<div class="phx-topic abstract-wrapper">Multiple forwarder sources who spoke with the Journal of Commerce confirmed that the portal booking specifics are still unavailable for February voyages from India to Europe.</div>

Multiple forwarder sources who spoke with the Journal of Commerce confirmed that the portal booking specifics are still unavailable for February voyages from India to Europe.

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<div class="phx-topic">Indian freight forwarders are still waiting to learn when Gemini alliance partners Maersk and Hapag-Lloyd will open spot bookings to Europe even as the so-called hub-and-spoke network moves closer to its official Feb. 1 launch. Hapag-Lloyd earlier told customers that Dec. 3 would be the booking start date for all Gemini services. But multiple forwarder sources who spoke with the Journal of Commerce confirmed that the portal booking specifics are still unavailable for February voyages from India to Europe. “While the inaugural sailing schedules have been declared, the network hasn’t begun accepting spot bookings as of now,” said a sales executive at a Mumbai-based forwarding house. “Some rollover adjustments from the current independent networks and other commercial considerations could be holding things back.” Gemini <a href="https://nam11.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.joc.com%2Farticle%2Fgemini-to-bulk-up-capacity-on-india-europe-trade-amid-rate-push-pressure-5911491&amp;data=05%7C02%7Ckevin.saville2%40spglobal.com%7C137c532edf0d471c908508dd33c2e925%7C8f3e36ea80394b4081a77dc0599e8645%7C1%7C0%7C638723634416921183%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&amp;sdata=KvNS921FK3lhQ3kswi9JR2bd%2BDoRoQb5v9h9sHBju9c%3D&amp;reserved=0">has three direct services out of India for North Europe</a> -- two with stops at Mundra and Nhava Sheva for northwestern India trade, and one for southern India trade over Ennore (Chennai). The first westbound Gemini sailing on the West India-Europe trade will be the Houston Express, operated by Hapag-Lloyd, with an estimated time of arrival in Mundra of Feb. 9, while the southern India leg is due to begin with the Maersk Stadelhorn calling at Ennore on Feb. 11, sources said. A second forwarder said as Maersk has the largest market share of the seasonal grape market out of India to Europe, which typically moves under carrier service contracts, the availability of space on early Gemini vessels could in some part hinge on this reefer trade that market sources generally expect to exceed last year's volumes. Hapag-Lloyd and Mediterranean Shipping Co. (MSC) are also major carriers for Indian-grown grape exports, which normally peak from February through March. As contract negotiations move into the closing stages, forwarder sources expect average carrier rates to hover at about $3,500 per FEU for grape bookings from West India to Europe. That range compares with early-January spot pricing of between $1,800 to $1,900 per FEU for standard dry loads from Nhava Sheva to London Gateway or Felixstowe. “A stronger grape season could cut into the spot booking space, thus driving rates up after steady declines,” the second forwarder source said. Shrugging off forwarder claims, Bhavik Mota, Maersk’s director of regional ocean management for India/Middle East/Africa, told the Journal of Commerce the Gemini network transition remains “on schedule.” “Bookings are open on the Gemini network,” said Mota. “There are no rollovers that could impact bookings.” He also reiterated that the network has been structured globally with Maersk providing 60% of the capacity and Hapag-Lloyd 40%. Hapag-Lloyd (India) was unavailable for comment. Contact Bency Mathew at <a href="mailto:bencyvmathew@gmail.com">bencyvmathew@gmail.com</a>. </div>

Indian freight forwarders are still waiting to learn when Gemini alliance partners Maersk and Hapag-Lloyd will open spot bookings to Europe even as the so-called hub-and-spoke network moves closer to its official Feb. 1 launch. Hapag-Lloyd earlier told customers that Dec. 3 would be the booking start date for all Gemini services. But multiple forwarder sources who spoke with the Journal of Commerce confirmed that the portal booking specifics are still unavailable for February voyages from India to Europe. “While the inaugural sailing schedules have been declared, the network hasn’t begun accepting spot bookings as of now,” said a sales executive at a Mumbai-based forwarding house. “Some rollover adjustments from the current independent networks and other commercial considerations could be holding things back.” Gemini has three direct services out of India for North Europe -- two with stops at Mundra and Nhava Sheva for northwestern India trade, and one for southern India trade over Ennore (Chennai). The first westbound Gemini sailing on the West India-Europe trade will be the Houston Express, operated by Hapag-Lloyd, with an estimated time of arrival in Mundra of Feb. 9, while the southern India leg is due to begin with the Maersk Stadelhorn calling at Ennore on Feb. 11, sources said. A second forwarder said as Maersk has the largest market share of the seasonal grape market out of India to Europe, which typically moves under carrier service contracts, the availability of space on early Gemini vessels could in some part hinge on this reefer trade that market sources generally expect to exceed last year's volumes. Hapag-Lloyd and Mediterranean Shipping Co. (MSC) are also major carriers for Indian-grown grape exports, which normally peak from February through March. As contract negotiations move into the closing stages, forwarder sources expect average carrier rates to hover at about $3,500 per FEU for grape bookings from West India to Europe. That range compares with early-January spot pricing of between $1,800 to $1,900 per FEU for standard dry loads from Nhava Sheva to London Gateway or Felixstowe. “A stronger grape season could cut into the spot booking space, thus driving rates up after steady declines,” the second forwarder source said. Shrugging off forwarder claims, Bhavik Mota, Maersk’s director of regional ocean management for India/Middle East/Africa, told the Journal of Commerce the Gemini network transition remains “on schedule.” “Bookings are open on the Gemini network,” said Mota. “There are no rollovers that could impact bookings.” He also reiterated that the network has been structured globally with Maersk providing 60% of the capacity and Hapag-Lloyd 40%. Hapag-Lloyd (India) was unavailable for comment. Contact Bency Mathew at bencyvmathew@gmail.com .

Container Shipping News

Container lines

Maritime

Indian forwarders seek clarity on spot booking program for Gemini Europe sailings

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

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

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

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

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

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

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

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

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

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

<div class="phx-topic abstract-wrapper">The carrier’s top-line financials are a clear signal that container shipping is firmly back in profitable territory following a poor end to 2023 that left several carriers nursing losses.</div>

The carrier’s top-line financials are a clear signal that container shipping is firmly back in profitable territory following a poor end to 2023 that left several carriers nursing losses.

<div class="phx-topic">Cosco Shipping Holdings, the parent of Cosco Shipping and OOCL, on Friday said it expects $7.5 billion in net profit for 2024, a 95% year-over-year jump that the carrier attributed to an increase in volumes and higher freight rates. While Cosco did not provide the volume or revenue figures in its estimated annual results, the China state-owned carrier noted in an announcement to the Hong Kong Exchange that the Red Sea diversions had caused a shortage in capacity and kept rates at “a relatively high level.” “In 2024, the company recorded an increase in volume and freight rate of its container shipping business on a year-over-year basis, achieving better operating results,” Cosco said in the statement. Also released Friday was an operational update from Cosco subsidiary OOCL. Although no profit and loss details were published — full financial results will be announced in March — the OOCL result gave a little more color on fourth-quarter and full-year performance. OOCL reported 2024 annual revenue just shy of $10 billion, with the 30% year-over-year increase driven by a booming fourth quarter when volume rose 3.5% to 7.6 million TEUs and average revenue per TEU rose 46.2% compared with the last three months of 2023. The operating result and Cosco’s 2024 earnings forecast show container shipping is firmly back in profitable territory following a poor end to 2023 when several carriers, including <a href="https://www.joc.com/article/red-sea-crisis-wont-prevent-likely-significant-operating-loss-2024-maersk_20240208.html">Maersk</a> and <a href="https://www.joc.com/article/hapag-lloyd-reports-q4-loss-falling-rates-red-sea-disruption_20240130.html">Hapag-Lloyd</a>, reported <a href="https://www.joc.com/article/evergreen-wai-hai-join-peers-in-reporting-sharply-lower-2023-financials-5214522">fourth-quarter operating losses</a>. <h3>High average revenue per TEU </h3>The trans-Pacific trade led both volume and revenue growth at OOCL last year, with 2024 volume up 10% to 2 million TEUs and revenue on the lane soaring 53.5% to $3.8 billion. Asia-Europe volume of 1.4 million TEUs was down 10.9% while revenue rose 44% to $2.3 billion. Trans-Atlantic volumes fell 0.6% to 479,517 with revenue declining 26% to $616 million. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="4bf824e9-ea85-4405-857e-04a7fa8dec88"></dynamic-object></div>OOCL’s largest segment by volume is effectively two trade lanes, intra-Asia and Australasia, which reported a 7.4% increase in demand to 3.6 million TEUs and revenue rising 17.1% to just under $3 billion. It was the fourth quarter where the big financial numbers were recorded as the carrier capitalized on trans-Pacific and trans-Atlantic frontloading ahead of <a href="https://www.joc.com/article/us-retailers-prepare-for-new-ila-strike-threat-tariffs-on-china-imports-5822904">a threatened increase in US tariffs on China</a> by the new Trump administration and <a href="https://www.joc.com/article/front-loading-of-ocean-cargo-diminishing-ch-robinson-ceo-says-5907756">an earlier Lunar New Year</a>. <h3>Trans-Pacific leads Q4 volume growth </h3>While OOCL’s total fourth-quarter volume rose 6.1% to just under 2 million TEUs, a sharp rise in average rate levels propelled revenue in the last three months of 2024 to $2.5 billion, up 55% year over year. The trans-Pacific led OOCL’s fourth-quarter volume growth, increasing 14.5% to 551,734 TEUs with revenue up 61.7% at $967 million. While Asia-Europe recorded a 6.5% decline in volume to 363,125 TEUs, revenue on the trade rose 75.4% to $553 million as diversions around southern Africa <a href="https://www.joc.com/article/ongoing-red-sea-effect-reaches-deep-into-asia-europe-trade-lane-5878610">absorbed all available capacity and drove up rate levels</a>. Trans-Atlantic fourth-quarter volume rose 11.3% to 119,733 TEUs, while revenue was up 22.9% to $163 million. Intra-Asia-Australasia volume in the fourth quarter increased 6.3% to 951,318 TEUs and revenue was up 44.3% year over year at $828 million. OOCL’s operational result also highlighted the gap between demand and available capacity, a result of strong demand all year on the trans-Pacific and the Africa diversions absorbing all excess supply. In the fourth quarter, the volume growth of 6.1% across all the carrier’s trade lanes was accompanied by available capacity growth of 4.2%. The full-year volume growth of 3.5% came as available capacity increased by just 0.3%. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Cosco Shipping Holdings, the parent of Cosco Shipping and OOCL, on Friday said it expects $7.5 billion in net profit for 2024, a 95% year-over-year jump that the carrier attributed to an increase in volumes and higher freight rates. While Cosco did not provide the volume or revenue figures in its estimated annual results, the China state-owned carrier noted in an announcement to the Hong Kong Exchange that the Red Sea diversions had caused a shortage in capacity and kept rates at “a relatively high level.” “In 2024, the company recorded an increase in volume and freight rate of its container shipping business on a year-over-year basis, achieving better operating results,” Cosco said in the statement. Also released Friday was an operational update from Cosco subsidiary OOCL. Although no profit and loss details were published — full financial results will be announced in March — the OOCL result gave a little more color on fourth-quarter and full-year performance. OOCL reported 2024 annual revenue just shy of $10 billion, with the 30% year-over-year increase driven by a booming fourth quarter when volume rose 3.5% to 7.6 million TEUs and average revenue per TEU rose 46.2% compared with the last three months of 2023. The operating result and Cosco’s 2024 earnings forecast show container shipping is firmly back in profitable territory following a poor end to 2023 when several carriers, including Maersk and Hapag-Lloyd , reported fourth-quarter operating losses . High average revenue per TEU The trans-Pacific trade led both volume and revenue growth at OOCL last year, with 2024 volume up 10% to 2 million TEUs and revenue on the lane soaring 53.5% to $3.8 billion. Asia-Europe volume of 1.4 million TEUs was down 10.9% while revenue rose 44% to $2.3 billion. Trans-Atlantic volumes fell 0.6% to 479,517 with revenue declining 26% to $616 million. OOCL’s largest segment by volume is effectively two trade lanes, intra-Asia and Australasia, which reported a 7.4% increase in demand to 3.6 million TEUs and revenue rising 17.1% to just under $3 billion. It was the fourth quarter where the big financial numbers were recorded as the carrier capitalized on trans-Pacific and trans-Atlantic frontloading ahead of a threatened increase in US tariffs on China by the new Trump administration and an earlier Lunar New Year . Trans-Pacific leads Q4 volume growth While OOCL’s total fourth-quarter volume rose 6.1% to just under 2 million TEUs, a sharp rise in average rate levels propelled revenue in the last three months of 2024 to $2.5 billion, up 55% year over year. The trans-Pacific led OOCL’s fourth-quarter volume growth, increasing 14.5% to 551,734 TEUs with revenue up 61.7% at $967 million. While Asia-Europe recorded a 6.5% decline in volume to 363,125 TEUs, revenue on the trade rose 75.4% to $553 million as diversions around southern Africa absorbed all available capacity and drove up rate levels . Trans-Atlantic fourth-quarter volume rose 11.3% to 119,733 TEUs, while revenue was up 22.9% to $163 million. Intra-Asia-Australasia volume in the fourth quarter increased 6.3% to 951,318 TEUs and revenue was up 44.3% year over year at $828 million. OOCL’s operational result also highlighted the gap between demand and available capacity, a result of strong demand all year on the trans-Pacific and the Africa diversions absorbing all excess supply. In the fourth quarter, the volume growth of 6.1% across all the carrier’s trade lanes was accompanied by available capacity growth of 4.2%. The full-year volume growth of 3.5% came as available capacity increased by just 0.3%. Contact Greg Knowler at greg.knowler@spglobal.com .

Trans-Atlantic

Asia-Europe

Trans-Pacific

Cosco forecasts 95% jump in 2024 net profit on robust volumes, freight rates

<div class="phx-topic abstract-wrapper">The US last-mile market has become fragmented, benefiting shippers from both a cost and capacity perspective. </div>

The US last-mile market has become fragmented, benefiting shippers from both a cost and capacity perspective.

<div class="phx-topic">The big picture: Large parcel carriers FedEx and UPS are discounting rates to attract volumes, while retailers are courting business-to-consumer (B2C) shipments by offering free delivery through subscription services. Shippers have spread volumes out among a number of carriers, which has also taken volumes from the large carriers. The more profitable business-to-business (B2B) parcel market is not expected to increase until manufacturing demand picks up. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5914613_0.1.png"></img></div>A look back: FedEx and UPS struggled in the B2C last-mile market last year, and B2B parcel volumes remained muted due to weak global manufacturing activity. Shippers diversifying the number of carriers they use and increased competition from regional carriers, retailers such as Amazon, Target and Walmart, the US Postal Service and parcel management technology tools have forced FedEx and UPS to lower rates to regain lost volumes. According to AFS Logistics, the cost to ship a ground parcel declined 2.5% year over year in the third quarter of 2024 due to higher discounts and lower average package weights. Those lighter parcels are often e-commerce related, which is the future of ground parcels, according to FedEx CFO Bill Dietrich. “E-commerce is going to make up a large percentage, probably up to 90% of the volume growth of our ground network,” Dietrich said at the November Baird Global Industrial Conference. “We just have to find the right cost structure to accommodate it.” Despite automation investments that have lowered some operating costs, FedEx and UPS are struggling to compete within the B2C last-mile market. Protecting revenue per parcel is a priority for both carriers, but it conflicts with discounting rates to attract volumes. A look ahead: Higher rates for 2025 went into effect as early as Dec. 23, 2024, with UPS’ average rate increases of 5.9% followed by other last-mile carriers’ rate increases effective in January. However, FedEx and UPS will likely continue to discount ground parcel rates because of the expected continuation of stronger B2C volumes. Amazon, Walmart and Target will benefit the most in terms, volume-wise, because of the expected increase in e-commerce demand and subscription services that each provide, which also include free delivery services. B2C parcel volumes will continue to shift away from FedEx and UPS. B2B volumes may see some gains, but not much, at least for the first half of the year. According to Deloitte, manufacturers are expected to continue to face a challenging and uncertain business climate due to a combination of higher costs, potential policy changes following the US and global elections, and geopolitical uncertainty in 2025. Until manufacturing demand improves, FedEx and UPS will face a competitive B2C last-mile market in which lower rates are the norm. This assumes, however, that consumer spending will remain resilient. Year-to-date through October, US retail sales rose 2.4% from the same period in 2023, according to data from the US Census Bureau. But slowing economic growth and the uncertainty of a new presidential administration could result in a pullback in consumer spending this year. The next inflection: Prior to the COVID-19 pandemic, shippers tended to split parcel volumes between FedEx, UPS and the US Postal System. Since then, however, the last-mile market has become much more fragmented, benefiting shippers from a cost and capacity perspective. But it has left FedEx and UPS trying to figure out how to profitably compete in the B2C parcel market while they wait for the B2B market to revive. Contact Cathy Morrow Roberson at <a href="mailto:cathy.morrowroberso@spglobal.com">cathy.morrowroberso@spglobal.com.</a></div>

The big picture: Large parcel carriers FedEx and UPS are discounting rates to attract volumes, while retailers are courting business-to-consumer (B2C) shipments by offering free delivery through subscription services. Shippers have spread volumes out among a number of carriers, which has also taken volumes from the large carriers. The more profitable business-to-business (B2B) parcel market is not expected to increase until manufacturing demand picks up. A look back: FedEx and UPS struggled in the B2C last-mile market last year, and B2B parcel volumes remained muted due to weak global manufacturing activity. Shippers diversifying the number of carriers they use and increased competition from regional carriers, retailers such as Amazon, Target and Walmart, the US Postal Service and parcel management technology tools have forced FedEx and UPS to lower rates to regain lost volumes. According to AFS Logistics, the cost to ship a ground parcel declined 2.5% year over year in the third quarter of 2024 due to higher discounts and lower average package weights. Those lighter parcels are often e-commerce related, which is the future of ground parcels, according to FedEx CFO Bill Dietrich. “E-commerce is going to make up a large percentage, probably up to 90% of the volume growth of our ground network,” Dietrich said at the November Baird Global Industrial Conference. “We just have to find the right cost structure to accommodate it.” Despite automation investments that have lowered some operating costs, FedEx and UPS are struggling to compete within the B2C last-mile market. Protecting revenue per parcel is a priority for both carriers, but it conflicts with discounting rates to attract volumes. A look ahead: Higher rates for 2025 went into effect as early as Dec. 23, 2024, with UPS’ average rate increases of 5.9% followed by other last-mile carriers’ rate increases effective in January. However, FedEx and UPS will likely continue to discount ground parcel rates because of the expected continuation of stronger B2C volumes. Amazon, Walmart and Target will benefit the most in terms, volume-wise, because of the expected increase in e-commerce demand and subscription services that each provide, which also include free delivery services. B2C parcel volumes will continue to shift away from FedEx and UPS. B2B volumes may see some gains, but not much, at least for the first half of the year. According to Deloitte, manufacturers are expected to continue to face a challenging and uncertain business climate due to a combination of higher costs, potential policy changes following the US and global elections, and geopolitical uncertainty in 2025. Until manufacturing demand improves, FedEx and UPS will face a competitive B2C last-mile market in which lower rates are the norm. This assumes, however, that consumer spending will remain resilient. Year-to-date through October, US retail sales rose 2.4% from the same period in 2023, according to data from the US Census Bureau. But slowing economic growth and the uncertainty of a new presidential administration could result in a pullback in consumer spending this year. The next inflection: Prior to the COVID-19 pandemic, shippers tended to split parcel volumes between FedEx, UPS and the US Postal System. Since then, however, the last-mile market has become much more fragmented, benefiting shippers from a cost and capacity perspective. But it has left FedEx and UPS trying to figure out how to profitably compete in the B2C parcel market while they wait for the B2B market to revive. Contact Cathy Morrow Roberson at cathy.morrowroberso@spglobal.com.

Last Mile News

Surface

FedEx, UPS to continue discounting parcel rates amid increased competition

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

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

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

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

Port News

Rail News

North American ports

Marine terminals

North-American rail

Vancouver braces for congestion, high rail dwells through January

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

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

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

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

Transport, Trade and Regulation News

Protecting navigation and the Commerce Clause in 2025

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

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

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

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

MSC takes measured steps toward long-term goals

Los Angeles

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Seattle

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The outbound port rates are calculated using data from Cargo Chief, DAT, and digital freight broker Loadsmart, and a survey of truckload brokers who participate on the condition of anonymity. Outbound port rates cover the regions of Los Angeles-Long Beach, Oakland, and Seattle on the West Coast, and Houston, New York-New Jersey, Virginia, and Savannah in the Gulf and East Coasts.

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

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

<div class="phx-topic abstract-wrapper">Capacity will continue to be the greatest challenge facing cargo owners moving goods from Asia by air this year. </div>

Capacity will continue to be the greatest challenge facing cargo owners moving goods from Asia by air this year.

<div class="phx-topic">The big picture: Capacity constraints on outbound air cargo routes from Asia, particularly China, will persist in 2025, with volumes continuing to outstrip available space. Airlines have been postponing the retirement of freighters to cope with booming e-commerce demand in the US and Europe, but many of those aircraft are at the end of their working life, and production delays at both Boeing and Airbus are slowing the arrival of any new capacity. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5914611_0.1.png"></img></div>A look back: Air cargo on the two main trade lanes from Asia to North America and Europe was stuck in a perpetual peak season throughout 2024. Following the traditional air freight peak season in the fourth quarter of 2023, hostilities in the Red Sea — and the resulting diversion of container ships around southern Africa — forced shippers of time-sensitive cargo into the air. As planes leaving Asia began to quickly fill up, competition for space emerged from an unexpected source: e-commerce platforms contracting directly with airlines. Even as online shopping demand accelerated during the COVID-19 pandemic, the major e-commerce platforms typically had fulfillment centers in destination markets. Chinese e-commerce giants Temu and Shein changed all that, cutting out forwarders and contracting space directly with airlines to move packages into the US and Europe. US package imports by the end of September were more than 1 billion units compared with 140 million units in 2023, according to a White House briefing, as the platforms made use of its generous “de minimis” value threshold; shipments valued at less than $800 in the US and €150 in the EU are exempt from import duties. The e-commerce platforms in the past year have factored this into their US and EU supply chains, which almost exclusively use air cargo. Although available capacity increased almost 5% during the first 10 months of the year, demand grew more than 12%, according to rate benchmarking and analytics platform Xeneta, pushing global load factors and rates to their highest levels in two years. A look ahead: Capacity will continue to be the greatest challenge facing cargo owners moving goods from Asia by air in 2025. As e-commerce siphons off huge amounts of space directly from airlines, forwarders are coming under increasing pressure to secure capacity for their customers shipping traditional cargo. That pressure is often translated into forwarders chartering freighter capacity at a high cost, adding further upward pressure on rates, especially during historical peaks around Lunar New Year and November online sales promotions. Exacerbating ongoing space constraints for shippers is an increasing shortage of intra-Asia capacity as airlines shift planes to the more lucrative long-haul routes. The heavy competition for limited space will likely keep rates elevated throughout 2025. Scrutiny of Chinese online platforms by US authorities is also likely to intensify next year, with plans in place to reform the US de minimis program that will almost certainly be accelerated by the new Trump administration. The next inflection: Even if the US significantly lowers the de minimis value threshold, however, it is unlikely to have any real impact on air cargo demand out of China. The average value order of US e-commerce transactions is about $170, according to Hong Kong-based CEIC economists. More important is a US proposal put forward in September 2024 by the Biden administration that, if adopted, could result in 40% of e-commerce products no longer covered by de minimis regulations and include 70% of textile and apparel exports from China. That would have a significant negative impact on sales via e-commerce platforms that rely on direct shipments to US consumers from China. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com.</a></div>

The big picture: Capacity constraints on outbound air cargo routes from Asia, particularly China, will persist in 2025, with volumes continuing to outstrip available space. Airlines have been postponing the retirement of freighters to cope with booming e-commerce demand in the US and Europe, but many of those aircraft are at the end of their working life, and production delays at both Boeing and Airbus are slowing the arrival of any new capacity. A look back: Air cargo on the two main trade lanes from Asia to North America and Europe was stuck in a perpetual peak season throughout 2024. Following the traditional air freight peak season in the fourth quarter of 2023, hostilities in the Red Sea — and the resulting diversion of container ships around southern Africa — forced shippers of time-sensitive cargo into the air. As planes leaving Asia began to quickly fill up, competition for space emerged from an unexpected source: e-commerce platforms contracting directly with airlines. Even as online shopping demand accelerated during the COVID-19 pandemic, the major e-commerce platforms typically had fulfillment centers in destination markets. Chinese e-commerce giants Temu and Shein changed all that, cutting out forwarders and contracting space directly with airlines to move packages into the US and Europe. US package imports by the end of September were more than 1 billion units compared with 140 million units in 2023, according to a White House briefing, as the platforms made use of its generous “de minimis” value threshold; shipments valued at less than $800 in the US and €150 in the EU are exempt from import duties. The e-commerce platforms in the past year have factored this into their US and EU supply chains, which almost exclusively use air cargo. Although available capacity increased almost 5% during the first 10 months of the year, demand grew more than 12%, according to rate benchmarking and analytics platform Xeneta, pushing global load factors and rates to their highest levels in two years. A look ahead: Capacity will continue to be the greatest challenge facing cargo owners moving goods from Asia by air in 2025. As e-commerce siphons off huge amounts of space directly from airlines, forwarders are coming under increasing pressure to secure capacity for their customers shipping traditional cargo. That pressure is often translated into forwarders chartering freighter capacity at a high cost, adding further upward pressure on rates, especially during historical peaks around Lunar New Year and November online sales promotions. Exacerbating ongoing space constraints for shippers is an increasing shortage of intra-Asia capacity as airlines shift planes to the more lucrative long-haul routes. The heavy competition for limited space will likely keep rates elevated throughout 2025. Scrutiny of Chinese online platforms by US authorities is also likely to intensify next year, with plans in place to reform the US de minimis program that will almost certainly be accelerated by the new Trump administration. The next inflection: Even if the US significantly lowers the de minimis value threshold, however, it is unlikely to have any real impact on air cargo demand out of China. The average value order of US e-commerce transactions is about $170, according to Hong Kong-based CEIC economists. More important is a US proposal put forward in September 2024 by the Biden administration that, if adopted, could result in 40% of e-commerce products no longer covered by de minimis regulations and include 70% of textile and apparel exports from China. That would have a significant negative impact on sales via e-commerce platforms that rely on direct shipments to US consumers from China. Contact Greg Knowler at greg.knowler@spglobal.com.

Air Cargo Forwarder News

Air Cargo Carriers News

Air Cargo

Ex-Asia air freight capacity constraints to persist in 2025

<div class="phx-topic abstract-wrapper">With shippers under pressure to finalize production plans with Asian factories amid ongoing vessel diversions around Africa and elevated rates, there is little point in delaying the signing of annual contracts.</div>

With shippers under pressure to finalize production plans with Asian factories amid ongoing vessel diversions around Africa and elevated rates, there is little point in delaying the signing of annual contracts.

<div class="phx-topic">Asia-Europe shippers have begun locking in annual contracts as the capacity-constrained trade lane is likely to remain firmly in favor of ocean carriers through the traditional post-Lunar New Year slowdown. Short-term rates have hovered near $5,000 per FEU on the Asia-North Europe lane since mid-December, according to the pricing indices, as healthy demand and ongoing diversions around southern Africa absorb significant amounts of capacity — estimated at more than 10% by analysts and carriers. With little expectation of any return to Suez transits this year, and with pressure mounting to set 2025 production plans with factories in Asia, Asia-Europe shippers are agreeing to annual contracts. “We know that shippers have monitored and analyzed the market closely throughout last year, postponing the signing of new contracts as much as possible, but at some point, you must strike,” Peter Sand, chief analyst for rate benchmarking platform Xeneta, told the Journal of Commerce Wednesday. “It seems to be the case that many shippers have moved forward with their tendering processes amidst the turbulent market as no massive postponement has taken place,” he added. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="db6ec523-b5f8-4a58-9f56-029ba9f0b967"></dynamic-object></div>Data from Xeneta shows long-term rates signed in the last three months on Asia-North Europe were up 52% year over year at $2,804 per FEU, while Asia-Mediterranean routes were flat at $2,436 per FEU. However, Sand said shippers should not be “overly disappointed” considering contract rates on both trade lanes are down sharply since September. Chantal McRoberts, director and head of advisory for the Drewry Supply Chain team, said China-North Europe contracts agreed in December were about $1,400 to $1,600 per FEU higher than the rates in the same period in 2023. “This jump in costs may have changed with the contracts just starting, but there has clearly been a 30%-plus inflation in recent contract negotiations on this trade route,” she told the Journal of Commerce, adding that Drewry was also hearing of some “strong” offers on quarterly rates in the Asia-Europe market. <h3>Stronger leverage </h3>In a container market update Wednesday, Jefferies Equity Research also highlighted moves by cargo owners to lock in long-term rates. “Liners have much stronger negotiating leverage, as evidenced by recent 2025 Asia-Europe contracts concluding at $2,500-$3,000 per FEU as compared to 2024 contracts which were concluded at best at $2,000,” the Jefferies update said. “Freight rates have ebbed and flowed at elevated levels since Red Sea diversions began and more recently have benefited from the normal pre-Lunar New Year ordering, which has been compounded by uncertainty related to looming US tariffs and potential US East Coast port disruptions,” the bank added. Jefferies is expecting the higher contract levels to have a positive impact on carrier financial results in the first quarter. “We are raising our 1Q25 estimates to reflect a strong start to 2025,” the bank noted. “We expect earnings to be front-loaded this year due to the normal pullback following Lunar New Year and potential destocking later in 2025.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Asia-Europe shippers have begun locking in annual contracts as the capacity-constrained trade lane is likely to remain firmly in favor of ocean carriers through the traditional post-Lunar New Year slowdown. Short-term rates have hovered near $5,000 per FEU on the Asia-North Europe lane since mid-December, according to the pricing indices, as healthy demand and ongoing diversions around southern Africa absorb significant amounts of capacity — estimated at more than 10% by analysts and carriers. With little expectation of any return to Suez transits this year, and with pressure mounting to set 2025 production plans with factories in Asia, Asia-Europe shippers are agreeing to annual contracts. “We know that shippers have monitored and analyzed the market closely throughout last year, postponing the signing of new contracts as much as possible, but at some point, you must strike,” Peter Sand, chief analyst for rate benchmarking platform Xeneta, told the Journal of Commerce Wednesday. “It seems to be the case that many shippers have moved forward with their tendering processes amidst the turbulent market as no massive postponement has taken place,” he added. Data from Xeneta shows long-term rates signed in the last three months on Asia-North Europe were up 52% year over year at $2,804 per FEU, while Asia-Mediterranean routes were flat at $2,436 per FEU. However, Sand said shippers should not be “overly disappointed” considering contract rates on both trade lanes are down sharply since September. Chantal McRoberts, director and head of advisory for the Drewry Supply Chain team, said China-North Europe contracts agreed in December were about $1,400 to $1,600 per FEU higher than the rates in the same period in 2023. “This jump in costs may have changed with the contracts just starting, but there has clearly been a 30%-plus inflation in recent contract negotiations on this trade route,” she told the Journal of Commerce, adding that Drewry was also hearing of some “strong” offers on quarterly rates in the Asia-Europe market. Stronger leverage In a container market update Wednesday, Jefferies Equity Research also highlighted moves by cargo owners to lock in long-term rates. “Liners have much stronger negotiating leverage, as evidenced by recent 2025 Asia-Europe contracts concluding at $2,500-$3,000 per FEU as compared to 2024 contracts which were concluded at best at $2,000,” the Jefferies update said. “Freight rates have ebbed and flowed at elevated levels since Red Sea diversions began and more recently have benefited from the normal pre-Lunar New Year ordering, which has been compounded by uncertainty related to looming US tariffs and potential US East Coast port disruptions,” the bank added. Jefferies is expecting the higher contract levels to have a positive impact on carrier financial results in the first quarter. “We are raising our 1Q25 estimates to reflect a strong start to 2025,” the bank noted. “We expect earnings to be front-loaded this year due to the normal pullback following Lunar New Year and potential destocking later in 2025.” Contact Greg Knowler at greg.knowler@spglobal.com .

Ocean carriers in control on Asia-Europe trade as cargo contracts closed

<div class="phx-topic abstract-wrapper">Local freight forwarders believe any extra capacity entering the Indian market from smaller ship operators working around an “opportunistic approach” has the potential to spoil rate recovery efforts by large carriers.</div>

Local freight forwarders believe any extra capacity entering the Indian market from smaller ship operators working around an “opportunistic approach” has the potential to spoil rate recovery efforts by large carriers.

<div class="phx-topic">Indian ports are seeing a capacity rush from Turkish container carriers willing to offer sailings via the traditional shorter Suez Canal route as mainline heavyweights continue to reroute vessels via the Cape of Good Hope amid the persistent threat of militant attacks in the Red Sea. The new, emboldened entrants include Turcon Line, with headquarters in Istanbul, and Izmir-based Arkas Line. They join a hot trend already set off by niche Asian-origin feeder lines, notably Singapore’s SeaLead, on India-Red Sea trades through vessel-sharing arrangements. Turcon will launch a service, known as the Turkey-Red Sea-India (TRI), out of Nhava Sheva and Mundra beginning in February, initially using four vessels that the carrier said will be upsized to five ships in June to provide a weekly rotation. It is expected to add between 10,000 TEUs to 15,000 TEUs of capacity a month for Indian loads. The TRI features a roundtrip rotation of Ambarli (Istanbul), Evyap (Izmit), Aliaga, Mersin, Aqaba, Jeddah, Nhava Sheva, Mundra, Jeddah, Aqaba, Alexandria and Ambarli. “The service offers the fastest transit from Turkey to India via the Suez Canal and the Red Sea, creating a vital link for the growing India-Turkey trade,” Turcon said in a statement. “The service will also offer connections via rail to strategic and important ICD [inland container depot] locations in North India.” Significantly, the newcomer for Indian trades is targeting a much wider market on the back of its Red Sea network reach. “The service will also connect Mundra and Nhava Sheva ports with America, North Europe and the Mediterranean via Turkon Line’s transshipment hub ports in Turkey,” the carrier said. Declared transit times from Nhava Sheva are 42 days to Norfolk and 44 days to New York, as well as 37 days to Antwerp and 44 days to Felixstowe. Turcon’s Indian operations will be handled by Mumbai-based third-party agent Abrao Group. Similarly, Arkas has announced the launch of a Suez routing connecting West India to the Mediterranean, also beginning next month. Arkas operates a fleet of 50 vessels. Mainline carriers have avoided the Suez and Red Sea for about 14 months, rerouting around southern Africa amid ongoing attacks on commercial shipping by Houthi militants operating in Yemen. <h3>Mixed reaction from market players </h3>While welcoming more services, local freight forwarders who spoke with the Journal of Commerce believe any extra capacity entering the market from smaller ship operators working around an “opportunistic approach” has the potential to spoil rate recovery efforts by mega carriers, especially on the India-US trade lane that continues to suffer week-over-week rate declines. Sources put early-January average spot pricing at $1,400 per FEU for bookings from Nhava Sheva to New York. Platts, a sister company of the Journal of Commerce within S&amp;P Global, pegged India-US East Coast rates at $1,500 per FEU as of Jan. 7, down 2% on the week. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="893ffa5c-0a69-45c7-a555-425e44318711"></dynamic-object></div>Jitendra Srivastava, CEO of Mumbai-based forwarder Triton Logistics &amp; Maritime, had a positive take on the new ocean network. “This offers efficient and cost-effective solutions for businesses engaged in bilateral trade between India and Turkey, and even beyond,” Srivastava said. Mainline carriers appear resigned to what is building around them. “There will always be some opportunistic players,” a senior executive at a European carrier who didn’t want to be identified told the Journal of Commerce. “There could also be some shippers looking for the cheapest pricing.” Still, larger shippers voiced skepticism regarding last-mile reliability for alternative Red Sea-centric options. “There are cargo flow risks when dealing with a startup-like solution trying to exploit a disruption for profit,” a source said. Two-way trade between India and Turkey stood at approximately $10.5 billion by value in fiscal year 2023–24, with engineering and electronics goods leading Indian exports, data shows. Contact Bency Mathew at <a href="mailto:bencyvmathew@gmail.com">bencyvmathew@gmail.com</a>.</div>

Indian ports are seeing a capacity rush from Turkish container carriers willing to offer sailings via the traditional shorter Suez Canal route as mainline heavyweights continue to reroute vessels via the Cape of Good Hope amid the persistent threat of militant attacks in the Red Sea. The new, emboldened entrants include Turcon Line, with headquarters in Istanbul, and Izmir-based Arkas Line. They join a hot trend already set off by niche Asian-origin feeder lines, notably Singapore’s SeaLead, on India-Red Sea trades through vessel-sharing arrangements. Turcon will launch a service, known as the Turkey-Red Sea-India (TRI), out of Nhava Sheva and Mundra beginning in February, initially using four vessels that the carrier said will be upsized to five ships in June to provide a weekly rotation. It is expected to add between 10,000 TEUs to 15,000 TEUs of capacity a month for Indian loads. The TRI features a roundtrip rotation of Ambarli (Istanbul), Evyap (Izmit), Aliaga, Mersin, Aqaba, Jeddah, Nhava Sheva, Mundra, Jeddah, Aqaba, Alexandria and Ambarli. “The service offers the fastest transit from Turkey to India via the Suez Canal and the Red Sea, creating a vital link for the growing India-Turkey trade,” Turcon said in a statement. “The service will also offer connections via rail to strategic and important ICD [inland container depot] locations in North India.” Significantly, the newcomer for Indian trades is targeting a much wider market on the back of its Red Sea network reach. “The service will also connect Mundra and Nhava Sheva ports with America, North Europe and the Mediterranean via Turkon Line’s transshipment hub ports in Turkey,” the carrier said. Declared transit times from Nhava Sheva are 42 days to Norfolk and 44 days to New York, as well as 37 days to Antwerp and 44 days to Felixstowe. Turcon’s Indian operations will be handled by Mumbai-based third-party agent Abrao Group. Similarly, Arkas has announced the launch of a Suez routing connecting West India to the Mediterranean, also beginning next month. Arkas operates a fleet of 50 vessels. Mainline carriers have avoided the Suez and Red Sea for about 14 months, rerouting around southern Africa amid ongoing attacks on commercial shipping by Houthi militants operating in Yemen. Mixed reaction from market players While welcoming more services, local freight forwarders who spoke with the Journal of Commerce believe any extra capacity entering the market from smaller ship operators working around an “opportunistic approach” has the potential to spoil rate recovery efforts by mega carriers, especially on the India-US trade lane that continues to suffer week-over-week rate declines. Sources put early-January average spot pricing at $1,400 per FEU for bookings from Nhava Sheva to New York. Platts, a sister company of the Journal of Commerce within S&P Global, pegged India-US East Coast rates at $1,500 per FEU as of Jan. 7, down 2% on the week. Jitendra Srivastava, CEO of Mumbai-based forwarder Triton Logistics & Maritime, had a positive take on the new ocean network. “This offers efficient and cost-effective solutions for businesses engaged in bilateral trade between India and Turkey, and even beyond,” Srivastava said. Mainline carriers appear resigned to what is building around them. “There will always be some opportunistic players,” a senior executive at a European carrier who didn’t want to be identified told the Journal of Commerce. “There could also be some shippers looking for the cheapest pricing.” Still, larger shippers voiced skepticism regarding last-mile reliability for alternative Red Sea-centric options. “There are cargo flow risks when dealing with a startup-like solution trying to exploit a disruption for profit,” a source said. Two-way trade between India and Turkey stood at approximately $10.5 billion by value in fiscal year 2023–24, with engineering and electronics goods leading Indian exports, data shows. Contact Bency Mathew at bencyvmathew@gmail.com .

International ports

Turkish liners shift to India for Suez routings with relays to US, Europe

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

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Shippers save money, time with automated transportation bidding tools

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

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Quarterly Intelligence

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

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

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

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

Longshore labor

ILA, USMX reach tentative deal that avoids another port strike

<div class="phx-topic abstract-wrapper">More uptake of transactional pricing in the less-than-truckload market is a sign that some carriers are targeting smaller or more infrequent LTL shippers.</div>

More uptake of transactional pricing in the less-than-truckload market is a sign that some carriers are targeting smaller or more infrequent LTL shippers.

<div class="phx-topic">Dynamic pricing tools are allowing less-than-truckload (LTL) shippers and brokers, especially smaller ones, to connect with LTL carriers looking for new sources of freight. That is widening the market reach for LTL carriers that have typically relied almost exclusively on contracts or general tariff rates for pricing. The incremental shift toward more spot pricing in the LTL market speaks less to titanic change in how shippers are procuring than it does about there being easier paths for certain LTL carriers to reach shippers directly. While the vast majority of LTL freight continues to move on shipper-specific contract pricing or more general pricing often used by brokers, there is an uptick in spot, or transactional, pricing in the LTL market, sources tell the Journal of Commerce. Some attribute this uptick primarily to the currently soft LTL market, with regular customers seeking competitive rates outside their contracts, or first-time LTL shippers or brokers using transactional rates to test the LTL waters. US LTL shipment volume in 2024 was relatively flat after a more than 6% drop in 2023, according to Satish Jindel, president of SJ Consulting Group. But digital tools are making transactional pricing easier for carriers to provide to customers, especially infrequent shippers or ones not accustomed to shipping LTL. “We are seeing and hearing of an increased demand and usage of transactional or spot LTL quotes both from discussions with carriers and 3PLs,” said Brian Thompson, chief commercial officer at SMC3, a trucking data and technology provider specializing in LTL pricing. <h3>APIs make LTL accessible </h3>Thompson said the increase in spot-quoted shipments is due to a boost in the availability of application programming interface (API)-based quoting, with more LTL carriers now offering this option for their customers to obtain spot quotes. Many shipper- and broker-focused transportation management systems (TMSs) now offer direct API connections to carriers. Additionally, a number of carriers are requiring or incentivizing their customers to come directly to them for a quote via API, especially 3PL partners offering transactional quotes, Thompson said. Spot quotes used to be limited to large LTL shipments weighing a minimum of 4,000 or 5,000 pounds, but in recent years carriers have expanded the use of those quoting methods to price transactional business from brokers, 3PLs, freight forwarders and small shippers, Thompson added. “Carriers are also starting to utilize more advanced pricing methodologies that incorporate prospective costing of individual shipments and an advanced business rules engine to price individual shipments with more certainty based on the carrier’s needs at the time of quote,” he said. Indeed, LTL carriers have even started to vacuum up shipments in the 500-pound ballpark that ordinarily would have been routed to parcel carriers. <h3>Targeting small shippers </h3>LTL carriers are looking for new customers and new sources of freight, including smaller shippers and even transloaded international freight. “In the last quarter we grew shipment count with small customers by more than 10%,” Mario Harik, CEO of XPO, the third-largest US LTL provider, told the Journal of Commerce. XPO has invested in technology, real estate and in its sales force, increasing its number of sales agents by 25% in 2024 to pursue smaller shippers, Harik said, adding contractual rates represent about 80% of XPO’s business. Shippers can obtain rate quotes based on pricing agreements directly from XPO’s website. The development of transactional pricing tools accomplishes a couple of key goals for certain LTL carriers. It lets them lure in shippers that would have been outside their traditional customer bases, either in terms of the size, number or frequency of shipments. Secondly, it lets carriers work directly with shippers, taking that business out of the hands of brokers. “Carriers dynamically adjust these rates,” said Curtis Garrett, CEO of LTL technology provider RateHero and a consultant to the LTL industry. “It’s a lever they have to fill capacity.” Garrett said the newest transactional pricing development is that some carriers are using it as a quicker way to onboard customers, either direct to shipper or through small and midsized brokers. “It cuts down on the admin back and forth and length of time to get a new customer set up and quoting,” he said. “Some carriers are putting this in the hands of their sales reps when they go visit a prospect. They can set them up and turn pricing on for them on the spot, which means more business quicker, but it usually falls into that transactional or dynamic bucket.” Not all LTL carriers are going this route, however. An LTL carrier executive who asked not to be identified told the Journal of Commerce they’re not seeing any major shift away from contractual business but added that the carrier doesn’t encourage that type of business, either. The executive said brokers are getting a bit more transactional business and that some LTL freight that moved to full truckload when truckload rates were low may be shifting back to LTL in drips and drabs. “Everybody has a TMS now, and that makes tendering an irregular, smaller LTL shipment outside of a contract easier,” the source said. <h3>A more ‘layered’ market </h3>Wider access to TMSs, whether it’s a shipper TMS that can manage across multiple modes or an LTL carrier TMS through which dynamic pricing can be offered, is impacting the market. “The rapid acceleration of technology, particularly through TMSs that offer multiple rate options, has created new opportunities for smaller clients,” said Dean Jones, chief commercial officer at third-party logistics provider AFS Logistics. “These systems allow them to access competitive rates without the need for traditional contractual arrangements.” Jones said 3PLs are also luring shippers outside contractual rate structures through ancillary services, whether via access to diverse rate options, a bundled TMS, freight audit and payment (FAP) or fully managed transportation. “This bundled approach eliminates the need for individual rate negotiations and provides clients with a streamlined, end-to-end solution powered by transactional rates embedded within the broader program,” he said. Jones added, however, that the majority of AFS’s clients operate under so-called client-specific pricing (CSP) contracts. “Across our customer base we don’t see any transactional spot quoting happening with LTL carriers,” said Shannon Vaillancourt, CEO of RateLinx, which provides TMS and freight audit tools to shippers. “All of our customers are on contract rates and are rate-shopping between the carriers.” Vaillancourt said customers he spoke to about an increase in transactional rates were skeptical about relying on spot quotes. “They really like the certainty of their contract rates and also were very confident that their contract rates were the ‘best’ rate out there,” he said. The uptick in transactional rates then speaks to a more layered market, with some carriers embracing dynamic rate availability and others more than happy to rely wholly on contractual pricing for shippers. The emergence of MyCarrier, a technology platform that lets LTL carriers provide a digital quoting and booking interface direct to shippers, is an example of this evolution. Last Thursday, FreightWise announced a partnership to incorporate rates from LTL carrier Estes directly into its TMS and that of Kuebix, a shipper-oriented, LTL-focused TMS that FreightWise acquired in 2023. Garrett said his company is working with a few LTL carriers on streamlining the process to get small and midsized brokers set up so they can push volume to those LTL carriers. The intent is to use technology to offset the high cost and risk that carriers have historically seen with small or infrequent LTL customers due to poor data and shipping practices. Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. Senior Editor William B. Cassidy contributed to this report. </div>

Dynamic pricing tools are allowing less-than-truckload (LTL) shippers and brokers, especially smaller ones, to connect with LTL carriers looking for new sources of freight. That is widening the market reach for LTL carriers that have typically relied almost exclusively on contracts or general tariff rates for pricing. The incremental shift toward more spot pricing in the LTL market speaks less to titanic change in how shippers are procuring than it does about there being easier paths for certain LTL carriers to reach shippers directly. While the vast majority of LTL freight continues to move on shipper-specific contract pricing or more general pricing often used by brokers, there is an uptick in spot, or transactional, pricing in the LTL market, sources tell the Journal of Commerce. Some attribute this uptick primarily to the currently soft LTL market, with regular customers seeking competitive rates outside their contracts, or first-time LTL shippers or brokers using transactional rates to test the LTL waters. US LTL shipment volume in 2024 was relatively flat after a more than 6% drop in 2023, according to Satish Jindel, president of SJ Consulting Group. But digital tools are making transactional pricing easier for carriers to provide to customers, especially infrequent shippers or ones not accustomed to shipping LTL. “We are seeing and hearing of an increased demand and usage of transactional or spot LTL quotes both from discussions with carriers and 3PLs,” said Brian Thompson, chief commercial officer at SMC3, a trucking data and technology provider specializing in LTL pricing. APIs make LTL accessible Thompson said the increase in spot-quoted shipments is due to a boost in the availability of application programming interface (API)-based quoting, with more LTL carriers now offering this option for their customers to obtain spot quotes. Many shipper- and broker-focused transportation management systems (TMSs) now offer direct API connections to carriers. Additionally, a number of carriers are requiring or incentivizing their customers to come directly to them for a quote via API, especially 3PL partners offering transactional quotes, Thompson said. Spot quotes used to be limited to large LTL shipments weighing a minimum of 4,000 or 5,000 pounds, but in recent years carriers have expanded the use of those quoting methods to price transactional business from brokers, 3PLs, freight forwarders and small shippers, Thompson added. “Carriers are also starting to utilize more advanced pricing methodologies that incorporate prospective costing of individual shipments and an advanced business rules engine to price individual shipments with more certainty based on the carrier’s needs at the time of quote,” he said. Indeed, LTL carriers have even started to vacuum up shipments in the 500-pound ballpark that ordinarily would have been routed to parcel carriers. Targeting small shippers LTL carriers are looking for new customers and new sources of freight, including smaller shippers and even transloaded international freight. “In the last quarter we grew shipment count with small customers by more than 10%,” Mario Harik, CEO of XPO, the third-largest US LTL provider, told the Journal of Commerce. XPO has invested in technology, real estate and in its sales force, increasing its number of sales agents by 25% in 2024 to pursue smaller shippers, Harik said, adding contractual rates represent about 80% of XPO’s business. Shippers can obtain rate quotes based on pricing agreements directly from XPO’s website. The development of transactional pricing tools accomplishes a couple of key goals for certain LTL carriers. It lets them lure in shippers that would have been outside their traditional customer bases, either in terms of the size, number or frequency of shipments. Secondly, it lets carriers work directly with shippers, taking that business out of the hands of brokers. “Carriers dynamically adjust these rates,” said Curtis Garrett, CEO of LTL technology provider RateHero and a consultant to the LTL industry. “It’s a lever they have to fill capacity.” Garrett said the newest transactional pricing development is that some carriers are using it as a quicker way to onboard customers, either direct to shipper or through small and midsized brokers. “It cuts down on the admin back and forth and length of time to get a new customer set up and quoting,” he said. “Some carriers are putting this in the hands of their sales reps when they go visit a prospect. They can set them up and turn pricing on for them on the spot, which means more business quicker, but it usually falls into that transactional or dynamic bucket.” Not all LTL carriers are going this route, however. An LTL carrier executive who asked not to be identified told the Journal of Commerce they’re not seeing any major shift away from contractual business but added that the carrier doesn’t encourage that type of business, either. The executive said brokers are getting a bit more transactional business and that some LTL freight that moved to full truckload when truckload rates were low may be shifting back to LTL in drips and drabs. “Everybody has a TMS now, and that makes tendering an irregular, smaller LTL shipment outside of a contract easier,” the source said. A more ‘layered’ market Wider access to TMSs, whether it’s a shipper TMS that can manage across multiple modes or an LTL carrier TMS through which dynamic pricing can be offered, is impacting the market. “The rapid acceleration of technology, particularly through TMSs that offer multiple rate options, has created new opportunities for smaller clients,” said Dean Jones, chief commercial officer at third-party logistics provider AFS Logistics. “These systems allow them to access competitive rates without the need for traditional contractual arrangements.” Jones said 3PLs are also luring shippers outside contractual rate structures through ancillary services, whether via access to diverse rate options, a bundled TMS, freight audit and payment (FAP) or fully managed transportation. “This bundled approach eliminates the need for individual rate negotiations and provides clients with a streamlined, end-to-end solution powered by transactional rates embedded within the broader program,” he said. Jones added, however, that the majority of AFS’s clients operate under so-called client-specific pricing (CSP) contracts. “Across our customer base we don’t see any transactional spot quoting happening with LTL carriers,” said Shannon Vaillancourt, CEO of RateLinx, which provides TMS and freight audit tools to shippers. “All of our customers are on contract rates and are rate-shopping between the carriers.” Vaillancourt said customers he spoke to about an increase in transactional rates were skeptical about relying on spot quotes. “They really like the certainty of their contract rates and also were very confident that their contract rates were the ‘best’ rate out there,” he said. The uptick in transactional rates then speaks to a more layered market, with some carriers embracing dynamic rate availability and others more than happy to rely wholly on contractual pricing for shippers. The emergence of MyCarrier, a technology platform that lets LTL carriers provide a digital quoting and booking interface direct to shippers, is an example of this evolution. Last Thursday, FreightWise announced a partnership to incorporate rates from LTL carrier Estes directly into its TMS and that of Kuebix, a shipper-oriented, LTL-focused TMS that FreightWise acquired in 2023. Garrett said his company is working with a few LTL carriers on streamlining the process to get small and midsized brokers set up so they can push volume to those LTL carriers. The intent is to use technology to offset the high cost and risk that carriers have historically seen with small or infrequent LTL customers due to poor data and shipping practices. Contact Eric Johnson at eric.johnson@spglobal.com . Senior Editor William B. Cassidy contributed to this report.

Logistics Technology News

Truck brokers

US LTL carriers widen market reach through spot pricing technology

<div class="phx-topic abstract-wrapper">Pitt Ohio’s acquisition of Sutton Transport is the latest in a string of acquisitions rebuilding the LTL sector from the middle out, and more regional acquisitions are expected.</div>

Pitt Ohio’s acquisition of Sutton Transport is the latest in a string of acquisitions rebuilding the LTL sector from the middle out, and more regional acquisitions are expected.

<div class="phx-topic">The US less-than-truckload (LTL) market is entering a new phase of consolidation in early 2025, led by regional LTL trucking companies building greater density and reach. The action is hottest perhaps in the Midwest, where the shutdown of Holland, a regional subsidiary of Yellow, in 2023 left a hole in the LTL market that has not been filled. There is a need for LTL carriers that can provide premium on-time, next-day service at scale across the region stretching from Ohio and the Great Lakes to the Great Plains. As M&amp;A activity continues, shippers may see regional LTL pricing stabilize or rise, but not drop, as larger carriers impose more disciplined pricing in local and regional markets. And although the LTL landscape may appear crowded, “there is still room in the market for good carriers,” said Mike Moran, president of Moran Transportation, a regional LTL provider based in Chicago. Moran <a href="https://www.joc.com/article/smaller-us-ltl-carriers-increasingly-merging-in-sink-or-swim-market-5783875">acquired RMX Freight Systems</a> in October, adding three Midwestern states to its LTL network. Pitt Ohio Transportation Group’s purchase of Sutton Transport, completed Jan. 1, is the latest in a string of acquisitions. Terms of the acquisition were not disclosed. Sutton, with 13 terminals across eight states, will bolster the 10-state network of Dohrn Transfer, a separate Pitt Ohio company that has its headquarters in Rock Island, Illinois. “The trend moving forward is going to be increased growth and scale of LTL operations,” said Geoffrey Muessig, chief marketing officer for Pittsburgh-based Pitt Ohio. Wisconsin-based Sutton will help Pitt Ohio build greater density within Dohrn’s existing market footprint, speeding freight and maintaining fluidity as demand grows — as is expected in 2025. “In the regional LTL market, density improves service and results,” said Muessig. “We saw the opportunity to combine the strengths of the Sutton and Dohrn networks.” Pitt Ohio will employ a “three-pronged” approach to the integration, blending sales first, then technology and ultimately operations, he said, adding: “We’re going to take our time.” <h3>More M&amp;A seen ahead </h3>The Pitt Ohio-Sutton deal won’t be the last significant LTL acquisition this year, according to an LTL freight and parcel market consultant. “Count on at least three smaller regional LTL carriers folding into bigger ones in 2025,” said Satish Jindel, president of transportation research firm SJ Consulting Group, which helped broker the Pitt Ohio-Sutton transaction.Jindel pointed to the Moran-RMX deal as well as Knight-Swift Transportation Holdings’ purchase of <a href="https://www.joc.com/article/knight-swift-acquisition-expands-ltl-network-coast-to-coast-5703164">Dependable Highway Express</a> last July as examples of the trend. The Pitt Ohio-Sutton deal is the latest development reshaping LTL networks while helping to broaden the sector’s role in supply chains from ports to last-mile delivery. LTL carriers are broadening their retail, warehousing and specialized services and adding more <a href="https://www.joc.com/article/estes-express-plans-near-port-expansion-as-new-generation-takes-charge-5220656">port transloading business</a>. As shippers work to shorten distances between distribution centers, suppliers and end-customers, LTL carriers see more opportunity to expand beyond their industrial base. The LTL market is already highly consolidated, with the 40 largest LTL providers claiming 84% of total LTL revenue of $62.2 billion in 2023, according to Jindel’s data. The largest Midwestern LTL provider, Dayton Freight System, has about 70 terminals throughout the region and more than $1 billion in annual revenue. Pitt Ohio is the 13th largest US LTL provider ranked by revenue, while Sutton is ranked 31st. Combined, the companies would have had more than $1 billion in revenue in 2023 — coming in just below Dayton Freight in the SJ Consulting Group/Journal of Commerce <a href="https://www.joc.com/article/journal-of-commerce-rankings-ltl-sector-revenue-drops-despite-yellow-distortion-5199865">Top 40 LTL Carrier rankings</a>. “The Top 10 LTL carriers [revenue-wise] are getting bigger, the Top 20 are all aiming to get into the Top 10 and everyone else is scrambling to get into the Top 20,” Muessig said. Larger LTL players have been more focused on growth through real estate purchases, particularly the ongoing auction of hundreds of terminals once operated by Yellow. The bankrupt company still has about 100 leased or owned terminals to auction or sell. Rising operating costs, including the need for more sophisticated technology, are putting more pressure on smaller LTL carriers to find larger partners or purchasers. “I think there’s absolutely going to be more consolidation as the time goes on,” Moran said. Many smaller carriers “are not pricing the freight right,” he said. By that, he means pricing shipments at too low a margin. “After a period of time, they simply can’t survive,” he said. “They need a way out and an acquisition is one.” For that reason, he thinks more regional mergers may be good for the LTL sector in the Midwest and elsewhere, with larger firms imposing more disciplined pricing. “There’s a need for carriers that can provide excellent service at an acceptable price,” Moran said. “‘Acceptable’ is a challenging term at times, depending on whether you’re a carrier or a shipper, but there’s plenty of room out there for good quality carriers.” Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>. </div>

The US less-than-truckload (LTL) market is entering a new phase of consolidation in early 2025, led by regional LTL trucking companies building greater density and reach. The action is hottest perhaps in the Midwest, where the shutdown of Holland, a regional subsidiary of Yellow, in 2023 left a hole in the LTL market that has not been filled. There is a need for LTL carriers that can provide premium on-time, next-day service at scale across the region stretching from Ohio and the Great Lakes to the Great Plains. As M&A activity continues, shippers may see regional LTL pricing stabilize or rise, but not drop, as larger carriers impose more disciplined pricing in local and regional markets. And although the LTL landscape may appear crowded, “there is still room in the market for good carriers,” said Mike Moran, president of Moran Transportation, a regional LTL provider based in Chicago. Moran acquired RMX Freight Systems in October, adding three Midwestern states to its LTL network. Pitt Ohio Transportation Group’s purchase of Sutton Transport, completed Jan. 1, is the latest in a string of acquisitions. Terms of the acquisition were not disclosed. Sutton, with 13 terminals across eight states, will bolster the 10-state network of Dohrn Transfer, a separate Pitt Ohio company that has its headquarters in Rock Island, Illinois. “The trend moving forward is going to be increased growth and scale of LTL operations,” said Geoffrey Muessig, chief marketing officer for Pittsburgh-based Pitt Ohio. Wisconsin-based Sutton will help Pitt Ohio build greater density within Dohrn’s existing market footprint, speeding freight and maintaining fluidity as demand grows — as is expected in 2025. “In the regional LTL market, density improves service and results,” said Muessig. “We saw the opportunity to combine the strengths of the Sutton and Dohrn networks.” Pitt Ohio will employ a “three-pronged” approach to the integration, blending sales first, then technology and ultimately operations, he said, adding: “We’re going to take our time.” More M&A seen ahead The Pitt Ohio-Sutton deal won’t be the last significant LTL acquisition this year, according to an LTL freight and parcel market consultant. “Count on at least three smaller regional LTL carriers folding into bigger ones in 2025,” said Satish Jindel, president of transportation research firm SJ Consulting Group, which helped broker the Pitt Ohio-Sutton transaction. Jindel pointed to the Moran-RMX deal as well as Knight-Swift Transportation Holdings’ purchase of Dependable Highway Express last July as examples of the trend. The Pitt Ohio-Sutton deal is the latest development reshaping LTL networks while helping to broaden the sector’s role in supply chains from ports to last-mile delivery. LTL carriers are broadening their retail, warehousing and specialized services and adding more port transloading business . As shippers work to shorten distances between distribution centers, suppliers and end-customers, LTL carriers see more opportunity to expand beyond their industrial base. The LTL market is already highly consolidated, with the 40 largest LTL providers claiming 84% of total LTL revenue of $62.2 billion in 2023, according to Jindel’s data. The largest Midwestern LTL provider, Dayton Freight System, has about 70 terminals throughout the region and more than $1 billion in annual revenue. Pitt Ohio is the 13th largest US LTL provider ranked by revenue, while Sutton is ranked 31st. Combined, the companies would have had more than $1 billion in revenue in 2023 — coming in just below Dayton Freight in the SJ Consulting Group/Journal of Commerce Top 40 LTL Carrier rankings . “The Top 10 LTL carriers [revenue-wise] are getting bigger, the Top 20 are all aiming to get into the Top 10 and everyone else is scrambling to get into the Top 20,” Muessig said. Larger LTL players have been more focused on growth through real estate purchases, particularly the ongoing auction of hundreds of terminals once operated by Yellow. The bankrupt company still has about 100 leased or owned terminals to auction or sell. Rising operating costs, including the need for more sophisticated technology, are putting more pressure on smaller LTL carriers to find larger partners or purchasers. “I think there’s absolutely going to be more consolidation as the time goes on,” Moran said. Many smaller carriers “are not pricing the freight right,” he said. By that, he means pricing shipments at too low a margin. “After a period of time, they simply can’t survive,” he said. “They need a way out and an acquisition is one.” For that reason, he thinks more regional mergers may be good for the LTL sector in the Midwest and elsewhere, with larger firms imposing more disciplined pricing. “There’s a need for carriers that can provide excellent service at an acceptable price,” Moran said. “‘Acceptable’ is a challenging term at times, depending on whether you’re a carrier or a shipper, but there’s plenty of room out there for good quality carriers.” Contact William B. Cassidy at bill.cassidy@spglobal.com .

Trucking News

M&A activity redrawing regional LTL map in US Midwest and beyond

<div class="phx-topic abstract-wrapper">It’s important for railroads to prevent export containers from clogging their terminals because domestic and international intermodal cargo share terminal space.</div>

It’s important for railroads to prevent export containers from clogging their terminals because domestic and international intermodal cargo share terminal space.

<div class="phx-topic">Norfolk Southern Railway (NS) has begun to wind down accepting export containers for movement from inland terminals to key ports along the US East Coast ahead of a possible longshore strike next week. NS, in a “port curtailment” schedule issued to customers, said all exports from Cleveland to the Port of New York and New Jersey and the Port of Virginia will not be accepted after Wednesday. Freight going from Chicago to the Virginia International Gateway terminal must be tendered by Friday and to Norfolk Intermodal Terminals by Saturday. The railroad said freight from Detroit to the Port of Virginia will stop being accepted on Friday, with no freight to the Port of New York and New Jersey accepted as of Saturday. No exports going to terminals at the Port of Virginia will be accepted from any location after Friday, NS said. Exports from Chicago and Pittsburgh to the Port of New York and New Jersey will be accepted through Saturday, while no cargo will be accepted beginning Sunday from any location that is destined for the port’s Elizabeth Marine Terminal or Global Container Terminals. Norfolk Southern has not released a schedule yet for export cutoffs to ports in Charleston or Savannah. The International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) were meeting in New Jersey this week in a bid to hammer out the final details of a new master contract and head off a strike that would begin Jan. 15, suspending container operations at ports along the East and Gulf coasts. It is important for railroads to prevent exports or empties from clogging their terminals because domestic and international intermodal cargo share terminal space, except in Chicago. If too much international cargo gets stuck inside terminals, it can disrupt customers who ship 53-foot domestic containers via rail, as happened during the COVID-19 pandemic. On an average weekday, about 600 to 1,000 loaded exports are hauled on trains from inland hubs to the Port of New York and New Jersey and about 1,000 to 1,500 to the Port of Virginia, according to a Journal of Commerce analysis of data from the Association of American Railroads (AAR) and the Intermodal Association of North America (IANA). CSX Transportation, the other eastern Class I railroad hauling containers between the Midwest and East Coast, has not issued any deadlines to in-gate containers, but it will adjust if a strike occurs. “In the event of an East Coast port disruption, CSX is prepared to pause both interchange traffic as well as in-gate activity and temporarily adjust terminal reservations in accordance with port shutdown plans,” CSX said in a statement to the Journal of Commerce. “CSX is making every effort to accommodate as much freight as possible in a fluid situation.” During the three-day ILA strike in October, CSX took a similar approach of accepting and storing outbound loads until there was no available space left inside the terminals. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>.</div>

Norfolk Southern Railway (NS) has begun to wind down accepting export containers for movement from inland terminals to key ports along the US East Coast ahead of a possible longshore strike next week. NS, in a “port curtailment” schedule issued to customers, said all exports from Cleveland to the Port of New York and New Jersey and the Port of Virginia will not be accepted after Wednesday. Freight going from Chicago to the Virginia International Gateway terminal must be tendered by Friday and to Norfolk Intermodal Terminals by Saturday. The railroad said freight from Detroit to the Port of Virginia will stop being accepted on Friday, with no freight to the Port of New York and New Jersey accepted as of Saturday. No exports going to terminals at the Port of Virginia will be accepted from any location after Friday, NS said. Exports from Chicago and Pittsburgh to the Port of New York and New Jersey will be accepted through Saturday, while no cargo will be accepted beginning Sunday from any location that is destined for the port’s Elizabeth Marine Terminal or Global Container Terminals. Norfolk Southern has not released a schedule yet for export cutoffs to ports in Charleston or Savannah. The International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) were meeting in New Jersey this week in a bid to hammer out the final details of a new master contract and head off a strike that would begin Jan. 15, suspending container operations at ports along the East and Gulf coasts. It is important for railroads to prevent exports or empties from clogging their terminals because domestic and international intermodal cargo share terminal space, except in Chicago. If too much international cargo gets stuck inside terminals, it can disrupt customers who ship 53-foot domestic containers via rail, as happened during the COVID-19 pandemic. On an average weekday, about 600 to 1,000 loaded exports are hauled on trains from inland hubs to the Port of New York and New Jersey and about 1,000 to 1,500 to the Port of Virginia, according to a Journal of Commerce analysis of data from the Association of American Railroads (AAR) and the Intermodal Association of North America (IANA). CSX Transportation, the other eastern Class I railroad hauling containers between the Midwest and East Coast, has not issued any deadlines to in-gate containers, but it will adjust if a strike occurs. “In the event of an East Coast port disruption, CSX is prepared to pause both interchange traffic as well as in-gate activity and temporarily adjust terminal reservations in accordance with port shutdown plans,” CSX said in a statement to the Journal of Commerce. “CSX is making every effort to accommodate as much freight as possible in a fluid situation.” During the three-day ILA strike in October, CSX took a similar approach of accepting and storing outbound loads until there was no available space left inside the terminals. Contact Ari Ashe at ari.ashe@spglobal.com .

Norfolk Southern begins limiting export container moves ahead of possible strike

<div class="phx-topic abstract-wrapper">The charges come as spot rates for ex-Asia cargo into the US have climbed sharply over the past month.</div>

The charges come as spot rates for ex-Asia cargo into the US have climbed sharply over the past month.

<div class="phx-topic">The number of container lines preparing surcharges ahead of potential disruption to US East and Gulf coast service networks has reached at least five as a Jan. 15 longshore strike deadline nears and new carrier alliances launch. CMA CGM, Yang Ming and Hapag-Lloyd said they would implement surcharges ranging from $1,125 to $1,700 per FEU linked to the expected disruption should 45,000 dockworkers from the International Longshoremen’s Association (ILA) walk off the job in less than two weeks.The three carriers join Mediterranean Shipping Company and Zim Integrated Shipping, <a href="https://www.joc.com/article/trans-atlantic-carriers-cue-fresh-surcharges-for-early-2025-risks-5908990">which in December announced they could implement disruption-related surcharges</a> in mid-January. Zim cited the potential ILA strike, while MSC said its charge was linked to the restructuring of its trans-Atlantic network from Feb. 1 when it will <a href="https://www.joc.com/article/mscs-global-scale-enables-standalone-network-coverage-5726563">begin operating as a standalone carrier following its exit from the 2M Alliance with Maersk</a>. CMA CGM said Thursday it will implement a $1,500 per unit “Peak Season Surcharge” (PSS) on Jan. 15 for all cargo from the Indian Subcontinent, Middle East, Red Sea and Egypt to the US East and Gulf coasts.Hapag-Lloyd said it will implement an $850 per TEU or $1,700 per FEU “Work Disruption Surcharge” (WDS) and “Work Interruption Destination Surcharge” (WID) on any cargo gated in on or after Jan. 20. The WID would apply to trans-Pacific cargo, while the WDS would cover trans-Atlantic shipments, the carrier said.“This surcharge covers additional costs from labor disruptions, strikes, slowdowns, unrest, congestion, and other unforeseen events that may delay operations and incur extra handling, storage, and feeder service costs,” Hapag-Lloyd said.Yang Ming will implement a “Port Congestion Surcharge” (PCS) on Jan. 15 for all cargo moving into the US and Canada of $800 per TEU and $1,000 per FEU. The carrier said the potential labor unrest could increase its costs. Sources said other carriers are planning to implement surcharges, which are often actually negotiated between carriers and their customers down from the originally announced amount.“The others are hinting at it with their adjustments, just not openly stating it,” said a freight forwarding source. The announced surcharges come as <a href="https://www.joc.com/article/trans-pacific-spot-rates-on-the-rise-amid-pre-lunar-new-year-cargo-bump-5912763">spot rates for ex-Asia cargo into the US have climbed sharply in the past month</a>, according to Platts, a Journal of Commerce sister company within S&amp;P Global. The Platts Container Index measured trans-Pacific East Coast import rates at $6,400 per FEU and West Coast rates at $5,000 per FEU as of Jan 2. Contact Laura Robb at <a href="mailto:Laura.Robb@spglobal.com">laura.robb@spglobal.com</a>. </div>

The number of container lines preparing surcharges ahead of potential disruption to US East and Gulf coast service networks has reached at least five as a Jan. 15 longshore strike deadline nears and new carrier alliances launch. CMA CGM, Yang Ming and Hapag-Lloyd said they would implement surcharges ranging from $1,125 to $1,700 per FEU linked to the expected disruption should 45,000 dockworkers from the International Longshoremen’s Association (ILA) walk off the job in less than two weeks. The three carriers join Mediterranean Shipping Company and Zim Integrated Shipping, which in December announced they could implement disruption-related surcharges in mid-January. Zim cited the potential ILA strike, while MSC said its charge was linked to the restructuring of its trans-Atlantic network from Feb. 1 when it will begin operating as a standalone carrier following its exit from the 2M Alliance with Maersk . CMA CGM said Thursday it will implement a $1,500 per unit “Peak Season Surcharge” (PSS) on Jan. 15 for all cargo from the Indian Subcontinent, Middle East, Red Sea and Egypt to the US East and Gulf coasts. Hapag-Lloyd said it will implement an $850 per TEU or $1,700 per FEU “Work Disruption Surcharge” (WDS) and “Work Interruption Destination Surcharge” (WID) on any cargo gated in on or after Jan. 20. The WID would apply to trans-Pacific cargo, while the WDS would cover trans-Atlantic shipments, the carrier said. “This surcharge covers additional costs from labor disruptions, strikes, slowdowns, unrest, congestion, and other unforeseen events that may delay operations and incur extra handling, storage, and feeder service costs,” Hapag-Lloyd said. Yang Ming will implement a “Port Congestion Surcharge” (PCS) on Jan. 15 for all cargo moving into the US and Canada of $800 per TEU and $1,000 per FEU. The carrier said the potential labor unrest could increase its costs. Sources said other carriers are planning to implement surcharges, which are often actually negotiated between carriers and their customers down from the originally announced amount. “The others are hinting at it with their adjustments, just not openly stating it,” said a freight forwarding source. The announced surcharges come as spot rates for ex-Asia cargo into the US have climbed sharply in the past month , according to Platts, a Journal of Commerce sister company within S&P Global. The Platts Container Index measured trans-Pacific East Coast import rates at $6,400 per FEU and West Coast rates at $5,000 per FEU as of Jan 2. Contact Laura Robb at laura.robb@spglobal.com .

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