<div class="phx-topic abstract-wrapper">Huge rail bottlenecks are being reported across the busy network, with carriers, forwarders and rail freight operators battling to keep cargo flowing as demand begins to build in an early start to peak season. </div>

Huge rail bottlenecks are being reported across the busy network, with carriers, forwarders and rail freight operators battling to keep cargo flowing as demand begins to build in an early start to peak season.

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<div class="phx-topic">Rail freight operations on Germany’s inland corridors are severely disrupted with delays from ongoing construction on key routes aggravated by a fire this week that closed a main line and a derailment in the Port of Hamburg. Huge rail bottlenecks are being reported across the busy network, with carriers, forwarders and rail freight operators battling to keep cargo flowing as demand begins to build in an early start to peak season. “Trains are accumulating in all directions – from north to south and from east to west – effectively leading to a blockage of the entire network,” rail operator Metrans said in a customer advisory. “As a result of this situation, we have been forced to temporarily park some train sets,” the subsidiary of Hamburg terminal operator HHLA added. “Rail traffic is experiencing significant delays, and in some sections it has come to a complete standstill.” Hapag-Lloyd spokesperson Nils Haupt described the situation as “critical,” with rail freight impacted by construction on the main Hamburg-Berlin and Hannover-Hamburg lines. Disruptions have been exacerbated by this week’s fire in Hannover and by a train that derailed at Hamburg’s Container Terminal Altenwerder. “On the detour routes, there are increasing status issues due to the overload,” Haupt told the Journal of Commerce. “As a result, train drivers exceed their allowed driving times, and trains simply cannot continue until the personnel has been replaced. The situation is extremely tense.” The many trains that are outside their schedules must be repositioned before they can return to a normal rhythm, but Haupt said the measure created further train cancellations and capacity shortages. “At present, the full operational impact and duration of the resulting restrictions cannot yet be reliably assessed,” Hapag-Lloyd said in an advisory. “However, further delays, congestion, terminal bottlenecks and disruptions to rail operations in and around the Port of Hamburg are to be expected.” <h3>Missed vessel connections </h3>Matthias Knicky, head of sea logistics in Germany for Kuehne + Nagel, said the forwarder was doing what it could to replan shipper transport and keep cargo moving. “Severe disruptions across the German rail network are currently creating scheduling unpredictability, resulting in missed vessel connections at ports and delays for our customers,” Knicky said. A Maersk spokesperson said ongoing work to modernize Germany’s rail infrastructure was constraining the available track capacity. Decades of underinvestment and overdevelopment of rail services has left Germany’s extensive rail system overloaded and prone to breakdowns. Some key transit corridors are running at 150% of their planned capacity, and broken rails, points failures and damaged overhead line equipment frequently stall trains. When a particular line is blocked, infrastructure managers typically reroute trains to open lines, but with several key northern routes affected in this week’s disruption, that option was difficult. “The situation is being seriously complicated by restrictions on the main diversion route between Hannover and Hamburg, which is currently serving as an alternative to the Berlin–Hamburg corridor,” according to the Metrans advisory. “The infrastructure manager is rerouting trains via diversion routes across northern Germany, with nighttime transit slots primarily allocated to freight trains,” it added. “However, it is becoming evident that these measures are insufficient.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Rail freight operations on Germany’s inland corridors are severely disrupted with delays from ongoing construction on key routes aggravated by a fire this week that closed a main line and a derailment in the Port of Hamburg. Huge rail bottlenecks are being reported across the busy network, with carriers, forwarders and rail freight operators battling to keep cargo flowing as demand begins to build in an early start to peak season. “Trains are accumulating in all directions – from north to south and from east to west – effectively leading to a blockage of the entire network,” rail operator Metrans said in a customer advisory. “As a result of this situation, we have been forced to temporarily park some train sets,” the subsidiary of Hamburg terminal operator HHLA added. “Rail traffic is experiencing significant delays, and in some sections it has come to a complete standstill.” Hapag-Lloyd spokesperson Nils Haupt described the situation as “critical,” with rail freight impacted by construction on the main Hamburg-Berlin and Hannover-Hamburg lines. Disruptions have been exacerbated by this week’s fire in Hannover and by a train that derailed at Hamburg’s Container Terminal Altenwerder. “On the detour routes, there are increasing status issues due to the overload,” Haupt told the Journal of Commerce. “As a result, train drivers exceed their allowed driving times, and trains simply cannot continue until the personnel has been replaced. The situation is extremely tense.” The many trains that are outside their schedules must be repositioned before they can return to a normal rhythm, but Haupt said the measure created further train cancellations and capacity shortages. “At present, the full operational impact and duration of the resulting restrictions cannot yet be reliably assessed,” Hapag-Lloyd said in an advisory. “However, further delays, congestion, terminal bottlenecks and disruptions to rail operations in and around the Port of Hamburg are to be expected.” Missed vessel connections Matthias Knicky, head of sea logistics in Germany for Kuehne + Nagel, said the forwarder was doing what it could to replan shipper transport and keep cargo moving. “Severe disruptions across the German rail network are currently creating scheduling unpredictability, resulting in missed vessel connections at ports and delays for our customers,” Knicky said. A Maersk spokesperson said ongoing work to modernize Germany’s rail infrastructure was constraining the available track capacity. Decades of underinvestment and overdevelopment of rail services has left Germany’s extensive rail system overloaded and prone to breakdowns. Some key transit corridors are running at 150% of their planned capacity, and broken rails, points failures and damaged overhead line equipment frequently stall trains. When a particular line is blocked, infrastructure managers typically reroute trains to open lines, but with several key northern routes affected in this week’s disruption, that option was difficult. “The situation is being seriously complicated by restrictions on the main diversion route between Hannover and Hamburg, which is currently serving as an alternative to the Berlin–Hamburg corridor,” according to the Metrans advisory. “The infrastructure manager is rerouting trains via diversion routes across northern Germany, with nighttime transit slots primarily allocated to freight trains,” it added. “However, it is becoming evident that these measures are insufficient.” Contact Greg Knowler at greg.knowler@spglobal.com .

Port News

Rail News

Container lines

International ports

Intermodal providers

Surface

Disrupted operations leave Germany’s northern rail network in chaos

<div class="phx-topic abstract-wrapper">Shareholder rights law firm Hagens Berman said it is continuing an investigation into whether the intermodal provider “misled investors about having prepared its financial statements consistent with relevant accounting rules.”</div>

Shareholder rights law firm Hagens Berman said it is continuing an investigation into whether the intermodal provider “misled investors about having prepared its financial statements consistent with relevant accounting rules.”

<div class="phx-topic">The chief operating officer and chief financial officer of intermodal provider Hub Group have left the company as it continues reconciling a $77 million accounting error that has drawn scrutiny from regulators and shareholder attorneys. Hub Group’s lead director Peter McNitt and audit committee chair Gary Yablon said the board views the integrity of the company’s financial statements as critical to its future. McNitt said the company’s audit committee conducted a full review of Hub Group’s finances. “We are taking corrective actions, including enhancing our financial reporting processes and making changes to the company’s leadership team,” he said in a statement Thursday. “We will continue to prioritize finalizing our financial statements and becoming current with the filing of our periodic reports with the SEC.” The changes to Hub’s leadership team resulted in the departures of COO Brian Meents and CFO Kevin Beth, the company said. Hub first disclosed accounting irregularities in February, when Beth told investors an error had resulted in an understatement of purchased transportation expenses and accounts payable during the first nine months of 2025. But the full scope of the issue became clearer May 12, when the company filed a Form 8-K with the US Securities and Exchange Commission disclosing that prior financial statements could no longer be relied upon. In that filing, Hub Group said its 2023 and 2024 annual financial statements “should no longer be relied upon” and that it “expects to conclude it did not maintain effective disclosure controls and procedures and internal control over financial reporting” during both years. The company said Meents and Beth will remain available in consulting roles following their departures. Hub Group also announced that Todd Heeter will immediately become interim CFO and treasurer for at least six months, with the term subject to extension while the company conducts a nationwide search for a permanent CFO. The COO position is being eliminated, with those responsibilities reassigned elsewhere within the company. Heeter founded the Heeter Group, which provides corporate financial leadership services, including CFO and chief accounting officer roles for public and private companies. Hub Group noted that Heeter has previously served in interim CFO and senior financial leadership positions. <h3>Law firm investigating </h3>Despite the accounting disclosures, shareholder scrutiny and executive shakeup, Hub Group said it remains financially sound and positioned for growth. “We remain focused on executing our strategy and serving our customers,” Hub CEO Phil Yeager said in the statement. “In the second quarter of 2026 to date, we executed a successful bid season and saw balanced demand trends and stronger pricing as well as increased opportunity for over-the-road conversion.” Yeager said the company also secured significant new business in logistics, while brokerage volumes reflected efforts to improve profitability and increase revenue per load. Hub plans to file its 2025 annual report, including restated results for the affected periods, on or before Sept. 14, the deadline to regain compliance with Nasdaq filing requirements. The company also plans to file first-quarter 2026 results by that date. Hub, meanwhile, could face litigation related to its financial disclosures. Shareholder rights law firm Hagens Berman, based in San Francisco, said it is continuing an investigation into whether the company “misled investors about having prepared its financial statements consistent with relevant accounting rules.” “Now that we know that Hub Group’s admitted improper accounting goes all the way back to fiscal 2023, we’re investigating whether the company may have...understated expenses and monitoring what additional financial statement accounts may have been misstated,” said Reed Kathrein, the Hagens Berman partner leading the firm’s investigation. The law firm said Hub Group’s stock price has declined $14.71 per share, or 28%, since Feb. 5, when the company first disclosed the accounting issues, erasing roughly $890 million in market capitalization. The firm also called on potential whistleblowers with non-public information about Hub Group to come forward and consider participating in the SEC whistleblower program. Contact Dan Ronan at <a href="mailto:contactdanronan@gmail.com">contactdanronan@gmail.com</a>. </div>

The chief operating officer and chief financial officer of intermodal provider Hub Group have left the company as it continues reconciling a $77 million accounting error that has drawn scrutiny from regulators and shareholder attorneys. Hub Group’s lead director Peter McNitt and audit committee chair Gary Yablon said the board views the integrity of the company’s financial statements as critical to its future. McNitt said the company’s audit committee conducted a full review of Hub Group’s finances. “We are taking corrective actions, including enhancing our financial reporting processes and making changes to the company’s leadership team,” he said in a statement Thursday. “We will continue to prioritize finalizing our financial statements and becoming current with the filing of our periodic reports with the SEC.” The changes to Hub’s leadership team resulted in the departures of COO Brian Meents and CFO Kevin Beth, the company said. Hub first disclosed accounting irregularities in February, when Beth told investors an error had resulted in an understatement of purchased transportation expenses and accounts payable during the first nine months of 2025. But the full scope of the issue became clearer May 12, when the company filed a Form 8-K with the US Securities and Exchange Commission disclosing that prior financial statements could no longer be relied upon. In that filing, Hub Group said its 2023 and 2024 annual financial statements “should no longer be relied upon” and that it “expects to conclude it did not maintain effective disclosure controls and procedures and internal control over financial reporting” during both years. The company said Meents and Beth will remain available in consulting roles following their departures. Hub Group also announced that Todd Heeter will immediately become interim CFO and treasurer for at least six months, with the term subject to extension while the company conducts a nationwide search for a permanent CFO. The COO position is being eliminated, with those responsibilities reassigned elsewhere within the company. Heeter founded the Heeter Group, which provides corporate financial leadership services, including CFO and chief accounting officer roles for public and private companies. Hub Group noted that Heeter has previously served in interim CFO and senior financial leadership positions. Law firm investigating Despite the accounting disclosures, shareholder scrutiny and executive shakeup, Hub Group said it remains financially sound and positioned for growth. “We remain focused on executing our strategy and serving our customers,” Hub CEO Phil Yeager said in the statement. “In the second quarter of 2026 to date, we executed a successful bid season and saw balanced demand trends and stronger pricing as well as increased opportunity for over-the-road conversion.” Yeager said the company also secured significant new business in logistics, while brokerage volumes reflected efforts to improve profitability and increase revenue per load. Hub plans to file its 2025 annual report, including restated results for the affected periods, on or before Sept. 14, the deadline to regain compliance with Nasdaq filing requirements. The company also plans to file first-quarter 2026 results by that date. Hub, meanwhile, could face litigation related to its financial disclosures. Shareholder rights law firm Hagens Berman, based in San Francisco, said it is continuing an investigation into whether the company “misled investors about having prepared its financial statements consistent with relevant accounting rules.” “Now that we know that Hub Group’s admitted improper accounting goes all the way back to fiscal 2023, we’re investigating whether the company may have...understated expenses and monitoring what additional financial statement accounts may have been misstated,” said Reed Kathrein, the Hagens Berman partner leading the firm’s investigation. The law firm said Hub Group’s stock price has declined $14.71 per share, or 28%, since Feb. 5, when the company first disclosed the accounting issues, erasing roughly $890 million in market capitalization. The firm also called on potential whistleblowers with non-public information about Hub Group to come forward and consider participating in the SEC whistleblower program. Contact Dan Ronan at contactdanronan@gmail.com .

Transport, Trade and Regulation News

Hub Group COO, CFO leave company after $77 million accounting error

<div class="phx-topic abstract-wrapper">A Canadian bitcoin miner that faced customs delays bringing specialty cooling towers into the US from China alleges Zim and the Port of Houston charged unfair per-diem fees.</div>

A Canadian bitcoin miner that faced customs delays bringing specialty cooling towers into the US from China alleges Zim and the Port of Houston charged unfair per-diem fees.

<div class="phx-topic">A Canadian firm that brought containers from China specially designed to cool bitcoin mining machines is suing Zim Integrated Shipping Services and the Port of Houston for excessive per-diem charges after US Customs and Border Protection (CBP) held the containers three months past their free time. Toronto-based Sunnyside Digital and its Delaware-registered entity Down Quark Systems filed the complaint last week with the Federal Maritime Commission(FMC). The complaint alleges Zim has already charged the company $5,880 in demurrage on its containers, while the Port of Houston Authority as terminal operator charge assessed $917,458 in extended dwell fees for the containers. Along with restitution of those charges, Sunnyside Digital is asking the FMC to investigate and restrain Zim from pursuing another $7 million in demurrage it is trying to collect from Sunnyside. Zim has also filed a federal lawsuit against Sunnyside seeking another $708,153 in terminal storage charges. <h3>‘Bespoke’ containers </h3>The containers themselves were not standard dry containers, the complaint said. Rather, they were “bespoke, highly specialized/modified containers” built to serve as cooling systems for bitcoin mining machines. Sunnyside argued in the complaint that because these were not standard dry containers, they “do not fall within” the scope of Zim’s published tariff. Sunnyside also argued Houston’s <a href="https://www.joc.com/article/houston-to-start-charging-long-dwell-fee-from-feb-1-5224463">excessive dwell fee</a> did not adhere to the FMC’s incentive principle for prompting the timely removal of cargo. Sunnyside said the 147 containers from Shanghai were loaded on the 11,923-TEU Zim Canada on March 17, 2025, and reached Houston about a month later on Good Friday. Due to the holiday, Sunnyside had four days of free time starting the following Monday. However, between April 21 and 23, CBP said it would inspect nine of the containers, while putting a hold on the rest until the inspection was completed. Sunnyside said between April 23 and May 6, CBP provided no information about “the basis for the hold or inspection of the containers.” On May 7, CBP issued a formal notice of detention for the containers to Sunnyside. About a month later, Sunnyside said CBP would only release the containers if Sunnyside agreed to a different valuation and tariff classification for the cargo. Sunnyside submitted a bond to CBP on July 31 to release the containers. Customs holds and the resulting demurrage fees from ocean carriers and marine terminals have been an issue for some shippers. In 2023, the FMC’s National Shipper Advisory had <a href="https://www.joc.com/article/shipper-group-wants-more-fmc-action-on-dwell-fees-erds-5220538">sought for the agency to determine</a> that shippers should only be billed a portion of per-diem fees resulting from government holds. But the agency has yet to craft a rule addressing the issue. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

A Canadian firm that brought containers from China specially designed to cool bitcoin mining machines is suing Zim Integrated Shipping Services and the Port of Houston for excessive per-diem charges after US Customs and Border Protection (CBP) held the containers three months past their free time. Toronto-based Sunnyside Digital and its Delaware-registered entity Down Quark Systems filed the complaint last week with the Federal Maritime Commission(FMC). The complaint alleges Zim has already charged the company $5,880 in demurrage on its containers, while the Port of Houston Authority as terminal operator charge assessed $917,458 in extended dwell fees for the containers. Along with restitution of those charges, Sunnyside Digital is asking the FMC to investigate and restrain Zim from pursuing another $7 million in demurrage it is trying to collect from Sunnyside. Zim has also filed a federal lawsuit against Sunnyside seeking another $708,153 in terminal storage charges. ‘Bespoke’ containers The containers themselves were not standard dry containers, the complaint said. Rather, they were “bespoke, highly specialized/modified containers” built to serve as cooling systems for bitcoin mining machines. Sunnyside argued in the complaint that because these were not standard dry containers, they “do not fall within” the scope of Zim’s published tariff. Sunnyside also argued Houston’s excessive dwell fee did not adhere to the FMC’s incentive principle for prompting the timely removal of cargo. Sunnyside said the 147 containers from Shanghai were loaded on the 11,923-TEU Zim Canada on March 17, 2025, and reached Houston about a month later on Good Friday. Due to the holiday, Sunnyside had four days of free time starting the following Monday. However, between April 21 and 23, CBP said it would inspect nine of the containers, while putting a hold on the rest until the inspection was completed. Sunnyside said between April 23 and May 6, CBP provided no information about “the basis for the hold or inspection of the containers.” On May 7, CBP issued a formal notice of detention for the containers to Sunnyside. About a month later, Sunnyside said CBP would only release the containers if Sunnyside agreed to a different valuation and tariff classification for the cargo. Sunnyside submitted a bond to CBP on July 31 to release the containers. Customs holds and the resulting demurrage fees from ocean carriers and marine terminals have been an issue for some shippers. In 2023, the FMC’s National Shipper Advisory had sought for the agency to determine that shippers should only be billed a portion of per-diem fees resulting from government holds. But the agency has yet to craft a rule addressing the issue. Contact Michael Angell at michael.angell@spglobal.com .

North American ports

Maritime

Bitcoin miner hits Zim, Houston with FMC lawsuit on delayed boxes

<div class="phx-topic abstract-wrapper">Rather than single objections against the proposed transcontinental railroad, time is the real threat to this deal, writes analyst Paul Tonsager. </div>

Rather than single objections against the proposed transcontinental railroad, time is the real threat to this deal, writes analyst Paul Tonsager.

<div class="phx-topic">On May 28, <a href="https://www.joc.com/article/stb-accepts-upns-paperwork-buts-holds-on-merger-decision-6228099">the Surface Transportation Board (STB) accepted</a> the amended Union Pacific (UP) and Norfolk Southern (NS) merger application. This was the April refiling, submitted after the Board rejected the railroads’ first attempt in January. UP and NS will call the acceptance a milestone. It is the least important thing the Board did that day. The same decision held the entire proceeding in abeyance. No merits schedule. No environmental review. The Board ordered the railroads to supplement nine areas of the filing by July 27, and it will not start the review clock until it has that material and is satisfied with it. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6228199_0.1.jpg"></img></div>Clearing completeness means the filing was good enough to keep, not good enough to approve. The Board said in the same decision that several parts of the application are unclear or underdeveloped. So here is where this now stands, and it is not where the railroads wanted to be. The Board did two things it did not have to pair: it kept the application alive and refused to set a date for judging it. Discovery continues, so UP and NS keep working ... but working does not mean advancing. The Board is moving the chains, and, two filings in, the railroads still have not picked up a first down. That makes time the real threat to this deal, ahead of any single objection the opponents are raising. The Board did not need to find a fatal flaw. Keeping the calendar open is enough. The wait is not neutral. The railroads carry the cost of an $85 billion transaction sitting in limbo, while the opposition uses that time to organize its filings and line up allies in Congress. Competitors keep taking real freight in real time, with CPKC selling the single-line service the merged carrier does not yet exist to counter. Everybody waits, but nobody waits equally. The deal’s own structure makes the delay bite harder. There is no voting trust, so Norfolk Southern shareholders are not cashed out early. Instead, they wait for full STB approval to be paid, which puts the entire timeline on their backs. The agreement’s outside date of Jan. 28, 2028, extends automatically if the review runs long. Sounds like a safety valve? Well, it is the trap. The deal has no clean expiration and no forcing event. It does not die on a deadline but erodes; it creates a combination that is now likelier to fail from exhaustion than from a flat “no.” The case for benefits decays on the same clock. The payoff the railroads are selling — led by 2.1 million truckloads moved off the highway — is modeled from a close date. Every quarter that close slips right, the present value of those benefits falls. As a result, delay weakens the central exhibit the Board is supposed to weigh. On substance, the sharpest signal in the decision is a small one. The Board asked for the applicants’ workpapers as a standalone supplemental item, which, in plain terms, means it could not reproduce the railroads’ own numbers from what they filed. That is a pointed thing for a regulator to put in writing about a benefits case. The Board also pulled the St. Louis and Kansas City terminals into one request alongside the TTX railcar pool, on gateways and car supply — a sign it sees neutral access to shared infrastructure as a single unresolved question rather than a set of separate fixes. For shippers, the takeaway is direct. Do not build around an early close. The initial target the railroads set by the first half of 2027 is now unreachable. The safe assumption now is later and open-ended. If your routing or rate strategy assumes a combined UP-NS network by 2027, rebuild it without that assumption. I support this merger, <a href="https://www.joc.com/article/strategic-vision-of-up-ns-merger-must-meet-operational-reality-6139519">I have said so in this publication</a> and elsewhere. The transcontinental thesis is sound, truck conversion is real, and single-line service creates genuine value. That is exactly why the execution should worry supporters more than critics. The merits fight is winnable on the record. The July 27 supplement is the third attempt at a record this Board will act on. The first application was rejected outright; the second cleared completeness and was still parked, because the Board found too much of it underdeveloped to judge; and there is no clever third version. The Board has told the railroads twice what it needs, and anyone who has watched this agency knew the list before the first application was filed. So give it to them, put the real numbers and the methodology behind them on the record, and stop trying to win on anything but substance. Every month spent deciding what to hold back is a month the clock takes off the merits case that can actually carry it. The author holds no equity in either carrier and represents no Class I railroad in this transaction. Paul Tonsager has held executive roles at Maersk, CN Rail, CN Worldwide, Coyote (RXO) and Patriot Rail. He is the founder of Integrated Multimodal Solutions LLC and author of the Substack newsletter Signals &amp; Switches. Contact him at <a href="mailto:paul.tonsager@multimodalsolutions.io">paul.tonsager@multimodalsolutions.io</a>. </div>

On May 28, the Surface Transportation Board (STB) accepted the amended Union Pacific (UP) and Norfolk Southern (NS) merger application. This was the April refiling, submitted after the Board rejected the railroads’ first attempt in January. UP and NS will call the acceptance a milestone. It is the least important thing the Board did that day. The same decision held the entire proceeding in abeyance. No merits schedule. No environmental review. The Board ordered the railroads to supplement nine areas of the filing by July 27, and it will not start the review clock until it has that material and is satisfied with it. Clearing completeness means the filing was good enough to keep, not good enough to approve. The Board said in the same decision that several parts of the application are unclear or underdeveloped. So here is where this now stands, and it is not where the railroads wanted to be. The Board did two things it did not have to pair: it kept the application alive and refused to set a date for judging it. Discovery continues, so UP and NS keep working ... but working does not mean advancing. The Board is moving the chains, and, two filings in, the railroads still have not picked up a first down. That makes time the real threat to this deal, ahead of any single objection the opponents are raising. The Board did not need to find a fatal flaw. Keeping the calendar open is enough. The wait is not neutral. The railroads carry the cost of an $85 billion transaction sitting in limbo, while the opposition uses that time to organize its filings and line up allies in Congress. Competitors keep taking real freight in real time, with CPKC selling the single-line service the merged carrier does not yet exist to counter. Everybody waits, but nobody waits equally. The deal’s own structure makes the delay bite harder. There is no voting trust, so Norfolk Southern shareholders are not cashed out early. Instead, they wait for full STB approval to be paid, which puts the entire timeline on their backs. The agreement’s outside date of Jan. 28, 2028, extends automatically if the review runs long. Sounds like a safety valve? Well, it is the trap. The deal has no clean expiration and no forcing event. It does not die on a deadline but erodes; it creates a combination that is now likelier to fail from exhaustion than from a flat “no.” The case for benefits decays on the same clock. The payoff the railroads are selling — led by 2.1 million truckloads moved off the highway — is modeled from a close date. Every quarter that close slips right, the present value of those benefits falls. As a result, delay weakens the central exhibit the Board is supposed to weigh. On substance, the sharpest signal in the decision is a small one. The Board asked for the applicants’ workpapers as a standalone supplemental item, which, in plain terms, means it could not reproduce the railroads’ own numbers from what they filed. That is a pointed thing for a regulator to put in writing about a benefits case. The Board also pulled the St. Louis and Kansas City terminals into one request alongside the TTX railcar pool, on gateways and car supply — a sign it sees neutral access to shared infrastructure as a single unresolved question rather than a set of separate fixes. For shippers, the takeaway is direct. Do not build around an early close. The initial target the railroads set by the first half of 2027 is now unreachable. The safe assumption now is later and open-ended. If your routing or rate strategy assumes a combined UP-NS network by 2027, rebuild it without that assumption. I support this merger, I have said so in this publication and elsewhere. The transcontinental thesis is sound, truck conversion is real, and single-line service creates genuine value. That is exactly why the execution should worry supporters more than critics. The merits fight is winnable on the record. The July 27 supplement is the third attempt at a record this Board will act on. The first application was rejected outright; the second cleared completeness and was still parked, because the Board found too much of it underdeveloped to judge; and there is no clever third version. The Board has told the railroads twice what it needs, and anyone who has watched this agency knew the list before the first application was filed. So give it to them, put the real numbers and the methodology behind them on the record, and stop trying to win on anything but substance. Every month spent deciding what to hold back is a month the clock takes off the merits case that can actually carry it. The author holds no equity in either carrier and represents no Class I railroad in this transaction. Paul Tonsager has held executive roles at Maersk, CN Rail, CN Worldwide, Coyote (RXO) and Patriot Rail. He is the founder of Integrated Multimodal Solutions LLC and author of the Substack newsletter Signals & Switches. Contact him at paul.tonsager@multimodalsolutions.io .

North-American rail

Benefits of UP-NS merger erode on approval delay: analyst

<div class="phx-topic abstract-wrapper">The agency said there needs to be additional information submitted concerning the environmental impact of the merger. </div>

The agency said there needs to be additional information submitted concerning the environmental impact of the merger.

<div class="phx-topic">The US Surface Transportation Board (STB) Thursday unanimously voted to accept Union Pacific Railroad’s (UP’s) revised application to acquire Norfolk Southern Railway (NS) but held off from giving a final blessing. Instead, the STB put a final decision in abeyance, because the agency said there needs to be additional information submitted concerning the environmental impact of the merger. The STB gave Union Pacific until July 26 to submit that material. The decision allows the process to go forward, but it is potentially another delay in the regulatory review of the proposed $85 billion transaction. The decision does not kill the deal but signals that regulators still do not believe the companies have provided enough information to allow a formal review of the proposed merger to begin, <a href="https://www.joc.com/article/stb-rejects-up-ns-merger-application-as-incomplete-6154074">much like they wrote in January</a>. “Today, the Board finds that Applicants have provided sufficient information to satisfy the completeness requirements for a major merger application.  Given the fairly narrow procedural question of completeness, issues raised by commenters do not warrant rejecting the revised application,” the STB wrote in its decision. Still, the STB’s decision might end the proposed marriage due to the costs associated with the deal. Previously, UP and NS disclosed that each was spending between $40 million and $60 million per quarter on merger-related expenses; eventually, shareholders might decide the costs are too much to continue. “However, the Board finds that there are several aspects of the revised application that are unclear or underdeveloped and require supplementation at this stage of the proceeding so that the Board may have the information necessary to thoroughly evaluate — and the public has an adequate opportunity to comment on — whether the transaction is in the public interest.” While not a rejection, the ruling is a setback because UP and NS thought the revised application fixed everything that was deemed deficient in January. The revised filing updated truck-to-rail conversions and attempted to address concerns over two entities — Kansas City Terminal Railway and the Terminal Railroad Association of St. Louis — which control switching and operations across those cities. Both groups are jointly owned by Class I railroads. It also disclosed Schedule 5.8 of the merger agreement, the document that defines which regulatory conditions would be onerous enough for the companies to walk away from the deal. Nevertheless, regulators effectively sided with opponents who argued the revised application remained too vague on market concentration, traffic diversions and control of jointly-owned rail assets. UP and NS said <a href="https://www.joc.com/article/ups-revised-filing-for-ns-merger-boosts-number-of-freight-conversions-6212318">the merger would shift 2.1 million truckloads from highways to rail each year</a> and save shippers an estimated $3.5 billion annually. UP and NS also say the combined railroad would create 88,000 new county-to-county lanes for single-line rail service and convert 10,000 existing interline lanes into single-line routes.  Opponents argued that those figures are too optimistic and not sufficiently supported. Their central claim is that UP and NS are overstating how much freight would move from truck to rail while understating how much traffic would simply be diverted from rival railroads. In its statement announcing the decision, the STB indicated it may be losing patience with Union Pacific, but it appears willing to give the parties 60 days to resolve the questions. Both railroads said the agency’s decision gives them a path forward to an eventual approval and merger. <h3>Decision time for UP, NS </h3>In a May 22 filing to the STB, state attorneys general from Florida, Iowa, Kansas, Montana, North Dakota and South Dakota argued that the application still failed to address how the combined UP and NS would control about half of US Class I freight rail traffic. The attorneys general also said the companies had not adequately analyzed whether the deal could trigger another round of Class I consolidation or provided enough detail on Kansas City, St. Louis, or a joint equipment pool of intermodal railcars called TTX. For UP and NS, the ruling turns what had been expected to be a procedural move into another test of the merger’s viability. The two railroads must now decide whether to submit additional information, providing more detail on the competitive and operational issues opponents have raised. Or they can decide to walk away from the deal. The calendar may also become a factor. As it stands, a decision from the STB was not likely until late 2027, but an additional delay would likely push attempts to rescue the deal into 2028, an election year. Democrats on Capitol Hill have already voiced their opposition to the merger because they believe it would create a virtual monopoly and harm union labor. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>. Special Correspondent Dan Ronan contributed to this report. </div>

The US Surface Transportation Board (STB) Thursday unanimously voted to accept Union Pacific Railroad’s (UP’s) revised application to acquire Norfolk Southern Railway (NS) but held off from giving a final blessing. Instead, the STB put a final decision in abeyance, because the agency said there needs to be additional information submitted concerning the environmental impact of the merger. The STB gave Union Pacific until July 26 to submit that material. The decision allows the process to go forward, but it is potentially another delay in the regulatory review of the proposed $85 billion transaction. The decision does not kill the deal but signals that regulators still do not believe the companies have provided enough information to allow a formal review of the proposed merger to begin, much like they wrote in January . “Today, the Board finds that Applicants have provided sufficient information to satisfy the completeness requirements for a major merger application.  Given the fairly narrow procedural question of completeness, issues raised by commenters do not warrant rejecting the revised application,” the STB wrote in its decision. Still, the STB’s decision might end the proposed marriage due to the costs associated with the deal. Previously, UP and NS disclosed that each was spending between $40 million and $60 million per quarter on merger-related expenses; eventually, shareholders might decide the costs are too much to continue. “However, the Board finds that there are several aspects of the revised application that are unclear or underdeveloped and require supplementation at this stage of the proceeding so that the Board may have the information necessary to thoroughly evaluate — and the public has an adequate opportunity to comment on — whether the transaction is in the public interest.” While not a rejection, the ruling is a setback because UP and NS thought the revised application fixed everything that was deemed deficient in January. The revised filing updated truck-to-rail conversions and attempted to address concerns over two entities — Kansas City Terminal Railway and the Terminal Railroad Association of St. Louis — which control switching and operations across those cities. Both groups are jointly owned by Class I railroads. It also disclosed Schedule 5.8 of the merger agreement, the document that defines which regulatory conditions would be onerous enough for the companies to walk away from the deal. Nevertheless, regulators effectively sided with opponents who argued the revised application remained too vague on market concentration, traffic diversions and control of jointly-owned rail assets. UP and NS said the merger would shift 2.1 million truckloads from highways to rail each year and save shippers an estimated $3.5 billion annually. UP and NS also say the combined railroad would create 88,000 new county-to-county lanes for single-line rail service and convert 10,000 existing interline lanes into single-line routes.  Opponents argued that those figures are too optimistic and not sufficiently supported. Their central claim is that UP and NS are overstating how much freight would move from truck to rail while understating how much traffic would simply be diverted from rival railroads. In its statement announcing the decision, the STB indicated it may be losing patience with Union Pacific, but it appears willing to give the parties 60 days to resolve the questions. Both railroads said the agency’s decision gives them a path forward to an eventual approval and merger. Decision time for UP, NS In a May 22 filing to the STB, state attorneys general from Florida, Iowa, Kansas, Montana, North Dakota and South Dakota argued that the application still failed to address how the combined UP and NS would control about half of US Class I freight rail traffic. The attorneys general also said the companies had not adequately analyzed whether the deal could trigger another round of Class I consolidation or provided enough detail on Kansas City, St. Louis, or a joint equipment pool of intermodal railcars called TTX. For UP and NS, the ruling turns what had been expected to be a procedural move into another test of the merger’s viability. The two railroads must now decide whether to submit additional information, providing more detail on the competitive and operational issues opponents have raised. Or they can decide to walk away from the deal. The calendar may also become a factor. As it stands, a decision from the STB was not likely until late 2027, but an additional delay would likely push attempts to rescue the deal into 2028, an election year. Democrats on Capitol Hill have already voiced their opposition to the merger because they believe it would create a virtual monopoly and harm union labor. Contact Ari Ashe at ari.ashe@spglobal.com . Special Correspondent Dan Ronan contributed to this report.

STB accepts UP/NS paperwork, puts holds on merger decision

<div class="phx-topic abstract-wrapper">Last month’s deal between the agency running Canada’s largest container port and the terminal operator tenant ends a years-long legal battle over development of the Robert Banks Terminal 2 and GCT’s separate plan to build a fourth berth at its Deltaport facility. </div>

Last month’s deal between the agency running Canada’s largest container port and the terminal operator tenant ends a years-long legal battle over development of the Robert Banks Terminal 2 and GCT’s separate plan to build a fourth berth at its Deltaport facility.

<div class="phx-topic">The recent decision by Global Container Terminals (GCT) and the Vancouver Fraser Port Authority to jointly study development of the port’s proposed mega-terminal squashes the duo’s long-running dispute, positions GCT to run the terminal, and inches the long-planned facility closer to realization. The <a href="https://www.joc.com/article/gct-vancouver-port-to-jointly-study-roberts-bank-terminal-project-6207642">truce between the agency running Canada’s largest container port and the terminal operator tenant</a> ends a years-long <a href="https://www.joc.com/article/vancouver-capacity-needs-spark-conflict-among-port-tenant-5223507">legal battle tied</a> to the port trying to develop the Robert Banks Terminal 2 and GCT’s separate plan to build a fourth berth at its Deltaport facility. The RB2 project is expected to cost more than C$3 billion ($2.17 billion). <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6227603_0.1.jpg"></img></div>The memorandum of understanding announced in April gives the two sides a year to determine how GCT could offer unique efficiencies by operating the planned RBT2 terminal given that its existing Deltaport would share a causeway with the new project. The port authority tentatively gains a terminal operator in GCT in exchange for the latter scrapping its plan to build another berth. Canadian Prime Minister Mark Carney’s Major Project Office is involved in driving the deal between the port authority and tenant. In the fall of 2024, Peter Xotta, CEO of the Vancouver Fraser Port Authority, told local media the port authority would allow GCT to take part in the selection process for an operator of RBT2. Under previous leadership, the port authority had argued a third-party operator was needed to keep the terminal competitive, ruling out GCT, which also operates the downtown Vanterm terminal. “Given the reality of where we’re at geopolitically and the risk associated with a project of this order of magnitude, it seemed prudent to me and to our board that we didn’t want to exclude anybody from bringing solutions forward that would help Canada,” Xotta told the Journal of Commerce last week. “It’s up to [GCT] to put their best foot forward to the landlord about the merits of them as the operator.” The sharing of administrative and maintenance facilities with GCT are some of the possible ways to mitigate the rising price tag of the RBT2 terminal, Xotta said. Potentially, both terminals could share a truck gate and the existing rail terminal at Deltaport. “GCT has a long history of supporting growth at the Port of Vancouver and remains deeply committed to the success of this gateway,” GCT President and CEO Eric Waltz said in a statement to the Journal of Commerce. “We have always sought to be part of the solution in advancing strong, reliable trade infrastructure that is so fundamental to Canada’s economic strength.”Separately, the port authority has shortlisted three consortia interested in building the landmass that would support the terminal. Vancouver sought terminal operators to build and operate RBT2 in 2002 and again in 2008 amid the global financial crisis, but there were no willing takers. On why another request for proposals wasn’t floated again, Xotta said terminal operator selection is “always bespoke,” but would be consistent with Canadian law and would be done in partnership with the federal government’s Office of Major Projects. “The port bellied up to the bar twice on this and without being able to get it across the line,” he said. “I’m determined this won’t happen a third time.” The shift in approach to seeking a partnership with an existing tenant rather than opening the project to bid again raised questions about whether Canadian shippers would get the most competitive terminal, according to a source close to the RBT2 development. Roberts Bank 2 would provide an additional 2.4 million TEUs of capacity to Vancouver, which, by some estimates, would near its existing full capacity by the 2030s. The port now has nominal capacity of 5 million TEUs. The current timeline, which has been delayed by lengthy environmental reviews, is for the new terminal to open in the early 2030s. The project received environmental approval in 2023. <h3>Next steps </h3>Xotta, who is cautiously optimistic that the agreement will end with GCT as operator of RBT2, said future milestones for the proposed terminal would be receiving funding from Canada’s Infrastructure Bank and potentially being added to a list of infrastructure projects of national importance. Meanwhile, on Canada’s eastern coast, the Port of Montreal’s <a href="https://www.joc.com/article/canada-looks-for-new-container-gateways-for-decoupling-from-us-6122714">own stalled mega-terminal project</a>, known as Contrecoeur, got a recent jolt back to life thanks to a C$1.16 million loan from the Infrastructure Bank, while Carney tapped it as one of five national infrastructure projects being fast-tracked. DP World and the port authority are developing the C$1.6 million terminal, which would have an annual throughput of 1.15 million TEUs. In a May 20 interview at the Greater Vancouver Board of Trade, the prime minister said there is similar urgency to add port capacity in Western Canada. “We’re going to run out of capacity at the Port of Vancouver over the next, well, decade in effect,” he said. “We would likely run out of capacity sooner than that, because we would like to be growing our exports faster than that which means we act now” in terms of building more port capacity for container and bulk exports. Carney aims to double Canada’s non-US exports in a decade to diversify away from US trade. Contact Mark Szakonyi at <a href="mailto:mark.szakonyi@spglobal.com">mark.szakonyi@spglobal.com</a>. </div>

The recent decision by Global Container Terminals (GCT) and the Vancouver Fraser Port Authority to jointly study development of the port’s proposed mega-terminal squashes the duo’s long-running dispute, positions GCT to run the terminal, and inches the long-planned facility closer to realization. The truce between the agency running Canada’s largest container port and the terminal operator tenant ends a years-long legal battle tied to the port trying to develop the Robert Banks Terminal 2 and GCT’s separate plan to build a fourth berth at its Deltaport facility. The RB2 project is expected to cost more than C$3 billion ($2.17 billion). The memorandum of understanding announced in April gives the two sides a year to determine how GCT could offer unique efficiencies by operating the planned RBT2 terminal given that its existing Deltaport would share a causeway with the new project. The port authority tentatively gains a terminal operator in GCT in exchange for the latter scrapping its plan to build another berth. Canadian Prime Minister Mark Carney’s Major Project Office is involved in driving the deal between the port authority and tenant. In the fall of 2024, Peter Xotta, CEO of the Vancouver Fraser Port Authority, told local media the port authority would allow GCT to take part in the selection process for an operator of RBT2. Under previous leadership, the port authority had argued a third-party operator was needed to keep the terminal competitive, ruling out GCT, which also operates the downtown Vanterm terminal. “Given the reality of where we’re at geopolitically and the risk associated with a project of this order of magnitude, it seemed prudent to me and to our board that we didn’t want to exclude anybody from bringing solutions forward that would help Canada,” Xotta told the Journal of Commerce last week. “It’s up to [GCT] to put their best foot forward to the landlord about the merits of them as the operator.” The sharing of administrative and maintenance facilities with GCT are some of the possible ways to mitigate the rising price tag of the RBT2 terminal, Xotta said. Potentially, both terminals could share a truck gate and the existing rail terminal at Deltaport. “GCT has a long history of supporting growth at the Port of Vancouver and remains deeply committed to the success of this gateway,” GCT President and CEO Eric Waltz said in a statement to the Journal of Commerce. “We have always sought to be part of the solution in advancing strong, reliable trade infrastructure that is so fundamental to Canada’s economic strength.” Separately, the port authority has shortlisted three consortia interested in building the landmass that would support the terminal. Vancouver sought terminal operators to build and operate RBT2 in 2002 and again in 2008 amid the global financial crisis, but there were no willing takers. On why another request for proposals wasn’t floated again, Xotta said terminal operator selection is “always bespoke,” but would be consistent with Canadian law and would be done in partnership with the federal government’s Office of Major Projects. “The port bellied up to the bar twice on this and without being able to get it across the line,” he said. “I’m determined this won’t happen a third time.” The shift in approach to seeking a partnership with an existing tenant rather than opening the project to bid again raised questions about whether Canadian shippers would get the most competitive terminal, according to a source close to the RBT2 development. Roberts Bank 2 would provide an additional 2.4 million TEUs of capacity to Vancouver, which, by some estimates, would near its existing full capacity by the 2030s. The port now has nominal capacity of 5 million TEUs. The current timeline, which has been delayed by lengthy environmental reviews, is for the new terminal to open in the early 2030s. The project received environmental approval in 2023. Next steps Xotta, who is cautiously optimistic that the agreement will end with GCT as operator of RBT2, said future milestones for the proposed terminal would be receiving funding from Canada’s Infrastructure Bank and potentially being added to a list of infrastructure projects of national importance. Meanwhile, on Canada’s eastern coast, the Port of Montreal’s own stalled mega-terminal project , known as Contrecoeur, got a recent jolt back to life thanks to a C$1.16 million loan from the Infrastructure Bank, while Carney tapped it as one of five national infrastructure projects being fast-tracked. DP World and the port authority are developing the C$1.6 million terminal, which would have an annual throughput of 1.15 million TEUs. In a May 20 interview at the Greater Vancouver Board of Trade, the prime minister said there is similar urgency to add port capacity in Western Canada. “We’re going to run out of capacity at the Port of Vancouver over the next, well, decade in effect,” he said. “We would likely run out of capacity sooner than that, because we would like to be growing our exports faster than that which means we act now” in terms of building more port capacity for container and bulk exports. Carney aims to double Canada’s non-US exports in a decade to diversify away from US trade. Contact Mark Szakonyi at  mark.szakonyi@spglobal.com .

Vancouver truce opens door for GCT as mega-terminal operator

<div class="phx-topic abstract-wrapper">Small carriers that practice pricing discipline and manage costs are turning a profit, but whether they can maintain profitability will directly affect how much capacity is available to shippers and how sharply rates may rise.</div>

Small carriers that practice pricing discipline and manage costs are turning a profit, but whether they can maintain profitability will directly affect how much capacity is available to shippers and how sharply rates may rise.

<div class="phx-topic">A regulatory crackdown is reshaping the US truckload market, leading to a supply-side recovery in spot and contract rates. Suddenly, small carriers that practice pricing discipline and manage costs are turning a profit, not just spinning their wheels. Whether they can maintain profitability will directly affect how much capacity is available to shippers and how sharply rates may rise. Small fleet profitability comes down to two variables: spot rates and diesel prices. When those variables move together, carriers survive. When they diverge, trucks go dark. DAT Freight &amp; Analytics data tracking the estimated annual average gross profit for small fleets reveals a swing from $46,550 in June 2018 to a $5,700 annualized loss in May 2020 (based on all costs for a typical dry-van spot market carrier). That average rose to $110,200 in January 2022 and fell to $5,700 by October 2025. Estimated gross profit is now recovering, rising to $36,000 in April — completing a full cycle that took eight years to complete and wiped out thousands of small carriers along the way. To understand that cycle fully, and where we may be headed, start where the data does: the boom following the 2018 electronic logging device (ELD) mandate. <h3>Strong start in 2018 </h3>January 2018 opened with all-in DAT spot rates at $2.24 per mile and a small fleet gross profit of $43,700. Breakeven costs were a manageable $1.63 per mile, leaving a $0.33 per mile gross margin. But the real catalyst was still building. The US ELD mandate took full effect in April 2018, compressing available capacity overnight. All-in spot rates surged to $2.32 per mile in June. That September, carriers placed record numbers of new truck orders, betting the good times would last. They were wrong. The freight market cooled rapidly into the fourth quarter of 2018. New trucks ordered at the peak of the 2018 boom rolled off assembly lines and into a softening market. By 2019, the industry was sitting on a structural oversupply of capacity. The ELD boom seeded its own bust. <h3>Freight recession </h3>From June 2018 to January 2019, spot linehaul rates collapsed from $2.03 to $1.67 per mile as shippers who had frontloaded inventory ahead of the ELD deadline and US tariffs on China let demand normalize. Small fleet annual gross profit fell from $46,550 to $19,950 in six months, then dropped further to $3,800 by April 2019. Breakeven costs held steady at $1.62 to $1.65 per mile — but costs weren’t the problem; rates simply wouldn’t cooperate. This was a demonstration of how quickly a capacity shock reversal can gut small fleet margins. Then COVID-19 hit. April and May 2020 produced the only negative gross profit months in the dataset, with losses of $4,750 and $5,700, respectively, as all-in rates collapsed to $1.62 and $1.59 per mile while breakeven costs barely budged at $1.58 to $1.59 per mile. It was a brief but brutal reminder that breakeven isn’t the floor — it’s just where you stop making money and start burning it. <h3>Boom to bust </h3>Pandemic stimulus, inventory restocking and port congestion drove spot rates from $1.59 per mile on average in May 2020 to $3.11 per mile by January 2022. Small fleet gross profit surged to $110,200 — the highest in the data set. Then Russia invaded Ukraine in February 2022. Diesel spiked, pushing breakeven costs from $1.77 to $2.08 per mile in five months, a 17% jump. By October 2022, small fleet gross profit had collapsed 75% to $27,550. Spot linehaul rates bottomed around $1.54 to $1.65 per mile and flatlined for nearly two years. Gross profit hovered between $3,800 and $19,950 for 24 consecutive months, with most months in the $6,000 to $12,000 range. This is the period that drove capacity rationalization — small fleets exiting, authorities being revoked, and the industry slowly bleeding out excess trucks. It was the longest freight recession in a generation, and carriers that survived it earned what’s coming next. <h3>A new cycle </h3>What’s coming next is a supply-driven inflection in rates. Spot rates began climbing again in December 2025, with gross profit jumping to $29,450 as all-in rates hit $2.29 per mile. January and February 2026 continued the trend, with average gross profit hitting $30,400 and $32,300, respectively. Then the Iran war started. The national average retail diesel price surged above $5 per gallon, pushing owner-operator breakeven costs from $1.88 per mile in February to $2.09 per mile by early May, a spike eerily similar in magnitude to the 2022 Ukraine shock. But this time spot truckload rates are rising, too. May’s to-date all-in rate of $2.62 per mile is the highest since mid-2022, producing a gross profit of $25,000 despite the elevated fuel costs. The rate recovery and diesel spike are running a race, and right now, rates are keeping pace. Contact Dean Croke at <a href="mailto:dean.croke@dat.com">dean.croke@dat.com</a>.</div>

A regulatory crackdown is reshaping the US truckload market, leading to a supply-side recovery in spot and contract rates. Suddenly, small carriers that practice pricing discipline and manage costs are turning a profit, not just spinning their wheels. Whether they can maintain profitability will directly affect how much capacity is available to shippers and how sharply rates may rise. Small fleet profitability comes down to two variables: spot rates and diesel prices. When those variables move together, carriers survive. When they diverge, trucks go dark. DAT Freight & Analytics data tracking the estimated annual average gross profit for small fleets reveals a swing from $46,550 in June 2018 to a $5,700 annualized loss in May 2020 (based on all costs for a typical dry-van spot market carrier). That average rose to $110,200 in January 2022 and fell to $5,700 by October 2025. Estimated gross profit is now recovering, rising to $36,000 in April — completing a full cycle that took eight years to complete and wiped out thousands of small carriers along the way. To understand that cycle fully, and where we may be headed, start where the data does: the boom following the 2018 electronic logging device (ELD) mandate. Strong start in 2018 January 2018 opened with all-in DAT spot rates at $2.24 per mile and a small fleet gross profit of $43,700. Breakeven costs were a manageable $1.63 per mile, leaving a $0.33 per mile gross margin. But the real catalyst was still building. The US ELD mandate took full effect in April 2018, compressing available capacity overnight. All-in spot rates surged to $2.32 per mile in June. That September, carriers placed record numbers of new truck orders, betting the good times would last. They were wrong. The freight market cooled rapidly into the fourth quarter of 2018. New trucks ordered at the peak of the 2018 boom rolled off assembly lines and into a softening market. By 2019, the industry was sitting on a structural oversupply of capacity. The ELD boom seeded its own bust. Freight recession From June 2018 to January 2019, spot linehaul rates collapsed from $2.03 to $1.67 per mile as shippers who had frontloaded inventory ahead of the ELD deadline and US tariffs on China let demand normalize. Small fleet annual gross profit fell from $46,550 to $19,950 in six months, then dropped further to $3,800 by April 2019. Breakeven costs held steady at $1.62 to $1.65 per mile — but costs weren’t the problem; rates simply wouldn’t cooperate. This was a demonstration of how quickly a capacity shock reversal can gut small fleet margins. Then COVID-19 hit. April and May 2020 produced the only negative gross profit months in the dataset, with losses of $4,750 and $5,700, respectively, as all-in rates collapsed to $1.62 and $1.59 per mile while breakeven costs barely budged at $1.58 to $1.59 per mile. It was a brief but brutal reminder that breakeven isn’t the floor — it’s just where you stop making money and start burning it. Boom to bust Pandemic stimulus, inventory restocking and port congestion drove spot rates from $1.59 per mile on average in May 2020 to $3.11 per mile by January 2022. Small fleet gross profit surged to $110,200 — the highest in the data set. Then Russia invaded Ukraine in February 2022. Diesel spiked, pushing breakeven costs from $1.77 to $2.08 per mile in five months, a 17% jump. By October 2022, small fleet gross profit had collapsed 75% to $27,550. Spot linehaul rates bottomed around $1.54 to $1.65 per mile and flatlined for nearly two years. Gross profit hovered between $3,800 and $19,950 for 24 consecutive months, with most months in the $6,000 to $12,000 range. This is the period that drove capacity rationalization — small fleets exiting, authorities being revoked, and the industry slowly bleeding out excess trucks. It was the longest freight recession in a generation, and carriers that survived it earned what’s coming next. A new cycle What’s coming next is a supply-driven inflection in rates. Spot rates began climbing again in December 2025, with gross profit jumping to $29,450 as all-in rates hit $2.29 per mile. January and February 2026 continued the trend, with average gross profit hitting $30,400 and $32,300, respectively. Then the Iran war started. The national average retail diesel price surged above $5 per gallon, pushing owner-operator breakeven costs from $1.88 per mile in February to $2.09 per mile by early May, a spike eerily similar in magnitude to the 2022 Ukraine shock. But this time spot truckload rates are rising, too. May’s to-date all-in rate of $2.62 per mile is the highest since mid-2022, producing a gross profit of $25,000 despite the elevated fuel costs. The rate recovery and diesel spike are running a race, and right now, rates are keeping pace. Contact Dean Croke at dean.croke@dat.com .

Truckload

Fuel prices threaten small trucker profits, pose capacity risk for shippers

<div class="phx-topic abstract-wrapper">The application of emergency fuel charges amid the war in the Middle East is the latest episode in poorly thought-out ideas and “short-termism” by carriers that has hammered another nail in the coffin of trust between them and BCOs. </div>

The application of emergency fuel charges amid the war in the Middle East is the latest episode in poorly thought-out ideas and “short-termism” by carriers that has hammered another nail in the coffin of trust between them and BCOs.

<div class="phx-topic">Trust, like any other brand, takes a long time to build. It requires patience, competence, consistency, reliability, and the impression (not always reality) of being not too self-serving. On the other side of the equation, trust is fragile and, depending on the action, can erode over time or vanish in a puff of smoke. I will not attempt to speculate on individual carrier and beneficial cargo owner (BCO) relationships as they are both individualistic and often dependent on one-to-one relationships rather than structural business-to-business in the wider sense. And so to describe the state of BCO-carrier relationships broadly, there is a predominance of mistrust on both sides. Part of this is structural and dates back to the early days of container shipping where the rules were unclear and many of the actors came from a bulk shipping background where charter parties were the benchmark of BCO/carrier contractual and relationship behavior. I recall a venerable shipper, steeped in charter party fine details, insisting we had to position refrigerated containers AND a vessel into Rockhampton, Queensland (Australia), as this was a named port in the annual meat shippers’ negotiations with the Japan Shipping conference. Needless to say, we didn’t do so, much to his disgust. And so it continued through the years. Carriers slowly shifting from trying to manage providing a service and making a profit to maximizing profit, while shippers played at relationships, too. BCOs cashed in when markets crashed and tried to limit the damage when markets were high. Meanwhile, carriers abandoned their attempt to provide a service versus profit. Schedule reliability is laughably low by any measure despite the best efforts to constrain supply through blank sailings, abandoning the chassis market, schedule slippages, etc. All make complete commercial and financial sense, but all contribute to erosion of trust. Shippers have not helped this dynamic, either, with poor forecasting, “best estimate” of volumes, etc., giving many a low reliability standing with carriers. <h3>A ‘new low’ after the pandemic </h3>COVID-19 ushered in a new low, with carriers generating extraordinary profits and cash piles enough to placate their long-suffering shareholders, allowing them to engage in seemingly random excursions into tangential asset plays (aircraft, tankers etc.) while retaining enough cash for the inevitable cyclical downturn. The downturn did not arrive, but in its place we found the geopolitical mess of the war that led to the effective closing of the Strait of Hormuz with all its implications for shipping and seafarers. Which leads to the latest significant erosion of trust. While spot rates typically incorporate the bunker adjustment factor (BAF) and other surcharges into an all-in price (quote, not invoice), a BCO has two contract options for a BAF mechanism. They can choose the carrier-published rates (some BCOs have been coerced to use these), or they can use their own formulas. BAF mechanisms are usually set for a quarter with a tolerance for movement above or below a certain percentage. For example, if the BAF moves 2%, this would be considered an insufficient change to warrant the administration required, thus a threshold is typically set at 5%. However, in either case the mechanism has relied on one overriding truth. The calculation is made at an agreed point before the end of the quarter, and the new BAF (if beyond the threshold) is applied for the subsequent quarter. This means that any significant movement up or down within the current quarter will only be recovered in the subsequent quarter. <h3>‘When is a contract not a contract?’ </h3>Certain carriers have insisted that an emergency BAF is warranted. BCOs read the papers too and know there is a major price and supply issue. Many BCOs have asked for detailed clarification in order to get a sense of what is being asked. In some cases, a flat rate across trades was proposed, which makes no sense. Account managers providing the advice were in most cases unable to explain in any detail what was proposed. Another point of contention is the carrier assertion they are burning cash because of fuel while accumulating cash over time to cover at least three years of operations. As one BCO said to me: “When is a contract not a contract?” This latest episode in poorly thought-out ideas and “short-termism” by carriers has hammered another nail in the coffin of trust between them and BCOs. Surely not the final one? 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>

Trust, like any other brand, takes a long time to build. It requires patience, competence, consistency, reliability, and the impression (not always reality) of being not too self-serving. On the other side of the equation, trust is fragile and, depending on the action, can erode over time or vanish in a puff of smoke. I will not attempt to speculate on individual carrier and beneficial cargo owner (BCO) relationships as they are both individualistic and often dependent on one-to-one relationships rather than structural business-to-business in the wider sense. And so to describe the state of BCO-carrier relationships broadly, there is a predominance of mistrust on both sides. Part of this is structural and dates back to the early days of container shipping where the rules were unclear and many of the actors came from a bulk shipping background where charter parties were the benchmark of BCO/carrier contractual and relationship behavior. I recall a venerable shipper, steeped in charter party fine details, insisting we had to position refrigerated containers AND a vessel into Rockhampton, Queensland (Australia), as this was a named port in the annual meat shippers’ negotiations with the Japan Shipping conference. Needless to say, we didn’t do so, much to his disgust. And so it continued through the years. Carriers slowly shifting from trying to manage providing a service and making a profit to maximizing profit, while shippers played at relationships, too. BCOs cashed in when markets crashed and tried to limit the damage when markets were high. Meanwhile, carriers abandoned their attempt to provide a service versus profit. Schedule reliability is laughably low by any measure despite the best efforts to constrain supply through blank sailings, abandoning the chassis market, schedule slippages, etc. All make complete commercial and financial sense, but all contribute to erosion of trust. Shippers have not helped this dynamic, either, with poor forecasting, “best estimate” of volumes, etc., giving many a low reliability standing with carriers. A ‘new low’ after the pandemic COVID-19 ushered in a new low, with carriers generating extraordinary profits and cash piles enough to placate their long-suffering shareholders, allowing them to engage in seemingly random excursions into tangential asset plays (aircraft, tankers etc.) while retaining enough cash for the inevitable cyclical downturn. The downturn did not arrive, but in its place we found the geopolitical mess of the war that led to the effective closing of the Strait of Hormuz with all its implications for shipping and seafarers. Which leads to the latest significant erosion of trust. While spot rates typically incorporate the bunker adjustment factor (BAF) and other surcharges into an all-in price (quote, not invoice), a BCO has two contract options for a BAF mechanism. They can choose the carrier-published rates (some BCOs have been coerced to use these), or they can use their own formulas. BAF mechanisms are usually set for a quarter with a tolerance for movement above or below a certain percentage. For example, if the BAF moves 2%, this would be considered an insufficient change to warrant the administration required, thus a threshold is typically set at 5%. However, in either case the mechanism has relied on one overriding truth. The calculation is made at an agreed point before the end of the quarter, and the new BAF (if beyond the threshold) is applied for the subsequent quarter. This means that any significant movement up or down within the current quarter will only be recovered in the subsequent quarter. ‘When is a contract not a contract?’ Certain carriers have insisted that an emergency BAF is warranted. BCOs read the papers too and know there is a major price and supply issue. Many BCOs have asked for detailed clarification in order to get a sense of what is being asked. In some cases, a flat rate across trades was proposed, which makes no sense. Account managers providing the advice were in most cases unable to explain in any detail what was proposed. Another point of contention is the carrier assertion they are burning cash because of fuel while accumulating cash over time to cover at least three years of operations. As one BCO said to me: “When is a contract not a contract?” This latest episode in poorly thought-out ideas and “short-termism” by carriers has hammered another nail in the coffin of trust between them and BCOs. Surely not the final one? John McCauley, formerly a vice president of transportation and logistics at Cargill, now consults for shippers. Contact him at john-mccauley1@outlook.com .

Another nail in the coffin of trust between carriers, clients

Shanghai to East Coast

{name} 
{dateX.formatDate('MMM dd, yyyy')}: ${valueY} 
Y-o-Y: {US_East_Coast_YoY.formatNumber("##.#'%'")}

 Shanghai to West Coast

{name} 
{dateX.formatDate('MMM dd, yyyy')}: ${valueY} 
Y-o-Y: {US_West_YoY.formatNumber("##.#'%'")}

The Shanghai Shipping Exchange’s (SSE) Shanghai Containerized Freight Index (SCFI) reflects spot rates and associated seaborne charges for containerized exports from Shanghai. The SCFI includes indices of freight rates in 13 individual shipping routes and a composite index, using Oct. 16, 2009, as the base period (Oct. 16, 2009 = 1,000). [SSE](https://en.sse.net.cn/indices/scfinew.jsp)

Shanghai to US West and East Coast container spot rates (SSE)

Shanghai to US Coasts container spot rates (SCFI-Weekly) Gateway

<div class="phx-topic abstract-wrapper">The move is likely to raise costs for forwarders and carriers as they devote more resources to ensure compliance with rate filing procedures, and it could hasten a wider shakeup in China’s logistics sector.</div>

The move is likely to raise costs for forwarders and carriers as they devote more resources to ensure compliance with rate filing procedures, and it could hasten a wider shakeup in China’s logistics sector.

<div class="phx-topic">Freight forwarders and ocean carriers are facing a widening crackdown by China's Transport Ministry and provincial authorities over the filing of ocean rate data, ostensibly as part of an effort to protect shippers from unclear pricing strategies, forwarders say. The move is likely to raise costs for forwarders and carriers as they devote more resources to ensure compliance with rate filing procedures. And it could hasten a wider shakeup in China's logistics sector, with increased consolidation and the demise of smaller, less-compliant operators, the forwarders said. The crackdown by Chinese authorities comes after nine carriers and seven non-vessel operating common carriers (NVOCCs) received fines or warning letters after Transport Ministry officials found discrepancies in rate data filed for international shipments at three gateway ports late last year. “Since the government has emphasized (that) enterprises must improve internal rate filing work systems and institutionalize accountability, with responsibility assigned to specific personnel, it may cost more for internal compliance costs, (and) force both large shipping lines and smaller forwarders to be more transparent," Cliff Xu, regional director of Greater China for the forwarder Rhenus Air &amp; Ocean, told the Journal of Commerce. “This would reduce the ability of non-compliant operators to undercut compliant competitors through opaque pricing strategies,” he added. “This may accelerate industry consolidation, with smaller and less-compliant operators struggling to survive.” Inspections last year focused on Guangzhou, Ningbo, and Qingdao. “We anticipate further expansion nationwide,” Xu said. “The logical next steps would include other major trade gateways such as Shanghai, Shenzhen, and Tianjin in future enforcement rounds. “The government has explicitly stated that it will increase the intensity of inspections on enterprises regarding the implementation of filed freight rates, and that both the central ministry and its authorized provincial transportation authorities will carry out these enforcement actions,” Xu added. Ocean Network Express (ONE), Hapag-Lloyd, CMA CGM, Mediterranean Shipping Co., Evergreen Marine (Asia), and Wan Hai Lines (Singapore) were among the carriers that received "administrative punishment" following the inspections between August and November last year. ONE said it was penalized due to a “filing inaccuracy in mid-2025.” “ONE has since addressed the relevant findings through appropriate follow-up and corrective actions,” a spokesperson for the carrier told the Journal of Commerce, not providing further details. “Our current operations remain unaffected, and we remain committed to full regulatory compliance.” Hapag-Lloyd declined to comment. “Please understand that we cannot comment on ongoing proceedings as a general matter,” a spokesperson for the carrier said. The seven forwarders that received “administrative punishment,” which can also include license suspension, include Huilida International Freight Forwarding (Guangzhou), the Qingdao branch of Xuda International Freight Forwarding (Shanghai), and Ningbo Port Southeast Logistics Group, according to a Transport Ministry statement on May 12. <h3>‘Significant increase’ in scrutiny </h3>The Transport Ministry made it mandatory for carriers and forwarders to file rate data and information to the Shanghai Shipping Exchange, as the ministry’s agent, in 2013. But forwarder FIBS Logistics said freight rate filing enforcement “was considered a bit of a toothless paper tiger” until 2024 when Shanghai’s municipal transport commission carried out a two-week inspection blitz on freight rate filing procedures. Those checks included copies of bills of lading, freight lists, bank accounts, invoices, and “financial accounting vouchers,” according to the notice issued by the commission shortly before the inspection regime started. It was at that time that FIBS put a dedicated person in charge of the local filings for all China contracts, a spokesperson for the company told the Journal of Commerce. “We have never actually been audited, nor did we really hear much about other forwarders getting audited,” the spokesperson said. “I guess only forwarders who never or just rarely update the filing system will be audited.” Xu from Rhenus Logistics said the company has seen “a significant increase in enforcement and systematic scrutiny” since 2024. “The authorities have moved beyond simple filing mandates to vigorously enforce compliance with filed rates,” he said. “This represents a clear step-change in regulatory oversight. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

Freight forwarders and ocean carriers are facing a widening crackdown by China's Transport Ministry and provincial authorities over the filing of ocean rate data, ostensibly as part of an effort to protect shippers from unclear pricing strategies, forwarders say. The move is likely to raise costs for forwarders and carriers as they devote more resources to ensure compliance with rate filing procedures. And it could hasten a wider shakeup in China's logistics sector, with increased consolidation and the demise of smaller, less-compliant operators, the forwarders said. The crackdown by Chinese authorities comes after nine carriers and seven non-vessel operating common carriers (NVOCCs) received fines or warning letters after Transport Ministry officials found discrepancies in rate data filed for international shipments at three gateway ports late last year. “Since the government has emphasized (that) enterprises must improve internal rate filing work systems and institutionalize accountability, with responsibility assigned to specific personnel, it may cost more for internal compliance costs, (and) force both large shipping lines and smaller forwarders to be more transparent," Cliff Xu, regional director of Greater China for the forwarder Rhenus Air & Ocean, told the Journal of Commerce. “This would reduce the ability of non-compliant operators to undercut compliant competitors through opaque pricing strategies,” he added. “This may accelerate industry consolidation, with smaller and less-compliant operators struggling to survive.” Inspections last year focused on Guangzhou, Ningbo, and Qingdao. “We anticipate further expansion nationwide,” Xu said. “The logical next steps would include other major trade gateways such as Shanghai, Shenzhen, and Tianjin in future enforcement rounds. “The government has explicitly stated that it will increase the intensity of inspections on enterprises regarding the implementation of filed freight rates, and that both the central ministry and its authorized provincial transportation authorities will carry out these enforcement actions,” Xu added. Ocean Network Express (ONE), Hapag-Lloyd, CMA CGM, Mediterranean Shipping Co., Evergreen Marine (Asia), and Wan Hai Lines (Singapore) were among the carriers that received "administrative punishment" following the inspections between August and November last year. ONE said it was penalized due to a “filing inaccuracy in mid-2025.” “ONE has since addressed the relevant findings through appropriate follow-up and corrective actions,” a spokesperson for the carrier told the Journal of Commerce, not providing further details. “Our current operations remain unaffected, and we remain committed to full regulatory compliance.” Hapag-Lloyd declined to comment. “Please understand that we cannot comment on ongoing proceedings as a general matter,” a spokesperson for the carrier said. The seven forwarders that received “administrative punishment,” which can also include license suspension, include Huilida International Freight Forwarding (Guangzhou), the Qingdao branch of Xuda International Freight Forwarding (Shanghai), and Ningbo Port Southeast Logistics Group, according to a Transport Ministry statement on May 12. ‘Significant increase’ in scrutiny The Transport Ministry made it mandatory for carriers and forwarders to file rate data and information to the Shanghai Shipping Exchange, as the ministry’s agent, in 2013. But forwarder FIBS Logistics said freight rate filing enforcement “was considered a bit of a toothless paper tiger” until 2024 when Shanghai’s municipal transport commission carried out a two-week inspection blitz on freight rate filing procedures. Those checks included copies of bills of lading, freight lists, bank accounts, invoices, and “financial accounting vouchers,” according to the notice issued by the commission shortly before the inspection regime started. It was at that time that FIBS put a dedicated person in charge of the local filings for all China contracts, a spokesperson for the company told the Journal of Commerce. “We have never actually been audited, nor did we really hear much about other forwarders getting audited,” the spokesperson said. “I guess only forwarders who never or just rarely update the filing system will be audited.” Xu from Rhenus Logistics said the company has seen “a significant increase in enforcement and systematic scrutiny” since 2024. “The authorities have moved beyond simple filing mandates to vigorously enforce compliance with filed rates,” he said. “This represents a clear step-change in regulatory oversight. Contact Keith Wallis at keithwallis@hotmail.com .

Forwarding

Asia-Europe

China widens regulatory crackdown on filing of ocean transport rate data

<div class="phx-topic abstract-wrapper">Costs rose sharply following the start of the war, and although emergency fuel surcharges were quickly levied on spot shipments, cargo under contract was locked into quarterly BAFs.</div>

Costs rose sharply following the start of the war, and although emergency fuel surcharges were quickly levied on spot shipments, cargo under contract was locked into quarterly BAFs.

<div class="phx-topic">Fuel prices that rocketed higher since the war with Iran began on Feb. 28 have so far added $5.5 billion to the bunker costs of container lines, according to Sea-Intelligence Maritime Analysis. Ocean carriers have rolled out emergency fuel surcharges in an urgent bid to recover that increase in operating costs, <a href="https://www.joc.com/article/war-adding-40-50-million-per-week-to-hapag-lloyds-costs-ceo-6193532">estimated at up to $50 million a week by Hapag-Lloyd</a>. “It is clear that if the (Strait of) Hormuz crisis persists, and hence fuel prices remain elevated, the industry would become clearly loss-making, unless the added fuel costs translate into higher freight rates,” Alan Murphy, CEO of Sea-Intelligence, wrote in his weekly Sunday Spotlight newsletter. “Spot rates have indeed been on the rise these past couple of weeks, especially on the Asia-Europe trade, implying that the process of passing on the added fuel costs is under way,” Murphy added. Bunker costs rose sharply following the start of the war, and although emergency fuel surcharges were quickly levied on spot shipments, cargo under contract was locked into quarterly bunker adjustment factors (BAFs). <a href="https://www.joc.com/article/demand-rising-on-asia-europe-ocean-trade-as-july-bunker-hike-looms-6225813">Those costs will be passed on to shippers in the third quarter</a> beginning July 1. Murphy put the scale of the additional fuel costs for the three-month period through May in context, noting that the first-quarter financial results for 2026 implied combined industry-wide revenue of $61 billion and earnings before interest and taxes (EBIT) of $2.7 billion. <h3>Peace prospects spark oil price drop</h3>While oil prices have fallen to a two-week low amid hopes that Washington and Tehran were close to a peace deal, the fragility of the current ceasefire was illustrated Monday by renewed US strikes and return fire from Iranian positions. Very low-sulfur fuel oil (VLSFO) was trading at $782 per metric ton (mt) Monday, down 11% since a mid-May high, according to Ship &amp; Bunker. High-sulfur fuel oil (HSFO) is trading at a substantial discount to VLSFO at $628/mt, down 13% since mid-May. To arrive at a daily added fuel cost per-container for the industry from the Middle East war, Sea-Intelligence used an estimated fuel use of 70 million tons per year, with 47.2 million TEUs shipped in the first three months of 2026, according to Container Trades Statistics (CTS). “The CTS data period is not quite the same as the fuel premium period,” Murphy acknowledged. “However, as a ballpark estimate, this implies an added fuel cost on average of $117/TEU.” Whether a vessel was equipped with an exhaust scrubber or not would also influence the cost per container. “Vessels equipped with a scrubber can use the lower-priced (HSFO), whereas vessels without a scrubber need to purchase the more expensive VLSFO,” Murphy said. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>.</div>

Fuel prices that rocketed higher since the war with Iran began on Feb. 28 have so far added $5.5 billion to the bunker costs of container lines, according to Sea-Intelligence Maritime Analysis. Ocean carriers have rolled out emergency fuel surcharges in an urgent bid to recover that increase in operating costs, estimated at up to $50 million a week by Hapag-Lloyd . “It is clear that if the (Strait of) Hormuz crisis persists, and hence fuel prices remain elevated, the industry would become clearly loss-making, unless the added fuel costs translate into higher freight rates,” Alan Murphy, CEO of Sea-Intelligence, wrote in his weekly Sunday Spotlight newsletter. “Spot rates have indeed been on the rise these past couple of weeks, especially on the Asia-Europe trade, implying that the process of passing on the added fuel costs is under way,” Murphy added. Bunker costs rose sharply following the start of the war, and although emergency fuel surcharges were quickly levied on spot shipments, cargo under contract was locked into quarterly bunker adjustment factors (BAFs). Those costs will be passed on to shippers in the third quarter beginning July 1. Murphy put the scale of the additional fuel costs for the three-month period through May in context, noting that the first-quarter financial results for 2026 implied combined industry-wide revenue of $61 billion and earnings before interest and taxes (EBIT) of $2.7 billion. Peace prospects spark oil price drop While oil prices have fallen to a two-week low amid hopes that Washington and Tehran were close to a peace deal, the fragility of the current ceasefire was illustrated Monday by renewed US strikes and return fire from Iranian positions. Very low-sulfur fuel oil (VLSFO) was trading at $782 per metric ton (mt) Monday, down 11% since a mid-May high, according to Ship & Bunker. High-sulfur fuel oil (HSFO) is trading at a substantial discount to VLSFO at $628/mt, down 13% since mid-May. To arrive at a daily added fuel cost per-container for the industry from the Middle East war, Sea-Intelligence used an estimated fuel use of 70 million tons per year, with 47.2 million TEUs shipped in the first three months of 2026, according to Container Trades Statistics (CTS). “The CTS data period is not quite the same as the fuel premium period,” Murphy acknowledged. “However, as a ballpark estimate, this implies an added fuel cost on average of $117/TEU.” Whether a vessel was equipped with an exhaust scrubber or not would also influence the cost per container. “Vessels equipped with a scrubber can use the lower-priced (HSFO), whereas vessels without a scrubber need to purchase the more expensive VLSFO,” Murphy said. Contact Greg Knowler at greg.knowler@spglobal.com .

Container Shipping News

Middle East war adds $5.5 billion to ocean carriers' bunker costs: Sea-Intelligence

<div class="phx-topic abstract-wrapper">Ag exporters have always faced logistical challenges because their crops are grown in the interior US and shipped through ports located hundreds of miles away; those challenges seem to be growing, the AgTC conference heard this week. </div>

Ag exporters have always faced logistical challenges because their crops are grown in the interior US and shipped through ports located hundreds of miles away; those challenges seem to be growing, the AgTC conference heard this week.

<div class="phx-topic">US agricultural shippers are facing increasing and costly challenges in getting their goods to global markets as the war in the Middle East and schedule changes by ocean carriers upset the cadence of their operations. “Container availability, schedule changes, rail delays from the interior of the country; these things can combine and create sort of a monster for us,” Christopher Jennum, global manager of export logistics and marketing at the Dairy Farmers of America, told the annual Agriculture Transportation Coalition (AgTC) conference this week in Tacoma. Ag exporters have always faced logistical challenges because their crops are grown in the interior US and shipped through ports located hundreds of miles away. This makes it difficult for exporters to secure empty containers, plan their rail moves to the ports, and meet marine terminal requirements for the on-time delivery of their boxes. Shippers must commit to delivery of their containers weeks ahead of time. “They’re committing to an export window that hasn’t formed,” said Vijay Harrell, CEO of logistics provider Tradelanes. Additionally, ag exporters are operating in a transportation environment designed decades ago and not equipped to handle modern day disruptions such as the pandemic and now the war in the Middle East. “I think the system that has carried us this far is starting to show some wear and tear,” Ken O’Brien, CEO of Gemini Shippers Association, told AgTC. “The disruption we face has somehow fundamentally changed our industry.” That wear and tear has affected the reliability of service, while communication between carriers and their customers has been compromised and the ability to accurately forecast supply and demand has been degraded, he said. “Both (carriers and customers) have to do a better job as to how we forecast demand,” O’Brien said. The fact that ag exports originate across a vast heartland and are shipped through a number of gateways makes it difficult for ocean carriers to consistently provide the equipment and services their customers demand and need, said Patrick “PJ” McGrath, senior vice president for commercial at Hapag-Lloyd in North America. If all imports and exports went through either Los Angeles-Long Beach or New York-New Jersey, serving shippers in the interior would be easy and much less costly for the ocean carriers. They’re not, but there is a strategy, McGrath said. “So how do I look at each individual piece? It boils down to communication (between the parties),” he said. <h3>Communication among parties is crucial </h3>Carriers must do a better job of communicating disruptions in vessel scheduling and services, as well as the fuel surcharges they are implementing due to the war in the Middle East, said Irina Brown, cotton export specialist at Dunavant Global Logistics Group. “The biggest problem is managing communication during disruptions, but it is super hard when you have trouble receiving responses from carriers, especially during the past year,” Brown told AgTC. “We get responses from carriers that make no sense.” Rapidly rising fuel costs and accompanying surcharges, which vary from carrier to carrier, have become a huge cost burden for shippers, said Cynthia Tathwell, supply chain logistics specialist at Columbia Grain. “I’ve seen unjustified rises in rates and billing practices outside of published tariffs,” Tathwell said. “It’s a pattern across the industry.” She added that she has challenged these charges, which has its own set of problems, noting that disputes “equal time and money for both sides.” <h3>FMC ‘has teeth’ </h3>Ag exporters also face ongoing problems with transportation providers in the levying of detention fees for the late return of equipment to the marine terminal or railyard and demurrage charges for containers remaining at a marine terminal or railyard after free storage time has expired. Laura DiBella, chairman of the Federal Maritime Commission (FMC), told the ag shippers the agency is aware of these practices and will move to stop any unfair implementation of detention and demurrage fees. “You are going to see plenty more on that,” DiBella told AgTc. “We’re definitely taking a more aggressive stance.” Whether it’s addressing unfair detention and demurrage fees or fuel surcharge issues, the FMC has various investigatory and enforcement powers it will use to move against unfair practices, she said. “The FMC has teeth,” DiBella said. “It has very big teeth.” Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>. </div>

US agricultural shippers are facing increasing and costly challenges in getting their goods to global markets as the war in the Middle East and schedule changes by ocean carriers upset the cadence of their operations. “Container availability, schedule changes, rail delays from the interior of the country; these things can combine and create sort of a monster for us,” Christopher Jennum, global manager of export logistics and marketing at the Dairy Farmers of America, told the annual Agriculture Transportation Coalition (AgTC) conference this week in Tacoma. Ag exporters have always faced logistical challenges because their crops are grown in the interior US and shipped through ports located hundreds of miles away. This makes it difficult for exporters to secure empty containers, plan their rail moves to the ports, and meet marine terminal requirements for the on-time delivery of their boxes. Shippers must commit to delivery of their containers weeks ahead of time. “They’re committing to an export window that hasn’t formed,” said Vijay Harrell, CEO of logistics provider Tradelanes. Additionally, ag exporters are operating in a transportation environment designed decades ago and not equipped to handle modern day disruptions such as the pandemic and now the war in the Middle East. “I think the system that has carried us this far is starting to show some wear and tear,” Ken O’Brien, CEO of Gemini Shippers Association, told AgTC. “The disruption we face has somehow fundamentally changed our industry.” That wear and tear has affected the reliability of service, while communication between carriers and their customers has been compromised and the ability to accurately forecast supply and demand has been degraded, he said. “Both (carriers and customers) have to do a better job as to how we forecast demand,” O’Brien said. The fact that ag exports originate across a vast heartland and are shipped through a number of gateways makes it difficult for ocean carriers to consistently provide the equipment and services their customers demand and need, said Patrick “PJ” McGrath, senior vice president for commercial at Hapag-Lloyd in North America. If all imports and exports went through either Los Angeles-Long Beach or New York-New Jersey, serving shippers in the interior would be easy and much less costly for the ocean carriers. They’re not, but there is a strategy, McGrath said. “So how do I look at each individual piece? It boils down to communication (between the parties),” he said. Communication among parties is crucial Carriers must do a better job of communicating disruptions in vessel scheduling and services, as well as the fuel surcharges they are implementing due to the war in the Middle East, said Irina Brown, cotton export specialist at Dunavant Global Logistics Group. “The biggest problem is managing communication during disruptions, but it is super hard when you have trouble receiving responses from carriers, especially during the past year,” Brown told AgTC. “We get responses from carriers that make no sense.” Rapidly rising fuel costs and accompanying surcharges, which vary from carrier to carrier, have become a huge cost burden for shippers, said Cynthia Tathwell, supply chain logistics specialist at Columbia Grain. “I’ve seen unjustified rises in rates and billing practices outside of published tariffs,” Tathwell said. “It’s a pattern across the industry.” She added that she has challenged these charges, which has its own set of problems, noting that disputes “equal time and money for both sides.” FMC ‘has teeth’ Ag exporters also face ongoing problems with transportation providers in the levying of detention fees for the late return of equipment to the marine terminal or railyard and demurrage charges for containers remaining at a marine terminal or railyard after free storage time has expired. Laura DiBella, chairman of the Federal Maritime Commission (FMC), told the ag shippers the agency is aware of these practices and will move to stop any unfair implementation of detention and demurrage fees. “You are going to see plenty more on that,” DiBella told AgTc. “We’re definitely taking a more aggressive stance.” Whether it’s addressing unfair detention and demurrage fees or fuel surcharge issues, the FMC has various investigatory and enforcement powers it will use to move against unfair practices, she said. “The FMC has teeth,” DiBella said. “It has very big teeth.” Contact Bill Mongelluzzo at  bill.mongelluzzo@spglobal.com .

Supply chain

US ag shippers navigate creaky supply chain not built for modern disruption

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<div class="phx-topic abstract-wrapper">Industry sources say operations have been affected by yard congestion and associated delays in inter-terminal transfer activity, which is an integral part of transshipment operations.</div>

Industry sources say operations have been affected by yard congestion and associated delays in inter-terminal transfer activity, which is an integral part of transshipment operations.

<div class="phx-topic">Sri Lanka’s Colombo Port has become another Asian container hub facing the pressure of supply chains squeezed by rerouted Middle East-bound containers. Industry sources in Colombo who spoke with the Journal of Commerce said terminal operations have been affected by yard congestion and associated delays in inter-terminal transfer (ITT) activity, which is an integral part of transshipment operations. Colombo is a key intermediate port in South Asia, especially for Indian East Coast shippers historically relying on transshipment connections. “Vessels are experiencing an average berthing delay of two to three days,” said an executive at a European liner who didn’t want to be identified. “Longer waits have a significant negative impact on our overall vessel operating costs.” Additionally, seasonal weather patterns along the Sri Lankan coast are posing operational challenges for carriers striving to keep their Colombo sailings on schedule. The bottlenecks have left some carriers announcing last-minute terminal changes for their regular service calls in Colombo. For example, the Gemini Cooperation has declared that its current week westbound and eastbound calls on the South India-Europe service known as the ME2 for Maersk and the IEX for Hapag-Lloyd will call Colombo’s South Asia Gateway Terminal (SAGT) instead of using the fixed-day berthing windows at the Colombo West International Terminal (CWIT). Adani Ports-managed CWIT opened to business in April 2025 with an ad-hoc Gemini network call. <h3>Colombo volumes up 20% since war began </h3>Maersk declined to comment on the vessel flow disruption at Colombo, which has seen volume gains of 20% since the Middle East war began on Feb. 28, rising from 636,084 TEUs in February to 736,094 TEUs in March and 761,096 TEUs in April, according to available data. The disruptive impact of unexpected transshipment volumes on port flows is widespread in the region as carriers diverted vessels away from the war zone. India’s busiest container hubs of <a href="https://www.joc.com/article/rising-container-dwells-hobble-vessel-flows-at-indias-nhava-sheva-mundra-ports-6220540">Nhava Sheva and Mundra have been plagued by clogged yards and considerable gate activity slowdowns</a> over the past month, an issue that continues to raise alarm bells through supply chain stakeholders and government circles. Responding to fresh government directives, Nhava Sheva is now pushing rail evacuations and green channel operations to ease freight delays, while the Indian Ports Association (IPA) is set to conduct an audit to measure the scale of yard congestion at the port. Contact Bency Mathew at <a href="mailto:bencyvmathew@gmail.com">bencyvmathew@gmail.com</a>. </div>

Sri Lanka’s Colombo Port has become another Asian container hub facing the pressure of supply chains squeezed by rerouted Middle East-bound containers. Industry sources in Colombo who spoke with the Journal of Commerce said terminal operations have been affected by yard congestion and associated delays in inter-terminal transfer (ITT) activity, which is an integral part of transshipment operations. Colombo is a key intermediate port in South Asia, especially for Indian East Coast shippers historically relying on transshipment connections. “Vessels are experiencing an average berthing delay of two to three days,” said an executive at a European liner who didn’t want to be identified. “Longer waits have a significant negative impact on our overall vessel operating costs.” Additionally, seasonal weather patterns along the Sri Lankan coast are posing operational challenges for carriers striving to keep their Colombo sailings on schedule. The bottlenecks have left some carriers announcing last-minute terminal changes for their regular service calls in Colombo. For example, the Gemini Cooperation has declared that its current week westbound and eastbound calls on the South India-Europe service known as the ME2 for Maersk and the IEX for Hapag-Lloyd will call Colombo’s South Asia Gateway Terminal (SAGT) instead of using the fixed-day berthing windows at the Colombo West International Terminal (CWIT). Adani Ports-managed CWIT opened to business in April 2025 with an ad-hoc Gemini network call. Colombo volumes up 20% since war began Maersk declined to comment on the vessel flow disruption at Colombo, which has seen volume gains of 20% since the Middle East war began on Feb. 28, rising from 636,084 TEUs in February to 736,094 TEUs in March and 761,096 TEUs in April, according to available data. The disruptive impact of unexpected transshipment volumes on port flows is widespread in the region as carriers diverted vessels away from the war zone. India’s busiest container hubs of Nhava Sheva and Mundra have been plagued by clogged yards and considerable gate activity slowdowns over the past month, an issue that continues to raise alarm bells through supply chain stakeholders and government circles. Responding to fresh government directives, Nhava Sheva is now pushing rail evacuations and green channel operations to ease freight delays, while the Indian Ports Association (IPA) is set to conduct an audit to measure the scale of yard congestion at the port. Contact Bency Mathew at bencyvmathew@gmail.com .

Choked container yards strain terminal operations at Sri Lanka’s Colombo Port

<div class="phx-topic abstract-wrapper">Rising fuel costs, reliable service and higher rates amid the end of the four-year recession in trucking are helping convert more freight to rail in the eastern US. </div>

Rising fuel costs, reliable service and higher rates amid the end of the four-year recession in trucking are helping convert more freight to rail in the eastern US.

<div class="phx-topic">US domestic intermodal demand has rebounded sharply since the war with Iran began, with the growth coming, surprisingly, on lanes east of the Mississippi River rather than the long-haul West Coast corridors that typically offer the biggest fuel advantage over trucking. Intermodal providers have historically struggled to compete with trucking in the eastern US because the shorter lengths of haul mean less cost savings than transcontinental moves. But railroads and intermodal marketing companies (IMCs) say rising fuel costs, higher rates amid the end of the four-year recession in the trucking industry, and reliable service are helping convert more freight to rail in the east. Combined domestic container traffic in March and April was up 9% over the same period in 2025, according to the International Association of North America (IANA), a surge not seen since the pandemic-related lockdowns six years ago. Freight originating in the Northeast, South-Central and Southeast US have all jumped more than 10% year over year. “You’re finally seeing us coming out of ... the worst trucking cycle that we’ve witnessed — at least the worst one certainly that I’ve seen,” Kevin Boone, CFO of CSX Transportation, said at the Bank of America Annual Industrials Conference on May 13. “We’re seeing [freight] start to convert over to rail and with our service product, we’re pretty optimistic that can continue here.” The strongest gains have been concentrated in eastern corridors. Traffic from the Northeast to the Southeast jumped 17.7% year over year in March and April, according to IANA, while Southeast-to-Northeast traffic on the same corridor rose 16%. Midwest-to-Northeast volume increased 17.6%. Those are three routes where CSX will be able to better compete after beginning double-stack intermodal service through the Howard Street Tunnel in Baltimore <a href="https://www.joc.com/article/soaring-truck-rates-power-major-rebound-in-domestic-intermodal-volume-6208736">earlier this month</a>. The upgrade allows CSX to compete better against Norfolk Southern (NS) on freight between Atlanta and Newark and cuts about a day from transit times between Chicago and Newark. That gives CSX a chance to capture more of the eastern demand upswing, along with private-asset intermodal partners such as J.B. Hunt Transport Services. J.B. Hunt executives are signaling the same strong demand pattern in the east, with shippers beginning to save more money on freight in the region. “The discount has grown from 15% to 20% in the last six to eight weeks,” Darren Field, the company’s president of intermodal, said this week at Wolfe Research’s Annual Global Transportation and Industrials Conference. “I don’t know that we can close that 20% discount gap back to 15% in just this cycle, but I would anticipate certainly our intermodal pricing opportunity to start to improve [in the 2027 bid cycle].” <h3>Rebound tied to diesel prices? </h3>The Journal of Commerce <a href="https://www.joc.com/resources/special-reports/intermodal-savings-index">Intermodal Savings Index</a> also showed the steepest increases in rail savings sequentially compared with truckload in March occurred in the eastern US. Even so, Norfolk Southern cautioned that the rebound may be tied more to higher diesel prices than to a structural change, meaning it could fade if energy markets ease. “If the war ends in the next couple of weeks and fuel prices start going back down over the next few months, does that dynamic persist or does it reverse back to where it was? Hard to say,” NS CEO Mark George said at the Wolfe Research conference. Service will help determine whether intermodal keeps gaining share from trucking on the East Coast. CSX’s intermodal train speed was 7.2% faster from March through the first week of May than during the same period last year, while Norfolk Southern’s speeds were 1.1% slower over the same span, according to the Association of American Railroads. A disruption at CSX’s Fairburn intermodal terminal in Atlanta in April sharply increased truck turn times, in some cases forcing drivers to wait hours and pushing deliveries to the next day. The issue has since been resolved. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>. </div>

US domestic intermodal demand has rebounded sharply since the war with Iran began, with the growth coming, surprisingly, on lanes east of the Mississippi River rather than the long-haul West Coast corridors that typically offer the biggest fuel advantage over trucking. Intermodal providers have historically struggled to compete with trucking in the eastern US because the shorter lengths of haul mean less cost savings than transcontinental moves. But railroads and intermodal marketing companies (IMCs) say rising fuel costs, higher rates amid the end of the four-year recession in the trucking industry, and reliable service are helping convert more freight to rail in the east. Combined domestic container traffic in March and April was up 9% over the same period in 2025, according to the International Association of North America (IANA), a surge not seen since the pandemic-related lockdowns six years ago. Freight originating in the Northeast, South-Central and Southeast US have all jumped more than 10% year over year. “You’re finally seeing us coming out of ... the worst trucking cycle that we’ve witnessed — at least the worst one certainly that I’ve seen,” Kevin Boone, CFO of CSX Transportation, said at the Bank of America Annual Industrials Conference on May 13. “We’re seeing [freight] start to convert over to rail and with our service product, we’re pretty optimistic that can continue here.” The strongest gains have been concentrated in eastern corridors. Traffic from the Northeast to the Southeast jumped 17.7% year over year in March and April, according to IANA, while Southeast-to-Northeast traffic on the same corridor rose 16%. Midwest-to-Northeast volume increased 17.6%. Those are three routes where CSX will be able to better compete after beginning double-stack intermodal service through the Howard Street Tunnel in Baltimore earlier this month . The upgrade allows CSX to compete better against Norfolk Southern (NS) on freight between Atlanta and Newark and cuts about a day from transit times between Chicago and Newark. That gives CSX a chance to capture more of the eastern demand upswing, along with private-asset intermodal partners such as J.B. Hunt Transport Services. J.B. Hunt executives are signaling the same strong demand pattern in the east, with shippers beginning to save more money on freight in the region. “The discount has grown from 15% to 20% in the last six to eight weeks,” Darren Field, the company’s president of intermodal, said this week at Wolfe Research’s Annual Global Transportation and Industrials Conference. “I don’t know that we can close that 20% discount gap back to 15% in just this cycle, but I would anticipate certainly our intermodal pricing opportunity to start to improve [in the 2027 bid cycle].” Rebound tied to diesel prices? The Journal of Commerce Intermodal Savings Index also showed the steepest increases in rail savings sequentially compared with truckload in March occurred in the eastern US. Even so, Norfolk Southern cautioned that the rebound may be tied more to higher diesel prices than to a structural change, meaning it could fade if energy markets ease. “If the war ends in the next couple of weeks and fuel prices start going back down over the next few months, does that dynamic persist or does it reverse back to where it was? Hard to say,” NS CEO Mark George said at the Wolfe Research conference. Service will help determine whether intermodal keeps gaining share from trucking on the East Coast. CSX’s intermodal train speed was 7.2% faster from March through the first week of May than during the same period last year, while Norfolk Southern’s speeds were 1.1% slower over the same span, according to the Association of American Railroads. A disruption at CSX’s Fairburn intermodal terminal in Atlanta in April sharply increased truck turn times, in some cases forcing drivers to wait hours and pushing deliveries to the next day. The issue has since been resolved. Contact Ari Ashe at ari.ashe@spglobal.com .

Local East Coast freight leading charge on intermodal rebound

<div class="phx-topic abstract-wrapper">The US maritime regulator said the ocean carrier will also refund third parties that paid detention bills and will limit future billing to shippers and consignees. </div>

The US maritime regulator said the ocean carrier will also refund third parties that paid detention bills and will limit future billing to shippers and consignees.

<div class="phx-topic">Maersk has reached an agreement with the US Federal Maritime Commission (FMC) to pay $1.9 million in civil penalties over the ocean carrier’s practices for billing for container detention. The agency said in a statement Tuesday it had reached a compromise agreement with Maersk related to allegations of it charging detention “against third parties who had not consented to be bound by the terms of Maersk’s bills of lading, service contracts, or tariffs.” Maersk paid the penalty, along with refunds to the third parties, but did not admit to violations of the US Shipping Act or FMC rules, the agency said. Maersk also agreed to end the practice and will limit detention billing to shippers, consignees, and others with a “beneficial interest” in the cargo as defined under the Shipping Act. While it was not disclosed when the billing practices took place, the FMC issued rules in 2024 that <a href="https://www.joc.com/article/stakeholders-sorting-out-per-diem-bills-under-new-fmc-rules-5192186">outlined how truckers or other third parties involved in ocean freight transportation should not be billed for detention and demurrage</a>. The move followed numerous complaints from drayage carriers about being forced to pay per diem bills at marine terminals before being allowed to retrieve containers or face a lockout for unpaid charges. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com.</a></div>

Maersk has reached an agreement with the US Federal Maritime Commission (FMC) to pay $1.9 million in civil penalties over the ocean carrier’s practices for billing for container detention. The agency said in a statement Tuesday it had reached a compromise agreement with Maersk related to allegations of it charging detention “against third parties who had not consented to be bound by the terms of Maersk’s bills of lading, service contracts, or tariffs.” Maersk paid the penalty, along with refunds to the third parties, but did not admit to violations of the US Shipping Act or FMC rules, the agency said. Maersk also agreed to end the practice and will limit detention billing to shippers, consignees, and others with a “beneficial interest” in the cargo as defined under the Shipping Act. While it was not disclosed when the billing practices took place, the FMC issued rules in 2024 that outlined how truckers or other third parties involved in ocean freight transportation should not be billed for detention and demurrage . The move followed numerous complaints from drayage carriers about being forced to pay per diem bills at marine terminals before being allowed to retrieve containers or face a lockout for unpaid charges. Contact Michael Angell at michael.angell@spglobal.com.

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