<div class="phx-topic abstract-wrapper">The weak import numbers come as the National Retail Federation is projecting record holiday sales in the US of more than $1 trillion for the first time, up between 3.7% and 4.2% from 2024.</div>

The weak import numbers come as the National Retail Federation is projecting record holiday sales in the US of more than $1 trillion for the first time, up between 3.7% and 4.2% from 2024.

Feature image

<div class="phx-topic">Containerized imports into the US this month are expected to fall to their lowest level in two and a half years, while ongoing tariff uncertainty will keep volumes at a significant year-on-year deficit at least into the second quarter of next year, US retailers said Tuesday. Projected December imports of 1.86 million TEUs would be the lowest since June 2023, the National Retail Federation and Hackett Associates said in their latest Global Port Tracker (GPT). And the weakened cargo picture shows no signs of abating, with GPT’s first forecast for April 2026 imports projecting 1.97 million TEUs, down 11% from the same month a year ago. “We are seeing the results of the tariffs in weakening cargo demand going forward from the fourth quarter of this year and likely into the first half of next year,” Ben Hackett, founder of Hackett Associates said in a statement accompanying the monthly port tracker. “Container shipping rates are already declining on both coasts due to less need for cargo space for goods from both Asia and Europe.” The projected April imports would follow a down first quarter, with volumes in January, February and March expected to be, respectively, 10.3%, 8.5% and 16.8% lower than the corresponding months in 2025. The weak import numbers come as the NRF is projecting record holiday sales in the US of more than $1 trillion for the first time, up between 3.7% and 4.2% from 2024. US retail sales rose 0.2% in September, according to the Commerce Department, while a Conference Board survey on Nov. 22 revealed falling US consumer confidence had reached the lowest since April, when the US began its tariff onslaught. “Stores are stocked up and ready for a record holiday season, but there is still a great deal of uncertainty about what will happen in 2026 with trade policy,” Jonathan Gold, NRF’s vice president for supply chain and customs policy, said in the statement. December’s projected imports of 1.86 million TEUs would be down almost 13% from a year ago, and while November’s figures are not yet reported, NRF expects 1.91 million TEUs, 11.6% lower year on year. For all of 2025, NRF expects imports of 25.2 million TEUs, down 1.4% from 2024. The GPT covers the ports of Los Angeles/Long Beach, Oakland, and Seattle and Tacoma on the West Coast; New York/New Jersey, the Port of Virginia, Charleston, Savannah, Port Everglades, Miami and Jacksonville on the East Coast; and Houston on the Gulf Coast. Contact Kevin Saville at <a href="mailto:kevin.saville2@spglobal.com">kevin.saville2@spglobal.com.</a></div>

Containerized imports into the US this month are expected to fall to their lowest level in two and a half years, while ongoing tariff uncertainty will keep volumes at a significant year-on-year deficit at least into the second quarter of next year, US retailers said Tuesday. Projected December imports of 1.86 million TEUs would be the lowest since June 2023, the National Retail Federation and Hackett Associates said in their latest Global Port Tracker (GPT). And the weakened cargo picture shows no signs of abating, with GPT’s first forecast for April 2026 imports projecting 1.97 million TEUs, down 11% from the same month a year ago. “We are seeing the results of the tariffs in weakening cargo demand going forward from the fourth quarter of this year and likely into the first half of next year,” Ben Hackett, founder of Hackett Associates said in a statement accompanying the monthly port tracker. “Container shipping rates are already declining on both coasts due to less need for cargo space for goods from both Asia and Europe.” The projected April imports would follow a down first quarter, with volumes in January, February and March expected to be, respectively, 10.3%, 8.5% and 16.8% lower than the corresponding months in 2025. The weak import numbers come as the NRF is projecting record holiday sales in the US of more than $1 trillion for the first time, up between 3.7% and 4.2% from 2024. US retail sales rose 0.2% in September, according to the Commerce Department, while a Conference Board survey on Nov. 22 revealed falling US consumer confidence had reached the lowest since April, when the US began its tariff onslaught. “Stores are stocked up and ready for a record holiday season, but there is still a great deal of uncertainty about what will happen in 2026 with trade policy,” Jonathan Gold, NRF’s vice president for supply chain and customs policy, said in the statement. December’s projected imports of 1.86 million TEUs would be down almost 13% from a year ago, and while November’s figures are not yet reported, NRF expects 1.91 million TEUs, 11.6% lower year on year. For all of 2025, NRF expects imports of 25.2 million TEUs, down 1.4% from 2024. The GPT covers the ports of Los Angeles/Long Beach, Oakland, and Seattle and Tacoma on the West Coast; New York/New Jersey, the Port of Virginia, Charleston, Savannah, Port Everglades, Miami and Jacksonville on the East Coast; and Houston on the Gulf Coast. Contact Kevin Saville at kevin.saville2@spglobal.com.

Port News

North American ports

Container Shipping News

Maritime

December US imports on track to be lowest since June ‘23: retailers

<div class="phx-topic abstract-wrapper">After 27 consecutive months of plus-40% year-over-year growth, China’s total cross-border e-commerce sales were flat in October, according to Xeneta.</div>

After 27 consecutive months of plus-40% year-over-year growth, China’s total cross-border e-commerce sales were flat in October, according to Xeneta.

<div class="phx-topic">Air freight peak season on the main trade lanes out of Asia got off to a mixed start, with solid growth in e-commerce shipments to Europe in October offset by a sharp drop in online demand from the US, according to new data. The US’ scrapping of duty-free access for low-value goods through the “de minimis” exemption is having a dramatic impact on e-commerce exports from China at both ends of the demand scale, according to rate benchmarking platform Xeneta. “After 27 straight months of plus-40% year-over-year growth, China’s total cross-border e-commerce sales were flat in October, based on the latest market data from China Customs,” Niall van de Wouw, Xeneta’s chief air freight officer, said in a market update. “Even robust expansion from China to Europe — up 47% in October — was offset by declines to the rest of Asia, down 3%, and a dramatic 51% drop in e-commerce shipment volumes to the US in this new post-de minimis environment,” van de Wouw noted. Data from the International Air Transport Association (IATA) shows that total Asia-North America volume declined 1.4% year over year in October. While an improvement from the 3.5% contraction registered in the previous month, it marks the sixth consecutive decrease for the lane and the seventh in 2025. Asia to Europe demand maintained the strong pace seen since April, up 11.7% year over year in October and only marginally down from September. To serve the strong demand, airlines shifted significant freighter capacity to the trade lane, according to data from air cargo analyst Rotate. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="26caec84-1a5c-435b-b0da-c02f19434600"></dynamic-object></div>Still, the impact of the US tariffs on air cargo is becoming clearer, with Willie Walsh, IATA’s director-general, also pointing to the contraction in Asia-North America demand amid double-digit growth on the Asia-Europe, intra-Asia and Middle East-Europe trades. “The shifting growth pattern shows that air cargo is enabling global supply chains to adapt to the impact of US tariffs,” Walsh said in IATA’s monthly market review, adding that although headline figures for October were generally positive, they revealed “concerning trends of [a] slowdown,” with North America experiencing a significant contraction. <h3>Unsettling trend </h3>Van de Wouw shared this view, noting that although the emerging trend was unsettling for the air freight market, it was not as dramatic as was feared and was not yet hitting US consumer demand “to a concerning level.” But he warned that the situation was likely to change in 2026. “Some [US] shippers have absorbed the increases and are yet to pass on these extra costs to consumers, but with stocks running low and inventory replenishment on the horizon, we expect to see more tariff impact on air cargo volumes next year,” he said. Despite strong growth in October, e-commerce volumes into Europe could also be impacted by increasing regulation, with the EU set to introduce its own accelerated de-minimis reform in 2026 to close loopholes exploited by low-value shipments. With uncertainty over demand, capacity and regulatory changes, the global air cargo industry will head into 2026 with expectations of only modest, low single-digit growth for the year ahead, Van de Wouw said. “We expect supply to grow more than demand in 2026, and that will have an impact on rates,” he said. “Right now, the consensus is the market will do well to achieve demand growth of 2%-3% in 2026.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Air freight peak season on the main trade lanes out of Asia got off to a mixed start, with solid growth in e-commerce shipments to Europe in October offset by a sharp drop in online demand from the US, according to new data. The US’ scrapping of duty-free access for low-value goods through the “de minimis” exemption is having a dramatic impact on e-commerce exports from China at both ends of the demand scale, according to rate benchmarking platform Xeneta. “After 27 straight months of plus-40% year-over-year growth, China’s total cross-border e-commerce sales were flat in October, based on the latest market data from China Customs,” Niall van de Wouw, Xeneta’s chief air freight officer, said in a market update. “Even robust expansion from China to Europe — up 47% in October — was offset by declines to the rest of Asia, down 3%, and a dramatic 51% drop in e-commerce shipment volumes to the US in this new post-de minimis environment,” van de Wouw noted. Data from the International Air Transport Association (IATA) shows that total Asia-North America volume declined 1.4% year over year in October. While an improvement from the 3.5% contraction registered in the previous month, it marks the sixth consecutive decrease for the lane and the seventh in 2025. Asia to Europe demand maintained the strong pace seen since April, up 11.7% year over year in October and only marginally down from September. To serve the strong demand, airlines shifted significant freighter capacity to the trade lane, according to data from air cargo analyst Rotate. Still, the impact of the US tariffs on air cargo is becoming clearer, with Willie Walsh, IATA’s director-general, also pointing to the contraction in Asia-North America demand amid double-digit growth on the Asia-Europe, intra-Asia and Middle East-Europe trades. “The shifting growth pattern shows that air cargo is enabling global supply chains to adapt to the impact of US tariffs,” Walsh said in IATA’s monthly market review, adding that although headline figures for October were generally positive, they revealed “concerning trends of [a] slowdown,” with North America experiencing a significant contraction. Unsettling trend Van de Wouw shared this view, noting that although the emerging trend was unsettling for the air freight market, it was not as dramatic as was feared and was not yet hitting US consumer demand “to a concerning level.” But he warned that the situation was likely to change in 2026. “Some [US] shippers have absorbed the increases and are yet to pass on these extra costs to consumers, but with stocks running low and inventory replenishment on the horizon, we expect to see more tariff impact on air cargo volumes next year,” he said. Despite strong growth in October, e-commerce volumes into Europe could also be impacted by increasing regulation, with the EU set to introduce its own accelerated de-minimis reform in 2026 to close loopholes exploited by low-value shipments. With uncertainty over demand, capacity and regulatory changes, the global air cargo industry will head into 2026 with expectations of only modest, low single-digit growth for the year ahead, Van de Wouw said. “We expect supply to grow more than demand in 2026, and that will have an impact on rates,” he said. “Right now, the consensus is the market will do well to achieve demand growth of 2%-3% in 2026.” Contact Greg Knowler at greg.knowler@spglobal.com .

Diverging demand for e-commerce drives muted start to air cargo peak season

<div class="phx-topic abstract-wrapper">A former DOT deputy assistant secretary in the Biden administration says tradable, guaranteed slot reservations would create a scenario enabling greater efficiencies for both shippers and carriers.</div>

A former DOT deputy assistant secretary in the Biden administration says tradable, guaranteed slot reservations would create a scenario enabling greater efficiencies for both shippers and carriers.

<div class="phx-topic">A new venture launched by a former US Department of Transportation (DOT) official is attempting in a novel way to create an alternative for container shippers and carriers who are forced into the spot market when market conditions disincentivize shipping under signed contracts. Shippers typically get forced into the spot market in tight markets when their actual volume exceeds weekly contracted allocations (minimum quantity commitments, or MQCs), a scenario many would prefer to avoid. Carriers, meanwhile, must turn to the spot market to fill their ships when booked cargo fails to show up at the port, known as downfalls. But Andrew Petrisin, a former DOT deputy assistant secretary for multimodal freight who led the FLOW project under the Biden administration, says tradable, guaranteed slot reservations would create an alternative scenario enabling greater efficiencies for both shippers and carriers. He’s created an online platform called Laneway that attempts to achieve exactly that. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6130493_0.1.jpg"></img></div>For shippers, being able to buy or sell tradable reservations, what Petrisin calls “Allocation Equivalent Units,” would enable them to ship under their existing carrier contracts, supporting their carrier relationships without having to direct cargo through third parties in periods when their volumes exceed their weekly contracted allocation. It avoids shippers having to go to the spot market given the uncertain costs and the need to juggle various spot quotes. By using the system, shippers can acquire or dispose of weekly allocations in the frequent scenario when their weekly volume diverges from their weekly allocation due to the vagaries of manufacturing output and other factors. For carriers, the opportunity is to reduce downfalls, which can exceed 30% on certain sailings, while keeping business — and margins — that would otherwise be captured in the spot, or freight-all-kinds (FAK), market. For both shippers and carriers, these outcomes would be the result of guaranteed slot reservations sold by carriers to shippers and then traded freely thereafter, whether among shippers or between shippers and non-vessel-operating common carriers (NVOs) for use by the NVOs’ named accounts. “It’s a market that allows the reservation to be tradable,” Petrisin told the Journal of Commerce. “The carrier sets the initial price; the shipper pays at the point of sale, and then after that it trades freely.” <h3>Addressing a core issue </h3>In effect, Laneway is addressing a core issue of risk management in a chaotic container shipping environment, where shippers see their cargo shut out from capacity, jeopardizing revenues and customer relationships. Others are trying to solve the same problem in different ways, such as container freight futures. Under that scenario, the shipper signs an index-linked contract that avoids their rates becoming unappealing to the carrier, and then hedges adverse price movements using container freight futures. Laneway’s tradable reservations, whose price would fluctuate on the free market, are not derivatives like container freight futures but rather the guaranteed right to capacity under shippers’ existing contracts. “Laneway doesn’t dictate the price, but I imagine the price will fluctuate based on the week of the year, overall market conditions, and other factors,” Petrisin said. While at DOT, Petrisin led development of the Freight Logistics Optimization Works, or FLOW, a well-regarded initiative kept active by the Trump administration that enables players to monitor capacity and enable them to proactively identify and respond to delays. The Laneway idea, by being tied to contracts versus the spot market, contrasts with a number of carrier spot product offerings that offer both quotes and guaranteed space. These include Maersk Spot, Hapag-Lloyd’s Quick Quotes Spot, Evergreen’s GreenX, and ONE’s ONE Quote. Other carrier spot products allow for quotes, but without space confirmation. <h3>Could FAK market shrink? </h3>The ability to access guaranteed space in the contract domain has been lacking, Petrisin said. “While some contract products now offer guaranteed space, you can’t flexibly manage that guaranteed space as your volume changes,” he said. According to Petrisin, creating fungible contract allocations through tradable slot capacity, if the concept takes off, could shrink the FAK market. However, as he sees it, this wouldn’t eliminate or threaten the forwarder; while their traditional NVOCC business may decrease, forwarders can facilitate capacity trades for their shippers in their role as order managers and receive a cut of the market commission. Petrisin is building a pipeline of carriers, forwarders and shippers to begin listing and trading reservations, including having shippers reach out to the carriers to indicate their interest in buying this new product. “This is all about aligning incentives between parties for a positive sum outcome, which is a core lesson I took away from FLOW,” he said. Petrisin said a system of tradable reservations would help reduce no-show rates that can exceed 30% for specific sailings, which force carriers onto the spot market to fill ships at the last minute, or sail underutilized. “Much of the current spot market is ‘spillover’ from the contract market,” he said. “There will always be a true spot market for shippers who need one-off bookings on a given lane, but by eliminating the ‘spillover’ market we will cut costs for shippers, increase profits for carriers, and provide forwarders more reliable revenue. “Carriers care about rate then service, and shippers care about service then rate,” he added. “A tradable reservation enables both parties to hedge what they care about most.” Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>.</div>

A new venture launched by a former US Department of Transportation (DOT) official is attempting in a novel way to create an alternative for container shippers and carriers who are forced into the spot market when market conditions disincentivize shipping under signed contracts. Shippers typically get forced into the spot market in tight markets when their actual volume exceeds weekly contracted allocations (minimum quantity commitments, or MQCs), a scenario many would prefer to avoid. Carriers, meanwhile, must turn to the spot market to fill their ships when booked cargo fails to show up at the port, known as downfalls. But Andrew Petrisin, a former DOT deputy assistant secretary for multimodal freight who led the FLOW project under the Biden administration, says tradable, guaranteed slot reservations would create an alternative scenario enabling greater efficiencies for both shippers and carriers. He’s created an online platform called Laneway that attempts to achieve exactly that. For shippers, being able to buy or sell tradable reservations, what Petrisin calls “Allocation Equivalent Units,” would enable them to ship under their existing carrier contracts, supporting their carrier relationships without having to direct cargo through third parties in periods when their volumes exceed their weekly contracted allocation. It avoids shippers having to go to the spot market given the uncertain costs and the need to juggle various spot quotes. By using the system, shippers can acquire or dispose of weekly allocations in the frequent scenario when their weekly volume diverges from their weekly allocation due to the vagaries of manufacturing output and other factors. For carriers, the opportunity is to reduce downfalls, which can exceed 30% on certain sailings, while keeping business — and margins — that would otherwise be captured in the spot, or freight-all-kinds (FAK), market. For both shippers and carriers, these outcomes would be the result of guaranteed slot reservations sold by carriers to shippers and then traded freely thereafter, whether among shippers or between shippers and non-vessel-operating common carriers (NVOs) for use by the NVOs’ named accounts. “It’s a market that allows the reservation to be tradable,” Petrisin told the Journal of Commerce. “The carrier sets the initial price; the shipper pays at the point of sale, and then after that it trades freely.” Addressing a core issue In effect, Laneway is addressing a core issue of risk management in a chaotic container shipping environment, where shippers see their cargo shut out from capacity, jeopardizing revenues and customer relationships. Others are trying to solve the same problem in different ways, such as container freight futures. Under that scenario, the shipper signs an index-linked contract that avoids their rates becoming unappealing to the carrier, and then hedges adverse price movements using container freight futures. Laneway’s tradable reservations, whose price would fluctuate on the free market, are not derivatives like container freight futures but rather the guaranteed right to capacity under shippers’ existing contracts. “Laneway doesn’t dictate the price, but I imagine the price will fluctuate based on the week of the year, overall market conditions, and other factors,” Petrisin said. While at DOT, Petrisin led development of the Freight Logistics Optimization Works, or FLOW, a well-regarded initiative kept active by the Trump administration that enables players to monitor capacity and enable them to proactively identify and respond to delays. The Laneway idea, by being tied to contracts versus the spot market, contrasts with a number of carrier spot product offerings that offer both quotes and guaranteed space. These include Maersk Spot, Hapag-Lloyd’s Quick Quotes Spot, Evergreen’s GreenX, and ONE’s ONE Quote. Other carrier spot products allow for quotes, but without space confirmation. Could FAK market shrink? The ability to access guaranteed space in the contract domain has been lacking, Petrisin said. “While some contract products now offer guaranteed space, you can’t flexibly manage that guaranteed space as your volume changes,” he said. According to Petrisin, creating fungible contract allocations through tradable slot capacity, if the concept takes off, could shrink the FAK market. However, as he sees it, this wouldn’t eliminate or threaten the forwarder; while their traditional NVOCC business may decrease, forwarders can facilitate capacity trades for their shippers in their role as order managers and receive a cut of the market commission. Petrisin is building a pipeline of carriers, forwarders and shippers to begin listing and trading reservations, including having shippers reach out to the carriers to indicate their interest in buying this new product. “This is all about aligning incentives between parties for a positive sum outcome, which is a core lesson I took away from FLOW,” he said. Petrisin said a system of tradable reservations would help reduce no-show rates that can exceed 30% for specific sailings, which force carriers onto the spot market to fill ships at the last minute, or sail underutilized. “Much of the current spot market is ‘spillover’ from the contract market,” he said. “There will always be a true spot market for shippers who need one-off bookings on a given lane, but by eliminating the ‘spillover’ market we will cut costs for shippers, increase profits for carriers, and provide forwarders more reliable revenue. “Carriers care about rate then service, and shippers care about service then rate,” he added. “A tradable reservation enables both parties to hedge what they care about most.” Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

Container lines

Forwarding

New product allows shippers to flex MQC volumes on a weekly basis

<div class="phx-topic abstract-wrapper">The Vancouver-Fraser Port Authority’s scheduling system is aimed at helping marine terminals better prepare labor and equipment planning to mitigate import surges. </div>

The Vancouver-Fraser Port Authority’s scheduling system is aimed at helping marine terminals better prepare labor and equipment planning to mitigate import surges.

<div class="phx-topic">The completion of a centralized scheduling system at the Port of Vancouver will provide marine terminals with at least four days of advance notice of container ship arrivals, allowing for better labor and equipment planning to mitigate import surges. The system, launched two years ago by the Vancouver Fraser Port Authority, helps coordinate the five different types of vessels, ranging from bulk to cruise ships, that call on some 29 marine terminals in three different districts. The port also presents unique navigational challenges, from confined waters to changing river flow conditions, said Capt. Gord Cooper, chair of the Fraser River Pilots Committee. Through the centralized scheduling system, the nearly 450 port stakeholders now have a “port-wide view” of vessel arrivals, said Sean Baxter, the port’s harbor master and director of marine operations. Similar to other North American West Coast ports, Vancouver experiences seasonal container cargo surges tied to the pre-Lunar New Year and holiday shipping seasons. Baxter said the centralized scheduling system will allow vessel operators to optimize vessel speeds when moving to berth or anchorage, terminal operators will have greater visibility to vessel arrivals and Canadian National Railway (CN) will be better able to handle CN trains run over the Second Narrows Rail Bridge, which must be raised regularly to allow vessels to pass underneath. “This helps us to meet the moment,” he said. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>. </div>

The completion of a centralized scheduling system at the Port of Vancouver will provide marine terminals with at least four days of advance notice of container ship arrivals, allowing for better labor and equipment planning to mitigate import surges. The system, launched two years ago by the Vancouver Fraser Port Authority, helps coordinate the five different types of vessels, ranging from bulk to cruise ships, that call on some 29 marine terminals in three different districts. The port also presents unique navigational challenges, from confined waters to changing river flow conditions, said Capt. Gord Cooper, chair of the Fraser River Pilots Committee. Through the centralized scheduling system, the nearly 450 port stakeholders now have a “port-wide view” of vessel arrivals, said Sean Baxter, the port’s harbor master and director of marine operations. Similar to other North American West Coast ports, Vancouver experiences seasonal container cargo surges tied to the pre-Lunar New Year and holiday shipping seasons. Baxter said the centralized scheduling system will allow vessel operators to optimize vessel speeds when moving to berth or anchorage, terminal operators will have greater visibility to vessel arrivals and Canadian National Railway (CN) will be better able to handle CN trains run over the Second Narrows Rail Bridge, which must be raised regularly to allow vessels to pass underneath. “This helps us to meet the moment,” he said. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .

Logistics Technology News

Trans-Pacific

Vancouver’s new scheduling system gives 96-hour advance notice of vessel arrivals

<div class="phx-topic abstract-wrapper">The import gateways have faced ongoing congestion this year amid strong demand on the Asia-Europe trade and limited buffer capacity at ports will be quickly overwhelmed. </div>

The import gateways have faced ongoing congestion this year amid strong demand on the Asia-Europe trade and limited buffer capacity at ports will be quickly overwhelmed.

<div class="phx-topic">The wave of inbound volume driven by a potential return of container shipping to Red Sea transits in 2026 would hit a European port network already struggling with maxed out capacity following a year of solid volume growth. It’s a hypothetical scenario forwarders say is increasingly possible, pointing to how the bottlenecks will take months to unravel and trigger equipment shortages in Asia while inbound volume from ships sailing around Africa and others cutting through Suez will fill yards and warehousing space. Although container lines have been reluctant to lay out a timeline for their return, industry optimism for a significant rerouting of major carriers to the waterway next year has grown since the fragile Gaza ceasefire was reached in October. Nearly two years ago when diversions away from the Red Sea began due to Houthi rebel attacks, import volumes from Asia to Europe were modest and the likes of Rotterdam, Antwerp and Hamburg were able to avoid severe vessel bunching. Things are different now. “Demand growth in Asia-Europe this year is up between 10% and 14%, depending on the market,” said Michael Aldwell, executive vice president of sea logistics at Kuehne + Nagel. “We haven't seen growth like that on the Far East westbound trade since before the global financial crisis.” <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="0460c499-cb7d-49c5-a239-5ff3853ede32"></dynamic-object></div>There is <a href="https://www.joc.com/article/europe-ports-lack-buffer-space-to-handle-demand-surges-6121393">limited buffer capacity in Europe’s terminals</a> to handle existing demand and a sudden surge in import containers will quickly lead to cargo backing up. “There is not a lot of idle capacity in facilities, and you better be ready for that,” Aldwell told the Journal of Commerce. “If everything’s full, when [Red Sea transits return] you will have a problem.” Some carriers have been testing the Red Sea waters recently by sending ships on their eastbound backhaul legs to India, the Middle East and Asia through the Suez Canal. Although a large scale return to the Red Sea is not imminent, “at some point, this is going to end,” Evangelos Chatzis, CFO at Danaos Corporation, told a Capital Link webcast Tuesday. “By ‘at some point,’ I’m not referring to the distant future. I believe that in 2026, the Suez will normalize,” Chatzis added. <h3>Safety of crew, ships paramount </h3>That point might be a little closer with news this week that CMA CGM’s Indamex service will transit the Suez on both front- and backhaul voyages between India/Pakistan and the US East Coast. “Until now, these transits via Suez Canal have been on a case-by-case basis, diverting voyages originally scheduled to sail around Cape of Good Hope,” Peter Sand, chief analyst at rate benchmarking platform Xeneta, noted in a market update Friday. “CMA CGM’s announcement this week is important because it is a structural change with a service proforma to transit Suez Canal on every sailing,” he said. Despite the positive signs, there remains no clarity on when the mainline Asia-Europe services will resume voyages through the Suez. Carriers are assessing the risk profile of returning to the Red Sea, which revolves around the safety of the crew, ship and cargo, Aldwell noted. “There are clear statements from the industry that this is about safe passage and not about passage no matter what,” he said, pointing to a Maersk missive issued in November that swiftly corrected an announcement by the Suez Canal Authority that the carrier was returning to the route this month. Maersk said transits through the Red Sea would only normalize "as soon as conditions allow, with safety of our crew as the top priority.” Aldwell said once safe passage was assured, and once multiple carriers transited the route with larger capacity, “that will quickly give way to the majority of services running back through Suez, and that is going to have an impact.” Andy Gillespie, senior logistics advisor at supply chain managers WOWL, said the real story was not the shorter transit times that will result from a return to the Red Sea, but the chaos that will accompany the switchover. “For a few months we’ll have Suez and Cape routes running side by side, ships suddenly gaining back 12-18 days and waves of vessels hitting Europe, the Mediterranean, North Africa and parts of the US East Coast in the same arrival windows,” he noted <a href="https://www.linkedin.com/feed/update/7401449611854323712">in a LinkedIn post</a> this week. <h3>Potential equipment shortages </h3>Aldwell said the delays at terminals in Europe will impact carrier schedules and take time to normalize, which could spell trouble for capacity and equipment availability in Asia. “There will be a metering out of capacity that has to go back to Asia, which means for a time there will likely be a shortage of equipment and a shortage of capacity in Asia until the shipping system gets back into a normal rotation,” he said. While North Europe ports will battle to handle the additional volume on top of ongoing congestion challenges, Helge Neuman-Lezius, global head of full container loads (FCL) at Hellmann Worldwide Logistics, said a mass move back to Suez will have significant implications for Mediterranean trade flows, particularly at ports handling transshipment cargo. “From a congestion perspective, you are a bit better off in the Mediterranean because there are so many small ports compared to the large ones in the north, but when it comes to transshipment ports, that is different,” he told the Journal of Commerce. When the Houthi attacks forced ships to divert around Africa two years ago, carriers moved their Asia–Mediterranean transshipment calls away from the eastern Mediterranean hubs of Port Said in Egypt, Piraeus in Greece and Ambarli in Turkey to ports in the west, such as Morocco’s Tanger Med and Algeciras in Spain. “Egyptian transshipment is nearly gone with no one transshipping in Egypt and Piraeus has lost a lot of transsshipment in cargo,” Neuman-Lezius told the Journal of Commerce. “But when the Red Sea route returns, carriers will move transshipment port calls from the west to the east, basically reverting to where we were two years ago. “When that shift happens there will be a lot of disruption, because it is not just one or two carriers that will be moving; it is all carriers and all alliances and the entire service offering that has been bypassing the Red Sea,” he noted. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

The wave of inbound volume driven by a potential return of container shipping to Red Sea transits in 2026 would hit a European port network already struggling with maxed out capacity following a year of solid volume growth. It’s a hypothetical scenario forwarders say is increasingly possible, pointing to how the bottlenecks will take months to unravel and trigger equipment shortages in Asia while inbound volume from ships sailing around Africa and others cutting through Suez will fill yards and warehousing space. Although container lines have been reluctant to lay out a timeline for their return, industry optimism for a significant rerouting of major carriers to the waterway next year has grown since the fragile Gaza ceasefire was reached in October. Nearly two years ago when diversions away from the Red Sea began due to Houthi rebel attacks, import volumes from Asia to Europe were modest and the likes of Rotterdam, Antwerp and Hamburg were able to avoid severe vessel bunching. Things are different now. “Demand growth in Asia-Europe this year is up between 10% and 14%, depending on the market,” said Michael Aldwell, executive vice president of sea logistics at Kuehne + Nagel. “We haven't seen growth like that on the Far East westbound trade since before the global financial crisis.” There is limited buffer capacity in Europe’s terminals to handle existing demand and a sudden surge in import containers will quickly lead to cargo backing up. “There is not a lot of idle capacity in facilities, and you better be ready for that,” Aldwell told the Journal of Commerce. “If everything’s full, when [Red Sea transits return] you will have a problem.” Some carriers have been testing the Red Sea waters recently by sending ships on their eastbound backhaul legs to India, the Middle East and Asia through the Suez Canal. Although a large scale return to the Red Sea is not imminent, “at some point, this is going to end,” Evangelos Chatzis, CFO at Danaos Corporation, told a Capital Link webcast Tuesday. “By ‘at some point,’ I’m not referring to the distant future. I believe that in 2026, the Suez will normalize,” Chatzis added. Safety of crew, ships paramount That point might be a little closer with news this week that CMA CGM’s Indamex service will transit the Suez on both front- and backhaul voyages between India/Pakistan and the US East Coast. “Until now, these transits via Suez Canal have been on a case-by-case basis, diverting voyages originally scheduled to sail around Cape of Good Hope,” Peter Sand, chief analyst at rate benchmarking platform Xeneta, noted in a market update Friday. “CMA CGM’s announcement this week is important because it is a structural change with a service proforma to transit Suez Canal on every sailing,” he said. Despite the positive signs, there remains no clarity on when the mainline Asia-Europe services will resume voyages through the Suez. Carriers are assessing the risk profile of returning to the Red Sea, which revolves around the safety of the crew, ship and cargo, Aldwell noted. “There are clear statements from the industry that this is about safe passage and not about passage no matter what,” he said, pointing to a Maersk missive issued in November that swiftly corrected an announcement by the Suez Canal Authority that the carrier was returning to the route this month. Maersk said transits through the Red Sea would only normalize "as soon as conditions allow, with safety of our crew as the top priority.” Aldwell said once safe passage was assured, and once multiple carriers transited the route with larger capacity, “that will quickly give way to the majority of services running back through Suez, and that is going to have an impact.” Andy Gillespie, senior logistics advisor at supply chain managers WOWL, said the real story was not the shorter transit times that will result from a return to the Red Sea, but the chaos that will accompany the switchover. “For a few months we’ll have Suez and Cape routes running side by side, ships suddenly gaining back 12-18 days and waves of vessels hitting Europe, the Mediterranean, North Africa and parts of the US East Coast in the same arrival windows,” he noted in a LinkedIn post this week. Potential equipment shortages Aldwell said the delays at terminals in Europe will impact carrier schedules and take time to normalize, which could spell trouble for capacity and equipment availability in Asia. “There will be a metering out of capacity that has to go back to Asia, which means for a time there will likely be a shortage of equipment and a shortage of capacity in Asia until the shipping system gets back into a normal rotation,” he said. While North Europe ports will battle to handle the additional volume on top of ongoing congestion challenges, Helge Neuman-Lezius, global head of full container loads (FCL) at Hellmann Worldwide Logistics, said a mass move back to Suez will have significant implications for Mediterranean trade flows, particularly at ports handling transshipment cargo. “From a congestion perspective, you are a bit better off in the Mediterranean because there are so many small ports compared to the large ones in the north, but when it comes to transshipment ports, that is different,” he told the Journal of Commerce. When the Houthi attacks forced ships to divert around Africa two years ago, carriers moved their Asia–Mediterranean transshipment calls away from the eastern Mediterranean hubs of Port Said in Egypt, Piraeus in Greece and Ambarli in Turkey to ports in the west, such as Morocco’s Tanger Med and Algeciras in Spain. “Egyptian transshipment is nearly gone with no one transshipping in Egypt and Piraeus has lost a lot of transsshipment in cargo,” Neuman-Lezius told the Journal of Commerce. “But when the Red Sea route returns, carriers will move transshipment port calls from the west to the east, basically reverting to where we were two years ago. “When that shift happens there will be a lot of disruption, because it is not just one or two carriers that will be moving; it is all carriers and all alliances and the entire service offering that has been bypassing the Red Sea,” he noted. Contact Greg Knowler at greg.knowler@spglobal.com .

Asia-Europe

International ports

Stretched logistics capacity in Europe threatened by Red Sea return

<div class="phx-topic abstract-wrapper">High-value megaproject activity in the US is propping up heavy-lift cargo volumes, while also generating breakbulk shipments.</div>

High-value megaproject activity in the US is propping up heavy-lift cargo volumes, while also generating breakbulk shipments.

<div class="phx-topic">Data center megaprojects are driving a surge of non-residential and industrial construction in the US, mounting a wave of breakbulk and project cargo activity to come as those projects advance. Total construction starts in the US rose by 21.1% in October to $1.53 trillion over the previous month, according to Dodge Construction Network (DCN), an industry data provider. Non-residential construction, which includes offices and data centers, rose by 17.9%, while non-building construction — defined as projects that are not buildings, such as infrastructure and utility projects — expanded 59.4% in that period. For the 12 months ending October 2025, total construction starts were up 8.1% from the previous year, while non-building construction grew 22.9% and non-residential projects starts increased 7.5% over the same period, according to DCN. Construction growth has been propped up by “high-value megaproject activity,” said Sarah Martin, associate director of forecasting at Dodge Construction Network. “Specifically, 10 projects valued at $1 billion and over broke ground, largely within data center, manufacturing and LNG construction,” Martin said of October construction activity in a Nov. 21 report. The largest non-building projects to break ground in October included the $15.1 billion first phase of Venture Global’s Calcasieu Pass 2 (CP2) liquefied natural gas (LNG) export terminal and pipeline in southwest Louisiana and the $9 billion second phase of the Rio Grande LNG facility in Brownsville, Texas. Meanwhile, one of the largest non-residential building projects to break ground in October was a $7.5 billion segment of the Meta Hyperion Data Center in northeast Louisiana. <a href="https://www.joc.com/article/increased-capital-investment-to-accelerate-project-cargo-demand-6111274">The development of LNG facilities</a> has emerged as a potential opportunity to provide natural gas to fuel power-hungry data centers amid the rapid expansion of artificial intelligence (AI). North America continues to progress with a multibillion-dollar round of LNG terminal construction, including the Calcasieu Pass project. Janine Mansour, director of trade development for the Port of New Orleans, told the Journal of Commerce that the CP2 LNG terminal, projected to cost $28 billion overall, is the single-largest project bringing heavy-lift cargo to the port, while also generating breakbulk shipments such as bagged cement. “Venture Global dominates the conversation in terms of LNG and driving cargo opportunities,” she said. The port has also been moving significant amounts of cargo for the $27 billion, 4 million-square-foot Meta campus project, set to become the largest data center in the Western Hemisphere upon its targeted completion in 2030. Mansour said the port has been moving more project cargo related to power generation, as well as working with companies that are exploring ways to provide resources for these facilities. “Projects like the data center create opportunities for the creation of new inland yards or infrastructure near the project,” she said. <h3>Data centers trigger plant projects </h3>Key project cargo shippers have been taking steps to support data center development while also reaping bottom-line benefits from the boom. For the first nine months of 2025, data center revenues shot up 140% to $331 million for oilfield services major SLB, formerly Schlumberger Ltd., compared with the same period a year earlier, according to the company’s Oct. 17 earnings results. Construction and mining equipment maker Caterpillar, considered a bellwether global manufacturer of high-and-heavy cargo, is planning a $725 million expansion of its large-engine facility in Lafayette, Indiana, to increase production of power generators for data centers. And Air Liquide, one of the world’s largest industrial gas suppliers, is investing over $50 million in the US semiconductor industry by building an ultra-pure gas production plant in the southeastern US on the site of the world’s largest manufacturer for advanced chip design. With data centers requiring tremendous amounts of energy, water and resources such as semiconductor chips, the rapid development of these facilities will rely on the extensive buildout of infrastructure such as utility plants and manufacturing facilities. On Dec. 1, Louisiana utility Entergy broke ground on a pair of gas-fired power plants to power the Meta Hyperion data center. Global investments in data center infrastructure are on pace to reach over $1.5 trillion by 2030, according to projections by consultant McKinsey. “Semiconductor chip facilities clearly classify as mega projects,” said Kristin Homsi, Bechtel Manufacturing &amp; Technology’s supply chain manager. “Think the world’s largest airports, a new generation of small modular nuclear reactors, and landmarks like the Hoover Dam or the Channel Tunnel” linking Great Britain and mainland Europe. “Semiconductor projects have recently grown in scale to the level of signature projects” Bechtel has historically taken on, she said. John Lu, global sector head of semiconductor fabrications for the industrial projects unit of DHL Global Forwarding, told the Journal of Commerce that buildouts of chip fabrication facilities, or fabs, will require more end-to-end support from specialized service providers such as logistics companies. “That means every part of this value chain that it takes to construct a fab or data center — moving equipment, warehousing, consulting, customs clearance, anything. It’s going to put a lot more stress on us to perform for our customers, but I think we’re well positioned to do that,” he said. Contact Autumn Cafiero Giusti at <a href="mailto:autumn@autumngiusti.com">autumn@autumngiusti.com</a>. </div>

Data center megaprojects are driving a surge of non-residential and industrial construction in the US, mounting a wave of breakbulk and project cargo activity to come as those projects advance. Total construction starts in the US rose by 21.1% in October to $1.53 trillion over the previous month, according to Dodge Construction Network (DCN), an industry data provider. Non-residential construction, which includes offices and data centers, rose by 17.9%, while non-building construction — defined as projects that are not buildings, such as infrastructure and utility projects — expanded 59.4% in that period. For the 12 months ending October 2025, total construction starts were up 8.1% from the previous year, while non-building construction grew 22.9% and non-residential projects starts increased 7.5% over the same period, according to DCN. Construction growth has been propped up by “high-value megaproject activity,” said Sarah Martin, associate director of forecasting at Dodge Construction Network. “Specifically, 10 projects valued at $1 billion and over broke ground, largely within data center, manufacturing and LNG construction,” Martin said of October construction activity in a Nov. 21 report. The largest non-building projects to break ground in October included the $15.1 billion first phase of Venture Global’s Calcasieu Pass 2 (CP2) liquefied natural gas (LNG) export terminal and pipeline in southwest Louisiana and the $9 billion second phase of the Rio Grande LNG facility in Brownsville, Texas. Meanwhile, one of the largest non-residential building projects to break ground in October was a $7.5 billion segment of the Meta Hyperion Data Center in northeast Louisiana. The development of LNG facilities has emerged as a potential opportunity to provide natural gas to fuel power-hungry data centers amid the rapid expansion of artificial intelligence (AI). North America continues to progress with a multibillion-dollar round of LNG terminal construction, including the Calcasieu Pass project. Janine Mansour, director of trade development for the Port of New Orleans, told the Journal of Commerce that the CP2 LNG terminal, projected to cost $28 billion overall, is the single-largest project bringing heavy-lift cargo to the port, while also generating breakbulk shipments such as bagged cement. “Venture Global dominates the conversation in terms of LNG and driving cargo opportunities,” she said. The port has also been moving significant amounts of cargo for the $27 billion, 4 million-square-foot Meta campus project, set to become the largest data center in the Western Hemisphere upon its targeted completion in 2030. Mansour said the port has been moving more project cargo related to power generation, as well as working with companies that are exploring ways to provide resources for these facilities. “Projects like the data center create opportunities for the creation of new inland yards or infrastructure near the project,” she said. Data centers trigger plant projects Key project cargo shippers have been taking steps to support data center development while also reaping bottom-line benefits from the boom. For the first nine months of 2025, data center revenues shot up 140% to $331 million for oilfield services major SLB, formerly Schlumberger Ltd., compared with the same period a year earlier, according to the company’s Oct. 17 earnings results. Construction and mining equipment maker Caterpillar, considered a bellwether global manufacturer of high-and-heavy cargo, is planning a $725 million expansion of its large-engine facility in Lafayette, Indiana, to increase production of power generators for data centers. And Air Liquide, one of the world’s largest industrial gas suppliers, is investing over $50 million in the US semiconductor industry by building an ultra-pure gas production plant in the southeastern US on the site of the world’s largest manufacturer for advanced chip design. With data centers requiring tremendous amounts of energy, water and resources such as semiconductor chips, the rapid development of these facilities will rely on the extensive buildout of infrastructure such as utility plants and manufacturing facilities. On Dec. 1, Louisiana utility Entergy broke ground on a pair of gas-fired power plants to power the Meta Hyperion data center. Global investments in data center infrastructure are on pace to reach over $1.5 trillion by 2030, according to projections by consultant McKinsey. “Semiconductor chip facilities clearly classify as mega projects,” said Kristin Homsi, Bechtel Manufacturing & Technology’s supply chain manager. “Think the world’s largest airports, a new generation of small modular nuclear reactors, and landmarks like the Hoover Dam or the Channel Tunnel” linking Great Britain and mainland Europe. “Semiconductor projects have recently grown in scale to the level of signature projects” Bechtel has historically taken on, she said. John Lu, global sector head of semiconductor fabrications for the industrial projects unit of DHL Global Forwarding, told the Journal of Commerce that buildouts of chip fabrication facilities, or fabs, will require more end-to-end support from specialized service providers such as logistics companies. “That means every part of this value chain that it takes to construct a fab or data center — moving equipment, warehousing, consulting, customs clearance, anything. It’s going to put a lot more stress on us to perform for our customers, but I think we’re well positioned to do that,” he said. Contact Autumn Cafiero Giusti at autumn@autumngiusti.com .

Energy projects

Project cargo

Breakbulk News

Data center buildout fuels construction boom, project cargo windfall

<div class="phx-topic abstract-wrapper">Until the whole container shipping industry improves its reliability, the scope for any form of premium/bonus for above-target performance is low, writes John McCauley. </div>

Until the whole container shipping industry improves its reliability, the scope for any form of premium/bonus for above-target performance is low, writes John McCauley.

<div class="phx-topic">We are a strange bunch, we logisticians. One of our self-designed millstones is our key definition of success, and it is always unattainable either at an individual or aggregate level. For container shipping, I refer to on-time arrival (OTA), although for other modes this is usually on-time delivery. We measure on-time arrival as a percentage, with the only feasible outcome to fail; the only question is by how much. Those odds aren’t acceptable outside of shipping. The analogy frequently used is patient operation success in a hospital. If a patient operation is successful 999 times out of 1,000, do we want to be the one that didn’t make it? But seriously, as pertains to container shipping, there are factors beyond the control of the carrier, including severe weather at ports and on the water and strikes and other labor disruptions. That means a 100% on-time arrival within 24 hours of schedule is unachievable on a volume and consistent basis. However, levels of 60% to 65% at the industry level, with no historical precedent for greater achievement nor likelihood of ever getting there, mean we are in a doom loop of trying, other than hoping, to make it better. This is despite <a href="https://www.joc.com/article/value-unlocked-by-gemini-will-clear-path-for-premium-charge-maersk-ceo-6111339">the admirable efforts of the Gemini Cooperation alliance</a> of Maersk and Hapag-Lloyd to achieve superior reliability. Which leads to my observations about the suggestions of a premium for higher reliability levels, and particularly that carriers would want to claw back some of the benefits of lower inventory costs for beneficial cargo owners (BCOs). <h3>A few obstacles </h3>Firstly, all BCOs will keep a mix of carriers (dual or multi-sourcing) for multiple reasons, including schedule, risk of losing space, price, etc., which means that while one carrier may achieve above-market reliability, their benefit to BCOs will be dragged down by the performance of their other choices in the industry. As an example, Carrier A achieves 90% reliability, Carrier B 60%. You have to program your planning systems for one, not multiple, delivery durations. Which do you choose? None are ideal, too long and you unnecessarily extend inventory carry, but if those same shipments arrive early, you need warehousing. Secondly, what about all the other problems caused by poor reliability? Stock-outs, air freight, extra staffing, warehousing and more. Focusing on inventory highlights a cash flow problem; many of the others are either opportunity costs (stock-outs, lost sales) or real costs (additional warehousing, staffing, sales contract non-compliance). I am not at all saying that container shipping is responsible for all of this, but it is an important contributor to the problem. Thirdly, any premium/bonus for above-target performance must surely have an offset for under-performance. And by this I don’t mean adjusted performance taking account of externalities. The non-performance must be explanation/excuse agnostic, meaning if the one-time arrival is not met, then this is a fail. In other modes of transport, this is the norm and why targets are never set at 100% even for best-in-class. Finally, I am all for improved reliability; most actors in container shipping share that view. How to get there is tricky and requires strategic intent. Many carriers will see it as unachievable and not worth the effort given the likelihood of high uncertainty of any reward other than some degree of customer stickiness. Until the whole industry improves its reliability, the scope for any form of premium/bonus for above-target performance is low. The only way I can see it working is to have a premium attached to index-linked contracts, and even then, that must be linked to performance against an agreed target level with penalties. Given the favorable buy-side economics in current contracting, this may be one for carriers to put on the backburner. John McCauley, formerly a vice president of transportation and logistics at Cargill, now consults for shippers. Contact him at <a href="mailto:john-mccauley1@outlook.com">john-mccauley1@outlook.com</a>. </div>

We are a strange bunch, we logisticians. One of our self-designed millstones is our key definition of success, and it is always unattainable either at an individual or aggregate level. For container shipping, I refer to on-time arrival (OTA), although for other modes this is usually on-time delivery. We measure on-time arrival as a percentage, with the only feasible outcome to fail; the only question is by how much. Those odds aren’t acceptable outside of shipping. The analogy frequently used is patient operation success in a hospital. If a patient operation is successful 999 times out of 1,000, do we want to be the one that didn’t make it? But seriously, as pertains to container shipping, there are factors beyond the control of the carrier, including severe weather at ports and on the water and strikes and other labor disruptions. That means a 100% on-time arrival within 24 hours of schedule is unachievable on a volume and consistent basis. However, levels of 60% to 65% at the industry level, with no historical precedent for greater achievement nor likelihood of ever getting there, mean we are in a doom loop of trying, other than hoping, to make it better. This is despite the admirable efforts of the Gemini Cooperation alliance of Maersk and Hapag-Lloyd to achieve superior reliability. Which leads to my observations about the suggestions of a premium for higher reliability levels, and particularly that carriers would want to claw back some of the benefits of lower inventory costs for beneficial cargo owners (BCOs). A few obstacles Firstly, all BCOs will keep a mix of carriers (dual or multi-sourcing) for multiple reasons, including schedule, risk of losing space, price, etc., which means that while one carrier may achieve above-market reliability, their benefit to BCOs will be dragged down by the performance of their other choices in the industry. As an example, Carrier A achieves 90% reliability, Carrier B 60%. You have to program your planning systems for one, not multiple, delivery durations. Which do you choose? None are ideal, too long and you unnecessarily extend inventory carry, but if those same shipments arrive early, you need warehousing. Secondly, what about all the other problems caused by poor reliability? Stock-outs, air freight, extra staffing, warehousing and more. Focusing on inventory highlights a cash flow problem; many of the others are either opportunity costs (stock-outs, lost sales) or real costs (additional warehousing, staffing, sales contract non-compliance). I am not at all saying that container shipping is responsible for all of this, but it is an important contributor to the problem. Thirdly, any premium/bonus for above-target performance must surely have an offset for under-performance. And by this I don’t mean adjusted performance taking account of externalities. The non-performance must be explanation/excuse agnostic, meaning if the one-time arrival is not met, then this is a fail. In other modes of transport, this is the norm and why targets are never set at 100% even for best-in-class. Finally, I am all for improved reliability; most actors in container shipping share that view. How to get there is tricky and requires strategic intent. Many carriers will see it as unachievable and not worth the effort given the likelihood of high uncertainty of any reward other than some degree of customer stickiness. Until the whole industry improves its reliability, the scope for any form of premium/bonus for above-target performance is low. The only way I can see it working is to have a premium attached to index-linked contracts, and even then, that must be linked to performance against an agreed target level with penalties. Given the favorable buy-side economics in current contracting, this may be one for carriers to put on the backburner. John McCauley, formerly a vice president of transportation and logistics at Cargill, now consults for shippers. Contact him at john-mccauley1@outlook.com .

Premium pricing linked to vessel schedule reliability faces rough waters

<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 .

North-American rail

Surface

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

 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 .

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 .

Intermodal providers

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 .

Rail News

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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Quarterly Intelligence

<div class="phx-topic abstract-wrapper">A group of Zim employees is said to object to a deal with Hapag-Lloyd due to the significant ownership stakes that the sovereign wealth funds of Saudi Arabia and Qatar have in the Hamburg-based carrier.</div>

A group of Zim employees is said to object to a deal with Hapag-Lloyd due to the significant ownership stakes that the sovereign wealth funds of Saudi Arabia and Qatar have in the Hamburg-based carrier.

<div class="phx-topic">Zim Integrated Shipping Services is reportedly fielding offers from other ocean carriers for a buyout, but the Israeli government’s stake in Zim and the partial Arabic state ownership of one potential suitor are complicating a possible deal. Israeli business newspaper Globes <a href="https://en.globes.co.il/en/article-hapag-lloyd-bids-for-zim-1001528325">reported Wednesday</a> that Zim received a buyout offer from Hapag-Lloyd as part of <a href="https://www.joc.com/article/zim-says-reviewing-buyout-offers-including-one-from-ceo-6123362">the strategic review its board of directors is undertaking</a>. Zim’s board is considering offers to sell the company, including one from its own Chief Executive Eli Glickman. A group of Zim employees is said to object to a deal with Hapag-Lloyd due to the significant ownership stakes that the sovereign wealth funds of Saudi Arabia and Qatar have in the Hamburg-based carrier, Globes reported. The two funds own a combined 22% of Hapag-Lloyd after its 2016 acquisition of United Arab Shipping Company. A Hapag-Lloyd spokesperson, asked to comment on the Globes report, told the Journal of Commerce, “We do not comment on market rumors.” Zim could not be reached for comment. Globes reported that Mediterranean Shipping Co. and Maersk have also expressed interest in Zim. A US-based Zim executive told the Journal of Commerce a deal with Hapag-Lloyd has about a “zero percent chance of happening” due to the Saudi and Qatari ownership stakes. “I believe with their ownership structure it makes such a relationship impossible,” said the executive, who did not want to be identified. “I don’t think anything other than Eli buying the company is likely.” Zim’s own governance structure complicates any potential deal. As part of the carrier’s privatization in 2004, Israel was granted a “special share” in the company that ensures the government can access Zim’s fleet in an emergency. The government, due to the special share, also “imposes certain limitations on our operating and managing activities,” Zim said in its last annual report. Those limitations include government approval for any merger or sale transaction, a requirement that the majority of Zim’s directors and its chief executive be Israeli citizens, and that the carrier remains incorporated in Israel. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

Zim Integrated Shipping Services is reportedly fielding offers from other ocean carriers for a buyout, but the Israeli government’s stake in Zim and the partial Arabic state ownership of one potential suitor are complicating a possible deal. Israeli business newspaper Globes reported Wednesday that Zim received a buyout offer from Hapag-Lloyd as part of the strategic review its board of directors is undertaking . Zim’s board is considering offers to sell the company, including one from its own Chief Executive Eli Glickman. A group of Zim employees is said to object to a deal with Hapag-Lloyd due to the significant ownership stakes that the sovereign wealth funds of Saudi Arabia and Qatar have in the Hamburg-based carrier, Globes reported. The two funds own a combined 22% of Hapag-Lloyd after its 2016 acquisition of United Arab Shipping Company. A Hapag-Lloyd spokesperson, asked to comment on the Globes report, told the Journal of Commerce, “We do not comment on market rumors.” Zim could not be reached for comment. Globes reported that Mediterranean Shipping Co. and Maersk have also expressed interest in Zim. A US-based Zim executive told the Journal of Commerce a deal with Hapag-Lloyd has about a “zero percent chance of happening” due to the Saudi and Qatari ownership stakes. “I believe with their ownership structure it makes such a relationship impossible,” said the executive, who did not want to be identified. “I don’t think anything other than Eli buying the company is likely.” Zim’s own governance structure complicates any potential deal. As part of the carrier’s privatization in 2004, Israel was granted a “special share” in the company that ensures the government can access Zim’s fleet in an emergency. The government, due to the special share, also “imposes certain limitations on our operating and managing activities,” Zim said in its last annual report. Those limitations include government approval for any merger or sale transaction, a requirement that the majority of Zim’s directors and its chief executive be Israeli citizens, and that the carrier remains incorporated in Israel. Contact Michael Angell at michael.angell@spglobal.com .

Hapag-Lloyd buyout offer for Zim unlikely to get far: report

<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 .

Supply chain

WiseTech pricing change tests shippers’ willingness to absorb tech costs

<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.

<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.

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