<div class="phx-topic abstract-wrapper">The question is not whether the market will be strong in the first quarter, but rather how high rates will climb, writes analyst Richard Bright. </div>

The question is not whether the market will be strong in the first quarter, but rather how high rates will climb, writes analyst Richard Bright.

Feature image

<div class="phx-topic">While a projection for the short-term developmental trends of the global reefer charter market is relatively straightforward, it is becoming increasingly difficult to forecast a medium-term trend. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5923843_0.1.jpg"></img></div>That is because that even though there is broad consensus and plenty of supporting evidence that the global volume of perishable and other temperature-sensitive goods will continue to rise, a forecast for the reefer market is no longer contingent on the traditional supply and demand levers for reefer cargo. Instead, there are other variables, often entirely unrelated to the trade in perishable goods, that now determine the state of the reefer market, particularly for containers. This in itself is important because the pricing of reefer containers is the most critical variable in determining the strength of the specialized reefer charter market. In terms of market share, the specialized reefer holds less than 3% of global reefer capacity. Consequently, the mode is a price taker. That it holds an estimated 15% to 18% share of globally transported perishable goods is a testament partly to its greater efficiency and partly because there is a degree of demand inelasticity for the mode. That is to say in some trades and for specific reasons, cargo has legitimate commercial reasons to prefer the specialized alternative and is prepared to pay a premium for the privilege. However, while it may occupy an ever-shrinking niche and have some resistance to the shift in competitive reefer rates offered by the carriers because of this demand inelasticity, the mode is unsurprisingly not entirely immune to the behavior of the container market. What complicates matters is that in contrast to the logical manner in which specialized reefer rates are determined, how the carriers price reefer is something of a mystery. Rates often seem arbitrary and/or bear little relation to commercial or reefer market reality. This is not only because the list of direct and indirect reefer rate-determining variables for the carriers is long, but also because container shipping is vulnerable to “Black Swan,” “Grey Rhino,” “White Elephant” and “Black Jellyfish” events. The other major factor, or variable, is the competition among carriers in general and on specific trade lanes in particular. The latter is more important: The more service strings offered on a certain voyage, the greater the competition. This maintains pressure on individual carriers and keeps the cost to ship cargo realistic. However, the same is true vice-versa — the fewer the services, the lower the competition. This is why in the short-term, cargo (both reefer and general) is right to fear the growing consolidation of the container shipping industry. In the medium-to-long term, the disappearance of the specialized alternative will further rationalize options, at least for reefer cargo. <h3>Feeding on disruption </h3>What then of the reefer? It is not extreme to suggest that the specialized mode feeds on disruptions in the reefer container supply chain and well beyond. For example, during the COVID-19 pandemic, demand for the specialized reefer mode soared — not because of an increase in the trade in perishable products, but because the carriers were using their equipment as non-operational reefers (NORs) to transport better-paying general cargo, thereby creating a reefer capacity shortage. Meanwhile, the Russian invasion of Ukraine led to the abandonment of all containerized services, bar those from Mediterranean Shipping Co. This has led to the absorption of more specialized reefer capacity of which Cool Carriers continues to be the major beneficiary. Since October 2023, when the Houthi rebels in Yemen first attacked commercial vessels, the carriers have been forced to divert away from Suez and sail around the Cape of Good Hope. This had added time and expense to east-west carrier services. It has also, therefore, tied up more dry vans and reefer containers for longer, creating localized shortages where demand is strong. As an example, the combination of inventory shortages and the start to the Chilean cherry season saw container lines temporarily blank some reefer services out of Ecuador at the end of October. It also led to all the carriers announcing indefinite and hefty peak season surcharges (PSSs) for reefer exports from the West Coast of South America. Meanwhile, in the first quarter of the year, just the threat of a container port strike in the US has benefitted the specialized mode. Cargo had already factored in the potential for a strike: The combination of a shortage of equipment, high reefer container rates and concerns about the consequences of a stoppage led to a surge in interest for specialized reefer capacity among Peruvian table grape shippers in December and the launch of Seatrade’s Andes Express Service. There are other reasons to suggest that the first quarter of 2025 will see strong demand for reefer capacity. Most significantly is the return of Seatrade tonnage to Chile. Last season, which was complicated by the Panama Canal transit restrictions and slot reservation difficulties, no Seatrade vessel was employed in the Chilean trade to the US East Coast. This season, Seatrade is planning 11 to 15 sailings. The question, therefore, is not whether the market will be strong in the first quarter — it is how high rates will climb. Given that such a large proportion of the reefer fleet is fixed into liner schedules and Contracts of Affreightment (COAs), operators are not going to reap the full benefit. However, if it is true that the principal cause for the shortage of reefer equipment is the increase in Chilean cherry and Peruvian grape and blueberry volumes, the short- to medium-term future for the mode is actually quite secure. If the carriers cannot service the extraordinary peak in demand from the West Coast of South America (WCSA) in December and January without sacrificing custom in other trade lanes, the reefer mode can justify its existence and retain its relevance. More importantly, it might just occur to the carriers that a genuine inability to cover all the bases on the WCSA in December through March could have a positive collateral impact on their contract rates for reefer globally for the full 12 months. Contact Richard Bright at <a href="mailto:richard.bright@spitfireuk.net">richard.bright@spitfireuk.net</a>.</div>

While a projection for the short-term developmental trends of the global reefer charter market is relatively straightforward, it is becoming increasingly difficult to forecast a medium-term trend. That is because that even though there is broad consensus and plenty of supporting evidence that the global volume of perishable and other temperature-sensitive goods will continue to rise, a forecast for the reefer market is no longer contingent on the traditional supply and demand levers for reefer cargo. Instead, there are other variables, often entirely unrelated to the trade in perishable goods, that now determine the state of the reefer market, particularly for containers. This in itself is important because the pricing of reefer containers is the most critical variable in determining the strength of the specialized reefer charter market. In terms of market share, the specialized reefer holds less than 3% of global reefer capacity. Consequently, the mode is a price taker. That it holds an estimated 15% to 18% share of globally transported perishable goods is a testament partly to its greater efficiency and partly because there is a degree of demand inelasticity for the mode. That is to say in some trades and for specific reasons, cargo has legitimate commercial reasons to prefer the specialized alternative and is prepared to pay a premium for the privilege. However, while it may occupy an ever-shrinking niche and have some resistance to the shift in competitive reefer rates offered by the carriers because of this demand inelasticity, the mode is unsurprisingly not entirely immune to the behavior of the container market. What complicates matters is that in contrast to the logical manner in which specialized reefer rates are determined, how the carriers price reefer is something of a mystery. Rates often seem arbitrary and/or bear little relation to commercial or reefer market reality. This is not only because the list of direct and indirect reefer rate-determining variables for the carriers is long, but also because container shipping is vulnerable to “Black Swan,” “Grey Rhino,” “White Elephant” and “Black Jellyfish” events. The other major factor, or variable, is the competition among carriers in general and on specific trade lanes in particular. The latter is more important: The more service strings offered on a certain voyage, the greater the competition. This maintains pressure on individual carriers and keeps the cost to ship cargo realistic. However, the same is true vice-versa — the fewer the services, the lower the competition. This is why in the short-term, cargo (both reefer and general) is right to fear the growing consolidation of the container shipping industry. In the medium-to-long term, the disappearance of the specialized alternative will further rationalize options, at least for reefer cargo. Feeding on disruption What then of the reefer? It is not extreme to suggest that the specialized mode feeds on disruptions in the reefer container supply chain and well beyond. For example, during the COVID-19 pandemic, demand for the specialized reefer mode soared — not because of an increase in the trade in perishable products, but because the carriers were using their equipment as non-operational reefers (NORs) to transport better-paying general cargo, thereby creating a reefer capacity shortage. Meanwhile, the Russian invasion of Ukraine led to the abandonment of all containerized services, bar those from Mediterranean Shipping Co. This has led to the absorption of more specialized reefer capacity of which Cool Carriers continues to be the major beneficiary. Since October 2023, when the Houthi rebels in Yemen first attacked commercial vessels, the carriers have been forced to divert away from Suez and sail around the Cape of Good Hope. This had added time and expense to east-west carrier services. It has also, therefore, tied up more dry vans and reefer containers for longer, creating localized shortages where demand is strong. As an example, the combination of inventory shortages and the start to the Chilean cherry season saw container lines temporarily blank some reefer services out of Ecuador at the end of October. It also led to all the carriers announcing indefinite and hefty peak season surcharges (PSSs) for reefer exports from the West Coast of South America. Meanwhile, in the first quarter of the year, just the threat of a container port strike in the US has benefitted the specialized mode. Cargo had already factored in the potential for a strike: The combination of a shortage of equipment, high reefer container rates and concerns about the consequences of a stoppage led to a surge in interest for specialized reefer capacity among Peruvian table grape shippers in December and the launch of Seatrade’s Andes Express Service. There are other reasons to suggest that the first quarter of 2025 will see strong demand for reefer capacity. Most significantly is the return of Seatrade tonnage to Chile. Last season, which was complicated by the Panama Canal transit restrictions and slot reservation difficulties, no Seatrade vessel was employed in the Chilean trade to the US East Coast. This season, Seatrade is planning 11 to 15 sailings. The question, therefore, is not whether the market will be strong in the first quarter — it is how high rates will climb. Given that such a large proportion of the reefer fleet is fixed into liner schedules and Contracts of Affreightment (COAs), operators are not going to reap the full benefit. However, if it is true that the principal cause for the shortage of reefer equipment is the increase in Chilean cherry and Peruvian grape and blueberry volumes, the short- to medium-term future for the mode is actually quite secure. If the carriers cannot service the extraordinary peak in demand from the West Coast of South America (WCSA) in December and January without sacrificing custom in other trade lanes, the reefer mode can justify its existence and retain its relevance. More importantly, it might just occur to the carriers that a genuine inability to cover all the bases on the WCSA in December through March could have a positive collateral impact on their contract rates for reefer globally for the full 12 months. Contact Richard Bright at richard.bright@spitfireuk.net .

Container Shipping News

Cool Cargo News

Maritime

Global reefer market set to soar amid disruption, strong demand

<div class="phx-topic abstract-wrapper">The moves by Hapag-Lloyd and CMA CGM come amid uncertainty about the outlook for the intra-Asia trade, with one analyst suggesting a possible rate war could see prices in the region tumble if there is no summer peak season.</div>

The moves by Hapag-Lloyd and CMA CGM come amid uncertainty about the outlook for the intra-Asia trade, with one analyst suggesting a possible rate war could see prices in the region tumble if there is no summer peak season.

<div class="phx-topic">Hapag-Lloyd and CMA CGM are bolstering their intra-Asia networks this month with a raft of new services and extra port calls ahead of the reshuffle of carrier alliances, including the launch of the Hapag-Lloyd/Maersk Gemini Cooperation partnership on Feb 1. Hapag-Lloyd said its new feeeders include a Vietnam-Cambodia-China (VCS) service that will better connect the two Southeast Asian countries with Gemini’s trans-Pacific and Asia networks. The service will be inaugurated on Jan. 18 with a call at Sihanoukville in Cambodia by the 1,900-TEU Nordatlantic. The rotation includes calls at Vung Tau, Haiphong, Yantian and Shekou. Other enhancements are a new India Asia Express (IAX) service that will connect ports in Asia, including Singapore and North Asia, with Mundra in India. It will link with the Gemini shuttle network to enable North America-bound cargo to connect at Qingdao and Busan, Hapag-Lloyd said in an advisory this week. The service will be inaugurated by the 4,957-TEU X-Press Odyssey that is due to arrive at Mundra on Feb. 16. The full rotation is Mundra-Singapore-Qingdao-Tianjin-Busan. Four other new services will connect the Gemini hubs at Singapore and Tanjung Pelepas in Malayasia with ports in Southeast Asia and East Asia. They are the China Philippines feeder (CPF) that will also connect Nansha in southern China and the Philippine ports of Batangas, Manila and Subic Bay beginning Feb. 14; the Jakarta feeder (JKF) that will have two weekly sailings linking Jakarta with the two Gemini hubs from Feb. 8; the Singapore Surabaya loop (SS1) service connecting Tanjung Pelepas and Singapore with Surabaya and Semarang in Indonesia beginning Feb. 13; and the Taiwan Express (TWX) linking the Gemini hubs with Taichung and Kaohsiung from Feb. 6. Tanjung Pelepas will also be added as a port call on the Vietnam-Indonesia-Straits (VIS) service to provide a direct connection between the existing VIS ports and Gemini’s east-west mainline network. CNC Line, the intra-Asia subsidiary of CMA CGM, said it will resume its NKT service connecting North and Southeast Asia that will improve connectivity with the updated Ocean Alliance 2025 east-west network <a href="https://www.joc.com/article/ocean-alliance-network-to-grow-trans-pacific-asia-europe-coverage-5921435">that was announced on Jan 13</a>. There will be direct calls from Thailand and Vietnam to South Korea, reducing transit times, CNC said. The service will be inaugurated by the 1,614-TEU Starship Aquila from Jan. 15. The full rotation is Incheon-Gwangyang-Busan-Hong Kong-Shekou-Laem Chabang-Bangkok-Laem Chabang-Ho Chi Minh City-Incheon. <h3>Regional rate war? </h3>The moves come amid uncertainty about the outlook for the intra-Asia trade, with a Drewry analyst suggesting a possible rate war could see rates in the region tumble if there is no summer peak season. Data from online benchmarking platform Xeneta and Container Trade Statistics (CTS) shows the intra-Asia peak season has shifted over the last three years from an early summer to an early fall high to more closely resemble the east-west mainline peak. Highlighting the current rate environment the intra-Asia trade, Stijn Rubens, senior consultant at Drewry Supply Chain Advisors, said average freight rates are likely to soften until the middle of the second quarter. Rubens said Drewry’s recently launched intra-Asia index showed rates softening, “which is indicative of sluggish volumes — i.e. no pre-Lunar New Year peak, and hence rates are likely to continue softening until the start of summer peak season.” FIBS Logistics agreed but said while rates generally may have slipped, they have nudged higher on some routes. “We have yet to see strong demand [for] after the Lunar New Year,” a Singapore-based senior executive at the company told the Journal of Commerce. “Intra-Asia space is still tight, partly due to bad weather, port and vessel delays,” the executive added. “Hence rate increases are positive for some corridors such as Japan/ Thailand/Indonesia.” Xeneta data shows intra-Asia rates started to ease on key trades from Shanghai to Singapore, Bangkok and Vietnam’s main ports — Ho Chi Minh City and Haiphong — at the beginning of January. Rates from Shanghai to Bangkok hit a 2024 high of about $2,000 per FEU in December, but had slipped to about $1,900 by Jan. 8. Similarly, spot rates from Shanghai to Vietnam’s main ports slipped from a 2024 high of $1,700 per FEU in December to $1,600 on Jan. 8. Drewry’s Rubens noted that rates still have some way to fall until they reach pre-COVID-19 levels. “With the new alliance structures phasing in during the first and second quarters, a rate war may make that happen without a summer peak,” he said. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>.</div>

Hapag-Lloyd and CMA CGM are bolstering their intra-Asia networks this month with a raft of new services and extra port calls ahead of the reshuffle of carrier alliances, including the launch of the Hapag-Lloyd/Maersk Gemini Cooperation partnership on Feb 1. Hapag-Lloyd said its new feeeders include a Vietnam-Cambodia-China (VCS) service that will better connect the two Southeast Asian countries with Gemini’s trans-Pacific and Asia networks. The service will be inaugurated on Jan. 18 with a call at Sihanoukville in Cambodia by the 1,900-TEU Nordatlantic. The rotation includes calls at Vung Tau, Haiphong, Yantian and Shekou. Other enhancements are a new India Asia Express (IAX) service that will connect ports in Asia, including Singapore and North Asia, with Mundra in India. It will link with the Gemini shuttle network to enable North America-bound cargo to connect at Qingdao and Busan, Hapag-Lloyd said in an advisory this week. The service will be inaugurated by the 4,957-TEU X-Press Odyssey that is due to arrive at Mundra on Feb. 16. The full rotation is Mundra-Singapore-Qingdao-Tianjin-Busan. Four other new services will connect the Gemini hubs at Singapore and Tanjung Pelepas in Malayasia with ports in Southeast Asia and East Asia. They are the China Philippines feeder (CPF) that will also connect Nansha in southern China and the Philippine ports of Batangas, Manila and Subic Bay beginning Feb. 14; the Jakarta feeder (JKF) that will have two weekly sailings linking Jakarta with the two Gemini hubs from Feb. 8; the Singapore Surabaya loop (SS1) service connecting Tanjung Pelepas and Singapore with Surabaya and Semarang in Indonesia beginning Feb. 13; and the Taiwan Express (TWX) linking the Gemini hubs with Taichung and Kaohsiung from Feb. 6. Tanjung Pelepas will also be added as a port call on the Vietnam-Indonesia-Straits (VIS) service to provide a direct connection between the existing VIS ports and Gemini’s east-west mainline network. CNC Line, the intra-Asia subsidiary of CMA CGM, said it will resume its NKT service connecting North and Southeast Asia that will improve connectivity with the updated Ocean Alliance 2025 east-west network that was announced on Jan 13 . There will be direct calls from Thailand and Vietnam to South Korea, reducing transit times, CNC said. The service will be inaugurated by the 1,614-TEU Starship Aquila from Jan. 15. The full rotation is Incheon-Gwangyang-Busan-Hong Kong-Shekou-Laem Chabang-Bangkok-Laem Chabang-Ho Chi Minh City-Incheon. Regional rate war? The moves come amid uncertainty about the outlook for the intra-Asia trade, with a Drewry analyst suggesting a possible rate war could see rates in the region tumble if there is no summer peak season. Data from online benchmarking platform Xeneta and Container Trade Statistics (CTS) shows the intra-Asia peak season has shifted over the last three years from an early summer to an early fall high to more closely resemble the east-west mainline peak. Highlighting the current rate environment the intra-Asia trade, Stijn Rubens, senior consultant at Drewry Supply Chain Advisors, said average freight rates are likely to soften until the middle of the second quarter. Rubens said Drewry’s recently launched intra-Asia index showed rates softening, “which is indicative of sluggish volumes — i.e. no pre-Lunar New Year peak, and hence rates are likely to continue softening until the start of summer peak season.” FIBS Logistics agreed but said while rates generally may have slipped, they have nudged higher on some routes. “We have yet to see strong demand [for] after the Lunar New Year,” a Singapore-based senior executive at the company told the Journal of Commerce. “Intra-Asia space is still tight, partly due to bad weather, port and vessel delays,” the executive added. “Hence rate increases are positive for some corridors such as Japan/ Thailand/Indonesia.” Xeneta data shows intra-Asia rates started to ease on key trades from Shanghai to Singapore, Bangkok and Vietnam’s main ports — Ho Chi Minh City and Haiphong — at the beginning of January. Rates from Shanghai to Bangkok hit a 2024 high of about $2,000 per FEU in December, but had slipped to about $1,900 by Jan. 8. Similarly, spot rates from Shanghai to Vietnam’s main ports slipped from a 2024 high of $1,700 per FEU in December to $1,600 on Jan. 8. Drewry’s Rubens noted that rates still have some way to fall until they reach pre-COVID-19 levels. “With the new alliance structures phasing in during the first and second quarters, a rate war may make that happen without a summer peak,” he said. Contact Keith Wallis at keithwallis@hotmail.com .

Port News

Container lines

International ports

Carriers bolster intra-Asia networks amid uncertain rate, demand outlook

<div class="phx-topic abstract-wrapper">The peace deal in Gaza is highlighting the capacity overhang facing container shipping once vessels absorbed by the longer voyages around southern Africa return to the shorter route via the Red Sea and Suez.</div>

The peace deal in Gaza is highlighting the capacity overhang facing container shipping once vessels absorbed by the longer voyages around southern Africa return to the shorter route via the Red Sea and Suez.

<div class="phx-topic">Commercial shipping will resume normal transits through the Suez Canal in late February at the earliest under the most optimistic analyst prediction made following the ceasefire agreement signed Wednesday between Israel and Hamas, assuming all conditions are met. While that best-case scenario was offered by Lars Jensen, CEO of Vespucci Maritime and a Journal of Commerce analyst, the peace deal in Gaza is highlighting the capacity overhang facing container shipping once vessels absorbed by the longer voyages around southern Africa return to the shorter route via the Red Sea and Suez Canal. Most commercial vessels have avoided the Suez for the past 14 months amid ongoing attacks by Houthi militants operating in Yemen, forcing ships to divert away from the Red Sea to the longer route around the Cape of Good Hope. The Houthis said their attacks were a sign of solidarity with Hamas. Jensen noted the best-case scenario for shipping would require that the six-week ceasefire that begins Jan. 19 sticks, and that the two other phases of the deal — a full withdrawal from Gaza by Israeli forces and a rebuilding plan in place for the territory — are also met. “There is no specificity at this point as to whether or when the Houthis will lift their proclaimed embargo against certain groups of merchant vessels passing through the southern Red Sea,” Jensen <a href="https://www.linkedin.com/search/results/all/?fetchDeterministicClustersOnly=true&amp;heroEntityKey=urn%3Ali%3Afsd_profile%3AACoAAABT06QBma5hiHVSOND3WOHMUNYfxwswFL8&amp;keywords=lars%20jensen&amp;origin=RICH_QUERY_TYPEAHEAD_HISTORY&amp;position=0&amp;searchId=1367a011-a129-45c7-bb5b-3a8cff1f4783&amp;sid=%3AIW&amp;spellCorrectionEnabled=true">wrote in a LinkedIn post Thursday</a>. “It is likely that shipping lines currently diverting around Africa want to see not only the ceasefire hold up ... but also see some meaningful traction on the negotiations for phase two and three of the ceasefire — as well as see some meaningful statements from the Houthis in terms of no longer targeting merchant vessels,” Jensen said. An analysis by S&amp;P Global Market Intelligence published Thursday noted that the main economic impact of the Red Sea route reopening would be to return capacity to the container shipping system, equivalent to about 6% to 8% of existing vessels. At the same time, new vessels adding nearly 24% of new capacity to the global fleet would be launched over the next three years. Still, Jack Kennedy, associate director of country risk for the Middle East and North Africa at S&amp;P Global Market Intelligence, parent company of the Journal of Commerce, said the ceasefire would not bring safety to the Red Sea. “The Houthi are likely to continue to target international vessels in transit regardless of a ceasefire being agreed between Israel and Hamas or end to the wider conflict because it still is an effective means for them to demonstrate internal legitimacy and engage external actors, and secure revenue through protection payments,” Kennedy wrote in a report Thursday. “Even with the ceasefire outlined, there is still going to be an Israeli military presence in Gaza, and what is in effect a blockade of the strip.” <h3>Red Sea risks remain </h3>Mediterranean Shipping Co. and the revised carrier alliances have all indicated in their new 2025 schedules that Cape of Good Hope diversions will continue, although Suez transit services were included in the schedules as the preferred option to deploy once it was safe to return to the Red Sea. Peter Sand, chief analyst at rate benchmarking platform Xeneta, said carriers need to re-assess their risks for Red Sea transits, and while a ceasefire was likely to lower the overall risk, more certainty was needed before shipping’s full return can happen. “Carriers need some assurance from the Houthi rebels before they begin their return, at first with sub-10,000 TEU ships and the last ones to return will be the 24,000-TEU container ships,” Sand told the Journal of Commerce. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="476e3a1b-4a99-4f05-9eb9-1b3e0c96bf09"></dynamic-object></div>Container carriers entered 2025 with a record order book of 8.3 million TEUs that followed the delivery of vessels totaling 2.9 million TEUs in 2024, according to shipping association BIMCO. An average of 1.9 million TEUs in capacity will be delivered every year from 2025 to 2028, peaking at 2.2 million TEUs in 2027, BIMCO noted. Sand said that when it was safe for carriers to return to the shorter Suez route, 2 million TEUs of container shipping capacity would no longer be needed, leading to large-scale lay-ups, demolition and re-deployment of vessels. ”But none of it, alone or in total, will prevent freight rates from falling to levels seen in early Q4 2023,” he said. “The question is how fast that will be. We expect some operational troubles to keep freight rates volatile for one to two months.” Sand said while carriers have been good at capacity management in the past few years, the Suez return scenario was “next level.” ”You can’t just be smart and feed 2 million TEUs into other trades and expect no impact,” he said. “Upon return [to the Suez], fundamental overcapacity will reign once again.” Much of the capacity ordered over the past three years is for vessels greater than 14,500 TEUs that are being steadily deployed on the Asia-Europe trade where all available vessels are being utilized. Virtually no scrapping in the past few years has resulted in the number of ships 20 years old or older reaching 11% of the in-service fleet at 3.4 million TEUs. “It would require 680,000 TEUs per year to recycle all ships 20 years old or older during the next five years — the current annual record is 657,000 TEUs — but actual recycling is likely to end lower,” Niels Rasmussen, chief shipping analyst at BIMCO, wrote in a report this week, adding that as long as ships could not fully return to the Red Sea, recycling would continue to be low. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Commercial shipping will resume normal transits through the Suez Canal in late February at the earliest under the most optimistic analyst prediction made following the ceasefire agreement signed Wednesday between Israel and Hamas, assuming all conditions are met. While that best-case scenario was offered by Lars Jensen, CEO of Vespucci Maritime and a Journal of Commerce analyst, the peace deal in Gaza is highlighting the capacity overhang facing container shipping once vessels absorbed by the longer voyages around southern Africa return to the shorter route via the Red Sea and Suez Canal. Most commercial vessels have avoided the Suez for the past 14 months amid ongoing attacks by Houthi militants operating in Yemen, forcing ships to divert away from the Red Sea to the longer route around the Cape of Good Hope. The Houthis said their attacks were a sign of solidarity with Hamas. Jensen noted the best-case scenario for shipping would require that the six-week ceasefire that begins Jan. 19 sticks, and that the two other phases of the deal — a full withdrawal from Gaza by Israeli forces and a rebuilding plan in place for the territory — are also met. “There is no specificity at this point as to whether or when the Houthis will lift their proclaimed embargo against certain groups of merchant vessels passing through the southern Red Sea,” Jensen wrote in a LinkedIn post Thursday . “It is likely that shipping lines currently diverting around Africa want to see not only the ceasefire hold up ... but also see some meaningful traction on the negotiations for phase two and three of the ceasefire — as well as see some meaningful statements from the Houthis in terms of no longer targeting merchant vessels,” Jensen said. An analysis by S&P Global Market Intelligence published Thursday noted that the main economic impact of the Red Sea route reopening would be to return capacity to the container shipping system, equivalent to about 6% to 8% of existing vessels. At the same time, new vessels adding nearly 24% of new capacity to the global fleet would be launched over the next three years. Still, Jack Kennedy, associate director of country risk for the Middle East and North Africa at S&P Global Market Intelligence, parent company of the Journal of Commerce, said the ceasefire would not bring safety to the Red Sea. “The Houthi are likely to continue to target international vessels in transit regardless of a ceasefire being agreed between Israel and Hamas or end to the wider conflict because it still is an effective means for them to demonstrate internal legitimacy and engage external actors, and secure revenue through protection payments,” Kennedy wrote in a report Thursday. “Even with the ceasefire outlined, there is still going to be an Israeli military presence in Gaza, and what is in effect a blockade of the strip.” Red Sea risks remain Mediterranean Shipping Co. and the revised carrier alliances have all indicated in their new 2025 schedules that Cape of Good Hope diversions will continue, although Suez transit services were included in the schedules as the preferred option to deploy once it was safe to return to the Red Sea. Peter Sand, chief analyst at rate benchmarking platform Xeneta, said carriers need to re-assess their risks for Red Sea transits, and while a ceasefire was likely to lower the overall risk, more certainty was needed before shipping’s full return can happen. “Carriers need some assurance from the Houthi rebels before they begin their return, at first with sub-10,000 TEU ships and the last ones to return will be the 24,000-TEU container ships,” Sand told the Journal of Commerce. Container carriers entered 2025 with a record order book of 8.3 million TEUs that followed the delivery of vessels totaling 2.9 million TEUs in 2024, according to shipping association BIMCO. An average of 1.9 million TEUs in capacity will be delivered every year from 2025 to 2028, peaking at 2.2 million TEUs in 2027, BIMCO noted. Sand said that when it was safe for carriers to return to the shorter Suez route, 2 million TEUs of container shipping capacity would no longer be needed, leading to large-scale lay-ups, demolition and re-deployment of vessels. ”But none of it, alone or in total, will prevent freight rates from falling to levels seen in early Q4 2023,” he said. “The question is how fast that will be. We expect some operational troubles to keep freight rates volatile for one to two months.” Sand said while carriers have been good at capacity management in the past few years, the Suez return scenario was “next level.” ”You can’t just be smart and feed 2 million TEUs into other trades and expect no impact,” he said. “Upon return [to the Suez], fundamental overcapacity will reign once again.” Much of the capacity ordered over the past three years is for vessels greater than 14,500 TEUs that are being steadily deployed on the Asia-Europe trade where all available vessels are being utilized. Virtually no scrapping in the past few years has resulted in the number of ships 20 years old or older reaching 11% of the in-service fleet at 3.4 million TEUs. “It would require 680,000 TEUs per year to recycle all ships 20 years old or older during the next five years — the current annual record is 657,000 TEUs — but actual recycling is likely to end lower,” Niels Rasmussen, chief shipping analyst at BIMCO, wrote in a report this week, adding that as long as ships could not fully return to the Red Sea, recycling would continue to be low. Contact Greg Knowler at greg.knowler@spglobal.com .

Asia-Europe

Return to Suez not a certainty even after Israel-Hamas ceasefire: analysts

<div class="phx-topic abstract-wrapper">With the president-elect looking to unwind some Biden administration policies, US port operators want to ensure that maritime transportation funding will not be unduly affected.</div>

With the president-elect looking to unwind some Biden administration policies, US port operators want to ensure that maritime transportation funding will not be unduly affected.

<div class="phx-topic">US ports on Wednesday laid out legislative priorities for the incoming Trump administration and new Congress that include continued federal spending for maritime transportation and navigation. While many of the priorities of the American Association of Port Authorities (AAPA) align with the president-elect’s campaign pledges, issues such as tariffs and clean energy funding at ports may face more challenges. AAPA said it met with Trump’s transition team and <a href="https://www.joc.com/article/former-congressman-tv-host-gets-trumps-nod-to-lead-dot-5820698">US Department of Transportation nominee Sean Duffy</a> to discuss its policy agenda for 2025. Among the group’s asks are permitting reform, easing restrictions on liquefied natural gas (LNG) development and reducing restrictions on vessel speed. AAPA said one of its top priorities is infrastructure spending. It asked Congress “not [to] rescind infrastructure spending” from the Inflation Reduction Act and the Bipartisan Infrastructure Law (BIL), two hallmark pieces of legislation from the outgoing Biden administration. BIL earmarked $17 billion specifically for ports through 2026, with the largest portion of that going to the US Army Corps of Engineers for maintenance of coastal and inland waterways. Some $2.25 billion of that law was funneled into the Port Infrastructure Development Program (PIDP), which has already issued $2 billion in grants since the BIL’s passage. The AAPA also asked that <a href="https://www.joc.com/article/port-nola-receives-more-federal-funds-for-proposed-container-terminal-5219974">other funding programs for ports</a>, <a href="https://www.joc.com/article/federal-grant-to-boost-baltimores-on-dock-rail-capacity-5242949">intermodal rail</a>, and <a href="https://www.joc.com/article/dot-offers-44-million-for-ny-nj-port-road-project-5249533">roads</a> be maintained. While Trump has not specifically addressed the BIL he has targeted the $3.5 trillion Inflation Reduction Act (IRA), saying in September he would “rescind all unspent funds” from the law. <a href="https://www.joc.com/article/project-cargo-optimism-buffeted-by-policy-unpredictability-5917316">Offshore wind</a>, and <a href="https://www.joc.com/article/offshore-project-delivers-virginia-cargo-windfall-5780771">breakbulk ports</a> by extension, expect to take the biggest hit from any change in the IRA. But container ports also <a href="https://www.joc.com/article/us-ports-plan-upgrades-to-electric-yard-equipment-after-securing-epa-grants-5782145">availed themselves of IRA funding</a>, chiefly for replacing diesel yard equipment with electric-powered machinery and installing charging stations for electric trucks. The IRA is also expected to help fund the Biden administration’s <a href="https://www.joc.com/article/white-house-counters-risk-of-chinese-port-cranes-with-20-billion-for-us-sourcing-5200230">$20 billion push</a> to establish a US-based manufacturer of ship-to-shore cranes. The program is bolstering electric vehicle battery and auto manufacturing, which is <a href="https://www.joc.com/article/southeast-gulf-ports-expect-container-uplift-from-electric-vehicle-plants-5224276">expected to boost cargo volumes through Southeast and Gulf ports</a>. Trump’s ability to roll back the IRA, though, remains unclear. Funds that have already been pledged to ports and others are considered safe. Additionally, rescinding unspent IRA funds would require an act of Congress. Although no Republicans voted for the IRA, 18 Republican representatives <a href="https://thehill.com/policy/energy-environment/4815990-mike-johnson-ira-clean-energy-tax-credits/">sent a letter last year to Speaker Mike Johnson</a> asking that IRA tax credits for clean energy projects remain intact. The AAPA also joined many other business groups in opposing Trump’s plans for fresh import tariffs, arguing that higher import duties may reduce cargo volumes and affect port revenues. “[But] any existing and expanded tariff revenue should be used to fund port infrastructure, which would strengthen our supply chains and have a deflationary effect on the economy,” the AAPA said. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

US ports on Wednesday laid out legislative priorities for the incoming Trump administration and new Congress that include continued federal spending for maritime transportation and navigation. While many of the priorities of the American Association of Port Authorities (AAPA) align with the president-elect’s campaign pledges, issues such as tariffs and clean energy funding at ports may face more challenges. AAPA said it met with Trump’s transition team and US Department of Transportation nominee Sean Duffy to discuss its policy agenda for 2025. Among the group’s asks are permitting reform, easing restrictions on liquefied natural gas (LNG) development and reducing restrictions on vessel speed. AAPA said one of its top priorities is infrastructure spending. It asked Congress “not [to] rescind infrastructure spending” from the Inflation Reduction Act and the Bipartisan Infrastructure Law (BIL), two hallmark pieces of legislation from the outgoing Biden administration. BIL earmarked $17 billion specifically for ports through 2026, with the largest portion of that going to the US Army Corps of Engineers for maintenance of coastal and inland waterways. Some $2.25 billion of that law was funneled into the Port Infrastructure Development Program (PIDP), which has already issued $2 billion in grants since the BIL’s passage. The AAPA also asked that other funding programs for ports , intermodal rail , and roads be maintained. While Trump has not specifically addressed the BIL he has targeted the $3.5 trillion Inflation Reduction Act (IRA), saying in September he would “rescind all unspent funds” from the law. Offshore wind , and breakbulk ports by extension, expect to take the biggest hit from any change in the IRA. But container ports also availed themselves of IRA funding , chiefly for replacing diesel yard equipment with electric-powered machinery and installing charging stations for electric trucks. The IRA is also expected to help fund the Biden administration’s $20 billion push to establish a US-based manufacturer of ship-to-shore cranes. The program is bolstering electric vehicle battery and auto manufacturing, which is expected to boost cargo volumes through Southeast and Gulf ports . Trump’s ability to roll back the IRA, though, remains unclear. Funds that have already been pledged to ports and others are considered safe. Additionally, rescinding unspent IRA funds would require an act of Congress. Although no Republicans voted for the IRA, 18 Republican representatives sent a letter last year to Speaker Mike Johnson asking that IRA tax credits for clean energy projects remain intact. The AAPA also joined many other business groups in opposing Trump’s plans for fresh import tariffs, arguing that higher import duties may reduce cargo volumes and affect port revenues. “[But] any existing and expanded tariff revenue should be used to fund port infrastructure, which would strengthen our supply chains and have a deflationary effect on the economy,” the AAPA said. Contact Michael Angell at michael.angell@spglobal.com .

Port infrastructure

North American ports

Transport, Trade and Regulation News

US ports urge Trump, Congress to keep funds in place but tariffs at bay

<div class="phx-topic abstract-wrapper">The Barstow International Gateway will be a transloading hub where the contents of ocean containers come to be transferred into 53-foot domestic containers to travel inland, ensuring quicker turnarounds of ocean boxes moving back to the ports of Los Angeles and Long Beach.</div>

The Barstow International Gateway will be a transloading hub where the contents of ocean containers come to be transferred into 53-foot domestic containers to travel inland, ensuring quicker turnarounds of ocean boxes moving back to the ports of Los Angeles and Long Beach.

<div class="phx-topic">The California Air Resources Board (CARB) has rescinded a proposed rule that would have required train locomotives operating in the state to produce zero emissions by 2030, a regulation that would have put a $1.5 billion project by BNSF Railway to expand its terminal in Barstow in serious jeopardy. BNSF can now move forward with the project that should be completed in 2027 or 2028. “Railroads are pleased that the California Air Resources Board has withdrawn its authorization request for the ill-conceived in-use locomotive rule,” the Association of American Railroads (AAR) said in a statement Wednesday. “As we move past this untenable proposal, railroads look forward to focusing on advancing their already strong sustainability profile and further reducing emissions in the years to come.” A US District Court judge last November paused the proposed Jan. 1 implementation of the locomotive emissions rule to determine whether it violated federal pre-emption laws on interstate commerce. The decision by CARB to drop the rule comes after the US Bureau of Land Management on Monday approved the sale of the federal land to BNSF on which the railroad will develop the Barstow Intermodal Gateway, or BIG. BIG will be a transloading hub where ocean containers come to be transferred into 53-foot domestic containers to travel inland, ensuring quicker turnarounds of ocean boxes moving back to the ports of Los Angeles and Long Beach. Aside from requiring zero-emission locomotives, the proposed CARB rule would have immediately banned any locomotive 23 years or older from operating in California. BNSF argued that the current technology isn’t viable to meet the zero-emission standards, adding the rule also would have limited the useful life of 25,000 relatively new diesel-electric hybrid locomotives. <h3>Hub would benefit stakeholders </h3>If BNSF’s Barstow hub is successful, it can have a positive impact on several supply chain stakeholders. For the railroad, it would boost transloading of imports into domestic containers using intermodal providers that don’t run into the same equipment challenges as the maritime industry. J.B. Hunt Transport Services, for example, owns its chassis, so BNSF can quickly mount a load off a train and place the unit in a parking spot. A successful Barstow terminal would also benefit shippers in several ways. Domestic intermodal providers are hyper-focused on box turns — meaning the number of revenue-paying loads an average container handles per month — in order to maximize revenue. BNSF partners such as J.B. Hunt are much more likely to send a driver immediately and deliver the load to the customer, rarely letting the box idle in the terminal for more than 24 to 48 hours. Also, customers who don’t transload will benefit because fewer loads would move in ocean containers. Transferring imports into domestic containers would free up the ocean boxes to be railed back to marine terminals in Los Angeles and Long Beach much faster, which benefits exporters requiring empty containers and helps ocean carriers moving boxes back to Asia. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>.</div>

The California Air Resources Board (CARB) has rescinded a proposed rule that would have required train locomotives operating in the state to produce zero emissions by 2030, a regulation that would have put a $1.5 billion project by BNSF Railway to expand its terminal in Barstow in serious jeopardy. BNSF can now move forward with the project that should be completed in 2027 or 2028. “Railroads are pleased that the California Air Resources Board has withdrawn its authorization request for the ill-conceived in-use locomotive rule,” the Association of American Railroads (AAR) said in a statement Wednesday. “As we move past this untenable proposal, railroads look forward to focusing on advancing their already strong sustainability profile and further reducing emissions in the years to come.” A US District Court judge last November paused the proposed Jan. 1 implementation of the locomotive emissions rule to determine whether it violated federal pre-emption laws on interstate commerce. The decision by CARB to drop the rule comes after the US Bureau of Land Management on Monday approved the sale of the federal land to BNSF on which the railroad will develop the Barstow Intermodal Gateway, or BIG. BIG will be a transloading hub where ocean containers come to be transferred into 53-foot domestic containers to travel inland, ensuring quicker turnarounds of ocean boxes moving back to the ports of Los Angeles and Long Beach. Aside from requiring zero-emission locomotives, the proposed CARB rule would have immediately banned any locomotive 23 years or older from operating in California. BNSF argued that the current technology isn’t viable to meet the zero-emission standards, adding the rule also would have limited the useful life of 25,000 relatively new diesel-electric hybrid locomotives. Hub would benefit stakeholders If BNSF’s Barstow hub is successful, it can have a positive impact on several supply chain stakeholders. For the railroad, it would boost transloading of imports into domestic containers using intermodal providers that don’t run into the same equipment challenges as the maritime industry. J.B. Hunt Transport Services, for example, owns its chassis, so BNSF can quickly mount a load off a train and place the unit in a parking spot. A successful Barstow terminal would also benefit shippers in several ways. Domestic intermodal providers are hyper-focused on box turns — meaning the number of revenue-paying loads an average container handles per month — in order to maximize revenue. BNSF partners such as J.B. Hunt are much more likely to send a driver immediately and deliver the load to the customer, rarely letting the box idle in the terminal for more than 24 to 48 hours. Also, customers who don’t transload will benefit because fewer loads would move in ocean containers. Transferring imports into domestic containers would free up the ocean boxes to be railed back to marine terminals in Los Angeles and Long Beach much faster, which benefits exporters requiring empty containers and helps ocean carriers moving boxes back to Asia. Contact Ari Ashe at ari.ashe@spglobal.com .

Intermodal providers

North-American rail

BNSF Barstow project to proceed after CARB emissions rule withdrawn

<div class="phx-topic abstract-wrapper">Projections for North American intermodal will likely be upended by some “black swan” event that isn’t even on the radar right now as there seems to be no shortage of potential hot spots and disruptors looming, writes Larry Gross.</div>

Projections for North American intermodal will likely be upended by some “black swan” event that isn’t even on the radar right now as there seems to be no shortage of potential hot spots and disruptors looming, writes Larry Gross.

<div class="phx-topic">As a forecaster of the intermodal sector, I believe that it is a good practice to look back each year to see what I was saying as the year began … and just how badly I may have missed the mark. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5923184_0.1.jpg"></img></div>In January 2024, readers of my Intermodal in Depth report were told to expect North American intermodal growth of 5.5%. Now that the Association of American Railroads (AAR) has issued its data for all 52 weeks of 2024, we can report that the growth in intermodal in 2024 was … drumroll please … 7.5%. So the forecast was not too bad. Call it a solid “B” grade. But a fair amount of luck was involved, because based on data from the Intermodal Association of North America (IANA) — which currently is available only through November — my forecast was substantially low for the international segment and too optimistic for the domestic market. So coming within 2% of the total was to a certain extent a fortunate coincidence. Regardless, 2024 was certainly a good year for intermodal; the chart shows just how strong it was. Using the AAR weekly data, it compares the weekly intermodal originated moves for 2024, 2023 and the average performance over the 10 years prior to the pandemic (2010–19). After a rough, weather-related stumble in January, volume leapt ahead of the prior year in February and the sector never looked back. Volume fell below the prior year in a meaningful manner only for one week (#40). This was due to a double whammy of Hurricane Helene plus the short-lived longshore port strike hitting the eastern US railroads that week. The 2024 volume was also below that of 2023 in week #48, but that was a statistical quirk relating to the week in which Thanksgiving occurred this year versus last and therefore not meaningful. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="a0bf68c7-f6e7-4480-89f3-6cb625967b00"></dynamic-object></div>The strength in international can be attributed to several factors. One was strong retail sales. A second was a reversal in the long-term trend of West Coast to East Coast migration of import volumes. Why? First, the unavailability of the Red Sea due to missile-firing Houthi rebels forced cargo bound for the USEC to take the long way around Africa and added both cost and time to the voyage. This made the West Coast option more attractive. Second, the labor situation on the East Coast and the potential for disruption led importers to divert. The migration of volume back to the West Coast was an intermodal tailwind as intermodal share off the USWC is generally much higher than in the east. USWC import share was 45% in November, 4.5% higher than the prior year. The third source of strength was the pull-forward of imports, particularly later in the year. Importers raced to land cargo in advance of a possible second longshore strike and potential new tariffs. Thankfully, the former problem appears to have been resolved, but the tariff impacts, although unknown in timing and scope, continue to loom. This pull-forward resulted in a notable feature of 2024 — the extremely late annual peak, in week #50. Normally the peak occurs in week #39. <h3>A look ahead</h3>Looking forward, it seems likely that most of the factors that drove volume in 2024 will not be present in 2025. The labor situation has been settled, and (hopefully) a ceasefire in Gaza will deprive the Houthis of a reason to keep firing missiles and lead to a reopening of the Red Sea/Suez Canal route. Of course, the piper will eventually have to be paid for all the volume that was pulled forward into 2024 that ordinarily might have moved in 2025. So the prospect for 2025 international intermodal is muted to say the least. Conversely, the picture is a bit brighter for domestic, despite its disappointing performance in 2024. The 2024 growth in long-haul truckload demand was far weaker than was the case for international. This kept a lid on domestic intermodal and left share gains as the only avenue for meaningful improvement. This has been slow in coming, although there was a tantalizing uptick in the third quarter that, if sustained, could eventually turn into something meaningful. The near-term prospects for the economy seem reasonably bright, although the incoming administration’s promised tariff actions and mass deportations will be disruptive and inflationary. However, it will take some time for these effects to be felt. I’m not expecting to see any significant acceleration in domestic intermodal activity, but rather some modest improvement. This will still result in domestic outperforming international in 2025. Of course, history tells us that these projections will likely be upended by some “black swan” event that possibly isn’t even on the radar right now. There seems to be no shortage of potential hot spots and disruptors out there. So it is best to keep options open and be prepared to be nimble once again to meet the challenges that lie in wait in 2025. Contact Larry Gross at <a href="https://www.joc.com/article/lgross@intermodalindepth.com">lgross@intermodalindepth.com</a>.</div>

As a forecaster of the intermodal sector, I believe that it is a good practice to look back each year to see what I was saying as the year began … and just how badly I may have missed the mark. In January 2024, readers of my Intermodal in Depth report were told to expect North American intermodal growth of 5.5%. Now that the Association of American Railroads (AAR) has issued its data for all 52 weeks of 2024, we can report that the growth in intermodal in 2024 was … drumroll please … 7.5%. So the forecast was not too bad. Call it a solid “B” grade. But a fair amount of luck was involved, because based on data from the Intermodal Association of North America (IANA) — which currently is available only through November — my forecast was substantially low for the international segment and too optimistic for the domestic market. So coming within 2% of the total was to a certain extent a fortunate coincidence. Regardless, 2024 was certainly a good year for intermodal; the chart shows just how strong it was. Using the AAR weekly data, it compares the weekly intermodal originated moves for 2024, 2023 and the average performance over the 10 years prior to the pandemic (2010–19). After a rough, weather-related stumble in January, volume leapt ahead of the prior year in February and the sector never looked back. Volume fell below the prior year in a meaningful manner only for one week (#40). This was due to a double whammy of Hurricane Helene plus the short-lived longshore port strike hitting the eastern US railroads that week. The 2024 volume was also below that of 2023 in week #48, but that was a statistical quirk relating to the week in which Thanksgiving occurred this year versus last and therefore not meaningful. The strength in international can be attributed to several factors. One was strong retail sales. A second was a reversal in the long-term trend of West Coast to East Coast migration of import volumes. Why? First, the unavailability of the Red Sea due to missile-firing Houthi rebels forced cargo bound for the USEC to take the long way around Africa and added both cost and time to the voyage. This made the West Coast option more attractive. Second, the labor situation on the East Coast and the potential for disruption led importers to divert. The migration of volume back to the West Coast was an intermodal tailwind as intermodal share off the USWC is generally much higher than in the east. USWC import share was 45% in November, 4.5% higher than the prior year. The third source of strength was the pull-forward of imports, particularly later in the year. Importers raced to land cargo in advance of a possible second longshore strike and potential new tariffs. Thankfully, the former problem appears to have been resolved, but the tariff impacts, although unknown in timing and scope, continue to loom. This pull-forward resulted in a notable feature of 2024 — the extremely late annual peak, in week #50. Normally the peak occurs in week #39. A look ahead Looking forward, it seems likely that most of the factors that drove volume in 2024 will not be present in 2025. The labor situation has been settled, and (hopefully) a ceasefire in Gaza will deprive the Houthis of a reason to keep firing missiles and lead to a reopening of the Red Sea/Suez Canal route. Of course, the piper will eventually have to be paid for all the volume that was pulled forward into 2024 that ordinarily might have moved in 2025. So the prospect for 2025 international intermodal is muted to say the least. Conversely, the picture is a bit brighter for domestic, despite its disappointing performance in 2024. The 2024 growth in long-haul truckload demand was far weaker than was the case for international. This kept a lid on domestic intermodal and left share gains as the only avenue for meaningful improvement. This has been slow in coming, although there was a tantalizing uptick in the third quarter that, if sustained, could eventually turn into something meaningful. The near-term prospects for the economy seem reasonably bright, although the incoming administration’s promised tariff actions and mass deportations will be disruptive and inflationary. However, it will take some time for these effects to be felt. I’m not expecting to see any significant acceleration in domestic intermodal activity, but rather some modest improvement. This will still result in domestic outperforming international in 2025. Of course, history tells us that these projections will likely be upended by some “black swan” event that possibly isn’t even on the radar right now. There seems to be no shortage of potential hot spots and disruptors out there. So it is best to keep options open and be prepared to be nimble once again to meet the challenges that lie in wait in 2025. Contact Larry Gross at lgross@intermodalindepth.com .

Surface

Intermodal comes off strong 2024 to face market unknowns of new year: analyst

<div class="phx-topic abstract-wrapper">After 200 years of building the world’s greatest economy on the settled Commerce Clause jurisprudence of Gibbons v. Ogden, no one has been reckless enough to try to upend it. </div>

After 200 years of building the world’s greatest economy on the settled Commerce Clause jurisprudence of Gibbons v. Ogden, no one has been reckless enough to try to upend it.

<div class="phx-topic">Last year marked 200 years of the Commerce Clause jurisprudence that underpins the modern, national American economy. In 2025, we may need to protect it. In 1824, the US Supreme Court decided Gibbons v. Ogden, the first major case to interpret the constitutional power of Congress to “regulate commerce among the several states,” or commonly known as the Commerce Clause. To reach this decision, the Court struck down a significant restriction on which ships were allowed access to navigation and an individual state’s seaports. And, as a result, Gibbons created the legal underpinnings of a unified national economy.  The specific legal question at issue in Gibbons was whether one state could deny access to ships from other states based on their means of propulsion: the use of a steam engine instead of sail. But the bigger implication of the question was whether the country would return to the fractured multi-state economy that existed under the Articles of Confederation. In 2024, however, Gibbons’ bicentennial was not celebrated by the environmental advocacy group Pacific Environment, who started advocating for the state of California to institute a “port access fee” based on “the carbon intensity of ship engines.”  This is literally advocating for a Gibbons-like state imposition of a restriction on navigational access to a port based on a ship’s use of a certain type of propulsion system.  In a May 2024 report, Pacific Environment also proclaimed that California should “lead the world to reduce emissions from ocean cargo ships, lower climate impacts, and improve air quality around ports.” The justification? The California “State Legislature is relatively nimble compared to the US Congress and less affected by national politics.” In the early 1800s, before canals and railroads opened up the interior of the continent, the introduction of steam propulsion on ships revolutionized commerce by virtually eliminating physical constraints on river trade. The State of New York wanted to limit the means of propulsion of ships calling on its ports, at the expense of free trade, competition, consumers and the burgeoning US economy. As a result, the Supreme Court in Gibbons needed to decide if New York could constitutionally restrict navigation by barring certain types of vessels from its ports based on their use of a steam engine. And to answer this, the young nation’s highest Court first had to grapple with another, larger question: If the Constitution guarantees free rights of navigation to ships under the Commerce Clause, then is New York’s ban preempted? Gibbons minced no words: “All America understands, and has uniformly understood, the word ‘commerce’ to comprehend navigation.” The Constitution granted the federal government authority over “commercial intercourse between nations, and parts of nations,” and “the power over commerce with foreign nations, and among the several states is vested in Congress as absolutely as it would be in a single government,” the court said.   <h3>California proposals </h3>In 2025, after two centuries of giving Chief Justice John Marshall the final word on the matter, should we reopen this fundamental question of whether states should be able to decide which ships are allowed to call on their ports based on a vessel’s system of propulsion?   In Southern California in 2023, the staff of the South Coast Air Quality Management District (AQMD) started a process to consider indirect regulation of ship propulsion systems. The staff was musing about the adoption of a regulation that would penalize ports or marine terminals that did not “route cleaner ships” or require “new, cleaner vessel designs” for vessels calling at the nation’s busiest container port complex in Los Angeles and Long Beach. AQMD’s board has yet to decide if the staff’s proposed concepts will proceed. California State’s air regulators are also starting a discussion in 2025 around reducing emissions from oceangoing vessels in transit. But whether they stick to incentives and voluntary measures in support of federal and International Maritime Organization (IMO) standards or they take the bait of the ship engine regulations proposed by Pacific Environment remains to be seen.  If either the state or a local air district acts directly to restrict the means of vessel propulsion as a condition of access to state seaports, it would be a novelty — the first direct tests of Gibbons’ rules and its conclusion that the right of navigation is commerce, and therefore the province of Congress and the federal government. And these would be novel cases for good reason. After 200 years of building the world’s greatest economy on the settled Commerce Clause jurisprudence of Gibbons, no one has been reckless enough to try to upend it. Contact Mike Jacob at <a href="mailto:mjacob@pmsaship.com">mjacob@pmsaship.com.</a></div>

Last year marked 200 years of the Commerce Clause jurisprudence that underpins the modern, national American economy. In 2025, we may need to protect it. In 1824, the US Supreme Court decided Gibbons v. Ogden, the first major case to interpret the constitutional power of Congress to “regulate commerce among the several states,” or commonly known as the Commerce Clause. To reach this decision, the Court struck down a significant restriction on which ships were allowed access to navigation and an individual state’s seaports. And, as a result, Gibbons created the legal underpinnings of a unified national economy.  The specific legal question at issue in Gibbons was whether one state could deny access to ships from other states based on their means of propulsion: the use of a steam engine instead of sail. But the bigger implication of the question was whether the country would return to the fractured multi-state economy that existed under the Articles of Confederation. In 2024, however, Gibbons’ bicentennial was not celebrated by the environmental advocacy group Pacific Environment, who started advocating for the state of California to institute a “port access fee” based on “the carbon intensity of ship engines.”  This is literally advocating for a Gibbons-like state imposition of a restriction on navigational access to a port based on a ship’s use of a certain type of propulsion system.  In a May 2024 report, Pacific Environment also proclaimed that California should “lead the world to reduce emissions from ocean cargo ships, lower climate impacts, and improve air quality around ports.” The justification? The California “State Legislature is relatively nimble compared to the US Congress and less affected by national politics.” In the early 1800s, before canals and railroads opened up the interior of the continent, the introduction of steam propulsion on ships revolutionized commerce by virtually eliminating physical constraints on river trade. The State of New York wanted to limit the means of propulsion of ships calling on its ports, at the expense of free trade, competition, consumers and the burgeoning US economy. As a result, the Supreme Court in Gibbons needed to decide if New York could constitutionally restrict navigation by barring certain types of vessels from its ports based on their use of a steam engine. And to answer this, the young nation’s highest Court first had to grapple with another, larger question: If the Constitution guarantees free rights of navigation to ships under the Commerce Clause, then is New York’s ban preempted? Gibbons minced no words: “All America understands, and has uniformly understood, the word ‘commerce’ to comprehend navigation.” The Constitution granted the federal government authority over “commercial intercourse between nations, and parts of nations,” and “the power over commerce with foreign nations, and among the several states is vested in Congress as absolutely as it would be in a single government,” the court said.   California proposals In 2025, after two centuries of giving Chief Justice John Marshall the final word on the matter, should we reopen this fundamental question of whether states should be able to decide which ships are allowed to call on their ports based on a vessel’s system of propulsion?   In Southern California in 2023, the staff of the South Coast Air Quality Management District (AQMD) started a process to consider indirect regulation of ship propulsion systems. The staff was musing about the adoption of a regulation that would penalize ports or marine terminals that did not “route cleaner ships” or require “new, cleaner vessel designs” for vessels calling at the nation’s busiest container port complex in Los Angeles and Long Beach. AQMD’s board has yet to decide if the staff’s proposed concepts will proceed. California State’s air regulators are also starting a discussion in 2025 around reducing emissions from oceangoing vessels in transit. But whether they stick to incentives and voluntary measures in support of federal and International Maritime Organization (IMO) standards or they take the bait of the ship engine regulations proposed by Pacific Environment remains to be seen.  If either the state or a local air district acts directly to restrict the means of vessel propulsion as a condition of access to state seaports, it would be a novelty — the first direct tests of Gibbons’ rules and its conclusion that the right of navigation is commerce, and therefore the province of Congress and the federal government. And these would be novel cases for good reason. After 200 years of building the world’s greatest economy on the settled Commerce Clause jurisprudence of Gibbons, no one has been reckless enough to try to upend it. Contact Mike Jacob at mjacob@pmsaship.com.

Protecting navigation and the Commerce Clause in 2025

<div class="phx-topic abstract-wrapper">MSC, which embarked on a major journey to establish a competitive independent network post-2M, has been helped by forging something mutually beneficial with the Premier Alliance and ZIM.</div>

MSC, which embarked on a major journey to establish a competitive independent network post-2M, has been helped by forging something mutually beneficial with the Premier Alliance and ZIM.

<div class="phx-topic">When it became clear that the restructuring of the industry in the east-west trades in early 2025 meant moving from three major networks — 2M, Ocean Alliance and THE Alliance — to four major networks — Ocean, Gemini, Premier and a standalone Mediterranean Shipping Co. — radical overcapacity was in the cards. Even though the carriers knew they were moving into dangerous territory, they didn’t have many options to curtail capacity if they wanted to build robust networks benefiting from the economies of scale that come with larger ships. The most viable option to limit the overall capacity injection at the front end was for the carriers to orchestrate some overlap of the reconfigured networks. Maersk and Hapag-Lloyd made it clear at the outset that the Gemini Cooperation alliance could not entertain more members or slot agreements if it was to deliver the kind of quality level it aspires to. This left it to MSC, Ocean and Premier to take some initiatives; as we have seen, MSC has led the charge. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="bc8c7bab-e415-4fea-861b-3926a4691794"></dynamic-object></div>With the dissolution of the 2M alliance, many industry observers assumed that MSC would operate entirely independently in the east-west trade. This was based on its clear desire to control its own destiny and be nimble in building products to answer client needs. Pundits underestimated MSC’s history of balancing its longer-term objectives with the realities and opportunities of the immediate market. We don’t know the number of slots bought and sold in MSC’s deal with Premier, but with the number of loops MSC will be operating to North Europe and the Med and the capacity it has deployed, it’s a reasonable assumption it is selling more slots than it’s buying, which probably suits the carrier well at this point of evolution. Conversely, the ZIM Integrated Shipping Services deal has helped reduce the capacity injection that MSC needed to make post-2M. (Maersk has been a much bigger contributor of tonnage to the US East Coast than MSC within 2M.) Furthermore, in as much as it has reduced the overall injection of capacity, which reduces overall oversupply in the east-west trade, that will also help rates stay up longer, which MSC also benefits from. It’s hard to see — once all the 25 new deployments are bedded in — that it will stem the capacity influx tide sufficiently to defy rate level gravity. Short, of course, of labor troubles becoming long term or other black swan events over and above the Suez problem. <h3>‘Competitive edge’ for MSC </h3>Meanwhile, the other benefit of the slot agreements MSC has made — particularly for the USEC and Gulf — is that it has enhanced the quality of its network and thus given it more of a competitive edge. The charts don’t give the full picture on service, and every shipper will look at their particular mix of port pairs and what service combo of frequency, transit time and reliability they want. Gemini will point out that this dry set of numbers does nothing to factor in the reliability they will be targeting. It would be correct, but the charts do highlight the fact that shippers will often have to make their pick between frequency and more direct port pairs on one side and dependable departures/arrivals on the other. What the charts also confirm is that in the trades where it has made slot deals, MSC has a competitive overall product that has been enhanced by the slot arrangements. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="886ef5d7-6ed6-45c1-b099-a851968de973"></dynamic-object></div>MSC, which embarked on a major journey to establish a competitive independent network post-2M, has been helped by forging something mutually beneficial with Premier and ZIM. If MSC carries on accumulating tonnage at the rate it is now, it’s an open question whether the deals with Premier and ZIM will look as attractive for them in the future as they do now. Of course, Premier — or its individual carriers — and ZIM may also have other options when the time comes. Contact Jeremy Masters at <a href="https://www.joc.com/article/jeremy@shippingmastershk.com">jeremy@shippingmastershk.com.</a></div>

When it became clear that the restructuring of the industry in the east-west trades in early 2025 meant moving from three major networks — 2M, Ocean Alliance and THE Alliance — to four major networks — Ocean, Gemini, Premier and a standalone Mediterranean Shipping Co. — radical overcapacity was in the cards. Even though the carriers knew they were moving into dangerous territory, they didn’t have many options to curtail capacity if they wanted to build robust networks benefiting from the economies of scale that come with larger ships. The most viable option to limit the overall capacity injection at the front end was for the carriers to orchestrate some overlap of the reconfigured networks. Maersk and Hapag-Lloyd made it clear at the outset that the Gemini Cooperation alliance could not entertain more members or slot agreements if it was to deliver the kind of quality level it aspires to. This left it to MSC, Ocean and Premier to take some initiatives; as we have seen, MSC has led the charge. With the dissolution of the 2M alliance, many industry observers assumed that MSC would operate entirely independently in the east-west trade. This was based on its clear desire to control its own destiny and be nimble in building products to answer client needs. Pundits underestimated MSC’s history of balancing its longer-term objectives with the realities and opportunities of the immediate market. We don’t know the number of slots bought and sold in MSC’s deal with Premier, but with the number of loops MSC will be operating to North Europe and the Med and the capacity it has deployed, it’s a reasonable assumption it is selling more slots than it’s buying, which probably suits the carrier well at this point of evolution. Conversely, the ZIM Integrated Shipping Services deal has helped reduce the capacity injection that MSC needed to make post-2M. (Maersk has been a much bigger contributor of tonnage to the US East Coast than MSC within 2M.) Furthermore, in as much as it has reduced the overall injection of capacity, which reduces overall oversupply in the east-west trade, that will also help rates stay up longer, which MSC also benefits from. It’s hard to see — once all the 25 new deployments are bedded in — that it will stem the capacity influx tide sufficiently to defy rate level gravity. Short, of course, of labor troubles becoming long term or other black swan events over and above the Suez problem. ‘Competitive edge’ for MSC Meanwhile, the other benefit of the slot agreements MSC has made — particularly for the USEC and Gulf — is that it has enhanced the quality of its network and thus given it more of a competitive edge. The charts don’t give the full picture on service, and every shipper will look at their particular mix of port pairs and what service combo of frequency, transit time and reliability they want. Gemini will point out that this dry set of numbers does nothing to factor in the reliability they will be targeting. It would be correct, but the charts do highlight the fact that shippers will often have to make their pick between frequency and more direct port pairs on one side and dependable departures/arrivals on the other. What the charts also confirm is that in the trades where it has made slot deals, MSC has a competitive overall product that has been enhanced by the slot arrangements. MSC, which embarked on a major journey to establish a competitive independent network post-2M, has been helped by forging something mutually beneficial with Premier and ZIM. If MSC carries on accumulating tonnage at the rate it is now, it’s an open question whether the deals with Premier and ZIM will look as attractive for them in the future as they do now. Of course, Premier — or its individual carriers — and ZIM may also have other options when the time comes. Contact Jeremy Masters at jeremy@shippingmastershk.com.

MSC takes measured steps toward long-term goals

Los Angeles

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Seattle

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The *Journal of Commerce* calculates outbound port rates using data from Cargo Chief, DAT Freight & Analytics, digital freight broker Loadsmart, and an anonymous survey of truckload brokers. Outbound port rates cover Los Angeles-Long Beach, Oakland, and Seattle on the West Coast, and Houston, New York-New Jersey, Virginia, and Savannah on the Gulf and East coasts.

Outbound spot dry van trucking rates from LA, Seattle (Various sources)

Outbound spot dry van trucking rates from US West Coast ports Gateway

<div class="phx-topic abstract-wrapper">The uncertainty surrounding the Red Sea was highlighted by member OOCL, and although the carrier provided both an around-Africa option and a version via the Suez, it said the Africa diversions will continue until further notice.</div>

The uncertainty surrounding the Red Sea was highlighted by member OOCL, and although the carrier provided both an around-Africa option and a version via the Suez, it said the Africa diversions will continue until further notice.

<div class="phx-topic">The Ocean Alliance of COSCO Shipping, OOCL, Evergreen Line and CMA CGM has unveiled its new shipping network, expanding direct coverage of both the Asia-Europe and trans-Pacific trades from April. “They [Ocean Alliance] are clearly increasing capacity,” Stefan Verberckmoes, senior analyst at Alphaliner, told the Journal of Commerce Monday. Ocean Alliance’s so-called “Day 9” product was announced by member carrier OOCL Monday and will comprise 41 service loops and 390 vessels. Three new services will be introduced: the trans-Pacific PSX from Xiamen and Yantian to Long Beach and back via Kaohsiung; the PNW5 from Ningbo and Shanghai to Tacoma and Seattle and back via Lianyungang; and the LL3, an Asia-Europe route calling Shanghai, Xiamen, Hong Kong, Yantian, Cai Mep, Singapore, Rotterdam, Hamburg, Zeebrugge, Felixstowe and back via Port Kelang. The uncertainty surrounding the Red Sea was highlighted by OOCL, and although the carrier provided both an around-Africa option and a version via the Suez, it said the Africa diversions will continue until further notice. “In light of the current situation in the Red Sea region, OOCL’s vessels will continue to be diverted to the Cape of Good Hope route to ensure the safety of our crews, your cargo and our vessels,” OOCL noted in a customer advisory. Outside the alliance services, OOCL will also roll out six new trans-Atlantic services from February. All four global networks have now been announced with the carriers in the vessel-sharing agreements repositioning ships in preparation for the launch of the new services. The new Gemini Cooperation between Maersk and Hapag-Lloyd will deploy a hub-and-spoke model connecting regional ports to the hubs by shuttles, while Ocean Alliance, the Premier Alliance (Ocean Network Express, HMM and Yang Ming) and a standalone Mediterranean Shipping Co. will offer direct services. “...The big change will not only be the transition period to the new alliances, but the fact that the networks will be very different,” Verberckmoes said. “Until last year, THE Alliance, Ocean Alliance and 2M were comparable, but now for the first time we will have networks which are not comparable.” While MSC and the alliances prepare for their networks, several carriers <a href="https://www.joc.com/article/ocean-carriers-outline-new-trans-atlantic-services-from-feb-1-5907735">are striking partnerships beyond their own networks</a> to plug coverage gaps. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

The Ocean Alliance of COSCO Shipping, OOCL, Evergreen Line and CMA CGM has unveiled its new shipping network, expanding direct coverage of both the Asia-Europe and trans-Pacific trades from April. “They [Ocean Alliance] are clearly increasing capacity,” Stefan Verberckmoes, senior analyst at Alphaliner, told the Journal of Commerce Monday. Ocean Alliance’s so-called “Day 9” product was announced by member carrier OOCL Monday and will comprise 41 service loops and 390 vessels. Three new services will be introduced: the trans-Pacific PSX from Xiamen and Yantian to Long Beach and back via Kaohsiung; the PNW5 from Ningbo and Shanghai to Tacoma and Seattle and back via Lianyungang; and the LL3, an Asia-Europe route calling Shanghai, Xiamen, Hong Kong, Yantian, Cai Mep, Singapore, Rotterdam, Hamburg, Zeebrugge, Felixstowe and back via Port Kelang. The uncertainty surrounding the Red Sea was highlighted by OOCL, and although the carrier provided both an around-Africa option and a version via the Suez, it said the Africa diversions will continue until further notice. “In light of the current situation in the Red Sea region, OOCL’s vessels will continue to be diverted to the Cape of Good Hope route to ensure the safety of our crews, your cargo and our vessels,” OOCL noted in a customer advisory. Outside the alliance services, OOCL will also roll out six new trans-Atlantic services from February. All four global networks have now been announced with the carriers in the vessel-sharing agreements repositioning ships in preparation for the launch of the new services. The new Gemini Cooperation between Maersk and Hapag-Lloyd will deploy a hub-and-spoke model connecting regional ports to the hubs by shuttles, while Ocean Alliance, the Premier Alliance (Ocean Network Express, HMM and Yang Ming) and a standalone Mediterranean Shipping Co. will offer direct services. “...The big change will not only be the transition period to the new alliances, but the fact that the networks will be very different,” Verberckmoes said. “Until last year, THE Alliance, Ocean Alliance and 2M were comparable, but now for the first time we will have networks which are not comparable.” While MSC and the alliances prepare for their networks, several carriers are striking partnerships beyond their own networks to plug coverage gaps. Contact Greg Knowler at greg.knowler@spglobal.com .

Ocean Alliance network to grow trans-Pacific, Asia-Europe coverage

<div class="phx-topic abstract-wrapper">A confluence of factors, including vessel bunching at Asian load ports and a pre-Lunar New Year cargo surge, have combined to cause congestion at the port and reduce its railcar availability.</div>

A confluence of factors, including vessel bunching at Asian load ports and a pre-Lunar New Year cargo surge, have combined to cause congestion at the port and reduce its railcar availability.

<div class="phx-topic">Port of Vancouver stakeholders expect they will have to navigate at least three more weeks of congestion as Canada’s largest port works to clear a backlog of rail containers that built up in December. A confluence of factors — including vessel bunching at Asian load ports, a pre-Lunar New Year cargo surge, <a href="https://www.joc.com/article/bc-container-ports-set-for-shutdown-after-foremen-begin-strike-5785499">a strike by dockworker foremen</a> in November and shorter trains due to winter operating conditions — combined to cause congestion at the port and reduce Vancouver’s railcar availability last month. As a result, the average rail container dwell time at the port’s four container terminals spiked to 6.9 days in December — the highest since last March – and up from 5.2 days in November and 4.5 days in October, according to data on the port’s website. “We are seeing an increase in the number of vessels waiting to enter the Port of Vancouver due to arrival delays associated with winter weather in Asia and the seasonal pre-Lunar New Year impact causing a surge in volume,” a spokesperson for the Vancouver Fraser Port Authority told the Journal of Commerce Wednesday. “As such, we anticipate that high on-dock times will continue for the rest of January.” Terminal operators and the railroads say they are chipping away at the rail container backlog and note conditions will improve further at the end of the month when import volumes are expected to drop significantly due to many factories in Asia closing for a week or two for the Lunar New Year celebrations that start Jan. 29. <h3>Train restrictions during Canadian cold snap </h3>Canadian National Railway (CN) in December was already recovering from a backlog of rail containers from the dockworkers’ strike and vessel bunching when a cold snap in Western Canada resulted in operating restrictions, including running shorter trains, that impacted CN’s network velocity, a CN spokesperson told the Journal of Commerce. “CN is working closely with the port operators to clear out these volumes as the vessel discharge normalizes over the next three weeks,” a spokesperson for the railroad said. “We are already seeing some improvements and are confident that the dwell metric will fall back to normal levels as we catch up on the backlog over the next few weeks.” Canadian Pacific Kansas City (CPKC) said Thursday its railcars are cycling efficiently through its network and that the supply of cars is good. Demand is forecast to remain strong through January, a CPKC spokesperson said. DP World Canada, which operates the Centerm terminal in Vancouver, said it is working with the railroads to handle the increased import volumes leading up to the Lunar New Year on Jan. 29. “We should be back to normal in a few weeks,” said CEO Doug Smith. Meanwhile, the elevated rail container dwell times at the marine terminals have not had an impact on drayage operations in Vancouver, said David Earle, CEO of the British Columbia Trucking Association. The only change Earle said he’s noted in recent days is that a small number of inbound containers that had been booked to leave the terminals by rail are being redirected to long-haul truckers for movement inland. <h3>Prince Rupert back to normal </h3>The Port of Prince Rupert, which faced challenges similar to Vancouver last month, saw its rail container dwell times spike to an average of nearly 10 days in mid-December, said Brian Friesen, vice president of trade development at the port. The average dwell dropped to 6.1 days for the week of Dec. 20 and has continued to slide in January. “The dwells are now below two days,” Friesen said. “It’s all fluid now.” Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>.</div>

Port of Vancouver stakeholders expect they will have to navigate at least three more weeks of congestion as Canada’s largest port works to clear a backlog of rail containers that built up in December. A confluence of factors — including vessel bunching at Asian load ports, a pre-Lunar New Year cargo surge, a strike by dockworker foremen in November and shorter trains due to winter operating conditions — combined to cause congestion at the port and reduce Vancouver’s railcar availability last month. As a result, the average rail container dwell time at the port’s four container terminals spiked to 6.9 days in December — the highest since last March – and up from 5.2 days in November and 4.5 days in October, according to data on the port’s website. “We are seeing an increase in the number of vessels waiting to enter the Port of Vancouver due to arrival delays associated with winter weather in Asia and the seasonal pre-Lunar New Year impact causing a surge in volume,” a spokesperson for the Vancouver Fraser Port Authority told the Journal of Commerce Wednesday. “As such, we anticipate that high on-dock times will continue for the rest of January.” Terminal operators and the railroads say they are chipping away at the rail container backlog and note conditions will improve further at the end of the month when import volumes are expected to drop significantly due to many factories in Asia closing for a week or two for the Lunar New Year celebrations that start Jan. 29. Train restrictions during Canadian cold snap Canadian National Railway (CN) in December was already recovering from a backlog of rail containers from the dockworkers’ strike and vessel bunching when a cold snap in Western Canada resulted in operating restrictions, including running shorter trains, that impacted CN’s network velocity, a CN spokesperson told the Journal of Commerce. “CN is working closely with the port operators to clear out these volumes as the vessel discharge normalizes over the next three weeks,” a spokesperson for the railroad said. “We are already seeing some improvements and are confident that the dwell metric will fall back to normal levels as we catch up on the backlog over the next few weeks.” Canadian Pacific Kansas City (CPKC) said Thursday its railcars are cycling efficiently through its network and that the supply of cars is good. Demand is forecast to remain strong through January, a CPKC spokesperson said. DP World Canada, which operates the Centerm terminal in Vancouver, said it is working with the railroads to handle the increased import volumes leading up to the Lunar New Year on Jan. 29. “We should be back to normal in a few weeks,” said CEO Doug Smith. Meanwhile, the elevated rail container dwell times at the marine terminals have not had an impact on drayage operations in Vancouver, said David Earle, CEO of the British Columbia Trucking Association. The only change Earle said he’s noted in recent days is that a small number of inbound containers that had been booked to leave the terminals by rail are being redirected to long-haul truckers for movement inland. Prince Rupert back to normal The Port of Prince Rupert, which faced challenges similar to Vancouver last month, saw its rail container dwell times spike to an average of nearly 10 days in mid-December, said Brian Friesen, vice president of trade development at the port. The average dwell dropped to 6.1 days for the week of Dec. 20 and has continued to slide in January. “The dwells are now below two days,” Friesen said. “It’s all fluid now.” Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .

Rail News

Marine terminals

Vancouver braces for congestion, high rail dwells through January

<div class="phx-topic abstract-wrapper">With the threat of a US port strike averted, the transition to new global service networks will not be accompanied by widespread disruption, the analyst believes.</div>

With the threat of a US port strike averted, the transition to new global service networks will not be accompanied by widespread disruption, the analyst believes.

<div class="phx-topic">Ocean carriers will roll out their new global networks next month, and while disruption to supply chains is inevitable during the transition period, the extent of that disruption will be limited by a series of factors, not least of which is the longshore contract agreement on the US East and Gulf coasts, according to Alphaliner The International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) late Wednesday said they <a href="https://www.joc.com/article/ila-usmx-reach-tentative-deal-that-avoids-another-port-strike-5919519">had reached a tentative agreemen</a>t on a new master contract, avoiding a strike that would have begun Jan. 15. “The carriers must feel relieved that there will not be any striking that would potentially complicate the changes they are preparing,” Stefan Verberckmoes, senior analyst at Alphaliner, told the Journal of Commerce Thursday. With the threat of a port strike removed, carriers can now focus on preparations for the new networks that will be implemented from Feb. 1 by the Gemini Cooperation (Maersk and Hapag-Lloyd), Premier Alliance (Ocean Network Express, HMM and Yang Ming) and the standalone Mediterranean Shipping Co. Verberckmoes said in the past, reshuffling carrier alliances “normally creates chaos,” but a series of factors would help to smooth the transition this time. He noted that Lunar New Year falls on Jan. 29, and on top of a slowdown in demand, factories in China will close for at least a week, so the new alliance services would only start in the second week of February. That will leave carriers plenty of time to move ships to the right Chinese port. Another factor is that even within the alliances, many services will be operated by a single carrier, and those fleets will continue to operate the new loops without the need for extensive repositioning of vessels. “The new schedules are already published and most of the ships have already been nominated and are in place, so every importer or exporter can already see which ships are available,” Verberckmoes said. “There will be skipped sailings, but it will certainly not be chaos.” <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="874fb71b-dde8-4286-b65b-1bef7790a9f3"></dynamic-object></div>In preparation for the post-Lunar New Year slowdown, ocean carriers are increasing blank sailings on the Asia-Europe trade lanes in February. Data from visibility provider eeSea shows available capacity from Asia to North Europe is set to drop to 860,974 TEUs from 1.1 million TEUs in January. <h3>Repositioning of ships </h3>Interestingly, disruption to supply chains from the canceled sailings will be mitigated by the repositioning of ships that were doubling as extra loaders moving from Asia to Europe to work the new trans-Atlantic services, Verberckmoes said. “I already see a lot of extra loaders mainly active on the trans-Pacific trade that are now coming to Europe on extra voyages from the Far East to ensure they are in position to join the new trans-Atlantic services starting in February,” he noted. Even though the vessels are 6,000-7,000 TEUs in capacity, they are taking on cargo during their repositioning voyages, which Verberckmoes said was offsetting the capacity impact of blank sailings. Sea-Intelligence Maritime Analysis noted that supply chain disruptions from the Lunar New Year blank sailings might be amplified on the trans-Pacific by the phase-out of existing alliance services and the phase-in of new services. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="3af4814e-7307-4298-887b-ce4d0ef124e6"></dynamic-object></div>In its weekly Sunday Spotlight newsletter, Sea-Intelligence said carriers on the Asia-US West Coast trade have so far scheduled blanked capacity of 9% for the Lunar New Year week and the following three-week period compared with the 22.8% blanked in 2024 and the average 2016–19 reduction of 18.3%. This is despite current capacity deployment at just under 1.34 million TEUs for the four-week period covering the Lunar New Year, which corresponds to 33.3% growth in capacity year over year. “Under normal circumstances, this would mean significant blank sailings announcements in the upcoming weeks, since it is highly unlikely that carriers would be satisfied with this level of excess capacity,” Alan Murphy, CEO of Sea-Intelligence, wrote in the newsletter. However, Murphy noted that the phase-in of new networks by MSC, Gemini Cooperation and Premier Alliance introduced a new uncertainty, where carriers might prioritize getting their vessels phased into the new networks at the expense of not blanking as much capacity as usual. Marc Meier, global head of ocean freight for Toll Global Forwarding, believes there are likely to be service disruptions on the major east-west trades in the first half of the year due to the startup of the new alliances. ”Carriers will plan their capacity to meet demand with many blank sailings in the first two weeks of February for all trades,” Meier told the Journal of Commerce this week, noting there would be a gradual pickup in volume expected from Feb. 21. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Ocean carriers will roll out their new global networks next month, and while disruption to supply chains is inevitable during the transition period, the extent of that disruption will be limited by a series of factors, not least of which is the longshore contract agreement on the US East and Gulf coasts, according to Alphaliner The International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) late Wednesday said they had reached a tentative agreemen t on a new master contract, avoiding a strike that would have begun Jan. 15. “The carriers must feel relieved that there will not be any striking that would potentially complicate the changes they are preparing,” Stefan Verberckmoes, senior analyst at Alphaliner, told the Journal of Commerce Thursday. With the threat of a port strike removed, carriers can now focus on preparations for the new networks that will be implemented from Feb. 1 by the Gemini Cooperation (Maersk and Hapag-Lloyd), Premier Alliance (Ocean Network Express, HMM and Yang Ming) and the standalone Mediterranean Shipping Co. Verberckmoes said in the past, reshuffling carrier alliances “normally creates chaos,” but a series of factors would help to smooth the transition this time. He noted that Lunar New Year falls on Jan. 29, and on top of a slowdown in demand, factories in China will close for at least a week, so the new alliance services would only start in the second week of February. That will leave carriers plenty of time to move ships to the right Chinese port. Another factor is that even within the alliances, many services will be operated by a single carrier, and those fleets will continue to operate the new loops without the need for extensive repositioning of vessels. “The new schedules are already published and most of the ships have already been nominated and are in place, so every importer or exporter can already see which ships are available,” Verberckmoes said. “There will be skipped sailings, but it will certainly not be chaos.” In preparation for the post-Lunar New Year slowdown, ocean carriers are increasing blank sailings on the Asia-Europe trade lanes in February. Data from visibility provider eeSea shows available capacity from Asia to North Europe is set to drop to 860,974 TEUs from 1.1 million TEUs in January. Repositioning of ships Interestingly, disruption to supply chains from the canceled sailings will be mitigated by the repositioning of ships that were doubling as extra loaders moving from Asia to Europe to work the new trans-Atlantic services, Verberckmoes said. “I already see a lot of extra loaders mainly active on the trans-Pacific trade that are now coming to Europe on extra voyages from the Far East to ensure they are in position to join the new trans-Atlantic services starting in February,” he noted. Even though the vessels are 6,000-7,000 TEUs in capacity, they are taking on cargo during their repositioning voyages, which Verberckmoes said was offsetting the capacity impact of blank sailings. Sea-Intelligence Maritime Analysis noted that supply chain disruptions from the Lunar New Year blank sailings might be amplified on the trans-Pacific by the phase-out of existing alliance services and the phase-in of new services. In its weekly Sunday Spotlight newsletter, Sea-Intelligence said carriers on the Asia-US West Coast trade have so far scheduled blanked capacity of 9% for the Lunar New Year week and the following three-week period compared with the 22.8% blanked in 2024 and the average 2016–19 reduction of 18.3%. This is despite current capacity deployment at just under 1.34 million TEUs for the four-week period covering the Lunar New Year, which corresponds to 33.3% growth in capacity year over year. “Under normal circumstances, this would mean significant blank sailings announcements in the upcoming weeks, since it is highly unlikely that carriers would be satisfied with this level of excess capacity,” Alan Murphy, CEO of Sea-Intelligence, wrote in the newsletter. However, Murphy noted that the phase-in of new networks by MSC, Gemini Cooperation and Premier Alliance introduced a new uncertainty, where carriers might prioritize getting their vessels phased into the new networks at the expense of not blanking as much capacity as usual. Marc Meier, global head of ocean freight for Toll Global Forwarding, believes there are likely to be service disruptions on the major east-west trades in the first half of the year due to the startup of the new alliances. ”Carriers will plan their capacity to meet demand with many blank sailings in the first two weeks of February for all trades,” Meier told the Journal of Commerce this week, noting there would be a gradual pickup in volume expected from Feb. 21. Contact Greg Knowler at greg.knowler@spglobal.com .

Trans-Atlantic

Forwarding

Trans-Pacific

Limited disruption likely as new carrier alliances roll out: Alphaliner

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

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Shippers save money, time with automated transportation bidding tools

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

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Filling the Supply Chain Education Gap with LTL Education Courses

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<div class="phx-topic abstract-wrapper">The twin complaints to the FMC charge that several ocean carriers pushed the shippers into paying surcharges and premium rates totaling $5.5 million, while creating another $76 million in added spot market costs. </div>

The twin complaints to the FMC charge that several ocean carriers pushed the shippers into paying surcharges and premium rates totaling $5.5 million, while creating another $76 million in added spot market costs.

<div class="phx-topic">Two US shippers, including the parent company of retailer Crate &amp; Barrel, want the Federal Maritime Commission (FMC) to investigate ocean carriers for not providing enough vessel space during the pandemic surge, alleging they also extracted surcharges and higher rates for previously agreed-upon container volumes in violation of US shipping law and forced the shippers into the then-costly spot market. The complaints are a further shot across the bow on the enforceability of service contracts and whether service refusals for some customers were a legitimate response to overwhelming demand during the COVID-19 era. In a pair of complaints published by FMC last week, Euromarket Designs, the parent of Crate &amp; Barrel, and housewares and furniture distributor Nielsen &amp; Bainbridge both allege that a host of ocean carriers failed to honor service contracts with the two shippers between 2020 and 2022, resulting in delays and a shortfall in expected cargo volumes. Instead, the shippers claim that carriers sought surcharges for getting their allocated cargo on a ship. All in, Euromarket said its freight bills with Mediterranean Shipping Co., HMM and Ocean Network Express (ONE) increased $5.5 million due to surcharges and higher rates. Nielsen &amp; Bainbridge said it paid $4 million more to ONE, OOCL and Evergreen Line for carrying cargo under its existing contracts.Even with the premiums, the two shippers said they were not able to get all the space they required during the 2020–22 service years. As a result, they were forced into the spot market where they say they paid a combined $76.5 million for capacity they expected to get under their service contracts. Nielsen &amp; Bainbridge filed for bankruptcy last year, turning itself over to private equity lenders KKR &amp; Co. and Silver Point Capital. The company said in its filing the higher freight costs “significantly contributed” to its bankruptcy. Along with an FMC investigation, the complainants asked for reparations from the carriers for the alleged violations. Representatives of the carriers did not immediately respond to the allegations. <h3>Similar complaints lobbed at carriers </h3>The twin complaints mirror similar ones filed in the wake of the pandemic-era container surge alleging refusal of service by carriers, with those cases having mixed success. MCS Industries, another home goods importer, alleged in 2021 that MSC and Cosco Shipping <a href="https://www.joc.com/article/us-importer-complains-of-container-line-collusion-to-fmc-5249085">failed to honor service contracts</a> and agreed-upon rate structures, the first such complaint on the issue of service contract fulfillment. MCS eventually entered into a settlement with Cosco.Food importer MSRF alleged in 2022 that HMM and Yang Ming did not honor service contracts that forced the shipper into the more expensive spot market. An FMC administrative law judge found <a href="https://www.joc.com/article/fmc-judge-rules-in-favor-of-hmm-in-rolled-cargo-complaint-5220361">HMM did try to accommodate MSRF’s cargo</a> by renegotiating contracts, while Yang Ming eventually settled with the shipper. Prior to the two recent filings, the largest complaints about refusal of service have come from Bed Bath &amp; Beyond. The bankrupt retailer alleged in <a href="https://www.joc.com/article/bed-bath-beyond-files-fmc-complaint-against-yang-ming-in-capacity-dispute-5220648">two complaints from 2023</a> that OOCL and Yang Ming caused a combined $40 million in damages for their alleged refusal to provide sufficient vessel space under existing contracts. The two cases are still pending. The alleged violations occurred before the June 2022 implementation of the Ocean Shipping Reform Act of 2022 (OSRA-22), which prohibits ocean carriers from <a href="https://www.joc.com/article/fmc-refusal-of-service-rule-risks-overreacting-to-pandemic-market-5216058">“unreasonable refusals” of cargo space to shippers</a>. In July 2024, the FMC published its final rules on how it would treat instances where carriers refused cargo space to customers. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

Two US shippers, including the parent company of retailer Crate & Barrel, want the Federal Maritime Commission (FMC) to investigate ocean carriers for not providing enough vessel space during the pandemic surge, alleging they also extracted surcharges and higher rates for previously agreed-upon container volumes in violation of US shipping law and forced the shippers into the then-costly spot market. The complaints are a further shot across the bow on the enforceability of service contracts and whether service refusals for some customers were a legitimate response to overwhelming demand during the COVID-19 era. In a pair of complaints published by FMC last week, Euromarket Designs, the parent of Crate & Barrel, and housewares and furniture distributor Nielsen & Bainbridge both allege that a host of ocean carriers failed to honor service contracts with the two shippers between 2020 and 2022, resulting in delays and a shortfall in expected cargo volumes. Instead, the shippers claim that carriers sought surcharges for getting their allocated cargo on a ship. All in, Euromarket said its freight bills with Mediterranean Shipping Co., HMM and Ocean Network Express (ONE) increased $5.5 million due to surcharges and higher rates. Nielsen & Bainbridge said it paid $4 million more to ONE, OOCL and Evergreen Line for carrying cargo under its existing contracts. Even with the premiums, the two shippers said they were not able to get all the space they required during the 2020–22 service years. As a result, they were forced into the spot market where they say they paid a combined $76.5 million for capacity they expected to get under their service contracts. Nielsen & Bainbridge filed for bankruptcy last year, turning itself over to private equity lenders KKR & Co. and Silver Point Capital. The company said in its filing the higher freight costs “significantly contributed” to its bankruptcy. Along with an FMC investigation, the complainants asked for reparations from the carriers for the alleged violations. Representatives of the carriers did not immediately respond to the allegations. Similar complaints lobbed at carriers The twin complaints mirror similar ones filed in the wake of the pandemic-era container surge alleging refusal of service by carriers, with those cases having mixed success. MCS Industries, another home goods importer, alleged in 2021 that MSC and Cosco Shipping failed to honor service contracts and agreed-upon rate structures, the first such complaint on the issue of service contract fulfillment. MCS eventually entered into a settlement with Cosco. Food importer MSRF alleged in 2022 that HMM and Yang Ming did not honor service contracts that forced the shipper into the more expensive spot market. An FMC administrative law judge found HMM did try to accommodate MSRF’s cargo by renegotiating contracts, while Yang Ming eventually settled with the shipper. Prior to the two recent filings, the largest complaints about refusal of service have come from Bed Bath & Beyond. The bankrupt retailer alleged in two complaints from 2023 that OOCL and Yang Ming caused a combined $40 million in damages for their alleged refusal to provide sufficient vessel space under existing contracts. The two cases are still pending. The alleged violations occurred before the June 2022 implementation of the Ocean Shipping Reform Act of 2022 (OSRA-22), which prohibits ocean carriers from “unreasonable refusals” of cargo space to shippers . In July 2024, the FMC published its final rules on how it would treat instances where carriers refused cargo space to customers. Contact Michael Angell at michael.angell@spglobal.com .

Two US shippers latest to allege carriers bumped contract cargo to spot market

<div class="phx-topic abstract-wrapper">The decline reflects the wider slide in container freight rates from August, which accelerated in October and November as cargo demand eased.</div>

The decline reflects the wider slide in container freight rates from August, which accelerated in October and November as cargo demand eased.

<div class="phx-topic">Taiwan's Big Three container lines saw an accelerating decline in revenues over the last six months, although they remain significantly higher than monthly revenues in 2023, filings this week with the Taiwan stock exchange show. Figures from Evergreen Marine, Taiwan’s largest container line, show monthly revenues dropped 30% between the peak in July and December. Yang Ming Marine Transport saw a similar pattern, with monthly revenues falling 32% between July and December, while intra-Asia-focused Wan Hai Lines saw a 28% drop in the same period. The slump reflects the wider slide in container freight rates from August, which accelerated in October and November as cargo demand eased. The Shanghai Containerized Freight Index (SCFI), which measures spot container rates on a basket of trades including the trans-Pacific from Shanghai, plunged 43% in the third quarter alone, the biggest third-quarter drop since 2022. That followed an early peak season as shippers forward booked shipments to offset port congestion and voyage delays and the threat of disruption due to industrial action by dockworkers on the US East and Gulf coasts in October. “With the end of the US East [and Gulf] coast port strike, concerns about supply chain disruptions ... eased, leading to increased competitive pressure in the market,” Yang Ming said in market comments about the fourth quarter. Evergreen and Wan Hai Lines did see a slight uptick in December revenues from November on the back of higher freight rates ahead of the Lunar New Year holidays. Overall, Evergreen saw monthly revenues slide from $1.6 billion in July to $1.1 billion in December, stock exchange filings show. Total revenues for the year were $14 billion, up 68% compared with $8.4 billion in 2023. Yang Ming reported monthly revenues of $770 million in July, falling to $521 million in December. But revenues for all of 2024 totaled $6.7 billion, up 58% from $4.2 billion in the year prior. Similarly, Wan Hai Lines recorded revenues of $608 million in July compared with $435 million in December. Full-year revenue of $4.9 billion was up 62% from $3 million in 2023. Other carriers are expected to report a similar slide in revenues after rates peaked in the middle of last year. <a href="https://www.joc.com/article/cosco-forecasts-95-jump-in-2024-net-profit-on-robust-volumes-freight-rates-5920588">OOCL on Friday</a> said revenues fell to $2.5 billion in the fourth quarter, despite an increase in liftings, from $3 billion in the third quarter. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>.</div>

Taiwan's Big Three container lines saw an accelerating decline in revenues over the last six months, although they remain significantly higher than monthly revenues in 2023, filings this week with the Taiwan stock exchange show. Figures from Evergreen Marine, Taiwan’s largest container line, show monthly revenues dropped 30% between the peak in July and December. Yang Ming Marine Transport saw a similar pattern, with monthly revenues falling 32% between July and December, while intra-Asia-focused Wan Hai Lines saw a 28% drop in the same period. The slump reflects the wider slide in container freight rates from August, which accelerated in October and November as cargo demand eased. The Shanghai Containerized Freight Index (SCFI), which measures spot container rates on a basket of trades including the trans-Pacific from Shanghai, plunged 43% in the third quarter alone, the biggest third-quarter drop since 2022. That followed an early peak season as shippers forward booked shipments to offset port congestion and voyage delays and the threat of disruption due to industrial action by dockworkers on the US East and Gulf coasts in October. “With the end of the US East [and Gulf] coast port strike, concerns about supply chain disruptions ... eased, leading to increased competitive pressure in the market,” Yang Ming said in market comments about the fourth quarter. Evergreen and Wan Hai Lines did see a slight uptick in December revenues from November on the back of higher freight rates ahead of the Lunar New Year holidays. Overall, Evergreen saw monthly revenues slide from $1.6 billion in July to $1.1 billion in December, stock exchange filings show. Total revenues for the year were $14 billion, up 68% compared with $8.4 billion in 2023. Yang Ming reported monthly revenues of $770 million in July, falling to $521 million in December. But revenues for all of 2024 totaled $6.7 billion, up 58% from $4.2 billion in the year prior. Similarly, Wan Hai Lines recorded revenues of $608 million in July compared with $435 million in December. Full-year revenue of $4.9 billion was up 62% from $3 million in 2023. Other carriers are expected to report a similar slide in revenues after rates peaked in the middle of last year. OOCL on Friday said revenues fell to $2.5 billion in the fourth quarter, despite an increase in liftings, from $3 billion in the third quarter. Contact Keith Wallis at keithwallis@hotmail.com .

Taiwan’s Big Three carriers see 30% slide in H2 monthly revenues after rate slump

<div class="phx-topic abstract-wrapper">While the draft language of the tentative agreement was not disclosed, the two sides said the deal includes language that covers the contentious issue of port automation and new technologies. </div>

While the draft language of the tentative agreement was not disclosed, the two sides said the deal includes language that covers the contentious issue of port automation and new technologies.

<div class="phx-topic">The International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) late Wednesday said they have reached a tentative agreement on a new master contract that covers ports from Maine to Texas. While the deal needs approval from ILA locals and USMX members, it avoids another port strike and ensures shippers of labor peace along the US East and Gulf coasts for the next six years. The ILA and the USMX said in separate statements the agreement includes language that covers the contentious issue of port automation and new technologies. While the draft language of the tentative agreement was not available, one source said that marine terminals will have some leeway in implementing new technologies in return for more longshore jobs. Talks on a new master contract broke down in November due to the union’s concerns about the impact on jobs from <a href="https://www.joc.com/article/ila-targets-rail-mounted-gantry-cranes-amid-impasse-in-port-labor-talks-5874742">the use of semi-automated rail-mounted gantry cranes</a> (RMGs) at marine terminals. “This agreement protects current ILA jobs and establishes a framework for implementing technologies that will create more jobs while modernizing East and Gulf coast ports — making them safer and more efficient and creating the capacity they need to keep our supply chains strong,” the statement said. Details of the agreement were not publicly disclosed, pending final approval by both sides. The deal was reached a week before a Jan. 15 strike deadline that was set <a href="https://www.joc.com/article/ila-usmx-agree-on-new-wage-offer-and-contract-extension-that-reopens-ports-5741882">in October at the end of the three-day ILA strike</a> that was settled with an agreement on wages. The 45,000 dockworkers at East and Gulf coast ports will work under the current contract until the tentative agreement is ratified by the wage-scale committees of local unions. But sources indicate that the locals are likely to support the contract negotiated by ILA President Harold Daggett and Executive Vice President Dennis Daggett. The breakthrough came after four days of talks in Teaneck, New Jersey, on a new master contract. Those talks included side discussions on the impact of new technology on longshore jobs, ahead of <a href="https://www.joc.com/article/ila-usmx-contract-talks-set-for-jan-7-restart-ahead-of-strike-deadline-sources-5913854">broader talks that restarted on Jan. 7</a> that covered benefits and specific longshore crafts such as checkers and clerks. In December, the union enlisted President-elect Donald Trump to advocate on behalf of their stance against automation. On Wednesday, the ILA issued its own statement thanking Trump for his “bold stance [that] helped prevent a second coastwide strike.” “President Trump clearly demonstrated his unwavering support for our ILA union and longshore workers with his statement ‘heard round the world’ backing our position to protect American longshore jobs against the ravages of automated terminals,” Harold Daggett said in the statement. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com.</a></div>

The International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) late Wednesday said they have reached a tentative agreement on a new master contract that covers ports from Maine to Texas. While the deal needs approval from ILA locals and USMX members, it avoids another port strike and ensures shippers of labor peace along the US East and Gulf coasts for the next six years. The ILA and the USMX said in separate statements the agreement includes language that covers the contentious issue of port automation and new technologies. While the draft language of the tentative agreement was not available, one source said that marine terminals will have some leeway in implementing new technologies in return for more longshore jobs. Talks on a new master contract broke down in November due to the union’s concerns about the impact on jobs from the use of semi-automated rail-mounted gantry cranes (RMGs) at marine terminals. “This agreement protects current ILA jobs and establishes a framework for implementing technologies that will create more jobs while modernizing East and Gulf coast ports — making them safer and more efficient and creating the capacity they need to keep our supply chains strong,” the statement said. Details of the agreement were not publicly disclosed, pending final approval by both sides. The deal was reached a week before a Jan. 15 strike deadline that was set in October at the end of the three-day ILA strike that was settled with an agreement on wages. The 45,000 dockworkers at East and Gulf coast ports will work under the current contract until the tentative agreement is ratified by the wage-scale committees of local unions. But sources indicate that the locals are likely to support the contract negotiated by ILA President Harold Daggett and Executive Vice President Dennis Daggett. The breakthrough came after four days of talks in Teaneck, New Jersey, on a new master contract. Those talks included side discussions on the impact of new technology on longshore jobs, ahead of broader talks that restarted on Jan. 7 that covered benefits and specific longshore crafts such as checkers and clerks. In December, the union enlisted President-elect Donald Trump to advocate on behalf of their stance against automation. On Wednesday, the ILA issued its own statement thanking Trump for his “bold stance [that] helped prevent a second coastwide strike.” “President Trump clearly demonstrated his unwavering support for our ILA union and longshore workers with his statement ‘heard round the world’ backing our position to protect American longshore jobs against the ravages of automated terminals,” Harold Daggett said in the statement. Contact Michael Angell at michael.angell@spglobal.com.

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