<div class="phx-topic abstract-wrapper">It would be foolish to extrapolate the road ahead based on one new service, but the fact that MSC brings so many things to bear and can move so quickly implies that others will have to be at the top of their game to compete, writes Jeremy Masters. </div>

It would be foolish to extrapolate the road ahead based on one new service, but the fact that MSC brings so many things to bear and can move so quickly implies that others will have to be at the top of their game to compete, writes Jeremy Masters.

Feature image

<div class="phx-topic">The playing field is not even when pursuing new route opportunities in north-south trades. The ever-increasing scale of the biggest players simply means that they have more assets to deploy. Raids on the NOO (non-operating owner) second-hand fleet by Mediterranean Shipping Co. (MSC) and CMA CGM in the 2000- to 8000-TEU ship size category and the consequent squeeze on ships available in the charter market (causing high rates on what is available) mean that attractive propositions in developing trades end up on the back burner for carriers requiring charter tonnage. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6102919_0.1.jpg"></img></div>This, of course, could change quite rapidly if big ship oversupply results in cascading and the return of smaller tonnage to NOOs. Right now, however, the only option for many carriers is to move ships off a weak trade and redeploy them to a promising one. This is not an easy decision, but waiting for the charter market to change is not a solution as it will change for everybody at the same time. Meantime, opportunities come and go. Developing trades is a particular challenge as volume growth is volatile, imbalances can be big, and these trades are easier to tip into oversupply if a sizeable capacity injection is made. <h3>US to West and South Africa </h3>An interesting case study of punching power and nimbleness is the recent move by MSC to introduce a new stand-alone service connecting the US with West and South Africa. With Maersk’s withdrawal from the joint service with MSC connecting the US East Coast and Freeport (and thus the US Gulf) with South Africa, it’s not a surprise that MSC would step up to be the only direct operator in the trade. There may be hiccups at the political level, but trade patterns tend to be more robust than the short-term programs of any government. MSC — never slow to identify an opportunity — has grabbed Maersk’s withdrawal as a gift, not only to dominate one trade but also take pole position in another by adding West Africa in the rotation in both directions. Thus, MSC ties in critical mass and alleviates any concern about short-term trade flows between the US and South Africa. Looking at Container Trade Statistics (CTS) volumes by trade sector, it’s actually quite surprising that Maersk and MSC did not prioritize a USEC and US Gulf link with West Africa over the link with South Africa or look earlier at doing both. MSC has recognized that without direct competition, the diversion to serve West Africa in both directions is achievable while still being dominant in both trades. The CTS stats show that neither trade has experienced gangbuster growth in the last five years, but if you are the only operator with a direct service, you can be reasonably assured of grabbing a high market share and setting the tone for highly contributive rates. What is clear is that a USEC to South Africa service was on fragile ground even before trade tensions threatened erosion. The addition of West Africa, however, gives the service a hyper boost. If getting a dominant position in two direct trades on one service was not enough, there is another new layer of opportunity for MSC by adding and connecting regions. <h3>Owned hubs and double-dipping delight </h3>By putting West Africa in the rotation, MSC has added intra-Africa capability. As the ships will be light coming out of South Africa, the strong trade to West Africa is an excellent chance to use dead space and provide another stream of revenue to the service. The fact that MSC can use hubs in this process that it partially or completely owns — Freeport, San Pedro and Lome — and use accompanying feeder systems to tap multiple local markets means that its widened products and costs are under its control. Meanwhile, spot rates being offered suggest that MSC is going to have a substantive premium — particularly in the US to South Africa lane in both directions and with West Africa providing so much extra critical mass. This deployment is not just a case of MSC having more ship muscle to flex than others. It’s also about network planning dexterity and having a portfolio of well-positioned hubs that enable local and connecting cargoes to be maximized without congestion. It would be foolish to extrapolate the road ahead from one new service, but the fact that MSC brings so many things to bear and can move so quickly implies that others will have to be at the top of their game to compete. Jeremy Masters is managing director of Shipping Masters. Contact him at <a href="mailto:jeremy@shippingmastershk.com">jeremy@shippingmastershk.com</a>. </div>

The playing field is not even when pursuing new route opportunities in north-south trades. The ever-increasing scale of the biggest players simply means that they have more assets to deploy. Raids on the NOO (non-operating owner) second-hand fleet by Mediterranean Shipping Co. (MSC) and CMA CGM in the 2000- to 8000-TEU ship size category and the consequent squeeze on ships available in the charter market (causing high rates on what is available) mean that attractive propositions in developing trades end up on the back burner for carriers requiring charter tonnage. This, of course, could change quite rapidly if big ship oversupply results in cascading and the return of smaller tonnage to NOOs. Right now, however, the only option for many carriers is to move ships off a weak trade and redeploy them to a promising one. This is not an easy decision, but waiting for the charter market to change is not a solution as it will change for everybody at the same time. Meantime, opportunities come and go. Developing trades is a particular challenge as volume growth is volatile, imbalances can be big, and these trades are easier to tip into oversupply if a sizeable capacity injection is made. US to West and South Africa An interesting case study of punching power and nimbleness is the recent move by MSC to introduce a new stand-alone service connecting the US with West and South Africa. With Maersk’s withdrawal from the joint service with MSC connecting the US East Coast and Freeport (and thus the US Gulf) with South Africa, it’s not a surprise that MSC would step up to be the only direct operator in the trade. There may be hiccups at the political level, but trade patterns tend to be more robust than the short-term programs of any government. MSC — never slow to identify an opportunity — has grabbed Maersk’s withdrawal as a gift, not only to dominate one trade but also take pole position in another by adding West Africa in the rotation in both directions. Thus, MSC ties in critical mass and alleviates any concern about short-term trade flows between the US and South Africa. Looking at Container Trade Statistics (CTS) volumes by trade sector, it’s actually quite surprising that Maersk and MSC did not prioritize a USEC and US Gulf link with West Africa over the link with South Africa or look earlier at doing both. MSC has recognized that without direct competition, the diversion to serve West Africa in both directions is achievable while still being dominant in both trades. The CTS stats show that neither trade has experienced gangbuster growth in the last five years, but if you are the only operator with a direct service, you can be reasonably assured of grabbing a high market share and setting the tone for highly contributive rates. What is clear is that a USEC to South Africa service was on fragile ground even before trade tensions threatened erosion. The addition of West Africa, however, gives the service a hyper boost. If getting a dominant position in two direct trades on one service was not enough, there is another new layer of opportunity for MSC by adding and connecting regions. Owned hubs and double-dipping delight By putting West Africa in the rotation, MSC has added intra-Africa capability. As the ships will be light coming out of South Africa, the strong trade to West Africa is an excellent chance to use dead space and provide another stream of revenue to the service. The fact that MSC can use hubs in this process that it partially or completely owns — Freeport, San Pedro and Lome — and use accompanying feeder systems to tap multiple local markets means that its widened products and costs are under its control. Meanwhile, spot rates being offered suggest that MSC is going to have a substantive premium — particularly in the US to South Africa lane in both directions and with West Africa providing so much extra critical mass. This deployment is not just a case of MSC having more ship muscle to flex than others. It’s also about network planning dexterity and having a portfolio of well-positioned hubs that enable local and connecting cargoes to be maximized without congestion. It would be foolish to extrapolate the road ahead from one new service, but the fact that MSC brings so many things to bear and can move so quickly implies that others will have to be at the top of their game to compete. Jeremy Masters is managing director of Shipping Masters. Contact him at jeremy@shippingmastershk.com .

Container lines

Trans-Atlantic

Container Shipping News

Maritime

MSC flexing its north-south muscle, particularly on US-Africa trade

<div class="phx-topic abstract-wrapper">The Coastal Virginia Offshore Wind project has been a test case of sorts for the Port of Virginia’s heavy-lift capabilities for future cargo opportunities. </div>

The Coastal Virginia Offshore Wind project has been a test case of sorts for the Port of Virginia’s heavy-lift capabilities for future cargo opportunities.

<div class="phx-topic">As offshore wind development slows in the United States, the Port of Virginia is experiencing a continued surge of breakbulk cargo tonnage, largely driven by the ongoing build-out of the largest offshore wind farm in the US mid-Atlantic. Virginia Port Authority (VPA) spokesperson Joe Harris told the Journal of Commerce that because of the project, the port is now positioned to take on heavy-lift cargo well into the future — with or without offshore wind. “We expect that positive tonnage trend to continue for the foreseeable future,” Harris said. Breakbulk cargo volumes at the Port of Virginia jumped 157% year over year, to 57,909 tons in September, according to VPA figures. Breakbulk activity also trended upward during the first nine months of the year, rising 16% year over year, to 417,878 tons. “That’s primarily attributable to offshore wind,” Harris said, referring to the 2.6-GW Coastal Virginia Offshore Wind (CVOW) project that Virginia utility Dominion Energy is developing about 27 miles off the coast of Virginia Beach. Construction of the CVOW project is about 60% finished and remains on schedule for full completion in late 2026, with the wind farm on track to start delivering to the grid in the first quarter of 2026, Dominion spokesperson Jeremy Slayton told the Journal of Commerce. All 176 monopile foundations have been installed for the project to date, along with 59 of 176 transition pieces — the “yellow pieces” that connect the foundations to the turbine towers, Slayton said. <h3>Sizing up bigger cargo </h3>The CVOW project has been a test case of sorts for the Port of Virginia’s heavy-lift capabilities for future cargo opportunities. “The experience we’re gaining in moving these components helps us market ourselves as a true heavy-lift port,” Harris said. Harris cited a 4,000-ton offshore wind component that moved through the port in September as one of the larger pieces the facility has been able to accommodate. “We moved it very safely and efficiently,” he said. “And it helps to be able to say that we can handle things up to this size and bigger, and here’s our point of proof.” In March, the Port of Virginia completed over $220 million in upgrades at the 287-acre Portsmouth Marine Terminal, the staging site for the CVOW project’s components and one of VPA’s two multipurpose terminals in Norfolk Harbor. Part of the port’s $1.4 billion strategic infrastructure plan is focused in part on supporting larger cargo volumes; the improvements included reconstructing the berth, reinforcing the cargo yard’s pavement and reworking the vessel mooring configuration. Looking to future heavy-lift opportunities, Harris said the Port of Virginia has been in discussions with domestic shipbuilding companies about using the Newport News Marine Terminal — the port’s main breakbulk and roll-on/roll-off (ro/ro) facility — as a laydown area for ship components. “Given the experience that we’ve gotten over the last two years with the offshore wind project, it helps us greatly handle and attract new business,” Harris said. <h3>‘New class’ of heavy-lift vessels </h3>Along with enhancing its ability to move heavy project cargo like offshore wind components from ship to shore, the Port of Virginia is executing a $450 million dredging project that will deepen Norfolk Harbor to 55 feet and help the port accommodate the kinds of larger vessels needed to transport cargoes of that size. Once that work is complete, the port will have one of the deepest, widest channels on the US East Coast. “As we deepen our channel, we’re talking about a new class of heavy-lift vessels that could possibly use Virginia,” Harris said, adding that the dredging project is on track for completion by early 2026. One high-profile heavy-lift vessel that recently arrived in Virginia for the offshore wind project is the Charybdis, the first US-flag-compliant wind turbine installation vessel. Capable of lifting up to 2,200 tons, the 472-foot heavy-lift vessel has been under construction at Brownsville, Texas, since 2020 and arrived at the Portsmouth Marine Terminal Sept. 17. Dominion Energy commissioned the Charybdis to ferry wind components from the port to the CVOW installation site in compliance with the Jones Act, the federal law requiring that goods shipped between US ports are transported on ships that are US-built, owned and operated. “We’re working through final punch list items in accordance with our installation vessel’s certificate of inspection,” Slayton said. Once the CVOW project is complete, the Charybdis will be available to support other types of heavy-lift projects. Contact Autumn Cafiero Giusti at <a href="mailto:autumn@autumngiusti.com">autumn@autumngiusti.com</a>. </div>

As offshore wind development slows in the United States, the Port of Virginia is experiencing a continued surge of breakbulk cargo tonnage, largely driven by the ongoing build-out of the largest offshore wind farm in the US mid-Atlantic. Virginia Port Authority (VPA) spokesperson Joe Harris told the Journal of Commerce that because of the project, the port is now positioned to take on heavy-lift cargo well into the future — with or without offshore wind. “We expect that positive tonnage trend to continue for the foreseeable future,” Harris said. Breakbulk cargo volumes at the Port of Virginia jumped 157% year over year, to 57,909 tons in September, according to VPA figures. Breakbulk activity also trended upward during the first nine months of the year, rising 16% year over year, to 417,878 tons. “That’s primarily attributable to offshore wind,” Harris said, referring to the 2.6-GW Coastal Virginia Offshore Wind (CVOW) project that Virginia utility Dominion Energy is developing about 27 miles off the coast of Virginia Beach. Construction of the CVOW project is about 60% finished and remains on schedule for full completion in late 2026, with the wind farm on track to start delivering to the grid in the first quarter of 2026, Dominion spokesperson Jeremy Slayton told the Journal of Commerce. All 176 monopile foundations have been installed for the project to date, along with 59 of 176 transition pieces — the “yellow pieces” that connect the foundations to the turbine towers, Slayton said. Sizing up bigger cargo The CVOW project has been a test case of sorts for the Port of Virginia’s heavy-lift capabilities for future cargo opportunities. “The experience we’re gaining in moving these components helps us market ourselves as a true heavy-lift port,” Harris said. Harris cited a 4,000-ton offshore wind component that moved through the port in September as one of the larger pieces the facility has been able to accommodate. “We moved it very safely and efficiently,” he said. “And it helps to be able to say that we can handle things up to this size and bigger, and here’s our point of proof.” In March, the Port of Virginia completed over $220 million in upgrades at the 287-acre Portsmouth Marine Terminal, the staging site for the CVOW project’s components and one of VPA’s two multipurpose terminals in Norfolk Harbor. Part of the port’s $1.4 billion strategic infrastructure plan is focused in part on supporting larger cargo volumes; the improvements included reconstructing the berth, reinforcing the cargo yard’s pavement and reworking the vessel mooring configuration. Looking to future heavy-lift opportunities, Harris said the Port of Virginia has been in discussions with domestic shipbuilding companies about using the Newport News Marine Terminal — the port’s main breakbulk and roll-on/roll-off (ro/ro) facility — as a laydown area for ship components. “Given the experience that we’ve gotten over the last two years with the offshore wind project, it helps us greatly handle and attract new business,” Harris said. ‘New class’ of heavy-lift vessels Along with enhancing its ability to move heavy project cargo like offshore wind components from ship to shore, the Port of Virginia is executing a $450 million dredging project that will deepen Norfolk Harbor to 55 feet and help the port accommodate the kinds of larger vessels needed to transport cargoes of that size. Once that work is complete, the port will have one of the deepest, widest channels on the US East Coast. “As we deepen our channel, we’re talking about a new class of heavy-lift vessels that could possibly use Virginia,” Harris said, adding that the dredging project is on track for completion by early 2026. One high-profile heavy-lift vessel that recently arrived in Virginia for the offshore wind project is the Charybdis, the first US-flag-compliant wind turbine installation vessel. Capable of lifting up to 2,200 tons, the 472-foot heavy-lift vessel has been under construction at Brownsville, Texas, since 2020 and arrived at the Portsmouth Marine Terminal Sept. 17. Dominion Energy commissioned the Charybdis to ferry wind components from the port to the CVOW installation site in compliance with the Jones Act, the federal law requiring that goods shipped between US ports are transported on ships that are US-built, owned and operated. “We’re working through final punch list items in accordance with our installation vessel’s certificate of inspection,” Slayton said. Once the CVOW project is complete, the Charybdis will be available to support other types of heavy-lift projects. Contact Autumn Cafiero Giusti at autumn@autumngiusti.com .

Port News

Energy projects

Heavy-haul transport

Breakbulk News

Wind cargo helps Virginia port lay groundwork for more heavy-lift business

<div class="phx-topic abstract-wrapper">Markets such as high tech and perishables are showing strong growth and, combined with shifting trade patterns in Asia, will help offset the lack of a traditional air peak season this quarter, forwarders say. </div>

Markets such as high tech and perishables are showing strong growth and, combined with shifting trade patterns in Asia, will help offset the lack of a traditional air peak season this quarter, forwarders say.

<div class="phx-topic">Forwarders are not expecting a peak air cargo season on the trans-Pacific this year, with demand weakened by the volatile impact of US tariffs and Washington’s elimination of duty-free imports on low-value goods. But no peak season does not mean the air freight business is in the doldrums. Certain verticals show strong growth, and demand is supported by shifting trade patterns in Asia. “Our market-share gains are continuing in the fourth quarter, especially in hard cargo, where we have been very successful,” Stefan Paul, CEO of Kuehne + Nagel, told analysts during <a href="https://www.joc.com/article/rival-kuehne-nagel-circles-dsv-customers-as-ocean-tender-season-nears-6102316">a third-quarter results briefing</a> Thursday. “What is clear is there is no peak season to be expected, but there are two main verticals where we see nice growth — perishables and the hyperscaler-semiconductor market — which is going to continue,” Paul said, adding that hyperscalers accounted for half the 7% year-over-year growth in third-quarter air freight volume. Semiconductors and hyperscalers are components used in AI-related infrastructure, with <a href="https://www.joc.com/article/growing-appetite-for-ai-technology-feeds-into-air-cargo-demand-6088168">tech giants pouring huge investments</a> into developing data centers, particularly in the US and China. “We have now 14 (air) charter operations out of Hanoi in Vietnam, purely serving hyperscalers and semiconductors and high-tech customers, which are operated by [Asia subsidiary] Apex, and we jointly leverage the capacity toward the US,” Paul said. Martin Habisreitinger, COO for air freight at Hellmann Worldwide Logistics, was not expecting a peak season on the trans-Pacific, but also highlighted ongoing Asia high-tech demand from the US. “We see a shift this year in air cargo from China going more into Southeast Asia,” Habisreitinger told the Journal of Commerce. “Much of what is being reduced in China is now coming out of Vietnam, out of Thailand, India and some other markets. The volume and demand is still there, but much of it is coming out of other origins to China.” <h3>No historical pickup in demand </h3>Habisreitinger said there has been a definite change in market dynamics this year, as there was no historical pickup in demand before the Oct. 1 start of Golden Week. “Normally, before Golden Week, there’s a lot of cargo coming into the market because factories shut for 10 days in China, but this year we did not see that,” he said. Another factor that normally influences air freight demand is high ocean rates, which signify tight capacity and push cargo owners into the air, but that is currently a nonfactor as ocean rates have fallen significantly on the trans-Pacific in the past few weeks. “We have seen ocean freight rates declining on the trans-Pacific, so we don’t expect huge demand for air freight this peak season,” Habisreitinger said. DSV CEO Jens Lund expects global air cargo volume growth to remain below GDP growth in the fourth quarter. While DSV’s air freight volume of 579,000 metric tons in the third quarter was up 64%, the growth was flat without the 232,000-metric-ton contribution from DB Schenker, according to DSV’s third-quarter earnings. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Forwarders are not expecting a peak air cargo season on the trans-Pacific this year, with demand weakened by the volatile impact of US tariffs and Washington’s elimination of duty-free imports on low-value goods. But no peak season does not mean the air freight business is in the doldrums. Certain verticals show strong growth, and demand is supported by shifting trade patterns in Asia. “Our market-share gains are continuing in the fourth quarter, especially in hard cargo, where we have been very successful,” Stefan Paul, CEO of Kuehne + Nagel, told analysts during a third-quarter results briefing Thursday. “What is clear is there is no peak season to be expected, but there are two main verticals where we see nice growth — perishables and the hyperscaler-semiconductor market — which is going to continue,” Paul said, adding that hyperscalers accounted for half the 7% year-over-year growth in third-quarter air freight volume. Semiconductors and hyperscalers are components used in AI-related infrastructure, with tech giants pouring huge investments into developing data centers, particularly in the US and China. “We have now 14 (air) charter operations out of Hanoi in Vietnam, purely serving hyperscalers and semiconductors and high-tech customers, which are operated by [Asia subsidiary] Apex, and we jointly leverage the capacity toward the US,” Paul said. Martin Habisreitinger, COO for air freight at Hellmann Worldwide Logistics, was not expecting a peak season on the trans-Pacific, but also highlighted ongoing Asia high-tech demand from the US. “We see a shift this year in air cargo from China going more into Southeast Asia,” Habisreitinger told the Journal of Commerce. “Much of what is being reduced in China is now coming out of Vietnam, out of Thailand, India and some other markets. The volume and demand is still there, but much of it is coming out of other origins to China.” No historical pickup in demand Habisreitinger said there has been a definite change in market dynamics this year, as there was no historical pickup in demand before the Oct. 1 start of Golden Week. “Normally, before Golden Week, there’s a lot of cargo coming into the market because factories shut for 10 days in China, but this year we did not see that,” he said. Another factor that normally influences air freight demand is high ocean rates, which signify tight capacity and push cargo owners into the air, but that is currently a nonfactor as ocean rates have fallen significantly on the trans-Pacific in the past few weeks. “We have seen ocean freight rates declining on the trans-Pacific, so we don’t expect huge demand for air freight this peak season,” Habisreitinger said. DSV CEO Jens Lund expects global air cargo volume growth to remain below GDP growth in the fourth quarter. While DSV’s air freight volume of 579,000 metric tons in the third quarter was up 64%, the growth was flat without the 232,000-metric-ton contribution from DB Schenker, according to DSV’s third-quarter earnings. Contact Greg Knowler at greg.knowler@spglobal.com .

Air Cargo Forwarder News

Air Cargo Carriers News

Trans-Pacific

Air Cargo

Trans-Pacific air cargo to be driven by ‘vertical’ markets: forwarders

<div class="phx-topic abstract-wrapper">Slowing demand from sluggish European economies and excess ocean capacity on the Asia-Europe trade lane are frustrating liners’ attempts to raise rates.</div>

Slowing demand from sluggish European economies and excess ocean capacity on the Asia-Europe trade lane are frustrating liners’ attempts to raise rates.

<div class="phx-topic">Spot rates from Asia to North Europe and the Mediterranean remain below long-term rates despite ocean carriers withdrawing significant amounts of capacity and pushing up prices ahead of the end-of-year tender season. Carriers have stepped up efforts to stem the steadily falling spot market by blanking 213,724 TEUs of capacity on Asia-North Europe routes in October, the most withdrawn since March last year, according to eeSea. Drewry reports that carriers announced 90 blanked sailings globally this month, with 43% of those on the Asia-North Europe and Mediterranean trades. Michael Ebbe, CFO of forwarder DSV, said he expected demand to flatten out or go into “slightly negative territory” on Asia-Europe through the fourth quarter and in the run-up to the Lunar New Year holiday in February. “If you look at the latest statistics, it shows that the market is under pressure on this trade lane, and some shippers have maybe pre-loaded some cargo this year,” Ebbe told the Journal of Commerce. While cutting sailings, carriers have also raised freight-all-kinds (FAK) rates. On Oct. 15, an FAK increase added around $300 on the day, but the rate has since given back some of the gains and remains below the contract rate. Another rate increase is planned for Nov. 1, and there are indications that a mid-November increase is also in the cards. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="6e51a3c0-5772-45a7-9cf0-5d566cc75495"></dynamic-object></div>Rate benchmarking platform Xeneta shows the average spot rate for Asia-North Europe is currently at $1,978 per FEU, down 40% since Aug. 1. Average long-term rates signed in the past three months are currently at $2,168 per FEU, with Xeneta data showing the contract rate has been above the spot market since Sept. 10. “The spot-rate spike in mid-October on European-bound front hauls should be good news for carriers, but they won’t be celebrating too much because it is not enough to bring it above the long-term rates,” said Peter Sand, Xeneta’s chief analyst. “This plays into the hands of shippers, who must be considering pushing contract negotiations back into Q1 next year,” he added. “A long-term market higher than a short-term market is an extremely powerful negotiating position for shippers, so why would they lock into a new 12-month contract at those levels?” <h3>Time is on the side of shippers </h3>Sand said shippers with cargo on front hauls could benefit from signing contracts later than normal, as time would work in their favor. “Overcapacity grows bigger every day, the first quarter is [historically] low on volumes, rerouting to avoid the Houthis and the Red Sea is well-established, and the around-Africa premium is still higher than what costs can verify,” he noted. “If shippers can extend existing contracts, that could buy themselves some time, so signing in Q1 instead of December 2025 seems like a fine strategy,” Sand added. Demand this year through August has been robust, with the latest data from Container Trades Statistics (CTS) showing volume on Asia-Europe was up 7.3% in the first eight months of the year. While data for September is not yet available, forwarders have highlighted slowing demand in the fourth quarter from sluggish European economies and excess capacity on Asia-Europe. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e8ec7edc-c832-4205-a8ed-f653d0f915a5"></dynamic-object></div>“There's a lot of capacity coming in with many newbuildings, and that, in combination with the lower demand, is putting pressure on the rates,” said DSV’s Ebbe. “The carriers have become more disciplined as demand slows, but if you look at the order book, they are still ordering vessels.” The order book has reached 30% of the global in-service fleet at 9.7 million TEUs, with 1.16 million TEUs of capacity comprising ships of 14,500 TEUs and above delivered so far this year, destined mostly for Asia-Europe, according to Sea-web, a sister company of the Journal of Commerce within S&amp;P Global. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Spot rates from Asia to North Europe and the Mediterranean remain below long-term rates despite ocean carriers withdrawing significant amounts of capacity and pushing up prices ahead of the end-of-year tender season. Carriers have stepped up efforts to stem the steadily falling spot market by blanking 213,724 TEUs of capacity on Asia-North Europe routes in October, the most withdrawn since March last year, according to eeSea. Drewry reports that carriers announced 90 blanked sailings globally this month, with 43% of those on the Asia-North Europe and Mediterranean trades. Michael Ebbe, CFO of forwarder DSV, said he expected demand to flatten out or go into “slightly negative territory” on Asia-Europe through the fourth quarter and in the run-up to the Lunar New Year holiday in February. “If you look at the latest statistics, it shows that the market is under pressure on this trade lane, and some shippers have maybe pre-loaded some cargo this year,” Ebbe told the Journal of Commerce. While cutting sailings, carriers have also raised freight-all-kinds (FAK) rates. On Oct. 15, an FAK increase added around $300 on the day, but the rate has since given back some of the gains and remains below the contract rate. Another rate increase is planned for Nov. 1, and there are indications that a mid-November increase is also in the cards. Rate benchmarking platform Xeneta shows the average spot rate for Asia-North Europe is currently at $1,978 per FEU, down 40% since Aug. 1. Average long-term rates signed in the past three months are currently at $2,168 per FEU, with Xeneta data showing the contract rate has been above the spot market since Sept. 10. “The spot-rate spike in mid-October on European-bound front hauls should be good news for carriers, but they won’t be celebrating too much because it is not enough to bring it above the long-term rates,” said Peter Sand, Xeneta’s chief analyst. “This plays into the hands of shippers, who must be considering pushing contract negotiations back into Q1 next year,” he added. “A long-term market higher than a short-term market is an extremely powerful negotiating position for shippers, so why would they lock into a new 12-month contract at those levels?” Time is on the side of shippers Sand said shippers with cargo on front hauls could benefit from signing contracts later than normal, as time would work in their favor. “Overcapacity grows bigger every day, the first quarter is [historically] low on volumes, rerouting to avoid the Houthis and the Red Sea is well-established, and the around-Africa premium is still higher than what costs can verify,” he noted. “If shippers can extend existing contracts, that could buy themselves some time, so signing in Q1 instead of December 2025 seems like a fine strategy,” Sand added. Demand this year through August has been robust, with the latest data from Container Trades Statistics (CTS) showing volume on Asia-Europe was up 7.3% in the first eight months of the year. While data for September is not yet available, forwarders have highlighted slowing demand in the fourth quarter from sluggish European economies and excess capacity on Asia-Europe. “There's a lot of capacity coming in with many newbuildings, and that, in combination with the lower demand, is putting pressure on the rates,” said DSV’s Ebbe. “The carriers have become more disciplined as demand slows, but if you look at the order book, they are still ordering vessels.” The order book has reached 30% of the global in-service fleet at 9.7 million TEUs, with 1.16 million TEUs of capacity comprising ships of 14,500 TEUs and above delivered so far this year, destined mostly for Asia-Europe, according to Sea-web, a sister company of the Journal of Commerce within S&P Global. Contact Greg Knowler at greg.knowler@spglobal.com .

Asia-Europe

Asia-Europe spot rates defy carrier efforts to lift prices above contract levels

<div class="phx-topic abstract-wrapper">The combination of AAA Cooper Transportation, Midwest Motor Express and Dependable Highway Express covers the US LTL market coast-to-coast, except for the Northeast. </div>

The combination of AAA Cooper Transportation, Midwest Motor Express and Dependable Highway Express covers the US LTL market coast-to-coast, except for the Northeast.

<div class="phx-topic">Knight-Swift is unifying its three less-than-truckload (LTL) subsidiaries under the AAA Cooper Transportation (ACT) brand, reflecting a back-office integration the company says is complete. The rebranding is the next step in the development of Knight-Swift as a coast-to-coast LTL provider, with terminals in most US regions except the Northeast. As of Jan. 1, Midwest Motor Express (MME) and Dependable Highway Express (DHE) will become ACT, Knight-Swift CEO Adam Miller told Wall Street analysts Wednesday. “The consolidated branding recognizes that we are already one business operating seamlessly on one system through one network,” Miller said during an earnings call. That network is still growing, but <a href="https://www.joc.com/article/knight-swift-puts-ltl-buyouts-on-hold-as-us-freight-market-flattens-5928140">not as quickly as last year</a>, when Knight-Swift <a href="https://www.joc.com/article/knight-swift-acquisition-expands-ltl-network-coast-to-coast-5703164">acquired DHE</a> and added 51 terminals, including DHE facilities and former Yellow properties. The company opened one new LTL terminal in this third quarter and replaced two others with larger facilities. Knight-Swift’s LTL door count increased 10.2% year over year. The LTL segment of Knight-Swift increased revenue 21.5% in the third quarter to $340.5 million, with its top line bolstered by the DHE acquisition in the third quarter of 2024. The three regional LTLs increased their combined shipment volume 14.2% from a year ago in this Q3, again thanks in part to the addition of DHE, boosting overall revenue. Knight-Swift’s LTL segment would have had a $27.1 million operating profit, but a $28.8 million goodwill charge related to the rebranding led to a $1.7 million operating loss. Despite <a href="https://www.joc.com/article/ltl-carriers-push-general-rate-hikes-despite-lackluster-us-freight-demand-6101838">market weakness</a>, “we are capturing growth opportunities with new LTL customers as well as from some of our long-standing truckload customers,” Miller said. <h3>LTL realignment </h3>The integration and rebranding of the LTL carriers Knight-Swift began acquiring in 2021 could put the company in a better competitive position in <a href="https://www.joc.com/article/journal-of-commerce-rankings-us-ltl-sector-defies-soft-demand-regains-traction-6010008">an evolving LTL market</a>. Following the collapse of Yellow in July 2023, companies such as Estes Express Lines, R+L Carriers and Saia have risen higher among the top 10 carriers ranked by revenue. Estes was the fifth-largest LTL carrier in 2022 and is now ranked third. R+L was eighth and is now ranked fifth, while Saia rose from ninth-ranked in 2022 to sixth last year. Knight-Swift’s LTL segment ranks 12th on the current Journal of Commerce/SJ Consulting Group list of top 25 US LTL trucking companies, with $1.07 billion in 2024 revenue. Year-over-year comparisons in revenue and volume are likely to get tougher as the DHE acquisition fades from view starting in the fourth quarter, which so far has been weak. “LTL demand appears softer than the normal fourth quarter seasonal slowdown,” Knight-Swift CFO Andrew Hess said during the earnings call. Contact William B. Cassidy at <a href="mailto://bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>. </div>

Knight-Swift is unifying its three less-than-truckload (LTL) subsidiaries under the AAA Cooper Transportation (ACT) brand, reflecting a back-office integration the company says is complete. The rebranding is the next step in the development of Knight-Swift as a coast-to-coast LTL provider, with terminals in most US regions except the Northeast. As of Jan. 1, Midwest Motor Express (MME) and Dependable Highway Express (DHE) will become ACT, Knight-Swift CEO Adam Miller told Wall Street analysts Wednesday. “The consolidated branding recognizes that we are already one business operating seamlessly on one system through one network,” Miller said during an earnings call. That network is still growing, but not as quickly as last year , when Knight-Swift acquired DHE and added 51 terminals, including DHE facilities and former Yellow properties. The company opened one new LTL terminal in this third quarter and replaced two others with larger facilities. Knight-Swift’s LTL door count increased 10.2% year over year. The LTL segment of Knight-Swift increased revenue 21.5% in the third quarter to $340.5 million, with its top line bolstered by the DHE acquisition in the third quarter of 2024. The three regional LTLs increased their combined shipment volume 14.2% from a year ago in this Q3, again thanks in part to the addition of DHE, boosting overall revenue. Knight-Swift’s LTL segment would have had a $27.1 million operating profit, but a $28.8 million goodwill charge related to the rebranding led to a $1.7 million operating loss. Despite market weakness , “we are capturing growth opportunities with new LTL customers as well as from some of our long-standing truckload customers,” Miller said. LTL realignment The integration and rebranding of the LTL carriers Knight-Swift began acquiring in 2021 could put the company in a better competitive position in an evolving LTL market . Following the collapse of Yellow in July 2023, companies such as Estes Express Lines, R+L Carriers and Saia have risen higher among the top 10 carriers ranked by revenue. Estes was the fifth-largest LTL carrier in 2022 and is now ranked third. R+L was eighth and is now ranked fifth, while Saia rose from ninth-ranked in 2022 to sixth last year. Knight-Swift’s LTL segment ranks 12th on the current Journal of Commerce/SJ Consulting Group list of top 25 US LTL trucking companies, with $1.07 billion in 2024 revenue. Year-over-year comparisons in revenue and volume are likely to get tougher as the DHE acquisition fades from view starting in the fourth quarter, which so far has been weak. “LTL demand appears softer than the normal fourth quarter seasonal slowdown,” Knight-Swift CFO Andrew Hess said during the earnings call. Contact William B. Cassidy at bill.cassidy@spglobal.com .

Trucking News

Surface

Knight-Swift combining LTL subsidiaries to form one carrier under ACT brand

<div class="phx-topic abstract-wrapper">The New Jersey-based carrier believes its vessels should be treated as container ships given that 80% of their cargo is containerized, but a USTR designation that would classify the ships as vehicle carriers means the company faces hefty US port fees.</div>

The New Jersey-based carrier believes its vessels should be treated as container ships given that 80% of their cargo is containerized, but a USTR designation that would classify the ships as vehicle carriers means the company faces hefty US port fees.

<div class="phx-topic">US-headquartered Atlantic Container Line (ACL) is “reviewing all options” after its China-built vessels were classified as vehicle carriers under new guidance from the US Trade Representative (USTR), setting the company up for a potential hit of $35 million each year in US port fees. Andrew Abbott, CEO of the New Jersey-based carrier, would not be drawn on the company’s possible alternatives when contacted by the Journal of Commerce Thursday. “We are reviewing all of the options at the moment,” Abbott said. “We are not giving up.” Options include cutting some US port calls altogether or favoring alternatives in Canada and Mexico. Other possibilities include swapping vessels with ACL parent company Grimaldi Group, investing in non-China-built ships or passing the new costs on to customers with surcharges or higher freight rates. ACL’s weekly trans-Atlantic services already call at Canada’s Halifax, along with New York, Baltimore and Norfolk. A further possibility is to reflag ACL’s ships in the US, a move that would exempt them from the port fees but is seen as an expensive option because it would require US crews. ACL operates a fleet of five container vessel roll-on/roll-off (con-ro) ships that have a capacity of 3,800 TEUs and multiple decks for roll-on/roll-off (ro/ro) and high and heavy cargo covering 311,000 square feet. The carrier believes the vessels should be treated as container ships given that 80% of their cargo is containerized, with another 9% breakbulk that is moved on platforms and the remaining 12% either rollable equipment or cars. By comparison, automobiles made up 30% of the cargo carried by container lines to and from the US East Coast and Europe in the first five months of this year, Abbott said, quoting data from PIERS, a sister company of the Journal of Commerce within S&amp;P Global. <h3>Customers are ‘incredulous’ </h3>In a Federal Register notice published Oct. 16, the USTR clarified that its definition of a vehicle carrier is based on the International Maritime Organization’s (IMO) international classification of ship types. Vehicle carriers are subject to a US fee of $46 per net ton. Highlighting the impact of the USTR’s decision, Abbot said each of ACL’s ships would face a port fee of $1.4 million every time they made an initial call at a US port, capped at five calls by the same vessel a year. “That’s 25 vessels being charged $1.4 million a year,” Abbott told CNBC Wednesday. Last week’s Federal Register notice said carriers could defer payment of the charges until Dec. 10 while the USTR considers changes to its port fee measures that affect vehicle carriers and other ship types. Operators must self-report a ship’s arrival and pay the port fee to US Customs and Border Protection (CBP) before the vessel docks, with CBP serving as the USTR’s collection agency, but neither USTR nor CBP has made clear the process for deferring port charges. Abbot told CNBC that one of ACL’s ships has already paid the port fee after docking at a US port the same day charges took effect on Oct. 14. Abbott said customers are “incredulous” that ACL is being charged port fees, noting that importers are already dealing with the financial burden of tariffs and that passing along the extra cost of port fees could jeopardize the carrier’s business. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

US-headquartered Atlantic Container Line (ACL) is “reviewing all options” after its China-built vessels were classified as vehicle carriers under new guidance from the US Trade Representative (USTR), setting the company up for a potential hit of $35 million each year in US port fees. Andrew Abbott, CEO of the New Jersey-based carrier, would not be drawn on the company’s possible alternatives when contacted by the Journal of Commerce Thursday. “We are reviewing all of the options at the moment,” Abbott said. “We are not giving up.” Options include cutting some US port calls altogether or favoring alternatives in Canada and Mexico. Other possibilities include swapping vessels with ACL parent company Grimaldi Group, investing in non-China-built ships or passing the new costs on to customers with surcharges or higher freight rates. ACL’s weekly trans-Atlantic services already call at Canada’s Halifax, along with New York, Baltimore and Norfolk. A further possibility is to reflag ACL’s ships in the US, a move that would exempt them from the port fees but is seen as an expensive option because it would require US crews. ACL operates a fleet of five container vessel roll-on/roll-off (con-ro) ships that have a capacity of 3,800 TEUs and multiple decks for roll-on/roll-off (ro/ro) and high and heavy cargo covering 311,000 square feet. The carrier believes the vessels should be treated as container ships given that 80% of their cargo is containerized, with another 9% breakbulk that is moved on platforms and the remaining 12% either rollable equipment or cars. By comparison, automobiles made up 30% of the cargo carried by container lines to and from the US East Coast and Europe in the first five months of this year, Abbott said, quoting data from PIERS, a sister company of the Journal of Commerce within S&P Global. Customers are ‘incredulous’ In a Federal Register notice published Oct. 16, the USTR clarified that its definition of a vehicle carrier is based on the International Maritime Organization’s (IMO) international classification of ship types. Vehicle carriers are subject to a US fee of $46 per net ton. Highlighting the impact of the USTR’s decision, Abbot said each of ACL’s ships would face a port fee of $1.4 million every time they made an initial call at a US port, capped at five calls by the same vessel a year. “That’s 25 vessels being charged $1.4 million a year,” Abbott told CNBC Wednesday. Last week’s Federal Register notice said carriers could defer payment of the charges until Dec. 10 while the USTR considers changes to its port fee measures that affect vehicle carriers and other ship types. Operators must self-report a ship’s arrival and pay the port fee to US Customs and Border Protection (CBP) before the vessel docks, with CBP serving as the USTR’s collection agency, but neither USTR nor CBP has made clear the process for deferring port charges. Abbot told CNBC that one of ACL’s ships has already paid the port fee after docking at a US port the same day charges took effect on Oct. 14. Abbott said customers are “incredulous” that ACL is being charged port fees, noting that importers are already dealing with the financial burden of tariffs and that passing along the extra cost of port fees could jeopardize the carrier’s business. Contact Keith Wallis at keithwallis@hotmail.com .

Transport, Trade and Regulation News

Ro/ro cargo

ACL weighs options after facing annual $35 million USTR port bill

<div class="phx-topic abstract-wrapper">The LTL world of 2025 does not reward those who guess, but rather those who know — and knowing begins with visibility. </div>

The LTL world of 2025 does not reward those who guess, but rather those who know — and knowing begins with visibility.

<div class="phx-topic">The US less-than-truckload (LTL) sector stands at a critical crossroads. Faced with depressed demand, high operating costs, economic uncertainty and rising customer expectations, LTL carriers, brokers and shippers are under mounting pressure to do more with less. Efficiency, accuracy and transparency have never been more vital. Even as some aspects of LTL have modernized, persistent blind spots still drain time, revenue and customer satisfaction. Accessorial management and location visibility remain at the heart of operational performance and profitability in the LTL sector, and companies must solve these challenges to thrive in this freight environment. Accessorial charges are often treated as the fine print of freight, but their financial impact is anything but small. These additional fees, covering services such as liftgate usage, residential delivery, limited-access sites and inside delivery are frequently not accounted for until after a delivery is completed. At that point, shippers receive unexpected invoices, brokers scramble to reconcile charges, and carriers are left fielding disputes that strain valuable relationships and negatively impact their bottom line. Without an accurate, upfront method of identifying potential accessorials, companies lose control over cost predictability. This unpredictability does more than damage budgets. It undermines long-term rate negotiations and muddies performance metrics such as cost per shipment and gross margin. Billing disputes over accessorials can also slow down cash flow and stretch out time-to-payment cycles. As the logistics sector faces tighter margins and rising customer expectations, these seemingly minor charges can add up to major financial consequences. Location data is another underestimated factor that directly impacts LTL performance. While most transportation management systems (TMSs) offer basic shipment tracking, they often lack granular location insights. This includes data points such as whether a site is residential or commercial, whether there is dock access or a forklift onsite, or if the delivery site has limited hours or requires specialized entry. These details may seem minor, but their absence leads to service mismatches, re-delivery attempts, extended dwell times and more accessorial charges. For example, failing to flag a residential delivery that requires a liftgate can result in a surprise fee and an unhappy customer. A shipment bound for a military base or an airport without the right equipment or credentials can create costly delays and failed deliveries. Inaccurate or incomplete location information does more than increase costs — it erodes operational agility. <h3>Technology can ease challenges </h3>The good news is that technology now exists to solve these challenges at scale. New platforms that leverage AI, machine learning and geospatial data are transforming how logistics professionals manage LTL freight. These tools can identify potential accessorial charges before the freight is tendered, analyze delivery site characteristics in real time and deliver a unified accessorial view across all stakeholders. By automating accessorial identification during order entry and integrating precise location attributes such as limited access, loading dock availability, forklifts on site or gated entry, these platforms allow teams to move from reactive firefighting to proactive planning. With real-time alerts and API integrations that connect directly into a TMS, shippers, brokers and carriers can operate from a shared source of accessorial truth. The impact of smarter accessorial identification and location visibility delivers measurable results. Companies that have adopted these advanced solutions have reported a 75% reduction in unexpected accessorial fees, leading to cleaner invoices and faster dispute resolution. Customers have also seen improved on-time in-full (OTIF) performance, driving higher customer satisfaction and stronger service-level agreement (SLA) compliance. This shift is particularly timely in 2025, as the LTL industry grapples with economic volatility, rising operating costs and major classification changes. Freight volumes are inconsistent, carriers are prioritizing profitability over market share, and the new National Motor Freight Traffic Association density-based classification system is forcing shippers to re-evaluate how they package and price freight. In this environment, hidden costs such as accessorials and inefficiencies tied to poor location visibility can erode already thin margins. With shifting demand, cost inflation and operational headwinds, the ability to forecast costs, identify risks and plan accordingly has become a key competitive advantage. In the past, accessorial management and granular location visibility may have been viewed as optional enhancements. Today, they are essential for any company that relies on LTL shipping as a core part of its logistics strategy. When customer expectations are rising and disruptions are the new norm, having visibility into every shipment detail and every delivery site is table stakes. The LTL world of 2025 does not reward those who guess. It rewards those who know, and knowing begins with visibility. North Winship is president of Shiplify. Contact him at <a href="mailto:northw@shiplify.com">northw@shiplify.com</a>. Bart De Muynck is a strategic advisor for Drewry. Contact him at <a href="mailto:bart@bartdemuynck.com">bart@bartdemuynck.com</a>. </div>

The US less-than-truckload (LTL) sector stands at a critical crossroads. Faced with depressed demand, high operating costs, economic uncertainty and rising customer expectations, LTL carriers, brokers and shippers are under mounting pressure to do more with less. Efficiency, accuracy and transparency have never been more vital. Even as some aspects of LTL have modernized, persistent blind spots still drain time, revenue and customer satisfaction. Accessorial management and location visibility remain at the heart of operational performance and profitability in the LTL sector, and companies must solve these challenges to thrive in this freight environment. Accessorial charges are often treated as the fine print of freight, but their financial impact is anything but small. These additional fees, covering services such as liftgate usage, residential delivery, limited-access sites and inside delivery are frequently not accounted for until after a delivery is completed. At that point, shippers receive unexpected invoices, brokers scramble to reconcile charges, and carriers are left fielding disputes that strain valuable relationships and negatively impact their bottom line. Without an accurate, upfront method of identifying potential accessorials, companies lose control over cost predictability. This unpredictability does more than damage budgets. It undermines long-term rate negotiations and muddies performance metrics such as cost per shipment and gross margin. Billing disputes over accessorials can also slow down cash flow and stretch out time-to-payment cycles. As the logistics sector faces tighter margins and rising customer expectations, these seemingly minor charges can add up to major financial consequences. Location data is another underestimated factor that directly impacts LTL performance. While most transportation management systems (TMSs) offer basic shipment tracking, they often lack granular location insights. This includes data points such as whether a site is residential or commercial, whether there is dock access or a forklift onsite, or if the delivery site has limited hours or requires specialized entry. These details may seem minor, but their absence leads to service mismatches, re-delivery attempts, extended dwell times and more accessorial charges. For example, failing to flag a residential delivery that requires a liftgate can result in a surprise fee and an unhappy customer. A shipment bound for a military base or an airport without the right equipment or credentials can create costly delays and failed deliveries. Inaccurate or incomplete location information does more than increase costs — it erodes operational agility. Technology can ease challenges The good news is that technology now exists to solve these challenges at scale. New platforms that leverage AI, machine learning and geospatial data are transforming how logistics professionals manage LTL freight. These tools can identify potential accessorial charges before the freight is tendered, analyze delivery site characteristics in real time and deliver a unified accessorial view across all stakeholders. By automating accessorial identification during order entry and integrating precise location attributes such as limited access, loading dock availability, forklifts on site or gated entry, these platforms allow teams to move from reactive firefighting to proactive planning. With real-time alerts and API integrations that connect directly into a TMS, shippers, brokers and carriers can operate from a shared source of accessorial truth. The impact of smarter accessorial identification and location visibility delivers measurable results. Companies that have adopted these advanced solutions have reported a 75% reduction in unexpected accessorial fees, leading to cleaner invoices and faster dispute resolution. Customers have also seen improved on-time in-full (OTIF) performance, driving higher customer satisfaction and stronger service-level agreement (SLA) compliance. This shift is particularly timely in 2025, as the LTL industry grapples with economic volatility, rising operating costs and major classification changes. Freight volumes are inconsistent, carriers are prioritizing profitability over market share, and the new National Motor Freight Traffic Association density-based classification system is forcing shippers to re-evaluate how they package and price freight. In this environment, hidden costs such as accessorials and inefficiencies tied to poor location visibility can erode already thin margins. With shifting demand, cost inflation and operational headwinds, the ability to forecast costs, identify risks and plan accordingly has become a key competitive advantage. In the past, accessorial management and granular location visibility may have been viewed as optional enhancements. Today, they are essential for any company that relies on LTL shipping as a core part of its logistics strategy. When customer expectations are rising and disruptions are the new norm, having visibility into every shipment detail and every delivery site is table stakes. The LTL world of 2025 does not reward those who guess. It rewards those who know, and knowing begins with visibility. North Winship is president of Shiplify. Contact him at northw@shiplify.com . Bart De Muynck is a strategic advisor for Drewry. Contact him at bart@bartdemuynck.com .

Visibility transforming accessorial and location insights in LTL shipping

<div class="phx-topic abstract-wrapper">There are measures carriers can take around the edges, but if they really want to take control of supply — and thus price — collectively sidelining some high-caliber tonnage is the standout solution, writes Jeremy Masters. </div>

There are measures carriers can take around the edges, but if they really want to take control of supply — and thus price — collectively sidelining some high-caliber tonnage is the standout solution, writes Jeremy Masters.

<div class="phx-topic">The laws of supply and demand dictate that prices will move in accordance with the relativity of the two. Container carriers can marginally move the dial between what is containerized and what is bulk or breakbulk by offering very attractive (low contribution) rates. An innovative product — for example, Gemini Cooperation’s high reliability network or an express service — might lure some air freight to sea freight. For the most part, however, carriers have very little control over demand. The key price lever that carriers have is slot supply, and current fundamentals point to heavy surplus, even as diversions around southern Africa continue. Are the carriers, then, sprinting to the edge of the cliff with newbuild deliveries, fresh orders, second-hand buying and chartering of what little spare capacity is left, followed by a freefall? Or do they at least have a parachute to slow down their momentum? There are some things they can do to help themselves in trades with overcapacity. <h3>Pushing pause </h3>The most obvious and dramatic way would be to park ships. To be impactful, that would mean collectively taking out multiple strings rather than tinkering with single strings or blank sailings. Understandably, there is a mental block in the big east-west trades when it comes to parking high-capacity, high-value, newer ships. But if the carriers get supply even minimally below demand, the economics are massively in their favor. Let's assume that, in the Asia-to-Europe trade, each consortium (for these purposes, Mediterranean Shipping Co. would be considered a consortium) ties up one string of ultra-large container vessels (ULCVs) that was forecasted to make a minimal contribution to fixed cost because of declining rates. If, because of removing these strings, freight rates were a very conservative $500 per TEU higher on average on the headhaul than they would have been, based on 20,000 TEU per week and 50 weeks, all consortiums would accumulate an additional $500,000 million per annum on all remaining loops. There would be, of course, some incremental lay-up costs, but other costs would remain similar. Parking some $3 billion worth of assets per consortium is easier in theory than in practice, especially for those carriers who need to justify some heavy investments to their boards. If the carriers accept that drastic action is required, however, and there is enough collective action — not orchestrated action, of course, in contravention of competition rules — then the results will be dramatically better, and the ships will be readily available for an upturn. <h3>Beyond parking </h3>Are there less capacity-eating measures that carriers could undertake? The catalyst for a major dive in multi-trade rates would be a return to the Red Sea and Suez Canal for Asia-to-Europe strings, but it's unlikely that we will go overnight from high-risk Red Sea transits to totally safe ones. Given the disruption and risk — for carriers and their clients — of moving all strings back to the Red Sea only to find that further issues arise, it would be entirely justifiable to keep some strings moving around the Cape of Good Hope. Big beneficial cargo owners (BCOs) and forwarders/non-vessel operating common carriers (NVOCCs) have — forcefully — adjusted to the Cape routing. And while there is higher on-the-water inventory cost, the weekly pipeline of arrivals are established. They would naturally lean towards the faster Red Sea routing, but at the same time, would want to strenuously avoid a situation where production lines are stopped or shelves empty because they have put all their eggs in the Red Sea basket that has turned bad again. This may be counterintuitive, given more expensive ship systems around the Cape, but carriers could also implement two-tier pricing to re-enforce this prudence — essentially, a premium for Red Sea risk or a deficit for longer transits, whichever you prefer. Slow-steaming is another area of capacity control where a systematic approach could eat up more capacity. This means not just applying it in over-tonnaged trades, but in all trades. Tonnage can then be moved from trades where there is oversupply to those that are short because of slow-steaming. Finally, there is the scrapping of older vessels. If we look at carriers' desire to hold onto bigger, newer assets and their purchase of relatively old smaller tonnage to run regional and feeder networks, this does not look to be a particularly encouraging area for capacity shedding. There are measures the carriers can take around the edges, but if they really want to take control of supply – and thus price – collectively sidelining some high-caliber tonnage is the standout solution. Contact Jeremy Masters at <a href="mailto:jeremy@shippingmastershk.com">jeremy@shippingmastershk.com</a>. </div>

The laws of supply and demand dictate that prices will move in accordance with the relativity of the two. Container carriers can marginally move the dial between what is containerized and what is bulk or breakbulk by offering very attractive (low contribution) rates. An innovative product — for example, Gemini Cooperation’s high reliability network or an express service — might lure some air freight to sea freight. For the most part, however, carriers have very little control over demand. The key price lever that carriers have is slot supply, and current fundamentals point to heavy surplus, even as diversions around southern Africa continue. Are the carriers, then, sprinting to the edge of the cliff with newbuild deliveries, fresh orders, second-hand buying and chartering of what little spare capacity is left, followed by a freefall? Or do they at least have a parachute to slow down their momentum? There are some things they can do to help themselves in trades with overcapacity. Pushing pause The most obvious and dramatic way would be to park ships. To be impactful, that would mean collectively taking out multiple strings rather than tinkering with single strings or blank sailings. Understandably, there is a mental block in the big east-west trades when it comes to parking high-capacity, high-value, newer ships. But if the carriers get supply even minimally below demand, the economics are massively in their favor. Let's assume that, in the Asia-to-Europe trade, each consortium (for these purposes, Mediterranean Shipping Co. would be considered a consortium) ties up one string of ultra-large container vessels (ULCVs) that was forecasted to make a minimal contribution to fixed cost because of declining rates. If, because of removing these strings, freight rates were a very conservative $500 per TEU higher on average on the headhaul than they would have been, based on 20,000 TEU per week and 50 weeks, all consortiums would accumulate an additional $500,000 million per annum on all remaining loops. There would be, of course, some incremental lay-up costs, but other costs would remain similar. Parking some $3 billion worth of assets per consortium is easier in theory than in practice, especially for those carriers who need to justify some heavy investments to their boards. If the carriers accept that drastic action is required, however, and there is enough collective action — not orchestrated action, of course, in contravention of competition rules — then the results will be dramatically better, and the ships will be readily available for an upturn. Beyond parking Are there less capacity-eating measures that carriers could undertake? The catalyst for a major dive in multi-trade rates would be a return to the Red Sea and Suez Canal for Asia-to-Europe strings, but it's unlikely that we will go overnight from high-risk Red Sea transits to totally safe ones. Given the disruption and risk — for carriers and their clients — of moving all strings back to the Red Sea only to find that further issues arise, it would be entirely justifiable to keep some strings moving around the Cape of Good Hope. Big beneficial cargo owners (BCOs) and forwarders/non-vessel operating common carriers (NVOCCs) have — forcefully — adjusted to the Cape routing. And while there is higher on-the-water inventory cost, the weekly pipeline of arrivals are established. They would naturally lean towards the faster Red Sea routing, but at the same time, would want to strenuously avoid a situation where production lines are stopped or shelves empty because they have put all their eggs in the Red Sea basket that has turned bad again. This may be counterintuitive, given more expensive ship systems around the Cape, but carriers could also implement two-tier pricing to re-enforce this prudence — essentially, a premium for Red Sea risk or a deficit for longer transits, whichever you prefer. Slow-steaming is another area of capacity control where a systematic approach could eat up more capacity. This means not just applying it in over-tonnaged trades, but in all trades. Tonnage can then be moved from trades where there is oversupply to those that are short because of slow-steaming. Finally, there is the scrapping of older vessels. If we look at carriers' desire to hold onto bigger, newer assets and their purchase of relatively old smaller tonnage to run regional and feeder networks, this does not look to be a particularly encouraging area for capacity shedding. There are measures the carriers can take around the edges, but if they really want to take control of supply – and thus price – collectively sidelining some high-caliber tonnage is the standout solution. Contact Jeremy Masters at jeremy@shippingmastershk.com .

Ocean carriers are not helpless when it comes to managing capacity

Asia to North Europe

Asia to Mediterranean

eeSea collects and centralizes liner network data from dozens of public sources including carriers’ vessel tracking portals, long-term schedules, customer advisories, port and terminal operator schedules, and pilot schedules. These disparate datasets are continually inspected, cleaned, and carefully structured. eeSea synthesizes this refined public data with AIS positions from a third-party provider and its datasets spanning schedule reliability, transit times, trade capacity evolution, and 60-day vessel forecasts. Ships are deemed late if they are one calendar day or late than scheduled. [eeSea](https://www.eesea.com)

Asia to North Europe and Mediterranean ocean reliability (eeSea)

On-Time Performance Asia to Northern Europe and Mediterranean (eeSea) Gateway

<div class="phx-topic abstract-wrapper">The absence of a framework on how global shipping can pass on the higher operating costs of using low- or zero-emission fuels to cargo owners will likely stall investment in the sector. </div>

The absence of a framework on how global shipping can pass on the higher operating costs of using low- or zero-emission fuels to cargo owners will likely stall investment in the sector.

<div class="phx-topic">The most optimistic view of global maritime regulators punting on a new net-zero emissions framework is that efforts to derail it completely were avoided. For most in the shipping industry, however, the International Maritime Organization’s (IMO’s) one-year delay is viewed as a major missed opportunity to give the investment community the certainty it needs to fund the transition to net-zero fuels. The Friday motion to delay adoption of the IMO’s net-zero framework was made at a tense and combative session of its Marine Environment Protection Committee (MEPC) in London. The vote to delay was 57 in favor and 49 against, with 21 abstentions. In the interim, member states will continue to work toward consensus on the decarbonization plans, but achieving the emissions-cutting targets agreed under the revised IMO greenhouse gas (GHG) strategy in 2023 will now be under pressure. The IMO’s targets include at least a 20% — striving for 30% — reduction in emissions by 2030 and at least a 70%, striving for 80%, reduction by 2040 compared with 2008 levels. The ultimate goal is to achieve net-zero emissions by 2050. But critics argue that the absence of a framework on how global shipping can pass on to cargo owners the higher operating costs of using low- or zero-emission fuels will likely stall investment in shipbuilding and in scaling up production of alternative fuels to replace conventional, heavy-emission bunkers. They fear that with no global pricing mechanism, there is likely to emerge a host of local carbon pricing initiatives that will be difficult for carriers to navigate. The United States’ willingness to threaten IMO member states voting against White House efforts to water down the regulations brings a challenge that wasn’t present in July 2023 when the IMO’s revised GHG strategy was agreed. The US believes putting a price on carbon emissions from ships will be passed on to its consumers, increasing costs by 10%. It was what triggered the extraordinary threats by the White House that included sanctions, port fees and visa refusals against member states voting to adopt the IMO net-zero framework. President Donald Trump even weighed in on his Truth Social media platform with a post last week saying, “the US will not stand for this Global Green New Scam Tax on Shipping. Stand with the US and vote NO in London...!” <h3>States swayed by US threats </h3>The US was supported in its opposition to the measures by petrostates Saudi Arabia, Russia and Venezuela, with Singapore raising the idea that the regulation be delayed and Saudi Arabia calling for the vote. Pressure from the US saw Liberia, the world’s largest ship registry with 16% of global tonnage, and Bahamas, home to almost 4% of global tonnage, reversing their support for the framework. Not everyone was cowed by the US threats, particularly the tiny Pacific Island states that are most vulnerable to the climate change dismissed as a hoax by Trump. “Don’t pretend that the Pacific was voiceless. We were ignored, bullied, threatened, cornered, sidelined and harassed. But we stood tall,” Marshall Islands Ambassador Albon Ishoda <a href="https://www.linkedin.com/in/albon-ishoda-384472333/recent-activity/all/">wrote in a LinkedIn post</a>. “When you mention those large countries that fought for or against the framework, don’t forget that it was the Pacific Island countries and Seychelles that gave the hardest miles and took the hardest hit,” Ishoda wrote. “A year delay is a year of more devastation and displacement for our communities that have nothing to do with this catastrophe. We don’t have the luxury of time.” There are concerns that the US considers the delay in adopting IMO decarbonization plans as a win and will use the time between now and next October to build further opposition against the net-zero framework, potentially killing the regulation. There are also concerns that the delay is a win for liquefied natural gas (LNG) that will continue to be the fuel of choice across shipping sectors. Reaction to the IMO vote to adjourn the attempted adoption of the net-zero framework for a year has been loud and predominantly negative, particularly concerning the enormous investment required to decarbonize the maritime industry. The Global Maritime Forum has estimated that achieving a 50% reduction in shipping's GHG emissions by 2050 will require investment of $1 trillion to $1.4 trillion between 2030 and 2050. If full decarbonization is the goal, the total could be as high as $1.9 trillion. “From an economic standpoint, introducing carbon pricing is essential to level the playing field with sustainable fuels, which are currently not economically viable,” said Rico Luman, senior economist for transport and logistics at global bank ING. “Regardless of the timing, a pricing mechanism will eventually be necessary to drive progress in reducing greenhouse gas emissions, also as it helps funding green investments,” Luman noted. <h3>Delay puts targets under pressure </h3>It was a sentiment repeated time and again as the reaction rolled in following the Friday afternoon vote. “The industry needs clarity to be able to make the investments needed to decarbonize the maritime sector, in line with the goals set out in the IMO greenhouse gas strategy,” said Thomas Kazakos, secretary-general of the International Chamber of Shipping. Kazakos said the framework would have created the first global carbon pricing mechanism for any industrial sector, with the aim of delivering a clear path for shipping’s transition to net zero. The delay means meeting the IMO’s decarbonization targets has been made more difficult, Luman told the Journal of Commerce. “The current timeline needs to be reassessed, as the projected CO₂ reductions by 2030 already fall short of earlier ambitions,” he said. “As a result, achieving the 2040 and 2050 targets set out in the IMO’s net-zero strategy is becoming increasingly challenging — particularly given the long investment horizons typical in the shipping industry.” Jesse Fahnestock, director of decarbonization at the Global Maritime Forum, agreed, calling Friday’s adjournment “a disappointing setback for shipping” that will make delivery of maritime decarbonization targets even more challenging. Lars Jensen, CEO of Vespucci Maritime and a Journal of Commerce contributor, said the main container carriers were unlikely to stray from their current newbuilding path, at least for now. “But it will make it more difficult to convince ... investors to come in hard on green fuel production with the new uncertainty,” <a href="https://www.linkedin.com/in/larsjensenvespuccimaritime/recent-activity/all/">Jensen wrote in a LinkedIn post</a> Monday. “In such an environment, LNG just got another improvement in its relative competitiveness versus the fully green fuels.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

The most optimistic view of global maritime regulators punting on a new net-zero emissions framework is that efforts to derail it completely were avoided. For most in the shipping industry, however, the International Maritime Organization’s (IMO’s) one-year delay is viewed as a major missed opportunity to give the investment community the certainty it needs to fund the transition to net-zero fuels. The Friday motion to delay adoption of the IMO’s net-zero framework was made at a tense and combative session of its Marine Environment Protection Committee (MEPC) in London. The vote to delay was 57 in favor and 49 against, with 21 abstentions. In the interim, member states will continue to work toward consensus on the decarbonization plans, but achieving the emissions-cutting targets agreed under the revised IMO greenhouse gas (GHG) strategy in 2023 will now be under pressure. The IMO’s targets include at least a 20% — striving for 30% — reduction in emissions by 2030 and at least a 70%, striving for 80%, reduction by 2040 compared with 2008 levels. The ultimate goal is to achieve net-zero emissions by 2050. But critics argue that the absence of a framework on how global shipping can pass on to cargo owners the higher operating costs of using low- or zero-emission fuels will likely stall investment in shipbuilding and in scaling up production of alternative fuels to replace conventional, heavy-emission bunkers. They fear that with no global pricing mechanism, there is likely to emerge a host of local carbon pricing initiatives that will be difficult for carriers to navigate. The United States’ willingness to threaten IMO member states voting against White House efforts to water down the regulations brings a challenge that wasn’t present in July 2023 when the IMO’s revised GHG strategy was agreed. The US believes putting a price on carbon emissions from ships will be passed on to its consumers, increasing costs by 10%. It was what triggered the extraordinary threats by the White House that included sanctions, port fees and visa refusals against member states voting to adopt the IMO net-zero framework. President Donald Trump even weighed in on his Truth Social media platform with a post last week saying, “the US will not stand for this Global Green New Scam Tax on Shipping. Stand with the US and vote NO in London...!” States swayed by US threats The US was supported in its opposition to the measures by petrostates Saudi Arabia, Russia and Venezuela, with Singapore raising the idea that the regulation be delayed and Saudi Arabia calling for the vote. Pressure from the US saw Liberia, the world’s largest ship registry with 16% of global tonnage, and Bahamas, home to almost 4% of global tonnage, reversing their support for the framework. Not everyone was cowed by the US threats, particularly the tiny Pacific Island states that are most vulnerable to the climate change dismissed as a hoax by Trump. “Don’t pretend that the Pacific was voiceless. We were ignored, bullied, threatened, cornered, sidelined and harassed. But we stood tall,” Marshall Islands Ambassador Albon Ishoda wrote in a LinkedIn post . “When you mention those large countries that fought for or against the framework, don’t forget that it was the Pacific Island countries and Seychelles that gave the hardest miles and took the hardest hit,” Ishoda wrote. “A year delay is a year of more devastation and displacement for our communities that have nothing to do with this catastrophe. We don’t have the luxury of time.” There are concerns that the US considers the delay in adopting IMO decarbonization plans as a win and will use the time between now and next October to build further opposition against the net-zero framework, potentially killing the regulation. There are also concerns that the delay is a win for liquefied natural gas (LNG) that will continue to be the fuel of choice across shipping sectors. Reaction to the IMO vote to adjourn the attempted adoption of the net-zero framework for a year has been loud and predominantly negative, particularly concerning the enormous investment required to decarbonize the maritime industry. The Global Maritime Forum has estimated that achieving a 50% reduction in shipping's GHG emissions by 2050 will require investment of $1 trillion to $1.4 trillion between 2030 and 2050. If full decarbonization is the goal, the total could be as high as $1.9 trillion. “From an economic standpoint, introducing carbon pricing is essential to level the playing field with sustainable fuels, which are currently not economically viable,” said Rico Luman, senior economist for transport and logistics at global bank ING. “Regardless of the timing, a pricing mechanism will eventually be necessary to drive progress in reducing greenhouse gas emissions, also as it helps funding green investments,” Luman noted. Delay puts targets under pressure It was a sentiment repeated time and again as the reaction rolled in following the Friday afternoon vote. “The industry needs clarity to be able to make the investments needed to decarbonize the maritime sector, in line with the goals set out in the IMO greenhouse gas strategy,” said Thomas Kazakos, secretary-general of the International Chamber of Shipping. Kazakos said the framework would have created the first global carbon pricing mechanism for any industrial sector, with the aim of delivering a clear path for shipping’s transition to net zero. The delay means meeting the IMO’s decarbonization targets has been made more difficult, Luman told the Journal of Commerce. “The current timeline needs to be reassessed, as the projected CO₂ reductions by 2030 already fall short of earlier ambitions,” he said. “As a result, achieving the 2040 and 2050 targets set out in the IMO’s net-zero strategy is becoming increasingly challenging — particularly given the long investment horizons typical in the shipping industry.” Jesse Fahnestock, director of decarbonization at the Global Maritime Forum, agreed, calling Friday’s adjournment “a disappointing setback for shipping” that will make delivery of maritime decarbonization targets even more challenging. Lars Jensen, CEO of Vespucci Maritime and a Journal of Commerce contributor, said the main container carriers were unlikely to stray from their current newbuilding path, at least for now. “But it will make it more difficult to convince ... investors to come in hard on green fuel production with the new uncertainty,” Jensen wrote in a LinkedIn post Monday. “In such an environment, LNG just got another improvement in its relative competitiveness versus the fully green fuels.” Contact Greg Knowler at greg.knowler@spglobal.com .

Delay in IMO decarbonization plans robs green fuel investors of certainty

<div class="phx-topic abstract-wrapper">But freighter operators were prepared for the frontloading, and no capacity shortages are being reported on China-US routes, according to Tiaca.</div>

But freighter operators were prepared for the frontloading, and no capacity shortages are being reported on China-US routes, according to Tiaca.

<div class="phx-topic">Air freight demand on the trans-Pacific has risen sharply as shippers advance orders following a threat by President Donald Trump to impose an additional 100% tariff on Chinese goods from Nov. 1. There has been no official announcement on the new tariff levels announced by the White House on Oct. 10 in response to Beijing’s plan to raise export controls on rare earth minerals, a crucial commodity primarily used in high-tech, renewables and defense industries. Still, jittery US importers were taking no chances, and with little time to frontload trans-Pacific ocean freight, they have turned to air cargo. “Many shippers are rushing to get their airfreight shipments into the US prior to Nov. 1 to beat the additional 100% tariffs that were announced recently,” said Sanjay Tejwani, CEO of 365 Logistics. “But I think this is a negotiating tactic to get China to review its recent regulations on the export of rare earth minerals,” he added. Kathy Liu, vice president of global sales and marketing at Dimerco Express Group, said air freight volume booked for this week into the US was “surging” ahead of the potential tariffs from Nov. 1. The Oct. 10 tariff announcement saw an initial 19% increase in rates compared with the previous week to $5.30 per kilogram, but rates have remained mostly flat since then, according to Freightos. Analysts expect to have a better idea of how rising demand is impacting pricing later this week. One factor preventing rates from spiking despite the rising demand is the available air freight capacity on the trans-Pacific. Glyn Hughes, director general of The International Air Cargo Association (Tiaca), said freighter operators were prepared for the frontloading and there were no capacity shortages on China-US routes. “This is the third round of such actions so to some degree it was expected and carriers were able to mobilize capacity on the trans-Pacific trade lane,” he told the Journal of Commerce Monday. In the week after the tariff announcement, available air freight capacity on China-US routes increased 24% compared with the previous week, according to data from air cargo analyst Rotate. Capacity deployed on the routes is currently up 21% year over year. Hughes said maritime supply chains were longer and slower to respond to deferred or implemented tariff decisions, with shippers preferring to take a “wait and see” approach and loading urgent consignments by air as required. “Overall, though, these constant frontloading spikes in capacity demand do not provide for a consistent operational environment conducive to rate stability and regularized network connectivity,” he added. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Air freight demand on the trans-Pacific has risen sharply as shippers advance orders following a threat by President Donald Trump to impose an additional 100% tariff on Chinese goods from Nov. 1. There has been no official announcement on the new tariff levels announced by the White House on Oct. 10 in response to Beijing’s plan to raise export controls on rare earth minerals, a crucial commodity primarily used in high-tech, renewables and defense industries. Still, jittery US importers were taking no chances, and with little time to frontload trans-Pacific ocean freight, they have turned to air cargo. “Many shippers are rushing to get their airfreight shipments into the US prior to Nov. 1 to beat the additional 100% tariffs that were announced recently,” said Sanjay Tejwani, CEO of 365 Logistics. “But I think this is a negotiating tactic to get China to review its recent regulations on the export of rare earth minerals,” he added. Kathy Liu, vice president of global sales and marketing at Dimerco Express Group, said air freight volume booked for this week into the US was “surging” ahead of the potential tariffs from Nov. 1. The Oct. 10 tariff announcement saw an initial 19% increase in rates compared with the previous week to $5.30 per kilogram, but rates have remained mostly flat since then, according to Freightos. Analysts expect to have a better idea of how rising demand is impacting pricing later this week. One factor preventing rates from spiking despite the rising demand is the available air freight capacity on the trans-Pacific. Glyn Hughes, director general of The International Air Cargo Association (Tiaca), said freighter operators were prepared for the frontloading and there were no capacity shortages on China-US routes. “This is the third round of such actions so to some degree it was expected and carriers were able to mobilize capacity on the trans-Pacific trade lane,” he told the Journal of Commerce Monday. In the week after the tariff announcement, available air freight capacity on China-US routes increased 24% compared with the previous week, according to data from air cargo analyst Rotate. Capacity deployed on the routes is currently up 21% year over year. Hughes said maritime supply chains were longer and slower to respond to deferred or implemented tariff decisions, with shippers preferring to take a “wait and see” approach and loading urgent consignments by air as required. “Overall, though, these constant frontloading spikes in capacity demand do not provide for a consistent operational environment conducive to rate stability and regularized network connectivity,” he added. Contact Greg Knowler at greg.knowler@spglobal.com .

China air freight demand, rates surge on new 100% US tariff

<div class="phx-topic abstract-wrapper">Terminal operators in Los Angeles-Long Beach have seen no changes in demurrage billing practices since the Federal Maritime Commission’s demurrage rule was struck down by an appeals court. </div>

Terminal operators in Los Angeles-Long Beach have seen no changes in demurrage billing practices since the Federal Maritime Commission’s demurrage rule was struck down by an appeals court.

<div class="phx-topic">The drayage industry is hoping maritime regulators will come out of the US government shutdown and clarify rulemaking aimed at shielding them from unfounded demurrage charges for the late return or retrieval of containers at marine terminals. In the meantime, a former Federal Maritime Commission (FMC) member is encouraging truckers and terminal operators to continue filing their concerns with the appropriate federal agencies, knowing that responses may be late in coming. Drayage operators’ concerns center on the impact of the DC Court of Appeals in late September <a href="https://www.joc.com/article/appeals-court-strikes-down-fmcs-detention-and-demurrage-billing-rule-6086773">striking down part of an FMC rulemaking</a> to clarify who is responsible for charges on the delayed retrieval and return of containers to marine terminals. Ocean carriers, truckers and terminal operators had anticipated that the FMC would either challenge the court’s decision or rewrite the rule to address the issues the court had with it. The agency then shut down on Oct. 1 and work has since stopped. “Obviously we are disappointed by the court’s ruling,” Jon Eisen, director, Intermodal Motor Carriers Conference of the American Trucking Associations, told the Journal of Commerce. “How this will play out I’m not sure,” he said. The FMC rule that was issued in February 2024 had required more transparent invoicing of demurrage and detention charges. It had set timelines for billing and limited which parties involved in container haulage could be charged for the delayed retrieval and return of containers. The court said the FMC’s rule was “arbitrary and capricious.” Although the FMC remains closed, that should not discourage truckers, terminal operators or other stakeholders that operate under the agency’s regulations from continuing to file their concerns with the FMC, said Carl Bentzel, a former FMC commissioner who is now president of the National Association of Waterfront Employers. Container terminals in Los Angeles-Long Beach have remained fluid since the government shutdown. “It’s business as usual. Cargo is flowing nicely,” said Alan McCorkle, president of Yusen Terminals in Los Angeles. Terminal operators in Los Angeles-Long Beach have seen no changes in demurrage billing practices since the Federal Maritime Commission’s demurrage rule was struck down by an appeals court. Contact Bill Mongelluzzo at <a href="bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>. </div>

The drayage industry is hoping maritime regulators will come out of the US government shutdown and clarify rulemaking aimed at shielding them from unfounded demurrage charges for the late return or retrieval of containers at marine terminals. In the meantime, a former Federal Maritime Commission (FMC) member is encouraging truckers and terminal operators to continue filing their concerns with the appropriate federal agencies, knowing that responses may be late in coming. Drayage operators’ concerns center on the impact of the DC Court of Appeals in late September striking down part of an FMC rulemaking to clarify who is responsible for charges on the delayed retrieval and return of containers to marine terminals. Ocean carriers, truckers and terminal operators had anticipated that the FMC would either challenge the court’s decision or rewrite the rule to address the issues the court had with it. The agency then shut down on Oct. 1 and work has since stopped. “Obviously we are disappointed by the court’s ruling,” Jon Eisen, director, Intermodal Motor Carriers Conference of the American Trucking Associations, told the Journal of Commerce. “How this will play out I’m not sure,” he said. The FMC rule that was issued in February 2024 had required more transparent invoicing of demurrage and detention charges. It had set timelines for billing and limited which parties involved in container haulage could be charged for the delayed retrieval and return of containers. The court said the FMC’s rule was “arbitrary and capricious.” Although the FMC remains closed, that should not discourage truckers, terminal operators or other stakeholders that operate under the agency’s regulations from continuing to file their concerns with the FMC, said Carl Bentzel, a former FMC commissioner who is now president of the National Association of Waterfront Employers. Container terminals in Los Angeles-Long Beach have remained fluid since the government shutdown. “It’s business as usual. Cargo is flowing nicely,” said Alan McCorkle, president of Yusen Terminals in Los Angeles. Terminal operators in Los Angeles-Long Beach have seen no changes in demurrage billing practices since the Federal Maritime Commission’s demurrage rule was struck down by an appeals court. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .

North American ports

Marine terminals

Drayage

Drayage industry hopes for FMC relief on demurrage billing

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

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Shippers save money, time with automated transportation bidding tools

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

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Filling the Supply Chain Education Gap with LTL Education Courses

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<div class="phx-topic abstract-wrapper">Tender season is a time when shippers traditionally look to switch forwarders, so signing them to new contracts will be the real test of the DSV-DB Schenker integration, DSV CFO Michael Ebbe says.</div>

Tender season is a time when shippers traditionally look to switch forwarders, so signing them to new contracts will be the real test of the DSV-DB Schenker integration, DSV CFO Michael Ebbe says.

<div class="phx-topic">DSV said Thursday it is stepping up efforts to retain its customer base amid the integration of DB Schenker into its global network as ocean tender season approaches and rival Kuehne + Nagel begins to circle. Cargo owners will soon begin to negotiate Asia–Europe contracts for next year, with the annual service contract talks on the trans-Pacific heating up in March. It is a time when shippers traditionally switch forwarders, so signing them to new contracts will be the real test of the DSV-DB Schenker integration, according to DSV CFO Michael Ebbe. “All the competition is focusing on us right now, but we are the market leaders, and we also did that when we were chasing,” Ebbe told analysts during a third-quarter earnings call. “We'd see quite some attrition by now in a normal integration, which we're not seeing, but the tender season will be the test.” At $16.25 billion, DB Schenker is Denmark-based DSV’s largest acquisition by a huge margin, after having previously taken over <a href="https://www.joc.com/article/size-equals-value-in-fragmented-market-dsvs-andersen-5248808">Agility’s Global Integrated Logistics (GIL) in 2021 for $4.2 billion</a>, <a href="https://www.joc.com/article/newly-combined-dsv-panalpina-targets-trans-pacific-trade-5226703">Panalpina in 2019 for $4.6 billion</a> and <a href="https://www.joc.com/article/dsv-buys-uti-for-135-billion-5205537">UTi in 2015 for $1.35 billion</a>. While exact figures are not available, DSV has previously acknowledged that following the Panalpina and GIL acquisitions, there were some large customer losses to rivals. “Of the customers that we have longer-term agreements with, it's going to come when we have the freight negotiations, basically for the renewal of the contracts, and that's typically happening into the new year,” Ebbe said. “We must make it through the tender season, and then we can really start to focus on the growth.” But also waiting for ocean tender season is rival Kuehne + Nagel, and the Swiss-based forwarder claimed during its own Q3 call Thursday to have already made inroads into DSV’s air freight customer base. “I can confirm we have taken advantage of that merger in air freight, and it has benefited us,” K + N CEO Stefan Paul told analysts. Paul said ocean freight came with two cargo request-for-quotation (RFQ) cycles while air freight shippers decided on a monthly or quarterly basis. “The share of wallet has moved much quicker on the air freight business where the purchasing guidance is more obvious than in sea freight, but that should come in the next RFQ cycle,” he said. <h3>Global headwinds hit forwarder results </h3>Both DSV and Kuehne + Nagel in their Q3 results highlighted significant global headwinds fanned by US tariffs and geopolitics. Boosted by the DB Schenker business, DSV’s Q3 revenue reached $11.7 billion, up 63% year over year, while gross profit increased 76% to $3 billion. Earnings before interest and taxes (EBIT) were up 23% at $842 million, while net profit of $335 million was down 24% year over year. Volume became increasingly volatile during the third quarter, particularly in ocean freight. Although overall volume was up 52% at just over 1 million TEUs, 404,000 TEUs of that was contributed by DB Schenker. Organic volume that excluded Schenker was down 5% year over year. In air freight, the volume grew 64% in the third quarter to 579,000 metric tons, with DB Schenker contributing 232,000 metric tons. Organic volume was flat. DSV reiterated that expected synergies from DB Schenker would be about $1.4 billion by the end of 2028, with an expected financial cost of about $124 million for the full-year 2025 based on the assumption that 30% of the integration will be completed by year-end. DSV has lowered the top range of its full-year profit expectation from $3.34 billion to $3.19 billion but maintained its lower EBIT level at $3.05 billion. <h3>K + N to slash jobs as yield pressure grows </h3>Kuehne + Nagel also lowered its EBIT forecast, and now expects profit of $1.6 billion in 2025, down from the previous expectation of just over $2 billion. The forwarder said overcapacity in the ocean trade, negative currency effects and a drop in volume in the third quarter were placing heavy pressure on air and ocean yields. Third-quarter revenue of $7.6 billion was down 7% year over year, EBIT of $358 million declined 37% and net profit was down 36% at $259 million. K + N handled 1.1 million TEUs in the third quarter, flat compared with the same period last year. But the excess ocean capacity dragged down gross profit per TEU by 15% to $688. In air freight, the forwarder handled 564,000 metric tons, up 7% year over year, although gross profit per 100 kilograms fell 13% to $90. Kuehne + Nagel aims to mitigate its declining profitability through cost cuts of $251 million that will see between 1,000 and 1,500 jobs lost as the forwarder increases automation and digitalization across its global network. “Challenging external factors are forcing us to sustainably and permanently improve our efficiency and performance culture,” Paul noted. “With the launch of group-wide cost reduction measures, we are now taking action to safeguard our cost base.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

DSV said Thursday it is stepping up efforts to retain its customer base amid the integration of DB Schenker into its global network as ocean tender season approaches and rival Kuehne + Nagel begins to circle. Cargo owners will soon begin to negotiate Asia–Europe contracts for next year, with the annual service contract talks on the trans-Pacific heating up in March. It is a time when shippers traditionally switch forwarders, so signing them to new contracts will be the real test of the DSV-DB Schenker integration, according to DSV CFO Michael Ebbe. “All the competition is focusing on us right now, but we are the market leaders, and we also did that when we were chasing,” Ebbe told analysts during a third-quarter earnings call. “We'd see quite some attrition by now in a normal integration, which we're not seeing, but the tender season will be the test.” At $16.25 billion, DB Schenker is Denmark-based DSV’s largest acquisition by a huge margin, after having previously taken over Agility’s Global Integrated Logistics (GIL) in 2021 for $4.2 billion , Panalpina in 2019 for $4.6 billion and UTi in 2015 for $1.35 billion . While exact figures are not available, DSV has previously acknowledged that following the Panalpina and GIL acquisitions, there were some large customer losses to rivals. “Of the customers that we have longer-term agreements with, it's going to come when we have the freight negotiations, basically for the renewal of the contracts, and that's typically happening into the new year,” Ebbe said. “We must make it through the tender season, and then we can really start to focus on the growth.” But also waiting for ocean tender season is rival Kuehne + Nagel, and the Swiss-based forwarder claimed during its own Q3 call Thursday to have already made inroads into DSV’s air freight customer base. “I can confirm we have taken advantage of that merger in air freight, and it has benefited us,” K + N CEO Stefan Paul told analysts. Paul said ocean freight came with two cargo request-for-quotation (RFQ) cycles while air freight shippers decided on a monthly or quarterly basis. “The share of wallet has moved much quicker on the air freight business where the purchasing guidance is more obvious than in sea freight, but that should come in the next RFQ cycle,” he said. Global headwinds hit forwarder results Both DSV and Kuehne + Nagel in their Q3 results highlighted significant global headwinds fanned by US tariffs and geopolitics. Boosted by the DB Schenker business, DSV’s Q3 revenue reached $11.7 billion, up 63% year over year, while gross profit increased 76% to $3 billion. Earnings before interest and taxes (EBIT) were up 23% at $842 million, while net profit of $335 million was down 24% year over year. Volume became increasingly volatile during the third quarter, particularly in ocean freight. Although overall volume was up 52% at just over 1 million TEUs, 404,000 TEUs of that was contributed by DB Schenker. Organic volume that excluded Schenker was down 5% year over year. In air freight, the volume grew 64% in the third quarter to 579,000 metric tons, with DB Schenker contributing 232,000 metric tons. Organic volume was flat. DSV reiterated that expected synergies from DB Schenker would be about $1.4 billion by the end of 2028, with an expected financial cost of about $124 million for the full-year 2025 based on the assumption that 30% of the integration will be completed by year-end. DSV has lowered the top range of its full-year profit expectation from $3.34 billion to $3.19 billion but maintained its lower EBIT level at $3.05 billion. K + N to slash jobs as yield pressure grows Kuehne + Nagel also lowered its EBIT forecast, and now expects profit of $1.6 billion in 2025, down from the previous expectation of just over $2 billion. The forwarder said overcapacity in the ocean trade, negative currency effects and a drop in volume in the third quarter were placing heavy pressure on air and ocean yields. Third-quarter revenue of $7.6 billion was down 7% year over year, EBIT of $358 million declined 37% and net profit was down 36% at $259 million. K + N handled 1.1 million TEUs in the third quarter, flat compared with the same period last year. But the excess ocean capacity dragged down gross profit per TEU by 15% to $688. In air freight, the forwarder handled 564,000 metric tons, up 7% year over year, although gross profit per 100 kilograms fell 13% to $90. Kuehne + Nagel aims to mitigate its declining profitability through cost cuts of $251 million that will see between 1,000 and 1,500 jobs lost as the forwarder increases automation and digitalization across its global network. “Challenging external factors are forcing us to sustainably and permanently improve our efficiency and performance culture,” Paul noted. “With the launch of group-wide cost reduction measures, we are now taking action to safeguard our cost base.” Contact Greg Knowler at greg.knowler@spglobal.com .

Forwarding

Rival Kuehne + Nagel circles DSV customers as ocean tender season nears

<div class="phx-topic abstract-wrapper">J.B. Hunt lowered its peak season surcharge because of disappointing volume on the West Coast.</div>

J.B. Hunt lowered its peak season surcharge because of disappointing volume on the West Coast.

<div class="phx-topic">J.B. Hunt Transport Services said demand for its intermodal business remained soft in the third quarter, particularly on the West Coast, where transcontinental container loads fell 6% from a year earlier, as total rail shipments declined 1% overall. In describing the overall freight market, the company remarked that “it’s no secret, the market hasn’t returned yet,” which has now surpassed three years. The nation’s largest domestic intermodal provider rolled out an early peak-season surcharge in July of $1,500 per container in Los Angeles, but the company <a href="https://www.joc.com/article/jb-hunt-reduces-peak-season-surcharge-on-southern-california-moves-6066323">later trimmed the fee to $800.</a> “We were disappointed in demand off the West Coast during the quarter and even adjusted our peak program in the middle of the quarter as an example,” said Darren Field, president of J.B. Hunt’s intermodal division. “Demand for our domestic intermodal service wasn’t all that strong.” Despite sluggish volume, executives said the peak season may not be finished because much of the cargo unloaded at West Coast ports this summer remains in local warehouses. “It is important to disconnect the timing of peak season on the water from peak season of the inland supply chain,” said Spencer Frazier, executive vice president of sales and marketing. “Our conversations indicate there is a large amount of freight that was imported early that hasn’t moved through the inland supply chain yet. No one has canceled Christmas.” There were some positive results despite the weaker third quarter in Southern California. Domestic intermodal operating income rose 12% year over year, contributing to an 8% increase in company-wide operating income. The company said aggressive cost controls shaved $20 million in costs during the quarter. <h3>East Coast intermodal doing better </h3>Local East Coast intermodal volume climbed 6% in the quarter, a signal that there is strength on containerized freight staying within the CSX Transportation and Norfolk Southern Railway (NS) networks. The carrier credited improved rail service for helping to shift more truckload freight to rail in the region. The Journal of Commerce Intermodal Service Z-Score, a measurement of how a railroad performs against its own history on three key service metrics, showed CSX and NS operated at or above average through the second-to-last week of the quarter. The final week’s data is unavailable because the US Surface Transportation Board, which publishes the metrics, is affected by the federal government shutdown. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="128e25f2-064e-4956-afe3-0fe7d3c06552"></dynamic-object></div>Norfolk Southern CEO Mark George said Thursday at the Virginia Maritime Association conference that intermodal train speeds are up this year. “We’re delivering consistent service, trending about 90% on-time performance,” George said. “In fact, in September, we had a standout month, hitting 100% in intermodal plan compliance.” He added that international intermodal traffic has risen more than 3% year over year, while domestic volume has flatlined because of trade disruptions. The comments suggest either J.B. Hunt’s East Coast gains may be concentrated on the CSX network, or other NS domestic intermodal partners have struggled to sustain shipments. <h3>Not taking sides on UP-NS deal </h3>J.B. Hunt CEO Shelley Simpson addressed Union Pacific Railroad’s (UP’s) <a href="https://www.joc.com/article/major-rail-union-backs-up-ns-merger-after-job-protection-deal-6084510">proposed acquisition</a> of NS before US regulators, signaling that the company would neither endorse nor oppose the transaction. “Our decades of experience, including navigating seven prior Class I railroad mergers and our thoughtfully developed long-term agreements and strong relationships with NS, CSX, and BNSF should provide the basis for us to accept any changes in the industry,” she said Wednesday. J.B. Hunt’s Field pushed back on speculation that a merger would force J.B. Hunt to shift all East Coast traffic to CSX. The assumption stems from the carrier’s long-standing partnership with BNSF Railway under the “Quantum Agreement,” a revenue-sharing arrangement formed more than 35 years ago that gives J.B. Hunt a pricing edge over competitors. It also launched a <a href="https://www.joc.com/article/j-b-hunt-bnsf-launch-new-intermodal-service-to-grab-time-sensitive-freight-5215574">Quantum service product</a> two years ago with a 95% on-time intermodal performance guarantee supported by J.B. Hunt staff embedded at BNSF’s headquarters in Texas. In recent months, BNSF and CSX have deepened their relationship, launching coast-to-coast intermodal routes linking Southern California <a href="https://www.joc.com/article/bnsf-csx-unveil-new-joint-intermodal-lanes-in-aftermath-of-up-ns-merger-6067789">with Charlotte and Jacksonville</a>. Other coast-to-coast routes to the Northeast <a href="https://www.joc.com/article/csx-restarts-baltimore-tunnel-service-for-double-stack-in-2026-6087384">may be announced next year</a> after CSX begins double-stack intermodal service through Baltimore next spring. This budding partnership has fueled speculation that J.B. Hunt could edge closer to CSX along with BNSF. Many West Coast rail contracts include exclusivity clauses preventing companies such as Hub Group or Schneider National from using BNSF in markets where UP also runs. J.B. Hunt’s BNSF deals carry similar restrictions, making it unlikely the carrier would be permitted to shift volume onto a merged UP-NS network in BNSF-served territories. Even so, J.B. Hunt could continue using a combined UP-NS network for freight to stay east of the Mississippi, where BNSF has no presence. “Any future merger that would be approved for whatever reason has been perceived that J.B. Hunt would have to move our traffic to CSX and that’s not accurate at all,” Field said. “There’s nothing about a future state new railroad that would mean our current Norfolk Southern footprint that we have today would be required to change.” Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>. Senior Editor Eric Johnson contributed to this report. </div>

J.B. Hunt Transport Services said demand for its intermodal business remained soft in the third quarter, particularly on the West Coast, where transcontinental container loads fell 6% from a year earlier, as total rail shipments declined 1% overall. In describing the overall freight market, the company remarked that “it’s no secret, the market hasn’t returned yet,” which has now surpassed three years. The nation’s largest domestic intermodal provider rolled out an early peak-season surcharge in July of $1,500 per container in Los Angeles, but the company later trimmed the fee to $800. “We were disappointed in demand off the West Coast during the quarter and even adjusted our peak program in the middle of the quarter as an example,” said Darren Field, president of J.B. Hunt’s intermodal division. “Demand for our domestic intermodal service wasn’t all that strong.” Despite sluggish volume, executives said the peak season may not be finished because much of the cargo unloaded at West Coast ports this summer remains in local warehouses. “It is important to disconnect the timing of peak season on the water from peak season of the inland supply chain,” said Spencer Frazier, executive vice president of sales and marketing. “Our conversations indicate there is a large amount of freight that was imported early that hasn’t moved through the inland supply chain yet. No one has canceled Christmas.” There were some positive results despite the weaker third quarter in Southern California. Domestic intermodal operating income rose 12% year over year, contributing to an 8% increase in company-wide operating income. The company said aggressive cost controls shaved $20 million in costs during the quarter. East Coast intermodal doing better Local East Coast intermodal volume climbed 6% in the quarter, a signal that there is strength on containerized freight staying within the CSX Transportation and Norfolk Southern Railway (NS) networks. The carrier credited improved rail service for helping to shift more truckload freight to rail in the region. The Journal of Commerce Intermodal Service Z-Score, a measurement of how a railroad performs against its own history on three key service metrics, showed CSX and NS operated at or above average through the second-to-last week of the quarter. The final week’s data is unavailable because the US Surface Transportation Board, which publishes the metrics, is affected by the federal government shutdown. Norfolk Southern CEO Mark George said Thursday at the Virginia Maritime Association conference that intermodal train speeds are up this year. “We’re delivering consistent service, trending about 90% on-time performance,” George said. “In fact, in September, we had a standout month, hitting 100% in intermodal plan compliance.” He added that international intermodal traffic has risen more than 3% year over year, while domestic volume has flatlined because of trade disruptions. The comments suggest either J.B. Hunt’s East Coast gains may be concentrated on the CSX network, or other NS domestic intermodal partners have struggled to sustain shipments. Not taking sides on UP-NS deal J.B. Hunt CEO Shelley Simpson addressed Union Pacific Railroad’s (UP’s) proposed acquisition of NS before US regulators, signaling that the company would neither endorse nor oppose the transaction. “Our decades of experience, including navigating seven prior Class I railroad mergers and our thoughtfully developed long-term agreements and strong relationships with NS, CSX, and BNSF should provide the basis for us to accept any changes in the industry,” she said Wednesday. J.B. Hunt’s Field pushed back on speculation that a merger would force J.B. Hunt to shift all East Coast traffic to CSX. The assumption stems from the carrier’s long-standing partnership with BNSF Railway under the “Quantum Agreement,” a revenue-sharing arrangement formed more than 35 years ago that gives J.B. Hunt a pricing edge over competitors. It also launched a Quantum service product two years ago with a 95% on-time intermodal performance guarantee supported by J.B. Hunt staff embedded at BNSF’s headquarters in Texas. In recent months, BNSF and CSX have deepened their relationship, launching coast-to-coast intermodal routes linking Southern California with Charlotte and Jacksonville . Other coast-to-coast routes to the Northeast may be announced next year after CSX begins double-stack intermodal service through Baltimore next spring. This budding partnership has fueled speculation that J.B. Hunt could edge closer to CSX along with BNSF. Many West Coast rail contracts include exclusivity clauses preventing companies such as Hub Group or Schneider National from using BNSF in markets where UP also runs. J.B. Hunt’s BNSF deals carry similar restrictions, making it unlikely the carrier would be permitted to shift volume onto a merged UP-NS network in BNSF-served territories. Even so, J.B. Hunt could continue using a combined UP-NS network for freight to stay east of the Mississippi, where BNSF has no presence. “Any future merger that would be approved for whatever reason has been perceived that J.B. Hunt would have to move our traffic to CSX and that’s not accurate at all,” Field said. “There’s nothing about a future state new railroad that would mean our current Norfolk Southern footprint that we have today would be required to change.” Contact Ari Ashe at ari.ashe@spglobal.com . Senior Editor Eric Johnson contributed to this report.

North-American rail

Intermodal providers

J.B. Hunt: Intermodal volume retracts amid cost-cutting measures

<div class="phx-topic abstract-wrapper">The ocean carrier and logistics provider already has big investments in Panama but may lack dedicated berth space for ships if MSC swoops in on two big container terminals there.</div>

The ocean carrier and logistics provider already has big investments in Panama but may lack dedicated berth space for ships if MSC swoops in on two big container terminals there.

<div class="phx-topic">Maersk signaled its interest in helping develop the Panama Canal’s yet-to-be-built container terminals, as the carrier faces the prospect of its former alliance partner Mediterranean Shipping Co. taking control of Panama’s current terminal assets. Speaking at an event Oct. 9 sponsored by Denmark’s embassy in Colombia, Maersk Chief Executive Vincent Clerc said his company may invest in the new terminals the Panama Canal Authority (ACP) hopes to build on both sides of the canal. This summer, <a href="https://www.joc.com/article/panama-canal-mulls-developing-corozal-to-allay-neutrality-fears-over-hutchison-deal-6023330">the ACP said it was looking to develop container terminals</a> on the Pacific side at Corozal and on the Atlantic side near Colon. According to local press reports about the event, the ACP is starting its outreach to ocean carriers and terminal operators about the new terminal concessions, with a formal tender expected in the second half of 2026. The new terminals are part of Panama’s response to US government concerns about Chinese conglomerate CK Hutchison owning terminals on both sides of the canal. President Donald Trump has repeatedly pressured Panama’s government about selling the terminals to a non-Chinese firm, despite <a href="https://www.joc.com/article/panama-canal-transit-data-belies-trumps-claims-of-chinas-control-project44-5948559">no evidence of US-bound ships receiving less preferential treatment for canal transits</a>. ACP President Ricuarte Vasquez Morales has said the canal needs more common carrier terminal capacity. MSC’s Terminal Investment Limited subsidiary and BlackRock’s Global Infrastructure Partners have emerged as the leading bidders for the terminals in Colon and Balboa. The sale, though, faces a lengthy regulatory review, plus the potential inclusion of Cosco Shipping as another partner as <a href="https://www.joc.com/article/beijing-issues-warning-over-hutchisons-proposed-sale-of-panama-ports-company-5962910">a sop to China for approving Hutchison’s sale of the terminals</a>. Hutchison has confirmed that a “major strategic investor from China” was looking to be part of a Hutchison acquisition. An MSC takeover of the two terminals could shut out Maersk from an important transshipment point for its north-south services. Over the past 12 months, Maersk-operated container ships have made 1,345 calls to Panama’s ports, according to data from Sea-web, a sister product of the Journal of Commerce within S&amp;P Global. MSC, as well, is a heavy user of Panama’s terminals, with 1,563 calls over the same time. In April, <a href="https://www.joc.com/article/apm-acquires-first-railroad-asset-with-deal-for-panama-canals-short-line-5975493">Maersk bought the Panama Canal Railway</a>, the short-line railroad that links the ports of Balboa and Colon. Maersk, which is the railway’s largest customer, also operates a logistics park in the country. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

Maersk signaled its interest in helping develop the Panama Canal’s yet-to-be-built container terminals, as the carrier faces the prospect of its former alliance partner Mediterranean Shipping Co. taking control of Panama’s current terminal assets. Speaking at an event Oct. 9 sponsored by Denmark’s embassy in Colombia, Maersk Chief Executive Vincent Clerc said his company may invest in the new terminals the Panama Canal Authority (ACP) hopes to build on both sides of the canal. This summer, the ACP said it was looking to develop container terminals on the Pacific side at Corozal and on the Atlantic side near Colon. According to local press reports about the event, the ACP is starting its outreach to ocean carriers and terminal operators about the new terminal concessions, with a formal tender expected in the second half of 2026. The new terminals are part of Panama’s response to US government concerns about Chinese conglomerate CK Hutchison owning terminals on both sides of the canal. President Donald Trump has repeatedly pressured Panama’s government about selling the terminals to a non-Chinese firm, despite no evidence of US-bound ships receiving less preferential treatment for canal transits . ACP President Ricuarte Vasquez Morales has said the canal needs more common carrier terminal capacity. MSC’s Terminal Investment Limited subsidiary and BlackRock’s Global Infrastructure Partners have emerged as the leading bidders for the terminals in Colon and Balboa. The sale, though, faces a lengthy regulatory review, plus the potential inclusion of Cosco Shipping as another partner as a sop to China for approving Hutchison’s sale of the terminals . Hutchison has confirmed that a “major strategic investor from China” was looking to be part of a Hutchison acquisition. An MSC takeover of the two terminals could shut out Maersk from an important transshipment point for its north-south services. Over the past 12 months, Maersk-operated container ships have made 1,345 calls to Panama’s ports, according to data from Sea-web, a sister product of the Journal of Commerce within S&P Global. MSC, as well, is a heavy user of Panama’s terminals, with 1,563 calls over the same time. In April, Maersk bought the Panama Canal Railway , the short-line railroad that links the ports of Balboa and Colon. Maersk, which is the railway’s largest customer, also operates a logistics park in the country. Contact Michael Angell at michael.angell@spglobal.com .

MSC flexing its north-south muscle, particularly on US-Africa trade

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