<div class="phx-topic abstract-wrapper">While India-USEC spot rates have steadily dropped from a late-July peak because of the demand downturn and increased capacity, co-loaders have been even more aggressive in adjusting rates downward to reach their slot targets.</div>

While India-USEC spot rates have steadily dropped from a late-July peak because of the demand downturn and increased capacity, co-loaders have been even more aggressive in adjusting rates downward to reach their slot targets.

Feature image

<div class="phx-topic">Desperate market share efforts by smaller carriers working on slot rights are seriously hurting rate dynamics on the India-US East Coast trade lane, according to local market sources in India. Freight forwarders who spoke with the Journal of Commerce noted that the lead carriers, who now operate standalone services on the route due to recent network changes linked to the Gemini alliance formation, have had to strike slot deals to fill expanded loading capacity out of India. To illustrate, Cosco Shipping and its subsidiary OOCL together hold about 1,500 TEUs of slot space per week on vessels operated by CMA CGM’s Indamex service and Ocean Network Express’ West India-North America (WIN) service. Additionally, HMM has an ongoing slot deal with ONE on the WIN. While India-USEC spot rates have steadily dropped from a late-July peak because of the demand downturn and increased capacity, co-loaders have been even more aggressive in adjusting rates downward, often on a vessel-to-vessel basis, to reach their slot targets. Forwarders are reporting a variance of up to $500 per FEU between rates quoted by consortium-leading carriers and their slot partners, leaving little room for pricing discipline in the market. “Cosco is usually the first to drop rates, forcing the mainline operators to proactively adjust their pricing accordingly,” a sales executive at a Mumbai-based forwarding house who didn’t want to be identified told the Journal of Commerce. “It’s the secondary carriers who are now setting market behavior.” “All carriers are chasing customers with volume-based special rates,” a second forwarder executive noted. “For customers committing double-digit bookings, rates are lower by no less than $200 per box than the general trendline.” Forwarders put spot rates from Cosco as of late last week for loads from Nhava Sheva to New York at $1,800 per FEU, compared with the $2,100 to $2,200 per FEU CMA CGM and Hapag-Lloyd were offering. Platts, a sister company of the Journal of Commerce within S&amp;P Global, pegged India-USEC rates at $2,140 per FEU as of Nov. 29, down 2% on the week. Contact Bency Mathew at bencymathew@gmail.com. </div>

Desperate market share efforts by smaller carriers working on slot rights are seriously hurting rate dynamics on the India-US East Coast trade lane, according to local market sources in India. Freight forwarders who spoke with the Journal of Commerce noted that the lead carriers, who now operate standalone services on the route due to recent network changes linked to the Gemini alliance formation, have had to strike slot deals to fill expanded loading capacity out of India. To illustrate, Cosco Shipping and its subsidiary OOCL together hold about 1,500 TEUs of slot space per week on vessels operated by CMA CGM’s Indamex service and Ocean Network Express’ West India-North America (WIN) service. Additionally, HMM has an ongoing slot deal with ONE on the WIN. While India-USEC spot rates have steadily dropped from a late-July peak because of the demand downturn and increased capacity, co-loaders have been even more aggressive in adjusting rates downward, often on a vessel-to-vessel basis, to reach their slot targets. Forwarders are reporting a variance of up to $500 per FEU between rates quoted by consortium-leading carriers and their slot partners, leaving little room for pricing discipline in the market. “Cosco is usually the first to drop rates, forcing the mainline operators to proactively adjust their pricing accordingly,” a sales executive at a Mumbai-based forwarding house who didn’t want to be identified told the Journal of Commerce. “It’s the secondary carriers who are now setting market behavior.” “All carriers are chasing customers with volume-based special rates,” a second forwarder executive noted. “For customers committing double-digit bookings, rates are lower by no less than $200 per box than the general trendline.” Forwarders put spot rates from Cosco as of late last week for loads from Nhava Sheva to New York at $1,800 per FEU, compared with the $2,100 to $2,200 per FEU CMA CGM and Hapag-Lloyd were offering. Platts, a sister company of the Journal of Commerce within S&P Global, pegged India-USEC rates at $2,140 per FEU as of Nov. 29, down 2% on the week. Contact Bency Mathew at bencymathew@gmail.com.

Forwarding

International ports

Container lines

Co-loader slot deals squeezing pricing power for India-US carriers: forwarders

<div class="phx-topic abstract-wrapper">A host of factors can raise transit times on the 11,000-plus-kilometer rail network, undermining the trust of cargo owners that is a crucial selling point of the Asia-Europe connection.</div>

A host of factors can raise transit times on the 11,000-plus-kilometer rail network, undermining the trust of cargo owners that is a crucial selling point of the Asia-Europe connection.

<div class="phx-topic">VIENNA — The ability to deliver on promised schedules remains one of the main challenges facing rail transport providers on the so-called middle corridor connecting China and Europe, according to executives at an intercontinental rail conference here last week. But on-time performance was the point of an iceberg of underlying reliability challenges, attendees at the European Silk Road Summit in Vienna were told. ”As long as everything goes well, the customer is happy, but if something goes wrong, the customer will start to doubt rail more than they would do for sea freight,” said Alona Toprak, managing director at DB Cargo Eurasia. Containerized freight on the middle corridor uses multiple cargo handovers — from rail to ferry to road and back to rail — with delays at key modal change points. Cross-border customs issues can add to delays, with volatile rates and equipment imbalances all placing service level promises under pressure. Still, meeting those promises is a selling point for the intercontinental rail network that cannot be compromised, logistics executives warned delegates. Thomas Kargl, director of Eurasian logistics provider Smartlog, told the summit that rail services from China to Europe had always suffered from a lack of reliability and it took much consulting time with shippers to change that impression. “If I say we are running between 12 and 15 days, we must hold that time,” Kargl said. “To attract customers, they must recognize that rail is available and is reliable. We are talking about containers valued at hundreds of thousands of dollars, so an increase of the transit time by a few days will tie up a lot of capital.” Toprak agreed and said customers of high-value products moving by rail had high expectations and were “very demanding.” DB Cargo Eurasia introduced an express rail service from China to Europe at the end of 2023 and expanded the offering this year. Toprak said it was now possible to offer shippers a nine-day transit time from China to the Malaszewicze rail hub in Poland via the northern corridor that was attractive to e-commerce, but it also raised the reliability bar even higher. ”The lead time of nine days is a real option for e-commerce, but if we promise nine days, we must stick to it because if not the customer will be penalized, lose money and then the service will not be trusted,” she said. <h3>Peak time delays </h3>There are several hurdles that must be overcome by service providers offering fast rail transit times, especially on the middle corridor with the intermodal requirements and the repeated border crossings, Kargl noted. China’s railways have a different gauge to those used in Europe that requires cargo to be transhipped at the China-Kazakhstan border and again at European entry points. At peak times, that can lead to delays. The service providers must also manage other factors, including the documentation for shipments and ensuring it is communicated electronically to all customs authorities along the route. In addition, sufficient equipment and access to rolling stock need to be guaranteed, while the provision of advance bookings and cargo closing times need to be ensured. “If you manage this all in a smooth way, the nine days transit will be reachable 80% of the time,” Kargl said. Following the Russian invasion of Ukraine in February 2022, containerized trade on the northern route from China to North Europe largely dried up. Most of the cargo was moved to ocean, but forwarders and rail freight operators began testing the middle corridor that runs from China through Central Asia, across the Caspian and Black seas, and on into Turkey or Eastern Europe. While some cargo has returned to the northern route through Russia, concerns over sanctions breaches and moral opposition to contributing revenue to Russian Railways is limiting volume. However, Kelvin Tang, the head of global cross-border business and multimodal leader at CEVA Logistics, said shipping containerized cargo on the middle corridor was not just a political solution, it was a product offering. “If customers can accept 60 days transit, they will choose ocean, but if they want 30 days or less, they need to choose rail,” Tang told the summit. “If rail service becomes more stable with reliable lead times and competitive prices, it will become more attractive.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

VIENNA — The ability to deliver on promised schedules remains one of the main challenges facing rail transport providers on the so-called middle corridor connecting China and Europe, according to executives at an intercontinental rail conference here last week. But on-time performance was the point of an iceberg of underlying reliability challenges, attendees at the European Silk Road Summit in Vienna were told. ”As long as everything goes well, the customer is happy, but if something goes wrong, the customer will start to doubt rail more than they would do for sea freight,” said Alona Toprak, managing director at DB Cargo Eurasia. Containerized freight on the middle corridor uses multiple cargo handovers — from rail to ferry to road and back to rail — with delays at key modal change points. Cross-border customs issues can add to delays, with volatile rates and equipment imbalances all placing service level promises under pressure. Still, meeting those promises is a selling point for the intercontinental rail network that cannot be compromised, logistics executives warned delegates. Thomas Kargl, director of Eurasian logistics provider Smartlog, told the summit that rail services from China to Europe had always suffered from a lack of reliability and it took much consulting time with shippers to change that impression. “If I say we are running between 12 and 15 days, we must hold that time,” Kargl said. “To attract customers, they must recognize that rail is available and is reliable. We are talking about containers valued at hundreds of thousands of dollars, so an increase of the transit time by a few days will tie up a lot of capital.” Toprak agreed and said customers of high-value products moving by rail had high expectations and were “very demanding.” DB Cargo Eurasia introduced an express rail service from China to Europe at the end of 2023 and expanded the offering this year. Toprak said it was now possible to offer shippers a nine-day transit time from China to the Malaszewicze rail hub in Poland via the northern corridor that was attractive to e-commerce, but it also raised the reliability bar even higher. ”The lead time of nine days is a real option for e-commerce, but if we promise nine days, we must stick to it because if not the customer will be penalized, lose money and then the service will not be trusted,” she said. Peak time delays There are several hurdles that must be overcome by service providers offering fast rail transit times, especially on the middle corridor with the intermodal requirements and the repeated border crossings, Kargl noted. China’s railways have a different gauge to those used in Europe that requires cargo to be transhipped at the China-Kazakhstan border and again at European entry points. At peak times, that can lead to delays. The service providers must also manage other factors, including the documentation for shipments and ensuring it is communicated electronically to all customs authorities along the route. In addition, sufficient equipment and access to rolling stock need to be guaranteed, while the provision of advance bookings and cargo closing times need to be ensured. “If you manage this all in a smooth way, the nine days transit will be reachable 80% of the time,” Kargl said. Following the Russian invasion of Ukraine in February 2022, containerized trade on the northern route from China to North Europe largely dried up. Most of the cargo was moved to ocean, but forwarders and rail freight operators began testing the middle corridor that runs from China through Central Asia, across the Caspian and Black seas, and on into Turkey or Eastern Europe. While some cargo has returned to the northern route through Russia, concerns over sanctions breaches and moral opposition to contributing revenue to Russian Railways is limiting volume. However, Kelvin Tang, the head of global cross-border business and multimodal leader at CEVA Logistics, said shipping containerized cargo on the middle corridor was not just a political solution, it was a product offering. “If customers can accept 60 days transit, they will choose ocean, but if they want 30 days or less, they need to choose rail,” Tang told the summit. “If rail service becomes more stable with reliable lead times and competitive prices, it will become more attractive.” Contact Greg Knowler at greg.knowler@spglobal.com .

Rail News

International rail

Surface

Schedule reliability remains key challenge for China-Europe rail

<div class="phx-topic abstract-wrapper">Rising regional trade along the old Silk Road between China and Europe is driving up containerized rail volume on the middle corridor and the logistics infrastructure is struggling to keep up. </div>

Rising regional trade along the old Silk Road between China and Europe is driving up containerized rail volume on the middle corridor and the logistics infrastructure is struggling to keep up.

<div class="phx-topic">VIENNA — Geopolitics shaped the middle corridor rail network between China and Europe, but the route has evolved in the past two years from an alternative to the heavily sanctioned northern route through Russia into a critical lifeline for the booming economies of Central Asia. Huge investments are being made across the region as the logistics infrastructure struggles to catch up with demand, attendees at the European Silk Road Summit were told this week. “We see a future for the middle corridor, and we are putting our money where our mouths are and investing billions in projects in Central Asia,” said Luis Blancas, senior transport and logistics specialist at the World Bank. “The middle corridor is an entirely discretionary connection for China, but for Central Asia it is a lifeline connection to the world. It’s a lifeline for Turkey, Azerbaijan, Georgia. They want to trade more with Central Asia and the middle corridor is very important for that.” That the middle corridor was a viable trade route, as well as an improving option for China-Europe shippers, was a theme expressed time and again by speakers at the summit. Emil Mammadov, advisor to the chairman of Azerbaijan Railways, said the future of the middle corridor was “fully related” to the economies of Central Asia where demand was developing fast and rail capacity had to match that growth. “The middle corridor is not just an alternative, it is a working corridor,” he told the summit. “This year to date, we have had more than 260 block trains from China going through Azerbaijan and by the end of December that will have increased to 300 trains, more than 10 times higher than in 2023. “We are in discussions with China and with our counterparts in Central Asia to reach a minimum of 1,000 block trains next year,” he added. <h3>China attention moves to middle corridor </h3>Also under way is the development of the southern part of the middle corridor that will improve rail connections through Turkmenistan, Uzbekistan, Kyrgyzstan and Tajikistan, with significant investment being made by China in construction of the routes. “China’s participation in the middle corridor is making a huge difference,” Blancas told the summit. “China was primarily focused on the northern corridor for a long time, but over the last couple of years, with what’s going on in Ukraine, the China ‘Belt and Road Initiative’ is really targeting the middle corridor.” But the increase in rail volume flowing across Central Asian countries is placing growing pressure on key transit points. For instance, the Georgian port of Poti on the Black Sea where rail freight is transferred to ships is 99% utilized, according to Blancas. “We are one of the bottlenecks,” acknowledged Mario Escobar, business development manager for APM Terminals Poti. “It’s important that we accept that and work towards fixing it. Today, we have a port that can handle 600,000 TEUs per year, and in 2023 we handled 592,000 TEUs. It is a small port for the cargo that needs to transit this region, and the rail infrastructure is not sufficient to move all that cargo.” APM Terminals is planning to expand the capacity of its Poti terminals to 1.2 million TEUs, but Escobar said the improvement in infrastructure must be accompanied by investment from rail companies into locomotives, wagons and platforms to handle the rising volume. <h3>Reopening Red Sea will see cargo shift to ocean </h3>Martin Koubek, head of the Silk Road for intermodal operator Metrans, said the middle corridor would not be the choice for cargo from China to Europe once most container traffic returned to routing through the Red Sea. “It takes 21 days via the Suez from Shenzhen to Piraeus, so when the Red Sea is again used, why would you send rail cargo on the middle corridor that is longer and more expensive?” he told the Journal of Commerce on the sidelines of the summit. While the shift of cargo from rail to ocean would have a significant impact on the rail business, it would be barely noticed by container shipping with less than 1% of containerized trade between Asia and Europe transported by rail. But Koubek agreed that the middle corridor would be crucial for the Central Asian economies. “They are all growing, and the route will serve their increasing trade with China,” he said. Following the Russian invasion of Ukraine in February 2022, <a href="https://www.joc.com/article/rapid-rail-transit-via-sanctions-hit-russia-has-limited-appeal-for-european-shippers-5220672">containerized trade on the northern route from China to North Europe largely dried up</a>. Most of the cargo was moved to ocean but forwarders and rail freight operators began testing the middle corridor that runs from China, through Central Asia, the Caspian Sea, Black Sea and on into Turkey or eastern Europe. There remain significant hurdles to overcome, such as cross border customs issues, multiple cargo handovers from rail to ferry to road and back to rail, high rates and unreliable transit times. Those issues are being addressed by service providers, and the average transit time from Xian to Duisburg in southern Germany is now about 30 days. When the northern route is again fully utilized, most of the China to Europe containerized rail cargo using the middle corridor or ocean will quickly return to the Russian transit route, said Alona Toprak, director at DB Cargo Eurasia. “That means it is really important all the countries in Central Asia work together to address the issues still facing the middle route and increase volume travelling both ways, otherwise the rates will be high, and it won’t make sense,” she said. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

VIENNA — Geopolitics shaped the middle corridor rail network between China and Europe, but the route has evolved in the past two years from an alternative to the heavily sanctioned northern route through Russia into a critical lifeline for the booming economies of Central Asia. Huge investments are being made across the region as the logistics infrastructure struggles to catch up with demand, attendees at the European Silk Road Summit were told this week. “We see a future for the middle corridor, and we are putting our money where our mouths are and investing billions in projects in Central Asia,” said Luis Blancas, senior transport and logistics specialist at the World Bank. “The middle corridor is an entirely discretionary connection for China, but for Central Asia it is a lifeline connection to the world. It’s a lifeline for Turkey, Azerbaijan, Georgia. They want to trade more with Central Asia and the middle corridor is very important for that.” That the middle corridor was a viable trade route, as well as an improving option for China-Europe shippers, was a theme expressed time and again by speakers at the summit. Emil Mammadov, advisor to the chairman of Azerbaijan Railways, said the future of the middle corridor was “fully related” to the economies of Central Asia where demand was developing fast and rail capacity had to match that growth. “The middle corridor is not just an alternative, it is a working corridor,” he told the summit. “This year to date, we have had more than 260 block trains from China going through Azerbaijan and by the end of December that will have increased to 300 trains, more than 10 times higher than in 2023. “We are in discussions with China and with our counterparts in Central Asia to reach a minimum of 1,000 block trains next year,” he added. China attention moves to middle corridor Also under way is the development of the southern part of the middle corridor that will improve rail connections through Turkmenistan, Uzbekistan, Kyrgyzstan and Tajikistan, with significant investment being made by China in construction of the routes. “China’s participation in the middle corridor is making a huge difference,” Blancas told the summit. “China was primarily focused on the northern corridor for a long time, but over the last couple of years, with what’s going on in Ukraine, the China ‘Belt and Road Initiative’ is really targeting the middle corridor.” But the increase in rail volume flowing across Central Asian countries is placing growing pressure on key transit points. For instance, the Georgian port of Poti on the Black Sea where rail freight is transferred to ships is 99% utilized, according to Blancas. “We are one of the bottlenecks,” acknowledged Mario Escobar, business development manager for APM Terminals Poti. “It’s important that we accept that and work towards fixing it. Today, we have a port that can handle 600,000 TEUs per year, and in 2023 we handled 592,000 TEUs. It is a small port for the cargo that needs to transit this region, and the rail infrastructure is not sufficient to move all that cargo.” APM Terminals is planning to expand the capacity of its Poti terminals to 1.2 million TEUs, but Escobar said the improvement in infrastructure must be accompanied by investment from rail companies into locomotives, wagons and platforms to handle the rising volume. Reopening Red Sea will see cargo shift to ocean Martin Koubek, head of the Silk Road for intermodal operator Metrans, said the middle corridor would not be the choice for cargo from China to Europe once most container traffic returned to routing through the Red Sea. “It takes 21 days via the Suez from Shenzhen to Piraeus, so when the Red Sea is again used, why would you send rail cargo on the middle corridor that is longer and more expensive?” he told the Journal of Commerce on the sidelines of the summit. While the shift of cargo from rail to ocean would have a significant impact on the rail business, it would be barely noticed by container shipping with less than 1% of containerized trade between Asia and Europe transported by rail. But Koubek agreed that the middle corridor would be crucial for the Central Asian economies. “They are all growing, and the route will serve their increasing trade with China,” he said. Following the Russian invasion of Ukraine in February 2022, containerized trade on the northern route from China to North Europe largely dried up . Most of the cargo was moved to ocean but forwarders and rail freight operators began testing the middle corridor that runs from China, through Central Asia, the Caspian Sea, Black Sea and on into Turkey or eastern Europe. There remain significant hurdles to overcome, such as cross border customs issues, multiple cargo handovers from rail to ferry to road and back to rail, high rates and unreliable transit times. Those issues are being addressed by service providers, and the average transit time from Xian to Duisburg in southern Germany is now about 30 days. When the northern route is again fully utilized, most of the China to Europe containerized rail cargo using the middle corridor or ocean will quickly return to the Russian transit route, said Alona Toprak, director at DB Cargo Eurasia. “That means it is really important all the countries in Central Asia work together to address the issues still facing the middle route and increase volume travelling both ways, otherwise the rates will be high, and it won’t make sense,” she said. Contact Greg Knowler at greg.knowler@spglobal.com .

Intermodal providers

Booming Central Asian economies lend lifeline to China-Europe rail

<div class="phx-topic abstract-wrapper">Hapag-Lloyd has contracted with a Chinese energy producer for green methanol to power five 10,100-TEU chartered ships with methanol dual-fuel propulsion systems.</div>

Hapag-Lloyd has contracted with a Chinese energy producer for green methanol to power five 10,100-TEU chartered ships with methanol dual-fuel propulsion systems.

<div class="phx-topic">Chinese energy producer Goldwind will be supplying both members of the <a href="https://www.joc.com/article/hapag-lloyd-says-gemini-alliance-cargo-bookings-to-open-dec-3-5846853">Gemini Cooperation</a> with green methanol from 2026. Hapag-Lloyd will receive 250,000 tons per year in a deal signed this week while its partner <a href="https://www.joc.com/article/maersk-inks-new-methanol-sourcing-deal-with-chinese-supplier-5234419">Maersk will get 500,000 tons a year</a> according to an agreement made last year. The green methanol will consist of a blend of bio- and e-methanol and enable a greenhouse gas (GHG) emissions reduction of at least 70%, Hapag-Lloyd said in a statement Thursday. “With the agreement, we are securing a significant proportion of our requirements for green fuels,” said Hapag-Lloyd CEO Rolf Habben Jansen. “This will bring us an important step closer to our goal of achieving net-zero fleet operations by 2045.” Hapag-Lloyd and Seaspan are converting five 10,100-TEU charter ships to a methanol dual-fuel propulsion system that will be ready in 2026. The carrier also made a recent order for 24 dual-fuel vessels capable of sailing on liquefied natural gas (LNG). By 2030, Hapag-Lloyd aims to reduce the absolute GHG emissions of the fleet by about one-third compared with 2022. Compared with conventional fuels, the ordered quantity of green methanol can save a total of up to 400,000 metric tons of CO2e emissions in fleet operations per year. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="1a054077-7728-4ffd-abb8-b7aff17c3235"></dynamic-object></div>Hapag-Lloyd’s decarbonization credentials were burnished by its recent <a href="https://www.joc.com/article/hapag-lloyd-wins-asia-europe-green-shipping-tender-to-launch-next-year-5240949">winning of a tender from the Zero Emission Maritime Buyers Alliance</a> (ZEMBA) aimed at fast-tracking commercial deployment of green shipping services at scale to create a competitive market for those services. About 70% of the total 1.7 million TEUs of ship orders made so far this year were for ships capable of sailing on methanol, LNG or hydrogen, according to Sea-web, a sister company of the Journal of Commerce within S&amp;P Global. The need to keep fuel options open and avoid being locked into one pathway was illustrated <a href="https://www.joc.com/article/maersks-lng-order-hedges-bet-on-green-fuel-technology-ceo-5703200">in a recent Maersk order for dual-fuel vessels totaling 800,000 TEUs</a> capable of sailing on methanol as well as LNG. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Chinese energy producer Goldwind will be supplying both members of the Gemini Cooperation with green methanol from 2026. Hapag-Lloyd will receive 250,000 tons per year in a deal signed this week while its partner Maersk will get 500,000 tons a year according to an agreement made last year. The green methanol will consist of a blend of bio- and e-methanol and enable a greenhouse gas (GHG) emissions reduction of at least 70%, Hapag-Lloyd said in a statement Thursday. “With the agreement, we are securing a significant proportion of our requirements for green fuels,” said Hapag-Lloyd CEO Rolf Habben Jansen. “This will bring us an important step closer to our goal of achieving net-zero fleet operations by 2045.” Hapag-Lloyd and Seaspan are converting five 10,100-TEU charter ships to a methanol dual-fuel propulsion system that will be ready in 2026. The carrier also made a recent order for 24 dual-fuel vessels capable of sailing on liquefied natural gas (LNG). By 2030, Hapag-Lloyd aims to reduce the absolute GHG emissions of the fleet by about one-third compared with 2022. Compared with conventional fuels, the ordered quantity of green methanol can save a total of up to 400,000 metric tons of CO2e emissions in fleet operations per year. Hapag-Lloyd’s decarbonization credentials were burnished by its recent winning of a tender from the Zero Emission Maritime Buyers Alliance (ZEMBA) aimed at fast-tracking commercial deployment of green shipping services at scale to create a competitive market for those services. About 70% of the total 1.7 million TEUs of ship orders made so far this year were for ships capable of sailing on methanol, LNG or hydrogen, according to Sea-web, a sister company of the Journal of Commerce within S&P Global. The need to keep fuel options open and avoid being locked into one pathway was illustrated in a recent Maersk order for dual-fuel vessels totaling 800,000 TEUs capable of sailing on methanol as well as LNG. Contact Greg Knowler at greg.knowler@spglobal.com .

Container Shipping News

Maritime

Hapag-Lloyd joins Maersk in Chinese methanol supply deal

<div class="phx-topic abstract-wrapper">The selection of Oregon Rep. Lori Chavez-DeRemer is seen as favorable to unions, with the new administration potentially facing the need to intervene if ILA contract talks aren’t settled before Trump takes office.</div>

The selection of Oregon Rep. Lori Chavez-DeRemer is seen as favorable to unions, with the new administration potentially facing the need to intervene if ILA contract talks aren’t settled before Trump takes office.

<div class="phx-topic">The incoming Trump administration’s pick for US labor secretary has drawn mixed reactions from the logistics industry, with the International Longshoremen’s Association (ILA) and Teamsters viewing Rep. Lori Chavez-DeRemer as solidly behind unions while trucking groups see a foe of the owner-operator driver model used widely by motor carriers. Last week’s announcement from President-elect Donald Trump that he would nominate the Oregon congresswoman drew praise from the ILA, which said in a statement, “Rep. Chavez-DeRemer built a strong pro-worker record protecting their rights to organize.” “We look forward to working with Ms. Chavez-DeRemer and [the Trump] administration on legislation and policies that protect workers’ rights, safety and honors their commitment to building a strong economy...,” ILA President Harold Daggett said in the statement. The ILA, of course, may have to draw on the incoming administration’s support in the event it’s not able to successfully settle on a new contract with maritime employers by the Jan. 15 expiration of the contract extension that ended October’s three-day port strike along the US East and Gulf coasts. While the ILA did not outright endorse either candidate in the 2024 presidential election, Daggett, who met with Trump last year, said the incoming president “<a href="https://www.joc.com/article/ila-looking-for-local-ports-to-bring-in-more-union-foremen-5244993">is looking to take care of things for the unions</a>.” The ILA also praised <a href="https://www.joc.com/article/behind-the-scenes-white-house-arm-twisting-got-ila-wage-deal-done-5747241">the Biden administration and acting Labor Secretary Julie Su</a> for helping settle wage discussions with maritime employers back in October. Sean O’Brien, president of the 1.3-million-member International Brotherhood of Teamsters, congratulated Chavez-DeRemer shortly after her nomination, saying in a statement that Trump “pledged to listen to workers and find common ground to protect and respect labor in America.” <h3>First term in Congress </h3>Chavez-DeRemer, who is serving her first term in Congress, co-sponsored 12 House bills that touched on labor and employment policy. Among union-focused activities, she co-sponsored a bill that would enshrine the rights of state public sector employees to organize and bargain collectively and another bill to ensure similar rights for state public safety employees. She has also supported the Protecting the Right to Organize (PRO) Act, which has drawn some 218 co-sponsors in the House. The PRO Act expands federal protections for unions by preventing employers from requiring attendance at meetings designed to dissuade union organizing or making workers sign pledges against union organizing. It also prohibits retaliation against employees for union organizing. PRO also allows union members to participate in secondary strikes and prohibits claims against unions that conduct such strikes. More controversially, though, the PRO Act makes it more difficult for employers to classify a worker as an independent contractor rather than a full-time employee. The PRO Act will limit the independent contractor definition to those workers who are not under an employer’s direct control for how the service is performed, or when the service is not part of the employer’s regular course of work Those criteria mirror <a href="https://www.joc.com/article/proposed-federal-rule-threatens-independent-contractor-model-in-trucking-opponents-5242331">the so-called ABC test that is used in states including California</a> and <a href="https://www.joc.com/article/stg-shifting-from-drayage-carrier-to-broker-after-new-jersey-legal-challenge-5703212">New Jersey</a> to classify independent contractors and has been widely criticized for forcing motor carriers to drop owner-operator drivers in favor of employee drivers. The PRO Act also creates the new category of a “joint employer” that determines or controls how an employee of another firm performs their job. Critics have said that it could create a condition where a marine terminal can be classified as a joint employer of a port trucker due to the instructions and requirements for drivers entering their facility. The American Trucking Associations said in a statement following Chavez-DeRemer’s nomination that her “anti-trucking policies undermine our essential workforce, threaten the right of independent truckers to choose their own career path, and impede the efficiency of the supply chain.” Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com ">michael.angell@spglobal.com</a>. </div>

The incoming Trump administration’s pick for US labor secretary has drawn mixed reactions from the logistics industry, with the International Longshoremen’s Association (ILA) and Teamsters viewing Rep. Lori Chavez-DeRemer as solidly behind unions while trucking groups see a foe of the owner-operator driver model used widely by motor carriers. Last week’s announcement from President-elect Donald Trump that he would nominate the Oregon congresswoman drew praise from the ILA, which said in a statement, “Rep. Chavez-DeRemer built a strong pro-worker record protecting their rights to organize.” “We look forward to working with Ms. Chavez-DeRemer and [the Trump] administration on legislation and policies that protect workers’ rights, safety and honors their commitment to building a strong economy...,” ILA President Harold Daggett said in the statement. The ILA, of course, may have to draw on the incoming administration’s support in the event it’s not able to successfully settle on a new contract with maritime employers by the Jan. 15 expiration of the contract extension that ended October’s three-day port strike along the US East and Gulf coasts. While the ILA did not outright endorse either candidate in the 2024 presidential election, Daggett, who met with Trump last year, said the incoming president “ is looking to take care of things for the unions .” The ILA also praised the Biden administration and acting Labor Secretary Julie Su for helping settle wage discussions with maritime employers back in October. Sean O’Brien, president of the 1.3-million-member International Brotherhood of Teamsters, congratulated Chavez-DeRemer shortly after her nomination, saying in a statement that Trump “pledged to listen to workers and find common ground to protect and respect labor in America.” First term in Congress Chavez-DeRemer, who is serving her first term in Congress, co-sponsored 12 House bills that touched on labor and employment policy. Among union-focused activities, she co-sponsored a bill that would enshrine the rights of state public sector employees to organize and bargain collectively and another bill to ensure similar rights for state public safety employees. She has also supported the Protecting the Right to Organize (PRO) Act, which has drawn some 218 co-sponsors in the House. The PRO Act expands federal protections for unions by preventing employers from requiring attendance at meetings designed to dissuade union organizing or making workers sign pledges against union organizing. It also prohibits retaliation against employees for union organizing. PRO also allows union members to participate in secondary strikes and prohibits claims against unions that conduct such strikes. More controversially, though, the PRO Act makes it more difficult for employers to classify a worker as an independent contractor rather than a full-time employee. The PRO Act will limit the independent contractor definition to those workers who are not under an employer’s direct control for how the service is performed, or when the service is not part of the employer’s regular course of work Those criteria mirror the so-called ABC test that is used in states including California and New Jersey to classify independent contractors and has been widely criticized for forcing motor carriers to drop owner-operator drivers in favor of employee drivers. The PRO Act also creates the new category of a “joint employer” that determines or controls how an employee of another firm performs their job. Critics have said that it could create a condition where a marine terminal can be classified as a joint employer of a port trucker due to the instructions and requirements for drivers entering their facility. The American Trucking Associations said in a statement following Chavez-DeRemer’s nomination that her “anti-trucking policies undermine our essential workforce, threaten the right of independent truckers to choose their own career path, and impede the efficiency of the supply chain.” Contact Michael Angell at michael.angell@spglobal.com .

Drayage

Longshore labor

Trucking labor

Transport, Trade and Regulation News

Trump’s labor pick draws longshore and Teamster praise but trucker ire

<div class="phx-topic abstract-wrapper">The news from Gemini came as MSC released the latest update to its standalone east-west network that will also launch in February. </div>

The news from Gemini came as MSC released the latest update to its standalone east-west network that will also launch in February.

<div class="phx-topic">Gemini Cooperation, the new Maersk/Hapag-Lloyd alliance, will open cargo bookings beginning Dec. 3, two months before the official Feb. 1 launch of the network, Hapag-Lloyd confirmed Wednesday. February voyages will be available when the booking portal opens, the carrier said in a customer advisory. “As our 2025 network will be fully phased in only after the transition from our current THE Alliance network during 2025, not all Gemini Cooperation voyages might be reflected in our schedule yet,” Hapag-Lloyd said. The carrier’s online schedules only cover vessel arrivals at the destination port up to the end of January, just before Hapag-Lloyd’s membership in THE Alliance ends. Gemini will provide 56 mainline and shuttle services covering seven east-west trades on a hub-and-spoke network and utilizing about 340 vessels with a total capacity of 3.7 million TEUs. The Gemini carriers have continued to tweak the network after releasing the final schedule on Oct. 9, which reflected their decision to choose the Cape of Good Hope option for vessel routings to avoid the threat of militant attacks in the Red Sea. The latest change, announced on Nov. 18, was to shift calls from the UK’s Felixstowe port to London Gateway on three Asia-Europe services. <h3>MSC updates east-west network </h3>The news from Gemini came as Mediterranean Shipping Co. released on Wednesday the latest update to its standalone east-west network that will launch in February. The changes feature extra port calls to “optimize our Asia to Europe, US and Canada connectivity,” the carrier said in a customer advisory. The biggest difference is MSC’s Mustang service connecting Asia to the Northwest US and Canada will be added to its standalone east-west network. The new rotation will be Xiamen–Yantian–Ningbo–Shanghai–Busan–Seattle–Vancouver–Portland–Busan. Other changes include the addition of calls at Vung Tau and Haiphong in Vietnam on MSC’s Pearl and Chinook services; Nansha on its Asia-Europe Lion and Dragon services; Yantian (westbound) and Yokohama in place of Busan on its Swan-Sentosa service; and Busan (westbound) on its Asia-US Orient and Lonestar services. MSC has also added a call at Vizhinjam in India on its Asia-Europe Jade service, with Colombo also added to both its Britannia service connecting Asia and North Europe and its eastbound America service between the US East Coast and Asia. MSC’s Albatross service will now feature two calls in the UK, with London Gateway added after Felixstowe, which will remain the first call in Europe from Asia. MSC said its standalone east-west network together with its existing Asia export services will “provide unmatched continental trade connectivity with Asia through a vast array of loops, competitive transit times and a high frequency of direct port calls.” Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

Gemini Cooperation, the new Maersk/Hapag-Lloyd alliance, will open cargo bookings beginning Dec. 3, two months before the official Feb. 1 launch of the network, Hapag-Lloyd confirmed Wednesday. February voyages will be available when the booking portal opens, the carrier said in a customer advisory. “As our 2025 network will be fully phased in only after the transition from our current THE Alliance network during 2025, not all Gemini Cooperation voyages might be reflected in our schedule yet,” Hapag-Lloyd said. The carrier’s online schedules only cover vessel arrivals at the destination port up to the end of January, just before Hapag-Lloyd’s membership in THE Alliance ends. Gemini will provide 56 mainline and shuttle services covering seven east-west trades on a hub-and-spoke network and utilizing about 340 vessels with a total capacity of 3.7 million TEUs. The Gemini carriers have continued to tweak the network after releasing the final schedule on Oct. 9, which reflected their decision to choose the Cape of Good Hope option for vessel routings to avoid the threat of militant attacks in the Red Sea. The latest change, announced on Nov. 18, was to shift calls from the UK’s Felixstowe port to London Gateway on three Asia-Europe services. MSC updates east-west network The news from Gemini came as Mediterranean Shipping Co. released on Wednesday the latest update to its standalone east-west network that will launch in February. The changes feature extra port calls to “optimize our Asia to Europe, US and Canada connectivity,” the carrier said in a customer advisory. The biggest difference is MSC’s Mustang service connecting Asia to the Northwest US and Canada will be added to its standalone east-west network. The new rotation will be Xiamen–Yantian–Ningbo–Shanghai–Busan–Seattle–Vancouver–Portland–Busan. Other changes include the addition of calls at Vung Tau and Haiphong in Vietnam on MSC’s Pearl and Chinook services; Nansha on its Asia-Europe Lion and Dragon services; Yantian (westbound) and Yokohama in place of Busan on its Swan-Sentosa service; and Busan (westbound) on its Asia-US Orient and Lonestar services. MSC has also added a call at Vizhinjam in India on its Asia-Europe Jade service, with Colombo also added to both its Britannia service connecting Asia and North Europe and its eastbound America service between the US East Coast and Asia. MSC’s Albatross service will now feature two calls in the UK, with London Gateway added after Felixstowe, which will remain the first call in Europe from Asia. MSC said its standalone east-west network together with its existing Asia export services will “provide unmatched continental trade connectivity with Asia through a vast array of loops, competitive transit times and a high frequency of direct port calls.” Contact Keith Wallis at keithwallis@hotmail.com .

Trans-Atlantic

Asia-Europe

Trans-Pacific

Hapag-Lloyd says Gemini alliance cargo bookings to open Dec. 3

<div class="phx-topic abstract-wrapper">It’s hard to see a world where AI isn’t a necessary component for financial durability in a sector that will always grapple with the volatility of freight rates and the ebbs and flows of demand and volumes. </div>

It’s hard to see a world where AI isn’t a necessary component for financial durability in a sector that will always grapple with the volatility of freight rates and the ebbs and flows of demand and volumes.

<div class="phx-topic">The last two years have been characterized by flat demand, volatile rates and increased costs in the logistics industry. But executives looking at data and comparing it with the pre-COVID era should bear in mind that one thing is vastly different this time around: We’re in the throes of a new technological wave around artificial intelligence (AI) that sets the stage for a meaningfully different environment of business building. AI has dominated discussions across industries in the last two years as buyers seek to separate signal from noise. This has sparked both enthusiasm and skepticism. Is AI in supply chain management merely a temporary trend, or does it possess the potential for lasting impact? Moreover, which AI applications are most likely to transform supply chain operations in the long run? At a supply chain conference earlier this year, I asked a room of about 200 executives how many were using generative AI in their everyday jobs. Almost every single hand went up. What was once a new, scary technology is proving to provide operational leverage in a period where margins are under secular pressure. Among service-intensive logistics services providers (LSPs) such as forwarders and freight brokers, AI is proving to be a valuable asset for coping with a litany of freight operations and back-office tasks. It turns out this tooling can help increase productivity in a way that reduces the cost to serve, or the expense required to execute a shipment. While it’s early days, we’re seeing harsh skepticism now turning into praise as early indicators of AI’s return on investment (ROI) are hard to ignore in an environment where companies have typically managed long-term margins through phases of retrenching and expansion. Given the service orientation of the supply chain, sales enablement is a key area of focus. We know of one upstart who has developed their own AI voice agent to handle preliminary sales calls on behalf of insurance brokers placing trucking liability policies. That is expected to improve sales conversions by at least 25% when rolled out across the organization. In another instance, a large freight broker mentioned cost reductions of 20% by having a voice agent qualify inbound calls from truckers looking for freight. This helps carrier sales professionals focus only on the higher-value carriers they believe fit their network and the needs of their shipper-clients. <h3>Understanding the promise of AI </h3>Lastly, emerging new business models are galvanizing the disruptive nature of AI. The adage among investors is to dub this new business model as “service-as-software.” It simply means that software now does the work rather than enabling it. Business models reflect that by simply “charging for the work,” allowing companies to bill directly for automated processes. That’s a shift akin to the previous migration to software-as-a-service (SaaS), but with an operational twist. Take customs brokerage and trade compliance, for example. Regardless of your politics, it’s clear that trade regulation will increase in complexity in the years to come. But the supply of customs brokers has been relatively flat, with more than 5,000 retirements expected by the end of the decade. Customs brokerage businesses are hard to manage to profitability and are often a loss-leader to cross-sell other freight services given how loyal customers can be to their customs broker. We’ve seen several startups develop an AI-native ability to broker customs at gross margins in excess of 50% and handle volumes per employee two to three times greater than incumbents. They’re also able to tie that to trade compliance workflows so organizations can make more informed decisions around sourcing and distribution to manage expenses while staying within the parameters of the law. We’re still in the early innings of understanding the promise AI brings to the supply chain, as well as how to develop and scale key processes around its capabilities. The thing that’s clear to me is that we cannot view the business environment and operational best practices of a bygone era as the baseline for the future. AI is something that’s here to stay and brings with it a large promise for an industry as service-heavy as supply chain. Data from these early deployments suggests that smaller teams can handle more volume without forsaking customer outcomes. If this continues, it’s hard to see a world where AI isn’t a necessary component for financial durability in a sector that will always grapple with the volatility of rates and the ebbs and flows of demand and freight volumes. Contact Santosh Sankar at <a href="mailto:santosh@dynamo.vc ">santosh@dynamo.vc</a>.</div>

The last two years have been characterized by flat demand, volatile rates and increased costs in the logistics industry. But executives looking at data and comparing it with the pre-COVID era should bear in mind that one thing is vastly different this time around: We’re in the throes of a new technological wave around artificial intelligence (AI) that sets the stage for a meaningfully different environment of business building. AI has dominated discussions across industries in the last two years as buyers seek to separate signal from noise. This has sparked both enthusiasm and skepticism. Is AI in supply chain management merely a temporary trend, or does it possess the potential for lasting impact? Moreover, which AI applications are most likely to transform supply chain operations in the long run? At a supply chain conference earlier this year, I asked a room of about 200 executives how many were using generative AI in their everyday jobs. Almost every single hand went up. What was once a new, scary technology is proving to provide operational leverage in a period where margins are under secular pressure. Among service-intensive logistics services providers (LSPs) such as forwarders and freight brokers, AI is proving to be a valuable asset for coping with a litany of freight operations and back-office tasks. It turns out this tooling can help increase productivity in a way that reduces the cost to serve, or the expense required to execute a shipment. While it’s early days, we’re seeing harsh skepticism now turning into praise as early indicators of AI’s return on investment (ROI) are hard to ignore in an environment where companies have typically managed long-term margins through phases of retrenching and expansion. Given the service orientation of the supply chain, sales enablement is a key area of focus. We know of one upstart who has developed their own AI voice agent to handle preliminary sales calls on behalf of insurance brokers placing trucking liability policies. That is expected to improve sales conversions by at least 25% when rolled out across the organization. In another instance, a large freight broker mentioned cost reductions of 20% by having a voice agent qualify inbound calls from truckers looking for freight. This helps carrier sales professionals focus only on the higher-value carriers they believe fit their network and the needs of their shipper-clients. Understanding the promise of AI Lastly, emerging new business models are galvanizing the disruptive nature of AI. The adage among investors is to dub this new business model as “service-as-software.” It simply means that software now does the work rather than enabling it. Business models reflect that by simply “charging for the work,” allowing companies to bill directly for automated processes. That’s a shift akin to the previous migration to software-as-a-service (SaaS), but with an operational twist. Take customs brokerage and trade compliance, for example. Regardless of your politics, it’s clear that trade regulation will increase in complexity in the years to come. But the supply of customs brokers has been relatively flat, with more than 5,000 retirements expected by the end of the decade. Customs brokerage businesses are hard to manage to profitability and are often a loss-leader to cross-sell other freight services given how loyal customers can be to their customs broker. We’ve seen several startups develop an AI-native ability to broker customs at gross margins in excess of 50% and handle volumes per employee two to three times greater than incumbents. They’re also able to tie that to trade compliance workflows so organizations can make more informed decisions around sourcing and distribution to manage expenses while staying within the parameters of the law. We’re still in the early innings of understanding the promise AI brings to the supply chain, as well as how to develop and scale key processes around its capabilities. The thing that’s clear to me is that we cannot view the business environment and operational best practices of a bygone era as the baseline for the future. AI is something that’s here to stay and brings with it a large promise for an industry as service-heavy as supply chain. Data from these early deployments suggests that smaller teams can handle more volume without forsaking customer outcomes. If this continues, it’s hard to see a world where AI isn’t a necessary component for financial durability in a sector that will always grapple with the volatility of rates and the ebbs and flows of demand and freight volumes. Contact Santosh Sankar at santosh@dynamo.vc .

Logistics Technology News

Supply chains embrace the AI takeover to slash costs

<div class="phx-topic abstract-wrapper">The large fuel tanks needed for low-density alternative fuels could make them a non-starter for multipurpose vessels.</div>

The large fuel tanks needed for low-density alternative fuels could make them a non-starter for multipurpose vessels.

<div class="phx-topic">The “future fuel” dilemma is a 21st century conundrum for shipowners of every type of ship, but perhaps more so for the multipurpose (MPV) and heavy-lift fleet. With their heavy and outsized cargoes, finding room for the larger fuel tanks needed for low-density fuels is a real challenge, which makes emerging fuels hydrogen and ammonia a much tougher option for MPV newbuilds today. Green methanol has potential, but there are caveats to that choice, too. The market is coming to terms with the time it will take to scale up the production and distribution of green methanol. While supplies can and are being secured for some pioneering ship operators, it is likely to be much harder to procure green methanol supplies for tramping MPVs with their variable routings and port calls. However, some carriers are choosing methanol from the newbuild stage, having implemented a “ready” approach with plans to convert. These include AAL with a series of eight 32,000-deadweight ton (dwt) liner-type MPVs, three of which have been delivered; Griegstar and Gearbulk with eight ammonia/methanol-ready 82,300-dwt open-hatch general cargo newbuilds; Skarv with four 7,000-dwt ammonia/methanol-ready project cargo carriers; and SAL’s methanol-ready heavy-lift MPV Orca class. Biofuels offer a more immediate solution for MPV operators, especially for those operating in European Union waters, where from next year FuelEU Maritime regulations will heavily penalize vessels that cannot comply with the requirements for using alternative fuels with lower fossil carbon content. Many owners and operators in the sector have already tested different kinds of biofuels with various “drop-in” ratios. A steep increase in demand for biofuels is expected in the coming years. At DNV, we see benefits in the pooling mechanism allowed in the EU’s FuelEU Maritime regulation to encourage future fuel procurement at scale. This could serve the MPV sector well as an emissions-reduction strategy. This novel approach gives MPV shipowners the option to pool well-to-wake greenhouse gas fuel intensity (GFI) compliance across several ships from the same or different companies. This means that a non-compliant vessel could rely on others in a pool to achieve a compliant combined GFI. This cooperative approach could provide a pathway for MPV operators to secure the benefits of using low- or zero-carbon fuels. <h3>‘New nuclear’ a long-term possibility </h3>Nuclear propulsion as an alternative fuel for MPVs falls in a much longer-term window, in my view. Small modular reactors (SMRs) are still in the testing stage on land for power generation, and it will be many years before they will be ready for commercial use in shipping. Expect to see SMR testing for ultra-large container carriers well before MPVs are ready for new nuclear. The industry is looking closely at the possibilities, however, so at DNV, we have recently joined with companies and stakeholders in the maritime and nuclear sector to explore the technology as part of the new Nuclear Energy Maritime Organization (NEMO). Batteries, as part of hybrid propulsion solutions, are on the rise. We estimate that some 900 ships are operating with batteries systems — from a few fully electric vessels, mainly in operation on short-sea point-to point ferry trades, to varying degrees of hybridization where batteries are combined with generators or fuel cells. Batteries as part of hybrid solutions are a relatively mature technology. Combine this with energy efficiency improvements, improved battery and charging technology, and a decrease in costs, and the economics of hybridization are likely to continue to improve. No matter the fuels, a greener choice will mean higher costs for MPVs. This puts an even greater premium on reducing losses through energy efficiency. Operational and technical energy-efficiency measures we can deploy today can reduce fuel consumption by up to 16%. The business case for these technologies, including wind-assisted propulsion, waste heat recovery, and hybrid systems is very strong compared with the cost of alternative fuels. Carbon capture and storage is a potential — but niche — option for emissions reduction for MPVs, but again the room required on board to store the CO2 is the sticking point. This takes us back to the key limitation of MPVs when switching to lower-density fuels: a lack of onboard space. For now, the most likely solution is that the MPV sector will need to rely on biofuels, dual-fuel and future fuel-ready notations, perhaps with demand aggregation and GFI pooling as we move ahead on the path to zero. Contact Jost Bergmann at <a href="mailto:jost.bergmann@dnv.com">jost.bergmann@dnv.com</a>. DNV is a Norway-based classification society. </div>

The “future fuel” dilemma is a 21st century conundrum for shipowners of every type of ship, but perhaps more so for the multipurpose (MPV) and heavy-lift fleet. With their heavy and outsized cargoes, finding room for the larger fuel tanks needed for low-density fuels is a real challenge, which makes emerging fuels hydrogen and ammonia a much tougher option for MPV newbuilds today. Green methanol has potential, but there are caveats to that choice, too. The market is coming to terms with the time it will take to scale up the production and distribution of green methanol. While supplies can and are being secured for some pioneering ship operators, it is likely to be much harder to procure green methanol supplies for tramping MPVs with their variable routings and port calls. However, some carriers are choosing methanol from the newbuild stage, having implemented a “ready” approach with plans to convert. These include AAL with a series of eight 32,000-deadweight ton (dwt) liner-type MPVs, three of which have been delivered; Griegstar and Gearbulk with eight ammonia/methanol-ready 82,300-dwt open-hatch general cargo newbuilds; Skarv with four 7,000-dwt ammonia/methanol-ready project cargo carriers; and SAL’s methanol-ready heavy-lift MPV Orca class. Biofuels offer a more immediate solution for MPV operators, especially for those operating in European Union waters, where from next year FuelEU Maritime regulations will heavily penalize vessels that cannot comply with the requirements for using alternative fuels with lower fossil carbon content. Many owners and operators in the sector have already tested different kinds of biofuels with various “drop-in” ratios. A steep increase in demand for biofuels is expected in the coming years. At DNV, we see benefits in the pooling mechanism allowed in the EU’s FuelEU Maritime regulation to encourage future fuel procurement at scale. This could serve the MPV sector well as an emissions-reduction strategy. This novel approach gives MPV shipowners the option to pool well-to-wake greenhouse gas fuel intensity (GFI) compliance across several ships from the same or different companies. This means that a non-compliant vessel could rely on others in a pool to achieve a compliant combined GFI. This cooperative approach could provide a pathway for MPV operators to secure the benefits of using low- or zero-carbon fuels. ‘New nuclear’ a long-term possibility Nuclear propulsion as an alternative fuel for MPVs falls in a much longer-term window, in my view. Small modular reactors (SMRs) are still in the testing stage on land for power generation, and it will be many years before they will be ready for commercial use in shipping. Expect to see SMR testing for ultra-large container carriers well before MPVs are ready for new nuclear. The industry is looking closely at the possibilities, however, so at DNV, we have recently joined with companies and stakeholders in the maritime and nuclear sector to explore the technology as part of the new Nuclear Energy Maritime Organization (NEMO). Batteries, as part of hybrid propulsion solutions, are on the rise. We estimate that some 900 ships are operating with batteries systems — from a few fully electric vessels, mainly in operation on short-sea point-to point ferry trades, to varying degrees of hybridization where batteries are combined with generators or fuel cells. Batteries as part of hybrid solutions are a relatively mature technology. Combine this with energy efficiency improvements, improved battery and charging technology, and a decrease in costs, and the economics of hybridization are likely to continue to improve. No matter the fuels, a greener choice will mean higher costs for MPVs. This puts an even greater premium on reducing losses through energy efficiency. Operational and technical energy-efficiency measures we can deploy today can reduce fuel consumption by up to 16%. The business case for these technologies, including wind-assisted propulsion, waste heat recovery, and hybrid systems is very strong compared with the cost of alternative fuels. Carbon capture and storage is a potential — but niche — option for emissions reduction for MPVs, but again the room required on board to store the CO2 is the sticking point. This takes us back to the key limitation of MPVs when switching to lower-density fuels: a lack of onboard space. For now, the most likely solution is that the MPV sector will need to rely on biofuels, dual-fuel and future fuel-ready notations, perhaps with demand aggregation and GFI pooling as we move ahead on the path to zero. Contact Jost Bergmann at jost.bergmann@dnv.com . DNV is a Norway-based classification society.

Breakbulk News

Breakbulk carriers

Heavy-haul transport

Project cargo

MPV fuel challenge complicated by heavy and outsized cargoes

< 10,000 TEU

<10,000 TEU: {valueY.formatNumber('###,###')}

Panamax: 10-14,000 TEU

New Panamax: {valueY.formatNumber('###,###')}

Ultra Large > 14,501 TEU

Ultra Large Container: {valueY.formatNumber('###,###')}

Retirements

The Sea-web ocean capacity orderbook database aggregates data for fully cellular container ships on order, including current ship status, registered owner, operator, orderbook date, and TEU capacity, on a weekly basis. [Sea-Web](https://maritime.ihs.com/EntitlementPortal/Home/Information/Seaweb_Ships)

Delivery and demolition of container vessel capacity (Sea-web)

Container vessel delivery by ships size, and demolition (Sea-web) Gateway

<div class="phx-topic abstract-wrapper">Frontloading and Red Sea diversions pushed volume and rates higher in the third quarter, and ongoing geopolitical disruption will allow carriers to extend their robust financial health into next year, according to the founder of the global equity firm.</div>

Frontloading and Red Sea diversions pushed volume and rates higher in the third quarter, and ongoing geopolitical disruption will allow carriers to extend their robust financial health into next year, according to the founder of the global equity firm.

<div class="phx-topic">The 47 million TEUs transported by ocean carriers in the third quarter comprised the highest quarterly volume on record, besting the previous high set in 2021 at the height of the pandemic by just over 2%, according to the founder of global equity firm Blue Alpha Capital. John McCown wrote in his quarterly market report this week that volume data from Container Trades Statistics (CTS) also showed that for the first nine months of 2024, the 136.7-million-TEU volume moved worldwide was up 6.3% year over year and 1.5% above the first nine months of 2021. The robust volume was accompanied by higher rate levels that saw the average revenue per load assessed by CTS up 52.5% in the third quarter year over year and 23.4% higher compared with the second quarter. “Driven by the capacity tightening resulting from the Red Sea situation and augmented by robust volume, the sector moved to a $5.4 billion Q1 profit that was doubled in the second quarter and more than doubled in the third quarter,” McCown said. Average global spot rate levels in the third quarter recorded by the Shanghai Containerized Freight Index (SCFI) of $3,074 per TEU were more than double the year-ago period and up 19% from the second quarter. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="b1d23881-2ae2-4545-ac9b-03e4ae60579e"></dynamic-object></div>McCown said the carriers’ third-quarter net profit of $26.8 billion was up 164% sequentially over the second quarter and almost nine times higher year over year. It was also more than twice what the container shipping industry earned in any full pre-pandemic year, he noted. The three consecutive quarters of exponential net profit growth this year followed an industry loss of $700 million in the last three months of 2023. Maritime consultancy Drewry has estimated that container shipping will report a pre-tax profit of $50 billion this year, up from $28 billion in 2023. While it is a fraction of the $298 billion recorded in 2022, the carriers will enter an uncertain 2025 in solid financial health. “Stronger-than-expected volume has certainly buoyed rates, but much of the recent pricing strength remains tied to the Red Sea situation that is effectively absorbing 8% of worldwide capacity,” McCown wrote. <h3>Tariffs on China ‘now more of a reality’ </h3>Looking ahead to next year, McCown said in addition to continued diversions around southern Africa to avoid the Red Sea, US President-elect Donald Trump’s stated intention to impose tariffs of 60% and more on Chinese imports and 10% to 20% on all other imports iss now more of a reality. The tariffs would also follow <a href="https://www.joc.com/article/ila-breaks-off-contract-talks-accuses-usmx-of-semi-automation-push-5810392">a possible second strike</a> by the International Longshoremen’s Association (ILA) when its tentative contract extension expires on Jan. 15. “The combined impact of those two, happening at the same time, would indeed be a perfect storm for the sector,” McCown warned. “My hope is that reason prevails and that the supposed silver bullet of tariffs was more about campaigning and less about administering.” Global bank HSBC also highlighted tariffs and ILA industrial action as catalysts for strong volume development on the US import trades for the rest of the year and into 2025. “We expect the looming US East [and Gulf] coasts labor union strike and an earlier Lunar New Year [Jan. 29] <a href="https://www.joc.com/article/us-importers-dabbling-in-frontloading-ahead-of-new-tariff-threat-5821448">to drive cargo frontloading into the year-end</a>,” HSBC said in a market update. “Separately, following the election of Donald Trump, we expect further frontloading due to potential tariff concerns to keep near-term freight rates elevated.” US imports from Asia were up 10.5% year over year in October, according to PIERS, a Journal of Commerce sister product within S&amp;P Global. <h3>‘Meaningful uplift to 2025 earnings’ </h3>Carriers will reap the benefits of elevated rate levels on the east-west trade lanes, which HSBC believes will see 2025 contract rates on Asia-Europe rising sharply compared with this year, providing “meaningful uplift to 2025 earnings.” Potentially standing in the way of continuing profitability is shipping supply, with the order book approaching 30% of the in-fleet capacity. Data from shipping association BIMCO has forecast cargo volume this year will grow between 4% and 5% against 16% growth in capacity. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="b1577241-6a7f-498a-8c5d-7a1e12ab9b6b"></dynamic-object></div>However, assuming Red Sea diversions last through 2025, container shipping analyst Clarksons estimates that nominal fleet capacity growth will slow from over 10% to 5% against estimated 18% growth in TEU-mile demand in 2024 and 3% growth in 2025. “While supply growth still exceeds demand and we continue to assume freight rates to trend lower in 2025 as our base case, we think the pace of supply delivery and demand from frontloading indicates that near-term freight rates may not capitulate as the market feared,” HSBC noted in its report. Ocean carriers are also becoming more optimistic in their capacity outlooks for next year as the Red Sea diversions absorb capacity. Maersk CEO Vincent Clerc told analysts in a third-quarter earnings call that demand would remain solid into 2025 and <a href="https://www.joc.com/article/scrapping-slow-steaming-demand-will-limit-capacity-overhang-clerc-5785020">the supply-demand balance could be smoothed out</a> by carriers pulling on the capacity management levers of increased scrapping and slow steaming. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

The 47 million TEUs transported by ocean carriers in the third quarter comprised the highest quarterly volume on record, besting the previous high set in 2021 at the height of the pandemic by just over 2%, according to the founder of global equity firm Blue Alpha Capital. John McCown wrote in his quarterly market report this week that volume data from Container Trades Statistics (CTS) also showed that for the first nine months of 2024, the 136.7-million-TEU volume moved worldwide was up 6.3% year over year and 1.5% above the first nine months of 2021. The robust volume was accompanied by higher rate levels that saw the average revenue per load assessed by CTS up 52.5% in the third quarter year over year and 23.4% higher compared with the second quarter. “Driven by the capacity tightening resulting from the Red Sea situation and augmented by robust volume, the sector moved to a $5.4 billion Q1 profit that was doubled in the second quarter and more than doubled in the third quarter,” McCown said. Average global spot rate levels in the third quarter recorded by the Shanghai Containerized Freight Index (SCFI) of $3,074 per TEU were more than double the year-ago period and up 19% from the second quarter. McCown said the carriers’ third-quarter net profit of $26.8 billion was up 164% sequentially over the second quarter and almost nine times higher year over year. It was also more than twice what the container shipping industry earned in any full pre-pandemic year, he noted. The three consecutive quarters of exponential net profit growth this year followed an industry loss of $700 million in the last three months of 2023. Maritime consultancy Drewry has estimated that container shipping will report a pre-tax profit of $50 billion this year, up from $28 billion in 2023. While it is a fraction of the $298 billion recorded in 2022, the carriers will enter an uncertain 2025 in solid financial health. “Stronger-than-expected volume has certainly buoyed rates, but much of the recent pricing strength remains tied to the Red Sea situation that is effectively absorbing 8% of worldwide capacity,” McCown wrote. Tariffs on China ‘now more of a reality’ Looking ahead to next year, McCown said in addition to continued diversions around southern Africa to avoid the Red Sea, US President-elect Donald Trump’s stated intention to impose tariffs of 60% and more on Chinese imports and 10% to 20% on all other imports iss now more of a reality. The tariffs would also follow a possible second strike by the International Longshoremen’s Association (ILA) when its tentative contract extension expires on Jan. 15. “The combined impact of those two, happening at the same time, would indeed be a perfect storm for the sector,” McCown warned. “My hope is that reason prevails and that the supposed silver bullet of tariffs was more about campaigning and less about administering.” Global bank HSBC also highlighted tariffs and ILA industrial action as catalysts for strong volume development on the US import trades for the rest of the year and into 2025. “We expect the looming US East [and Gulf] coasts labor union strike and an earlier Lunar New Year [Jan. 29] to drive cargo frontloading into the year-end ,” HSBC said in a market update. “Separately, following the election of Donald Trump, we expect further frontloading due to potential tariff concerns to keep near-term freight rates elevated.” US imports from Asia were up 10.5% year over year in October, according to PIERS, a Journal of Commerce sister product within S&P Global. ‘Meaningful uplift to 2025 earnings’ Carriers will reap the benefits of elevated rate levels on the east-west trade lanes, which HSBC believes will see 2025 contract rates on Asia-Europe rising sharply compared with this year, providing “meaningful uplift to 2025 earnings.” Potentially standing in the way of continuing profitability is shipping supply, with the order book approaching 30% of the in-fleet capacity. Data from shipping association BIMCO has forecast cargo volume this year will grow between 4% and 5% against 16% growth in capacity. However, assuming Red Sea diversions last through 2025, container shipping analyst Clarksons estimates that nominal fleet capacity growth will slow from over 10% to 5% against estimated 18% growth in TEU-mile demand in 2024 and 3% growth in 2025. “While supply growth still exceeds demand and we continue to assume freight rates to trend lower in 2025 as our base case, we think the pace of supply delivery and demand from frontloading indicates that near-term freight rates may not capitulate as the market feared,” HSBC noted in its report. Ocean carriers are also becoming more optimistic in their capacity outlooks for next year as the Red Sea diversions absorb capacity. Maersk CEO Vincent Clerc told analysts in a third-quarter earnings call that demand would remain solid into 2025 and the supply-demand balance could be smoothed out by carriers pulling on the capacity management levers of increased scrapping and slow steaming. Contact Greg Knowler at greg.knowler@spglobal.com .

Global ocean volume in Q3 beat pandemic record: Blue Alpha Capital

<div class="phx-topic abstract-wrapper">NVOs will enter 2025 hoping that their experience this year with carriers taking a get-tough approach to their business dealings was merely cyclical, a product of an unusual market following the Red Sea diversions and an early peak season.</div>

NVOs will enter 2025 hoping that their experience this year with carriers taking a get-tough approach to their business dealings was merely cyclical, a product of an unusual market following the Red Sea diversions and an early peak season.

<div class="phx-topic">Non-vessel-operating common carriers (NVOs) will look back on 2024 as a challenging year in two key respects: it was when carriers, seizing on an unexpectedly favorable market, got tough in demanding more spot cargo as a condition for granting contracts to NVOs’ customers, while putting further pressure on NVOs by closely monitoring their adherence to those contracts. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5821197_0.1.jpg"></img></div>“In 2024, ocean carriers began tightening their grip on the market,” analyst Jon Monroe wrote on Nov. 19. “They became more selective with NVOCC contracts, making ‘named account’ deals, [i.e.] contracts reserved for large, high-volume customers, harder to secure.” NVOs will go into 2025 hoping that experience was merely cyclical, a product of an unusual market following the Red Sea diversions and an early peak season. For beneficial cargo owners (BCOs), the idea that NVOs are coming under pressure from carriers is relevant in terms of NVOs’ ability to access vessel space. Indeed, some BCOs have recently raised concerns to the Journal of Commerce about the presence in their NVO contracts of clauses absolving the NVO if space can’t be procured. Unfortunately, there is no guarantee the market will weaken in the New Year even as a glut of capacity threatens to weigh on the market. Some NVOs contacted by the Journal of Commerce believe a softening is likely next year — and may already have begun. But others believe the stretch of good fortune for carriers — seen in a fully deployed fleet and still-elevated spot rates — hasn’t run its course and won’t until the Suez becomes a safe route again, whereupon capacity will pour back into the market. Maersk CEO Vincent Clerc suggested as such in a recent earnings call, <a href="https://www.joc.com/article/scrapping-slow-steaming-demand-will-limit-capacity-overhang-clerc-5785020">noting carriers have untapped levers to forestall overcapacity</a>. Maersk “highlighted that supply discipline in the form of slow steaming, blanked sailings and scrapping could emerge once the market returns to a normal level of profitability,” Parash Jain, HSBC Commercial Banking’s global head of transport and logistics research and a TPM25 speaker, wrote on Nov. 1. <h3>Carriers’ evolving positions on NVO cargo </h3>For NVOs, as long as carriers are in control such that spot rates end up higher than contract rates, carriers will demand more spot market cargo, also called freight-all-kinds (FAK), as the price for granting NVOs’ contract, or named account rates (NAC), for their BCO customers. “The ratio between nominated account rates and FAK rates varies among different carriers. However, we are observing an increasing demand for a more balanced approach as we approach 2025,” meaning carriers seeking a larger share of FAK cargo from NVOs, said Marc Meier, global head of ocean freight at Toll Global Forwarding. Others see an already softening market reflected in carriers’ evolving positions relative to NVO cargo. “Carriers have taken such a policy each year during annual negotiations on NAC rates to request for at least 50-50 on NAC/FAK bookings, but when space is tighter, some even ask for 4 to 1 (FAK to NAC) to even 5 to 1 as happened in June-July of this year,” said Christian Sur, executive vice president for ocean freight/contract logistics at Unique Logistics International. “We are back to more 1 to 1 or even a better ratio to receive NAC space.” Others see it similarly, given that new tonnage deliveries will add 11% to existing capacity by the end of 2024 and another 6% next year, growth only minimally reduced by scrapping at least so far, according to S&amp;P Global Market Intelligence. “NVOCCs could find themselves in a more favorable position in 2025 as the market shifts and carriers face increased competition to fill excess vessel capacity,” Monroe wrote on Nov. 19. “With the surge of available capacity in the ocean freight market, carriers are likely to adopt more flexible and reasonable terms for NVOCCs in order to maintain their vessel utilization.” <h3>Carriers monitoring NVOs’ use of NAC rates </h3>Carriers’ NVO policies this year forced some NVOs to be more aggressive in scrounging up FAK cargo, often from the smaller end of the shipper market that is too small to secure contract rates. But while market cyclicality might make carriers hungry for NVO cargo, what will likely not change so fast is carriers’ increasingly sophisticated monitoring of NVOs’ use of named account rates, especially when spot rates exceed contract rates. That monitoring has disrupted longstanding practice under which NVOs — when contract rates fall below spot rates — utilize named account rates to ship multiple shippers’ cargo, not just the shipper named in the account, thereby taking advantage of lower buy rates than were available on the open market. Not anymore, as carriers have developed technology and systems enabling them to closely monitor NVO named account volumes. When they see commodities or volumes shipped beyond what was agreed in an NAC contract, or the NVO not providing agreed-upon volumes in a given month, they intervene. In a soft market, carriers may pressure NVOs less but won’t stop monitoring the volumes. That is something unlikely to change irrespective of where the market goes. Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>. </div>

Non-vessel-operating common carriers (NVOs) will look back on 2024 as a challenging year in two key respects: it was when carriers, seizing on an unexpectedly favorable market, got tough in demanding more spot cargo as a condition for granting contracts to NVOs’ customers, while putting further pressure on NVOs by closely monitoring their adherence to those contracts. “In 2024, ocean carriers began tightening their grip on the market,” analyst Jon Monroe wrote on Nov. 19. “They became more selective with NVOCC contracts, making ‘named account’ deals, [i.e.] contracts reserved for large, high-volume customers, harder to secure.” NVOs will go into 2025 hoping that experience was merely cyclical, a product of an unusual market following the Red Sea diversions and an early peak season. For beneficial cargo owners (BCOs), the idea that NVOs are coming under pressure from carriers is relevant in terms of NVOs’ ability to access vessel space. Indeed, some BCOs have recently raised concerns to the Journal of Commerce about the presence in their NVO contracts of clauses absolving the NVO if space can’t be procured. Unfortunately, there is no guarantee the market will weaken in the New Year even as a glut of capacity threatens to weigh on the market. Some NVOs contacted by the Journal of Commerce believe a softening is likely next year — and may already have begun. But others believe the stretch of good fortune for carriers — seen in a fully deployed fleet and still-elevated spot rates — hasn’t run its course and won’t until the Suez becomes a safe route again, whereupon capacity will pour back into the market. Maersk CEO Vincent Clerc suggested as such in a recent earnings call, noting carriers have untapped levers to forestall overcapacity . Maersk “highlighted that supply discipline in the form of slow steaming, blanked sailings and scrapping could emerge once the market returns to a normal level of profitability,” Parash Jain, HSBC Commercial Banking’s global head of transport and logistics research and a TPM25 speaker, wrote on Nov. 1. Carriers’ evolving positions on NVO cargo For NVOs, as long as carriers are in control such that spot rates end up higher than contract rates, carriers will demand more spot market cargo, also called freight-all-kinds (FAK), as the price for granting NVOs’ contract, or named account rates (NAC), for their BCO customers. “The ratio between nominated account rates and FAK rates varies among different carriers. However, we are observing an increasing demand for a more balanced approach as we approach 2025,” meaning carriers seeking a larger share of FAK cargo from NVOs, said Marc Meier, global head of ocean freight at Toll Global Forwarding. Others see an already softening market reflected in carriers’ evolving positions relative to NVO cargo. “Carriers have taken such a policy each year during annual negotiations on NAC rates to request for at least 50-50 on NAC/FAK bookings, but when space is tighter, some even ask for 4 to 1 (FAK to NAC) to even 5 to 1 as happened in June-July of this year,” said Christian Sur, executive vice president for ocean freight/contract logistics at Unique Logistics International. “We are back to more 1 to 1 or even a better ratio to receive NAC space.” Others see it similarly, given that new tonnage deliveries will add 11% to existing capacity by the end of 2024 and another 6% next year, growth only minimally reduced by scrapping at least so far, according to S&P Global Market Intelligence. “NVOCCs could find themselves in a more favorable position in 2025 as the market shifts and carriers face increased competition to fill excess vessel capacity,” Monroe wrote on Nov. 19. “With the surge of available capacity in the ocean freight market, carriers are likely to adopt more flexible and reasonable terms for NVOCCs in order to maintain their vessel utilization.” Carriers monitoring NVOs’ use of NAC rates Carriers’ NVO policies this year forced some NVOs to be more aggressive in scrounging up FAK cargo, often from the smaller end of the shipper market that is too small to secure contract rates. But while market cyclicality might make carriers hungry for NVO cargo, what will likely not change so fast is carriers’ increasingly sophisticated monitoring of NVOs’ use of named account rates, especially when spot rates exceed contract rates. That monitoring has disrupted longstanding practice under which NVOs — when contract rates fall below spot rates — utilize named account rates to ship multiple shippers’ cargo, not just the shipper named in the account, thereby taking advantage of lower buy rates than were available on the open market. Not anymore, as carriers have developed technology and systems enabling them to closely monitor NVO named account volumes. When they see commodities or volumes shipped beyond what was agreed in an NAC contract, or the NVO not providing agreed-upon volumes in a given month, they intervene. In a soft market, carriers may pressure NVOs less but won’t stop monitoring the volumes. That is something unlikely to change irrespective of where the market goes. Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

NVOs eager to get past carriers’ tight grip on unexpectedly favorable market

<div class="phx-topic abstract-wrapper">The new charges apply to both spot market business originating in Southern California and to contractual agreements when weekly limits are surpassed by shippers using rail-owned containers.</div>

The new charges apply to both spot market business originating in Southern California and to contractual agreements when weekly limits are surpassed by shippers using rail-owned containers.

<div class="phx-topic">Union Pacific Railroad (UP) has again increased surcharges on shippers exceeding their weekly allotments in Southern California as domestic intermodal volumes show no signs of the seasonal slowdown typically seen by mid-November. Low-volume shippers will now face a surcharge of $850 per container above their peak season allotment, up from $750, UP said Monday. High-volume shippers will see their surcharges double to $600 per container. It’s the third time UP has increased surcharges on small shippers since August and the second boost for large shippers. The new charges apply both to spot market business originating in Southern California and to contractual agreements when weekly limits are surpassed on rail-owned containers. UP partners Hub Group, Schneider National, STG Logistics and Swift Intermodal control pricing on their privately-owned boxes. Raising surcharges is meant to discourage one-off business from occupying containers that otherwise would be used by long-term customers, notably parcel giant UPS with the holiday shopping season about to ramp up. Class I railroads are facing the challenge of an <a href="https://www.joc.com/article/strong-imports-low-blanks-extend-peak-season-on-eastbound-trans-pacific-5782101">elongated peak season</a> for ocean and domestic freight, which has put significant pressure on North American intermodal networks. Intermodal marketing companies (IMCs) are experiencing difficulties in getting containers into terminals, onto trains, and to inland destinations with consistent transit times. Volume has been a factor in the service disruptions in international and domestic rail, including higher dwell times, more railcars idling and additional trains being held up compared with a year ago. “Union Pacific’s strategic intermodal investments are enabling us to capture the largest peak season volume increase in five years while maintaining fluidity across the network,” UP said in a statement to the Journal of Commerce. “Los Angeles to Chicago domestic intermodal is experiencing double-digit growth, including setting a volume record last week.” UP and competitor BNSF Railway hauled 1.5 million domestic containers out of the Southwest US between January and October, according to the Intermodal Association of North America (IANA), up 8.4% compared with a year ago and a new record high for the period. The Southwest region includes the ports of Los Angeles and Long Beach, the busiest US gateway. October also set monthly volume records for Southwest originations to the Midwest, Southeast and south-central US, according to IANA. Rails hauled 82,381 domestic containers from the Southwest to Midwest, the first ever monthly total exceeding 80,000, putting pressure on service from Los Angeles to Chicago, Cincinnati, Cleveland and Columbus. The Journal of Commerce estimates that rails hauled nearly 50,000 domestic containers from Los Angeles to Chicago in October, up more than 20% compared with a year ago. UP reported that international intermodal volume in Southern California jumped 30% year over year in the third quarter, further challenging network fluidity in Los Angeles and Long Beach. <h3>Service metrics show worst is over </h3>Despite recent improvement, UP and BNSF service was inconsistent between September and mid-October. After UP reported that an average of 58 loaded intermodal railcars idled for more than 48 hours per week between January and August, that rose to 139 railcars in September and then jumped to 231.5 in the first half of October, surpassing levels seen during the pandemic surge. However, in the past four weeks, UP’s average has dropped to 131.3 railcars per week, according to data from the US Surface Transportation Board. BNSF reported a similar trend. Both western US railroads also reported slower train speeds and an increase in the number of delayed intermodal trains during September and early October before the metrics improved in the last four weeks. Despite those service gains, some IMC partners remain concerned. Two IMC executives who did not want to be identified said ongoing service issues on UP’s network are a threat to the ability of their companies to retain current customers and attract new ones. “It’s better than it was a month ago, but service is still not where it needs to be, and with UPS ramping up holiday shipments, that’s not helping things,” said one executive. “The problem is inside the terminals. They’ve got terminal issues in Los Angeles, in Houston, in Memphis. I understand service challenges arise with record volumes. But two-week transit times from Los Angeles to Houston, or San Antonio? How do I explain that to our customers?” A second IMC executive shared similar frustrations, especially when attempting to convert truckload freight to rail in Southern California. “When we have that opportunity in hand for a truck conversion, we can save the shipper money, and we’ve finally convinced the shipper to try the intermodal product, it’s disheartening when it’s not a positive experience, leaving a poor first impression,” the source said. “I recently explained to a new customer that shipping early in the week was the best way to get cargo onto the train. But if you think about it, they could just say, ‘Well, I’m just going to put it on a truck, and I don’t have to worry about anything.’” UP, for its part, acknowledges that there have been “episodic” events that have caused service disruptions in recent weeks, but says it’s the result of IMCs winning new business and taking market share off the highways, thus showing the strength of intermodal. With fluidity returning to its network, UP also said it believes shippers moving freight off the highways will have a better experience going forward. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>. </div>

Union Pacific Railroad (UP) has again increased surcharges on shippers exceeding their weekly allotments in Southern California as domestic intermodal volumes show no signs of the seasonal slowdown typically seen by mid-November. Low-volume shippers will now face a surcharge of $850 per container above their peak season allotment, up from $750, UP said Monday. High-volume shippers will see their surcharges double to $600 per container. It’s the third time UP has increased surcharges on small shippers since August and the second boost for large shippers. The new charges apply both to spot market business originating in Southern California and to contractual agreements when weekly limits are surpassed on rail-owned containers. UP partners Hub Group, Schneider National, STG Logistics and Swift Intermodal control pricing on their privately-owned boxes. Raising surcharges is meant to discourage one-off business from occupying containers that otherwise would be used by long-term customers, notably parcel giant UPS with the holiday shopping season about to ramp up. Class I railroads are facing the challenge of an elongated peak season for ocean and domestic freight, which has put significant pressure on North American intermodal networks. Intermodal marketing companies (IMCs) are experiencing difficulties in getting containers into terminals, onto trains, and to inland destinations with consistent transit times. Volume has been a factor in the service disruptions in international and domestic rail, including higher dwell times, more railcars idling and additional trains being held up compared with a year ago. “Union Pacific’s strategic intermodal investments are enabling us to capture the largest peak season volume increase in five years while maintaining fluidity across the network,” UP said in a statement to the Journal of Commerce. “Los Angeles to Chicago domestic intermodal is experiencing double-digit growth, including setting a volume record last week.” UP and competitor BNSF Railway hauled 1.5 million domestic containers out of the Southwest US between January and October, according to the Intermodal Association of North America (IANA), up 8.4% compared with a year ago and a new record high for the period. The Southwest region includes the ports of Los Angeles and Long Beach, the busiest US gateway. October also set monthly volume records for Southwest originations to the Midwest, Southeast and south-central US, according to IANA. Rails hauled 82,381 domestic containers from the Southwest to Midwest, the first ever monthly total exceeding 80,000, putting pressure on service from Los Angeles to Chicago, Cincinnati, Cleveland and Columbus. The Journal of Commerce estimates that rails hauled nearly 50,000 domestic containers from Los Angeles to Chicago in October, up more than 20% compared with a year ago. UP reported that international intermodal volume in Southern California jumped 30% year over year in the third quarter, further challenging network fluidity in Los Angeles and Long Beach. Service metrics show worst is over Despite recent improvement, UP and BNSF service was inconsistent between September and mid-October. After UP reported that an average of 58 loaded intermodal railcars idled for more than 48 hours per week between January and August, that rose to 139 railcars in September and then jumped to 231.5 in the first half of October, surpassing levels seen during the pandemic surge. However, in the past four weeks, UP’s average has dropped to 131.3 railcars per week, according to data from the US Surface Transportation Board. BNSF reported a similar trend. Both western US railroads also reported slower train speeds and an increase in the number of delayed intermodal trains during September and early October before the metrics improved in the last four weeks. Despite those service gains, some IMC partners remain concerned. Two IMC executives who did not want to be identified said ongoing service issues on UP’s network are a threat to the ability of their companies to retain current customers and attract new ones. “It’s better than it was a month ago, but service is still not where it needs to be, and with UPS ramping up holiday shipments, that’s not helping things,” said one executive. “The problem is inside the terminals. They’ve got terminal issues in Los Angeles, in Houston, in Memphis. I understand service challenges arise with record volumes. But two-week transit times from Los Angeles to Houston, or San Antonio? How do I explain that to our customers?” A second IMC executive shared similar frustrations, especially when attempting to convert truckload freight to rail in Southern California. “When we have that opportunity in hand for a truck conversion, we can save the shipper money, and we’ve finally convinced the shipper to try the intermodal product, it’s disheartening when it’s not a positive experience, leaving a poor first impression,” the source said. “I recently explained to a new customer that shipping early in the week was the best way to get cargo onto the train. But if you think about it, they could just say, ‘Well, I’m just going to put it on a truck, and I don’t have to worry about anything.’” UP, for its part, acknowledges that there have been “episodic” events that have caused service disruptions in recent weeks, but says it’s the result of IMCs winning new business and taking market share off the highways, thus showing the strength of intermodal. With fluidity returning to its network, UP also said it believes shippers moving freight off the highways will have a better experience going forward. Contact Ari Ashe at ari.ashe@spglobal.com .

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UP hikes LA-LB surcharges again as volumes remain elevated

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

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Shippers save money, time with automated transportation bidding tools

SSA Marine Mexico has made significant strides in modernizing its infrastructure at the Port of Manzanillo, investing $15 million to enhance operational efficiency and sustainability at its facilities. This move is part of the company's broader strategy to remain at the forefront of the shipping and logistics industry. •	Strengthening Sustainability with Advanced Technology <figure class="joc_admin__inline-image-position-left joc_admin__inline-image-size-medium" data-figure-size="medium" data-figure-position="left"><img src="/content-assets/1730488295264_Cranes%20arrival%20to%20TEC%20I.png" alt="Cranes arrival to TEC I" class="joc_admin__inline-image-inherit"></figure> In July, SSA Marine Mexico added seven state-of-the-art E-RTG (Electric Rubber-Tired Gantry) cranes to its fleet, valued at $14 million. These advanced cranes were distributed across its two terminals: four cranes were assigned to the Multipurpose Terminal, and three to the Specialized Container Terminal I. What sets these cranes apart is their dual-operation capability, allowing them to function either on electric power or diesel fuel. This innovation plays a critical role in reducing the environmental impact of operations, contributing to a 7% increase in energy efficiency. This efficiency improvement is equivalent to eliminating nearly 4,000 tons of CO2 emissions annually, underscoring SSA Marine Mexico's commitment to sustainability. Through this acquisition, SSA Marine Mexico not only enhances its cargo-handling capabilities but also reinforces its leadership in integrating cutting-edge, eco-friendly technology in the maritime industry. The company continues to push the boundaries of efficiency and sustainability, ensuring long-term value for both its customers and the environment. •	Upgraded Facilities to Meet Growing Demand <figure class="joc_admin__inline-image-position-left joc_admin__inline-image-size-medium" data-figure-size="medium" data-figure-position="left"><img src="/content-assets/1730488350634_Multipurpose%20terminal.png" alt="Multipurpose Terminal" class="joc_admin__inline-image-inherit"></figure> In addition to the new cranes, SSA Marine Mexico has completed crucial modernization and repair work across its Multipurpose Terminal and Specialized Facility at the Port of Manzanillo. This $1 million investment targeted critical infrastructure enhancements, focusing on both structural integrity and operational functionality. Key improvements included leveling approximately 12,000 square meters in the dock area, along with the removal of outdated concrete curbs and asphalt layers. The upgraded space now features high-resistance pavers designed to optimize water drainage and prevent pooling, ensuring safer and more efficient operations. Moreover, the Specialized Facility saw significant upgrades, including the leveling of key warehouse areas to facilitate smoother cargo handling processes. These infrastructure improvements directly enhance the handling of TEUS (Twenty-foot Equivalent Unit containers), further demonstrating SSA Marine Mexico's unwavering commitment to continuous modernization, operational safety, and efficiency. With these initiatives, SSA Marine Mexico is well-positioned to meet the growing demands of the global shipping industry while setting new standards in sustainable port operations. LINK:<a href="https://www.ssamarine.mx/ssa-ing/index" rel="noreferrer" class="joc_admin__link"> https://www.ssamarine.mx/ssa-ing/index</a>

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SSA Marine Mexico Modernizes Facilities with $15 Million Investment 

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

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<div class="phx-topic abstract-wrapper">While the presidential campaign is no longer a factor, the new Trump administration will likely be similarly disinterested in a strike of any significant length and, it can be assumed, will get directly involved in talks.</div>

While the presidential campaign is no longer a factor, the new Trump administration will likely be similarly disinterested in a strike of any significant length and, it can be assumed, will get directly involved in talks.

<div class="phx-topic">Following President Joe Biden’s intervention in October <a href="https://www.joc.com/article/ila-usmx-agree-on-new-wage-offer-and-contract-extension-that-reopens-ports-5741882">to end the brief strike at East and Gulf coast ports</a>, US longshore labor negotiations can no longer be seen through a traditional lens. The precedent now firmly established is that politics will prevail over the traditional give-and-take at the negotiating table. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5817573_0.1.jpg"></img></div>A traditional lens on the current scenario, <a href="https://www.joc.com/article/ila-breaks-off-contract-talks-accuses-usmx-of-semi-automation-push-5810392">following the suspension of talks again by the International Longshoremen’s Association (ILA) on Wednesday</a>, would show labor and management dug in with few evident pathways to bridge the gap and the real possibility of another strike as of Jan. 15. Management’s fundamental view is that given minimal physical additions to US port capacity, efficiency gains through automation — starting with contractual rights — are required to move growing volumes through existing facilities. Although no current union jobs would be placed at risk, the union sees automation as a threat to its nearly 150-year-old franchise and is intent on rolling back the limited right of terminal operators to automate under the existing contract. The union suspended further talks this week over that issue, with management, represented by the United States Maritime Alliance (USMX), stating the union is intent on “restricting future use of technology that has existed in some of our ports for nearly two decades.” But the real question is: Does it matter? Is the economic rationale for greater port efficiency relevant in terms of how decisions will get made over the coming few months? Does it matter that US ports appear nowhere in the top 50 of the <a href="https://www.worldbank.org/en/news/press-release/2024/06/01/regional-disruptions-drive-changes-in-global-container-port-performance-ranking">Container Port Performance Index</a>, a data set developed by the Journal of Commerce, and that costly bottlenecks are a frequent occurrence at US ports? Conversations the Journal of Commerce has had with multiple sources close to the negotiations say with a Republican, pro-business administration coming into power on Jan. 20 and anti-union figures including Elon Musk advising President-elect Donald Trump, management may have more leverage in the negotiations than they did in October. But sources admit the possibility cannot be ruled out that management’s position is, in fact, no stronger than it was. In other words, even as the White House changes hands, the outcome will be the same as it was in October — presidential intervention in favor of the union irrespective of the costs to the industry and the economy. The carriers being on the losing end was precisely what happened in October. The USMX and its ocean carrier members were <a href="https://www.joc.com/article/behind-the-scenes-white-house-arm-twisting-got-ila-wage-deal-done-5747241">all but forced by the White House</a> to agree to a 62% pay increase for dockworkers over six years in a preliminary settlement on the wage issue. The “deal” ended the strike after three days and took the issue off the table as a dangerous campaign factor for Democrats. <h3>Little apparent leverage for management </h3>This time, the campaign is no longer a factor, but the new administration will likely be similarly disinterested in a strike of any significant length and, it can be assumed, will get directly involved, following precedent set by a series of presidents going back to George W. Bush, who acted to end a 10-day lockout of West Coast dockworkers in 2002. What does the incoming President-elect Trump do? Reject the views of blue-collar workers — a core Trump constituency — and a union that did him a favor during the campaign by withholding an endorsement of his opponent, as it had given to Biden in 2020? Having met with Trump late last year, documented in a photo widely spread on social media, ILA President Harold Daggett said in a social media post that “President Trump promised to support the ILA in its opposition to automated terminals in the US,” a statement that can hardly be written off. If Trump is all too willing to raise the costs of trade via tariffs, the reasoning goes, why would he be concerned about inefficiency at ports? That is why some close to the negotiations believe USMX will ultimately agree to the union’s demands, including agreeing to its terms on automation. The result would be avoiding a strike, or at the very least a lengthy one, and averting another White House showdown management had no chance of winning in October and could have no chance of winning in January. “The employers in the end are likely to agree to language that effectively bans new automation for the life of the contract,” a knowledgeable source told the Journal of Commerce. “The employers will want to put this contract behind them and prioritize strategy for future negotiations in hopes of avoiding a repeat of what happened just before the presidential election.” Ocean carriers, for whom the US is an important market, have traditionally sought to maintain a low profile, knowing they are foreign entities and politically speaking have few friends in Washington, as was seen when the Ocean Shipping Reform Act of 2022 (OSRA-22) was signed into law over their objections. That thinking appears to be part of the union’s calculus that, at the moment, it holds all the cards and if so, why not seize the day in seeking to not just prevent an expansion of automation, but to roll back employers’ existing automation rights? Under that scenario, USMX would live to fight another day and likely take the next few years to re-tool in a bid to fare better in future negotiations. Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>. </div>

Following President Joe Biden’s intervention in October to end the brief strike at East and Gulf coast ports , US longshore labor negotiations can no longer be seen through a traditional lens. The precedent now firmly established is that politics will prevail over the traditional give-and-take at the negotiating table. A traditional lens on the current scenario, following the suspension of talks again by the International Longshoremen’s Association (ILA) on Wednesday , would show labor and management dug in with few evident pathways to bridge the gap and the real possibility of another strike as of Jan. 15. Management’s fundamental view is that given minimal physical additions to US port capacity, efficiency gains through automation — starting with contractual rights — are required to move growing volumes through existing facilities. Although no current union jobs would be placed at risk, the union sees automation as a threat to its nearly 150-year-old franchise and is intent on rolling back the limited right of terminal operators to automate under the existing contract. The union suspended further talks this week over that issue, with management, represented by the United States Maritime Alliance (USMX), stating the union is intent on “restricting future use of technology that has existed in some of our ports for nearly two decades.” But the real question is: Does it matter? Is the economic rationale for greater port efficiency relevant in terms of how decisions will get made over the coming few months? Does it matter that US ports appear nowhere in the top 50 of the Container Port Performance Index , a data set developed by the Journal of Commerce, and that costly bottlenecks are a frequent occurrence at US ports? Conversations the Journal of Commerce has had with multiple sources close to the negotiations say with a Republican, pro-business administration coming into power on Jan. 20 and anti-union figures including Elon Musk advising President-elect Donald Trump, management may have more leverage in the negotiations than they did in October. But sources admit the possibility cannot be ruled out that management’s position is, in fact, no stronger than it was. In other words, even as the White House changes hands, the outcome will be the same as it was in October — presidential intervention in favor of the union irrespective of the costs to the industry and the economy. The carriers being on the losing end was precisely what happened in October. The USMX and its ocean carrier members were all but forced by the White House to agree to a 62% pay increase for dockworkers over six years in a preliminary settlement on the wage issue. The “deal” ended the strike after three days and took the issue off the table as a dangerous campaign factor for Democrats. Little apparent leverage for management This time, the campaign is no longer a factor, but the new administration will likely be similarly disinterested in a strike of any significant length and, it can be assumed, will get directly involved, following precedent set by a series of presidents going back to George W. Bush, who acted to end a 10-day lockout of West Coast dockworkers in 2002. What does the incoming President-elect Trump do? Reject the views of blue-collar workers — a core Trump constituency — and a union that did him a favor during the campaign by withholding an endorsement of his opponent, as it had given to Biden in 2020? Having met with Trump late last year, documented in a photo widely spread on social media, ILA President Harold Daggett said in a social media post that “President Trump promised to support the ILA in its opposition to automated terminals in the US,” a statement that can hardly be written off. If Trump is all too willing to raise the costs of trade via tariffs, the reasoning goes, why would he be concerned about inefficiency at ports? That is why some close to the negotiations believe USMX will ultimately agree to the union’s demands, including agreeing to its terms on automation. The result would be avoiding a strike, or at the very least a lengthy one, and averting another White House showdown management had no chance of winning in October and could have no chance of winning in January. “The employers in the end are likely to agree to language that effectively bans new automation for the life of the contract,” a knowledgeable source told the Journal of Commerce. “The employers will want to put this contract behind them and prioritize strategy for future negotiations in hopes of avoiding a repeat of what happened just before the presidential election.” Ocean carriers, for whom the US is an important market, have traditionally sought to maintain a low profile, knowing they are foreign entities and politically speaking have few friends in Washington, as was seen when the Ocean Shipping Reform Act of 2022 (OSRA-22) was signed into law over their objections. That thinking appears to be part of the union’s calculus that, at the moment, it holds all the cards and if so, why not seize the day in seeking to not just prevent an expansion of automation, but to roll back employers’ existing automation rights? Under that scenario, USMX would live to fight another day and likely take the next few years to re-tool in a bid to fare better in future negotiations. Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

North American ports

New precedent established for politics to drive longshore union negotiations

<div class="phx-topic abstract-wrapper">The move effectively allows both sides to avoid having to agree to a deal brokered by Ottawa, as had been ordered by the country’s labor minister. </div>

The move effectively allows both sides to avoid having to agree to a deal brokered by Ottawa, as had been ordered by the country’s labor minister.

<div class="phx-topic">Maritime employers at the Port of Montreal will try yet again to reach a deal with dockworkers on a new contract with a mediator’s help, heading off a government-brokered deal that aims to end the coast-to-coast strife hitting Canada’s major ports. The Maritime Employers Association (MEA) said in a statement Monday that it and the Canadian Union of Public Employees (CUPE) Local 375 mutually agreed to engage in a 90-day mediation process in a bid to come to terms on <a href="https://www.joc.com/article/canadian-shippers-urge-ottawa-to-act-as-montreal-port-talks-hit-impasse-5241393">a new collective bargaining agreement covering 1,300 longshore workers at the port</a>. The MEA said the process will be led by Gilles Charland, “an experienced mediator with a good knowledge of the industry.” The decision to engage with a mediator comes after <a href="">Labor Minister Steve MacKinnon ordered the MEA to end a lockout of Local 375</a> stemming from <a href="https://www.joc.com/article/bc-montreal-ports-set-to-reopen-under-orders-from-canadas-labor-chief-5792214">its ongoing work stoppages</a>. The mediation process means both sides won’t have to submit to a government-appointed arbitrator, also ordered by MacKinnon. Whether mediation succeeds is far from certain, however. The MEA said last month that it has engaged in 35 mediation meetings with Local 375 since mid-2023, with no resolution. Montreal’s port effectively reopened on Nov. 16 following MacKinnon’s back-to-work order. MacKinnon’s order also covered the ports in British Columbia where longshore foremen have been in protracted contract talks with maritime employers over a new contract and work rules following a semi-automation project at a Vancouver-area marine terminal. Local 514 of the International Longshore and Warehouse Union, the foremen’s union, said <a href="https://www.joc.com/article/bc-ports-to-reopen-but-longshore-union-plans-challenge-to-back-to-work-order-5810473">it plans to challenge the constitutionality of MacKinnon’s request</a>. Yet its members also followed the return-to-work order, allowing the ports of Vancouver and Prince Rupert to reopen. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

Maritime employers at the Port of Montreal will try yet again to reach a deal with dockworkers on a new contract with a mediator’s help, heading off a government-brokered deal that aims to end the coast-to-coast strife hitting Canada’s major ports. The Maritime Employers Association (MEA) said in a statement Monday that it and the Canadian Union of Public Employees (CUPE) Local 375 mutually agreed to engage in a 90-day mediation process in a bid to come to terms on a new collective bargaining agreement covering 1,300 longshore workers at the port . The MEA said the process will be led by Gilles Charland, “an experienced mediator with a good knowledge of the industry.” The decision to engage with a mediator comes after Labor Minister Steve MacKinnon ordered the MEA to end a lockout of Local 375 stemming from its ongoing work stoppages . The mediation process means both sides won’t have to submit to a government-appointed arbitrator, also ordered by MacKinnon. Whether mediation succeeds is far from certain, however. The MEA said last month that it has engaged in 35 mediation meetings with Local 375 since mid-2023, with no resolution. Montreal’s port effectively reopened on Nov. 16 following MacKinnon’s back-to-work order. MacKinnon’s order also covered the ports in British Columbia where longshore foremen have been in protracted contract talks with maritime employers over a new contract and work rules following a semi-automation project at a Vancouver-area marine terminal. Local 514 of the International Longshore and Warehouse Union, the foremen’s union, said it plans to challenge the constitutionality of MacKinnon’s request . Yet its members also followed the return-to-work order, allowing the ports of Vancouver and Prince Rupert to reopen. Contact Michael Angell at michael.angell@spglobal.com .

Marine terminals

Montreal port employers, union agree to mediation in talks for new contract

<div class="phx-topic abstract-wrapper">Major retailers such as Ralph Lauren and Target say they successfully mitigated disruptions from the early October port strike and are ready for the next labor threat and the fallout from likely higher tariffs on Chinese goods. </div>

Major retailers such as Ralph Lauren and Target say they successfully mitigated disruptions from the early October port strike and are ready for the next labor threat and the fallout from likely higher tariffs on Chinese goods.

<div class="phx-topic">US retailers are telling investors that after successfully managing the three-day port strike along the East and Gulf coasts in early October, they’re prepared to navigate whatever operational challenges arise from the higher tariffs on Chinese goods that President-elect Donald Trump has promised for his second term. Ralph Lauren, Williams Sonoma and Target, during their respective third-quarter earnings calls, highlighted how they diverted cargoes to West Coast ports ahead of the Oct. 1 expiration of the labor contract between the International Longshoremen’s Association (ILA) and maritime employers. Ralph Lauren said it tapped air cargo transport in the days before the strike to ensure it had key products on hand. Following the tentative deal that ended the brief strike, the three retailers said they are now monitoring developments ahead of the Jan. 15 expiration of that extended pact. ILA last week announced it <a href="https://www.joc.com/article/ila-breaks-off-contract-talks-accuses-usmx-of-semi-automation-push-5810392">pulled out of negotiations</a> over what it said was a desire by employers to introduce semi-automated equipment at marine terminals. The cargo diversions to the West Coast “came at a cost, but allowed us to be well-positioned for our guests through the strike and into the holiday season,” Target CFO Michael Fiddelke said during a Nov. 20 earnings call. ”Thankfully, the strike was short-lived,” he added. “We’ll continue to watch the situation closely in the lead up to continued negotiations in January.” US inventories in comparison to sales have risen this fall as shippers experience an extended peak season highlighted by frontloading linked to renewed ILA strike threats, the <a href="https://www.joc.com/article/us-importers-dabbling-in-frontloading-ahead-of-new-tariff-threat-5821448">anticipation of higher US tariffs</a> on Chinese retail imports and a shorter post-holiday period due to an earlier Lunar New Year. <h3>Retail inventories rising</h3>The ratio of US retail inventories to sales climbed to 1.42 in September from 1.27 in August, according to US Census Bureau data. The 1.42 level, also observed in February 2023 and February 2021, is the highest since 1.69 in April 2020 at the outset of the pandemic.Facing Trump’s threat of tariffs on Chinese goods of more than 60%, retailers took pains on earnings calls to stress the limits of their exposure to Chinese sourcing because of multiyear preparation to diversify away from the world’s largest factory. Williams Sonoma has mapped out its various product lines and will evaluate sourcing by tariffs levels and alternatives, CFO Jeff Howie told investors Wednesday. The high-end home furnishing retailer can also lean on domestic manufacturing plants in North Carolina, Mississippi and Oregon, and will considering front-loading some goods from China early next year to avoid tariffs, he said. ”I just want to remind everyone that it’s not our first time at this,” Howie said. “We’ve always been a leader and proactively responded to changes in the trade environment. ”There’s a lot of change since the last time this came up,” he added. “We’ve significantly reduced our China-sourced goods from 50% to 25% over the last few years.” Lowe’s has been working its suppliers in recent years to diversify away from China, giving it confidence that the company can handle “whatever it is that gets thrown as us,” said Bill Boltz, the company’s executive vice president of merchandising. Contact Mark Szakonyi at <a href="mailto:mark.szakonyi@spglobal.com">mark.szakonyi@spglobal.com</a>. </div>

US retailers are telling investors that after successfully managing the three-day port strike along the East and Gulf coasts in early October, they’re prepared to navigate whatever operational challenges arise from the higher tariffs on Chinese goods that President-elect Donald Trump has promised for his second term. Ralph Lauren, Williams Sonoma and Target, during their respective third-quarter earnings calls, highlighted how they diverted cargoes to West Coast ports ahead of the Oct. 1 expiration of the labor contract between the International Longshoremen’s Association (ILA) and maritime employers. Ralph Lauren said it tapped air cargo transport in the days before the strike to ensure it had key products on hand. Following the tentative deal that ended the brief strike, the three retailers said they are now monitoring developments ahead of the Jan. 15 expiration of that extended pact. ILA last week announced it pulled out of negotiations over what it said was a desire by employers to introduce semi-automated equipment at marine terminals. The cargo diversions to the West Coast “came at a cost, but allowed us to be well-positioned for our guests through the strike and into the holiday season,” Target CFO Michael Fiddelke said during a Nov. 20 earnings call. ”Thankfully, the strike was short-lived,” he added. “We’ll continue to watch the situation closely in the lead up to continued negotiations in January.” US inventories in comparison to sales have risen this fall as shippers experience an extended peak season highlighted by frontloading linked to renewed ILA strike threats, the anticipation of higher US tariffs on Chinese retail imports and a shorter post-holiday period due to an earlier Lunar New Year. Retail inventories rising The ratio of US retail inventories to sales climbed to 1.42 in September from 1.27 in August, according to US Census Bureau data. The 1.42 level, also observed in February 2023 and February 2021, is the highest since 1.69 in April 2020 at the outset of the pandemic. Facing Trump’s threat of tariffs on Chinese goods of more than 60%, retailers took pains on earnings calls to stress the limits of their exposure to Chinese sourcing because of multiyear preparation to diversify away from the world’s largest factory. Williams Sonoma has mapped out its various product lines and will evaluate sourcing by tariffs levels and alternatives, CFO Jeff Howie told investors Wednesday. The high-end home furnishing retailer can also lean on domestic manufacturing plants in North Carolina, Mississippi and Oregon, and will considering front-loading some goods from China early next year to avoid tariffs, he said. ”I just want to remind everyone that it’s not our first time at this,” Howie said. “We’ve always been a leader and proactively responded to changes in the trade environment. ”There’s a lot of change since the last time this came up,” he added. “We’ve significantly reduced our China-sourced goods from 50% to 25% over the last few years.” Lowe’s has been working its suppliers in recent years to diversify away from China, giving it confidence that the company can handle “whatever it is that gets thrown as us,” said Bill Boltz, the company’s executive vice president of merchandising. Contact Mark Szakonyi at mark.szakonyi@spglobal.com .

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