since last April’s so-called “Liberation Day” is likely to throw the Trump administration’s tariff policy into disarray. Trump, during a press briefing at the White House after the ruling, said he was “ashamed” of the justices who voted to kill the tariffs, but vowed he would pursue new options to put them in place. “Other alternatives will be used to replace the ones the Court incorrectly suspended,” he said. That includes the immediate implementation of a 10% “global” tariff under so-called Section 122 action, presumably levied against all US trading partners. “We’ll go in a different direction, which is even stronger than our original choice,” Trump said. The ruling could potentially unlock US-bound ocean freight volumes that have been bogged down since the end of the 2025 peak season due to economic uncertainty and worries that tariff costs couldn’t be effectively passed on to consumers. IEEPA-based tariffs vary between 10% and 50%, depending on the country, although most were 15% or lower. Numerous importers have decried the cost of paying tariffs as a material drag on their businesses over the past year, either due to the impact of price increases or profit margin pressure. Companies have also had to undertake nearly constant scenario planning to account for rapid changes to tariff exposure and subsequent sourcing location changes. A paper published earlier this month by the New York Federal Reserve found that 90% of the added costs of Trump’s tariffs were being passed on to consumers and businesses. What’s next? The Supreme Court ruling is likely to lead to a chain reaction of legislation and administrative actions involving the Trump administration, US Customs and Border Protection, US importers, and trade consultants and attorneys representing those importers. CBP will have to refund importers hundreds of billions of dollars of tariffs paid over the course of the last nine months, though the Supreme Court’s decision Friday did not specify how that process should take place. Pete Mento, director of global trade advisory services at accounting firm Baker Tilly, told the Journal of Commerce that the Court of International Trade will decide how the refund process will unfold, a decision he said will likely come quickly. In early January, CBP shared a new electronic refund process that trade experts saw as a foreshadowing of Friday’s decision. “The court said tariffs are taxes, taxes belong to Congress, and ‘regulating importation’ in a sanctions statue does not secretly mean ‘rewrite the HTS [Harmonized Tariff Schedule] because the trade deficit hurt your feelings,’” Mento wrote in a LinkedIn post Friday. The calls for refunds are coming fast. The National Retail Federation praised the Supreme Court’s decision and urged lower courts to “ensure a seamless process to refund the tariffs to US importers.” “[The Court’s decision] provides much-needed certainty for US businesses and manufacturers, enabling global supply chains to operate without ambiguity,” David French, the NRF’s executive vice president of government relations, said in a statement. Analysts at Global Trade Alert estimate that the trade-weighted average tariff will fall from 15.4% to 8.3% on US imports, notwithstanding the imminent imposition of 10% tariffs under the Section 122 provision. Other tariff mechanisms available In the meantime, the administration has previously signaled its intent to implement tariffs through other legislative mechanisms if the Court struck down its IEEPA tariffs. Levers that are available to the Trump administration include the aforementioned Section 122, a provision that allows the executive branch to assess tariffs on countries to address a “large and serious” balance-of-payments deficit through import surcharges of up to 15%, import quotas, or a combination of the two, according to a December blog from the American Enterprise Institute. The catch with actions under Section 122 is that while they don’t require Congressional approval, they expire after 150 days. The president could, theoretically, extend them for another 150 days, but that action would be seen to contravene the spirit of the section. Also notable is that Section 122 has never been used before specifically to impose trade restrictions. Another option is use of Section 338, a largely defunct provision that allows the president to impose tariffs of up to 50% on imports from countries that discriminate against US commerce compared with other nations, the AEI blog explained. Section 338 is largely thought to have been supplanted by Section 301, the unfair trading practices provision under which Trump instituted tariffs against China in his first term. Under 301, the US Trade Representative must conduct an investigation before deciding that tariffs are necessary. The administration could expand its use of Section 232 tariffs, also deployed widely in Trump’s first term, to target national security risks. Contact Eric Johnson at eric.johnson@spglobal.com .

Port News

US Supreme Court rules against Trump in critical IEEPA tariff case

<div class="phx-topic abstract-wrapper">Hapag-Lloyd said it wants to integrate Zim into the alliance with Maersk, but adding new ports and overlapping coverage means changes to services. </div>

Hapag-Lloyd said it wants to integrate Zim into the alliance with Maersk, but adding new ports and overlapping coverage means changes to services.

<div class="phx-topic">Hapag-Lloyd’s acquisition of Zim Integrated Shipping Services raises questions of how much of Zim’s express, port-direct services will survive under Gemini Cooperation’s transshipment model and to what extent the acquisition will force further changes in trans-Pacific networks, according to Sea-Intelligence Maritime AnalysisIntegrating Zim’s services into the Gemini network makes more sense than operating Zim as a separate product, Sea-Intelligence said in a report Sunday. Even though Zim offers a premium product based on its transit times and direct service, Sea-Intelligence said a premium, standalone service confuses the messaging for Gemini customers “Operating premium direct strings outside the alliance effectively positions Hapag-Lloyd in competition with its own shared hub-and-spoke infrastructure, which could potentially draw high-yield cargo away from Gemini’s core network.” Sea-Intelligence said. Adding Zim’s current trans-Pacific services would increase Gemini’s port coverage by 28%, Sea-Intelligence said. In particular, Zim’s network would give Gemini more coverage between origin ports in southeast China, South Korea, and Taiwan to US East Coast ports. Yet offering those additional port calls will introduce more complexity into Gemini’s network, Sea-Intelligence said. Offering the same port coverage to the Gemini network will require “careful product design to avoid undermining customer expectations.”Speaking during a briefing last week after the <a href="https://www.joc.com/article/hapag-lloyd-bolsters-fleet-with-42-billion-deal-to-acquire-zim-6170540">$4.2 billion acquisition of Zim was announced</a>, Hapag-Lloyd Chief Executive Rolf Habben Jansen said the approximately 100 vessels controlled by Zim will eventually be integrated into services that Hapag-Lloyd offers alongside Maersk under the Gemini banner. He added that the additional capacity could help Gemini gain market share in certain trade lanes. “It’s very likely to assume that indeed, some of the tonnage that Zim deploys on the east-west trades would also phase into Gemini,” Habben Jansen said. “We think that’s actually a good thing that will help Gemini gain a little bit of scale that will help us to bring unit cost further down.” <h3>‘Structural challenge’ for Gemini</h3>Integrating Zim’s current network would also mean Gemini offering a second Asia service to the Port of Baltimore and providing service to Boston. Sea-Intelligence said that while some services with port overlap could be consolidated, servicing smaller ports might require standalone services that won’t affect Gemini’s reliability. “If this market reach is integrated, Gemini faces a structural challenge: servicing these secondary gateways via transshipment hubs can add transit time on the ocean leg, and it may dilute the faster transit times some legacy Zim customers currently value,” Sea-Intelligence said. Along with Gemini’s network, the acquisition of Zim has the potential to reshape other vessel-sharing arrangements, Sea-Intelligence said. For the past two years, Hapag-Lloyd has offered a jointly-operated Asia-US East Coast service with Wan Hai Lines, the AA7. But Sea-Intelligence said the AA7’s large overlap with existing Zim services suggests “Hapag-Lloyd could exit this joint operation over time.” Zim has its own vessel-sharing agreement with Mediterranean Shipping Co. for five services between Asia and the US East and Gulf coasts. Zim and MSC each operate two of the services, while the fifth service is jointly operated. While it would take between six months and a year to dissolve the joint agreement, Sea-Intelligence said the end of the agreement would reduce MSC’s port coverage on Asia-to-US East Coast services by nearly one-third. Sea-Intelligence said it’s likely that MSC will launch a new US East Coast anchor service to compensate for the potential exit of Zim. “If MSC opts not to launch a replacement service, they would be ceding a defined strategic advantage to the potentially expanded Gemini network,” Sea-Intelligence said. Contact Michael Angell at <a href="mailto: michael.angell@spglobal.com">michael.angell@spglobal.com</a>.</div>

Hapag-Lloyd’s acquisition of Zim Integrated Shipping Services raises questions of how much of Zim’s express, port-direct services will survive under Gemini Cooperation’s transshipment model and to what extent the acquisition will force further changes in trans-Pacific networks, according to Sea-Intelligence Maritime Analysis Integrating Zim’s services into the Gemini network makes more sense than operating Zim as a separate product, Sea-Intelligence said in a report Sunday. Even though Zim offers a premium product based on its transit times and direct service, Sea-Intelligence said a premium, standalone service confuses the messaging for Gemini customers “Operating premium direct strings outside the alliance effectively positions Hapag-Lloyd in competition with its own shared hub-and-spoke infrastructure, which could potentially draw high-yield cargo away from Gemini’s core network.” Sea-Intelligence said. Adding Zim’s current trans-Pacific services would increase Gemini’s port coverage by 28%, Sea-Intelligence said. In particular, Zim’s network would give Gemini more coverage between origin ports in southeast China, South Korea, and Taiwan to US East Coast ports. Yet offering those additional port calls will introduce more complexity into Gemini’s network, Sea-Intelligence said. Offering the same port coverage to the Gemini network will require “careful product design to avoid undermining customer expectations.” Speaking during a briefing last week after the $4.2 billion acquisition of Zim was announced , Hapag-Lloyd Chief Executive Rolf Habben Jansen said the approximately 100 vessels controlled by Zim will eventually be integrated into services that Hapag-Lloyd offers alongside Maersk under the Gemini banner. He added that the additional capacity could help Gemini gain market share in certain trade lanes. “It’s very likely to assume that indeed, some of the tonnage that Zim deploys on the east-west trades would also phase into Gemini,” Habben Jansen said. “We think that’s actually a good thing that will help Gemini gain a little bit of scale that will help us to bring unit cost further down.” ‘Structural challenge’ for Gemini Integrating Zim’s current network would also mean Gemini offering a second Asia service to the Port of Baltimore and providing service to Boston. Sea-Intelligence said that while some services with port overlap could be consolidated, servicing smaller ports might require standalone services that won’t affect Gemini’s reliability. “If this market reach is integrated, Gemini faces a structural challenge: servicing these secondary gateways via transshipment hubs can add transit time on the ocean leg, and it may dilute the faster transit times some legacy Zim customers currently value,” Sea-Intelligence said. Along with Gemini’s network, the acquisition of Zim has the potential to reshape other vessel-sharing arrangements, Sea-Intelligence said. For the past two years, Hapag-Lloyd has offered a jointly-operated Asia-US East Coast service with Wan Hai Lines, the AA7. But Sea-Intelligence said the AA7’s large overlap with existing Zim services suggests “Hapag-Lloyd could exit this joint operation over time.” Zim has its own vessel-sharing agreement with Mediterranean Shipping Co. for five services between Asia and the US East and Gulf coasts. Zim and MSC each operate two of the services, while the fifth service is jointly operated. While it would take between six months and a year to dissolve the joint agreement, Sea-Intelligence said the end of the agreement would reduce MSC’s port coverage on Asia-to-US East Coast services by nearly one-third. Sea-Intelligence said it’s likely that MSC will launch a new US East Coast anchor service to compensate for the potential exit of Zim. “If MSC opts not to launch a replacement service, they would be ceding a defined strategic advantage to the potentially expanded Gemini network,” Sea-Intelligence said. Contact Michael Angell at michael.angell@spglobal.com .

Zim acquisition sets up network changes for Gemini: Sea-Intelligence

<div class="phx-topic abstract-wrapper">The International Air Transport Association Wednesday condemned a Canadian government plan to impose</div>

The International Air Transport Association Wednesday condemned a Canadian government plan to impose

<div class="phx-topic">The International Air Transport Association Wednesday condemned a Canadian government plan to impose a tax Nov. 1 on foreign airlines flying over Canada.The fee primarily will hit flights between the United States and Europe and the Pacific Rim.At a press conference in Montreal, IATA Director General Pierre Jeanniot urged Ottawa authorities to scrap a plan that "discriminates against international airlines overflying Canada."He called for "an equitable distribution of the costs among all users of air traffic control" and a phasing out of new charges over a three-year period.Cargo as well as passenger airlines will be hit by a fee - virtual seed money - destined to help defray costs for Nav Canada, a newly created privatized air traffic control system set to become operational in April 1996.The charge is expected to generate revenue of about 165 million Canadiandollars (US$120 million) annually."We are shocked," said Pete Diefenbach, New York-based marketing manager for North America of Nippon Cargo Airlines, which has regular flights between Tokyo, Anchorage, Chicago and New York."It's a very inopportune move at a time carriers are trying to return to profitability," he said.Most affected will be the major American, European and Asian airlines, including American Airlines, Delta, British Airways, Air France, KLM, Swissair, Lufthansa, Japan Airlines and Cathay Pacific.To offset the levy, many airlines will be compelled to impose a ticket surcharge, IATA said in a press release.As many as 800 international flights daily arc over Canadian airspace without touching down.Under the fee plan, for instance, a Boeing 747 flying from Los Angeles to London would be billed C$1,423. On this route, the distance flown over Canadian airspace is estimated at 2,300 miles.The formula for the charge is described as C$0.026 times the square root of the maximum takeoff weight of the aircraft times the distance flown in Canada airspace.Such charges can be found in Europe and Australia, but do not exist in Canada and the United States.U.S. domestic flights that overfly Canada, like Boston-Chicago, will not be charged the new fee. Neither will government or military aircraft.The fee, however, will apply to flights on large aircraft flying between Alaska and the continental United States.The official Canada Gazette recently commented, "These would be international flights from Asia that stop over in Alaska."Mr. Jeanniot said foreign airlines did not get adequate warning of the impending levy - first mentioned in the February 1995 federal budget and detailed in June.In a strongly worded letter to Canadian Transport Minister Doug Young, Mr. Jeanniot stressed that IATA was prepared to cooperate with Transport Canada and Nav Canada "in defining an equitable charging system for a full cost recovery of an agreed cost-base."Nav Canada is a nonprofit corporation whose board is dominated by air traffic controllers, government officials and users of the system, including domestic airlines.In a letter to Transport Canada, dated July 27, Carol Hallett, president of the Washington-based Air Transport Association, said a selective overflight charge should not be imposed just months before Nav Canada establishes its own charging mechanism for all users of the air navigation system.</div>

The International Air Transport Association Wednesday condemned a Canadian government plan to impose a tax Nov. 1 on foreign airlines flying over Canada. The fee primarily will hit flights between the United States and Europe and the Pacific Rim.At a press conference in Montreal, IATA Director General Pierre Jeanniot urged Ottawa authorities to scrap a plan that "discriminates against international airlines overflying Canada." He called for "an equitable distribution of the costs among all users of air traffic control" and a phasing out of new charges over a three-year period. Cargo as well as passenger airlines will be hit by a fee - virtual seed money - destined to help defray costs for Nav Canada, a newly created privatized air traffic control system set to become operational in April 1996. The charge is expected to generate revenue of about 165 million Canadian dollars (US$120 million) annually. "We are shocked," said Pete Diefenbach, New York-based marketing manager for North America of Nippon Cargo Airlines, which has regular flights between Tokyo, Anchorage, Chicago and New York. "It's a very inopportune move at a time carriers are trying to return to profitability," he said. Most affected will be the major American, European and Asian airlines, including American Airlines, Delta, British Airways, Air France, KLM, Swissair, Lufthansa, Japan Airlines and Cathay Pacific. To offset the levy, many airlines will be compelled to impose a ticket surcharge, IATA said in a press release. As many as 800 international flights daily arc over Canadian airspace without touching down. Under the fee plan, for instance, a Boeing 747 flying from Los Angeles to London would be billed C$1,423. On this route, the distance flown over Canadian airspace is estimated at 2,300 miles. The formula for the charge is described as C$0.026 times the square root of the maximum takeoff weight of the aircraft times the distance flown in Canada airspace. Such charges can be found in Europe and Australia, but do not exist in Canada and the United States. U.S. domestic flights that overfly Canada, like Boston-Chicago, will not be charged the new fee. Neither will government or military aircraft. The fee, however, will apply to flights on large aircraft flying between Alaska and the continental United States. The official Canada Gazette recently commented, "These would be international flights from Asia that stop over in Alaska." Mr. Jeanniot said foreign airlines did not get adequate warning of the impending levy - first mentioned in the February 1995 federal budget and detailed in June. In a strongly worded letter to Canadian Transport Minister Doug Young, Mr. Jeanniot stressed that IATA was prepared to cooperate with Transport Canada and Nav Canada "in defining an equitable charging system for a full cost recovery of an agreed cost-base." Nav Canada is a nonprofit corporation whose board is dominated by air traffic controllers, government officials and users of the system, including domestic airlines. In a letter to Transport Canada, dated July 27, Carol Hallett, president of the Washington-based Air Transport Association, said a selective overflight charge should not be imposed just months before Nav Canada establishes its own charging mechanism for all users of the air navigation system.

IATA RIPS CANADA'S PLAN TO IMPOSE OVERFLIGHT FEES

<div class="phx-topic abstract-wrapper">Retailers are holding back on signing their 2026–27 service contracts because they anticipate spot rates may sink further in the next few weeks, while carriers hold out hope market fundamentals will emerge to reverse the softening trend. </div>

Retailers are holding back on signing their 2026–27 service contracts because they anticipate spot rates may sink further in the next few weeks, while carriers hold out hope market fundamentals will emerge to reverse the softening trend.

<div class="phx-topic">Neither ocean carriers nor US importers are in a rush to sign contracts for the 2026–27 service year in a trans-Pacific market where spot rates to the West Coast have fallen more than 20% since early January and, many believe, have room to slide further. Multiple sources who spoke to the Journal of Commerce this week said carriers are in no hurry to ink deals with their customers, holding out hope market fundamentals will emerge to reverse the softening trend on the trans-Pacific. And shippers are biding their time, happy to watch rates continue to fall before they’ll put pen to paper on service contracts, most of which begin May 1. The levels and direction of spot rates impact service contracting, as it’s a barometer of the degree to which carriers can effectively match supply to demand. Long-term contract rates generally allow shippers to lock in lower prices than they could find in the spot market, leading shippers to watch the latter closely ahead of and during service contract negotiations. The Journal of Commerce spoke with three ocean carriers, three retailers, three forwarders, two consultants, and an industry analyst for this story. “No one will sign now,” one carrier executive said. “Most shippers will wait until [TPM26] to see if rates have dropped further.” In past years leading up to the Journal of Commerce’s Trans-Pacific Maritime Conference in Long Beach in the first week of March, at least one or two of the half-dozen largest retailers had already signed their service contracts. Those initial contracts then set the floor for contract rates, with the remaining large, midsize and smaller importers signing for somewhat higher rates in March and through April. TPM26 will be held March 1–4. “No major big-box retailers have signed as of yet,” a source with a top 20 US retailer said. “We’re running two to three weeks late.” A second carrier executive said while a couple of carriers could be “close” to signing a big-box account, most customers are holding out to see how much further the market falls. <h3>Shippers’ market </h3>The signals, at least now, favor the importers. In addition to <a href="https://www.joc.com/article/soft-demand-in-eastbound-trans-pacific-overwhelms-carriers-gri-attempt-6109240">softer demand</a> and <a href="https://www.joc.com/article/pre-lunar-new-year-demand-to-give-trans-pac-market-first-test-of-2026-6149869">falling spot rates</a>, no significant surge in imports is projected in March, when the factories in Asia that closed for the Lunar New Year holiday that began Feb. 17 return to full production. Indeed, retailers and direct importers are holding back on signing their 2026–27 service contracts because they anticipate spot rates may sink further in the next few weeks, forcing carriers to reduce their contract tenders, said Bob Fredman, principal at the consulting firm SF Global Logistics who formerly negotiated service contracts for big-box retailers. “That’s what smart shippers should do,” Fredman said. “It doesn’t make much sense to get too far in front of the [big retailers].” <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="56cdc0fc-22a5-4ef9-9e3e-11f96f369c70"></dynamic-object></div>A national furniture importer said he circulated his “boilerplate” tender to his core carrier partners but is not pressuring them to finalize a contract because he anticipates rates will move lower in March. “As a mid-size importer, why not wait? I want to get more clarity as to where the market is,” the source said. As of Feb. 19, the market from Asia to the West Coast was at $1,600 per FEU, down 23% since early January and 42% lower year over year, according to Platts, a sister company of the Journal of Commerce within S&amp;P Global. The East Coast spot rate of $2,400 was down 21% so far this year and 39% lower year over year. According to online rate benchmarking platform Xeneta, Asia-West Coast rates were at $1.356 per FEU as of Feb. 19, down from $2,289 per FEU on Jan. 4 and almost 60% lower year over year. A second top 20 retailer said carriers and their customers are holding back from signing service contracts to see what the negotiating environment looks like after TPM26 in terms of spot rates and forecasts for demand in the second quarter. “We are pretty much completed with our tenders. I suspect we will be completed within the next couple of weeks,” the source said. “Demand right now leading up to Q2 is soft. Carriers are holding back to see if demand picks up after Chinese New Year.” <h3>Carriers ‘failed’ to balance supply and demand </h3>But the slower-than-usual finalizing of contracts by the largest big-box retailers does not mean that medium to smaller retailers will sign later than usual, said Jason Cook, CEO of forwarder Ardent Global Logistics. “After TPM there will be a rapid succession of completions for the big-box retailers,” Cook said. “Then the midsize and smaller importers will get serious in round two...” Unlike in past years when importers were anxious to lock in volume allotments, known as minimum quantity commitments (MQCs), because vessel space was tight, capacity is readily available this year, and it is the carriers who are edgy. The second top 20 retailer source said her preliminary discussions with carriers have been “colorful.” <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e5c8a2a0-9aa5-4787-bbed-bf4b7a9f9677"></dynamic-object></div>A major reason why there was no capacity shortage in the trans-Pacific leading into the Lunar New Year was that carriers did not respond quickly enough to the market conditions by managing vessel space, said Destine Ozuygur, senior analyst for liner network performance at Xeneta. According to data from Xeneta’s eeSea, carriers had 1.19 million TEUs of actual capacity on the Asia-West Coast trade lane in January, with that expected to rise to 1.26 million TEUs in February and 1.4 million TEUs in March. “Given the current slump in rates on the trans-Pacific and the absence of a strong Lunar New Year surge, it appears the carriers failed to balance supply against demand,” Ozuygur said. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>. </div>

Neither ocean carriers nor US importers are in a rush to sign contracts for the 2026–27 service year in a trans-Pacific market where spot rates to the West Coast have fallen more than 20% since early January and, many believe, have room to slide further. Multiple sources who spoke to the Journal of Commerce this week said carriers are in no hurry to ink deals with their customers, holding out hope market fundamentals will emerge to reverse the softening trend on the trans-Pacific. And shippers are biding their time, happy to watch rates continue to fall before they’ll put pen to paper on service contracts, most of which begin May 1. The levels and direction of spot rates impact service contracting, as it’s a barometer of the degree to which carriers can effectively match supply to demand. Long-term contract rates generally allow shippers to lock in lower prices than they could find in the spot market, leading shippers to watch the latter closely ahead of and during service contract negotiations. The Journal of Commerce spoke with three ocean carriers, three retailers, three forwarders, two consultants, and an industry analyst for this story. “No one will sign now,” one carrier executive said. “Most shippers will wait until [TPM26] to see if rates have dropped further.” In past years leading up to the Journal of Commerce’s Trans-Pacific Maritime Conference in Long Beach in the first week of March, at least one or two of the half-dozen largest retailers had already signed their service contracts. Those initial contracts then set the floor for contract rates, with the remaining large, midsize and smaller importers signing for somewhat higher rates in March and through April. TPM26 will be held March 1–4. “No major big-box retailers have signed as of yet,” a source with a top 20 US retailer said. “We’re running two to three weeks late.” A second carrier executive said while a couple of carriers could be “close” to signing a big-box account, most customers are holding out to see how much further the market falls. Shippers’ market The signals, at least now, favor the importers. In addition to softer demand and falling spot rates , no significant surge in imports is projected in March, when the factories in Asia that closed for the Lunar New Year holiday that began Feb. 17 return to full production. Indeed, retailers and direct importers are holding back on signing their 2026–27 service contracts because they anticipate spot rates may sink further in the next few weeks, forcing carriers to reduce their contract tenders, said Bob Fredman, principal at the consulting firm SF Global Logistics who formerly negotiated service contracts for big-box retailers. “That’s what smart shippers should do,” Fredman said. “It doesn’t make much sense to get too far in front of the [big retailers].” A national furniture importer said he circulated his “boilerplate” tender to his core carrier partners but is not pressuring them to finalize a contract because he anticipates rates will move lower in March. “As a mid-size importer, why not wait? I want to get more clarity as to where the market is,” the source said. As of Feb. 19, the market from Asia to the West Coast was at $1,600 per FEU, down 23% since early January and 42% lower year over year, according to Platts, a sister company of the Journal of Commerce within S&P Global. The East Coast spot rate of $2,400 was down 21% so far this year and 39% lower year over year. According to online rate benchmarking platform Xeneta, Asia-West Coast rates were at $1.356 per FEU as of Feb. 19, down from $2,289 per FEU on Jan. 4 and almost 60% lower year over year. A second top 20 retailer said carriers and their customers are holding back from signing service contracts to see what the negotiating environment looks like after TPM26 in terms of spot rates and forecasts for demand in the second quarter. “We are pretty much completed with our tenders. I suspect we will be completed within the next couple of weeks,” the source said. “Demand right now leading up to Q2 is soft. Carriers are holding back to see if demand picks up after Chinese New Year.” Carriers ‘failed’ to balance supply and demand But the slower-than-usual finalizing of contracts by the largest big-box retailers does not mean that medium to smaller retailers will sign later than usual, said Jason Cook, CEO of forwarder Ardent Global Logistics. “After TPM there will be a rapid succession of completions for the big-box retailers,” Cook said. “Then the midsize and smaller importers will get serious in round two...” Unlike in past years when importers were anxious to lock in volume allotments, known as minimum quantity commitments (MQCs), because vessel space was tight, capacity is readily available this year, and it is the carriers who are edgy. The second top 20 retailer source said her preliminary discussions with carriers have been “colorful.” A major reason why there was no capacity shortage in the trans-Pacific leading into the Lunar New Year was that carriers did not respond quickly enough to the market conditions by managing vessel space, said Destine Ozuygur, senior analyst for liner network performance at Xeneta. According to data from Xeneta’s eeSea, carriers had 1.19 million TEUs of actual capacity on the Asia-West Coast trade lane in January, with that expected to rise to 1.26 million TEUs in February and 1.4 million TEUs in March. “Given the current slump in rates on the trans-Pacific and the absence of a strong Lunar New Year surge, it appears the carriers failed to balance supply against demand,” Ozuygur said. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .

Trans-Pacific carriers, importers slow-walking service contract negotiations

<div class="phx-topic abstract-wrapper">The $4.2 billion acquisition announced last week does nothing to alter the market’s weak fundamentals, notably soft demand and vessel oversupply, writes analyst John McCauley.</div>

The $4.2 billion acquisition announced last week does nothing to alter the market’s weak fundamentals, notably soft demand and vessel oversupply, writes analyst John McCauley.

<div class="phx-topic">The ink has barely dried on the <a href="https://www.joc.com/article/hapag-lloyd-bolsters-fleet-with-42-billion-deal-to-acquire-zim-6170540">Hapag-Lloyd tie up with Zim Integrated Shipping Services</a> and there is a view that the enlargement of the container shipping oligopoly will have some far-reaching effect and potentially stem the tide of red ink in carriers’ results. Indeed, in the longer term, this should bring about significant cost savings for the combined HL/Zim entity through procurement and agent network rationalization. However, adding another name or moving one slot higher in the rankings of the biggest carriers will not change the underlying issues facing the industry. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6174595_0.1.jpg"></img></div>Let’s start with demand. Global container freight demand is up and forecast to maintain that performance, which is good overall. However, prospects for the two key trade lanes — the trans-Pacific and Asia-Europe — are poor. Trans-Pacific is dire, and without any structural change in the trade, I can see us heading back to $500 rates sooner rather than later. Asia-Europe is benefiting from the China and China + shift to non-US markets, but the fundamentals in European economies indicate this demand surge will be short-lived. The biggest problem is oversupply. With over 30% of the existing global fleet on order, oversupply is a self-inflicted wound. Surely, common sense prevailed in certain boardrooms to foresee the need to better deploy the extraordinary cash piles most carriers possess (although the piles are starting to shrink). In some cases, we can see that using cash flow to mop up charter tonnage in key segments, particularly Panamax and post-Panamax, was a smart move to increase fleet flexibility, but also to keep charter rates high and potentially push out bottom feeders as rates drop and margins erode. However — and the following comments assume there will be no full reopening of the Red Sea and Suez Canal — the continued desire to add new tonnage alongside the bloated order book seems nonsensical. This will leave very few options for carriers should demand continue to soften. Bear in mind that even without Red Sea resumption, schedule slippages, blank sailings and other current tactics will seem like trying to ride a wakeboard in a tsunami. Anchoring up will solve some immediate supply problems, but only layups will actually take tonnage out of service for an extensive period. Those who remember 2009 and the Eastern Anchorage in Singapore with multiple vessels moored together will get the picture. The compounding oversupply issue is that the trades benefiting from increased demand are not predominantly the trades that suit new tonnage coming out of the shipyards. If a magic wand could be waved, you would order 5,000- and 8,000-TEU ships, and not any bigger. Ordering 14,000-TEU-plus, even with the best intentions of dual-fuel to help the planet, will only exacerbate oversupply. <h3>Strong argument for scrapping </h3>The other supply reduction strategy is scrapping. There is a strong argument for scrapping, particularly older vessels that will come up against regulatory requirements that will prove costlier to implement than the return the vessels will derive. Granted, many will have reached their full depreciation, so are essentially running on operating expenses only. The temptation will be to keep them going, particularly those in the desirable 5,000- to 8,000-TEU range. Two other factors suggest large-scale scrapping is unlikely. The first is that while scrap yards have capacity, they need reservations well in advance given that most vessels in line for scrapping are usually part of a homogeneous order for multiple vessels rather than one-offs. Second, scrapping regulations have become tighter, which will make it more costly to scrap. Scrap prices are also weak, although container vessel scrap prices are at a small premium above dry and wet vessels. Even the E-class Maersk vessels and their (near) equivalents that are at or near 20 years old would still seem a bizarre candidate for scrapping So where does all that leave carriers? Some will hope that the US recovers, and global trade rebalances and tactical supply constraints will suffice. Combined with that will be the knowledge that carriers have about three years of free cash flow cover to ride out the downturn. Others will review their order book and see how they can delay or even withdraw from purchase and delivery. However, the favorable financing terms on offer will make this unlikely. Most will hope a smaller competitor or two will go bust, but that would not stem the vessel glut. And some will look at their playbook and go the acquisition route. But hope is never a good strategy, and a combination of layups and scrapping seems the only viable solution. So the question for this (failed) oligopolistic market is: “Who blinks first?” 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>

The ink has barely dried on the Hapag-Lloyd tie up with Zim Integrated Shipping Services and there is a view that the enlargement of the container shipping oligopoly will have some far-reaching effect and potentially stem the tide of red ink in carriers’ results. Indeed, in the longer term, this should bring about significant cost savings for the combined HL/Zim entity through procurement and agent network rationalization. However, adding another name or moving one slot higher in the rankings of the biggest carriers will not change the underlying issues facing the industry. Let’s start with demand. Global container freight demand is up and forecast to maintain that performance, which is good overall. However, prospects for the two key trade lanes — the trans-Pacific and Asia-Europe — are poor. Trans-Pacific is dire, and without any structural change in the trade, I can see us heading back to $500 rates sooner rather than later. Asia-Europe is benefiting from the China and China + shift to non-US markets, but the fundamentals in European economies indicate this demand surge will be short-lived. The biggest problem is oversupply. With over 30% of the existing global fleet on order, oversupply is a self-inflicted wound. Surely, common sense prevailed in certain boardrooms to foresee the need to better deploy the extraordinary cash piles most carriers possess (although the piles are starting to shrink). In some cases, we can see that using cash flow to mop up charter tonnage in key segments, particularly Panamax and post-Panamax, was a smart move to increase fleet flexibility, but also to keep charter rates high and potentially push out bottom feeders as rates drop and margins erode. However — and the following comments assume there will be no full reopening of the Red Sea and Suez Canal — the continued desire to add new tonnage alongside the bloated order book seems nonsensical. This will leave very few options for carriers should demand continue to soften. Bear in mind that even without Red Sea resumption, schedule slippages, blank sailings and other current tactics will seem like trying to ride a wakeboard in a tsunami. Anchoring up will solve some immediate supply problems, but only layups will actually take tonnage out of service for an extensive period. Those who remember 2009 and the Eastern Anchorage in Singapore with multiple vessels moored together will get the picture. The compounding oversupply issue is that the trades benefiting from increased demand are not predominantly the trades that suit new tonnage coming out of the shipyards. If a magic wand could be waved, you would order 5,000- and 8,000-TEU ships, and not any bigger. Ordering 14,000-TEU-plus, even with the best intentions of dual-fuel to help the planet, will only exacerbate oversupply. Strong argument for scrapping The other supply reduction strategy is scrapping. There is a strong argument for scrapping, particularly older vessels that will come up against regulatory requirements that will prove costlier to implement than the return the vessels will derive. Granted, many will have reached their full depreciation, so are essentially running on operating expenses only. The temptation will be to keep them going, particularly those in the desirable 5,000- to 8,000-TEU range. Two other factors suggest large-scale scrapping is unlikely. The first is that while scrap yards have capacity, they need reservations well in advance given that most vessels in line for scrapping are usually part of a homogeneous order for multiple vessels rather than one-offs. Second, scrapping regulations have become tighter, which will make it more costly to scrap. Scrap prices are also weak, although container vessel scrap prices are at a small premium above dry and wet vessels. Even the E-class Maersk vessels and their (near) equivalents that are at or near 20 years old would still seem a bizarre candidate for scrapping So where does all that leave carriers? Some will hope that the US recovers, and global trade rebalances and tactical supply constraints will suffice. Combined with that will be the knowledge that carriers have about three years of free cash flow cover to ride out the downturn. Others will review their order book and see how they can delay or even withdraw from purchase and delivery. However, the favorable financing terms on offer will make this unlikely. Most will hope a smaller competitor or two will go bust, but that would not stem the vessel glut. And some will look at their playbook and go the acquisition route. But hope is never a good strategy, and a combination of layups and scrapping seems the only viable solution. So the question for this (failed) oligopolistic market is: “Who blinks first?” John McCauley, formerly a vice president of transportation and logistics at Cargill, now consults for shippers. Contact him at john-mccauley1@outlook.com .

WiseTech says to cut nearly 30% of workforce as it preps for AI era

Featured Gateway Chart

Essential Reads

Trucking executives buoyed by market signals as winter exit nears

Greater capacity control needs hinder ocean reliability efforts

Zim deal to strengthen Hapag-Lloyd’s market share across key trade lanes

Recent Commentary

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

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

Top 5 Most Read Stories