<div class="phx-topic abstract-wrapper">The new rule, a second attempt at requiring the so-called ABC test for workers in the state, has drawn opposition from multiple groups, with port trucking among the affected industries.</div>

The new rule, a second attempt at requiring the so-called ABC test for workers in the state, has drawn opposition from multiple groups, with port trucking among the affected industries.

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<div class="phx-topic">A second attempt at requiring New Jersey employers to test whether their workers are employees or independent contractors is again raising concerns about the impact on port truckers. This time, though, legislators are readily joining with drayage carriers to question potential economic harm under the proposal. The New Jersey Department of Labor and Workforce Development finished a 90-day comment period on Wednesday over a proposed rule that would require use of the so-called “ABC” test for determining whether a worker is a full-time employee or an independent contractor.The ABC test, which looks at factors such as the kind of work, how it’s done and who supervises it, undergirds <a href="https://www.joc.com/article/trucker-classification-effort-ripe-for-national-expansion-5197032">California’s AB5 law</a> passed in 2019. AB5 imposed a higher hurdle on the state’s trucking industry for using independent owner-operators as drivers. That same year, <a href="https://www.joc.com/article/njs-classification-bill-dead-for-now-but-will-return-senator-5196905">New Jersey’s legislature failed to pass a similar law</a> codifying use of the ABC test. However, the state Labor Department proposed in May adding a rule that would require using the ABC test, saying the rule was necessary due to recent court cases of misclassification. The Labor Department did not say how many comments it received about the rule. But one group — Save Independent Work — said it received 18,000 comments for submission opposing the rule. New Jersey has about 1.7 million independent contractors. As with the earlier attempted legislation, the Labor Department’s proposed rule drew opposition from the state’s drayage carriers, which rely on about 8,300 independent contractor drivers at the Port of New York and New Jersey. Lisa Yakomin, president of the Association of Bi-State Motor Carriers, said during public testimony in Trenton in June the rule would “paralyze the regional supply chain.” “Previous attempts to enshrine the Labor Department’s narrow application of the ABC test have been soundly rejected by the state legislature,” Yakomin said during her testimony. “This new rulemaking ignores that opposition and bypasses the authority of our state’s elected legislative representatives.” Other port stakeholders joined to oppose the new rule, including the Shipping Association of New York and New Jersey and the Maritime Association of the Port of New York and New Jersey (MAPONYNJ), which said disrupting the business model for port truckers would hurt supply chains.“Rather than protecting independent contractors, the proposal would effectively eliminate their ability to operate,” MAPONYNJ said in its comments. The proposed rule did draw support from the groups aligned with labor unions, such as the Economic Policy Institute and Human Rights Watch, which highlighted how delivery and rideshare drivers in Texas only earn about $5 per hour due to being classified as independent contractors. <h3>No timeline for decision</h3>The decision to adopt the rule rests largely with Robert Asaro-Angelo, the state’s labor commissioner and an appointee of New Jersey Gov. Phil Murphy, a Democrat.There is no timeline for when Asaro-Angelo must decide on whether to implement the rule. Bi-State’s Yakomin told the Journal of Commerce a decision on the rule is an overhang for port truckers as the outgoing Murphy administration may try to push it through during a lame duck session“If Asaro-Angelo wants to move forward, there’s nothing we can do,” Yakomin said. “It would take some legislation to roll back some of the test.”However, Yakomin said that this second attempt at implementing the ABC test has drawn more opposition from other New Jersey legislators, especially Democratic legislators who have typically been friendlier to unions and other labor groups. State Sen. Angela McKnight, a Democrat representing the area around the marine terminal in Bayonne, said in a letter to the Labor Department this month the proposed rule “could have serious unintended economic consequences” at the NY-NJ port and could “push drivers to relocate to less restrictive states.” Democratic State Sen. John Burzichelli, who took over the seat vacated by the senator who sponsored the original ABC legislation in 2019, also said in comments about the rule that he’s heard from constituents that the rule would be “detrimental.”“It’s great to see how many legislators have expressed concerns about the rule,” Yakomin said. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

A second attempt at requiring New Jersey employers to test whether their workers are employees or independent contractors is again raising concerns about the impact on port truckers. This time, though, legislators are readily joining with drayage carriers to question potential economic harm under the proposal. The New Jersey Department of Labor and Workforce Development finished a 90-day comment period on Wednesday over a proposed rule that would require use of the so-called “ABC” test for determining whether a worker is a full-time employee or an independent contractor. The ABC test, which looks at factors such as the kind of work, how it’s done and who supervises it, undergirds California’s AB5 law passed in 2019. AB5 imposed a higher hurdle on the state’s trucking industry for using independent owner-operators as drivers. That same year, New Jersey’s legislature failed to pass a similar law codifying use of the ABC test. However, the state Labor Department proposed in May adding a rule that would require using the ABC test, saying the rule was necessary due to recent court cases of misclassification. The Labor Department did not say how many comments it received about the rule. But one group — Save Independent Work — said it received 18,000 comments for submission opposing the rule. New Jersey has about 1.7 million independent contractors. As with the earlier attempted legislation, the Labor Department’s proposed rule drew opposition from the state’s drayage carriers, which rely on about 8,300 independent contractor drivers at the Port of New York and New Jersey. Lisa Yakomin, president of the Association of Bi-State Motor Carriers, said during public testimony in Trenton in June the rule would “paralyze the regional supply chain.” “Previous attempts to enshrine the Labor Department’s narrow application of the ABC test have been soundly rejected by the state legislature,” Yakomin said during her testimony. “This new rulemaking ignores that opposition and bypasses the authority of our state’s elected legislative representatives.” Other port stakeholders joined to oppose the new rule, including the Shipping Association of New York and New Jersey and the Maritime Association of the Port of New York and New Jersey (MAPONYNJ), which said disrupting the business model for port truckers would hurt supply chains. “Rather than protecting independent contractors, the proposal would effectively eliminate their ability to operate,” MAPONYNJ said in its comments. The proposed rule did draw support from the groups aligned with labor unions, such as the Economic Policy Institute and Human Rights Watch, which highlighted how delivery and rideshare drivers in Texas only earn about $5 per hour due to being classified as independent contractors. No timeline for decision The decision to adopt the rule rests largely with Robert Asaro-Angelo, the state’s labor commissioner and an appointee of New Jersey Gov. Phil Murphy, a Democrat. There is no timeline for when Asaro-Angelo must decide on whether to implement the rule. Bi-State’s Yakomin told the Journal of Commerce a decision on the rule is an overhang for port truckers as the outgoing Murphy administration may try to push it through during a lame duck session “If Asaro-Angelo wants to move forward, there’s nothing we can do,” Yakomin said. “It would take some legislation to roll back some of the test.” However, Yakomin said that this second attempt at implementing the ABC test has drawn more opposition from other New Jersey legislators, especially Democratic legislators who have typically been friendlier to unions and other labor groups. State Sen. Angela McKnight, a Democrat representing the area around the marine terminal in Bayonne, said in a letter to the Labor Department this month the proposed rule “could have serious unintended economic consequences” at the NY-NJ port and could “push drivers to relocate to less restrictive states.” Democratic State Sen. John Burzichelli, who took over the seat vacated by the senator who sponsored the original ABC legislation in 2019, also said in comments about the rule that he’s heard from constituents that the rule would be “detrimental.” “It’s great to see how many legislators have expressed concerns about the rule,” Yakomin said. Contact Michael Angell at michael.angell@spglobal.com .

Drayage

North American ports

Trucking labor

New Jersey’s proposed worker classification rule hangs over port truckers

<div class="phx-topic abstract-wrapper">Shippers stand to benefit on lanes where both western US railroads are vying for market share. </div>

Shippers stand to benefit on lanes where both western US railroads are vying for market share.

<div class="phx-topic">Western US railroads BNSF Railway and Union Pacific Railroad (UP) are adding new intermodal services and expanding capacity in key domestic corridors as part of a broader effort to capture freight that might otherwise move on trucks. UP on Thursday announced an expedited intermodal service between Southern California’s Inland Empire and its Global 2 terminal in Chicago, set to begin Sept. 3. The train will operate five days per week and is designed to be 20% faster than existing lanes in a bid to attract time-sensitive freight now moving over the road, UP said. The announcement followed the formal opening of Union Pacific’s new intermodal terminal in Kansas City, which held a ribbon-cutting ceremony on Wednesday. The facility began operating in mid-July and now handles both international and domestic trains from Southern California. UP has introduced several other services in recent months, including a second train between Seattle and Chicago that began operating July 26 and a train linking Memphis and Dallas that launched in the spring. “We’re committed to capturing the over-the-road traffic and see it as a long-term growth engine for us,” Kenny Rocker, UP’s vice president of marketing and sales, told the Journal of Commerce. “You’ve seen the commitment to our intermodal business at a broad level with these investments.” BNSF, meanwhile, has also expanded its service offerings, introducing a new international intermodal lane linking Salt Lake City with ports in Northern and Southern California. Its 43-acre terminal in Salt Lake City opened July 31 after six months of development and is intended to serve importers and exporters seeking alternatives to long-haul drayage. “Our Salt Lake City service boosts competition, it speaks to our growth mindset and strengthens Utah’s role in the global supply chain,” Jon Gabriel, BNSF’s group vice president of consumer products, told the Journal of Commerce. “It’s part of our shared vision of a more connected, sustainable, cost-efficient future for moving freight.” BNSF also launched an expedited train on July 10 between Los Angeles and Houston and is exploring further expansion. While Union Pacific seeks <a href="https://www.joc.com/article/up-looks-to-create-first-coast-to-coast-railroad-with-85-billion-ns-deal-6052288">regulatory approval</a> to acquire Norfolk Southern Railway (NS), rival BNSF is working to strengthen its partnership with CSX Transportation. BNSF and CSX already operate expedited services from Southern California to Georgia, New Jersey and Ohio. While there are crew changes, there’s no work involved loading or unloading boxes, meaning the services operate largely like a single-line railroad. <h3>Competition gives shippers more options </h3>Shippers, meanwhile, stand to benefit on lanes where both railroads are vying for market share. BNSF has long held a transit-time advantage from Los Angeles to Chicago, Los Angeles to Kansas City and Seattle to Chicago; UP aims to close those gaps with its new service offerings. Conversely, BNSF is targeting corridors such as Los Angeles to Houston, where UP currently has faster service. Each must convince shippers who are already committed to intermodal why their railroad is the best option. UP has targeted cost-sensitive shippers in Kansas City by shifting origin points away from Long Beach. The new Los Angeles-to-Kansas City train departs from City of Industry, avoiding the Alameda Corridor surcharges — $62 per TEU and $81 per domestic container — that made UP’s pricing less competitive in prior years. The new Los Angeles-to-Chicago service will originate in the Inland Empire, located within Southern California’s densest concentration of warehouses. While BNSF already serves the Inland Empire via its San Bernardino terminal, UP’s expansion gives shippers in the region another option for direct service to the Midwest. The Memphis-to-Dallas train is designed in part to support eastern railroads looking to move freight from the Northeast to Dallas via Memphis, and to reposition empty containers in Memphis heading to Mexico. UP said most laden cargo will not originate in Memphis, and most empty containers will travel beyond Dallas. Meanwhile, BNSF wants not only to close the transit time gap to Houston, but also to the US Southeast, where an existing UP-NS joint service over the Meridian Speedway is the fastest option to cities such as Atlanta, Charlotte and Jacksonville. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>.</div>

Western US railroads BNSF Railway and Union Pacific Railroad (UP) are adding new intermodal services and expanding capacity in key domestic corridors as part of a broader effort to capture freight that might otherwise move on trucks. UP on Thursday announced an expedited intermodal service between Southern California’s Inland Empire and its Global 2 terminal in Chicago, set to begin Sept. 3. The train will operate five days per week and is designed to be 20% faster than existing lanes in a bid to attract time-sensitive freight now moving over the road, UP said. The announcement followed the formal opening of Union Pacific’s new intermodal terminal in Kansas City, which held a ribbon-cutting ceremony on Wednesday. The facility began operating in mid-July and now handles both international and domestic trains from Southern California. UP has introduced several other services in recent months, including a second train between Seattle and Chicago that began operating July 26 and a train linking Memphis and Dallas that launched in the spring. “We’re committed to capturing the over-the-road traffic and see it as a long-term growth engine for us,” Kenny Rocker, UP’s vice president of marketing and sales, told the Journal of Commerce. “You’ve seen the commitment to our intermodal business at a broad level with these investments.” BNSF, meanwhile, has also expanded its service offerings, introducing a new international intermodal lane linking Salt Lake City with ports in Northern and Southern California. Its 43-acre terminal in Salt Lake City opened July 31 after six months of development and is intended to serve importers and exporters seeking alternatives to long-haul drayage. “Our Salt Lake City service boosts competition, it speaks to our growth mindset and strengthens Utah’s role in the global supply chain,” Jon Gabriel, BNSF’s group vice president of consumer products, told the Journal of Commerce. “It’s part of our shared vision of a more connected, sustainable, cost-efficient future for moving freight.” BNSF also launched an expedited train on July 10 between Los Angeles and Houston and is exploring further expansion. While Union Pacific seeks regulatory approval to acquire Norfolk Southern Railway (NS), rival BNSF is working to strengthen its partnership with CSX Transportation. BNSF and CSX already operate expedited services from Southern California to Georgia, New Jersey and Ohio. While there are crew changes, there’s no work involved loading or unloading boxes, meaning the services operate largely like a single-line railroad. Competition gives shippers more options Shippers, meanwhile, stand to benefit on lanes where both railroads are vying for market share. BNSF has long held a transit-time advantage from Los Angeles to Chicago, Los Angeles to Kansas City and Seattle to Chicago; UP aims to close those gaps with its new service offerings. Conversely, BNSF is targeting corridors such as Los Angeles to Houston, where UP currently has faster service. Each must convince shippers who are already committed to intermodal why their railroad is the best option. UP has targeted cost-sensitive shippers in Kansas City by shifting origin points away from Long Beach. The new Los Angeles-to-Kansas City train departs from City of Industry, avoiding the Alameda Corridor surcharges — $62 per TEU and $81 per domestic container — that made UP’s pricing less competitive in prior years. The new Los Angeles-to-Chicago service will originate in the Inland Empire, located within Southern California’s densest concentration of warehouses. While BNSF already serves the Inland Empire via its San Bernardino terminal, UP’s expansion gives shippers in the region another option for direct service to the Midwest. The Memphis-to-Dallas train is designed in part to support eastern railroads looking to move freight from the Northeast to Dallas via Memphis, and to reposition empty containers in Memphis heading to Mexico. UP said most laden cargo will not originate in Memphis, and most empty containers will travel beyond Dallas. Meanwhile, BNSF wants not only to close the transit time gap to Houston, but also to the US Southeast, where an existing UP-NS joint service over the Meridian Speedway is the fastest option to cities such as Atlanta, Charlotte and Jacksonville. Contact Ari Ashe at ari.ashe@spglobal.com .

Rail News

Intermodal providers

New and faster intermodal services put BNSF, UP on hunt for truck freight

<div class="phx-topic abstract-wrapper">Globalization is accelerating on the back of the commercial success of Chinese companies that are taking market share on the global stage, according to the Maersk CEO. </div>

Globalization is accelerating on the back of the commercial success of Chinese companies that are taking market share on the global stage, according to the Maersk CEO.

<div class="phx-topic">The rapid expansion of Chinese brands across a range of industrial and consumer verticals is changing the fabric of global trade and shaping up as a new driver of demand for container shipping, according to Maersk CEO Vincent Clerc. Clerc told analysts during a first-half earnings call Thursday that up until 2021, demand was mostly in line with consumption and anything that could be offshored by Western businesses “was already being offshored.” “Now we’re seeing a different phase ... China gaining market share on the world stage, not by producing stuff for Western companies, but by having its own companies going global,” Clerc said, pointing to electric vehicles, solar panels, wind turbines, chemicals, mobile phones and electronics. “I think the fabric of global trade is changing,” he added. “If you just look at the numbers, what we’ve seen in the last two and a half years is an acceleration of globalization on the back of huge commercial success from Chinese companies that are taking market share on the global stage.” Maersk certainly saw a decoupling from the North American market in its first-half demand where the contraction in US imports was more than offset by strong growth in imports into Europe, Latin America, Western and Central Asia, and Africa. <h3>‘Sluggish US market’ </h3>Trans-Pacific demand will be further influenced by sweeping new tariffs from the US that took effect Thursday, with taxes on most of its trading partners ranging from 10% to 50%. Clerc said there would be “a continued, sluggish US market” for the rest of the year, with China remaining the engine behind stronger demand growth. “The question is whether we are in a process of rebalancing global trade, where the US basically goes a certain way with a tariff regime and China continues to gain market share,” he said. “If they [China] do that on the back of the industrial successes that they’re having, this could carry stronger market growth than anticipated for a few years.” While Clerc said the expansion of Chinese brands around the world was creating long-term demand, it could run into protectionism issues in various sectors if a country or a trading bloc’s industrial base felt threatened. “But what I know is that as long as the market works the way that the market works, there is a new driver in container demand that is adding a lot of upside potential to what we’re doing, which is moving those goods,” he said. “And this is not something that is well-factored in the scenario models going forward.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

The rapid expansion of Chinese brands across a range of industrial and consumer verticals is changing the fabric of global trade and shaping up as a new driver of demand for container shipping, according to Maersk CEO Vincent Clerc. Clerc told analysts during a first-half earnings call Thursday that up until 2021, demand was mostly in line with consumption and anything that could be offshored by Western businesses “was already being offshored.” “Now we’re seeing a different phase ... China gaining market share on the world stage, not by producing stuff for Western companies, but by having its own companies going global,” Clerc said, pointing to electric vehicles, solar panels, wind turbines, chemicals, mobile phones and electronics. “I think the fabric of global trade is changing,” he added. “If you just look at the numbers, what we’ve seen in the last two and a half years is an acceleration of globalization on the back of huge commercial success from Chinese companies that are taking market share on the global stage.” Maersk certainly saw a decoupling from the North American market in its first-half demand where the contraction in US imports was more than offset by strong growth in imports into Europe, Latin America, Western and Central Asia, and Africa. ‘Sluggish US market’ Trans-Pacific demand will be further influenced by sweeping new tariffs from the US that took effect Thursday, with taxes on most of its trading partners ranging from 10% to 50%. Clerc said there would be “a continued, sluggish US market” for the rest of the year, with China remaining the engine behind stronger demand growth. “The question is whether we are in a process of rebalancing global trade, where the US basically goes a certain way with a tariff regime and China continues to gain market share,” he said. “If they [China] do that on the back of the industrial successes that they’re having, this could carry stronger market growth than anticipated for a few years.” While Clerc said the expansion of Chinese brands around the world was creating long-term demand, it could run into protectionism issues in various sectors if a country or a trading bloc’s industrial base felt threatened. “But what I know is that as long as the market works the way that the market works, there is a new driver in container demand that is adding a lot of upside potential to what we’re doing, which is moving those goods,” he said. “And this is not something that is well-factored in the scenario models going forward.” Contact Greg Knowler at greg.knowler@spglobal.com .

Maritime

Container Shipping News

Trans-Pacific

Container lines

Chinese brand expansion changing ‘fabric’ of global trade: Clerc

<div class="phx-topic abstract-wrapper">Vincent Clerc said while the solid on-time performance levels had to be maintained before any commercial discussions would be held with customers, the time was coming. </div>

Vincent Clerc said while the solid on-time performance levels had to be maintained before any commercial discussions would be held with customers, the time was coming.

<div class="phx-topic">Rate premiums could be in the cards for Gemini Cooperation customers after partners Maersk and Hapag-Lloyd delivered on their target of 90%-plus schedule reliability in the first half of the year, Maersk CEO Vincent Clerc said Thursday. The Maersk executive was in a confident mood when he addressed analysts during a first-half earnings call, noting that in the five months since the first Gemini service was phased in, the reliability has been above 90%. “Any skeptics there might have been in the market about our ability to deliver the 90% schedule reliability are gone,” Clerc said. “But now we need to sustain this for a while, and then we need to move towards a more commercial discussion. I don’t think customers have experienced this long enough that they’re ready to entertain such a discussion, but it is something that is going to come.” Data from eeSea shows that Gemini Cooperation was leading reliability among the carrier alliances up to July, but its overall on-time performance recorded by the ocean visibility provider was 84%. Gemini’s best performance was on the Europe-North America trade, where it maintained above 90% reliability throughout June and July. The new Gemini networks, which were fully phased in by June, helped drive up Maersk’s second-quarter volume by 4.2% year over year to 3.2 million FEUs, which was also a 10% improvement on the first quarter. “Gemini does not increase the size of the fleet, but it increases the amount of capacity that we can offer every week, and that’s the big part of the business case,” Clerc said. “That way we lower the unit cost by being able to load more volumes on the same size of fleet.” The increase in volume offset a 6.9% year-over-year drop in average freight rates to $2,259/FEU in the second quarter and a 9.6% decline in rates sequentially. That helped Maersk revenue in the second quarter grow 2.8% year over year to just over $13 billion, with growth reported in all the carrier’s business segments. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="008a8e1d-fe3e-4f4f-b8ad-0d13591dc98f"></dynamic-object></div>Ocean revenue increased 2.4% year over year to $8.6 billion, lifted by higher volumes and higher revenue from demurrage and detention. Logistics and services revenue was up 1% at $3.7 billion, while terminals revenue of $1.3 billion in the second quarter was an increase of 20%, driven by higher volume, higher tariffs and higher storage revenue. Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 8% to $2.3 billion in the second quarter, while earnings before interest and taxes (EBIT) declined 12% to $845 million, which the carrier attributed to “lower gains on sale of assets and higher depreciation linked to capacity increases.” After tax, net profit fell 23% year over year in the second quarter to $639 million. For the first half, revenue increased 5% to $26.5 billion, EBITDA increased 34% to $5 billion and EBIT almost doubled to $2.1 billion. First-half net profit after tax of $1.8 billion was up 77% year over year. <h3>Full-year profit forecast raised </h3>The strong first half prompted Maersk to raise its full-year 2025 financial guidance, with EBITDA now expected to be between $8 billion and $9.5 billion, up from the previous forecast of $6 billion to $9 billion. The increased profit expectation is based on a boost in the carrier’s global container volume growth forecast, which has been raised to between 2% and 4%, up from a previous forecast of between negative 1% and 4%, with the improved demand coming from outside North America. Still, Clerc said achieving the upper range of the full-year outlook was heavily dependent on how the fourth quarter played out. “In the volume guidance, the 2% to 4% assumes a continued, sluggish US market for the rest of the year, but the question is, how long will the strength of exports from China to the rest of the world continue?” he told analysts. Clerc said the average spot rate at the end of the second quarter was 37% higher than at the end of the first quarter, and as long as the supporting rate environment held, the carrier’s profitability would continue. “If we suddenly see a sharp deceleration following the normal peak, or a bit of weakness from China to the rest of the world, then you could see more of an adjustment during the fourth quarter of spot rates,” he said. “Leading into contracts, that would not necessarily be great news.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Rate premiums could be in the cards for Gemini Cooperation customers after partners Maersk and Hapag-Lloyd delivered on their target of 90%-plus schedule reliability in the first half of the year, Maersk CEO Vincent Clerc said Thursday. The Maersk executive was in a confident mood when he addressed analysts during a first-half earnings call, noting that in the five months since the first Gemini service was phased in, the reliability has been above 90%. “Any skeptics there might have been in the market about our ability to deliver the 90% schedule reliability are gone,” Clerc said. “But now we need to sustain this for a while, and then we need to move towards a more commercial discussion. I don’t think customers have experienced this long enough that they’re ready to entertain such a discussion, but it is something that is going to come.” Data from eeSea shows that Gemini Cooperation was leading reliability among the carrier alliances up to July, but its overall on-time performance recorded by the ocean visibility provider was 84%. Gemini’s best performance was on the Europe-North America trade, where it maintained above 90% reliability throughout June and July. The new Gemini networks, which were fully phased in by June, helped drive up Maersk’s second-quarter volume by 4.2% year over year to 3.2 million FEUs, which was also a 10% improvement on the first quarter. “Gemini does not increase the size of the fleet, but it increases the amount of capacity that we can offer every week, and that’s the big part of the business case,” Clerc said. “That way we lower the unit cost by being able to load more volumes on the same size of fleet.” The increase in volume offset a 6.9% year-over-year drop in average freight rates to $2,259/FEU in the second quarter and a 9.6% decline in rates sequentially. That helped Maersk revenue in the second quarter grow 2.8% year over year to just over $13 billion, with growth reported in all the carrier’s business segments. Ocean revenue increased 2.4% year over year to $8.6 billion, lifted by higher volumes and higher revenue from demurrage and detention. Logistics and services revenue was up 1% at $3.7 billion, while terminals revenue of $1.3 billion in the second quarter was an increase of 20%, driven by higher volume, higher tariffs and higher storage revenue. Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 8% to $2.3 billion in the second quarter, while earnings before interest and taxes (EBIT) declined 12% to $845 million, which the carrier attributed to “lower gains on sale of assets and higher depreciation linked to capacity increases.” After tax, net profit fell 23% year over year in the second quarter to $639 million. For the first half, revenue increased 5% to $26.5 billion, EBITDA increased 34% to $5 billion and EBIT almost doubled to $2.1 billion. First-half net profit after tax of $1.8 billion was up 77% year over year. Full-year profit forecast raised The strong first half prompted Maersk to raise its full-year 2025 financial guidance, with EBITDA now expected to be between $8 billion and $9.5 billion, up from the previous forecast of $6 billion to $9 billion. The increased profit expectation is based on a boost in the carrier’s global container volume growth forecast, which has been raised to between 2% and 4%, up from a previous forecast of between negative 1% and 4%, with the improved demand coming from outside North America. Still, Clerc said achieving the upper range of the full-year outlook was heavily dependent on how the fourth quarter played out. “In the volume guidance, the 2% to 4% assumes a continued, sluggish US market for the rest of the year, but the question is, how long will the strength of exports from China to the rest of the world continue?” he told analysts. Clerc said the average spot rate at the end of the second quarter was 37% higher than at the end of the first quarter, and as long as the supporting rate environment held, the carrier’s profitability would continue. “If we suddenly see a sharp deceleration following the normal peak, or a bit of weakness from China to the rest of the world, then you could see more of an adjustment during the fourth quarter of spot rates,” he said. “Leading into contracts, that would not necessarily be great news.” Contact Greg Knowler at greg.knowler@spglobal.com .

High Gemini reliability lays groundwork for premium rate discussions: Maersk CEO

<div class="phx-topic abstract-wrapper">The spot and contract savings from domestic intermodal eroded in the second quarter compared with a year ago, while the fate of the third quarter depends largely on whether volume in Southern California keeps up to support peak season surcharges.</div>

The spot and contract savings from domestic intermodal eroded in the second quarter compared with a year ago, while the fate of the third quarter depends largely on whether volume in Southern California keeps up to support peak season surcharges.

<div class="phx-topic">US shippers saved an average of 17% on spot market freight and nearly 24% on contract loads in the second quarter by using domestic intermodal instead of long-haul trucking with tepid pricing continuing through midyear, according to the latest Journal of Commerce <a href="https://www.joc.com/resources/special-reports/intermodal-savings-index">Intermodal Savings Index</a> (ISI). Intermodal contract rates were flat in the second quarter compared with a year ago — up less than 1% excluding fuel, but down less than 1% including fuel, while contract truckload rates rose between 0% and 2%. North American railroads hauled 2.12 million domestic containers in the second quarter, up 2.6% compared with a year ago, according to the Intermodal Association of North America (IANA). While the Journal of Commerce forecast calls for domestic intermodal volume to decline between 1% and 4% year over year in the third quarter, Schneider National and Hub Group said there was an uptick in demand in July. “Near-term demand trends off the West Coast are strong and we are seeing indications of an early West Coast peak season,” Hub Group CEO Phil Yeager said during an Aug. 1 earnings call. “It remains unclear how long elevated import demand will persist as we are seeing variances in forecasts by customers.” The Spot ISI averaged 117.1 in the second quarter, down from 121.9 one year ago. The Contract ISI slipped to 124.2 compared with 125.7 one year ago. Index values above 100 indicate intermodal is the more cost-effective mode. The higher the index number, the greater the savings. For example, a spot ISI of 117.1 translates to a 17.1% savings on intermodal versus truckload and a contract ISI of 124.2 implies a 24.2% savings. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="18f45e44-8027-488a-8afc-87771e60ca91"></dynamic-object></div>In terms of raw dollars, intermodal shippers saved an average of $659 per container on the spot market in the second quarter and $789 per container on the contract market. Both totals were lower than a year ago, when intermodal shippers saved $722 per container on the spot market and $938 per container on the contract market. Spot intermodal rates rose 2 cents between April and June to $1.58 per mile, while spot truckload rates rose 5 cents to $1.89 during the same period, according to the ISI. The results are seasonally normal as freight demand increases between Memorial Day and July 4th. Contract truckload rates rose 2 cents to $1.97 per mile between April and June, while contract intermodal rates also rose 2 cents to $1.49 per mile during the period. <h3>Q3 pricing </h3>While J.B. Hunt Transport Services, the largest US domestic intermodal provider, announced a <a href="https://www.joc.com/article/jb-hunt-says-surcharges-necessary-to-maintain-peak-season-service-6044880">$1,500 per container surcharge</a> last month in Southern California, the broader industry has followed with smaller hikes. Spot intermodal rates from Southern California to Atlanta, Chicago, Dallas, and Memphis have risen between $300 and $500 per container since June 1, according to the ISI, but those rate increases are consistent with prior peak seasons, which typically start in the third quarter. Last year, peak season surcharges began in mid-August, not July. Hub Group and Schneider National confirmed they’ve also put in peak season surcharges. Similar to last year, however, their surcharges are close to the broader spot rate increases, not J.B. Hunt’s higher figure. The surcharges cover how much Hub and Schneider pay to railroads and drivers to reposition empty boxes. “Our intent there is really to be able to manage our operations … and to make sure that one or a small number of customers don’t completely disrupt our network,” Jim Filter, executive vice president of Schneider, said during a July 31 earnings call. Hub Group added that while it has implemented some surcharges, it has not incorporated “significant” surcharges into its third-quarter earnings guidance. Intermodal providers must be careful about the surcharge total if there isn’t a simultaneous increase in truck rates. From Los Angeles to Dallas and Kansas City, intermodal saves about $700 to $900 per container. If surcharges are too high, shippers might tender freight back to trucking. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>. The data behind the Contract ISI and Spot ISI is available to Journal of Commerce subscribers with a Gold-tier subscription. </div>

US shippers saved an average of 17% on spot market freight and nearly 24% on contract loads in the second quarter by using domestic intermodal instead of long-haul trucking with tepid pricing continuing through midyear, according to the latest Journal of Commerce Intermodal Savings Index (ISI). Intermodal contract rates were flat in the second quarter compared with a year ago — up less than 1% excluding fuel, but down less than 1% including fuel, while contract truckload rates rose between 0% and 2%. North American railroads hauled 2.12 million domestic containers in the second quarter, up 2.6% compared with a year ago, according to the Intermodal Association of North America (IANA). While the Journal of Commerce forecast calls for domestic intermodal volume to decline between 1% and 4% year over year in the third quarter, Schneider National and Hub Group said there was an uptick in demand in July. “Near-term demand trends off the West Coast are strong and we are seeing indications of an early West Coast peak season,” Hub Group CEO Phil Yeager said during an Aug. 1 earnings call. “It remains unclear how long elevated import demand will persist as we are seeing variances in forecasts by customers.” The Spot ISI averaged 117.1 in the second quarter, down from 121.9 one year ago. The Contract ISI slipped to 124.2 compared with 125.7 one year ago. Index values above 100 indicate intermodal is the more cost-effective mode. The higher the index number, the greater the savings. For example, a spot ISI of 117.1 translates to a 17.1% savings on intermodal versus truckload and a contract ISI of 124.2 implies a 24.2% savings. In terms of raw dollars, intermodal shippers saved an average of $659 per container on the spot market in the second quarter and $789 per container on the contract market. Both totals were lower than a year ago, when intermodal shippers saved $722 per container on the spot market and $938 per container on the contract market. Spot intermodal rates rose 2 cents between April and June to $1.58 per mile, while spot truckload rates rose 5 cents to $1.89 during the same period, according to the ISI. The results are seasonally normal as freight demand increases between Memorial Day and July 4th. Contract truckload rates rose 2 cents to $1.97 per mile between April and June, while contract intermodal rates also rose 2 cents to $1.49 per mile during the period. Q3 pricing While J.B. Hunt Transport Services, the largest US domestic intermodal provider, announced a $1,500 per container surcharge last month in Southern California, the broader industry has followed with smaller hikes. Spot intermodal rates from Southern California to Atlanta, Chicago, Dallas, and Memphis have risen between $300 and $500 per container since June 1, according to the ISI, but those rate increases are consistent with prior peak seasons, which typically start in the third quarter. Last year, peak season surcharges began in mid-August, not July. Hub Group and Schneider National confirmed they’ve also put in peak season surcharges. Similar to last year, however, their surcharges are close to the broader spot rate increases, not J.B. Hunt’s higher figure. The surcharges cover how much Hub and Schneider pay to railroads and drivers to reposition empty boxes. “Our intent there is really to be able to manage our operations … and to make sure that one or a small number of customers don’t completely disrupt our network,” Jim Filter, executive vice president of Schneider, said during a July 31 earnings call. Hub Group added that while it has implemented some surcharges, it has not incorporated “significant” surcharges into its third-quarter earnings guidance. Intermodal providers must be careful about the surcharge total if there isn’t a simultaneous increase in truck rates. From Los Angeles to Dallas and Kansas City, intermodal saves about $700 to $900 per container. If surcharges are too high, shippers might tender freight back to trucking. Contact Ari Ashe at ari.ashe@spglobal.com . The data behind the Contract ISI and Spot ISI is available to Journal of Commerce subscribers with a Gold-tier subscription.

Trucking News

Truckload

North-American rail

Surface

Intermodal savings dipped in Q2; surcharges to factor into Q3 decisions

<div class="phx-topic abstract-wrapper">The reasons for the increase are largely tariff-related, sources say, as market participants adjust to the possibility of permanently higher tariff levels imposed by the Trump administration.</div>

The reasons for the increase are largely tariff-related, sources say, as market participants adjust to the possibility of permanently higher tariff levels imposed by the Trump administration.

<div class="phx-topic">Growing volumes of trans-Pacific eastbound spot cargo are being controlled at origin countries such as China as the impact of US tariffs bores deeply into shipping practices, sources tell the Journal of Commerce. The reasons for a noticeable increase in origin-controlled container trade are largely tariff-related, sources said, as parties to trade transactions adjust to possibly permanently higher tariff levels imposed by the Trump Administration. Origin-controlled cargo means the purchasing of ocean transportation is done by parties in exporting countries such as China, for example, rather than in the US. “At Toll Group, we are observing a slight upward trend in origin-controlled cargo,” said Marc Meier, Toll’s global head of ocean freight. “This trend appears to be influenced by factors such as the current supply and demand situation, where supply is notably higher than demand, as well as ongoing tariff discussions.” Meier said Toll’s origin-controlled cargo is now about 35% of its total cargo compared with 20% a few years ago. “We believe going forward, it might be 40-45%,” he said. Others see the trend also. “I have noticed a significant shift in the traditional mix of our smaller volume shippers where there is more Asia controlled/nominated shipments as a percent of our overall weekly bookings … this has been going on for the last five to six months,” said Kurt McElroy, executive vice president at the forwarder Kerry Apex. McElroy said the shift could be due to “smaller importers choosing to buy DDP [delivery duty paid] and leaving the duty uncertainty to the shipper.” “Volatile freight rates could also be a contributing factor in small importers’ decisions to have terms of sale [DDP or cost-insurance-freight], instead of typical [free-on-board] terms of sale,” he said. Under DDP terms, the seller bears all shipping and customs costs until it delivers the goods to the buyer, having cleared customs as the named place of destination. Another possible reason for growth in origin-controlled spot cargo is the growing ease of booking using online tools from carriers such as Maersk, Hapag Lloyd and CMA-CGM, who sources say are allocating greater amounts of their vessel space to online channels. McElroy said the volatile market could also be prompting large US retailers to seek DDP terms from their suppliers versus receiving such goods at origin and shipping them under their own contracts. “Big box retailers like Walmart, when ocean rates are not as volatile, will want to purchase FOB from their smaller suppliers and move under their own contract,” McElroy said. “Yet, when rates get volatile … on the upswing, and space tightens, along with duty uncertainty, Walmart will choose to have small suppliers ship to Walmart distribution centers CIF and not allow price increases. They have such leverage with smaller suppliers to accept these kind of terms.” <h3>Contract market shifting from US control? </h3> Few are seeing the contract market shift from US control, but some see it coming. “In the trans-Pacific trade, there has been a view that importers of goods into the USA were the major buyers of freight as they purchased goods from manufacturers in Asia FOB and controlled the import supply chain into the USA,” said Lian Hoon Lim, Singapore-based partner and managing director of Alix Partners, which has a long history in ocean freight. “So carriers naturally gave priority to marketing and selling freight to the ‘FOB buyer’ over the exporter in Asia who was labelled the ‘CIF buyer,’” he added. “Ten to 15 years ago that was very true for pretty much everything that came out of China, and that you could price up somewhat for FOB cargo vs. CIF.” But as Chinese companies emerge as sellers of goods under their own brand names, the ocean freight landscape will begin to change. “If you look at South Korea and Japan, as their exporting companies became big enough and more adventurous and spread their wings overseas, they established sales units in the US and Europe,” Lim said. “So instead of exporting their goods to third-party distributors, they sold to their own sales companies in the US and Europe. At that point the FOB vs. CIF issue becomes moot, because the control of the freight passes over to those companies and if their [headquarters] are in Japan or Korea or China, they are more likely to buy freight there versus at destination. “I can easily imagine that at some point in time, companies like Huawei saying we have a sales company in the US or Europe and that we should take control of long-distance shipments ourselves, and when that happens you can easily see the freight buying shifting from destination to origin,” Lim added. Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>. </div>

Growing volumes of trans-Pacific eastbound spot cargo are being controlled at origin countries such as China as the impact of US tariffs bores deeply into shipping practices, sources tell the Journal of Commerce. The reasons for a noticeable increase in origin-controlled container trade are largely tariff-related, sources said, as parties to trade transactions adjust to possibly permanently higher tariff levels imposed by the Trump Administration. Origin-controlled cargo means the purchasing of ocean transportation is done by parties in exporting countries such as China, for example, rather than in the US. “At Toll Group, we are observing a slight upward trend in origin-controlled cargo,” said Marc Meier, Toll’s global head of ocean freight. “This trend appears to be influenced by factors such as the current supply and demand situation, where supply is notably higher than demand, as well as ongoing tariff discussions.” Meier said Toll’s origin-controlled cargo is now about 35% of its total cargo compared with 20% a few years ago. “We believe going forward, it might be 40-45%,” he said. Others see the trend also. “I have noticed a significant shift in the traditional mix of our smaller volume shippers where there is more Asia controlled/nominated shipments as a percent of our overall weekly bookings … this has been going on for the last five to six months,” said Kurt McElroy, executive vice president at the forwarder Kerry Apex. McElroy said the shift could be due to “smaller importers choosing to buy DDP [delivery duty paid] and leaving the duty uncertainty to the shipper.” “Volatile freight rates could also be a contributing factor in small importers’ decisions to have terms of sale [DDP or cost-insurance-freight], instead of typical [free-on-board] terms of sale,” he said. Under DDP terms, the seller bears all shipping and customs costs until it delivers the goods to the buyer, having cleared customs as the named place of destination. Another possible reason for growth in origin-controlled spot cargo is the growing ease of booking using online tools from carriers such as Maersk, Hapag Lloyd and CMA-CGM, who sources say are allocating greater amounts of their vessel space to online channels. McElroy said the volatile market could also be prompting large US retailers to seek DDP terms from their suppliers versus receiving such goods at origin and shipping them under their own contracts. “Big box retailers like Walmart, when ocean rates are not as volatile, will want to purchase FOB from their smaller suppliers and move under their own contract,” McElroy said. “Yet, when rates get volatile … on the upswing, and space tightens, along with duty uncertainty, Walmart will choose to have small suppliers ship to Walmart distribution centers CIF and not allow price increases. They have such leverage with smaller suppliers to accept these kind of terms.” Contract market shifting from US control? Few are seeing the contract market shift from US control, but some see it coming. “In the trans-Pacific trade, there has been a view that importers of goods into the USA were the major buyers of freight as they purchased goods from manufacturers in Asia FOB and controlled the import supply chain into the USA,” said Lian Hoon Lim, Singapore-based partner and managing director of Alix Partners, which has a long history in ocean freight. “So carriers naturally gave priority to marketing and selling freight to the ‘FOB buyer’ over the exporter in Asia who was labelled the ‘CIF buyer,’” he added. “Ten to 15 years ago that was very true for pretty much everything that came out of China, and that you could price up somewhat for FOB cargo vs. CIF.” But as Chinese companies emerge as sellers of goods under their own brand names, the ocean freight landscape will begin to change. “If you look at South Korea and Japan, as their exporting companies became big enough and more adventurous and spread their wings overseas, they established sales units in the US and Europe,” Lim said. “So instead of exporting their goods to third-party distributors, they sold to their own sales companies in the US and Europe. At that point the FOB vs. CIF issue becomes moot, because the control of the freight passes over to those companies and if their [headquarters] are in Japan or Korea or China, they are more likely to buy freight there versus at destination. “I can easily imagine that at some point in time, companies like Huawei saying we have a sales company in the US or Europe and that we should take control of long-distance shipments ourselves, and when that happens you can easily see the freight buying shifting from destination to origin,” Lim added. Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

Supply chain

Tariff realities prompt growth in ‘origin-controlled’ cargo on trans-Pacific

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

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

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

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

Ocean carriers are not helpless when it comes to managing capacity

<div class="phx-topic abstract-wrapper">The introduction of containerized shipping to Michigan presents an opportunity to reinforce the domestic maritime industrial base.</div>

The introduction of containerized shipping to Michigan presents an opportunity to reinforce the domestic maritime industrial base.

<div class="phx-topic">For decades, international containerized freight from Michigan and the broader Midwest has been routed through distant US coastal gateways such as New York, Norfolk and Savannah, or Canadian ports such as Halifax and Montreal. Export-side users have included automotive original equipment manufacturers (OEMs), steel and chemical producers and agricultural shippers, while imports have consisted of tier 1 suppliers, machinery and equipment distributors and retail or e-commerce consolidators. These routes were not chosen for efficiency or cost. They were imposed by federal restrictions that have for decades prevented containerized freight from entering or exiting the Great Lakes by vessel. US Customs today does not permit such movements through Michigan because no facility in the state meets the required federal standards for security and processing. That is about to change. In 2026, the Port of Monroe will activate the first SAFE Port Act-compliant international container terminal in the Great Lakes, along with a new roll-on/roll-off (ro/ro) platform that complements existing vessel berths, dual Class I rail access and proximity to interstate highways and Midwest manufacturing. Together, these assets position Monroe as a fully integrated inland gateway for containerized trade and high-value industrial logistics. Conservatively, 1 million to 2 million TEUs of oceangoing cargo are generated annually from the Great Lakes’ industrial core, according to port estimates. This includes high-value shipments from sectors such as automotive, machinery, chemicals and electronics. Rather than projecting future throughput volumes, the Port of Monroe is focused on establishing a lawful and functioning corridor, allowing the market to respond. The goal is to restore balance, provide carriers with a practical entry point and give shippers a logistics option that should have existed decades ago. The terminal at Monroe will be available to operators who recognize the value of establishing service in an underserved but strategically positioned market. The automotive industry, in particular, stands to benefit. With production concentrated in the Midwest and export demand on the rise, direct vessel service from Monroe reduces complexity and supports just-in-time inventory models. Monroe offers a new point of connection between Midwest production and global markets, serving as a strategic outlet for general containerized freight and, more uniquely, for the direct shipment of new vehicles via ro/ro or in containers. Resilience has become a defining priority for today’s logistics networks. The March 2024 collapse of the Francis Scott Key Bridge in Baltimore, a critical ro/ro and vehicle export hub, exposed the system’s fragility. Overnight, cargo flows were disrupted, schedules were delayed and shippers were forced to reroute at significant cost. Inland ports such as the Port of Monroe offer a hedge against that kind of single-point failure. <h3>‘Manageable’ constraints </h3>Do the Great Lakes have constraints? Yes, but they are manageable. The annual three-month winter closure of the St. Lawrence Seaway is predictable and published well in advance, allowing cargo owners and carriers to plan accordingly. Intra-lake shipping continues throughout the winter, particularly with ice-class vessels. Recent climate trends indicate shorter freeze periods and milder conditions, which are gradually increasing intralake shipping capacity during the winter months. Other northern regions facing even harsher winter conditions have demonstrated what is possible. The Baltic Sea offers a relevant example. Despite a smaller economic footprint and more severe ice conditions, Baltic ports remain active year-round through the use of ice-capable vessels and integrated multimodal infrastructure. There is no reason the Great Lakes, now that the regulatory path has been cleared, should not do the same and make a comparable contribution to North American trade resilience. Unlike coastal gateways, which face sudden disruptions from hurricanes, labor action and infrastructure failures, the risks on the Great Lakes are stable and foreseeable. That reliability offers a competitive advantage for shippers navigating global volatility. But infrastructure alone is not enough. What is required is a shift in mindset. Federal freight policy must treat the Great Lakes as a fully integrated corridor. Carriers need to revisit assumptions about vessel size and routing patterns. Shippers will now be able to prioritize proximity, reliability and carbon performance rather than adhering to legacy paths shaped by outdated restrictions. The introduction of containerized shipping to Michigan presents an opportunity to reinforce the domestic maritime industrial base. Supporting inland container movement by vessel can drive demand for US-built ships, sustain skilled shipyard jobs, and expand the national maritime workforce. This is not just a logistics upgrade. It is a long-term investment in national capacity, employment, and competitiveness. This is a practical opportunity to enhance the national freight system using inland infrastructure that is efficient, cost-effective and underutilized. Monroe stands ready to serve shippers, carriers and policymakers seeking flexible, durable solutions. The Great Lakes have always had the potential to support containerized trade. Now that the path is open, the Port of Monroe is prepared to deliver. Capt. Paul C. LaMarre III is also director of the Port of Monroe in Michigan. Contact him at <a href="mailto:plamarre@portofmonroe.com">plamarre@portofmonroe.com</a>. </div>

For decades, international containerized freight from Michigan and the broader Midwest has been routed through distant US coastal gateways such as New York, Norfolk and Savannah, or Canadian ports such as Halifax and Montreal. Export-side users have included automotive original equipment manufacturers (OEMs), steel and chemical producers and agricultural shippers, while imports have consisted of tier 1 suppliers, machinery and equipment distributors and retail or e-commerce consolidators. These routes were not chosen for efficiency or cost. They were imposed by federal restrictions that have for decades prevented containerized freight from entering or exiting the Great Lakes by vessel. US Customs today does not permit such movements through Michigan because no facility in the state meets the required federal standards for security and processing. That is about to change. In 2026, the Port of Monroe will activate the first SAFE Port Act-compliant international container terminal in the Great Lakes, along with a new roll-on/roll-off (ro/ro) platform that complements existing vessel berths, dual Class I rail access and proximity to interstate highways and Midwest manufacturing. Together, these assets position Monroe as a fully integrated inland gateway for containerized trade and high-value industrial logistics. Conservatively, 1 million to 2 million TEUs of oceangoing cargo are generated annually from the Great Lakes’ industrial core, according to port estimates. This includes high-value shipments from sectors such as automotive, machinery, chemicals and electronics. Rather than projecting future throughput volumes, the Port of Monroe is focused on establishing a lawful and functioning corridor, allowing the market to respond. The goal is to restore balance, provide carriers with a practical entry point and give shippers a logistics option that should have existed decades ago. The terminal at Monroe will be available to operators who recognize the value of establishing service in an underserved but strategically positioned market. The automotive industry, in particular, stands to benefit. With production concentrated in the Midwest and export demand on the rise, direct vessel service from Monroe reduces complexity and supports just-in-time inventory models. Monroe offers a new point of connection between Midwest production and global markets, serving as a strategic outlet for general containerized freight and, more uniquely, for the direct shipment of new vehicles via ro/ro or in containers. Resilience has become a defining priority for today’s logistics networks. The March 2024 collapse of the Francis Scott Key Bridge in Baltimore, a critical ro/ro and vehicle export hub, exposed the system’s fragility. Overnight, cargo flows were disrupted, schedules were delayed and shippers were forced to reroute at significant cost. Inland ports such as the Port of Monroe offer a hedge against that kind of single-point failure. ‘Manageable’ constraints Do the Great Lakes have constraints? Yes, but they are manageable. The annual three-month winter closure of the St. Lawrence Seaway is predictable and published well in advance, allowing cargo owners and carriers to plan accordingly. Intra-lake shipping continues throughout the winter, particularly with ice-class vessels. Recent climate trends indicate shorter freeze periods and milder conditions, which are gradually increasing intralake shipping capacity during the winter months. Other northern regions facing even harsher winter conditions have demonstrated what is possible. The Baltic Sea offers a relevant example. Despite a smaller economic footprint and more severe ice conditions, Baltic ports remain active year-round through the use of ice-capable vessels and integrated multimodal infrastructure. There is no reason the Great Lakes, now that the regulatory path has been cleared, should not do the same and make a comparable contribution to North American trade resilience. Unlike coastal gateways, which face sudden disruptions from hurricanes, labor action and infrastructure failures, the risks on the Great Lakes are stable and foreseeable. That reliability offers a competitive advantage for shippers navigating global volatility. But infrastructure alone is not enough. What is required is a shift in mindset. Federal freight policy must treat the Great Lakes as a fully integrated corridor. Carriers need to revisit assumptions about vessel size and routing patterns. Shippers will now be able to prioritize proximity, reliability and carbon performance rather than adhering to legacy paths shaped by outdated restrictions. The introduction of containerized shipping to Michigan presents an opportunity to reinforce the domestic maritime industrial base. Supporting inland container movement by vessel can drive demand for US-built ships, sustain skilled shipyard jobs, and expand the national maritime workforce. This is not just a logistics upgrade. It is a long-term investment in national capacity, employment, and competitiveness. This is a practical opportunity to enhance the national freight system using inland infrastructure that is efficient, cost-effective and underutilized. Monroe stands ready to serve shippers, carriers and policymakers seeking flexible, durable solutions. The Great Lakes have always had the potential to support containerized trade. Now that the path is open, the Port of Monroe is prepared to deliver. Capt. Paul C. LaMarre III is also director of the Port of Monroe in Michigan. Contact him at plamarre@portofmonroe.com .

Ro/ro cargo

Marine terminals

Port infrastructure

Michigan inland port offers new option for Great Lakes containerized freight

North Europe to US East Coast

Mediterranean to US East Coast

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

North Europe and Mediterranean to US East Coast ocean reliability (eeSea)

On-Time Performance Northern Europe and Mediterranean to US East Coast (eeSea) Gateway

<div class="phx-topic abstract-wrapper">TGS Logistics said state grants for electric trucks failed to stem higher costs for new equipment amid a soft rate environment. </div>

TGS Logistics said state grants for electric trucks failed to stem higher costs for new equipment amid a soft rate environment.

<div class="phx-topic">A second major California-based drayage operator has closed its doors in less than a month, raising renewed concerns that the cost of the state’s green push for low and zero-emission trucks might be hastening the demise of the companies. TGS Logistics last week shut down its operations in Northern and Southern California, <a href="https://www.joc.com/article/drayage-stakeholders-say-industry-under-threat-from-falling-rates-increased-costs-6045985">following GSC Enterprises’ announcement</a> in mid-July that it ceased operations in the Oakland area. Robert Loya, chief operating officer at TGS, said that drayage operators in California rely upon “layered grants” from the state and from the ports of Los Angeles and Long Beach. A harbor-wide clean truck program reimburses drayage providers partly for electric truck purchases, but much of the revenues collected through the $10-per-TEU fee on laden containers goes toward building electric charging infrastructure. <a href="https://www.joc.com/article/drayage-stakeholders-say-industry-under-threat-from-falling-rates-increased-costs-6045985">Drayage operators are struggling</a> in an environment marked by stagnating pricing while drayage operators’ costs have increased significantly. These market developments haven’t spared drayage operators in California who also face the additional cost of approximately $500,000 per zero-emission truck, said Matt Schrap, CEO of the Harbor Trucking Association. Drayage operators in California have been upgrading their fleets <a href="https://www.joc.com/article/proposed-california-container-fee-would-hit-bcos-5198183">with clean-diesel trucks</a> and, more recently, <a href="https://www.joc.com/article/new-fee-to-support-zero-emission-drayage-fleet-at-la-lb-5228423">with the purchase of zero-emission trucks</a>. Those purchases have “exacerbated” current market conditions, he said. The ports since 2022 together have collected about $250 million in revenue from the Clean Truck Fund (CTF) rate. The grants to individual drayage companies are made when the zero-emission vehicles are delivered. The ports continue to modify the CTF rate so that it will have a greater impact on the financial capability of drayage operators to purchase zero-emission vehicles, said Noel Hacegaba, chief operating officer of the Port of Long Beach. Bryan Brandes maritime director at the Port of Oakland, said drayage operators in California — who are already struggling with waning pricing power and increased operating costs and at the same time are purchasing clean-diesel and zero-emission vehicles — run the risk of following TGS’ fate. “TGS was trying to be a leader in the clean-truck movement,” Brandes said. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>. </div>

A second major California-based drayage operator has closed its doors in less than a month, raising renewed concerns that the cost of the state’s green push for low and zero-emission trucks might be hastening the demise of the companies. TGS Logistics last week shut down its operations in Northern and Southern California, following GSC Enterprises’ announcement in mid-July that it ceased operations in the Oakland area. Robert Loya, chief operating officer at TGS, said that drayage operators in California rely upon “layered grants” from the state and from the ports of Los Angeles and Long Beach. A harbor-wide clean truck program reimburses drayage providers partly for electric truck purchases, but much of the revenues collected through the $10-per-TEU fee on laden containers goes toward building electric charging infrastructure. Drayage operators are struggling in an environment marked by stagnating pricing while drayage operators’ costs have increased significantly. These market developments haven’t spared drayage operators in California who also face the additional cost of approximately $500,000 per zero-emission truck, said Matt Schrap, CEO of the Harbor Trucking Association. Drayage operators in California have been upgrading their fleets with clean-diesel trucks and, more recently, with the purchase of zero-emission trucks . Those purchases have “exacerbated” current market conditions, he said. The ports since 2022 together have collected about $250 million in revenue from the Clean Truck Fund (CTF) rate. The grants to individual drayage companies are made when the zero-emission vehicles are delivered. The ports continue to modify the CTF rate so that it will have a greater impact on the financial capability of drayage operators to purchase zero-emission vehicles, said Noel Hacegaba, chief operating officer of the Port of Long Beach. Bryan Brandes maritime director at the Port of Oakland, said drayage operators in California — who are already struggling with waning pricing power and increased operating costs and at the same time are purchasing clean-diesel and zero-emission vehicles — run the risk of following TGS’ fate. “TGS was trying to be a leader in the clean-truck movement,” Brandes said. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .

Port News

Second California drayage operator shuts business, cites electric truck costs

<div class="phx-topic abstract-wrapper">The number of unique services on routes navigating through Houthi-controlled waters has doubled since the third quarter of last year, according to data from eeSea, as carriers who do not call Israel feel growing comfort sailing the Bab-el-Mandeb Strait.</div>

The number of unique services on routes navigating through Houthi-controlled waters has doubled since the third quarter of last year, according to data from eeSea, as carriers who do not call Israel feel growing comfort sailing the Bab-el-Mandeb Strait.

<div class="phx-topic">The Red Sea is seeing “a quiet revival” in shipping services as regional carriers steadily add capacity to vessel strings passing through the Houthi-controlled Bab-el-Mandeb Strait, according to ocean visibility provider eeSea. Some are Asia-Europe services passing through the Suez Canal, while others are regional services calling at Red Sea ports such as Jeddah, Destine Ozuygur, chief analyst at eeSea, said in a market update. “The number of unique service versions on this trade has doubled since Q3 2024, when there was an average of eight services on any given month,” Ozuygur said. “This gradual comeback now boasts 16 services and a 54% year-to-date planned capacity increase that is set to peak at 104,000 TEUs of proforma capacity in August.” Many of the services are operated by carriers from China or those based in the Middle East or India that serve the Asia-Middle East trade lane with small- to medium-sized vessels. The Red Sea has effectively been out of bounds since December 2023, when Yemen’s Houthi militants began attacking commercial shipping passing through the narrow Bab-el-Mandeb Strait at the southern entrance to the Red Sea as a show of solidarity for Gaza amid the Israel-Hamas war. Major carriers on the Asia-Europe and Asia-US East Coast trade lanes were then forced to reroute ships around the Cape of Good Hope in southern Africa, which has absorbed an estimated 10% of global capacity and extended transit times by two weeks. Most of the carriers on the Asia-Middle East trade and those passing through the Red Sea en route to Europe do not make calls to Israel on any of their strings, regardless of trade lane, “so that probably lends them confidence” to sail through Houthi-controlled waters, Ozuygur said. After no attacks on shipping were reported since this past December, pressure was beginning to build on the major container shipping companies to return to Red Sea transits. However, in July, two bulk carriers were attacked and sunk, killing three crew and leaving 11 missing, effectively <a href="https://www.joc.com/article/new-houthi-attacks-likely-kill-hopes-of-shipping-returning-to-red-sea-this-year-6040923">ending any chance of a Red Sea return this year</a>. CMA CGM has some services operating in the Red Sea, but group CFO Ramon Fernandez told the Journal of Commerce last week that security in the region was strictly monitored. “We have a constant position here, which is that vessels will pass the Bab-al-Mandab Strait when security conditions are met,” he said. “That means security for the crew, security for the vessel and for the cargo. “We have some vessels going through when these conditions are met, and for the rest of the fleet must go around the Cape of Good Hope,” Fernandez added. “This is a constant policy the group has followed since the early days of last year.” <h3>Navigating dangerous waters </h3>Of the Asia-Europe services that continue to operate through the strait and the Suez Canal, 39% call ports outside the East Mediterranean and 33% make direct calls to Russian ports, according to eeSea. “A score of new or improved services announced as recently as Q2 2025 are not restricted to regional carriers alone,” Ozuygur noted. She outlined some of the services that are currently sailing through the Houthi-controlled waterway. A China United Lines extra loader is scheduled to begin operations in the last week of August that will complement the carrier’s Red Sea Service (REX) that began in December 2023. Cosco increased the frequency of the RES2 service operated alongside PIL since March 2024 from a 12-day to a weekly service with the addition of three more sailings at the end of April. Cosco also introduced an additional RES1 service in early May, partnering with OOCL and currently operating with three general cargo vessels. Hong Kong-based Kawa Shipping operates the China-Europe Express (CEX) service between Ningbo and Wilhelmshaven in Germany through the Red Sea that was launched in 2023. In June, its Eastern Mediterranean Express (EMX) service covering the Red Sea, Egypt and Turkey was expanded with the addition of four more vessels. Taiwanese carrier Wan Hai Lines will double the number of vessels on its AR2 service to eight later this month, while increasing the sailing frequency from every 14 days to seven days. India-based Sea Legend Shipping introduced their Asia-Red Sea service in mid-June with three of nine available vessels currently providing voyages. Dubai’s CStar Lines began their China-Red Sea services FRS1, FRS1-X, and FRS2 in May and June, and Singapore headquartered SeaLead Shipping recently reinstated its China-Red Sea (CRS) service, which has not been operational since December 2022. Carriers in the Ocean Alliance — CMA CGM, Cosco, OOCL and Evergreen — operate the MED5 service via the Suez Canal to connect Asia to its Mediterranean network. “While the Asia-Europe trade has largely suffered from longer transit times and increased CO2 emissions tied to military conflict in the zone, the secondary Asia-Middle East trade serving the Red Sea is finally witnessing a quiet revival,” Ozuygur said. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

The Red Sea is seeing “a quiet revival” in shipping services as regional carriers steadily add capacity to vessel strings passing through the Houthi-controlled Bab-el-Mandeb Strait, according to ocean visibility provider eeSea. Some are Asia-Europe services passing through the Suez Canal, while others are regional services calling at Red Sea ports such as Jeddah, Destine Ozuygur, chief analyst at eeSea, said in a market update. “The number of unique service versions on this trade has doubled since Q3 2024, when there was an average of eight services on any given month,” Ozuygur said. “This gradual comeback now boasts 16 services and a 54% year-to-date planned capacity increase that is set to peak at 104,000 TEUs of proforma capacity in August.” Many of the services are operated by carriers from China or those based in the Middle East or India that serve the Asia-Middle East trade lane with small- to medium-sized vessels. The Red Sea has effectively been out of bounds since December 2023, when Yemen’s Houthi militants began attacking commercial shipping passing through the narrow Bab-el-Mandeb Strait at the southern entrance to the Red Sea as a show of solidarity for Gaza amid the Israel-Hamas war. Major carriers on the Asia-Europe and Asia-US East Coast trade lanes were then forced to reroute ships around the Cape of Good Hope in southern Africa, which has absorbed an estimated 10% of global capacity and extended transit times by two weeks. Most of the carriers on the Asia-Middle East trade and those passing through the Red Sea en route to Europe do not make calls to Israel on any of their strings, regardless of trade lane, “so that probably lends them confidence” to sail through Houthi-controlled waters, Ozuygur said. After no attacks on shipping were reported since this past December, pressure was beginning to build on the major container shipping companies to return to Red Sea transits. However, in July, two bulk carriers were attacked and sunk, killing three crew and leaving 11 missing, effectively ending any chance of a Red Sea return this year . CMA CGM has some services operating in the Red Sea, but group CFO Ramon Fernandez told the Journal of Commerce last week that security in the region was strictly monitored. “We have a constant position here, which is that vessels will pass the Bab-al-Mandab Strait when security conditions are met,” he said. “That means security for the crew, security for the vessel and for the cargo. “We have some vessels going through when these conditions are met, and for the rest of the fleet must go around the Cape of Good Hope,” Fernandez added. “This is a constant policy the group has followed since the early days of last year.” Navigating dangerous waters Of the Asia-Europe services that continue to operate through the strait and the Suez Canal, 39% call ports outside the East Mediterranean and 33% make direct calls to Russian ports, according to eeSea. “A score of new or improved services announced as recently as Q2 2025 are not restricted to regional carriers alone,” Ozuygur noted. She outlined some of the services that are currently sailing through the Houthi-controlled waterway. A China United Lines extra loader is scheduled to begin operations in the last week of August that will complement the carrier’s Red Sea Service (REX) that began in December 2023. Cosco increased the frequency of the RES2 service operated alongside PIL since March 2024 from a 12-day to a weekly service with the addition of three more sailings at the end of April. Cosco also introduced an additional RES1 service in early May, partnering with OOCL and currently operating with three general cargo vessels. Hong Kong-based Kawa Shipping operates the China-Europe Express (CEX) service between Ningbo and Wilhelmshaven in Germany through the Red Sea that was launched in 2023. In June, its Eastern Mediterranean Express (EMX) service covering the Red Sea, Egypt and Turkey was expanded with the addition of four more vessels. Taiwanese carrier Wan Hai Lines will double the number of vessels on its AR2 service to eight later this month, while increasing the sailing frequency from every 14 days to seven days. India-based Sea Legend Shipping introduced their Asia-Red Sea service in mid-June with three of nine available vessels currently providing voyages. Dubai’s CStar Lines began their China-Red Sea services FRS1, FRS1-X, and FRS2 in May and June, and Singapore headquartered SeaLead Shipping recently reinstated its China-Red Sea (CRS) service, which has not been operational since December 2022. Carriers in the Ocean Alliance — CMA CGM, Cosco, OOCL and Evergreen — operate the MED5 service via the Suez Canal to connect Asia to its Mediterranean network. “While the Asia-Europe trade has largely suffered from longer transit times and increased CO2 emissions tied to military conflict in the zone, the secondary Asia-Middle East trade serving the Red Sea is finally witnessing a quiet revival,” Ozuygur said. Contact Greg Knowler at greg.knowler@spglobal.com .

Asia-Europe

Red Sea ‘revival’ taking place as regional carriers lead the way

<div class="phx-topic abstract-wrapper">Trade uncertainties are limiting visibility for the latter half of the carrier’s fiscal year, prompting it to significantly reduce its profit expectations.</div>

Trade uncertainties are limiting visibility for the latter half of the carrier’s fiscal year, prompting it to significantly reduce its profit expectations.

<div class="phx-topic">Ocean Network Express (ONE) slashed its fiscal year 2025 profitability forecast by more than 36% Friday on expectations that the bearish fundamentals of falling demand and declining rates on the major trades out of Asia will be amplified by new vessel deliveries on the way. The Singapore-based carrier now expects its full fiscal-year 2025 net profit to be $700 million compared with the $1.1 billion forecast made earlier this year, it said in an earnings statement. ONE’s 2025 fiscal year began April 1 and ends March 31, 2026. “Recent trade uncertainties complicate visibility for the latter half of the fiscal year ... the current global environment remains highly uncertain,” the carrier said, adding that security risks in the Red Sea would keep pressure on the global supply chain. In its first quarter ending June 30, ONE reported revenue of $4 billion, down 4% year over year. Earnings before interest, taxes, depreciation and amortization (EBITDA) fell 49% to $616 million, earnings before interest and taxes (EBIT) dropped 94% to $38 million and net profit of $86 million was almost 90% lower compared with the same quarter last year. ONE reported flat volume on Asia-North America eastbound routes of 672,000 TEUs, with vessel utilization dropping from 100% to 94%. Asia-Europe volume was up 5% year over year at 456,000 TEUs, although utilization fell from 100% to 90%. While all of the earnings metrics were down year over year, comparisons with the fourth quarter of ONE’s 2024 fiscal year (January–March) show the impact of tariff uncertainty on the trans-Pacific. ONE reported volume slowing in April following the initial implementation of US tariffs, then surging in May after a 90-day pause on the levies was announced. Container handling on the Asia-North America eastbound trade in the fiscal first quarter increased 6% compared with the January–March period, ONE said in the statement. “This was due to a combination of several factors including fluctuating demand amid tariff uncertainties and an increase in capacity on the Asia-North America trade to cater to the strong demand from a 90-day tariff pause,” the carrier noted. Asia-Europe westbound volume increased 5% compared with the first three months of the year when demand was impacted by Chinese New Year. <h3>Capacity to outstrip demand </h3>ONE has 54 ships on order, contributing to the global container shipping order book that, at 9.1 million TEUs, is about 28% of the total in-service fleet, most of which will be delivered in the next two years, according to Sea-web, a sister company of the Journal of Commerce. Just 9,000 TEUs in capacity will be scrapped this year. The growing supply-demand imbalance is being felt in the spot market. Rates on the Asia-US West Coast trade as of July 31 were at $1,713 per FEU, down 73% year over year; Asia-US East Coast rates were down 71% at $2,800/FEU, according to Platts, also part of S&amp;P Global. “The US is striking multiple trade deals, but this is unlikely to spark a cargo rush in the remainder of 2025 and prevent further softening of rates,” Emily Stausbøll, senior shipping analyst at rate benchmarking platform Xeneta, said in a market update Thursday. “Carriers are trying to manage capacity, but they may be fighting a losing battle and have no choice but to accept lower freight rates,” she added. With trans-Pacific demand slowing, ocean carriers <a href="https://www.joc.com/article/looming-august-tariff-deadline-prompts-carriers-to-pull-trans-pacific-capacity-6045526">plan to deploy less tonnage from Asia to the US</a> in August than in July, according to ocean visibility provider eeSea. And ocean carriers are planning to blank less capacity this month than in July, although carriers warn that may change as container spot rates keep falling. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="5a0d1715-465b-4c14-aac5-b50642195578"></dynamic-object></div>China-North Europe rates on July 31 were down 60% year over year at $3,326/FEU, converging on China-Mediterranean rates that were down 55% to $3,293/FEU, according to Xeneta. As capacity outstrips demand, HSBC is expecting <a href="https://www.joc.com/article/ocean-carriers-face-three-year-decline-in-profitability-hsbc-6032235">a 45% year-over-year decline in profits</a> for the container shipping industry this year, raising the potential for a price war between carriers that the bank forecasts will lead to a 61% decline in profits in 2026 and a further 10% slide in 2027. Transportation analysts at HSBC indicated in a recent report that although carriers will remain profitable through the period, it will be nowhere near the three record years of 2021, 2022 and 2024. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Ocean Network Express (ONE) slashed its fiscal year 2025 profitability forecast by more than 36% Friday on expectations that the bearish fundamentals of falling demand and declining rates on the major trades out of Asia will be amplified by new vessel deliveries on the way. The Singapore-based carrier now expects its full fiscal-year 2025 net profit to be $700 million compared with the $1.1 billion forecast made earlier this year, it said in an earnings statement. ONE’s 2025 fiscal year began April 1 and ends March 31, 2026. “Recent trade uncertainties complicate visibility for the latter half of the fiscal year ... the current global environment remains highly uncertain,” the carrier said, adding that security risks in the Red Sea would keep pressure on the global supply chain. In its first quarter ending June 30, ONE reported revenue of $4 billion, down 4% year over year. Earnings before interest, taxes, depreciation and amortization (EBITDA) fell 49% to $616 million, earnings before interest and taxes (EBIT) dropped 94% to $38 million and net profit of $86 million was almost 90% lower compared with the same quarter last year. ONE reported flat volume on Asia-North America eastbound routes of 672,000 TEUs, with vessel utilization dropping from 100% to 94%. Asia-Europe volume was up 5% year over year at 456,000 TEUs, although utilization fell from 100% to 90%. While all of the earnings metrics were down year over year, comparisons with the fourth quarter of ONE’s 2024 fiscal year (January–March) show the impact of tariff uncertainty on the trans-Pacific. ONE reported volume slowing in April following the initial implementation of US tariffs, then surging in May after a 90-day pause on the levies was announced. Container handling on the Asia-North America eastbound trade in the fiscal first quarter increased 6% compared with the January–March period, ONE said in the statement. “This was due to a combination of several factors including fluctuating demand amid tariff uncertainties and an increase in capacity on the Asia-North America trade to cater to the strong demand from a 90-day tariff pause,” the carrier noted. Asia-Europe westbound volume increased 5% compared with the first three months of the year when demand was impacted by Chinese New Year. Capacity to outstrip demand ONE has 54 ships on order, contributing to the global container shipping order book that, at 9.1 million TEUs, is about 28% of the total in-service fleet, most of which will be delivered in the next two years, according to Sea-web, a sister company of the Journal of Commerce. Just 9,000 TEUs in capacity will be scrapped this year. The growing supply-demand imbalance is being felt in the spot market. Rates on the Asia-US West Coast trade as of July 31 were at $1,713 per FEU, down 73% year over year; Asia-US East Coast rates were down 71% at $2,800/FEU, according to Platts, also part of S&P Global. “The US is striking multiple trade deals, but this is unlikely to spark a cargo rush in the remainder of 2025 and prevent further softening of rates,” Emily Stausbøll, senior shipping analyst at rate benchmarking platform Xeneta, said in a market update Thursday. “Carriers are trying to manage capacity, but they may be fighting a losing battle and have no choice but to accept lower freight rates,” she added. With trans-Pacific demand slowing, ocean carriers plan to deploy less tonnage from Asia to the US in August than in July, according to ocean visibility provider eeSea. And ocean carriers are planning to blank less capacity this month than in July, although carriers warn that may change as container spot rates keep falling. China-North Europe rates on July 31 were down 60% year over year at $3,326/FEU, converging on China-Mediterranean rates that were down 55% to $3,293/FEU, according to Xeneta. As capacity outstrips demand, HSBC is expecting a 45% year-over-year decline in profits for the container shipping industry this year, raising the potential for a price war between carriers that the bank forecasts will lead to a 61% decline in profits in 2026 and a further 10% slide in 2027. Transportation analysts at HSBC indicated in a recent report that although carriers will remain profitable through the period, it will be nowhere near the three record years of 2021, 2022 and 2024. Contact Greg Knowler at greg.knowler@spglobal.com .

ONE cuts profit forecast as falling rates, excess capacity weigh on carriers

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At SSA Marine Mexico, we firmly believe that business development must go hand in hand with social and environmental well-being. Our vision is not solely focused on operating efficiently, but also on creating a meaningful and positive impact in the communities where we are present. Since 1995, we have reaffirmed this commitment through tangible actions that reflect our core values of responsibility, solidarity, and sustainability. <span class="joc_admin__inline-image joc_admin__inline-image-aspect-ratio-3_2 joc_admin__inline-image-position-left joc_admin__inline-image-size-medium" data-figure-size="medium" data-figure-position="left" data-figure-aspect-ratio="3:2"><img src="/content-assets/1752584535914_Photo%201.jpg" alt="" class="joc_admin__inline-image-inherit"> A Year of Major Achievements Over the past year, we allocated more than $107,000 USD to the implementation of 60 social and environmental projects, positively impacting over 7,800 people across various regions of Mexico. Each initiative was designed with a holistic approach, addressing key areas that contribute to long-term community development. Education: Laying the Foundation for the Future Education is one of the most powerful tools to promote social mobility and equitable development. At SSA Marine Mexico, we support academic initiatives that inspire and empower the next generation of leaders. One of our most impactful partnerships was with the University of Colima, where we sponsored the “Reto Camp” program. This initiative encourages university students to develop innovative solutions in the fields of sustainability, logistics, and port operations, offering them mentorship, tools, and real-world challenges to solve. In addition, we donated microscopes, school supplies, and educational materials to institutions in underserved communities, helping to improve the learning environment and provide students with the resources they need to succeed. Health and Sports: Promoting Wellness We believe that healthy communities are strong communities. We have supported several local sporting events and provided direct assistance to talented athletes, enabling them to pursue their passions and represent their regions with pride. Beyond sports, we also strengthened our collaboration with critical emergency response organizations such as the Mexican Red Cross and Civil Protection. Our contributions helped enhance their readiness and capabilities in times of crisis, ensuring better outcomes for those affected by emergencies. Supporting Vulnerable Groups: Reaching Those Who Need It Most A core part of our social responsibility efforts is directed toward supporting vulnerable populations. We have contributed to a range of initiatives focused on children, migrants, and at-risk families. These efforts included donations to orphanages and shelters, as well as support for the National Institute of Migration and grassroots organizations dedicated to protecting and empowering people facing adversity. By standing with those in need, we reinforce our commitment to inclusion and social justice, values that are central to our identity as a responsible company. <span class="joc_admin__inline-image joc_admin__inline-image-aspect-ratio-3_2 joc_admin__inline-image-position-left joc_admin__inline-image-size-medium" data-figure-size="medium" data-figure-position="left" data-figure-aspect-ratio="3:2"><img src="/content-assets/1752584944645_Photo%202.png" alt="" class="joc_admin__inline-image-inherit">Culture: Strengthening Community Identity Cultural identity is a key element in building resilient and united communities. At SSA Marine Mexico, we actively participate in the organization and sponsorship of cultural events that celebrate local traditions and foster civic pride. Working alongside port authorities and municipal governments, we helped bring music, art, and heritage to the forefront, creating spaces for community engagement and intercultural dialogue. Environment: Investing in the Planet Our commitment to sustainability goes beyond operations—it’s a philosophy that drives every decision we make. We have partnered with environmental institutions to carry out reforestation campaigns, beach cleanups, and conservation efforts. In collaboration with the Institute for the Environment, we supported initiatives aimed at decarbonization, biodiversity protection, and environmental education. By involving our employees and local volunteers in these actions, we also foster a culture of environmental stewardship throughout our organization and our surrounding communities. Innovation for a Sustainable Future Sustainability is not just about doing good—it’s also about doing things better. In 2024, we invested $22 million USD in the acquisition of 11 state-of-the-art E-RTG cranes. These electric rubber-tired gantry cranes represent a significant technological advancement in port equipment. Seven of them are already operating on clean electric energy, resulting in a reduction of nearly 4,000 tons of CO₂ emissions and improving operational efficiency by 7%. The remaining four cranes are fully compatible with future electrification, underscoring our long-term strategy to modernize our operations in an environmentally responsible way. This investment is part of a broader innovation roadmap that includes digitalization, automation, and cleaner energy sources—all designed to ensure that our ports continue to grow without compromising the health of our planet. Building a Better Tomorrow, Together At SSA Marine Mexico, we understand that sustainability is a shared and ongoing responsibility. True impact requires collaboration across sectors, long-term vision, and unwavering commitment. That is why we continue to work hand-in-hand with local authorities, non-profit organizations, universities, and our own employees to create solutions that are both scalable and sustainable. Our journey is far from over. In the years ahead, we will continue to deepen our community engagement, explore cleaner technologies, and strengthen the social fabric of the regions where we operate. Each initiative, no matter the size, is a step toward building a future where business success goes hand-in-hand with human and environmental prosperity. We are proud of what we have achieved in 2024, but we are even more excited about what lies ahead. SSA Marine Mexico — Moving the World, Caring for People and Planet. LINK: https://www.ssamarine.mx/

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<div class="phx-topic abstract-wrapper">But the increase in truck counts at large truckload providers is more about anticipated growth than any change in current demand. </div>

But the increase in truck counts at large truckload providers is more about anticipated growth than any change in current demand.

<div class="phx-topic">Large US truckload carriers are beginning to add capacity to their fleets after three years of deep cuts, pushing the Journal of Commerce Truckload Capacity Index (TCI) up 1.1 percentage points sequentially in the second quarter to a reading of 76%. The capacity gain was only a trickle of tractors, but it caused the first increase in the TCI in 11 quarters, signaling growing — if not cautious — confidence among trucking executives that the freight downturn that began in 2022, while not yet finished, is finally approaching its end. The TCI was down 0.9 of a percentage point year over year, but the gain from the first quarter indicates the index could soon turn positive on an annualized basis, perhaps by year-end. The increase isn’t a reaction to higher demand in today’s US domestic freight market. Instead, the gain in capacity shows truckload carriers are slowly and judiciously preparing for higher volumes that may arrive in the fourth quarter of 2025 and early 2026. Contract rates negotiated with shippers are either flat or up by low single-digit percentages, carriers report. Capacity is still widely available, and while small and midsized carriers continue to leave the market, shippers retain pricing power. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="bbf4a072-889b-4bbf-94bd-cd682d4252d0"></dynamic-object></div>“The impact of accumulated inflation remains a drag on the amount of truckload freight generated in relation to consumer spending,” Frank Lonegro, president and CEO of Landstar System, told Wall Street analysts during a July 29 earnings call. “Truck capacity continued to be readily available with small pockets of supply-demand equilibrium and market conditions continue to favor the shipper,” Lonegro said. Several truckload shippers have told the Journal of Commerce that they’ve given some carriers small rate increases this year simply to retain access to their capacity, not because of any significant tightness in the marketplace. <h3>Looking ahead </h3>The second-quarter increase in the TCI — which measures changes in actual truck counts at a select group of large, publicly-owned truckload carriers — indicates the US domestic freight market is doing more than just bouncing along the bottom it hit in mid-2022. Shippers are evaluating their capacity needs for the second half of the year and for 2026 amid volatile changes in US trade and tariff policy. Those who expect freight demand and the US economy to improve are looking to secure capacity ahead of any crunch. “We’re having some discussions around doing some peak projects,” Adam Miller, CEO of Knight-Swift Transportation Holdings, told Wall Street analysts July 23. “There’s some discussion about what capacity may look like at scale,” Miller said during an earnings call. “[When capacity gets tight], that’s when a carrier of our size at our different brands has the ability to come in and solve large problems for our customers.” Knight-Swift cut its average truckload tractor count by 6.6% year over year in the second quarter and by 6.3% in the first half of 2025. CFO Andrew Hess told analysts Knight-Swift’s truck count should be stable through the rest of 2025. A <a href="https://www.joc.com/article/truckload-carriers-balance-networks-as-tariff-uncertainty-shifts-demand-6052453">reshuffling of capacity</a> across lanes, driven in part by higher US tariffs, is also affecting demand. In the second quarter, Werner Enterprises increased its truck count 1.4% sequentially from the first quarter and 1.1% from a year ago to 7,545 trucks. That’s still a 12.3% reduction compared with a peak of 8,600 trucks in the fourth quarter of 2022, according to company data. “Our one-way fleet size increased sequentially, driven in part from engineered pop-up solutions in response to customer requests,” Derek Leathers, Werner chairman and CEO, told Wall Street analysts July 29. “We have assets in place to support growth through the rest of this year,” Leathers said. <h3>Adding capacity as needed </h3>Other large trucking companies say shippers are seeking to ensure carriers can ramp up capacity as demand grows. “Their conversations with us focus on how to dynamically optimize their supply chain and capacity plans to meet their service needs,” Bradley Hicks, president of dedicated contract services for J.B. Hunt Transport Services, said during a July 15 earnings call. J.B. Hunt wants to be ready with people and equipment “whenever that demand does occur over the next few months,” Spencer Frazier, executive vice president of sales and marketing, said during the call. J.B. Hunt Truckload, the company’s smallest division, increased its one-way truckload capacity by 10.2% sequentially and 7.6% from a year ago in the second quarter. “We’re not banking on big demand improvement, but we do think the supply story will continue to play out,” with more carriers exiting the market, Werner’s Leathers said. Executives at large truckload carriers have been predicting — incorrectly — an imminent shortfall in capacity as smaller providers have left the market over the past three years. Today, they’re more cautious about predictions. “Anecdotally, we hear about failures in our industry, [and] some are sizeable fleets, but it’s always hard to have a good feel about what’s happening with capacity,” Knight-Swift’s Miller said. “We think it’s going to be a slow process for capacity to exit the market.” Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>. </div>

Large US truckload carriers are beginning to add capacity to their fleets after three years of deep cuts, pushing the Journal of Commerce Truckload Capacity Index (TCI) up 1.1 percentage points sequentially in the second quarter to a reading of 76%. The capacity gain was only a trickle of tractors, but it caused the first increase in the TCI in 11 quarters, signaling growing — if not cautious — confidence among trucking executives that the freight downturn that began in 2022, while not yet finished, is finally approaching its end. The TCI was down 0.9 of a percentage point year over year, but the gain from the first quarter indicates the index could soon turn positive on an annualized basis, perhaps by year-end. The increase isn’t a reaction to higher demand in today’s US domestic freight market. Instead, the gain in capacity shows truckload carriers are slowly and judiciously preparing for higher volumes that may arrive in the fourth quarter of 2025 and early 2026. Contract rates negotiated with shippers are either flat or up by low single-digit percentages, carriers report. Capacity is still widely available, and while small and midsized carriers continue to leave the market, shippers retain pricing power. “The impact of accumulated inflation remains a drag on the amount of truckload freight generated in relation to consumer spending,” Frank Lonegro, president and CEO of Landstar System, told Wall Street analysts during a July 29 earnings call. “Truck capacity continued to be readily available with small pockets of supply-demand equilibrium and market conditions continue to favor the shipper,” Lonegro said. Several truckload shippers have told the Journal of Commerce that they’ve given some carriers small rate increases this year simply to retain access to their capacity, not because of any significant tightness in the marketplace. Looking ahead The second-quarter increase in the TCI — which measures changes in actual truck counts at a select group of large, publicly-owned truckload carriers — indicates the US domestic freight market is doing more than just bouncing along the bottom it hit in mid-2022. Shippers are evaluating their capacity needs for the second half of the year and for 2026 amid volatile changes in US trade and tariff policy. Those who expect freight demand and the US economy to improve are looking to secure capacity ahead of any crunch. “We’re having some discussions around doing some peak projects,” Adam Miller, CEO of Knight-Swift Transportation Holdings, told Wall Street analysts July 23. “There’s some discussion about what capacity may look like at scale,” Miller said during an earnings call. “[When capacity gets tight], that’s when a carrier of our size at our different brands has the ability to come in and solve large problems for our customers.” Knight-Swift cut its average truckload tractor count by 6.6% year over year in the second quarter and by 6.3% in the first half of 2025. CFO Andrew Hess told analysts Knight-Swift’s truck count should be stable through the rest of 2025. A reshuffling of capacity across lanes, driven in part by higher US tariffs, is also affecting demand. In the second quarter, Werner Enterprises increased its truck count 1.4% sequentially from the first quarter and 1.1% from a year ago to 7,545 trucks. That’s still a 12.3% reduction compared with a peak of 8,600 trucks in the fourth quarter of 2022, according to company data. “Our one-way fleet size increased sequentially, driven in part from engineered pop-up solutions in response to customer requests,” Derek Leathers, Werner chairman and CEO, told Wall Street analysts July 29. “We have assets in place to support growth through the rest of this year,” Leathers said. Adding capacity as needed Other large trucking companies say shippers are seeking to ensure carriers can ramp up capacity as demand grows. “Their conversations with us focus on how to dynamically optimize their supply chain and capacity plans to meet their service needs,” Bradley Hicks, president of dedicated contract services for J.B. Hunt Transport Services, said during a July 15 earnings call. J.B. Hunt wants to be ready with people and equipment “whenever that demand does occur over the next few months,” Spencer Frazier, executive vice president of sales and marketing, said during the call. J.B. Hunt Truckload, the company’s smallest division, increased its one-way truckload capacity by 10.2% sequentially and 7.6% from a year ago in the second quarter. “We’re not banking on big demand improvement, but we do think the supply story will continue to play out,” with more carriers exiting the market, Werner’s Leathers said. Executives at large truckload carriers have been predicting — incorrectly — an imminent shortfall in capacity as smaller providers have left the market over the past three years. Today, they’re more cautious about predictions. “Anecdotally, we hear about failures in our industry, [and] some are sizeable fleets, but it’s always hard to have a good feel about what’s happening with capacity,” Knight-Swift’s Miller said. “We think it’s going to be a slow process for capacity to exit the market.” Contact William B. Cassidy at bill.cassidy@spglobal.com .

Truckload capacity index turns upward as carriers cautiously add trucks

<div class="phx-topic abstract-wrapper">Marine terminal operators may be forced to resell or even abandon cranes if the tariffs take effect, which would further erode US port productivity.</div>

Marine terminal operators may be forced to resell or even abandon cranes if the tariffs take effect, which would further erode US port productivity.

<div class="phx-topic">US ports and terminal operators <a href="https://www.joc.com/article/ports-look-to-delay-proposed-us-tariffs-on-chinese-made-cranes-6007628">facing up to 270% tariffs on ship-to-shore cranes</a> they’ll receive from China in the coming months are considering reselling the units or laying them up in bond if they don’t receive exemptions from the Trump administration. The tariffs taking effect Oct. 14, absent relief of some kind, will make the total cost unfeasible for ports and terminals, tripling the price tag in some cases. While the industry lobbies the White House for an exemption, marine terminal operators may be forced to resell or even abandon cranes if the tariffs take effect, said Carl Bentzel, president of the National Association of Waterfront Employers (NAWE). <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6055442_0.1.jpg"></img></div>Such moves would interrupt normal US replenishment demand of 20 to 25 cranes per year on an installed base of an estimated 450 ship-to-shore (STS) cranes deployed at ports in the US and US territories. “Without relief or accommodation, these tariffs pose a serious risk of rendering critical investments economically unfeasible and will ultimately undermine the very policy objectives they are intended to advance,” Ports America CEO Matthew Leech told the Journal of Commerce. Port Houston is proposing grandfathering China-built ship-to-shore cranes that were under contract and in fabrication before Dec. 31, 2024. “This proposal would solve the Port Houston issue, along with similar issues Port Freeport, Port of Virginia and Ports America have with their STS cranes currently completing fabrication,” <a href="https://comments.ustr.gov/s/commentdetails?rid=HTCTBWHHBW">according to Port Houston Executive Director Charlie Jenkins</a>. But with that solution not guaranteed, alternative options being considered by ports and terminals include not putting the cranes to use. “If they must pay these tariffs, they will have three options,” Cary Davis, president of the American Association of Port Authorities (AAPA), wrote in a May letter to US Trade Representative (USTR) Jamison Greer. “First, they can let the cranes collect dust while they are held in bonded warehouses at an additional cost. Second, they can attempt to slash budgets elsewhere to pay the tariff costs. Or third, ports planning future procurement can purchase used cranes instead, which are not as structurally or operationally sound.” <h3>Port productivity at risk </h3>The result of not upgrading or expanding ship-to-shore crane capacity would have several negative consequences, including lower port productivity driven by longer wait times for ships, delayed cargo availability and the inability to handle larger ships. That would further erode the competitiveness of US ports, which rank low in global port productivity rankings and are among the most expensive in the world on a per-container lifted basis. The main benefit of larger cranes is greater height, meaning US ports would face greater operational challenges handing larger ships without the upgrades. The Port of Virginia <a href="https://comments.ustr.gov/s/commentdetails?rid=73RDQKH6G2">told the USTR</a> it expects to be handling vessels in the 18,000 to 20,000-TEU range in the coming years, but that “without continued investment in greater port capacity, these larger ships are hampered from consistently calling the East Coast because the existing infrastructure, specifically ship-to-shore cranes, cannot support them.” Houston is a case in point in terms of the immediate challenges US ports are facing from the potential tariffs. The port is under contract with dominant Chinese crane manufacturer ZPMC for eight cranes at $14 million each scheduled for delivery in the spring of 2026. If it is forced to pay the full tariffs, it will owe $302.4 million in total, which would equate to more than half of the port’s annual container operating revenues and greater than a full year of operating cash flow, Jenkins wrote. The tax figure includes a proposed additional 100% tariff on China-made ship-to-shore cranes on top of 25% tariffs imposed in 2024 and the 145% in tariffs that still could be applied to all Chinese goods absent a broader settlement. For Ports America, the price tag for a single STS crane scheduled to arrive at Gulfport in early September is $16 million. “However, any scenario in which the total landed cost — including applicable penalties, tariffs and related charges — exceeds $22 million would render the equipment economically unviable for deployment,” Leech said. “In such a case, the only practical options would be to resell and re-export the crane or to store it in a bonded facility without commissioning it or paying duties.” <h3>Reshoring push from White House </h3>New legislation just introduced in the House of Representatives seeks to encourage the domestic <a href="https://www.joc.com/article/congress-eyes-a-tax-credit-for-reshoring-port-crane-manufacturing-6053124">building of cranes to lessen the dependence on China-built equipment</a>, which makes up 80% of cranes at US ports and has raised security concerns. Although no solid plan to support US manufacturing or assembly of cranes has materialized as yet, affected ports appear to universally support the idea. The Canadian infrastructure investor Brookfield is discussing such an initiative in collaboration with Matsui-Paceco, Paceco being the builder of the original container cranes for Sea-Land Service Inc. in the 1960s. A White House meeting in April attended by several US port leaders included participation by Peter Stone, a leader of Brookfield’s US port business. At that meeting, according to one participant, the message from White House officials was: “We don’t understand why US industry is buying Chinese equipment and we don’t want you to. We want you to get on board with a program that creates availability of US-assembled cranes.” “There was no objection to this from the assembled ports assuming a transition agreement covering price, timing and specs,” the meeting participant told the Journal of Commerce. “Currently, there is ongoing engagement on developing a framework to nearshore and onshore STS crane manufacturing between the Trump administration, Congress and industry stakeholders. However, no agreement has been proposed as of yet.” If the threatened tariffs are implemented and remain in place, a prospect ports are taking seriously, it would stunt the planned expansion of US port capacity. According to an AAPA survey conducted with the US Maritime Administration, 165 cranes are either on order or will be ordered for delivery from China over the next 10 years, potentially being subjected to a prohibitive $6.7 billion in tariffs and penalties. Terminal operators are finding that ramping up orders through alternative manufacturers is proving a challenge. One terminal operator told the Journal of Commerce that it recently completed a tender for procurement of additional cranes. It said that in both cases the lowest price quoted was 65% to 75% higher than what it was paying for the same cranes ordered for use outside of the US. It attributed the price gap to increased demand for non-Chinese built cranes versus the production capacity of alternative manufacturers. In other words, apart from the short-term need for tariff exemptions on Chinese cranes already on order, longer term there is an even bigger need for mitigating measures to facilitate new crane orders in a market where insufficient alternative supply is available. Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>.</div>

US ports and terminal operators facing up to 270% tariffs on ship-to-shore cranes they’ll receive from China in the coming months are considering reselling the units or laying them up in bond if they don’t receive exemptions from the Trump administration. The tariffs taking effect Oct. 14, absent relief of some kind, will make the total cost unfeasible for ports and terminals, tripling the price tag in some cases. While the industry lobbies the White House for an exemption, marine terminal operators may be forced to resell or even abandon cranes if the tariffs take effect, said Carl Bentzel, president of the National Association of Waterfront Employers (NAWE). Such moves would interrupt normal US replenishment demand of 20 to 25 cranes per year on an installed base of an estimated 450 ship-to-shore (STS) cranes deployed at ports in the US and US territories. “Without relief or accommodation, these tariffs pose a serious risk of rendering critical investments economically unfeasible and will ultimately undermine the very policy objectives they are intended to advance,” Ports America CEO Matthew Leech told the Journal of Commerce. Port Houston is proposing grandfathering China-built ship-to-shore cranes that were under contract and in fabrication before Dec. 31, 2024. “This proposal would solve the Port Houston issue, along with similar issues Port Freeport, Port of Virginia and Ports America have with their STS cranes currently completing fabrication,” according to Port Houston Executive Director Charlie Jenkins . But with that solution not guaranteed, alternative options being considered by ports and terminals include not putting the cranes to use. “If they must pay these tariffs, they will have three options,” Cary Davis, president of the American Association of Port Authorities (AAPA), wrote in a May letter to US Trade Representative (USTR) Jamison Greer. “First, they can let the cranes collect dust while they are held in bonded warehouses at an additional cost. Second, they can attempt to slash budgets elsewhere to pay the tariff costs. Or third, ports planning future procurement can purchase used cranes instead, which are not as structurally or operationally sound.” Port productivity at risk The result of not upgrading or expanding ship-to-shore crane capacity would have several negative consequences, including lower port productivity driven by longer wait times for ships, delayed cargo availability and the inability to handle larger ships. That would further erode the competitiveness of US ports, which rank low in global port productivity rankings and are among the most expensive in the world on a per-container lifted basis. The main benefit of larger cranes is greater height, meaning US ports would face greater operational challenges handing larger ships without the upgrades. The Port of Virginia told the USTR it expects to be handling vessels in the 18,000 to 20,000-TEU range in the coming years, but that “without continued investment in greater port capacity, these larger ships are hampered from consistently calling the East Coast because the existing infrastructure, specifically ship-to-shore cranes, cannot support them.” Houston is a case in point in terms of the immediate challenges US ports are facing from the potential tariffs. The port is under contract with dominant Chinese crane manufacturer ZPMC for eight cranes at $14 million each scheduled for delivery in the spring of 2026. If it is forced to pay the full tariffs, it will owe $302.4 million in total, which would equate to more than half of the port’s annual container operating revenues and greater than a full year of operating cash flow, Jenkins wrote. The tax figure includes a proposed additional 100% tariff on China-made ship-to-shore cranes on top of 25% tariffs imposed in 2024 and the 145% in tariffs that still could be applied to all Chinese goods absent a broader settlement. For Ports America, the price tag for a single STS crane scheduled to arrive at Gulfport in early September is $16 million. “However, any scenario in which the total landed cost — including applicable penalties, tariffs and related charges — exceeds $22 million would render the equipment economically unviable for deployment,” Leech said. “In such a case, the only practical options would be to resell and re-export the crane or to store it in a bonded facility without commissioning it or paying duties.” Reshoring push from White House New legislation just introduced in the House of Representatives seeks to encourage the domestic building of cranes to lessen the dependence on China-built equipment , which makes up 80% of cranes at US ports and has raised security concerns. Although no solid plan to support US manufacturing or assembly of cranes has materialized as yet, affected ports appear to universally support the idea. The Canadian infrastructure investor Brookfield is discussing such an initiative in collaboration with Matsui-Paceco, Paceco being the builder of the original container cranes for Sea-Land Service Inc. in the 1960s. A White House meeting in April attended by several US port leaders included participation by Peter Stone, a leader of Brookfield’s US port business. At that meeting, according to one participant, the message from White House officials was: “We don’t understand why US industry is buying Chinese equipment and we don’t want you to. We want you to get on board with a program that creates availability of US-assembled cranes.” “There was no objection to this from the assembled ports assuming a transition agreement covering price, timing and specs,” the meeting participant told the Journal of Commerce. “Currently, there is ongoing engagement on developing a framework to nearshore and onshore STS crane manufacturing between the Trump administration, Congress and industry stakeholders. However, no agreement has been proposed as of yet.” If the threatened tariffs are implemented and remain in place, a prospect ports are taking seriously, it would stunt the planned expansion of US port capacity. According to an AAPA survey conducted with the US Maritime Administration, 165 cranes are either on order or will be ordered for delivery from China over the next 10 years, potentially being subjected to a prohibitive $6.7 billion in tariffs and penalties. Terminal operators are finding that ramping up orders through alternative manufacturers is proving a challenge. One terminal operator told the Journal of Commerce that it recently completed a tender for procurement of additional cranes. It said that in both cases the lowest price quoted was 65% to 75% higher than what it was paying for the same cranes ordered for use outside of the US. It attributed the price gap to increased demand for non-Chinese built cranes versus the production capacity of alternative manufacturers. In other words, apart from the short-term need for tariff exemptions on Chinese cranes already on order, longer term there is an even bigger need for mitigating measures to facilitate new crane orders in a market where insufficient alternative supply is available. Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

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