<div class="phx-topic abstract-wrapper">Cosco said changes in the shipping alliances this year will trigger competition in digitization and decarbonization.</div>

Cosco said changes in the shipping alliances this year will trigger competition in digitization and decarbonization.

Feature image

<div class="phx-topic">Cosco Shipping Holdings said Friday that the industry will experience “profound changes in global cargo flow patterns” due to tariff- and trade-related policies after reporting strong profits in 2024. Container shipping demand growth is set to moderate this year, the carrier said, thanks to the combined effects of an easing of “global inflationary pressures and accommodative monetary policies in Europe and the United States.” The carrier, the fourth-largest by tonnage, according to Alphaliner, said changes among the major container shipping alliances are expected to trigger increased competition this year, “particularly in two strategic arenas: digitalized supply chains and green and low-carbon development initiatives.” That came as Cosco reported a 106% increase in net profit, to $6.8 billion, last year, on revenues that rose 33% to $32 billion thanks to significantly higher freight rates and a 10% year-over-year increase in total container volumes. Average revenue per TEU on international routes climbed 30% to $1,055 per TEU. Industrywide operating profits reached nearly $60 billion in 2024, according to estimates from Sea-Intelligence Maritime Analysis, but analysts are <a href="https://www.joc.com/article/oversupplied-ocean-carriers-sailing-into-new-downcycle-analysts-5963852">warning of a downcycle beginning this year</a>. The state-owned carrier said it will accelerate the scaled development of its dual-brand fleet, consisting of Cosco Shipping Lines and Hong Kong-based subsidiary Orient Overseas Container Line (OOCL), after it ordered a dozen 14,000-TEU methanol dual-fuel container ships last year. Cosco Shipping Lines accounted for approximately two-thirds ($4.3 billion) of the $6.8 billion in reported profits last year, with the balance coming from OOCL and terminal arm Cosco Shipping Port, which saw its net profit slip 5% to $309 million. Revenue gains were led by the trans-Pacific trade, which spiked 63% to $9 billion on a 13% jump in volumes. Asia-Europe revenue rose 41% to $6.4 billion despite a 13% drop in liftings, a reflection of operational capacity cuts stemming from vessels diverting around the Cape of Good Hope to avoid Houthi militant attacks in the Red Sea area. Revenue from intra-Asia, including Australia, climbed 23% to $7.4 billion on volumes that increased 11%. Earnings from other trades, including the trans-Atlantic and Latin America, grew 27% year over year to $4.5 billion as liftings rose 10%.Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

Cosco Shipping Holdings said Friday that the industry will experience “profound changes in global cargo flow patterns” due to tariff- and trade-related policies after reporting strong profits in 2024. Container shipping demand growth is set to moderate this year, the carrier said, thanks to the combined effects of an easing of “global inflationary pressures and accommodative monetary policies in Europe and the United States.” The carrier, the fourth-largest by tonnage, according to Alphaliner, said changes among the major container shipping alliances are expected to trigger increased competition this year, “particularly in two strategic arenas: digitalized supply chains and green and low-carbon development initiatives.” That came as Cosco reported a 106% increase in net profit, to $6.8 billion, last year, on revenues that rose 33% to $32 billion thanks to significantly higher freight rates and a 10% year-over-year increase in total container volumes. Average revenue per TEU on international routes climbed 30% to $1,055 per TEU. Industrywide operating profits reached nearly $60 billion in 2024, according to estimates from Sea-Intelligence Maritime Analysis, but analysts are warning of a downcycle beginning this year . The state-owned carrier said it will accelerate the scaled development of its dual-brand fleet, consisting of Cosco Shipping Lines and Hong Kong-based subsidiary Orient Overseas Container Line (OOCL), after it ordered a dozen 14,000-TEU methanol dual-fuel container ships last year. Cosco Shipping Lines accounted for approximately two-thirds ($4.3 billion) of the $6.8 billion in reported profits last year, with the balance coming from OOCL and terminal arm Cosco Shipping Port, which saw its net profit slip 5% to $309 million. Revenue gains were led by the trans-Pacific trade, which spiked 63% to $9 billion on a 13% jump in volumes. Asia-Europe revenue rose 41% to $6.4 billion despite a 13% drop in liftings, a reflection of operational capacity cuts stemming from vessels diverting around the Cape of Good Hope to avoid Houthi militant attacks in the Red Sea area. Revenue from intra-Asia, including Australia, climbed 23% to $7.4 billion on volumes that increased 11%. Earnings from other trades, including the trans-Atlantic and Latin America, grew 27% year over year to $4.5 billion as liftings rose 10%. Contact Keith Wallis at keithwallis@hotmail.com .

Port News

Container lines

Asia-Europe

Trans-Pacific

Container Shipping News

Escalating tariffs will cause ‘profound’ trade pattern changes: Cosco

<div class="phx-topic abstract-wrapper">US maritime interests said the proposed fees on Chinese ships would hit a variety of low-value, niche trades that can’t absorb the costs.</div>

US maritime interests said the proposed fees on Chinese ships would hit a variety of low-value, niche trades that can’t absorb the costs.

<div class="phx-topic">While major container lines and their major customers are not speaking out much about the Trump administration’s proposed fees of about $1 million per US port call on Chinese vessels, shippers involved in smaller maritime and container trades are lashing out directly against the proposal through a comment period ending Monday. In comments filed with US Trade Representative (USTR) prior to a Monday hearing on the proposed fees, maritime interests said it will hit swathes of the economy outside the container trade and will even hurt the US-based maritime industry, which relies on Chinese ships. The USTR hearing comes after a year-long investigation found that <a href="https://www.joc.com/article/us-port-fees-could-hit-chinese-ships-under-trump-trade-proposal-5949409">China heavily subsidized its shipbuilding industry to take a dominant market share</a>. Last month, the USTR outlined a broad array of possible remedies, including collecting fees on Chinese carriers calling US ports, collecting other fees on non-Chinese carriers with Chinese ships in their fleet or newbuild orders in China, and requiring that US-flag vessels carry more exports. After the public hearing, the USTR will make a final determination on which of the penalties to enforce. The USTR has received more than 200 submissions ahead of Monday’s hearing on the impact of those penalties. The majority of commenters argue against any type of penalties, citing the potential for much higher shipping costs on trades that can least afford them and the reduction of services as Chinese ships avoid US ports. Many of the submissions highlighted that US-based ocean carriers also have Chinese-built ships in their fleets, with some of these fleets serving small regional markets such as the Caribbean, or dry and liquid bulk trades that will also be swept up in the port fees. There are 448 ships currently in service that are built in China and owned and operated by US ocean carriers, according to Sea-Web, a sister company of the Journal of Commerce within S&amp;P Global. Dry bulk ships make up about one-third of that total. There are also about 90 Chinese-built container and general cargo ships in US-based fleets, Sea-web data show. Although the Jones Act bars these ships from transporting goods between US ports, carriers such as Tropical Shipping and Seaboard Marine can serve international ports in the Caribbean and Central America from US ports. <h3>Caribbean sees end to shipping services </h3>A number of Florida ports and Caribbean-based shippers said USTR’s proposed penalties would cripple trade throughout the region. While the port fees could easily be absorbed across multiple cargoes on large ships, smaller vessels and shippers would take a big hit if a fee is charged regardless of the size of the ship and the value of the cargo. Carriers that serve Caribbean markets with Chinese ships “would effectively be out of business and so would all the islands and countries they trade with,” West Indian Marine Group said in its comment. “Islands and countries in the Caribbean would not be able to survive and exist because all trade is supplied from the USA.” Other niche carriers said they would not be able to serve the US market if fees on Chinese ships are levied. Atlantic Container Line, which has five ships in the trans-Atlantic trade, said only Chinese shipyards were willing to build its ships, which can switch between handling containers, breakbulk and roll-on, roll-off cargoes. “ACL would be forced to terminate its US service, close its American offices, lay off its American staff and redeploy its ships to non-US trades,” the company said in its submission. Container lines that remain in the US trade will likely have to pass on those charges to customers, the International Chamber of Shipping (ICS) said in its submission. It said the port fees could add $600 to $800 to the cost of each shipping container moved through US ports as the USTR proposal would impact nearly all container vessel calls to the US. “While some reorganization and substitution may be possible to avoid exposure to fees, it would be impossible for container liners to avoid the disproportionately high fees proposed, and costs would be passed on to US charterers and consumers,” the ICS said. The proposed fees would also cause large ocean carriers to change their service networks, the American Association of Port Authorities (AAPA) said in its submission to the USTR. It said container lines could increase calls to Canadian and Mexican ports to avoid the fees while reducing US port calls. <a href="https://www.joc.com/article/us-port-tax-would-scramble-ocean-services-raise-shipper-costs-drewry-5952046">That would strain big US ports and leave others with vastly reduced business, all while increasing costs to shippers</a>, the AAPA said. “This would cause significant congestion at large ports and the collapse of business lines at small and medium-sized ports. The results would be higher inflation, more unemployment, and higher trade deficits,” the AAPA said. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

While major container lines and their major customers are not speaking out much about the Trump administration’s proposed fees of about $1 million per US port call on Chinese vessels, shippers involved in smaller maritime and container trades are lashing out directly against the proposal through a comment period ending Monday. In comments filed with US Trade Representative (USTR) prior to a Monday hearing on the proposed fees, maritime interests said it will hit swathes of the economy outside the container trade and will even hurt the US-based maritime industry, which relies on Chinese ships. The USTR hearing comes after a year-long investigation found that China heavily subsidized its shipbuilding industry to take a dominant market share . Last month, the USTR outlined a broad array of possible remedies, including collecting fees on Chinese carriers calling US ports, collecting other fees on non-Chinese carriers with Chinese ships in their fleet or newbuild orders in China, and requiring that US-flag vessels carry more exports. After the public hearing, the USTR will make a final determination on which of the penalties to enforce. The USTR has received more than 200 submissions ahead of Monday’s hearing on the impact of those penalties. The majority of commenters argue against any type of penalties, citing the potential for much higher shipping costs on trades that can least afford them and the reduction of services as Chinese ships avoid US ports. Many of the submissions highlighted that US-based ocean carriers also have Chinese-built ships in their fleets, with some of these fleets serving small regional markets such as the Caribbean, or dry and liquid bulk trades that will also be swept up in the port fees. There are 448 ships currently in service that are built in China and owned and operated by US ocean carriers, according to Sea-Web, a sister company of the Journal of Commerce within S&P Global. Dry bulk ships make up about one-third of that total. There are also about 90 Chinese-built container and general cargo ships in US-based fleets, Sea-web data show. Although the Jones Act bars these ships from transporting goods between US ports, carriers such as Tropical Shipping and Seaboard Marine can serve international ports in the Caribbean and Central America from US ports. Caribbean sees end to shipping services A number of Florida ports and Caribbean-based shippers said USTR’s proposed penalties would cripple trade throughout the region. While the port fees could easily be absorbed across multiple cargoes on large ships, smaller vessels and shippers would take a big hit if a fee is charged regardless of the size of the ship and the value of the cargo. Carriers that serve Caribbean markets with Chinese ships “would effectively be out of business and so would all the islands and countries they trade with,” West Indian Marine Group said in its comment. “Islands and countries in the Caribbean would not be able to survive and exist because all trade is supplied from the USA.” Other niche carriers said they would not be able to serve the US market if fees on Chinese ships are levied. Atlantic Container Line, which has five ships in the trans-Atlantic trade, said only Chinese shipyards were willing to build its ships, which can switch between handling containers, breakbulk and roll-on, roll-off cargoes. “ACL would be forced to terminate its US service, close its American offices, lay off its American staff and redeploy its ships to non-US trades,” the company said in its submission. Container lines that remain in the US trade will likely have to pass on those charges to customers, the International Chamber of Shipping (ICS) said in its submission. It said the port fees could add $600 to $800 to the cost of each shipping container moved through US ports as the USTR proposal would impact nearly all container vessel calls to the US. “While some reorganization and substitution may be possible to avoid exposure to fees, it would be impossible for container liners to avoid the disproportionately high fees proposed, and costs would be passed on to US charterers and consumers,” the ICS said. The proposed fees would also cause large ocean carriers to change their service networks, the American Association of Port Authorities (AAPA) said in its submission to the USTR. It said container lines could increase calls to Canadian and Mexican ports to avoid the fees while reducing US port calls. That would strain big US ports and leave others with vastly reduced business, all while increasing costs to shippers , the AAPA said. “This would cause significant congestion at large ports and the collapse of business lines at small and medium-sized ports. The results would be higher inflation, more unemployment, and higher trade deficits,” the AAPA said. Contact Michael Angell at michael.angell@spglobal.com .

North American ports

Transport, Trade and Regulation News

USTR’s China tonnage tax would squeeze smaller trades: stakeholders

<div class="phx-topic abstract-wrapper">MPV industry experts call for exemptions to US port taxes for China-built ships, stressing the lack of alternatives for specialist cargo carriage and the unfair burden on responsibility on the sector.</div>

MPV industry experts call for exemptions to US port taxes for China-built ships, stressing the lack of alternatives for specialist cargo carriage and the unfair burden on responsibility on the sector.

<div class="phx-topic">Breakbulk operators and interests are pulling no punches in their responses to the United States Trade Representative (USTR) proposal to hit Chinese-made and -operated vessels with fees of $1 million to $1.5 million per US port call.“Very bad for US trade,” “disadvantaging American businesses,” “disproportionately [affecting] US non-asset-based vessel operators, particularly those engaged in … breakbulk shipping,” various stakeholders said, weighing in on the proposal. In advance of Monday’s deadline for submission of comments to the proposal, multipurpose vessel (MPV) charterers and operators have criticized the proposal for creating higher vessel fees that will substantially increase the cost of transporting breakbulk and project cargoes, including steel coils and industrial components. Captain Scott Bravener, CEO of McKeil Marine Limited, a Canadian enterprise that delivers marine transportation and project cargo services across the Great Lakes, St. Lawrence Seaway, East Coast, and the Canadian Arctic, said the proposed port fees “fail to account for the frequency-driven nature of short-sea shipping, where repeated port calls amplify financial burdens.”He added that MPVs lack the pricing flexibility of deep-sea container ships and cannot simply absorb substantial cost increases. The proposed fees seem “designed for large ocean-going vessels carrying cargo worth hundreds of millions or even billions of dollars,” Bravener said.In its response, MPV operator BBC Chartering asked for a complete exclusion for the breakbulk sector from the fees “because there are no US-built multipurpose heavy-lift vessels and because multipurpose heavy-lift vessels carry critical industrial cargoes, strategic components and resources to and from the US,” BBC Chartering USA president Tim Kopfensteiner and BBC Chartering Carriers CEO Ulrich Ulrichs said. BBC said the operator’s 581 port calls to the US in 2024 would translate to $581 million in fees under the proposal, “close to 200% of BBC’s annual revenue controlled in the US,” said the response. Suggesting amendments to the proposal, BBC recommended that the service fee be applied to Chinese-built tonnage prospectively; that it only applies to Chinese-built vessels without regard to the percentage of Chinese-built tonnage in the operator’s fleet; and that it corresponds to the size of the vessel.<h3>Rate not equitable for US versus non-US interests</h3>Another submission claimed the proposal unfairly penalizes non-Chinese shipping companies that have purchased secondhand Chinese-built vessels. A more effective and equitable approach would be to impose the fees solely on Chinese shipping companies with Chinese-built ships, suggested Kasper Bihlet, director of chartering Norvic Shipping with broad experience in the project and breakbulk sectors. “This would ensure that the burden falls on the true beneficiaries of China’s state-subsidized shipping industry, rather than on global shipowners who have lawfully acquired Chinese-built tonnage,” Bihlet said.Juan Ignacio Lopez, CEO of King Ocean Gulf Alliance LLC (KOGA), a transporter of mining and oilfield supplies, steel, agricultural products, dry bulk chemicals, power generation equipment, and heavy machinery, said the proposed rule would impose a higher tax burden on US operators than their foreign competitors. Lopez calculated that non-US operators using Chinese-built vessels would face a $1-million-per-port entry tax, while US operators using the same vessels would be subject to a higher tax of $1.5 million per port entry.“This disproportionate taxation on US companies puts us at a severe competitive disadvantage against foreign operators, who will have a lower cost structure when engaging in the same trade routes,” he said.To mitigate the unintended consequences of the proposed tax, KOGA echoed BBC comments that the tax be a tiered structure based on net tonnage, rather than a flat rate, and that it is implemented in a phased-in approach, allowing time for industry adjustments.Respondents also raised concerns that the fees would force MPV operators to ultimately pull US port calls. “This would leave a dramatic hole in the amount of ocean tonnage available for trading in the US. Limiting the options of vessels available on the market to carry US goods would most likely increase costs further for US shippers,” said a submission from John S. Connor, Inc., with interests in project cargo forwarding.Contact Carly Fields at <a href="mailto:carly.fields@spglobal.com">carly.fields@spglobal.com</a>.</div>

Breakbulk operators and interests are pulling no punches in their responses to the United States Trade Representative (USTR) proposal to hit Chinese-made and -operated vessels with fees of $1 million to $1.5 million per US port call. “Very bad for US trade,” “disadvantaging American businesses,” “disproportionately [affecting] US non-asset-based vessel operators, particularly those engaged in … breakbulk shipping,” various stakeholders said, weighing in on the proposal. In advance of Monday’s deadline for submission of comments to the proposal, multipurpose vessel (MPV) charterers and operators have criticized the proposal for creating higher vessel fees that will substantially increase the cost of transporting breakbulk and project cargoes, including steel coils and industrial components. Captain Scott Bravener, CEO of McKeil Marine Limited, a Canadian enterprise that delivers marine transportation and project cargo services across the Great Lakes, St. Lawrence Seaway, East Coast, and the Canadian Arctic, said the proposed port fees “fail to account for the frequency-driven nature of short-sea shipping, where repeated port calls amplify financial burdens.” He added that MPVs lack the pricing flexibility of deep-sea container ships and cannot simply absorb substantial cost increases. The proposed fees seem “designed for large ocean-going vessels carrying cargo worth hundreds of millions or even billions of dollars,” Bravener said. In its response, MPV operator BBC Chartering asked for a complete exclusion for the breakbulk sector from the fees “because there are no US-built multipurpose heavy-lift vessels and because multipurpose heavy-lift vessels carry critical industrial cargoes, strategic components and resources to and from the US,” BBC Chartering USA president Tim Kopfensteiner and BBC Chartering Carriers CEO Ulrich Ulrichs said. BBC said the operator’s 581 port calls to the US in 2024 would translate to $581 million in fees under the proposal, “close to 200% of BBC’s annual revenue controlled in the US,” said the response. Suggesting amendments to the proposal, BBC recommended that the service fee be applied to Chinese-built tonnage prospectively; that it only applies to Chinese-built vessels without regard to the percentage of Chinese-built tonnage in the operator’s fleet; and that it corresponds to the size of the vessel. Rate not equitable for US versus non-US interests Another submission claimed the proposal unfairly penalizes non-Chinese shipping companies that have purchased secondhand Chinese-built vessels. A more effective and equitable approach would be to impose the fees solely on Chinese shipping companies with Chinese-built ships, suggested Kasper Bihlet, director of chartering Norvic Shipping with broad experience in the project and breakbulk sectors. “This would ensure that the burden falls on the true beneficiaries of China’s state-subsidized shipping industry, rather than on global shipowners who have lawfully acquired Chinese-built tonnage,” Bihlet said. Juan Ignacio Lopez, CEO of King Ocean Gulf Alliance LLC (KOGA), a transporter of mining and oilfield supplies, steel, agricultural products, dry bulk chemicals, power generation equipment, and heavy machinery, said the proposed rule would impose a higher tax burden on US operators than their foreign competitors. Lopez calculated that non-US operators using Chinese-built vessels would face a $1-million-per-port entry tax, while US operators using the same vessels would be subject to a higher tax of $1.5 million per port entry. “This disproportionate taxation on US companies puts us at a severe competitive disadvantage against foreign operators, who will have a lower cost structure when engaging in the same trade routes,” he said. To mitigate the unintended consequences of the proposed tax, KOGA echoed BBC comments that the tax be a tiered structure based on net tonnage, rather than a flat rate, and that it is implemented in a phased-in approach, allowing time for industry adjustments. Respondents also raised concerns that the fees would force MPV operators to ultimately pull US port calls. “This would leave a dramatic hole in the amount of ocean tonnage available for trading in the US. Limiting the options of vessels available on the market to carry US goods would most likely increase costs further for US shippers,” said a submission from John S. Connor, Inc., with interests in project cargo forwarding. Contact Carly Fields at carly.fields@spglobal.com .

Breakbulk carriers

Project cargo

Breakbulk News

Breakbulk stakeholders blast USTR’s China tonnage tax proposal

<div class="phx-topic abstract-wrapper">Container lines serving the India-US trade appear to be taking a hard line in the first round of annual contract negotiations amid overcapacity putting downward pressure on spot rates. </div>

Container lines serving the India-US trade appear to be taking a hard line in the first round of annual contract negotiations amid overcapacity putting downward pressure on spot rates.

<div class="phx-topic">India-US trade ocean carriers have kicked off their first round of contract negotiations for the next season (2025–26) and appear to be signaling a “tight hold” on rates even as excess capacity continues to undermine their spot price-hiking efforts. “Major carriers are looking firm on how they want to sell the space,” a Mumbai-based freight forwarder who didn’t want to be identified told the Journal of Commerce. “But it remains to be seen if they will be able to hold that resolve for long.” Leading carriers are generally targeting long-term (yearly) contracts at rates of $1,900 to $2,100 per FEU for loads to the US East Coast, market sources say. Container rates, as measured by Platts, a sister company of Journal of Commerce with S&amp;P Global, have ticked up in recent weeks, to $2,250 per FEU. Forwarders who spoke with the Journal of Commerce and asked not to be identified believe it all depends on how rate-hungry carriers will strategize their capacity plans as the introduction of an enhanced Maersk MECL loop, since late February, added to that pressure. The last MECL sailing is said to have lifted close to 4,000 TEUs out of West India, compared with the previous average of 2,500 TEUs a week, which arguably meant some market share losses for CMA CGM’s Indamex and Hapag-Lloyd’s TPI services, sources stated. “No contract deals are done yet,” a line manager at a European carrier said. “Customers are negotiating for the best rates they can buy.” While annual service contracts typically come into play from May 1, last year, negotiations continued well into June and July as shippers and forwarders found the spot market more attractive. Even now, as a second carrier source told the Journal Commerce, several large beneficial cargo owners (BCOs) don't want to rush into finalizing their contract commitments due to ongoing volatile market conditions — an early indicator of coming long negotiations. That said, Maersk, known for its compliance enforcement, usually closes all contract deals by April 30. “It’s a <a href=" ">falling market</a>, so we are a bit cautious about locking ourselves into any fixed rates with exposure to several terms/conditions,” a logistics head at a diversified Indian conglomerate noted. “Moreover, we are now seeing sales calls from several first-time carriers, promising better rates than our regular liner partners and forwarding agents.” Local forwarding houses and global non-vessel-operating common carriers (NVOs) control a significant portion of the Indian container market. “We are awaiting firm [contract] proposals after some informal discussions,” said an NVO country head with high stakes in the India-US trade. In the last contracting cycle, the lead carriers — Hapag-Lloyd, CMA CGM and Maersk — were initially negotiating to close deals at rates in the range of $2,100 and $2,300 per FEU but eventually had to settle at about $1,900 per FEU due to the entry of Ocean Network Express’ standalone WIN loop from May 2024. ONE and other smaller operators, especially Cosco Shipping, ended up signing at rates of $1,600 to $1,700 per FEU last year, sources noted. “As things stand, the market is heading toward the same direction, plus or minus 10% contingent on shippers’ minimum quantity commitments (MQCs),” an industry expert said. Contact Bency Matthew at <a href="bencymathew@gmail.com">bencymathew@gmail.com</a>.</div>

India-US trade ocean carriers have kicked off their first round of contract negotiations for the next season (2025–26) and appear to be signaling a “tight hold” on rates even as excess capacity continues to undermine their spot price-hiking efforts. “Major carriers are looking firm on how they want to sell the space,” a Mumbai-based freight forwarder who didn’t want to be identified told the Journal of Commerce. “But it remains to be seen if they will be able to hold that resolve for long.” Leading carriers are generally targeting long-term (yearly) contracts at rates of $1,900 to $2,100 per FEU for loads to the US East Coast, market sources say. Container rates, as measured by Platts, a sister company of Journal of Commerce with S&P Global, have ticked up in recent weeks, to $2,250 per FEU. Forwarders who spoke with the Journal of Commerce and asked not to be identified believe it all depends on how rate-hungry carriers will strategize their capacity plans as the introduction of an enhanced Maersk MECL loop, since late February, added to that pressure. The last MECL sailing is said to have lifted close to 4,000 TEUs out of West India, compared with the previous average of 2,500 TEUs a week, which arguably meant some market share losses for CMA CGM’s Indamex and Hapag-Lloyd’s TPI services, sources stated. “No contract deals are done yet,” a line manager at a European carrier said. “Customers are negotiating for the best rates they can buy.” While annual service contracts typically come into play from May 1, last year, negotiations continued well into June and July as shippers and forwarders found the spot market more attractive. Even now, as a second carrier source told the Journal Commerce, several large beneficial cargo owners (BCOs) don't want to rush into finalizing their contract commitments due to ongoing volatile market conditions — an early indicator of coming long negotiations. That said, Maersk, known for its compliance enforcement, usually closes all contract deals by April 30. “It’s a falling market , so we are a bit cautious about locking ourselves into any fixed rates with exposure to several terms/conditions,” a logistics head at a diversified Indian conglomerate noted. “Moreover, we are now seeing sales calls from several first-time carriers, promising better rates than our regular liner partners and forwarding agents.” Local forwarding houses and global non-vessel-operating common carriers (NVOs) control a significant portion of the Indian container market. “We are awaiting firm [contract] proposals after some informal discussions,” said an NVO country head with high stakes in the India-US trade. In the last contracting cycle, the lead carriers — Hapag-Lloyd, CMA CGM and Maersk — were initially negotiating to close deals at rates in the range of $2,100 and $2,300 per FEU but eventually had to settle at about $1,900 per FEU due to the entry of Ocean Network Express’ standalone WIN loop from May 2024. ONE and other smaller operators, especially Cosco Shipping, ended up signing at rates of $1,600 to $1,700 per FEU last year, sources noted. “As things stand, the market is heading toward the same direction, plus or minus 10% contingent on shippers’ minimum quantity commitments (MQCs),” an industry expert said. Contact Bency Matthew at bencymathew@gmail.com .

India-US contract cycle shadowed by overcapacity

<div class="phx-topic abstract-wrapper">Air cargo operators out of Europe’s busiest airport will face at least a week of turmoil as airlines, forwarders and terminals start clearing the rapidly building backlog of freight when flight operations restart at midnight Friday.</div>

Air cargo operators out of Europe’s busiest airport will face at least a week of turmoil as airlines, forwarders and terminals start clearing the rapidly building backlog of freight when flight operations restart at midnight Friday.

<div class="phx-topic">Air freight forwarders are scrambling to recover cargo stranded at airports across Europe and the UK with inbound planes forced to divert following the complete shutdown of London’s Heathrow Airport. Europe’s busiest airport will remain shut all Friday after a fire at an electrical substation cut power to most of west London, including the airport, and led to the cancellation or diversion of more than 1,300 flights. “Due to a power outage in the London Heathrow area, our operations are temporarily disrupted ... at this time, we are unable to accept any freight at London Heathrow,” IAG Cargo, the holding company for British Airways and Iberia, said in a customer advisory Friday. The scale of the disruption to cargo is immense. In February, Heathrow handled 120,000 tons of air cargo, according to the airport authority, with record volume in 2024 that increased 10.4% year over year to 1.5 million tons. Flights on the ground at Heathrow are unable to take off and inbound aircraft are being rerouted to cities such as Barcelona, Lyon and Glasgow, stranding passengers and severely disrupting air freight flows. “Today’s closure of Heathrow is going to have a profound impact on supply chains for days, and potentially weeks,” was the grim assessment of Angus Hind, director of UK-based forwarder Europa Air and Sea. “Airline handling facilities are operating as normal, so airline transfers from European hubs and UK airports will continue to arrive on the ground and be processed as normal,” he said in a statement. But the terminals will need to work through the backlog of freight when flights resume, he added. <h3>Airline sheds filling up fast </h3>The British International Freight Association (BIFA) said in a statement Friday that the impact of Heathrow’s closure will be significant on both import and export shipments that depend on a consistent flow of goods. “For exports the immediate concern will be that airline sheds will fill up rapidly and be unable to accept fresh freight [perishable] deliveries, which will then affect other parties. For imports, freight will not arrive at or be diverted from its original destination,” BIFA noted. Much of the cargo in and out of Heathrow is carried in the below-deck bellies of passenger aircraft, and BIFA warned that when flights were restored, the onward movement of passengers would likely take precedence over air freight that could potentially restrict the cargo capacity available. Heathrow is a key airport serving the trans-Atlantic trade lane that has been seeing <a href="https://www.joc.com/article/trans-atlantic-air-cargo-demand-surges-ahead-of-us-tariffs-5965691">rising demand as the US implements tariffs</a> on the European Union. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Air freight forwarders are scrambling to recover cargo stranded at airports across Europe and the UK with inbound planes forced to divert following the complete shutdown of London’s Heathrow Airport. Europe’s busiest airport will remain shut all Friday after a fire at an electrical substation cut power to most of west London, including the airport, and led to the cancellation or diversion of more than 1,300 flights. “Due to a power outage in the London Heathrow area, our operations are temporarily disrupted ... at this time, we are unable to accept any freight at London Heathrow,” IAG Cargo, the holding company for British Airways and Iberia, said in a customer advisory Friday. The scale of the disruption to cargo is immense. In February, Heathrow handled 120,000 tons of air cargo, according to the airport authority, with record volume in 2024 that increased 10.4% year over year to 1.5 million tons. Flights on the ground at Heathrow are unable to take off and inbound aircraft are being rerouted to cities such as Barcelona, Lyon and Glasgow, stranding passengers and severely disrupting air freight flows. “Today’s closure of Heathrow is going to have a profound impact on supply chains for days, and potentially weeks,” was the grim assessment of Angus Hind, director of UK-based forwarder Europa Air and Sea. “Airline handling facilities are operating as normal, so airline transfers from European hubs and UK airports will continue to arrive on the ground and be processed as normal,” he said in a statement. But the terminals will need to work through the backlog of freight when flights resume, he added. Airline sheds filling up fast The British International Freight Association (BIFA) said in a statement Friday that the impact of Heathrow’s closure will be significant on both import and export shipments that depend on a consistent flow of goods. “For exports the immediate concern will be that airline sheds will fill up rapidly and be unable to accept fresh freight [perishable] deliveries, which will then affect other parties. For imports, freight will not arrive at or be diverted from its original destination,” BIFA noted. Much of the cargo in and out of Heathrow is carried in the below-deck bellies of passenger aircraft, and BIFA warned that when flights were restored, the onward movement of passengers would likely take precedence over air freight that could potentially restrict the cargo capacity available. Heathrow is a key airport serving the trans-Atlantic trade lane that has been seeing rising demand as the US implements tariffs on the European Union. Contact Greg Knowler at greg.knowler@spglobal.com .

Air Cargo

Air Cargo Forwarder News

Air Cargo Carriers News

Heathrow shut down plunges air cargo supply chain into chaos

<div class="phx-topic abstract-wrapper">The IMO is a specialized agency of the United Nations, which potentially puts the organization in the crosshairs of the new administration that is reassessing all its UN positions and policies. </div>

The IMO is a specialized agency of the United Nations, which potentially puts the organization in the crosshairs of the new administration that is reassessing all its UN positions and policies.

<div class="phx-topic">A crucial April meeting of the International Maritime Organization (IMO) will be the first during President Trump’s second term, with the US currently “in a holding pattern” regarding continued membership of the IMO, according to classification society DNV. The 176 member states of the IMO will gather at the 83rd Marine Environment Protection Committee (MEPC) meeting in London from April 7–11 to design a greenhouse gas (GHG) fuel intensity regulation and settle on an economic measure for taxing carbon emissions, with both measures aiming for implementation in 2027. Eirik Nyhus, director for environment and maritime at DNV, said in an MEPC update this week that <a href="https://www.joc.com/article/progress-on-carbon-pricing-on-track-despite-us-stance-on-green-initiatives-imo-5929236">the US position regarding the IMO</a> going forward remained unclear. At the last meeting of the IMO’s Intersessional Working Group on Reduction of Greenhouse Gas Emissions from Ships (ISWG-GHG 18) in late February, Nyhus said the US did not take the floor until the very end, stating that the new administration was reassessing all its United Nations positions and policies. The IMO is a specialized agency of the UN. The Trump administration is also in the process of withdrawing from the Paris Agreement climate change accord, part of a broader initiative of “reviewing for rescission all regulations that impose undue burdens on energy production and use.” A spokesperson for the IMO told the Journal of Commerce this week that “any member state can withdraw from the organization, as outlined in Article 73 of the IMO Convention, though they would still be bound by the treaties to which they are party.” Still, Nyhus played down the significance of a potential US withdrawal with the IMO having far more important issues to focus on. “While the US has turned into a bit of a wild card, I cannot see this being a showstopper [at MEPC] in any way,” he noted. “Many issues, big and small, remain under negotiation, with the two most challenging ones being the design of the greenhouse gas fuel intensity regulation and the choice of economic measure. The discussions remain intensely political,” he added. The goal is to have a net zero framework ready for approval at MEPC 83 in London, and there is pressure on member states to finalize the legal framework around a fuel standard and economic measure with implementation planned for October. If the measures do not roll out in October, it will place the IMO’s interim emissions reduction targets at risk. Ocean carriers are watching the MEPC deliberations closely — many have had to invest huge sums in dual-fuel ships able to run on cleaner energy despite the lack of regulations to narrow the gap between fossil fuels and the alternatives. “We <a href="https://www.joc.com/article/lack-of-clarity-over-clean-energy-supply-driving-dual-fuel-ship-orders-5747200">have to take decisions on decarbonizing our fleet</a> over the next 20, 25 or 30 years, and we believe that the direction that we have chosen remains valid,” Hapag-Lloyd CEO Rolf Habben Jansen told reporters at the carrier’s annual results presentation Thursday. “That means trying to reduce our emissions significantly until 2030 and also to stick to our target to be net carbon neutral by 2045.” <h3>No deal is not an option </h3>Andy Wibroe, lead regulatory specialist at classification society Lloyd’s Register, said in an MEPC update this week that one of the main issues to be resolved in April is how shipowners and operators will pay for GHG emissions from their ships on a well-to-wake basis. Funds coming from whatever carbon-charging measure is agreed upon are essential to support the development and scale up of a new generation of carbon-free marine fuels, which remain significantly more expensive than traditional fossil fuels. Another crucial point is the support for developing countries and remote island states through the energy transition in shipping. Wibroe highlighted the divisions between two camps — those who believe in a technical measure built around a fuel standard that generates revenue from under-compliant ships paying for credits to make up the compliance deficit, and the others who want a flat carbon emissions fee to guarantee revenue and reduce the cost gap between fuel types. Small island nations oppose both approaches because they believe the fuel standard measure will not generate enough funding to support “a just and equitable transition,” and because they rely on sea trade for everything, the carbon tax will cost them out of existence. Navigating a way through the divisions among member states will not be easy, but Lloyd’s Register said the IMO cannot be seen to close this milestone MEPC meeting on a “no deal” basis. “It is not expected to be a hostile meeting, but there are many heated discussions already taking place in back rooms and corridors that will continue in the lead up to the meeting,” Wibroe said. “It is anticipated, however, that the IMO is still likely to close MEPC 83 with a consensus.” Nyhus had the same view that by the time MEPC delegates emerge on April 11 from their London Embankment bunker at the IMO headquarters in London they will have reached a deal of some kind. “It looks pretty certain that this is going to come down to the wire at MEPC 83 with a very real possibility that the meeting at some point simply will be presented with a take it or leave it proposal,” was Nyhus’ assessment. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

A crucial April meeting of the International Maritime Organization (IMO) will be the first during President Trump’s second term, with the US currently “in a holding pattern” regarding continued membership of the IMO, according to classification society DNV. The 176 member states of the IMO will gather at the 83rd Marine Environment Protection Committee (MEPC) meeting in London from April 7–11 to design a greenhouse gas (GHG) fuel intensity regulation and settle on an economic measure for taxing carbon emissions, with both measures aiming for implementation in 2027. Eirik Nyhus, director for environment and maritime at DNV, said in an MEPC update this week that the US position regarding the IMO going forward remained unclear. At the last meeting of the IMO’s Intersessional Working Group on Reduction of Greenhouse Gas Emissions from Ships (ISWG-GHG 18) in late February, Nyhus said the US did not take the floor until the very end, stating that the new administration was reassessing all its United Nations positions and policies. The IMO is a specialized agency of the UN. The Trump administration is also in the process of withdrawing from the Paris Agreement climate change accord, part of a broader initiative of “reviewing for rescission all regulations that impose undue burdens on energy production and use.” A spokesperson for the IMO told the Journal of Commerce this week that “any member state can withdraw from the organization, as outlined in Article 73 of the IMO Convention, though they would still be bound by the treaties to which they are party.” Still, Nyhus played down the significance of a potential US withdrawal with the IMO having far more important issues to focus on. “While the US has turned into a bit of a wild card, I cannot see this being a showstopper [at MEPC] in any way,” he noted. “Many issues, big and small, remain under negotiation, with the two most challenging ones being the design of the greenhouse gas fuel intensity regulation and the choice of economic measure. The discussions remain intensely political,” he added. The goal is to have a net zero framework ready for approval at MEPC 83 in London, and there is pressure on member states to finalize the legal framework around a fuel standard and economic measure with implementation planned for October. If the measures do not roll out in October, it will place the IMO’s interim emissions reduction targets at risk. Ocean carriers are watching the MEPC deliberations closely — many have had to invest huge sums in dual-fuel ships able to run on cleaner energy despite the lack of regulations to narrow the gap between fossil fuels and the alternatives. “We have to take decisions on decarbonizing our fleet over the next 20, 25 or 30 years, and we believe that the direction that we have chosen remains valid,” Hapag-Lloyd CEO Rolf Habben Jansen told reporters at the carrier’s annual results presentation Thursday. “That means trying to reduce our emissions significantly until 2030 and also to stick to our target to be net carbon neutral by 2045.” No deal is not an option Andy Wibroe, lead regulatory specialist at classification society Lloyd’s Register, said in an MEPC update this week that one of the main issues to be resolved in April is how shipowners and operators will pay for GHG emissions from their ships on a well-to-wake basis. Funds coming from whatever carbon-charging measure is agreed upon are essential to support the development and scale up of a new generation of carbon-free marine fuels, which remain significantly more expensive than traditional fossil fuels. Another crucial point is the support for developing countries and remote island states through the energy transition in shipping. Wibroe highlighted the divisions between two camps — those who believe in a technical measure built around a fuel standard that generates revenue from under-compliant ships paying for credits to make up the compliance deficit, and the others who want a flat carbon emissions fee to guarantee revenue and reduce the cost gap between fuel types. Small island nations oppose both approaches because they believe the fuel standard measure will not generate enough funding to support “a just and equitable transition,” and because they rely on sea trade for everything, the carbon tax will cost them out of existence. Navigating a way through the divisions among member states will not be easy, but Lloyd’s Register said the IMO cannot be seen to close this milestone MEPC meeting on a “no deal” basis. “It is not expected to be a hostile meeting, but there are many heated discussions already taking place in back rooms and corridors that will continue in the lead up to the meeting,” Wibroe said. “It is anticipated, however, that the IMO is still likely to close MEPC 83 with a consensus.” Nyhus had the same view that by the time MEPC delegates emerge on April 11 from their London Embankment bunker at the IMO headquarters in London they will have reached a deal of some kind. “It looks pretty certain that this is going to come down to the wire at MEPC 83 with a very real possibility that the meeting at some point simply will be presented with a take it or leave it proposal,” was Nyhus’ assessment. Contact Greg Knowler at greg.knowler@spglobal.com .

Maritime

US in ‘holding pattern’ over IMO membership: DNV

<div class="phx-topic abstract-wrapper">No matter what changes occur, a FedEx Freight spinoff as a standalone LTL carrier will be good for the entire industry, writes Satish Jindel.</div>

No matter what changes occur, a FedEx Freight spinoff as a standalone LTL carrier will be good for the entire industry, writes Satish Jindel.

<div class="phx-topic">On June 25, 2024, during an earnings call, FedEx leaders announced that the company’s board had authorized management to explore options for a sale or spinoff of FedEx Freight, and that a decision would be announced by the end of the year. On Dec. 19, <a href="https://www.joc.com/article/fedex-freight-spinoff-is-latest-move-to-reshape-us-ltl-market-5909683">the leadership announced that a spinoff</a> was the best option and would be completed over 18 months. Why tell the shareholders and the less-than-truckload (LTL) market of this move if it is not happening for many months? Now, competitors and shippers can prepare for the various changes that could result from the FedEx Freight spinoff. Competing carriers and shippers should benefit from FedEx’s Priority and Economy services getting merged for a number of reasons. While the parcel market supports express and ground services, the FedEx Express volume has been shrinking for many years, with FedEx Ground now representing over 80% of total parcel volume. So, if there is a rationale to merge the Express and Ground parcel networks, FedEx Freight’s Priority and Economy services should also be merged. The premium for the Priority service price is so small that it does not make up for the various costs related to offering two services. If the two services were so appealing and financially rewarding, other LTL carriers would have done the same. Yet after 12 years, no other LTL carrier has followed suit. Many LTL carriers with just one service are generating operating margins better than 14.5% of FedEx Freight. As the LTL industry speeds up the transit times on high-volume lanes, the gap between Priority and Economy services will shrink. <h3>Greater role for technology </h3>While the parent company wants to spin it off as FedEx Freight, expect the new board to rename it American Freightways. With relief from intercompany charges of $528 million during fiscal year 2024 paid to FedEx Corporation for marketing, sales, technology and billing support, the spinoff will save FedEx Freight a few hundred million dollars by handling those corporate support functions itself. If it uses that money to go for greater market share with pricing initiatives, it could be good news for shippers. Shippers should get ready for a greater role of technology. With the National Motor Freight Traffic Association finally adopting dimensional pricing, there will be a greater need by shippers and carriers to capture shipment dimensions. This change should ensure more accurate billing and reduce the cost for auditing all freight bills for proper classification. With shippers being required to pay greater attention to the dimensions of the pallets, they can expect FedEx Freight support to improve their palletizing just as FedEx helps parcel customers improve their packaging. Because there are practically no appointment deliveries in the parcel business, expect FedEx Freight to embrace opportunities with AI to reduce the number of appointment deliveries, which should help shippers avoid charges for such service. We can also expect FedEx Freight to take greater interest in participating in LTL industry conferences and contributing its shipment data to SMC3’s national LTL database. No matter which of these changes occur, a FedEx Freight spinoff as a standalone LTL carrier will be good for the entire industry. And for those wondering why FedEx needs 18 months to spin off Freight, just imagine the pressure on the board and leadership that may find that investors are valuing its LTL business at a higher market cap than its parcel business, which is generating just a 5.5% margin compared with 14.5% for LTL business. Contact Satish Jindel at <a href="mailto:info@shipmatrix.com">info@shipmatrix.com</a>. </div>

On June 25, 2024, during an earnings call, FedEx leaders announced that the company’s board had authorized management to explore options for a sale or spinoff of FedEx Freight, and that a decision would be announced by the end of the year. On Dec. 19, the leadership announced that a spinoff was the best option and would be completed over 18 months. Why tell the shareholders and the less-than-truckload (LTL) market of this move if it is not happening for many months? Now, competitors and shippers can prepare for the various changes that could result from the FedEx Freight spinoff. Competing carriers and shippers should benefit from FedEx’s Priority and Economy services getting merged for a number of reasons. While the parcel market supports express and ground services, the FedEx Express volume has been shrinking for many years, with FedEx Ground now representing over 80% of total parcel volume. So, if there is a rationale to merge the Express and Ground parcel networks, FedEx Freight’s Priority and Economy services should also be merged. The premium for the Priority service price is so small that it does not make up for the various costs related to offering two services. If the two services were so appealing and financially rewarding, other LTL carriers would have done the same. Yet after 12 years, no other LTL carrier has followed suit. Many LTL carriers with just one service are generating operating margins better than 14.5% of FedEx Freight. As the LTL industry speeds up the transit times on high-volume lanes, the gap between Priority and Economy services will shrink. Greater role for technology While the parent company wants to spin it off as FedEx Freight, expect the new board to rename it American Freightways. With relief from intercompany charges of $528 million during fiscal year 2024 paid to FedEx Corporation for marketing, sales, technology and billing support, the spinoff will save FedEx Freight a few hundred million dollars by handling those corporate support functions itself. If it uses that money to go for greater market share with pricing initiatives, it could be good news for shippers. Shippers should get ready for a greater role of technology. With the National Motor Freight Traffic Association finally adopting dimensional pricing, there will be a greater need by shippers and carriers to capture shipment dimensions. This change should ensure more accurate billing and reduce the cost for auditing all freight bills for proper classification. With shippers being required to pay greater attention to the dimensions of the pallets, they can expect FedEx Freight support to improve their palletizing just as FedEx helps parcel customers improve their packaging. Because there are practically no appointment deliveries in the parcel business, expect FedEx Freight to embrace opportunities with AI to reduce the number of appointment deliveries, which should help shippers avoid charges for such service. We can also expect FedEx Freight to take greater interest in participating in LTL industry conferences and contributing its shipment data to SMC3’s national LTL database. No matter which of these changes occur, a FedEx Freight spinoff as a standalone LTL carrier will be good for the entire industry. And for those wondering why FedEx needs 18 months to spin off Freight, just imagine the pressure on the board and leadership that may find that investors are valuing its LTL business at a higher market cap than its parcel business, which is generating just a 5.5% margin compared with 14.5% for LTL business. Contact Satish Jindel at info@shipmatrix.com .

Surface

How the LTL market could evolve as the FedEx Freight spinoff plays out

<div class="phx-topic abstract-wrapper">What we have today in containerization is the opposite of Malcom McLean’s vision, writes Ted Prince — a vertically integrated enterprise of cost centers has been replaced by a network of profit centers that closely resembles the intermodal rail world.</div>

What we have today in containerization is the opposite of Malcom McLean’s vision, writes Ted Prince — a vertically integrated enterprise of cost centers has been replaced by a network of profit centers that closely resembles the intermodal rail world.

<div class="phx-topic">The Journal of Commerce’s roots extend back to 1827, when Samuel Morse and partners started a newspaper in New York. In 1844, Morse effectively started the telecommunications revolution. His first telegraph message asked, “What hath God wrought?” To many, the answer to that question might have been the development of containerization by Malcom McLean of Maxton, North Carolina. McLean’s transportation roots were in less-than-truckload (LTL). He was an early pioneer; McLean Trucking was founded in 1934 — the same year as the Motor Carrier Act of 1934 — and at one time was the fourth-largest motor carrier in the United States. This Motor Carrier Act followed traditional regulatory thinking. To ensure sufficient capacity, carriers were granted monopolies in the form of operating authorities. With tobacco a highly rated commodity, this was an incredibly lucrative business. These profits supported the acquisition of other motor carriers and the seed capital to start containerization. What the hagiography of McLean frequently omits is that he was not perfect. He twice “bet the company” on oil prices — and got it wrong both times. The development of high-speed container ships known as SL-7s were deployed in 1972 and 1973 during the first fuel shock. The ships’ high operating costs destroyed any profitability, and they were sold to the United States Navy in 1981 and 1982. In 1969, McLean sold Sea-Land to R.J. Reynolds Tobacco Company. In 1978, McLean purchased United States Lines and built a fleet of 4,400-TEU container ships. These were the largest ships at the time and were designed to operate in around-the-world services. Following the second oil shock of 1979, these vessels were designed to be fuel-efficient — albeit slow. When oil prices cratered five years later, so did US Lines. <h3>A ‘grander strategy’</h3>While the SL-7s and EconoShips are well-known aspects of McLean’s legacy, I think it is worthwhile exploring his grander strategy. SeaLand was vertically integrated — deploying his ships, calling his terminals, utilizing cranes of his specifications, carrying his containers, and moving on his chassis. While this model was emulated by many of those that followed, it is worthwhile to think about what has changed since then — and what it means today. Independent vessel strings are mostly a thing of the past. Vessel-sharing agreements (VSAs) have given way to global alliances — not to mention outright acquisitions. SeaLand–Maersk was an early VSA that ultimately led to Maersk acquiring SeaLand. This is a reflection of the need for economies of scope and scale — alongside density and service frequency — that are table stakes in today’s liner shipping world. By the early 1960s, McLean’s concept for standardized shipping containers gave rise to the container leasing industry. Sea Containers was an early entrant that was followed by others. This was a reflection that the capital-intensive nature of liner shipping made it almost impossible for a carrier to invest in everything. It was also a realization that economies of scale were sometimes beyond the reach of a single entity. While the chassis was necessary to provide pickup and delivery, carrier provision of chassis was limited to the United States. McLean was a trucker at heart and couldn’t imagine not having his own wheels. This decision haunted the industry for decades. Finally, in 2012, Maersk sold its chassis-leasing subsidiary, Direct ChassisLink, Inc. (DCLI), to a private equity firm. In an industry where most want to be second, almost every other line followed. Marine terminals were the last to be unbundled — perhaps because lines viewed them as their “crown jewels,” or perhaps because of their high price tags. These investments became popular with infrastructure funds and their pension fund investors. What we have today is the opposite of McLean’s vision. A vertically integrated enterprise of cost centers has been replaced by a network of profit centers that closely resembles the intermodal rail world. Whereas the former would inevitably cross-subsidize separate components through intricate transfer pricing, the latter has created a world of cutthroat capitalism. The impacts are not always clear. Container and chassis providers claim that they offer savings; however, their line customers may not agree — perhaps because they lack the sophistication to ascertain the true cost of ownership and operation. The impact on marine terminals is much more pervasive. Whereas an ocean carrier might have previously absorbed some additional costs (e.g., extra gates, third shifts, etc.) in a holistic service perspective, today’s terminals have owners that demand profitability across the spectrum. Our industry, despite its global scale, is still relatively young. We are living Joseph Schumpeter’s theory of creative destruction that he believed is essential for capitalism and economic growth. New innovations replace old ones. McLean’s innovations were essential, but not timeless. Our industry is essential, and the only certainty is change. Contact Ted Prince at <a href="mailto:ted@tricitiesintermodal.com">ted@tricitiesintermodal.com</a>.</div>

The Journal of Commerce’s roots extend back to 1827, when Samuel Morse and partners started a newspaper in New York. In 1844, Morse effectively started the telecommunications revolution. His first telegraph message asked, “What hath God wrought?” To many, the answer to that question might have been the development of containerization by Malcom McLean of Maxton, North Carolina. McLean’s transportation roots were in less-than-truckload (LTL). He was an early pioneer; McLean Trucking was founded in 1934 — the same year as the Motor Carrier Act of 1934 — and at one time was the fourth-largest motor carrier in the United States. This Motor Carrier Act followed traditional regulatory thinking. To ensure sufficient capacity, carriers were granted monopolies in the form of operating authorities. With tobacco a highly rated commodity, this was an incredibly lucrative business. These profits supported the acquisition of other motor carriers and the seed capital to start containerization. What the hagiography of McLean frequently omits is that he was not perfect. He twice “bet the company” on oil prices — and got it wrong both times. The development of high-speed container ships known as SL-7s were deployed in 1972 and 1973 during the first fuel shock. The ships’ high operating costs destroyed any profitability, and they were sold to the United States Navy in 1981 and 1982. In 1969, McLean sold Sea-Land to R.J. Reynolds Tobacco Company. In 1978, McLean purchased United States Lines and built a fleet of 4,400-TEU container ships. These were the largest ships at the time and were designed to operate in around-the-world services. Following the second oil shock of 1979, these vessels were designed to be fuel-efficient — albeit slow. When oil prices cratered five years later, so did US Lines. A ‘grander strategy’ While the SL-7s and EconoShips are well-known aspects of McLean’s legacy, I think it is worthwhile exploring his grander strategy. SeaLand was vertically integrated — deploying his ships, calling his terminals, utilizing cranes of his specifications, carrying his containers, and moving on his chassis. While this model was emulated by many of those that followed, it is worthwhile to think about what has changed since then — and what it means today. Independent vessel strings are mostly a thing of the past. Vessel-sharing agreements (VSAs) have given way to global alliances — not to mention outright acquisitions. SeaLand–Maersk was an early VSA that ultimately led to Maersk acquiring SeaLand. This is a reflection of the need for economies of scope and scale — alongside density and service frequency — that are table stakes in today’s liner shipping world. By the early 1960s, McLean’s concept for standardized shipping containers gave rise to the container leasing industry. Sea Containers was an early entrant that was followed by others. This was a reflection that the capital-intensive nature of liner shipping made it almost impossible for a carrier to invest in everything. It was also a realization that economies of scale were sometimes beyond the reach of a single entity. While the chassis was necessary to provide pickup and delivery, carrier provision of chassis was limited to the United States. McLean was a trucker at heart and couldn’t imagine not having his own wheels. This decision haunted the industry for decades. Finally, in 2012, Maersk sold its chassis-leasing subsidiary, Direct ChassisLink, Inc. (DCLI), to a private equity firm. In an industry where most want to be second, almost every other line followed. Marine terminals were the last to be unbundled — perhaps because lines viewed them as their “crown jewels,” or perhaps because of their high price tags. These investments became popular with infrastructure funds and their pension fund investors. What we have today is the opposite of McLean’s vision. A vertically integrated enterprise of cost centers has been replaced by a network of profit centers that closely resembles the intermodal rail world. Whereas the former would inevitably cross-subsidize separate components through intricate transfer pricing, the latter has created a world of cutthroat capitalism. The impacts are not always clear. Container and chassis providers claim that they offer savings; however, their line customers may not agree — perhaps because they lack the sophistication to ascertain the true cost of ownership and operation. The impact on marine terminals is much more pervasive. Whereas an ocean carrier might have previously absorbed some additional costs (e.g., extra gates, third shifts, etc.) in a holistic service perspective, today’s terminals have owners that demand profitability across the spectrum. Our industry, despite its global scale, is still relatively young. We are living Joseph Schumpeter’s theory of creative destruction that he believed is essential for capitalism and economic growth. New innovations replace old ones. McLean’s innovations were essential, but not timeless. Our industry is essential, and the only certainty is change. Contact Ted Prince at ted@tricitiesintermodal.com .

Supply chain

In appreciation of McLean’s essential, although not timeless, innovations

S&P Global Platts editors engaging with market participants to assess the current value of freight-all-kinds (FAK) rates on major container trades produce container spot rates. The rates include bunker adjustment factors, general rate increases and emergency rare restoration. They also include low-sulfur fuel, equipment imbalance and repositioning surcharges. The rates exclude terminal handling, port security, overweight container, delivery, and detention and demurrage charges. [Platts](https://www.spglobal.com/commodityinsights)

North Europe to US East Coast container spot rates (Platts)

Platts North Europe to US East Coast Weekly Gateway

<div class="phx-topic abstract-wrapper">Despite banking a collective operating profit of about $60 billion in 2024, a worsening supply-demand imbalance could make the next three years difficult for the container shipping industry.</div>

Despite banking a collective operating profit of about $60 billion in 2024, a worsening supply-demand imbalance could make the next three years difficult for the container shipping industry.

<div class="phx-topic">Container shipping is plunging into another downcycle with an oversupply of capacity and weakening demand hanging over the industry, leaving little to slow the slide in rates on major trades that analysts say has declined beyond seasonal norms. Despite reporting a highly profitable 2024 — operating profit will be near $60 billion across the industry, according to estimates from Sea-Intelligence Maritime Analysis — analysts are predicting a sharp downturn beginning this year. “We think we are entering a multi-year period of losses as the industry grapples with overcapacity,” J.P. Morgan wrote in a market update Monday, noting that the losses will likely emerge even if capacity does not fully return to the Red Sea this year. “Our demand-supply analysis now points to a 30% reduction in freight rates year over year in 2025 [down from the previous estimate of negative 15%],” the bank’s transport analysts wrote. “This leads to ocean EBIT [earnings before interest and taxes] losses emerging during 2025 and in our view persisting into the next three years, as vessel deliveries re-accelerate in 2027.” On the trans-Pacific, North Asia-US West Coast rates are down 65% since early January, falling an additional $400 last week to $1,800 per FEU. North Asia-US East Coast rates of $2,800/FEU lost $500 in the past week and are down 58% so far this year, according to Platts, a sister company of the Journal of Commerce within S&amp;P Global. Similarly, Asia-North Europe spot rates are down 50% since the beginning of January at $2,549/FEU and are now $148/FEU below the long-term contract rate, according to rate benchmarking platform Xeneta. <h3>Short-lived rate increases </h3>Carriers levied freight-all-kinds (FAK) increases on Asia-North Europe on March 1, but it had little effect on the oversupplied market, according to Peter Sand, Xeneta’s chief analyst. “The short-lived uptick in spot rates at the start of March suggests a weakness in the market and demonstrates the difficulties carriers will face in capacity management during 2025,” Sand said in a market update, adding that a similar weakening of rates can be seen on the Asia-to-US West and East coast trades despite a series of general rate increases (GRIs). <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e60581e5-a2c4-45df-a59f-3fe2b770f471"></dynamic-object></div>Maersk CEO Vincent Clerc <a href="https://www.joc.com/article/excess-capacity-hangs-over-recovering-container-market-maersk-ceo-5214234">said during the carrier’s earnings call</a> earlier this month that no matter how long the Red Sea disruption lasted, the fundamentals of increasing overcapacity in container shipping would “eventually” prevail and could start hitting the market as early as the third quarter. “Even if the situation on the Red Sea was to endure for two years, three years or four years, the current orderbook would eventually be bigger than what we expect market growth to be,” Clerc said. <h3>Flurry of air strikes on Houthi positions </h3>The container shipping order book is currently just over 7 million TEUs, representing 25% of the existing fleet, according to S&amp;P Global’s Sea-web, sister company of the Journal of Commerce, with the supply-demand imbalance expected to be particularly acute over the next two years. Niels Rasmussen, chief shipping analyst at shipping association BIMCO, had forecast cargo volume growth at 3% to 4% in both 2024 and 2025, which will be easily outstripped by fleet growth that was due to top 9.5% in 2024 and is forecast for 4.9% in 2025. An estimated 10% of global capacity has been absorbed by the longer transits around southern Africa to avoid the Red Sea. The Houthi’s move last week to renew attacks on Israeli-linked ships and a flurry of air strikes from US warplanes on the militants’ positions in Yemen over the weekend highlighted the ongoing volatility in the region. “The next incremental addition in capacity will result near term from the reopening of the Red Sea, which we think will likely happen in 2026 as it will take time for the full capacity to return,” J.P. Morgan noted in its update. The bank has forecast 2% growth in global volume this year, with volume rising 5% in the first quarter before falling to 1% growth for the remaining quarters of 2025. “We continue to see the freight backdrop as challenging and it remains subject to heightened demand risks as we enter a global trade war, given recent announcements of reciprocal tariffs with business confidence subject to downside risks,” J.P. Morgan said. John McCown, founder of private equity firm Blue Alpha Capital, agreed in his McCown Report released earlier this month. “The year 2025 could be a return to the roller coaster volume swings that most of us had hoped were in the past,” he wrote. “Whether it’s the Panama Canal situation, the complex reciprocal tariffs or the initiative <a href="https://www.joc.com/article/us-port-tax-would-scramble-ocean-services-raise-shipper-costs-drewry-5952046">to tax ships with a Chinese connection</a> each time they call on a US port, these initiatives inject chaos, uncertainty and unnecessary costs into the container supply chain.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Container shipping is plunging into another downcycle with an oversupply of capacity and weakening demand hanging over the industry, leaving little to slow the slide in rates on major trades that analysts say has declined beyond seasonal norms. Despite reporting a highly profitable 2024 — operating profit will be near $60 billion across the industry, according to estimates from Sea-Intelligence Maritime Analysis — analysts are predicting a sharp downturn beginning this year. “We think we are entering a multi-year period of losses as the industry grapples with overcapacity,” J.P. Morgan wrote in a market update Monday, noting that the losses will likely emerge even if capacity does not fully return to the Red Sea this year. “Our demand-supply analysis now points to a 30% reduction in freight rates year over year in 2025 [down from the previous estimate of negative 15%],” the bank’s transport analysts wrote. “This leads to ocean EBIT [earnings before interest and taxes] losses emerging during 2025 and in our view persisting into the next three years, as vessel deliveries re-accelerate in 2027.” On the trans-Pacific, North Asia-US West Coast rates are down 65% since early January, falling an additional $400 last week to $1,800 per FEU. North Asia-US East Coast rates of $2,800/FEU lost $500 in the past week and are down 58% so far this year, according to Platts, a sister company of the Journal of Commerce within S&P Global. Similarly, Asia-North Europe spot rates are down 50% since the beginning of January at $2,549/FEU and are now $148/FEU below the long-term contract rate, according to rate benchmarking platform Xeneta. Short-lived rate increases Carriers levied freight-all-kinds (FAK) increases on Asia-North Europe on March 1, but it had little effect on the oversupplied market, according to Peter Sand, Xeneta’s chief analyst. “The short-lived uptick in spot rates at the start of March suggests a weakness in the market and demonstrates the difficulties carriers will face in capacity management during 2025,” Sand said in a market update, adding that a similar weakening of rates can be seen on the Asia-to-US West and East coast trades despite a series of general rate increases (GRIs). Maersk CEO Vincent Clerc said during the carrier’s earnings call earlier this month that no matter how long the Red Sea disruption lasted, the fundamentals of increasing overcapacity in container shipping would “eventually” prevail and could start hitting the market as early as the third quarter. “Even if the situation on the Red Sea was to endure for two years, three years or four years, the current orderbook would eventually be bigger than what we expect market growth to be,” Clerc said. Flurry of air strikes on Houthi positions The container shipping order book is currently just over 7 million TEUs, representing 25% of the existing fleet, according to S&P Global’s Sea-web, sister company of the Journal of Commerce, with the supply-demand imbalance expected to be particularly acute over the next two years. Niels Rasmussen, chief shipping analyst at shipping association BIMCO, had forecast cargo volume growth at 3% to 4% in both 2024 and 2025, which will be easily outstripped by fleet growth that was due to top 9.5% in 2024 and is forecast for 4.9% in 2025. An estimated 10% of global capacity has been absorbed by the longer transits around southern Africa to avoid the Red Sea. The Houthi’s move last week to renew attacks on Israeli-linked ships and a flurry of air strikes from US warplanes on the militants’ positions in Yemen over the weekend highlighted the ongoing volatility in the region. “The next incremental addition in capacity will result near term from the reopening of the Red Sea, which we think will likely happen in 2026 as it will take time for the full capacity to return,” J.P. Morgan noted in its update. The bank has forecast 2% growth in global volume this year, with volume rising 5% in the first quarter before falling to 1% growth for the remaining quarters of 2025. “We continue to see the freight backdrop as challenging and it remains subject to heightened demand risks as we enter a global trade war, given recent announcements of reciprocal tariffs with business confidence subject to downside risks,” J.P. Morgan said. John McCown, founder of private equity firm Blue Alpha Capital, agreed in his McCown Report released earlier this month. “The year 2025 could be a return to the roller coaster volume swings that most of us had hoped were in the past,” he wrote. “Whether it’s the Panama Canal situation, the complex reciprocal tariffs or the initiative to tax ships with a Chinese connection each time they call on a US port, these initiatives inject chaos, uncertainty and unnecessary costs into the container supply chain.” Contact Greg Knowler at greg.knowler@spglobal.com .

Forwarding

Oversupplied ocean carriers sailing into new downcycle: analysts

<div class="phx-topic abstract-wrapper">A commentary published in a Hong Kong state-backed newspaper said the acquisition of Hutchison’s Panama assets by BlackRock and TiL would “Americanize” the canal and cause Washington to restrict Chinese access to the waterway. </div>

A commentary published in a Hong Kong state-backed newspaper said the acquisition of Hutchison’s Panama assets by BlackRock and TiL would “Americanize” the canal and cause Washington to restrict Chinese access to the waterway.

<div class="phx-topic">Beijing is voicing its opposition to the sale by Hong Kong conglomerate CK Hutchison of its Panama ports terminals to a consortium of BlackRock Group and Mediterranean Shipping Co.’s Terminal Investment Limited (TiL), warning the Panama Canal would be “Americanized” by the US government restricting Chinese access to the waterway. Chinese government concerns were outlined in a commentary published Thursday by Hong Kong newspaper Ta Kung Pao, a China state-backed newspaper. Official endorsement of the commentary was demonstrated when it was reposted on the joint website of the Chinese Communist Party’s Hong Kong and Macao Work Office and the Chinese government’s Hong Kong and Macao Affairs Office. The report spooked investors, causing Hutchison’s share price to drop more than 6% Friday to close at HK$46.25 (US$6). China’s opposition could put pressure on regulators to reject the sale. Hutchison on March 4 <a href="https://www.joc.com/article/hutchison-inks-228-billion-deal-to-sell-majority-of-port-holdings-to-blackrock-til-5955819">announced it had agreed to sell</a> its 90% stake in the Panama Ports Company as part of a larger $22.8 billion deal to offload its global ports business to BlackRock and TiL. The deal covers its 80% interest in Hutchison Port Holdings, which has terminal operations at 43 ports, but excludes Hutchison’s China ports. The Panama Ports Company controls terminals at Cristobal and Balboa at both ends of the canal. The newspaper commentary said the sale of the Panama terminals would lead the canal to become “Americanized” and “politicized,” with the US using the canal for “political purposes and pursuit of its own political agenda.” “China’s shipping trade will inevitably be constrained by the United States,” it said. “Once the US implements measures such as selective flow restrictions and imposition of political surcharges, the logistics costs and supply chain stability of Chinese enterprises will face great risks.” <h3>‘Not ordinary business practice’</h3>When the deal was announced, Frank Sixt, CK Hutchison’s co-managing director, stressed that the transaction was “purely commercial in nature and wholly unrelated to recent political news reports concerning the Panama Ports.” He added the sale “was the result of a rapid, discrete, but competitive process in which numerous bids and expressions of interest were received.” But the newspaper commentary rejected that explanation, highlighting Donald Trump’s ongoing threats to take back control of the canal and his close relationship with BlackRock co-founder, chairman and CEO Larry Fink. The Hutchison ports sale was “not ordinary business practice,” the commentary said. “Some [on the internet] pointed out that the United States may use this transaction as a template, through political pressure, to set off port mergers and acquisitions around the world, control more key ports in the world, and use ‘long-arm jurisdiction’ to implement suppression methods so that Chinese ships have nowhere to be berth,” the commentary added. “It can be seen that this deal is a hegemonic act by the US to use national power to embezzle the legitimate rights and interests of other countries through coercion, pressure, inducement and other despicable means, and it is power politics packaged as commercial behavior,” it added. CK Hutchison was also attacked, with the commentary saying that observers “generally strongly questioned and criticized this transaction” with the company “ignoring national interests and betraying all Chinese.” Warning of possible consequences if the sale goes ahead, the commentary said: “The relevant enterprises should think twice and think carefully about what position they want to stand on and which side they want to stand on.” Hutchison structured the deal as two transactions so the Panama Ports Company can likely be sold ahead of the other terminals in its portfolio. Regulatory and related issues in jurisdictions where the terminals are located could delay the sale of those assets by about a year, Eleanor Hadland, senior associate and ports and terminals analyst at maritime consultancy Drewry, <a href="https://www.joc.com/article/big-hutchison-deal-could-reshuffle-global-ports-network-drewry-5958162">told the Journal of Commerce</a>. Officially, the Chinese government has not commented on the deal, with a Foreign Ministry spokesperson saying it does not comment on commercial matters. Hutchison, which is in a 145-day exclusive negotiating period with BlackRock and TiL, did not immediately comment. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>.</div>

Beijing is voicing its opposition to the sale by Hong Kong conglomerate CK Hutchison of its Panama ports terminals to a consortium of BlackRock Group and Mediterranean Shipping Co.’s Terminal Investment Limited (TiL), warning the Panama Canal would be “Americanized” by the US government restricting Chinese access to the waterway. Chinese government concerns were outlined in a commentary published Thursday by Hong Kong newspaper Ta Kung Pao, a China state-backed newspaper. Official endorsement of the commentary was demonstrated when it was reposted on the joint website of the Chinese Communist Party’s Hong Kong and Macao Work Office and the Chinese government’s Hong Kong and Macao Affairs Office. The report spooked investors, causing Hutchison’s share price to drop more than 6% Friday to close at HK$46.25 (US$6). China’s opposition could put pressure on regulators to reject the sale. Hutchison on March 4 announced it had agreed to sell its 90% stake in the Panama Ports Company as part of a larger $22.8 billion deal to offload its global ports business to BlackRock and TiL. The deal covers its 80% interest in Hutchison Port Holdings, which has terminal operations at 43 ports, but excludes Hutchison’s China ports. The Panama Ports Company controls terminals at Cristobal and Balboa at both ends of the canal. The newspaper commentary said the sale of the Panama terminals would lead the canal to become “Americanized” and “politicized,” with the US using the canal for “political purposes and pursuit of its own political agenda.” “China’s shipping trade will inevitably be constrained by the United States,” it said. “Once the US implements measures such as selective flow restrictions and imposition of political surcharges, the logistics costs and supply chain stability of Chinese enterprises will face great risks.” ‘Not ordinary business practice’ When the deal was announced, Frank Sixt, CK Hutchison’s co-managing director, stressed that the transaction was “purely commercial in nature and wholly unrelated to recent political news reports concerning the Panama Ports.” He added the sale “was the result of a rapid, discrete, but competitive process in which numerous bids and expressions of interest were received.” But the newspaper commentary rejected that explanation, highlighting Donald Trump’s ongoing threats to take back control of the canal and his close relationship with BlackRock co-founder, chairman and CEO Larry Fink. The Hutchison ports sale was “not ordinary business practice,” the commentary said. “Some [on the internet] pointed out that the United States may use this transaction as a template, through political pressure, to set off port mergers and acquisitions around the world, control more key ports in the world, and use ‘long-arm jurisdiction’ to implement suppression methods so that Chinese ships have nowhere to be berth,” the commentary added. “It can be seen that this deal is a hegemonic act by the US to use national power to embezzle the legitimate rights and interests of other countries through coercion, pressure, inducement and other despicable means, and it is power politics packaged as commercial behavior,” it added. CK Hutchison was also attacked, with the commentary saying that observers “generally strongly questioned and criticized this transaction” with the company “ignoring national interests and betraying all Chinese.” Warning of possible consequences if the sale goes ahead, the commentary said: “The relevant enterprises should think twice and think carefully about what position they want to stand on and which side they want to stand on.” Hutchison structured the deal as two transactions so the Panama Ports Company can likely be sold ahead of the other terminals in its portfolio. Regulatory and related issues in jurisdictions where the terminals are located could delay the sale of those assets by about a year, Eleanor Hadland, senior associate and ports and terminals analyst at maritime consultancy Drewry, told the Journal of Commerce. Officially, the Chinese government has not commented on the deal, with a Foreign Ministry spokesperson saying it does not comment on commercial matters. Hutchison, which is in a 145-day exclusive negotiating period with BlackRock and TiL, did not immediately comment. Contact Keith Wallis at keithwallis@hotmail.com .

International ports

Beijing issues warning over Hutchison’s proposed sale of Panama Ports Company

<div class="phx-topic abstract-wrapper">Fresh questions about the direction of the US economy after the tariff chaos unleashed by the Trump administration in recent weeks has container lines resetting their rate expectations for the 2025–26 service year.</div>

Fresh questions about the direction of the US economy after the tariff chaos unleashed by the Trump administration in recent weeks has container lines resetting their rate expectations for the 2025–26 service year.

<div class="phx-topic">Ocean carriers on the eastbound trans-Pacific are acknowledging they will be unable to achieve their hoped-for rates in 2025–26 annual service contracts with importers amid fresh concerns about the health of the US economy and a spot market that continues to slide. Mere weeks ago, those same carriers were adamant about nailing down rates for next year at a minimum level of $2,000 per FEU to the West Coast and $3,000 per FEU to the East Coast, <a href="https://www.joc.com/article/trans-pacific-carriers-reaching-higher-in-early-202526-contract-talks-5952701">saying they were determined not to underprice their services again</a> as they believe they did in the existing 2024–25 contracts. But a plummeting stock market and larger questions about the direction of the US economy after the tariff chaos unleashed by the Trump administration in recent weeks has container lines resetting their rate expectations. Four carriers told the Journal of Commerce they are now setting their sights slightly lower than $2,000/FEU for the West Coast and $3,000/FEU to the East Coast. One carrier executive said the new going rate in service contract negotiations with shippers is $1,800 to $1,900 per FEU to the West Coast and about $1,000 higher to the East Coast. But even that may not be a level to satiate some beneficial cargo owners (BCOs) who may prefer to wait to see if the market moves lower. “BCOs are still asking for lower,” the carrier executive said. The rapid decline in spot rates during the Lunar New Year factory closures in Asia is prompting some retailers to look at one or two more rounds of negotiations before they agree to a final contract rate for the 2025–26 service year, a second carrier source said. Most service contracts begin on May 1. <h3>Spot rate plunge influencing contract talks </h3>Spot rates from North Asia to the West Coast were at $1,850 per FEU as of Thursday, down 19% in just one week, according to Platts, a sister company of the Journal of Commerce within S&amp;P Global. Rates to the East Coast of $2,900 per FEU were down 14% over the week. Plummeting spot rates — which are about 46% lower than this time last year — are having a knock-on effect on service contract levels now under negotiation. “Contract rates have mostly fallen below $2,000/$3,000,” said Rachel Shames, vice president for pricing and procurement at the forwarder CV International. “Carriers are becoming more aggressive with rates.” <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e7a65aab-9aac-4f07-9b74-1793746c01ef"></dynamic-object></div>Kevin Parkerson, an industry consultant and former logistics manager at national retailers, said he’s seeing West Coast/East Coast levels now talked at $1,800/$2,900. “I would not be surprised to see $1,700 [for the West Coast],” he said. Four importers who spoke to the Journal of Commerce said carriers, in a second round of negotiations over 2025–26 contracts, are now quoting rates below $2,000 to the West Coast and $3,000 to the East Coast. “Round two is now south of $2,000 [to the West Coast],” said one importer in the apparel sector. <h3>Confusion, frustration over tariffs </h3>While they negotiate new service contracts with carriers, importers are also trying to plan their sourcing and supply chain requirements while wading through the day-to-day confusion over the Trump administration’s ever-changing policy on tariffs. Frustrated retailers and importers say it has become increasingly difficult to plan ahead. “We are making estimates on [the tariffs’] impact on a per-unit basis and determining how that might impact imports on [vessel] strings where we do not have many options,” said an importer in the automotive sector. “This whole tariff thing is causing chaos and an inability to plan. We hate it.” An importer in the furniture sector said he is almost becoming numb to the bluster and constantly changing announcements from the White House on which nations will be hit with tariffs and how much those tariffs will be. “Whatever answer I get could change in the next 24 hours,” the source said. If and when some clarity is achieved as to how the tariffs will affect sourcing, “[we] will certainly go to our carriers” to lock in vessel space, he added. Meanwhile, importers say they will <a href="https://www.joc.com/article/new-year-heralds-triple-threat-to-us-container-shipping-5908327">continue to engage in frontloading of seasonal merchandise</a> while they wait for clarity on tariffs. One importer said he is already bringing in back-to-school and other fall merchandise, and another said his team is preparing to begin importing year-end holiday merchandise soon depending on the ability of factories in Asia to deliver the products. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>.</div>

Ocean carriers on the eastbound trans-Pacific are acknowledging they will be unable to achieve their hoped-for rates in 2025–26 annual service contracts with importers amid fresh concerns about the health of the US economy and a spot market that continues to slide. Mere weeks ago, those same carriers were adamant about nailing down rates for next year at a minimum level of $2,000 per FEU to the West Coast and $3,000 per FEU to the East Coast, saying they were determined not to underprice their services again as they believe they did in the existing 2024–25 contracts. But a plummeting stock market and larger questions about the direction of the US economy after the tariff chaos unleashed by the Trump administration in recent weeks has container lines resetting their rate expectations. Four carriers told the Journal of Commerce they are now setting their sights slightly lower than $2,000/FEU for the West Coast and $3,000/FEU to the East Coast. One carrier executive said the new going rate in service contract negotiations with shippers is $1,800 to $1,900 per FEU to the West Coast and about $1,000 higher to the East Coast. But even that may not be a level to satiate some beneficial cargo owners (BCOs) who may prefer to wait to see if the market moves lower. “BCOs are still asking for lower,” the carrier executive said. The rapid decline in spot rates during the Lunar New Year factory closures in Asia is prompting some retailers to look at one or two more rounds of negotiations before they agree to a final contract rate for the 2025–26 service year, a second carrier source said. Most service contracts begin on May 1. Spot rate plunge influencing contract talks Spot rates from North Asia to the West Coast were at $1,850 per FEU as of Thursday, down 19% in just one week, according to Platts, a sister company of the Journal of Commerce within S&P Global. Rates to the East Coast of $2,900 per FEU were down 14% over the week. Plummeting spot rates — which are about 46% lower than this time last year — are having a knock-on effect on service contract levels now under negotiation. “Contract rates have mostly fallen below $2,000/$3,000,” said Rachel Shames, vice president for pricing and procurement at the forwarder CV International. “Carriers are becoming more aggressive with rates.” Kevin Parkerson, an industry consultant and former logistics manager at national retailers, said he’s seeing West Coast/East Coast levels now talked at $1,800/$2,900. “I would not be surprised to see $1,700 [for the West Coast],” he said. Four importers who spoke to the Journal of Commerce said carriers, in a second round of negotiations over 2025–26 contracts, are now quoting rates below $2,000 to the West Coast and $3,000 to the East Coast. “Round two is now south of $2,000 [to the West Coast],” said one importer in the apparel sector. Confusion, frustration over tariffs While they negotiate new service contracts with carriers, importers are also trying to plan their sourcing and supply chain requirements while wading through the day-to-day confusion over the Trump administration’s ever-changing policy on tariffs. Frustrated retailers and importers say it has become increasingly difficult to plan ahead. “We are making estimates on [the tariffs’] impact on a per-unit basis and determining how that might impact imports on [vessel] strings where we do not have many options,” said an importer in the automotive sector. “This whole tariff thing is causing chaos and an inability to plan. We hate it.” An importer in the furniture sector said he is almost becoming numb to the bluster and constantly changing announcements from the White House on which nations will be hit with tariffs and how much those tariffs will be. “Whatever answer I get could change in the next 24 hours,” the source said. If and when some clarity is achieved as to how the tariffs will affect sourcing, “[we] will certainly go to our carriers” to lock in vessel space, he added. Meanwhile, importers say they will continue to engage in frontloading of seasonal merchandise while they wait for clarity on tariffs. One importer said he is already bringing in back-to-school and other fall merchandise, and another said his team is preparing to begin importing year-end holiday merchandise soon depending on the ability of factories in Asia to deliver the products. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .

Tariffs, falling spot market weaken contract resolve of trans-Pac carriers

Use code GTW695 at checkout and save $800 on first year of an annual Gold subscription!

Upgrade Subscription - Gold Trials

Become a Gold Subscriber and Save!

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

Group Subscriptions - Wide Box

Get into a group subscription today

Use code STSW20 at checkout to save 20% on the first year of any annual subscription! 

Subscribe Now - Free Trials - Wide Box

SUBSCRIBE AND SAVE

Use code GUW795 at checkout and save $700 on first year of a Gold subscription!

Upgrade Subscription - Wide Box

UPGRADE AND SAVE

Access Journal of Commerce content for 30 days

Free Trial - Wide Box

START A FREE TRIAL TODAY

Subscribe Now - Anonymous - Wide Box

SUBSCRIBE TODAY

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

SMC3rates_shutterstock_5247046.jpg

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>

SMC3rates_shutterstock_5247046 (1).jpg

Filling the Supply Chain Education Gap with LTL Education Courses

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

Subscribe Now - Anonymous - Offer Box

Subscribe Today

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

Free Trial - Offer Box

Free Trial

SUBSCRIBE AND SAVE: Use code STSW20 at checkout to save 20% on first year of any subscription plan!


Subscribe Now - Free Trials - Offer Box

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

Group Subscriptions - Offer Box

Group Subscriptions

UPGRADE TO GOLD AND SAVE: Use code GTW695 at checkout and save $800 on first year of a Gold subscription!

Upgrade Subscription

UPGRADE AND SAVE: Use code GUW795 at checkout and save $700 on first year of a Gold subscription! 

Upgrade Subscription - Offer Box

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

ISI Report - Rectangle Box

Intermodal Savings Index

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

Breakbulk Report - Rectangle Box

Breakbulk Quarterly

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

Gateway - Rectangle Box

Gateway

Customers scoring their intermodal partners to identify the best service providers

Intermodal Service Scorecard - Rectangle Box

Intermodal Service Scorecard

A premium access outlook critical to shippers and transportation providers

QI Report - Rectangle Box

Quarterly Intelligence

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

Breakbulk Conference - Rectangle Box

Attend Breakbulk25

<div class="phx-topic abstract-wrapper">The growing backlog of boxes awaiting a return to Asia has resulted in finger pointing among stakeholders over how best to address the problem.</div>

The growing backlog of boxes awaiting a return to Asia has resulted in finger pointing among stakeholders over how best to address the problem.

<div class="phx-topic">The surge in imports landing in Southern California during January amid a rush to beat new US tariffs and Lunar New Year factory closures has resulted in a significant buildup of empty containers awaiting a return trip to Asia in drayage yards and marine terminals. The growing backlog has also resulted in finger pointing among stakeholders over how to address the problem. The empties are creating a costly logistics problem for drayage operators in Southern California, according to Matt Schrap, CEO of the Harbor Trucking Association. Schrap said many of the empties are sitting on chassis at the yards of drayage operators, taking up space and inhibiting the return of the equipment before free storage time runs out at the marine terminals. One way to address the problem is for marine terminals to open more appointment slots for truckers so they can return the containers and chassis before detention and demurrage charges kick in, Schrap told the Journal of Commerce. “If you can’t get an appointment, you have to pay the late fees and demurrage fees,” he said. The threat of tariffs from the new Trump administration and an earlier-than-normal Lunar New Year that began Jan. 29 resulted in a cargo rush in Southern California at the start of the year. Imports from Asia were up 31.3% in Long Beach in January and 12.6% in Los Angeles year over year, according to PIERS, a Journal of Commerce sister product within S&amp;P Global. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="23e67c9e-b9d6-4eb9-a4ca-6b3ac6e2cb07"></dynamic-object></div>At the same time, US exports through Southern California are down, so most of the containers must be returned to Asia empty. Gene Seroka, executive director of the Port of Los Angeles, told a press conference this week that exports in February from Los Angeles were down 18% year over year, while empty containers were up 16%. <h3>Trucker appointment slots a factor </h3>Because the empties cannot be returned to Asia quickly enough to prevent the containers from accumulating at the marine terminals, they have created a backlog at some terminals and at drayage operators’ facilities in Southern California. “Volumes are high. We get it,” Schrap said. But Schrap said the marine terminals continue to make it difficult for truckers to get sufficient appointment slots for empty container returns. Also, he noted, some terminals will only allow an empty to be returned if the trucker also picks up a loaded inbound container, a process known as a dual transaction. Terminal operators disagree with Schrap’s assessment. They note that Los Angeles-Long Beach is the only US port complex to consistently keep its gates open for 10 shifts each week. The terminals said they offer sufficient appointments to handle empty container returns, but a number of slots go unfilled each day because many truckers do not want to make appointments at inconvenient times, such as late at night or on weekends. SSA Marine, which operates three of the six container terminals in Long Beach, intentionally caps its truck traffic during the day gates in order to push more truck calls into the night shift. If SSA and other terminals didn’t do that, the freeways from the port would be overwhelmed during daytime hours, said Sal Ferrigno, SSA’s vice president in Southern California. Ferrigno said SSA attempts to maintain a mix of 55% of truck calls during the day shift and 45% at night. However, drayage companies are not using most of the nighttime slots that are available to them. “Those guys need to work at night,” Ferrigno said. Schrap said the empty container situation varies from ocean carrier to ocean carrier and terminal to terminal. Alan McCorkle, president of Yusen Terminals in Los Angeles, said containers have been flowing freely at his facility despite the January cargo surge and a February that was stronger than usual. Yusen, according to McCorkle, continues to experience unused trucker appointment slots during the terminal’s day and evening shifts. About 6% to 12% of its daytime appointment slots go unfilled or are no-shows, and about 16% to 20% of its nighttime appointments are not used, he said. Yet another factor at work this time of year is that terminals must catch up with the backlog of empty containers that occurs when ocean carriers blank sailings during the Lunar New Year lull, said Noel Hacegaba, COO at the Port of Long Beach. “Terminals, in an effort to manage blank sailings, are limiting the return of empties,” he said. “Because of the strong influx of imports in recent months, there are more empties across the system that need to be repositioned back to Asia.” <h3>Who should pay for container storage? </h3>Schrap said an even greater problem for truckers is “a complete unwillingness” by ocean carriers and intermodal equipment providers to pay drayage companies for storing their containers and chassis until the units can be returned to the terminals. “History has shown that it is cheaper for [equipment providers] to stage boxes at motor carrier yards [at no cost] as opposed to finding off/near-dock return locations or paying the MTO [marine terminal operator] to store them,” Schrap said. Seroka noted that according to the Pool of Pools, which is operated by the three largest chassis providers in Southern California, the average chassis street dwell time in the region is about six days. “We’d like to see it at four days,” Seroka said. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>.</div>

The surge in imports landing in Southern California during January amid a rush to beat new US tariffs and Lunar New Year factory closures has resulted in a significant buildup of empty containers awaiting a return trip to Asia in drayage yards and marine terminals. The growing backlog has also resulted in finger pointing among stakeholders over how to address the problem. The empties are creating a costly logistics problem for drayage operators in Southern California, according to Matt Schrap, CEO of the Harbor Trucking Association. Schrap said many of the empties are sitting on chassis at the yards of drayage operators, taking up space and inhibiting the return of the equipment before free storage time runs out at the marine terminals. One way to address the problem is for marine terminals to open more appointment slots for truckers so they can return the containers and chassis before detention and demurrage charges kick in, Schrap told the Journal of Commerce. “If you can’t get an appointment, you have to pay the late fees and demurrage fees,” he said. The threat of tariffs from the new Trump administration and an earlier-than-normal Lunar New Year that began Jan. 29 resulted in a cargo rush in Southern California at the start of the year. Imports from Asia were up 31.3% in Long Beach in January and 12.6% in Los Angeles year over year, according to PIERS, a Journal of Commerce sister product within S&P Global. At the same time, US exports through Southern California are down, so most of the containers must be returned to Asia empty. Gene Seroka, executive director of the Port of Los Angeles, told a press conference this week that exports in February from Los Angeles were down 18% year over year, while empty containers were up 16%. Trucker appointment slots a factor Because the empties cannot be returned to Asia quickly enough to prevent the containers from accumulating at the marine terminals, they have created a backlog at some terminals and at drayage operators’ facilities in Southern California. “Volumes are high. We get it,” Schrap said. But Schrap said the marine terminals continue to make it difficult for truckers to get sufficient appointment slots for empty container returns. Also, he noted, some terminals will only allow an empty to be returned if the trucker also picks up a loaded inbound container, a process known as a dual transaction. Terminal operators disagree with Schrap’s assessment. They note that Los Angeles-Long Beach is the only US port complex to consistently keep its gates open for 10 shifts each week. The terminals said they offer sufficient appointments to handle empty container returns, but a number of slots go unfilled each day because many truckers do not want to make appointments at inconvenient times, such as late at night or on weekends. SSA Marine, which operates three of the six container terminals in Long Beach, intentionally caps its truck traffic during the day gates in order to push more truck calls into the night shift. If SSA and other terminals didn’t do that, the freeways from the port would be overwhelmed during daytime hours, said Sal Ferrigno, SSA’s vice president in Southern California. Ferrigno said SSA attempts to maintain a mix of 55% of truck calls during the day shift and 45% at night. However, drayage companies are not using most of the nighttime slots that are available to them. “Those guys need to work at night,” Ferrigno said. Schrap said the empty container situation varies from ocean carrier to ocean carrier and terminal to terminal. Alan McCorkle, president of Yusen Terminals in Los Angeles, said containers have been flowing freely at his facility despite the January cargo surge and a February that was stronger than usual. Yusen, according to McCorkle, continues to experience unused trucker appointment slots during the terminal’s day and evening shifts. About 6% to 12% of its daytime appointment slots go unfilled or are no-shows, and about 16% to 20% of its nighttime appointments are not used, he said. Yet another factor at work this time of year is that terminals must catch up with the backlog of empty containers that occurs when ocean carriers blank sailings during the Lunar New Year lull, said Noel Hacegaba, COO at the Port of Long Beach. “Terminals, in an effort to manage blank sailings, are limiting the return of empties,” he said. “Because of the strong influx of imports in recent months, there are more empties across the system that need to be repositioned back to Asia.” Who should pay for container storage? Schrap said an even greater problem for truckers is “a complete unwillingness” by ocean carriers and intermodal equipment providers to pay drayage companies for storing their containers and chassis until the units can be returned to the terminals. “History has shown that it is cheaper for [equipment providers] to stage boxes at motor carrier yards [at no cost] as opposed to finding off/near-dock return locations or paying the MTO [marine terminal operator] to store them,” Schrap said. Seroka noted that according to the Pool of Pools, which is operated by the three largest chassis providers in Southern California, the average chassis street dwell time in the region is about six days. “We’d like to see it at four days,” Seroka said. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .

Marine terminals

Empty containers piling up in Los Angeles-Long Beach after January import surge

<div class="phx-topic abstract-wrapper">Ports across the continent are struggling to clear bottlenecks as containers stack up in terminals and delay inland and feeder connections.</div>

Ports across the continent are struggling to clear bottlenecks as containers stack up in terminals and delay inland and feeder connections.

<div class="phx-topic">Severe congestion continues to plague ports across Europe with new alliance vessel plans combining with strikes, bad weather and fully occupied container yards to delay ships and disrupt terminal operations. The bottlenecks are being felt in both North Europe and the Mediterranean, with carriers, terminals and forwarders reporting lengthy delays in some ports. Maersk said in its latest Europe advisory that all terminals in Antwerp were congested “due to the phase-in and phase-out of vessel plans,” a factor that was being exacerbated by late vessel arrivals from delays in previous ports. Maersk and Hapag-Lloyd are phasing in Gemini Cooperation services, with the new network expected to be fully deployed by the end of the second quarter. Likewise, Mediterranean Shipping Co. is moving services from its 2M Alliance with Maersk to a standalone network, and the Premier Alliance is adjusting to services without Hapag-Lloyd. Carrier executives have warned customers that operational disruptions to port schedules will be experienced, with some old and new services running in parallel. The new networks will require two full cycles from Asia to Europe and back to Asia before they will be fully rolled out. Maersk also reported delays in Bremerhaven, where several services were arriving late due to bad weather en route to the German port. In Rotterdam, the carrier said the Hutchinson Ports Delta II terminal was back to full operational productivity <a href="https://www.joc.com/article/strikes-storms-and-record-volumes-adding-to-north-europe-port-delays-5942119">after a month of slowdowns</a> following a tentative agreement between the company and dockworkers, but a backlog of inland cargo was still being cleared. South Korean carrier HMM warned customers it was taking an average of three days to secure a berth at Hamburg that was experiencing a strike by boat pilots, while berth waiting times at Le Havre were up to 5.7 days because of recurring strikes in the French hub. French unions are holding four-hour stoppages in Le Havre on eight separate days in March, in addition to a three-day strike planned this week from March 18–20. Significant disruption is already being experienced from the rolling industrial action, and the full-day strikes are set to bring container operations in France to a standstill this week. Spillover effects of the Le Havre strike are also affecting Rotterdam, according to HMM, which said the average berth waiting time at Europe’s largest container port was 5.6 days. <h3>Yards and berths fully occupied </h3>Kuehne + Nagel’s SeaExplorer visibility platform reported heavily disrupted operations at Rotterdam, Hamburg, Antwerp and Le Havre, with full container yards and most berths fully occupied. Although SeaExplorer put the average waiting time at Hamburg at 1.25 days, it said the port was experiencing “heavily disrupted operations.” The bottlenecks saw Hamburg terminal operator HHLA imposing container delivery restrictions from Monday at Container Terminal Burchardkai (CTB) and Container Terminal Tollerort (CTT). Export container deliveries will be managed on a ship-by-ship basis, “potentially causing delays and complicating daily operations,” HHLA noted. At Rotterdam’s ECT Euromax terminal, Hutchison Ports has announced that container stacks are so high it will not be able to accept empty containers delivered by road ​​from ​March 23 “​​to prevent an unworkable situation.” The port bottlenecks are also impacting inland connections from Rotterdam and nearby Antwerp. Intermodal operator Contargo on Monday reported average waiting times for the handling of its barges have reached 75 hours in Antwerp and 72 hours in Rotterdam. Adding to the port congestion issues are seasonal low water levels in the Rhine River that restrict the loading of containers for inland destinations and are generating surcharges of about €50 ($54) per box. The low-water surcharges will rise as water levels drop further through the summer, with shifting cargo putting pressure on road and rail services. In the Mediterranean, HMM noted that the Greek hub of Piraeus has a berth waiting time of 4.4 days and six days for feeder vessels, while average berth wait times at Genoa and La Spezia were four days. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>.</div>

Severe congestion continues to plague ports across Europe with new alliance vessel plans combining with strikes, bad weather and fully occupied container yards to delay ships and disrupt terminal operations. The bottlenecks are being felt in both North Europe and the Mediterranean, with carriers, terminals and forwarders reporting lengthy delays in some ports. Maersk said in its latest Europe advisory that all terminals in Antwerp were congested “due to the phase-in and phase-out of vessel plans,” a factor that was being exacerbated by late vessel arrivals from delays in previous ports. Maersk and Hapag-Lloyd are phasing in Gemini Cooperation services, with the new network expected to be fully deployed by the end of the second quarter. Likewise, Mediterranean Shipping Co. is moving services from its 2M Alliance with Maersk to a standalone network, and the Premier Alliance is adjusting to services without Hapag-Lloyd. Carrier executives have warned customers that operational disruptions to port schedules will be experienced, with some old and new services running in parallel. The new networks will require two full cycles from Asia to Europe and back to Asia before they will be fully rolled out. Maersk also reported delays in Bremerhaven, where several services were arriving late due to bad weather en route to the German port. In Rotterdam, the carrier said the Hutchinson Ports Delta II terminal was back to full operational productivity after a month of slowdowns following a tentative agreement between the company and dockworkers, but a backlog of inland cargo was still being cleared. South Korean carrier HMM warned customers it was taking an average of three days to secure a berth at Hamburg that was experiencing a strike by boat pilots, while berth waiting times at Le Havre were up to 5.7 days because of recurring strikes in the French hub. French unions are holding four-hour stoppages in Le Havre on eight separate days in March, in addition to a three-day strike planned this week from March 18–20. Significant disruption is already being experienced from the rolling industrial action, and the full-day strikes are set to bring container operations in France to a standstill this week. Spillover effects of the Le Havre strike are also affecting Rotterdam, according to HMM, which said the average berth waiting time at Europe’s largest container port was 5.6 days. Yards and berths fully occupied Kuehne + Nagel’s SeaExplorer visibility platform reported heavily disrupted operations at Rotterdam, Hamburg, Antwerp and Le Havre, with full container yards and most berths fully occupied. Although SeaExplorer put the average waiting time at Hamburg at 1.25 days, it said the port was experiencing “heavily disrupted operations.” The bottlenecks saw Hamburg terminal operator HHLA imposing container delivery restrictions from Monday at Container Terminal Burchardkai (CTB) and Container Terminal Tollerort (CTT). Export container deliveries will be managed on a ship-by-ship basis, “potentially causing delays and complicating daily operations,” HHLA noted. At Rotterdam’s ECT Euromax terminal, Hutchison Ports has announced that container stacks are so high it will not be able to accept empty containers delivered by road ​​from ​March 23 “​​to prevent an unworkable situation.” The port bottlenecks are also impacting inland connections from Rotterdam and nearby Antwerp. Intermodal operator Contargo on Monday reported average waiting times for the handling of its barges have reached 75 hours in Antwerp and 72 hours in Rotterdam. Adding to the port congestion issues are seasonal low water levels in the Rhine River that restrict the loading of containers for inland destinations and are generating surcharges of about €50 ($54) per box. The low-water surcharges will rise as water levels drop further through the summer, with shifting cargo putting pressure on road and rail services. In the Mediterranean, HMM noted that the Greek hub of Piraeus has a berth waiting time of 4.4 days and six days for feeder vessels, while average berth wait times at Genoa and La Spezia were four days. Contact Greg Knowler at greg.knowler@spglobal.com .

Longshore labor

New alliance vessel plans add to ongoing port congestion in Europe

<div class="phx-topic abstract-wrapper">The Federal Maritime Commission is looking at areas where ships are having transit troubles with an eye on how US maritime influence can fix those problems.</div>

The Federal Maritime Commission is looking at areas where ships are having transit troubles with an eye on how US maritime influence can fix those problems.

<div class="phx-topic">The US Federal Maritime Commission (FMC) is asking shipping interests to weigh in on the biggest global maritime chokepoints they face as part of US waterborne commerce. The probe, part of the FMC’s regular work under US shipping law, comes amid the Trump administration’s moves to assert US power across the global maritime sector and to develop a US-based shipping industry. The FMC said Thursday it is investigating “transit constraints at international maritime chokepoints” as part of its regular annual report to Congress about practices in the ocean shipping industry. The agency is asking, in particular, whether the practices or policies of foreign governments and ocean carriers exacerbate those chokepoints. “It appears that constraints on transits ... may have created shipping conditions that call for careful consideration by the Federal Maritime Commission in connection with the determination of its policies and the carrying out of its duties,” the agency said in the docket announcing the probe. The FMC identified seven chokepoints for the probe — the English Channel, the Malacca Strait, the Northern Sea Passage, the Singapore Strait, the Panama Canal, the Strait of Gibraltar and the Suez Canal. The Panama Canal has been a particular area of concern for President Donald Trump, who has criticized the 1977 treaty that ceded US control of the canal to Panama. The Trump administration got one win in that regard when <a href="https://www.joc.com/article/big-hutchison-deal-could-reshuffle-global-ports-network-drewry-5958162">BlackRock-backed investors Global Infrastructure Partners struck a $23 billion deal</a> to buy the ports network belonging to Hong Kong’s CK Hutchison. The deal included two <a href="https://www.joc.com/article/panama-canal-transit-data-belies-trumps-claims-of-chinas-control-project44-5948559">Panama marine terminals that Trump called out for their Chinese ownership</a>. The FMC said in its docket about the investigation that the Panama Canal “holds substantial geopolitical importance [and is] crucial to the interests of the United States.” “Political instability or disruptions in its operation could have far-reaching consequences,” it added. The FMC suggested that if Panama or any other maritime entity appears to be causing problems at the canal, the US is prepared to hit back at Panama’s ship registry — one of the largest in the world with 8,000 vessels — including refusing US entry to Panama-flag vessels. <h3>Attempt to bolster US maritime presence</h3>The FMC is also seeking input on avoiding other types of navigational constraints, including the <a href="https://www.joc.com/article/with-ever-given-freed-suez-backlog-to-clear-through-week-carriers-5250358">2021 grounding of the Ever Given in the Suez Canal</a> and the <a href="https://www.joc.com/article/baltimore-preps-for-limited-port-reopening-by-end-of-april-5225392">2024 closure of the Port of Baltimore</a> after the container ship Dali struck a bridge, causing it to collapse. Alongside the FMC, the Trump administration as a whole has taken interest in the maritime sector, particularly regarding how to boost the US’ presence. The US Trade Representative is currently weighing whether <a href="https://www.joc.com/article/tpm25-us-exporters-starting-to-feel-pinch-of-trump-trade-war-with-china-5956798">Chinese-built and -operated ships should face $1 million fees for US port calls</a> to offset China’s dominance in shipbuilding. A hearing on the matter is scheduled for March 24. Trump also said in his joint address to Congress at the start of March that his administration plans to create an office of commercial and military shipbuilding with a view of “bringing this industry home to America.” Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

The US Federal Maritime Commission (FMC) is asking shipping interests to weigh in on the biggest global maritime chokepoints they face as part of US waterborne commerce. The probe, part of the FMC’s regular work under US shipping law, comes amid the Trump administration’s moves to assert US power across the global maritime sector and to develop a US-based shipping industry. The FMC said Thursday it is investigating “transit constraints at international maritime chokepoints” as part of its regular annual report to Congress about practices in the ocean shipping industry. The agency is asking, in particular, whether the practices or policies of foreign governments and ocean carriers exacerbate those chokepoints. “It appears that constraints on transits ... may have created shipping conditions that call for careful consideration by the Federal Maritime Commission in connection with the determination of its policies and the carrying out of its duties,” the agency said in the docket announcing the probe. The FMC identified seven chokepoints for the probe — the English Channel, the Malacca Strait, the Northern Sea Passage, the Singapore Strait, the Panama Canal, the Strait of Gibraltar and the Suez Canal. The Panama Canal has been a particular area of concern for President Donald Trump, who has criticized the 1977 treaty that ceded US control of the canal to Panama. The Trump administration got one win in that regard when BlackRock-backed investors Global Infrastructure Partners struck a $23 billion deal to buy the ports network belonging to Hong Kong’s CK Hutchison. The deal included two Panama marine terminals that Trump called out for their Chinese ownership . The FMC said in its docket about the investigation that the Panama Canal “holds substantial geopolitical importance [and is] crucial to the interests of the United States.” “Political instability or disruptions in its operation could have far-reaching consequences,” it added. The FMC suggested that if Panama or any other maritime entity appears to be causing problems at the canal, the US is prepared to hit back at Panama’s ship registry — one of the largest in the world with 8,000 vessels — including refusing US entry to Panama-flag vessels. Attempt to bolster US maritime presence The FMC is also seeking input on avoiding other types of navigational constraints, including the 2021 grounding of the Ever Given in the Suez Canal and the 2024 closure of the Port of Baltimore after the container ship Dali struck a bridge, causing it to collapse. Alongside the FMC, the Trump administration as a whole has taken interest in the maritime sector, particularly regarding how to boost the US’ presence. The US Trade Representative is currently weighing whether Chinese-built and -operated ships should face $1 million fees for US port calls to offset China’s dominance in shipbuilding. A hearing on the matter is scheduled for March 24. Trump also said in his joint address to Congress at the start of March that his administration plans to create an office of commercial and military shipbuilding with a view of “bringing this industry home to America.” Contact Michael Angell at michael.angell@spglobal.com .

Escalating tariffs will cause ‘profound’ trade pattern changes: Cosco

Featured Gateway Chart

Essential Reads

Oversupplied ocean carriers sailing into new downcycle: analysts

Beijing issues warning over Hutchison’s proposed sale of Panama Ports Company

Tariffs, falling spot market weaken contract resolve of trans-Pac carriers

Recent Commentary

How the LTL market could evolve as the FedEx Freight spinoff plays out

In appreciation of McLean’s essential, although not timeless, innovations

Top 5 Most Read Stories