<div class="phx-topic abstract-wrapper">Despite lower volumes and elevated capacity, carriers have managed to keep rates at acceptable levels of late in part by favoring shorter, more frequent general rate increases. </div>

Despite lower volumes and elevated capacity, carriers have managed to keep rates at acceptable levels of late in part by favoring shorter, more frequent general rate increases.

Feature image

<div class="phx-topic">Container lines over the past two months have been able to keep spot rates from crashing in the eastbound trans-Pacific despite US imports from Asia falling and while they deployed significantly more tonnage in the same period. But that high-wire act will become increasingly precarious over the next two months. Import volume declines are expected to accelerate over the next 60 days as forwarders bemoan a deep lull in new bookings due to shipper uncertainty. Yet carriers plan to keep capacity elevated, with tonnage from Asia to the US West Coast set to rise almost 13% year over year in January to hit what would be close to a 37-month high, according to data from Xeneta’s eeSea. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6127952_0.1.jpg"></img></div>The additional tonnage comes ahead of Lunar New Year in mid-February, but forwarders are skeptical that the historical shipping rush before Chinese factories slow or halt production for the celebrations will have much oomph. Ocean tonnage from Asia to the US East and Gulf coasts is set to hit a two-year high in January, up 14% from a year ago, according to eeSea. The spot rate from China to the US West Coast hit its 2025 low point on Oct. 3 at $1,300 per FEU, according to Platts, a sister company of the Journal of Commerce within S&amp;P Global. In the two months since, carriers have been able to hold that line, with the rate bouncing as high as $2,220 in early November before retreating. It was at $1,500 per FEU as of Tuesday. Carriers have been able to avoid a sub-$1,300 market by resisting old urges to slash freight-all-kinds (FAK) rates. Instead, carriers have watched prices drift down and then reacted by adding some pep via general rate increases (GRIs) that were just successful enough to keep spot and FAK rates from collapsing. At the same time, liners have been protecting their individual market shares by offering so-called bullet rates to non-vessel-operating common carriers (NVOs). <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e5c8a2a0-9aa5-4787-bbed-bf4b7a9f9677"></dynamic-object></div>Rather than announcing a large $1,000 GRI on the first and 15th of each month, only to see the rate deteriorate within days, some carriers are coming in with smaller, rapid-fire GRIs almost weekly. They are able to do that under filing requirements of the Federal Maritime Commission (FMC). The FMC requires that carriers file a GRI with 30-day advance notice when attempting to raise spot rates. However, when dropping the intended GRI, the lower rate takes effect immediately upon filing, several forwarders said. For example, one alliance carrier that had filed for a large GRI effective Dec. 1 informed customers through its rate sheet of the following staggered schedule of smaller increases: Dec. 1, a $200 GRI to raise the spot rate to $1,900 per FEU to the West Coast, expiring Dec. 7; a second $200 GRI on Dec. 8, raising the rate to $2,100, expiring Dec. 14; another $200 GRI on Dec. 15, expiring Dec. 25, that raises the spot rate to $2,300. In that way, the carrier did not attempt to implement the $1,000 GRI that was supposed to take effect on Dec. 1, but rather is attempting to secure a series of $200 GRIs through the end of the month. “It’s crazy,” a carrier executive told the Journal of Commerce Tuesday. “It used to be a GRI every two weeks. Now [some carriers] are taking a week-to-week approach.” Trans-Pacific container lines are “conflicted,” the carrier source said. As a group, they want to minimize pricing damage in the current soft market, which many industry sources are forecasting will last into early 2026. But at the same time, they don’t want to individually lose market share, he said. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e8c13a3e-9f5a-412f-8741-adbf5e1a7779"></dynamic-object></div>Most carriers, be they alliance members or independents, continue to post GRIs twice each month, while at the same time they are offering discounted, or bullet, rates several hundred dollars lower on the same trade lanes. The bullet rates, also known as special commodity rates or voyage-specific rates, are available primarily for carriers’ largest customers, a forwarder told the Journal of Commerce. For example, while the posted spot/FAK rate from China to the West Coast on Tuesday was $1,500 per FEU, according to Platts, a forwarder told the Journal of Commerce, “I’ve got bullet rates of $1,350.” While carriers generally reserve bullet rates for their larger forwarder customers, there is a way around that barrier as well. A number of smaller forwarders participate in co-loading arrangements with a master co-loader, so they also have access to the lowest bullet rates. “We have co-loader rates that every day defy the GRIs,” said Ben Coleman, president of the forwarder Teampower Logistics. “We get far better rates from co-loaders than the posted rates.” The need for carriers to keep some semblance of a pricing floor will become increasingly urgent as trans-Pacific service contract negotiations intensify though the winter. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>. Executive Editor Mark Szakonyi contributed to this report. </div>

Container lines over the past two months have been able to keep spot rates from crashing in the eastbound trans-Pacific despite US imports from Asia falling and while they deployed significantly more tonnage in the same period. But that high-wire act will become increasingly precarious over the next two months. Import volume declines are expected to accelerate over the next 60 days as forwarders bemoan a deep lull in new bookings due to shipper uncertainty. Yet carriers plan to keep capacity elevated, with tonnage from Asia to the US West Coast set to rise almost 13% year over year in January to hit what would be close to a 37-month high, according to data from Xeneta’s eeSea. The additional tonnage comes ahead of Lunar New Year in mid-February, but forwarders are skeptical that the historical shipping rush before Chinese factories slow or halt production for the celebrations will have much oomph. Ocean tonnage from Asia to the US East and Gulf coasts is set to hit a two-year high in January, up 14% from a year ago, according to eeSea. The spot rate from China to the US West Coast hit its 2025 low point on Oct. 3 at $1,300 per FEU, according to Platts, a sister company of the Journal of Commerce within S&P Global. In the two months since, carriers have been able to hold that line, with the rate bouncing as high as $2,220 in early November before retreating. It was at $1,500 per FEU as of Tuesday. Carriers have been able to avoid a sub-$1,300 market by resisting old urges to slash freight-all-kinds (FAK) rates. Instead, carriers have watched prices drift down and then reacted by adding some pep via general rate increases (GRIs) that were just successful enough to keep spot and FAK rates from collapsing. At the same time, liners have been protecting their individual market shares by offering so-called bullet rates to non-vessel-operating common carriers (NVOs). Rather than announcing a large $1,000 GRI on the first and 15th of each month, only to see the rate deteriorate within days, some carriers are coming in with smaller, rapid-fire GRIs almost weekly. They are able to do that under filing requirements of the Federal Maritime Commission (FMC). The FMC requires that carriers file a GRI with 30-day advance notice when attempting to raise spot rates. However, when dropping the intended GRI, the lower rate takes effect immediately upon filing, several forwarders said. For example, one alliance carrier that had filed for a large GRI effective Dec. 1 informed customers through its rate sheet of the following staggered schedule of smaller increases: Dec. 1, a $200 GRI to raise the spot rate to $1,900 per FEU to the West Coast, expiring Dec. 7; a second $200 GRI on Dec. 8, raising the rate to $2,100, expiring Dec. 14; another $200 GRI on Dec. 15, expiring Dec. 25, that raises the spot rate to $2,300. In that way, the carrier did not attempt to implement the $1,000 GRI that was supposed to take effect on Dec. 1, but rather is attempting to secure a series of $200 GRIs through the end of the month. “It’s crazy,” a carrier executive told the Journal of Commerce Tuesday. “It used to be a GRI every two weeks. Now [some carriers] are taking a week-to-week approach.” Trans-Pacific container lines are “conflicted,” the carrier source said. As a group, they want to minimize pricing damage in the current soft market, which many industry sources are forecasting will last into early 2026. But at the same time, they don’t want to individually lose market share, he said. Most carriers, be they alliance members or independents, continue to post GRIs twice each month, while at the same time they are offering discounted, or bullet, rates several hundred dollars lower on the same trade lanes. The bullet rates, also known as special commodity rates or voyage-specific rates, are available primarily for carriers’ largest customers, a forwarder told the Journal of Commerce. For example, while the posted spot/FAK rate from China to the West Coast on Tuesday was $1,500 per FEU, according to Platts, a forwarder told the Journal of Commerce, “I’ve got bullet rates of $1,350.” While carriers generally reserve bullet rates for their larger forwarder customers, there is a way around that barrier as well. A number of smaller forwarders participate in co-loading arrangements with a master co-loader, so they also have access to the lowest bullet rates. “We have co-loader rates that every day defy the GRIs,” said Ben Coleman, president of the forwarder Teampower Logistics. “We get far better rates from co-loaders than the posted rates.” The need for carriers to keep some semblance of a pricing floor will become increasingly urgent as trans-Pacific service contract negotiations intensify though the winter. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com . Executive Editor Mark Szakonyi contributed to this report.

Trans-Pacific

Container Shipping News

Maritime

Trans-Pacific carriers tweak pricing strategy to keep rates from collapsing

<div class="phx-topic abstract-wrapper">Even though the claims originate from more than seven years ago, the government alleges artificially high freight rates are nonetheless hurting South Africa’s consumers and exporters.</div>

Even though the claims originate from more than seven years ago, the government alleges artificially high freight rates are nonetheless hurting South Africa’s consumers and exporters.

<div class="phx-topic">South Africa’s government is accusing major ocean carriers of colluding on container freight pricing between that country and Asia. Even though the claims originate from more than seven years ago, the government said artificially high rates are nonetheless hurting South Africa’s consumers and exporters. South Africa’s Competition Commission said Tuesday that it referred eight shipping companies for prosecution by the country’s competition tribunal. The companies include the local affiliates of Maersk, Mediterranean Shipping Co., CMA CGM, Cosco Shipping, Evergreen Marine, Mitsui OSK Lines, K Line, and Pacific International Lines. The complaint alleges price fixing through general rate increases (GRIs) issued by the carriers. The competition commission accused the carriers of charging the same GRI for freight from various Chinese ports to Durban, as well as the backhaul route from Durban to Hong Kong. The commission said the GRI increases occurred between 2008 and 2018. Despite the alleged collusion having taken place years earlier, Competition Commissioner Doris Tshepe said in a statement Tuesday that prosecuting the ocean carriers will benefit the country’s economy. “The dismantling of the cartel will reduce the price of goods imported to South Africa for the benefit of consumers and will also reduce the costs of exports out of South Africa, which will render the South African exports competitive in the world markets,” Tshepe said. South Africa imported $123.5 billion worth of goods in 2024, according to UN Trade and Development data, down from a 2022 peak of $136.2 billion. The country’s exports were valued at $110 billion in 2024, about $13 billion less than in 2021. MSC has been the most frequent caller to South Africa among major container lines, with 808 port calls over the last 12 months, according to Sea-web, a sister product of the Journal of Commerce within S&amp;P Global. Maersk and Ocean Network Express followed with 188 and 149 calls, respectively. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

South Africa’s government is accusing major ocean carriers of colluding on container freight pricing between that country and Asia. Even though the claims originate from more than seven years ago, the government said artificially high rates are nonetheless hurting South Africa’s consumers and exporters. South Africa’s Competition Commission said Tuesday that it referred eight shipping companies for prosecution by the country’s competition tribunal. The companies include the local affiliates of Maersk, Mediterranean Shipping Co., CMA CGM, Cosco Shipping, Evergreen Marine, Mitsui OSK Lines, K Line, and Pacific International Lines. The complaint alleges price fixing through general rate increases (GRIs) issued by the carriers. The competition commission accused the carriers of charging the same GRI for freight from various Chinese ports to Durban, as well as the backhaul route from Durban to Hong Kong. The commission said the GRI increases occurred between 2008 and 2018. Despite the alleged collusion having taken place years earlier, Competition Commissioner Doris Tshepe said in a statement Tuesday that prosecuting the ocean carriers will benefit the country’s economy. “The dismantling of the cartel will reduce the price of goods imported to South Africa for the benefit of consumers and will also reduce the costs of exports out of South Africa, which will render the South African exports competitive in the world markets,” Tshepe said. South Africa imported $123.5 billion worth of goods in 2024, according to UN Trade and Development data, down from a 2022 peak of $136.2 billion. The country’s exports were valued at $110 billion in 2024, about $13 billion less than in 2021. MSC has been the most frequent caller to South Africa among major container lines, with 808 port calls over the last 12 months, according to Sea-web, a sister product of the Journal of Commerce within S&P Global. Maersk and Ocean Network Express followed with 188 and 149 calls, respectively. Contact Michael Angell at michael.angell@spglobal.com .

Container lines

South Africa hits eight ocean carriers with price collusion allegations

<div class="phx-topic abstract-wrapper">The IMO and IAEA are working on setting up international regulations and standards that would underpin the production and development of nuclear power in the maritime industry. </div>

The IMO and IAEA are working on setting up international regulations and standards that would underpin the production and development of nuclear power in the maritime industry.

<div class="phx-topic">A push to establish a regulatory framework for the safe deployment of civil nuclear applications in maritime environments is gathering momentum, with two key agencies now working on a set of standards for the shipping industry. The Maritime Safety Committee of the International Maritime Organization (IMO) in June agreed to start revising the “Code of Safety for Nuclear Merchant Ships.” That initiative will begin in January as part of broader discussions on decarbonization and alternative fuels, aiming to create a regulatory framework for civilian nuclear shipping. The IMO is also working with the International Atomic Energy Agency (IAEA) division known as Atlas (Atomic Technologies Licensed for Applications at Sea) to plug regulatory gaps and develop the maritime nuclear power framework. “These two agencies are taking all the security and safeguard standards that exist and making sure that they’re relevant for the maritime industry,” said Mikal Bøe, founder and CEO of Core Power, a UK-based development company specializing in scalable atomic power technology. “During 2026, the agencies will come together to form a harmonized regulatory framework that will apply both to floating nuclear power and to nuclear-powered ships,” Bøe told reporters at a recent press briefing. “That is the bedrock on which maritime nuclear power will rest.” Nuclear-powered container ships have the potential to eliminate bunker costs, cut greenhouse gas (GHG) emissions and deliver faster transit times, while maintaining safety and economic competitiveness, according to classification society Lloyd’s Register. With no international regulatory framework yet in place, Lloyd’s Register in October published Navigating Nuclear Energy in Maritime, a new guidance document providing the first roadmap for the safe and responsible use of nuclear technology in commercial shipping and offshore industries. The document discusses the roles of key bodies, including the IMO and the IAEA, highlighting the importance of harmonizing maritime and nuclear standards. “Nuclear energy has the potential to transform maritime, providing a scalable and zero-carbon energy source that can accelerate the industry’s energy transition,” Mark Tipping, a director at Lloyd’s Register, said in a statement. “However, its adoption requires clarity, collaboration and trust across regulators, operators, insurers and wider society.” In September, US President Donald Trump and UK Prime Minister Sir Keir Starmer signed a memorandum of understanding on the “Technology Prosperity Deal.” The MOU included commitments to explore opportunities for civil maritime nuclear applications, consult on the creation of international standards, establish a maritime shipping corridor between the two nations and strengthen energy resilience for defense facilities. <h3>Setting the building blocks </h3>An international regulatory framework is one of two key building blocks that need to be in place before nuclear power in the maritime industry can be realized at scale, sitting alongside an imperative to reduce nuclear production costs through mass manufacturing. Lowering the costs of building floating nuclear power platforms (FNPPs) and nuclear-powered ships rests on the large-scale modular construction of the sort employed by existing shipyards, Bøe noted. “It is taking a project-based industry and turning it into a product-based industry where you’re mass manufacturing an identical product at scale,” he said. “We do this with ships, with aircraft, with space technology. The way to get things done at a grand scale with economics that makes sense, and quality that makes sense, is through mass manufacturing.” The large-scale modular construction where systems or components are assembled separately dramatically reduces time and costs and has enabled shipyards to achieve high volume and high quality with a skilled workforce. There is growing recognition that nuclear can play a significant role in the decarbonization of shipping and enable the maritime industry to meet its ambitious emissions-cutting targets. The IMO’s 2023 GHG Strategy wants total annual emissions from international shipping to be reduced by at least 20% (striving for 30%) by 2030, at least 70% (striving for 80%) by 2040 and to achieve net-zero GHG emissions by or around 2050, all compared with2008 levels. But Bøe said that the only way the global maritime industry would achieve its mandated 70% reduction in carbon emissions by 2040 is to offset the use of marine fuel for smaller ships and adopt nuclear power for larger vessels. He noted that of the world’s 65,000-ship fleet, just 7,000 vessels consume 50% of all marine fuel oil. “If we're cutting emissions by 50%, we need to focus on the larger ships rather than the smaller ships, because that is where we will get the most bang for our buck,” he said. “Reactors with about 100,000 horsepower is the right kind of power profile for those 7,000 ships, which will cut emissions and speed up the fleet,” Bøe added. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

A push to establish a regulatory framework for the safe deployment of civil nuclear applications in maritime environments is gathering momentum, with two key agencies now working on a set of standards for the shipping industry. The Maritime Safety Committee of the International Maritime Organization (IMO) in June agreed to start revising the “Code of Safety for Nuclear Merchant Ships.” That initiative will begin in January as part of broader discussions on decarbonization and alternative fuels, aiming to create a regulatory framework for civilian nuclear shipping. The IMO is also working with the International Atomic Energy Agency (IAEA) division known as Atlas (Atomic Technologies Licensed for Applications at Sea) to plug regulatory gaps and develop the maritime nuclear power framework. “These two agencies are taking all the security and safeguard standards that exist and making sure that they’re relevant for the maritime industry,” said Mikal Bøe, founder and CEO of Core Power, a UK-based development company specializing in scalable atomic power technology. “During 2026, the agencies will come together to form a harmonized regulatory framework that will apply both to floating nuclear power and to nuclear-powered ships,” Bøe told reporters at a recent press briefing. “That is the bedrock on which maritime nuclear power will rest.” Nuclear-powered container ships have the potential to eliminate bunker costs, cut greenhouse gas (GHG) emissions and deliver faster transit times, while maintaining safety and economic competitiveness, according to classification society Lloyd’s Register. With no international regulatory framework yet in place, Lloyd’s Register in October published Navigating Nuclear Energy in Maritime, a new guidance document providing the first roadmap for the safe and responsible use of nuclear technology in commercial shipping and offshore industries. The document discusses the roles of key bodies, including the IMO and the IAEA, highlighting the importance of harmonizing maritime and nuclear standards. “Nuclear energy has the potential to transform maritime, providing a scalable and zero-carbon energy source that can accelerate the industry’s energy transition,” Mark Tipping, a director at Lloyd’s Register, said in a statement. “However, its adoption requires clarity, collaboration and trust across regulators, operators, insurers and wider society.” In September, US President Donald Trump and UK Prime Minister Sir Keir Starmer signed a memorandum of understanding on the “Technology Prosperity Deal.” The MOU included commitments to explore opportunities for civil maritime nuclear applications, consult on the creation of international standards, establish a maritime shipping corridor between the two nations and strengthen energy resilience for defense facilities. Setting the building blocks An international regulatory framework is one of two key building blocks that need to be in place before nuclear power in the maritime industry can be realized at scale, sitting alongside an imperative to reduce nuclear production costs through mass manufacturing. Lowering the costs of building floating nuclear power platforms (FNPPs) and nuclear-powered ships rests on the large-scale modular construction of the sort employed by existing shipyards, Bøe noted. “It is taking a project-based industry and turning it into a product-based industry where you’re mass manufacturing an identical product at scale,” he said. “We do this with ships, with aircraft, with space technology. The way to get things done at a grand scale with economics that makes sense, and quality that makes sense, is through mass manufacturing.” The large-scale modular construction where systems or components are assembled separately dramatically reduces time and costs and has enabled shipyards to achieve high volume and high quality with a skilled workforce. There is growing recognition that nuclear can play a significant role in the decarbonization of shipping and enable the maritime industry to meet its ambitious emissions-cutting targets. The IMO’s 2023 GHG Strategy wants total annual emissions from international shipping to be reduced by at least 20% (striving for 30%) by 2030, at least 70% (striving for 80%) by 2040 and to achieve net-zero GHG emissions by or around 2050, all compared with2008 levels. But Bøe said that the only way the global maritime industry would achieve its mandated 70% reduction in carbon emissions by 2040 is to offset the use of marine fuel for smaller ships and adopt nuclear power for larger vessels. He noted that of the world’s 65,000-ship fleet, just 7,000 vessels consume 50% of all marine fuel oil. “If we're cutting emissions by 50%, we need to focus on the larger ships rather than the smaller ships, because that is where we will get the most bang for our buck,” he said. “Reactors with about 100,000 horsepower is the right kind of power profile for those 7,000 ships, which will cut emissions and speed up the fleet,” Bøe added. Contact Greg Knowler at greg.knowler@spglobal.com .

Regulatory agencies developing framework for use of maritime nuclear power

<div class="phx-topic abstract-wrapper">Forwarders are bemoaning pricing changes WiseTech made this week to its CargoWise products, saying their technology costs will rise markedly because shippers will be unwilling to accept the pass-through costs. </div>

Forwarders are bemoaning pricing changes WiseTech made this week to its CargoWise products, saying their technology costs will rise markedly because shippers will be unwilling to accept the pass-through costs.

<div class="phx-topic">WiseTech Global this week unveiled a pricing model change to the forwarding industry’s most widely used software platform, triggering sharp backlash from customers who say the move will raise their costs between 20% and 50%. The change implemented on Monday by WiseTech is stirring market debate about pricing transparency and whether technology costs incurred by third-party logistics providers (3PLs) can be passed on to shippers. The new pricing model, called Value Pack Community Pricing, is for WiseTech’s flagship CargoWise set of products. The logistics software provider said the change is meant to simplify pricing for its customers and drive broader use of its other products. WiseTech CEO Zubin Appoo told the Journal of Commerce the shift is “not a pricing change, but a totally different commercial model.” The old pricing model was based on the number of users within a customer, with additional fees charged for certain features and set fees associated with cloud hosting and other infrastructure costs. The new model rolls all those fees into a single transaction cost based on the type of activity a forwarder chooses. For instance, management of a full import container with an associated inland leg would cost $19.95; a standalone import customs entry would cost $9.95. WiseTech’s intent is to get forwarders to use more of the products the company has developed and to help forwarders defray the cost of those products by passing the cost on to shippers. <h3>Forwarders see their costs rising </h3>But a variety of forwarders say the pricing change will increase their costs significantly — by 20% on the low end and 50% or more on the high end. That would, by default, cut their margins unless they are able to pass those additional costs on to customers. Most forwarders who spoke with the Journal of Commerce were skeptical that shippers would accept a technology line item on an invoice from a forwarder, especially in a competitive market where shippers can easily shop around for better rates. There was also unease at the rollout itself, with some US forwarders bemoaning the change happening over the Thanksgiving holiday weekend, and others suggesting that WiseTech should have made the shift on Jan. 1 so that accounting for the 2025 calendar year would have been more straightforward. One forwarder said the change this late in the year would affect its forecast costs for technology made at the start of the year. The forwarder generally projects a 10% increase annually for its cost of using CargoWise but expects the pricing change made Monday will drive its costs up between 25% and 35%. WiseTech announced to customers on Oct. 31 that the pricing change would go into effect Dec. 1, but some customers were still caught unaware. One forwarder described the rollout as “bananas.” “Everyone I know opened a ticket [with WiseTech] and got a response saying, ‘we’ll let you know when we release the new pricing,’” said another forwarder source. “Then we got the pricing information on Wednesday, and the upgrades got pushed Thursday.” Appoo, in a memo to customers Monday, said WiseTech would be pushing upgrades and patches in real time. <h3>CEO expects gradual acceptance </h3>WiseTech’s CEO said the pass-through costs would take time to be accepted in an industry that is generally reluctant to change but would eventually be thought of in the same vein as other costs that forwarders make on behalf of their customers and later recover. “The industry we work in operates in a disbursement model,” Appoo said. “There are customs fees, gate fees, port fees that 3PLs incur on behalf of the customer, and some are absorbed by the forwarder,” he said. “Standalone jobs [in the Value Pack pricing bundles] are $2 to $20. We’re talking a small number, a 0.1% charge added to customers and one of the smallest, if not the smallest, disbursements to the customer.” Appoo added that giving all its customers the ability to pass on technology costs to customers democratizes access to CargoWise because smaller players won’t experience the pricing “friction” of paying per seat, while larger customers will be able to scale WiseTech’s investments in artificial intelligence (AI) in a way smaller players might not. Another undercurrent at play is WiseTech’s ongoing deployment of AI to automate a range of individual processes and connected workflows within CargoWise, a development occurring amid broader use of AI across the forwarding industry. Appoo contends that AI will change the size of the workforce using CargoWise across its customers, and the old pricing model didn’t reflect the investment the technology provider devotes annually to maintaining and upgrading its product. That includes the development of AI agents to help CargoWise users get more value from their investment in the product. “We see how rapidly AI has progressed,” Appoo said. “It will cause labor reduction over the next year. That’s the more urgent motivation.” Still, industry participants are skeptical about the changes. “You’re introducing fees to a price-sensitive market that doesn’t have a track record for paying this fee,” said Robert Petti, CEO of logistics technology provider Prompt Global and a former CargoWise service partner. “Automatically there is going to be reluctance because of that. People are looking to ship for the lowest possible price. This [cost] will likely be eaten by forwarders. The choice of using CargoWise is the forwarder’s, not the [beneficial cargo owner’s].” The CEO of another logistics technology provider who did not want to be identified said the WiseTech change is the equivalent of going “to Taco Bell and they charge me a fee for their use of SAP.” “Every dollar counts for a forwarder’s bottom line,” said a third logistics technology provider CEO. Appoo is confident the industry will adapt, and learn to appreciate, WiseTech’s new model. “We have, over time, introduced things that customers haven’t necessarily asked for, and over time they see the value,” he said. “We’re not just a software vendor, we’re the operating system that runs their supply chain, the partner that makes sure they’re compliant, and the solution that gives them levels of efficiency they wouldn’t have access to before.” Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. </div>

WiseTech Global this week unveiled a pricing model change to the forwarding industry’s most widely used software platform, triggering sharp backlash from customers who say the move will raise their costs between 20% and 50%. The change implemented on Monday by WiseTech is stirring market debate about pricing transparency and whether technology costs incurred by third-party logistics providers (3PLs) can be passed on to shippers. The new pricing model, called Value Pack Community Pricing, is for WiseTech’s flagship CargoWise set of products. The logistics software provider said the change is meant to simplify pricing for its customers and drive broader use of its other products. WiseTech CEO Zubin Appoo told the Journal of Commerce the shift is “not a pricing change, but a totally different commercial model.” The old pricing model was based on the number of users within a customer, with additional fees charged for certain features and set fees associated with cloud hosting and other infrastructure costs. The new model rolls all those fees into a single transaction cost based on the type of activity a forwarder chooses. For instance, management of a full import container with an associated inland leg would cost $19.95; a standalone import customs entry would cost $9.95. WiseTech’s intent is to get forwarders to use more of the products the company has developed and to help forwarders defray the cost of those products by passing the cost on to shippers. Forwarders see their costs rising But a variety of forwarders say the pricing change will increase their costs significantly — by 20% on the low end and 50% or more on the high end. That would, by default, cut their margins unless they are able to pass those additional costs on to customers. Most forwarders who spoke with the Journal of Commerce were skeptical that shippers would accept a technology line item on an invoice from a forwarder, especially in a competitive market where shippers can easily shop around for better rates. There was also unease at the rollout itself, with some US forwarders bemoaning the change happening over the Thanksgiving holiday weekend, and others suggesting that WiseTech should have made the shift on Jan. 1 so that accounting for the 2025 calendar year would have been more straightforward. One forwarder said the change this late in the year would affect its forecast costs for technology made at the start of the year. The forwarder generally projects a 10% increase annually for its cost of using CargoWise but expects the pricing change made Monday will drive its costs up between 25% and 35%. WiseTech announced to customers on Oct. 31 that the pricing change would go into effect Dec. 1, but some customers were still caught unaware. One forwarder described the rollout as “bananas.” “Everyone I know opened a ticket [with WiseTech] and got a response saying, ‘we’ll let you know when we release the new pricing,’” said another forwarder source. “Then we got the pricing information on Wednesday, and the upgrades got pushed Thursday.” Appoo, in a memo to customers Monday, said WiseTech would be pushing upgrades and patches in real time. CEO expects gradual acceptance WiseTech’s CEO said the pass-through costs would take time to be accepted in an industry that is generally reluctant to change but would eventually be thought of in the same vein as other costs that forwarders make on behalf of their customers and later recover. “The industry we work in operates in a disbursement model,” Appoo said. “There are customs fees, gate fees, port fees that 3PLs incur on behalf of the customer, and some are absorbed by the forwarder,” he said. “Standalone jobs [in the Value Pack pricing bundles] are $2 to $20. We’re talking a small number, a 0.1% charge added to customers and one of the smallest, if not the smallest, disbursements to the customer.” Appoo added that giving all its customers the ability to pass on technology costs to customers democratizes access to CargoWise because smaller players won’t experience the pricing “friction” of paying per seat, while larger customers will be able to scale WiseTech’s investments in artificial intelligence (AI) in a way smaller players might not. Another undercurrent at play is WiseTech’s ongoing deployment of AI to automate a range of individual processes and connected workflows within CargoWise, a development occurring amid broader use of AI across the forwarding industry. Appoo contends that AI will change the size of the workforce using CargoWise across its customers, and the old pricing model didn’t reflect the investment the technology provider devotes annually to maintaining and upgrading its product. That includes the development of AI agents to help CargoWise users get more value from their investment in the product. “We see how rapidly AI has progressed,” Appoo said. “It will cause labor reduction over the next year. That’s the more urgent motivation.” Still, industry participants are skeptical about the changes. “You’re introducing fees to a price-sensitive market that doesn’t have a track record for paying this fee,” said Robert Petti, CEO of logistics technology provider Prompt Global and a former CargoWise service partner. “Automatically there is going to be reluctance because of that. People are looking to ship for the lowest possible price. This [cost] will likely be eaten by forwarders. The choice of using CargoWise is the forwarder’s, not the [beneficial cargo owner’s].” The CEO of another logistics technology provider who did not want to be identified said the WiseTech change is the equivalent of going “to Taco Bell and they charge me a fee for their use of SAP.” “Every dollar counts for a forwarder’s bottom line,” said a third logistics technology provider CEO. Appoo is confident the industry will adapt, and learn to appreciate, WiseTech’s new model. “We have, over time, introduced things that customers haven’t necessarily asked for, and over time they see the value,” he said. “We’re not just a software vendor, we’re the operating system that runs their supply chain, the partner that makes sure they’re compliant, and the solution that gives them levels of efficiency they wouldn’t have access to before.” Contact Eric Johnson at eric.johnson@spglobal.com .

Logistics Technology News

Supply chain

WiseTech pricing change tests shippers’ willingness to absorb tech costs

<div class="phx-topic abstract-wrapper">Jim Vena blamed the delay on a contractor that must revise material that will be included in what will be a nearly 4,000-page filing to federal regulators.</div>

Jim Vena blamed the delay on a contractor that must revise material that will be included in what will be a nearly 4,000-page filing to federal regulators.

<div class="phx-topic">Union Pacific Railroad (UP) said Tuesday it will delay by two more weeks the filing of its application with the US Surface Transportation Board (STB) requesting formal approval for its proposed $85 billion acquisition of Norfolk Southern Railway (NS). UP CEO Jim Vena blamed the delay on a contractor that must revise material that will be included in what will be a nearly 4,000-page filing to federal regulators. The railroad had previously said it was targeting the first week of December to submit the formal application to the STB. “I was hoping [to file] at the end of this week [and] then we had one contractor that needed to do some re-work on some product,” Vena said at the UBS Global Industrials and Transportation Conference. “Am I happy? No ... [But] we want to make sure that the final [submission] is at a level that is exceptional.” Railroads often hire outside firms during complicated merger processes to provide economic analysis, financial modeling, and projections on questions such as how many trucks would be taken off highways. Consultants are also paid to field questions about their calculations during the application process. S&amp;P Global, the parent company of the Journal of Commerce, was among the firms hired to provide analysis during Canadian Pacific’s acquisition of Kansas City Southern Railway, which was finalized in 2023. Although the UP delay is minor, it likely eliminates any chance of a decision from the STB before the end of 2026. More realistically, a ruling is now expected in the first half of 2027. Regulators for the first time will be applying stricter rules enacted more than two decades ago to guide a deal of this size because the transaction qualifies as a “major” merger. The STB requires not only that Union Pacific and Norfolk Southern show that the deal will not reduce competition, but that it will actually enhance competition — i.e. that the combined railroad must improve the competitive landscape in the US. <h3>Competition heating up against UP </h3>Meanwhile, pressure around UP’s application is building as more companies weigh in on the proposed transaction. Canadian Pacific Kansas City (CPKC) CEO Keith Creel, speaking Tuesday at the same UBS conference as Vena, had sharp words for the deal. Creel said that while he does not “lose any sleep” over whether the deal is approved or rejected, he believes further consolidation of the industry leaves the supply chain more vulnerable. He compared the rail landscape to four airlines serving Chicago’s O’Hare and Midway airports — American Airlines, Delta Air Lines, Southwest Airlines and United Airlines. “Think about a world where there’s only two railroads or two airlines. If there was only United and Delta, do you think they’d be operating Midway and be operating O’Hare?” Creel said. “The likelihood is they go to O’Hare because that’s the workhorse. And then if O’Hare breaks, what do you do? You’ve got a nation that’s in gridlock. It’s the same for the railroad.”Creel acknowledged there is minimal overlap between CPKC and a combined UP-NS, noting that only about 5% of CPKC’s volume touches Norfolk Southern. Even so, he said CPKC will seek concessions from Union Pacific during the application process to demonstrate a pro-competition posture. Those concessions, Creel said, would include better access around Houston, which is critical for CPKC’s Mexico Midwest Express intermodal service to Chicago but depends on a stretch of track owned by Union Pacific. “What I’m going to ask for is a means to ensure that anticompetitive behavior is held at bay,” Creel said. “I know Jim [Vena]. I trust Jim, but Jim is not going to be [at Union Pacific] forever. But this decision is forever.” BNSF Railway last Friday filed a petition with the STB calling for an immediate investigation into whether Union Pacific has exhibited a pattern of anticompetitive and harmful conduct since Union Pacific and Southern Pacific merged in 1996. If the STB agreed to review the implementation of merger conditions issued nearly 30 years ago before ruling on the UP-NS merger, it would almost certainly delay the approval process. How long that might take is unclear, because there is no direct precedent. On Monday, the National Association of Waterfront Employers (NAWE) <a href="https://www.joc.com/article/ports-urge-strict-review-of-intermodal-impacts-from-up-ns-merger-6126527">sent a letter</a> to the STB expressing serious concerns about the impact of the UP-NS deal on international intermodal and on-dock rail in US ports. NAWE, whose members represent more than 90% of US marine terminal operators, warned that consolidation could reduce on-dock rail options and result in fewer choices for international intermodal flows into the US interior. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>.</div>

Union Pacific Railroad (UP) said Tuesday it will delay by two more weeks the filing of its application with the US Surface Transportation Board (STB) requesting formal approval for its proposed $85 billion acquisition of Norfolk Southern Railway (NS). UP CEO Jim Vena blamed the delay on a contractor that must revise material that will be included in what will be a nearly 4,000-page filing to federal regulators. The railroad had previously said it was targeting the first week of December to submit the formal application to the STB. “I was hoping [to file] at the end of this week [and] then we had one contractor that needed to do some re-work on some product,” Vena said at the UBS Global Industrials and Transportation Conference. “Am I happy? No ... [But] we want to make sure that the final [submission] is at a level that is exceptional.” Railroads often hire outside firms during complicated merger processes to provide economic analysis, financial modeling, and projections on questions such as how many trucks would be taken off highways. Consultants are also paid to field questions about their calculations during the application process. S&P Global, the parent company of the Journal of Commerce, was among the firms hired to provide analysis during Canadian Pacific’s acquisition of Kansas City Southern Railway, which was finalized in 2023. Although the UP delay is minor, it likely eliminates any chance of a decision from the STB before the end of 2026. More realistically, a ruling is now expected in the first half of 2027. Regulators for the first time will be applying stricter rules enacted more than two decades ago to guide a deal of this size because the transaction qualifies as a “major” merger. The STB requires not only that Union Pacific and Norfolk Southern show that the deal will not reduce competition, but that it will actually enhance competition — i.e. that the combined railroad must improve the competitive landscape in the US. Competition heating up against UP Meanwhile, pressure around UP’s application is building as more companies weigh in on the proposed transaction. Canadian Pacific Kansas City (CPKC) CEO Keith Creel, speaking Tuesday at the same UBS conference as Vena, had sharp words for the deal. Creel said that while he does not “lose any sleep” over whether the deal is approved or rejected, he believes further consolidation of the industry leaves the supply chain more vulnerable. He compared the rail landscape to four airlines serving Chicago’s O’Hare and Midway airports — American Airlines, Delta Air Lines, Southwest Airlines and United Airlines. “Think about a world where there’s only two railroads or two airlines. If there was only United and Delta, do you think they’d be operating Midway and be operating O’Hare?” Creel said. “The likelihood is they go to O’Hare because that’s the workhorse. And then if O’Hare breaks, what do you do? You’ve got a nation that’s in gridlock. It’s the same for the railroad.” Creel acknowledged there is minimal overlap between CPKC and a combined UP-NS, noting that only about 5% of CPKC’s volume touches Norfolk Southern. Even so, he said CPKC will seek concessions from Union Pacific during the application process to demonstrate a pro-competition posture. Those concessions, Creel said, would include better access around Houston, which is critical for CPKC’s Mexico Midwest Express intermodal service to Chicago but depends on a stretch of track owned by Union Pacific. “What I’m going to ask for is a means to ensure that anticompetitive behavior is held at bay,” Creel said. “I know Jim [Vena]. I trust Jim, but Jim is not going to be [at Union Pacific] forever. But this decision is forever.” BNSF Railway last Friday filed a petition with the STB calling for an immediate investigation into whether Union Pacific has exhibited a pattern of anticompetitive and harmful conduct since Union Pacific and Southern Pacific merged in 1996. If the STB agreed to review the implementation of merger conditions issued nearly 30 years ago before ruling on the UP-NS merger, it would almost certainly delay the approval process. How long that might take is unclear, because there is no direct precedent. On Monday, the National Association of Waterfront Employers (NAWE) sent a letter to the STB expressing serious concerns about the impact of the UP-NS deal on international intermodal and on-dock rail in US ports. NAWE, whose members represent more than 90% of US marine terminal operators, warned that consolidation could reduce on-dock rail options and result in fewer choices for international intermodal flows into the US interior. Contact Ari Ashe at ari.ashe@spglobal.com .

Rail News

North-American rail

UP CEO says NS merger filing with US regulators to be delayed two weeks

<div class="phx-topic abstract-wrapper">Ocean Network Express said the East Coast 2 service jointly operated with HMM and Yang Ming will call Cai Mep on eastbound rotations, while dropping a call at China’s Port of Xiamen.</div>

Ocean Network Express said the East Coast 2 service jointly operated with HMM and Yang Ming will call Cai Mep on eastbound rotations, while dropping a call at China’s Port of Xiamen.

<div class="phx-topic">The Premier Alliance is adding port calls in Vietnam and Halifax to its mainline service between China and the US East Coast, part of the reshuffling of vessel services stemming from new trade flows out of Asia. Ocean Network Express (ONE) said Monday that <a href="https://www.joc.com/article/premier-alliance-enhances-network-ahead-of-february-launch-5751123">the East Coast 2 (EC2) service jointly operated with HMM and Yang Ming</a> will call the Port of Cai Mep in Vietnam on eastbound rotations, dropping a call at China’s Port of Xiamen. The first call at Cai Mep will be the Dec. 22 departure of the 13,154-TEU HMM Victory. The EC2 will also start routing via the Cape of Good Hope in southern Africa instead of returning to Asia via the Panama Canal. Its outbound rotation will now make its last North American call at Halifax in eastern Canada, with a call to Singapore also added to the return voyage. The new rotation takes effect with the Dec. 10 departure of the 10,055-TEU Hyundai Pluto from Halifax. To accommodate the new rotation, the Premier Alliance will adjust westbound voyages of the EC1 service to include calls at Manzanillo in Mexico and South Korea’s Busan that were dropped from the EC2. Premier Alliance’s EC3 service out of Southeast Asia will also drop a second call at Halifax as part of its North American rotation. Along with the EC3’s existing service from Cai Mep, the additional call reflects the growing trade between Vietnam and the US. Through August, Vietnamese exports to the US this year totaled $122.6 billion, according to the US Census Bureau, a 43% increase from the year-earlier period. Containerized exports to the US from Cai Mep, part of the broader Vung Tau port system in southern Vietnam, reached 35,400 TEUs in the third quarter of 2025, according to PIERS, a sister product of the Journal of Commerce within S&amp;P Global, a 20% increase from 2024. Containerized exports from Xiamen to the US reached 194,895 TEUs in the third quarter, according to PIERS. While that is a rebound from the second quarter’s 158,916 TEUs, it is 15% lower than the third quarter of 2024. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

The Premier Alliance is adding port calls in Vietnam and Halifax to its mainline service between China and the US East Coast, part of the reshuffling of vessel services stemming from new trade flows out of Asia. Ocean Network Express (ONE) said Monday that the East Coast 2 (EC2) service jointly operated with HMM and Yang Ming will call the Port of Cai Mep in Vietnam on eastbound rotations, dropping a call at China’s Port of Xiamen. The first call at Cai Mep will be the Dec. 22 departure of the 13,154-TEU HMM Victory. The EC2 will also start routing via the Cape of Good Hope in southern Africa instead of returning to Asia via the Panama Canal. Its outbound rotation will now make its last North American call at Halifax in eastern Canada, with a call to Singapore also added to the return voyage. The new rotation takes effect with the Dec. 10 departure of the 10,055-TEU Hyundai Pluto from Halifax. To accommodate the new rotation, the Premier Alliance will adjust westbound voyages of the EC1 service to include calls at Manzanillo in Mexico and South Korea’s Busan that were dropped from the EC2. Premier Alliance’s EC3 service out of Southeast Asia will also drop a second call at Halifax as part of its North American rotation. Along with the EC3’s existing service from Cai Mep, the additional call reflects the growing trade between Vietnam and the US. Through August, Vietnamese exports to the US this year totaled $122.6 billion, according to the US Census Bureau, a 43% increase from the year-earlier period. Containerized exports to the US from Cai Mep, part of the broader Vung Tau port system in southern Vietnam, reached 35,400 TEUs in the third quarter of 2025, according to PIERS, a sister product of the Journal of Commerce within S&P Global, a 20% increase from 2024. Containerized exports from Xiamen to the US reached 194,895 TEUs in the third quarter, according to PIERS. While that is a rebound from the second quarter’s 158,916 TEUs, it is 15% lower than the third quarter of 2024. Contact Michael Angell at michael.angell@spglobal.com .

Premier Alliance adds Cai Mep call amid US import surge from Vietnam

<div class="phx-topic abstract-wrapper">With the proposed Union Pacific-Norfolk Southern merger, the US rail industry finds itself facing a new future but the same historical set of challenges.</div>

With the proposed Union Pacific-Norfolk Southern merger, the US rail industry finds itself facing a new future but the same historical set of challenges.

<div class="phx-topic">Oct. 14 marked the 45th anniversary of President Jimmy Carter signing The Harley O. Staggers Rail Act of 1980, named for the chairman of the House Committee on Interstate and Foreign Commerce (today the Committee on Energy and Commerce). However, the real “heavy lifting” to get the bill passed was by Rep. Jim Florio, the New Jersey Democrat who chaired the House Subcommittee on Commerce, Transportation, and Tourism. The Association of American Railroads (AAR) frequently points out how, by 1980, the railroad industry was on the brink of collapse until Congress passed bipartisan legislation to partially deregulate the industry, thereby allowing market-driven pricing, customer-specific contracts and the ability to shed unprofitable routes. However, this neglects the tortured decade of the 1970s when Congress was repeatedly drawn into legislating railroad matters. It started with The Rail Passenger Service Act of 1970, creating Amtrak. This relieved private railroads from their losses operating passenger service. But it was not enough to save Penn Central, so Congress passed the Regional Rail Reorganization Act of 1973 (the “3R Act”) to salvage viable freight operations from Penn Central and other failing rail lines in the Northeast, mid-Atlantic and Midwest. It created the United States Railway Association (USRA) to develop a “Final System Plan” for the reorganization into a single entity — Conrail. Finally, The Railroad Revitalization and Regulatory Reform Act of 1976 (The “4R Act”) approved the Final System Plan, enabling Conrail to start operations on April 1, 1976. It provided what it thought was sufficient funding — an initial federal “investment” of $2.026 billion for Conrail to acquire the assets of bankrupt Northeast and Midwest railroads and get its operations started. This funding turned out to be insufficient. Conrail subsequently sought and received an additional $3 billion. However, by 1979, it had almost exhausted that amount. Under the leadership of a new CEO, L. Stanley Crane, Conrail claimed that it could succeed as a private entity if the rail marketplace was deregulated. <h3>Regulation intended to perpetuate monopolies </h3>Railroads had been operating under a regulated system since the Interstate Commerce Act of 1887. This legislation was an early initiative of the Progressive era and preceded other efforts at regulation, such as the Sherman Antitrust Act three years later. The Interstate Commerce Commission (ICC) became the model for rate-of-return regulation of public utilities. The microeconomic theory is that a monopoly business can be regulated by having the government control the prices charged by the market to a level equal to the efficient costs of production, plus a government-permitted rate of return on capital. This model became the norm for oversight of many asset-based, network-operating businesses such as communications, utilities, and other transportation modes. What is overlooked by many is that — by design — regulation was intended to perpetuate monopolies because it ensured that excess capacity would be available in the event of war or other national emergencies. The monopoly license was maintained through a series of operating authorities that determined which providers could serve which markets. Consumers paid more — but hopefully not too much more. This legislation was passed when railroads were the primary means of freight and passenger transportation. However, the subsequent development of the Interstate Highway System and air traffic changed that dominant position. Meanwhile, the onset of persistent stagflation during the 1970s encouraged deregulatory efforts in many regulated industries. The Airline Deregulation Act of 1978 was a predecessor. However, the Interstate Commerce Commission, under Chairman Dan O’Neal, had already taken initiatives, permitted by the 4R Act, to deregulate certain rail sectors, such as intermodal. <h3>Key components of Staggers Act </h3>The Staggers Act had three key components: Railroads were able to negotiate contracts with a customer at market-based rates; reduced regulatory oversight over mergers and abandonments was enacted; and a regulatory backstop was established to protect shippers lacking effective competition. These legislative efforts completely inverted the commercial process. Regulation was cost-based pricing. Shippers were price takers. Deregulation begat price-based costing. The market determined the competitive price, and the carrier needed to find a way to produce the service so as to be profitable. This was accomplished in numerous ways: Railroad mergers enabled increased economies of scale and reduced overhead; technology supported cost reductions (e.g., end of train devices replacing the caboose); significant amounts of the networks were spun off to short line operations; and a reduction in train crew size from five to two and extending crew districts reduced costs significantly. The final step of this reduction required Congressional help in 1991, with the imposition of Presidential Emergency Board 219. But downsizing could only do so much. Topline growth was necessary. Into this opportunity stepped intermodal. As international traffic grew with globalization, a large part of the volume growth came from ocean carriers. Traditional domestic customers increased their volume, and major new customers, such as J.B. Hunt, entered as well. It was a win-win situation for everyone. Railroads filled excess capacity, and intermodal customers enjoyed reliable and cost-effective service. Everything went well until the summer of 1993. The weather that summer caused terrible service problems. As an industry, we missed the wakeup call. We were too eager to attribute the problems to a fluke weather condition, not recognizing that capacity utilization was nearing maximum. Since then, the industry has been dealing with the challenge of increasing the top and bottom lines simultaneously. This has frequently proven elusive. The advent of activist investors has only raised the stakes. With the proposed Union Pacific-Norfolk Southern merger, the industry finds itself facing a new future but the same historical set of challenges. In retrospect, it is clear to see how we got here, but it is less clear where we are going. Contact Ted Prince at <a href="mailto:ted@tricitiesintermodal.com">ted@tricitiesintermodal.com</a>.</div>

Oct. 14 marked the 45th anniversary of President Jimmy Carter signing The Harley O. Staggers Rail Act of 1980, named for the chairman of the House Committee on Interstate and Foreign Commerce (today the Committee on Energy and Commerce). However, the real “heavy lifting” to get the bill passed was by Rep. Jim Florio, the New Jersey Democrat who chaired the House Subcommittee on Commerce, Transportation, and Tourism. The Association of American Railroads (AAR) frequently points out how, by 1980, the railroad industry was on the brink of collapse until Congress passed bipartisan legislation to partially deregulate the industry, thereby allowing market-driven pricing, customer-specific contracts and the ability to shed unprofitable routes. However, this neglects the tortured decade of the 1970s when Congress was repeatedly drawn into legislating railroad matters. It started with The Rail Passenger Service Act of 1970, creating Amtrak. This relieved private railroads from their losses operating passenger service. But it was not enough to save Penn Central, so Congress passed the Regional Rail Reorganization Act of 1973 (the “3R Act”) to salvage viable freight operations from Penn Central and other failing rail lines in the Northeast, mid-Atlantic and Midwest. It created the United States Railway Association (USRA) to develop a “Final System Plan” for the reorganization into a single entity — Conrail. Finally, The Railroad Revitalization and Regulatory Reform Act of 1976 (The “4R Act”) approved the Final System Plan, enabling Conrail to start operations on April 1, 1976. It provided what it thought was sufficient funding — an initial federal “investment” of $2.026 billion for Conrail to acquire the assets of bankrupt Northeast and Midwest railroads and get its operations started. This funding turned out to be insufficient. Conrail subsequently sought and received an additional $3 billion. However, by 1979, it had almost exhausted that amount. Under the leadership of a new CEO, L. Stanley Crane, Conrail claimed that it could succeed as a private entity if the rail marketplace was deregulated. Regulation intended to perpetuate monopolies Railroads had been operating under a regulated system since the Interstate Commerce Act of 1887. This legislation was an early initiative of the Progressive era and preceded other efforts at regulation, such as the Sherman Antitrust Act three years later. The Interstate Commerce Commission (ICC) became the model for rate-of-return regulation of public utilities. The microeconomic theory is that a monopoly business can be regulated by having the government control the prices charged by the market to a level equal to the efficient costs of production, plus a government-permitted rate of return on capital. This model became the norm for oversight of many asset-based, network-operating businesses such as communications, utilities, and other transportation modes. What is overlooked by many is that — by design — regulation was intended to perpetuate monopolies because it ensured that excess capacity would be available in the event of war or other national emergencies. The monopoly license was maintained through a series of operating authorities that determined which providers could serve which markets. Consumers paid more — but hopefully not too much more. This legislation was passed when railroads were the primary means of freight and passenger transportation. However, the subsequent development of the Interstate Highway System and air traffic changed that dominant position. Meanwhile, the onset of persistent stagflation during the 1970s encouraged deregulatory efforts in many regulated industries. The Airline Deregulation Act of 1978 was a predecessor. However, the Interstate Commerce Commission, under Chairman Dan O’Neal, had already taken initiatives, permitted by the 4R Act, to deregulate certain rail sectors, such as intermodal. Key components of Staggers Act The Staggers Act had three key components: Railroads were able to negotiate contracts with a customer at market-based rates; reduced regulatory oversight over mergers and abandonments was enacted; and a regulatory backstop was established to protect shippers lacking effective competition. These legislative efforts completely inverted the commercial process. Regulation was cost-based pricing. Shippers were price takers. Deregulation begat price-based costing. The market determined the competitive price, and the carrier needed to find a way to produce the service so as to be profitable. This was accomplished in numerous ways: Railroad mergers enabled increased economies of scale and reduced overhead; technology supported cost reductions (e.g., end of train devices replacing the caboose); significant amounts of the networks were spun off to short line operations; and a reduction in train crew size from five to two and extending crew districts reduced costs significantly. The final step of this reduction required Congressional help in 1991, with the imposition of Presidential Emergency Board 219. But downsizing could only do so much. Topline growth was necessary. Into this opportunity stepped intermodal. As international traffic grew with globalization, a large part of the volume growth came from ocean carriers. Traditional domestic customers increased their volume, and major new customers, such as J.B. Hunt, entered as well. It was a win-win situation for everyone. Railroads filled excess capacity, and intermodal customers enjoyed reliable and cost-effective service. Everything went well until the summer of 1993. The weather that summer caused terrible service problems. As an industry, we missed the wakeup call. We were too eager to attribute the problems to a fluke weather condition, not recognizing that capacity utilization was nearing maximum. Since then, the industry has been dealing with the challenge of increasing the top and bottom lines simultaneously. This has frequently proven elusive. The advent of activist investors has only raised the stakes. With the proposed Union Pacific-Norfolk Southern merger, the industry finds itself facing a new future but the same historical set of challenges. In retrospect, it is clear to see how we got here, but it is less clear where we are going. Contact Ted Prince at ted@tricitiesintermodal.com .

Surface

A look back at the ‘Staggers Act’ and where the US rail industry is today

<div class="phx-topic abstract-wrapper">If the proposed Union Pacific–Norfolk Southern merger proceeds, the balance of power inside a little-known cooperative that serves as the industry’s shared equipment pool could shift dramatically.</div>

If the proposed Union Pacific–Norfolk Southern merger proceeds, the balance of power inside a little-known cooperative that serves as the industry’s shared equipment pool could shift dramatically.

<div class="phx-topic">When your railroad says “no cars available,” the problem usually isn’t a shortage. It’s a cooperative most shippers have never heard of — one that controls nearly every intermodal container, autorack and flatcar in North America. And if the proposed Union Pacific (UP)–Norfolk Southern (NS) merger proceeds, the balance of power inside that cooperative could shift dramatically. That cooperative is TTX Company. While shippers and unions debate potential service disruptions and job losses from the $85 billion merger announced in July, a more fundamental question has gone unasked: What happens when one railroad becomes the dominant voice in the industry’s shared equipment pool? <h3>The system you didn’t know existed </h3>TTX manages approximately 177,000 well cars, flats, autoracks and boxcars, representing about $17 billion in assets. It’s a neutral pool owned collectively by the Class I railroads, operating under Surface Transportation Board (STB) oversight since 1974. The concept is simple: Competing railroads share rolling stock rather than hoarding it. When a car finishes one move, it can be loaded again immediately, regardless of whose track it’s on next. This model has saved the industry billions in duplicate investment and given shippers a measure of reliability in an otherwise fragmented system. Cars flow to demand, not ownership. Repairs are standardized. Procurement is centralized. Until now, no single railroad has had enough control to tilt the playing field. <h3>Why the merger changes everything </h3>The combined Union Pacific–Norfolk Southern network would span nearly 60% of US rail route miles across 43 states, likely making them TTX’s largest shareholder by a significant margin. On paper, neutrality is guaranteed through the STB’s pooling agreement. In practice, concentration of influence can change incentives subtly, but powerfully. Who prioritizes which lanes for car replacement? Who decides where limited heavy-duty flats or autoracks are deployed first? When I was at Maersk negotiating large-scale rail contracts, we constantly ran into a black hole of visibility. Equipment was technically available, but no one could pinpoint where it was or who controlled the next move. The pooling model made coordination possible, but it also made accountability diffuse. Now imagine that opacity combined with ownership concentration. A railroad controlling the largest stake in TTX doesn’t need to explicitly starve competitors of equipment. It just needs to optimize for its own network first. Repairs get prioritized in its lanes. New equipment gets spec’d for its corridors. Allocation algorithms favor its terminals. The result isn’t dramatic — it’s death by a thousand micro-decisions that tilt velocity in one direction. <h3>What gravity looks like </h3>Every time a major shipper changes carriers, the math inside the TTX pool shifts. Steel doesn’t teleport. Cars must physically migrate through the network, a process that can take weeks. Shortages often follow commercial wins because the new carrier gains the freight before it gains the equipment. Even in a neutral pool, gravity takes time to reset. Post-merger, that shock absorption could become selective. If car allocation subtly favors the combined UP-NS lanes, competitors lose not just freight; they lose the equipment velocity needed to compete for the next contract. <h3>What the STB should do </h3>The STB received formal notice of the merger on July 30, 2025. The railroads plan to file their full application by Jan. 29, 2026, triggering a 16-month statutory review. The STB has broad authority to preserve equilibrium through independent TTX governance, fleet-allocation audits and service-performance metrics tied to pooling access. Whether those powers are used will determine if TTX remains the stabilizer it was built to be, or becomes another lever of competitive advantage hidden inside consolidation. The 1996 Union Pacific-Southern Pacific merger produced what the head of the nation’s largest rail union called a “massive meltdown.” Service disruptions lasted months. The STB should apply those lessons to equipment pooling now, before approval — not after the damage is done. <h3>What shippers should ask now </h3>Most customers never deal directly with TTX, but they feel its influence in every service metric. Don’t wait until after the merger is approved. Start asking pointed questions now: How do you measure car velocity in my lanes? Who controls the pool cars that serve my freight? What protections ensure neutrality if ownership concentration shifts? If your railroad can’t answer clearly, you’re not buying transportation, you’re buying uncertainty. <h3>The bottom line </h3>TTX doesn’t appear in marketing campaigns, but its model — shared steel, shared access — keeps the industry balanced. The merger debate has focused on jobs, rates and service promises. But the real test will be whether a system designed for competition can survive when one player holds the dominant stake. Because when the pool tips, everyone feels it. And once gravity shifts, it doesn’t shift back. Paul Tonsager has held executive roles at Maersk, CN Rail, CN Worldwide, Coyote (RXO), and Patriot Rail. He is the founder of Integrated Multimodal Solutions LLC and author of the Substack newsletter Signals &amp; Switches. Contact him at  <a href="mailto:paul.tonsager@multimodalsolutions.io">paul.tonsager@multimodalsolutions.io</a>. </div>

When your railroad says “no cars available,” the problem usually isn’t a shortage. It’s a cooperative most shippers have never heard of — one that controls nearly every intermodal container, autorack and flatcar in North America. And if the proposed Union Pacific (UP)–Norfolk Southern (NS) merger proceeds, the balance of power inside that cooperative could shift dramatically. That cooperative is TTX Company. While shippers and unions debate potential service disruptions and job losses from the $85 billion merger announced in July, a more fundamental question has gone unasked: What happens when one railroad becomes the dominant voice in the industry’s shared equipment pool? The system you didn’t know existed TTX manages approximately 177,000 well cars, flats, autoracks and boxcars, representing about $17 billion in assets. It’s a neutral pool owned collectively by the Class I railroads, operating under Surface Transportation Board (STB) oversight since 1974. The concept is simple: Competing railroads share rolling stock rather than hoarding it. When a car finishes one move, it can be loaded again immediately, regardless of whose track it’s on next. This model has saved the industry billions in duplicate investment and given shippers a measure of reliability in an otherwise fragmented system. Cars flow to demand, not ownership. Repairs are standardized. Procurement is centralized. Until now, no single railroad has had enough control to tilt the playing field. Why the merger changes everything The combined Union Pacific–Norfolk Southern network would span nearly 60% of US rail route miles across 43 states, likely making them TTX’s largest shareholder by a significant margin. On paper, neutrality is guaranteed through the STB’s pooling agreement. In practice, concentration of influence can change incentives subtly, but powerfully. Who prioritizes which lanes for car replacement? Who decides where limited heavy-duty flats or autoracks are deployed first? When I was at Maersk negotiating large-scale rail contracts, we constantly ran into a black hole of visibility. Equipment was technically available, but no one could pinpoint where it was or who controlled the next move. The pooling model made coordination possible, but it also made accountability diffuse. Now imagine that opacity combined with ownership concentration. A railroad controlling the largest stake in TTX doesn’t need to explicitly starve competitors of equipment. It just needs to optimize for its own network first. Repairs get prioritized in its lanes. New equipment gets spec’d for its corridors. Allocation algorithms favor its terminals. The result isn’t dramatic — it’s death by a thousand micro-decisions that tilt velocity in one direction. What gravity looks like Every time a major shipper changes carriers, the math inside the TTX pool shifts. Steel doesn’t teleport. Cars must physically migrate through the network, a process that can take weeks. Shortages often follow commercial wins because the new carrier gains the freight before it gains the equipment. Even in a neutral pool, gravity takes time to reset. Post-merger, that shock absorption could become selective. If car allocation subtly favors the combined UP-NS lanes, competitors lose not just freight; they lose the equipment velocity needed to compete for the next contract. What the STB should do The STB received formal notice of the merger on July 30, 2025. The railroads plan to file their full application by Jan. 29, 2026, triggering a 16-month statutory review. The STB has broad authority to preserve equilibrium through independent TTX governance, fleet-allocation audits and service-performance metrics tied to pooling access. Whether those powers are used will determine if TTX remains the stabilizer it was built to be, or becomes another lever of competitive advantage hidden inside consolidation. The 1996 Union Pacific-Southern Pacific merger produced what the head of the nation’s largest rail union called a “massive meltdown.” Service disruptions lasted months. The STB should apply those lessons to equipment pooling now, before approval — not after the damage is done. What shippers should ask now Most customers never deal directly with TTX, but they feel its influence in every service metric. Don’t wait until after the merger is approved. Start asking pointed questions now: How do you measure car velocity in my lanes? Who controls the pool cars that serve my freight? What protections ensure neutrality if ownership concentration shifts? If your railroad can’t answer clearly, you’re not buying transportation, you’re buying uncertainty. The bottom line TTX doesn’t appear in marketing campaigns, but its model — shared steel, shared access — keeps the industry balanced. The merger debate has focused on jobs, rates and service promises. But the real test will be whether a system designed for competition can survive when one player holds the dominant stake. Because when the pool tips, everyone feels it. And once gravity shifts, it doesn’t shift back. Paul Tonsager has held executive roles at Maersk, CN Rail, CN Worldwide, Coyote (RXO), and Patriot Rail. He is the founder of Integrated Multimodal Solutions LLC and author of the Substack newsletter Signals & Switches. Contact him at   paul.tonsager@multimodalsolutions.io .

Intermodal providers

UP-NS merger could mean new dominant voice inside rail industry cooperative

 Actual capacity

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Planned capacity

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eeSea collects and centralizes liner network data from dozens of public sources including carriers’ vessel tracking portals, long-term schedules, customer advisories, port and terminal operator schedules, and pilot schedules. These disparate datasets are continually inspected, cleaned, and carefully structured. eeSea synthesizes this refined public data with AIS positions from a third-party provider and its datasets spanning schedule reliability, transit times, trade capacity evolution, and 60-day vessel forecasts. Capacity is measured based on the last load port in Europe. [eeSea](https://www.eesea.com)

North Europe to US East and Gulf coasts container capacity (eeSea)

Northern Europe to US East and Gulf Coasts Container Capacity and Deployment (eeSea) Gateway

<div class="phx-topic abstract-wrapper">The conflicting interests became apparent last week when the Suez Canal Authority issued a statement indicating that Maersk planned to resume normal transits in December, triggering a quick response from the carrier that no timeline had been set. </div>

The conflicting interests became apparent last week when the Suez Canal Authority issued a statement indicating that Maersk planned to resume normal transits in December, triggering a quick response from the carrier that no timeline had been set.

<div class="phx-topic">Geopolitical forces favoring the resumption of container trade through the Red Sea and the corresponding commercial reluctance to do so are converging after nearly two years of most ships diverting around southern Africa to avoid attacks by Houthi militants. The conflicting interests became apparent in late November when the Suez Canal Authority (SCA) issued a statement indicating that Maersk planned to resume normal transits in December, triggering a quick response from the carrier that no timeline had been set. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6126957_0.1.jpg"></img></div>But the contours of a clash are taking shape. Facing monthly losses of $800 million, Egypt President Abdel Fattah El-Sisi said earlier this year the country desperately wants full use of the canal to resume without further delay. After exerting little influence to reopen the Canal, Egypt saw fresh hope after the Oct. 13 Israel-Hamas peace summit in Sharm El-Sheikh, Egypt, attended by Sisi, US President Donald Trump and representatives of 20 countries. The SCA on Nov. 25 said the event “succeeded in paving the way for restoring the rates of traffic in the region back to normal.” Despite the pushback by Maersk and its Gemini partner Hapag-Lloyd, the peace conference was potentially significant regarding the Suez. The conference endorsed the October agreement between Hamas and Israel to end the war in Gaza, the hostilities that led the Houthis to start firing on shipping in late 2023. So, in theory, the end of active fighting between Israel and Hamas should end the attacks and fully reopen the waterway. But it’s not so simple. Mideast analysts have little confidence that hostilities have truly ended, and thus say the pause in attacks by the Houthis disclosed in early November is in fact not permanent. The tenuous nature of Mideast peace was reflected in ships failing to return to the Red Sea following a May announcement by Trump of a deal with the Houthis, under which the US would stop bombing the Iran-aligned group and the militants would stop menacing ships seeking to transit the Red Sea and Suez Canal. <h3>Carriers’ views are complex </h3>Carriers say they believe the Suez is the natural route connecting Asia and Europe. CMA CGM Egypt &amp; Sudan Cluster CEO Tariq Zaghloul was quoted by the Canal authority in early November saying “there is no alternative to the Suez.” But carriers are also disinclined to resume normal transits and perform extensive reworking of their networks, including transshipment points, only to have to re-divert if shipping were to come under renewed attack. ”We need to see consistent stability and tangible progress before routing vessels back through the Suez Canal,” Hapag-Lloyd said on Nov. 19.Thus, in assessing the real situation, carriers have thus far concluded that not enough has changed to warrant resumption of normal routings between Asia and Europe and Asia and the North American East Coast. “The Houthi decision to pause attacks is probably a tactical decision to allow the group to rearm and rebuild damaged infrastructure,” Jack Kennedy, head of Middle East and North Africa country risk at S&amp;P Global Market Intelligence, wrote on Nov. 12 in an assessment he said is unchanged as of Nov. 26. “Although it reduces the likelihood of attacks on shipping while the Gaza ceasefire holds, there remains a severe risk of attacks on vessels in transit in the one-year outlook if, as is likely, the ceasefire between Hamas and Israel breaks down permanently without progressing to its later stages,” Kennedy said. There are reasons why it is to the Houthi’s advantage to continue the attacks, he said. “The Houthis have incentive to continue some level of attack activity in the Red Sea and against Israel in the one-year outlook in order to secure external financial and military support and to continue to generate domestic support within Yemen,” Kennedy said. S&amp;P Global is the parent company of the Journal of Commerce. With the ongoing diversions serving as stark evidence that Mideast peace is tenuous, Egypt — in citing the peace conference as having cleared the way to normal transits — is hoping to draw a straight line between geopolitics and the ongoing diversions. And they are hoping the US draws the same line, seeing the issue in big picture terms and rejecting obstacles tied to the operational realities of shipping. “If the [Trump] administration links the canal disruption directly to their broader peace deal efforts in the Middle East, they could ramp up the regulatory or diplomatic playbook,” said Andrew Petrisin, who served as deputy assistant secretary for multimodal freight within the US Department of Transportation from June 2024 to January 2025 and is now CEO of Laneway, an online platform that enables the trading of guaranteed container space. Petrisin told the Journal of Commerce the White House, in an effort to pressure carriers to resume transits through the Suez, could try to frame the vessel diversions as causing rising costs for consumers. “If they decide that avoiding the Suez is driving inflation, given the recent election results and the focus on affordability, they may try to frame the carriers’ safety decisions as raising prices,” Petrisin said. “Politically, this angle is an easier sell than a complex argument about how commercial shipping impacts a peace treaty.” Economists have previously told the Journal of Commerce they see no evidence in data that the diversions are impacting inflation in the US. Any effort to point the finger at ocean carriers would echo the Biden administration’s rhetoric blaming carriers for price gouging during the pandemic. <h3>US security guarantees? </h3>From the point of view of carriers, their reluctance to resume Suez transits remains high due to safety risks. The financial advantage of vessel diversions, never mentioned by carriers, is a consideration in the background given that resumption of Suez transits would dump about 10% of global capacity back into the market and soften freight rates, although the effect would be muted over several months by the extensive port congestion many believe would result from a massive realignment of East-West networks. “There are many pieces to fall in place before they can [resume Suez transits], and insurance is one factor,” said Patrick Fay, CEO of BOC International. Thus, according to industry sources, resuming Suez transits would likely require more than mere rhetoric from the US administration. For example, the US would likely have to put security guarantees in place beyond what it has already done, perhaps increasing its naval presence in the region, industry sources say. But that would run into a view expressed by Mideast analysts that the Houthis are too agile and dug in within Yemen to be eliminated as a military threat to shipping. And if efforts were made by the US to impose fines on carriers for not using the Suez, were it to come to that, carriers would resist, Petrisin believes. “I don’t see a world where they risk the safety of their people and fleets for fear of a port fee,” he said. Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>. </div>

Geopolitical forces favoring the resumption of container trade through the Red Sea and the corresponding commercial reluctance to do so are converging after nearly two years of most ships diverting around southern Africa to avoid attacks by Houthi militants. The conflicting interests became apparent in late November when the Suez Canal Authority (SCA) issued a statement indicating that Maersk planned to resume normal transits in December, triggering a quick response from the carrier that no timeline had been set. But the contours of a clash are taking shape. Facing monthly losses of $800 million, Egypt President Abdel Fattah El-Sisi said earlier this year the country desperately wants full use of the canal to resume without further delay. After exerting little influence to reopen the Canal, Egypt saw fresh hope after the Oct. 13 Israel-Hamas peace summit in Sharm El-Sheikh, Egypt, attended by Sisi, US President Donald Trump and representatives of 20 countries. The SCA on Nov. 25 said the event “succeeded in paving the way for restoring the rates of traffic in the region back to normal.” Despite the pushback by Maersk and its Gemini partner Hapag-Lloyd, the peace conference was potentially significant regarding the Suez. The conference endorsed the October agreement between Hamas and Israel to end the war in Gaza, the hostilities that led the Houthis to start firing on shipping in late 2023. So, in theory, the end of active fighting between Israel and Hamas should end the attacks and fully reopen the waterway. But it’s not so simple. Mideast analysts have little confidence that hostilities have truly ended, and thus say the pause in attacks by the Houthis disclosed in early November is in fact not permanent. The tenuous nature of Mideast peace was reflected in ships failing to return to the Red Sea following a May announcement by Trump of a deal with the Houthis, under which the US would stop bombing the Iran-aligned group and the militants would stop menacing ships seeking to transit the Red Sea and Suez Canal. Carriers’ views are complex Carriers say they believe the Suez is the natural route connecting Asia and Europe. CMA CGM Egypt & Sudan Cluster CEO Tariq Zaghloul was quoted by the Canal authority in early November saying “there is no alternative to the Suez.” But carriers are also disinclined to resume normal transits and perform extensive reworking of their networks, including transshipment points, only to have to re-divert if shipping were to come under renewed attack. ”We need to see consistent stability and tangible progress before routing vessels back through the Suez Canal,” Hapag-Lloyd said on Nov. 19. Thus, in assessing the real situation, carriers have thus far concluded that not enough has changed to warrant resumption of normal routings between Asia and Europe and Asia and the North American East Coast. “The Houthi decision to pause attacks is probably a tactical decision to allow the group to rearm and rebuild damaged infrastructure,” Jack Kennedy, head of Middle East and North Africa country risk at S&P Global Market Intelligence, wrote on Nov. 12 in an assessment he said is unchanged as of Nov. 26. “Although it reduces the likelihood of attacks on shipping while the Gaza ceasefire holds, there remains a severe risk of attacks on vessels in transit in the one-year outlook if, as is likely, the ceasefire between Hamas and Israel breaks down permanently without progressing to its later stages,” Kennedy said. There are reasons why it is to the Houthi’s advantage to continue the attacks, he said. “The Houthis have incentive to continue some level of attack activity in the Red Sea and against Israel in the one-year outlook in order to secure external financial and military support and to continue to generate domestic support within Yemen,” Kennedy said. S&P Global is the parent company of the Journal of Commerce. With the ongoing diversions serving as stark evidence that Mideast peace is tenuous, Egypt — in citing the peace conference as having cleared the way to normal transits — is hoping to draw a straight line between geopolitics and the ongoing diversions. And they are hoping the US draws the same line, seeing the issue in big picture terms and rejecting obstacles tied to the operational realities of shipping. “If the [Trump] administration links the canal disruption directly to their broader peace deal efforts in the Middle East, they could ramp up the regulatory or diplomatic playbook,” said Andrew Petrisin, who served as deputy assistant secretary for multimodal freight within the US Department of Transportation from June 2024 to January 2025 and is now CEO of Laneway, an online platform that enables the trading of guaranteed container space. Petrisin told the Journal of Commerce the White House, in an effort to pressure carriers to resume transits through the Suez, could try to frame the vessel diversions as causing rising costs for consumers. “If they decide that avoiding the Suez is driving inflation, given the recent election results and the focus on affordability, they may try to frame the carriers’ safety decisions as raising prices,” Petrisin said. “Politically, this angle is an easier sell than a complex argument about how commercial shipping impacts a peace treaty.” Economists have previously told the Journal of Commerce they see no evidence in data that the diversions are impacting inflation in the US. Any effort to point the finger at ocean carriers would echo the Biden administration’s rhetoric blaming carriers for price gouging during the pandemic. US security guarantees? From the point of view of carriers, their reluctance to resume Suez transits remains high due to safety risks. The financial advantage of vessel diversions, never mentioned by carriers, is a consideration in the background given that resumption of Suez transits would dump about 10% of global capacity back into the market and soften freight rates, although the effect would be muted over several months by the extensive port congestion many believe would result from a massive realignment of East-West networks. “There are many pieces to fall in place before they can [resume Suez transits], and insurance is one factor,” said Patrick Fay, CEO of BOC International. Thus, according to industry sources, resuming Suez transits would likely require more than mere rhetoric from the US administration. For example, the US would likely have to put security guarantees in place beyond what it has already done, perhaps increasing its naval presence in the region, industry sources say. But that would run into a view expressed by Mideast analysts that the Houthis are too agile and dug in within Yemen to be eliminated as a military threat to shipping. And if efforts were made by the US to impose fines on carriers for not using the Suez, were it to come to that, carriers would resist, Petrisin believes. “I don’t see a world where they risk the safety of their people and fleets for fear of a port fee,” he said. Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

Asia-Europe

Complexity of resumption of Suez transits beginning to take shape

<div class="phx-topic abstract-wrapper">The National Association of Waterfront Employers said intermodal service from ports could degrade further unless service commitments are made in the proposed $85 billion deal. </div>

The National Association of Waterfront Employers said intermodal service from ports could degrade further unless service commitments are made in the proposed $85 billion deal.

<div class="phx-topic">The National Association of Waterfront Employers (NAWE) became the first group in ocean freight to weigh in on the proposed merger of Union Pacific and Norfolk Southern, arguing a combined railroad could mean less competition and further erosion in intermodal service reliability at US ports.In a Dec. 1 letter to the US Surface Transportation Board (STB), NAWE said its members are concerned that reducing the number of Class I railroads through UP’s $85 billion acquisition of NS will further degrade intermodal service at ports. “Marine terminals need an intermodal rail service to handle increasing volumes of trade in order to provide streamlined imports and exports from increasingly strained port complexes,” NAWE’s letter said. “We are greatly concerned as to whether a reduction of two of the four major remaining competitors offering intermodal rail service will serve to benefit our industry.” NAWE, which represents marine terminals and stevedoring companies, said that Class I railroads, in general, are only taking a “best efforts” approach to providing intermodal service at ports. The group said the railroad industry’s focus on maintaining high operating ratios and “precision scheduled railroading” means less reliable intermodal service. Instead, railroads are leaving it to port operators and marine terminals to invest in rail operations “while the railroad usually takes more of an ‘if you build it, I may carry your cargo, if I see fit,’ approach,” NAWE’s letter said. “This results in a situation where the marine terminal industry finances and manages all the placement of intermodal on-dock rail transport, sometimes with very little in return on commitments in level of service,” the group wrote to STB, the federal regulator who will ultimately decide the fate of the proposed merger.<h3>Argues for intermodal growth at smaller ports</h3>Ocean carriers and ports have generally avoided public comments on the merger plans. NAWE said many of its members have good working relationships with the railroads, but it sees more potential for intermodal services to expand outside of larger ports by offering shippers more reach through less crowded gateways. The combination of two Class I railroads serving both coasts will further concentrate international intermodal freight at already busy ports, it said. “We need intermodal railroad services that expand the reach and capacity of medium-sized ports so they grow, but more fundamentally, we need to build a stronger business partnership with the railroads,” NAWE said. “Other port areas of the nation continue to struggle for commitment of service and greater level of investment to help spur growth.” Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>.</div>

The National Association of Waterfront Employers (NAWE) became the first group in ocean freight to weigh in on the proposed merger of Union Pacific and Norfolk Southern, arguing a combined railroad could mean less competition and further erosion in intermodal service reliability at US ports. In a Dec. 1 letter to the US Surface Transportation Board (STB), NAWE said its members are concerned that reducing the number of Class I railroads through UP’s $85 billion acquisition of NS will further degrade intermodal service at ports. “Marine terminals need an intermodal rail service to handle increasing volumes of trade in order to provide streamlined imports and exports from increasingly strained port complexes,” NAWE’s letter said. “We are greatly concerned as to whether a reduction of two of the four major remaining competitors offering intermodal rail service will serve to benefit our industry.” NAWE, which represents marine terminals and stevedoring companies, said that Class I railroads, in general, are only taking a “best efforts” approach to providing intermodal service at ports. The group said the railroad industry’s focus on maintaining high operating ratios and “precision scheduled railroading” means less reliable intermodal service. Instead, railroads are leaving it to port operators and marine terminals to invest in rail operations “while the railroad usually takes more of an ‘if you build it, I may carry your cargo, if I see fit,’ approach,” NAWE’s letter said. “This results in a situation where the marine terminal industry finances and manages all the placement of intermodal on-dock rail transport, sometimes with very little in return on commitments in level of service,” the group wrote to STB, the federal regulator who will ultimately decide the fate of the proposed merger. Argues for intermodal growth at smaller ports Ocean carriers and ports have generally avoided public comments on the merger plans. NAWE said many of its members have good working relationships with the railroads, but it sees more potential for intermodal services to expand outside of larger ports by offering shippers more reach through less crowded gateways. The combination of two Class I railroads serving both coasts will further concentrate international intermodal freight at already busy ports, it said. “We need intermodal railroad services that expand the reach and capacity of medium-sized ports so they grow, but more fundamentally, we need to build a stronger business partnership with the railroads,” NAWE said. “Other port areas of the nation continue to struggle for commitment of service and greater level of investment to help spur growth.” Contact Michael Angell at michael.angell@spglobal.com .

North American ports

Ports urge strict review of intermodal impacts from UP-NS merger

<div class="phx-topic abstract-wrapper">The railroad says the appointment system will create more “predictable operations” by controlling the number of containers that are in-gated each day.</div>

The railroad says the appointment system will create more “predictable operations” by controlling the number of containers that are in-gated each day.

<div class="phx-topic">Norfolk Southern Railway (NS) has begun requiring truck drivers to make reservations to drop off domestic intermodal loads, with a system-wide rollout of the program scheduled to continue through March. As of Dec. 1, drivers must secure a reservation to deliver domestic containers to the NS terminal in Charlotte, North Carolina. Reservations are now also required in Atlanta; Columbus, Ohio; Jacksonville, Florida.; Kansas City, Missouri; Memphis and St. Louis after a “soft” rollout of the appointment system over the past few months, NS said, adding that one additional terminal will be added each week for the next 16 weeks. “We softly rolled [our mandatory appointment system] out for domestic [intermodal] in a handful of lanes, mostly between Chicago and New England,” Norfolk Southern said in a statement to intermodal partners that was seen by the Journal of Commerce. “After a year’s worth of testing and systems enhancements, we will be rolling [it] out systemwide.” The railroad says the reservation system will create more “predictable operations.” By controlling the number of containers that are in-gated each day, NS says it can reduce so-called origin dwell, or how long a container sits before being loaded on a train. Lower dwell times prevent terminals from becoming congested and preserve capacity to unload inbound trains quickly, according to the railroad. “By reducing variability and enhancing operational predictability, we aim to deliver better service and support to our customers,” NS said in the advisory. Key rollout dates ahead include Dec. 8 in Philadelphia; Feb. 2 in Harrisburg, Pennsylvania; Feb. 9 in Newark (Croxton), New Jersey; and Feb. 23 at Chicago’s 47th Street terminal. International intermodal customers already use a reservation system at several NS hubs, including Atlanta, Memphis and Chicago. BNSF Railway is now the only Class I North American railroad that does not require reservations for domestic intermodal drop-offs. <h3>Extra step for IMCs </h3>NS will host information sessions across its network to brief motor carriers and intermodal marketing companies (IMCs) on the new requirements. Sessions are scheduled in Cincinnati on Dec. 10 and Louisville on Dec. 11, ahead of those markets adopting the reservations system in mid-January. The change adds a planning step for IMCs to ensure loads depart on time by booking and providing reservation numbers to third-party drayage carriers. During peak periods, NS may also cap how many containers an IMC can ingate daily, potentially delaying some shipments. High-volume IMCs will receive a daily allocation of reservation slots per terminal. Once that allotment is exceeded, IMCs must use an open pool of remaining slots on a first-come, first-served basis. CSX Transportation — NS’ chief competitor in the eastern US domestic market — has used a similar reservation system since 2019. During the pandemic-era freight surge, reservation slots at times filled for days in Chicago and other hubs, leaving IMCs waiting to ingate containers. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>.</div>

Norfolk Southern Railway (NS) has begun requiring truck drivers to make reservations to drop off domestic intermodal loads, with a system-wide rollout of the program scheduled to continue through March. As of Dec. 1, drivers must secure a reservation to deliver domestic containers to the NS terminal in Charlotte, North Carolina. Reservations are now also required in Atlanta; Columbus, Ohio; Jacksonville, Florida.; Kansas City, Missouri; Memphis and St. Louis after a “soft” rollout of the appointment system over the past few months, NS said, adding that one additional terminal will be added each week for the next 16 weeks. “We softly rolled [our mandatory appointment system] out for domestic [intermodal] in a handful of lanes, mostly between Chicago and New England,” Norfolk Southern said in a statement to intermodal partners that was seen by the Journal of Commerce. “After a year’s worth of testing and systems enhancements, we will be rolling [it] out systemwide.” The railroad says the reservation system will create more “predictable operations.” By controlling the number of containers that are in-gated each day, NS says it can reduce so-called origin dwell, or how long a container sits before being loaded on a train. Lower dwell times prevent terminals from becoming congested and preserve capacity to unload inbound trains quickly, according to the railroad. “By reducing variability and enhancing operational predictability, we aim to deliver better service and support to our customers,” NS said in the advisory. Key rollout dates ahead include Dec. 8 in Philadelphia; Feb. 2 in Harrisburg, Pennsylvania; Feb. 9 in Newark (Croxton), New Jersey; and Feb. 23 at Chicago’s 47th Street terminal. International intermodal customers already use a reservation system at several NS hubs, including Atlanta, Memphis and Chicago. BNSF Railway is now the only Class I North American railroad that does not require reservations for domestic intermodal drop-offs. Extra step for IMCs NS will host information sessions across its network to brief motor carriers and intermodal marketing companies (IMCs) on the new requirements. Sessions are scheduled in Cincinnati on Dec. 10 and Louisville on Dec. 11, ahead of those markets adopting the reservations system in mid-January. The change adds a planning step for IMCs to ensure loads depart on time by booking and providing reservation numbers to third-party drayage carriers. During peak periods, NS may also cap how many containers an IMC can ingate daily, potentially delaying some shipments. High-volume IMCs will receive a daily allocation of reservation slots per terminal. Once that allotment is exceeded, IMCs must use an open pool of remaining slots on a first-come, first-served basis. CSX Transportation — NS’ chief competitor in the eastern US domestic market — has used a similar reservation system since 2019. During the pandemic-era freight surge, reservation slots at times filled for days in Chicago and other hubs, leaving IMCs waiting to ingate containers. Contact Ari Ashe at ari.ashe@spglobal.com .

Norfolk Southern to roll out reservation system on domestic intermodal

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The world of LTL is slow to embrace change. Business anachronisms permeate current supply chain processes. These vestiges of the way things used to work define the LTL freight transportation procurement process of many modern shippers.David Knuth, logistics specialist at IEWC, a global supplier of cable and wire based in Wisconsin, is happy to have modernized the RFP process, automating the entire LTL bidding procedure with Bid$ense, SMC³’s automated truckload and LTL freight transportation sourcing solution. But when prompted, he can still recall what once was.In his previous job, a large part of his duties were consumed by creating an intermodal bid package for carriers. In a spreadsheet, Knuth detailed the company’s volumes lane by lane, taking care to delete any errant keystrokes or misleading data. He would then email out the information to each carrier, taking time to respond to detailed technical questions about the spreadsheet data. Finally, he had to compile all the results, create an algorithm that would compare the carriers on each lane, and award the business.“It was a huge undertaking. It took about four months to do,” Knuth said of the old process. “It was almost a full-time job for that part of the year, every year.”In his new job at IEWC, he sat down with Bid$ense on day one and was amazed at the capabilities. Knuth had never before used a bid tool. SMC³’s latest versions of Bid$ense automate the process even further, taking truckload and LTL RFPs entirely online. The tool draws on RFP best-practices protocols to streamline the bidding communication process, enabling bidding carriers to respond accurately and promptly to shipper requests. The solution also does all the distribution work automatically, electronically submitting shipper bid data to carriers based on their actual service capabilities and performance records. Carriers are alerted with timely prompts for RFP deliverables, so shippers aren’t waiting by the phone for responses.Another benefit of automating the process is the data-cleansing assistance. When Knuth sent spreadsheets to carriers, data errors might cloud the bidding process; he might have to resend data or simply accept a price that did not truly reflect the costs of doing business. Data cleansing is incredibly beneficial, he said.The spreadsheet technique also made bidding analysis an onerous task. Since Bid$ense automates and streamlines the entire RFP process, intensive examination is now simple. SMC³ knows that each bid has more than one best outcome. With uniform responses from each carrier, shippers can quickly rank results and create an unlimited quantity of what-if scenarios to make the optimal procurement decision.Jesse Burnett of Central Garden &amp; Pet experiences many of the same benefits. Founded in 1980, Central Garden &amp; Pet has spent the last three decades growing from a small garden supply company to a provider of a range of products from dog chews and bird seed to soil supplements and natural insecticides. For much of its life, the company shipped these disparate goods via LTL and truckload carriers to retailers throughout the country, relying on each business unit to negotiate directly with their freight transportation providers. This arrangement worked fairly well for a small company, but as Central Garden &amp; Pet expanded, leadership decided to consolidate decision making.Burnett helped centralize the transportation decision making in 2015 with SMC³’s Bid$ense. Before Bid$ense, every business unit operated independently as far as negotiating with carriers.“There were a lot of different things just floating around,” he said. “We didn’t have master agreements in place; no national pricing at all. The pricing from carriers was just all over the place, depending on where you were.”The transformations he saw with Bid$ense were immediate. Burnett has been using the tool about every other year since its implementation at the company. Central Garden and Pet’s $19.6 million 2019 LTL bid saved the company just more than 9 percent when compared to its historical average. For Burnett, though, bid automation extends far beyond savings.“We knew that we weren’t getting the best pricing offer from our carriers just because nothing was centralized,” he continued. “We knew that if we combined everything from all these business units and paired it with one corporate offering, then it would drive some cost benefit with it.”When the company initially decided to centralize bid procurement, executives researched a number of different methodologies and technologies. In the end, though, Burnett found that Bid$ense was both widespread and well known, and that his carrier partners already knew how to use the application. Burnett also highlighted the data-cleansing process as a major benefit, saying the rigorous process ensures that carriers always return the best price.“It definitely has helped drive savings,” he said. “Any time you go out there and you drive that competitiveness with the carriers and they know they’re in a bid environment, it seems to sharpen their pencils.”Transportation procurement is an integral part of the modern supply chain. With Bid$ense, shippers can develop a strategic implementation plan that saves them time and money, but also helps them create strong relationships with their carrier partners. These carriers appreciate the solution’s data-cleansing process; when carriers receive a complete shipment history and future volume forecast, they don’t have to guess on pricing. Carriers that receive more data from shippers get a complete picture of that shipper’s freight, allowing them to accurately plan instead of simply preparing for the worst-case scenario. Clean data presented through an automated system can lead to both bigger shipment savings and a lasting partnership between carrier and customer.Whether customers are looking to streamline over-the-road transportation bidding by automating the RFP process or create an entirely new, centralized sourcing process, Bid$ense has the analytical horsepower to get the job done.SMC³ 2020 Customer Case Study

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Shippers save money, time with automated transportation bidding tools

If there’s one immutable truth in the world of logistics, it’s this: LTL is an inherently complex form of transportation. Tariffs, rates, DIM weights, transit times — it’s enough to confuse even seasoned logistics professionals. The solution to this knowledge gap has historically been on-the-job training or university supply chain education, but for a variety of reasons there is now a pressing need for third-party, remote LTL training that prepares logistics workers for transportation success. Global Scope Can Overlook Local Intricacies In the past, professionals looking to move into a supply chain career learned about the basics of supply chain from universities. However, many of these college supply chain programs are now global in scope, focusing on worldwide supply chain management instead of the intricacies of specialized domestic transportation. And even these programs, which used to be widespread, are becoming less common. LTL is not an industry of broad-brush strokes; supply chain professionals really need a pointillistic understanding of the logistics of LTL in order to excel in the industry. Accelerating Need for Dedicated LTL Education This lack of specified training put the onus on employers to prepare new hires with the LTL knowledge needed to do their jobs. Dedicated LTL study is a necessity, not a luxury. At the same time, changes in LTL and the broader supply chain world are accelerating. The reliance on e-commerce has ballooned since the start of the pandemic, and last-mile LTL shipments and related e-commerce strains on the supply chain won’t diminish once social distancing abates. That genie isn’t going back into the bottle. So supply chain employers need logistics workers that are fully versed in all aspects of the industry, ready to solve unique shipping and delivery problems based on their extensive supply chain knowledge But why care about LTL? It’s been reported that some shippers in today’s world are no longer concerned with what mode is used to ship their goods. A Multimodal Approach Ensures On-Time Delivery This mode agnosticism means supply chain stakeholders have to be well versed in all modes of transportation. As unforeseen weather events and other disruptions, such as protests, become more common, savvy logistics employees will need to be armed with familiarity of all modes, not just the most popular, to ensure that freight is delivered on time, without damage, and in the most financially expedient way possible. Offerings like SMC³’s LTL online education courses cover a wide range of topics from LTL basics and operations to more advanced concepts like pricing analytics and transportation law. The company also has plans to continually refresh content, adding new expert presenters and taking the feedback of students to make the courses even better as time goes on. Learn more about&nbsp;<a href="https://logisticstrainingcenter.com/smc3-courses/" rel="noreferrer" class="joc_admin__link">SMC³’s LTL Online Education program</a>&nbsp;and view the 2021 hybrid schedule, featuring live industry experts,&nbsp;<a href="https://www.smc3.com/onlinelearning2021/" rel="noreferrer" class="joc_admin__link">here.</a>

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Filling the Supply Chain Education Gap with LTL Education Courses

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<div class="phx-topic abstract-wrapper">The French carrier plans to enter the long-crimped trade lane via subsidiary brand CNC Line, with a targeted launch in January, market sources say.</div>

The French carrier plans to enter the long-crimped trade lane via subsidiary brand CNC Line, with a targeted launch in January, market sources say.

<div class="phx-topic">CMA CGM is in the final stages of laying out the operational framework to begin accepting container bookings from India to Russia as carriers search for incremental cargo opportunities to lift revenue and profitability amid multiple market challenges. The French carrier plans to enter the long-crimped trade lane via subsidiary brand CNC Line, with a targeted launch in January, market sources say. The strategy behind operating on a group arm bill of lading system instead of CMA CGM’s own contract of carriage/instrument is to limit potential operational and compliance risks from ongoing Western sanctions against Russia due to Moscow’s almost four-year-long war against Ukraine, sources believe. Founded in 1971, Singapore-headquartered CNC (formerly Cheng Lie Navigation Company) — a predominant intra-Asia operator — was acquired by CMA CGM in 2007. CMA CGM declined to comment on the matter when contacted by the Journal of Commerce. <h3>Transshipment options </h3>Current indications are that space will be allocated on CMA CGM’s India-Europe “Epic” service for Russian loading out of Nhava Sheva and Mundra with likely transshipment options over Hamburg. To that end, the carrier is said to be considering expanding its Finland Express (FLX) service with a new call to St. Petersburg, Russia’s main gateway port. The Baltic feeder now rotates Bremerhaven, Hamburg, Rauma, Tallinn, Kotka, Helsinki and Bremerhaven, available data shows. Mediterranean Shipping Co. is the only mainline carrier that has continued to provide coverage for Indian shipments to Russia on the back of multiple feeder networks between North Europe and Russia, including the Baltic Loop 02 that shuttles between Antwerp, Klaipeda, Kotka and St. Petersburg. Corten Shipping is one emerging secondary carrier on the India-Russia trade lane, offering two fortnightly direct connections out of Nhava Sheva/Kandla with three 1,500-TEU ships that boast transit times of 25 days to St. Petersburg and 18 days to Novorossiysk. Considering the typical limitations of sanctioned trades, pharmaceutical products as well as food and agricultural items are generally shipped to Russia, although some construction materials, mainly tiles, are also carried by ad-hoc vessel operators. Anecdotal industry data puts India-Russia container volumes at 8,000 TEUs a week. The freight yield is admittedly lucrative for capacity participants — pegged at $3,000 per TEU and $4,000 per FEU for dry cargo and $9,000 per FEU for reefer loads from Nhava Sheva to St. Petersburg. As US tariff-stricken Indian exporters and policy makers seek trade diversification, Russian volume gains are one option on the table. Contact Bency Mathew at <a href="mailto:bencyvmathew@gmail.com">bencyvmathew@gmail.com</a>.</div>

CMA CGM is in the final stages of laying out the operational framework to begin accepting container bookings from India to Russia as carriers search for incremental cargo opportunities to lift revenue and profitability amid multiple market challenges. The French carrier plans to enter the long-crimped trade lane via subsidiary brand CNC Line, with a targeted launch in January, market sources say. The strategy behind operating on a group arm bill of lading system instead of CMA CGM’s own contract of carriage/instrument is to limit potential operational and compliance risks from ongoing Western sanctions against Russia due to Moscow’s almost four-year-long war against Ukraine, sources believe. Founded in 1971, Singapore-headquartered CNC (formerly Cheng Lie Navigation Company) — a predominant intra-Asia operator — was acquired by CMA CGM in 2007. CMA CGM declined to comment on the matter when contacted by the Journal of Commerce. Transshipment options Current indications are that space will be allocated on CMA CGM’s India-Europe “Epic” service for Russian loading out of Nhava Sheva and Mundra with likely transshipment options over Hamburg. To that end, the carrier is said to be considering expanding its Finland Express (FLX) service with a new call to St. Petersburg, Russia’s main gateway port. The Baltic feeder now rotates Bremerhaven, Hamburg, Rauma, Tallinn, Kotka, Helsinki and Bremerhaven, available data shows. Mediterranean Shipping Co. is the only mainline carrier that has continued to provide coverage for Indian shipments to Russia on the back of multiple feeder networks between North Europe and Russia, including the Baltic Loop 02 that shuttles between Antwerp, Klaipeda, Kotka and St. Petersburg. Corten Shipping is one emerging secondary carrier on the India-Russia trade lane, offering two fortnightly direct connections out of Nhava Sheva/Kandla with three 1,500-TEU ships that boast transit times of 25 days to St. Petersburg and 18 days to Novorossiysk. Considering the typical limitations of sanctioned trades, pharmaceutical products as well as food and agricultural items are generally shipped to Russia, although some construction materials, mainly tiles, are also carried by ad-hoc vessel operators. Anecdotal industry data puts India-Russia container volumes at 8,000 TEUs a week. The freight yield is admittedly lucrative for capacity participants — pegged at $3,000 per TEU and $4,000 per FEU for dry cargo and $9,000 per FEU for reefer loads from Nhava Sheva to St. Petersburg. As US tariff-stricken Indian exporters and policy makers seek trade diversification, Russian volume gains are one option on the table. Contact Bency Mathew at bencyvmathew@gmail.com .

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