<div class="phx-topic abstract-wrapper">Market participants yearning for a market where adverse events never lead to major supply chain hiccups are essentially asking for a reality that has never existed, writes Lars Jensen.</div>

Market participants yearning for a market where adverse events never lead to major supply chain hiccups are essentially asking for a reality that has never existed, writes Lars Jensen.

Feature image

<div class="phx-topic">It could be said that global shipping dodged a bullet with the brief, three-day strike on the US East and Gulf coasts. However, it should be noted that the operational ripple effects will be felt until mid-November, <a href="https://www.joc.com/article/despite-tentative-wage-deal-usmx-and-ila-have-bumpy-road-ahead-on-other-key-issues-5743997">and the possibility of a new strike on Jan. 15</a>could create a market impact from mid-November until the end of the year. And it also raises questions as to whether we should be concerned about the resilience of the supply chain linking the US to the rest of the world. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5745031_0.1.jpg"></img></div>First, the ripple effects from the short strike. Around 60 vessels had to drop anchor and await a port reopening during the strike. Those vessels will suffer a delay of at least three days. More vessels will suffer delays as the ports are unable to handle the backlog instantaneously. Consequently, those vessels will arrive back at origin in Europe, Asia and Latin America with a delay – in turn causing a drop in export capacity in those regions with a time delay equal to the usual transit time for cargo coming from the US. The shortest impact will be in Europe and the northern reaches of Latin America where this will be felt within the next two weeks, and the time delay will be longest to Asia where the effect will not be felt until mid-November. The next issue would be a possible strike in mid-January. Chinese New Year is on Jan. 29. Usual seasonality would see significant volumes loaded from China to the US from the end of December and during January. If shippers are concerned about a new strike, we might expect to see a shift of some cargo away from the East Coast and over to the West Coast during this seasonal peak, as well as potentially an earlier shipment of cargo than usual. This could place some pressure on the trans-Pacific trade from early December, and on Asia-USWC during January especially. This issue can be avoided, of course, if the International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) reach final agreement on a new master contract within the next month and a half. <h3>What does a resilient supply chain mean? </h3>But the broader question then arises: Is the supply chain to and from the US sufficiently resilient? Not only did we have to manage the pandemic ripple effects, but 2024 alone have had its own share of issues with the Red Sea crisis, a strong early peak season causing a surge in spot rates, <a href="https://www.joc.com/article/canadas-labour-minister-orders-end-to-rail-work-stoppage-via-binding-arbitration-5709672">the last-minute cancellation of a rail strike in Canada</a> and now the three-day strike at US East and Gulf coast ports. If by resilience we mean that the supply chain always has ample capacity no matter which problems arise, then the supply chain is not 100% resilient. And it would be unrealistic to expect this to ever be the case. A practical example being the Red Sea crisis. Global supply chain stakeholders were lucky that the crisis erupted at a point in time when the carriers had created a substantial overcapacity of vessels. This allowed for vessels to divert around southern Africa without major issues. But had the carriers not over-ordered on vessels, 2024 would have looked very different as it would have been physically impossible to handle the full global trade volumes while having to divert around Africa. How about resilience in the face of potential strike actions? We have seen this issue multiple times in the past as well. We had the go-slow actions on the US West Coast in 2015 that led to an unprecedented pileup of vessels outside Los Angeles and Long Beach – only later superseded by the pandemic problems. We had the 10-day closure of West Coast ports in 2002. Strike action in different countries around the world is basically part of the normal way the market operates. This year has also seen port strikes in various places in Europe, as well as Australia. If resilience means never having to risk a bottleneck due to labor action, that has clearly never been the case – and highly likely never will be the case. Market participants yearning for a market where adverse events never lead to major supply chain hiccups are essentially asking for a reality that has never existed. <h3>‘Disruptive events’ loom </h3>It is clear that carriers over-ordered vessels based on their profits in 2021-22, leading to significant overcapacity in 2023-24 that caused freight rates to drop to loss-making levels for carriers in late 2023. This was a clear illustration that there is not a willingness to pay for having resilience in the form of having excess capacity in case of a major disruption. In turn, this means that when such capacity is needed, it is expensive to tap into. The baseline expectation for the market in the future should be that the major swings we have seen since 2020 are not necessarily unusual events. We might very well be looking at a future where we will see more of these large swings between overcapacity and loss-making carriers interspersed with capacity crunches and very high freight rates whenever the market is hit by external disruptive events. But will we get such disruptive events? The list of potential events is, unfortunately, quite extensive and includes: a spread of the Middle East crisis to the Strait of Hormuz, challenges with China in the South China Sea and Taiwan Strait, a rapidly escalating trade war if a new Trump administration places triple-digit tariffs on multiple countries, natural disasters destroying vital container terminals, and highly destructive cyberattacks. And this is before the “black swan” events which are completely unexpected, such as the sudden de facto closure of the southern Red Sea and Suez Canal. Contact Lars Jensen at lars.jensen@vespucci-maritime.com.  </div>

It could be said that global shipping dodged a bullet with the brief, three-day strike on the US East and Gulf coasts. However, it should be noted that the operational ripple effects will be felt until mid-November, and the possibility of a new strike on Jan. 15 could create a market impact from mid-November until the end of the year. And it also raises questions as to whether we should be concerned about the resilience of the supply chain linking the US to the rest of the world. First, the ripple effects from the short strike. Around 60 vessels had to drop anchor and await a port reopening during the strike. Those vessels will suffer a delay of at least three days. More vessels will suffer delays as the ports are unable to handle the backlog instantaneously. Consequently, those vessels will arrive back at origin in Europe, Asia and Latin America with a delay – in turn causing a drop in export capacity in those regions with a time delay equal to the usual transit time for cargo coming from the US. The shortest impact will be in Europe and the northern reaches of Latin America where this will be felt within the next two weeks, and the time delay will be longest to Asia where the effect will not be felt until mid-November. The next issue would be a possible strike in mid-January. Chinese New Year is on Jan. 29. Usual seasonality would see significant volumes loaded from China to the US from the end of December and during January. If shippers are concerned about a new strike, we might expect to see a shift of some cargo away from the East Coast and over to the West Coast during this seasonal peak, as well as potentially an earlier shipment of cargo than usual. This could place some pressure on the trans-Pacific trade from early December, and on Asia-USWC during January especially. This issue can be avoided, of course, if the International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) reach final agreement on a new master contract within the next month and a half. What does a resilient supply chain mean? But the broader question then arises: Is the supply chain to and from the US sufficiently resilient? Not only did we have to manage the pandemic ripple effects, but 2024 alone have had its own share of issues with the Red Sea crisis, a strong early peak season causing a surge in spot rates, the last-minute cancellation of a rail strike in Canada and now the three-day strike at US East and Gulf coast ports. If by resilience we mean that the supply chain always has ample capacity no matter which problems arise, then the supply chain is not 100% resilient. And it would be unrealistic to expect this to ever be the case. A practical example being the Red Sea crisis. Global supply chain stakeholders were lucky that the crisis erupted at a point in time when the carriers had created a substantial overcapacity of vessels. This allowed for vessels to divert around southern Africa without major issues. But had the carriers not over-ordered on vessels, 2024 would have looked very different as it would have been physically impossible to handle the full global trade volumes while having to divert around Africa. How about resilience in the face of potential strike actions? We have seen this issue multiple times in the past as well. We had the go-slow actions on the US West Coast in 2015 that led to an unprecedented pileup of vessels outside Los Angeles and Long Beach – only later superseded by the pandemic problems. We had the 10-day closure of West Coast ports in 2002. Strike action in different countries around the world is basically part of the normal way the market operates. This year has also seen port strikes in various places in Europe, as well as Australia. If resilience means never having to risk a bottleneck due to labor action, that has clearly never been the case – and highly likely never will be the case. Market participants yearning for a market where adverse events never lead to major supply chain hiccups are essentially asking for a reality that has never existed. ‘Disruptive events’ loom It is clear that carriers over-ordered vessels based on their profits in 2021-22, leading to significant overcapacity in 2023-24 that caused freight rates to drop to loss-making levels for carriers in late 2023. This was a clear illustration that there is not a willingness to pay for having resilience in the form of having excess capacity in case of a major disruption. In turn, this means that when such capacity is needed, it is expensive to tap into. The baseline expectation for the market in the future should be that the major swings we have seen since 2020 are not necessarily unusual events. We might very well be looking at a future where we will see more of these large swings between overcapacity and loss-making carriers interspersed with capacity crunches and very high freight rates whenever the market is hit by external disruptive events. But will we get such disruptive events? The list of potential events is, unfortunately, quite extensive and includes: a spread of the Middle East crisis to the Strait of Hormuz, challenges with China in the South China Sea and Taiwan Strait, a rapidly escalating trade war if a new Trump administration places triple-digit tariffs on multiple countries, natural disasters destroying vital container terminals, and highly destructive cyberattacks. And this is before the “black swan” events which are completely unexpected, such as the sudden de facto closure of the southern Red Sea and Suez Canal. Contact Lars Jensen at lars.jensen@vespucci-maritime.com. 

Supply chain

Container lines

Maritime

Strike bullet dodged for now, but raises questions of market resilience: analyst

<div class="phx-topic abstract-wrapper">With the 62% wage increase being an unprecedented offer to the union, the USMX will be hard-pressed to give in on other key demands the ILA is making, sources tell the Journal of Commerce. </div>

With the 62% wage increase being an unprecedented offer to the union, the USMX will be hard-pressed to give in on other key demands the ILA is making, sources tell the Journal of Commerce.

<div class="phx-topic">The 90-day clock has started for the International Longshoremen’s Association (ILA) and US East and Gulf coast longshore employers, who haven’t been at the contract negotiating table since June, to restart the talks and hash out details on a range of complex issues including automation, royalties, work rules and job jurisdiction. Salary increases — <a href="https://www.joc.com/article/ila-usmx-agree-on-new-wage-offer-and-contract-extension-that-reopens-ports-5741882">as were agreed to in a tentative deal to end the three-day strike last week</a> — seem pedestrian compared with the scale of challenge facing both sides. The deal on wages that ended the strike was merely “provisional,” according to one management source, just one element of those several others that still need to be negotiated between now and the new deadline of Jan. 15. Yet several factors suggest agreement on those points in upcoming negotiations, which are expected to resume within weeks, will be difficult to achieve, according to sources. The issues are detailed and complex. Still, the United States Maritime Alliance (USMX) and the ILA have not sat down face to face since the union suspended negotiations last June, despite over 10 failed attempts by the USMX to restart negotiations. The union’s lack of response <a href="https://www.joc.com/article/usmx-tries-to-force-ila-back-to-contract-talks-with-nlrb-complaint-5736646">led the USMX on Sept. 26 to file an unfair labor practices case with the National Labor Relations Board</a> seeking to force the union back to the table. The inability of the USMX to get formal negotiations restarted continued throughout the intensive two-week stretch leading up to the strike and over the course of the three-day work stoppage, where what was described as multiple efforts by employers to discuss the wage issue directly with the union, rather than through Biden administration intermediaries, never resulted in face-to-face dialogue with the union. With the 62% wage increase being an unprecedented offer to the union, the USMX will be hard-pressed to give in on other key demands the ILA is making, sources say, especially as the offer merely reinforces the longstanding disconnect in the view of ocean carriers between high US port costs primarily driven by longshore labor and low productivity. That is why, sources say, the USMX will do its best to resist the union’s demand for a rolling back of employers’ automation rights as enshrined in prior contracts. The ILA is seeking <a href="http://go.microsoft.com/fwlink/p/?LinkId=255141">“absolute, airtight language</a> that there be no automation or semi-automation,” according to ILA President Harold Daggett, a longtime vocal opponent of automation. If that language is agreed to in a final contract, it would disallow future implementation of semi-automation installed at ports in Virginia and at Global Container Terminal in Bayonne, NJ. <h3>Preserving growth opportunities </h3>The reason why the USMX will resist that demand is to preserve growth opportunities in the US market. Carriers want to be able to grow, but with hardly any new terminals being built — the Hugh K. Leatherman facility that opened in Charleston in 2021 was the first new US terminal opened since 2009 – a key means of facilitating container TEU growth is by densifying terminals, and the only way to do that is through automation. That is not to say that every port aspires to automate – most do not given the cost – but carriers do not want to forestall the possibility because if they give in now, they may never get back the right to automate at a later date. “It is critical that terminals have the capability to densify as American consumer demand and exports continue to rise,” the USMX confidentially told the Biden administration last week, according to documents shared with the Journal of Commerce. “There is not enough land or berth capacity in US ports to handle future trade growth without implementing new technology.” Finally, the USMX appears in no mood to concede on key points such as automation after what was described as a demoralizing experience over the last week, when they were prevented at every turn from returning to direct bargaining with the union — a practice that was standard procedure for decades in negotiating prior contracts — and ultimately saw their unified position on wages and the need to negotiate in person disintegrate on Thursday on orders from some carrier headquarters. <h3>Pressure from the White House </h3>The USMX board members — both carriers and marine terminal operators — displayed unity in holding firm on their approximately 50% wage increase offer despite intense pressure during multiple virtual and in-person meetings with the Biden administration over the past two weeks. They were then overruled on Oct. 3 by carrier head offices following a group CEO-only virtual meeting held early in the early morning hours of Oct. 3 EST, according to one source. That White House pressure manifested itself in what management sources said was a two-week, gradually intensifying campaign by Biden administration officials, including Transportation Secretary Pete Buttigieg, Acting Labor Secretary Julie Su and White House Chief of Staff Jeff Zients. What started as what executives described as a polite phone call from Su to the USMX a few weeks before the strike led to a series of more senior-level meetings with industry officials and ultimately to a group CEO-only conference call, after which the tentative deal was swiftly concluded. It included USMX senior staff and board members being summoned to Washington on short notice as well as separate conference calls with US-based carrier CEOs and marine terminal operator CEOs. Throughout the series of meetings, according to sources, Biden administration officials consistently voiced the same or similar messages as that of the union: basically, that because carriers earned record profits during the pandemic, it is their duty pay up to avoid further disruption at the ports. Ever-present, officials said, was the upcoming presidential election and what appeared to be a determination by the administration to avoid a politically damaging distraction in the final weeks of the campaign, which is what they feared from a protracted strike. Now, USMX will have to regroup, as negotiations with the union will likely resume in the coming weeks after what had been a cordial, even cooperative working relationship that led to several contracts and labor peace since 1977 shattered over the course of the last several months, culminating in the strike last week. Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>. </div>

The 90-day clock has started for the International Longshoremen’s Association (ILA) and US East and Gulf coast longshore employers, who haven’t been at the contract negotiating table since June, to restart the talks and hash out details on a range of complex issues including automation, royalties, work rules and job jurisdiction. Salary increases — as were agreed to in a tentative deal to end the three-day strike last week — seem pedestrian compared with the scale of challenge facing both sides. The deal on wages that ended the strike was merely “provisional,” according to one management source, just one element of those several others that still need to be negotiated between now and the new deadline of Jan. 15. Yet several factors suggest agreement on those points in upcoming negotiations, which are expected to resume within weeks, will be difficult to achieve, according to sources. The issues are detailed and complex. Still, the United States Maritime Alliance (USMX) and the ILA have not sat down face to face since the union suspended negotiations last June, despite over 10 failed attempts by the USMX to restart negotiations. The union’s lack of response led the USMX on Sept. 26 to file an unfair labor practices case with the National Labor Relations Board seeking to force the union back to the table. The inability of the USMX to get formal negotiations restarted continued throughout the intensive two-week stretch leading up to the strike and over the course of the three-day work stoppage, where what was described as multiple efforts by employers to discuss the wage issue directly with the union, rather than through Biden administration intermediaries, never resulted in face-to-face dialogue with the union. With the 62% wage increase being an unprecedented offer to the union, the USMX will be hard-pressed to give in on other key demands the ILA is making, sources say, especially as the offer merely reinforces the longstanding disconnect in the view of ocean carriers between high US port costs primarily driven by longshore labor and low productivity. That is why, sources say, the USMX will do its best to resist the union’s demand for a rolling back of employers’ automation rights as enshrined in prior contracts. The ILA is seeking “absolute, airtight language that there be no automation or semi-automation,” according to ILA President Harold Daggett, a longtime vocal opponent of automation. If that language is agreed to in a final contract, it would disallow future implementation of semi-automation installed at ports in Virginia and at Global Container Terminal in Bayonne, NJ. Preserving growth opportunities The reason why the USMX will resist that demand is to preserve growth opportunities in the US market. Carriers want to be able to grow, but with hardly any new terminals being built — the Hugh K. Leatherman facility that opened in Charleston in 2021 was the first new US terminal opened since 2009 – a key means of facilitating container TEU growth is by densifying terminals, and the only way to do that is through automation. That is not to say that every port aspires to automate – most do not given the cost – but carriers do not want to forestall the possibility because if they give in now, they may never get back the right to automate at a later date. “It is critical that terminals have the capability to densify as American consumer demand and exports continue to rise,” the USMX confidentially told the Biden administration last week, according to documents shared with the Journal of Commerce. “There is not enough land or berth capacity in US ports to handle future trade growth without implementing new technology.” Finally, the USMX appears in no mood to concede on key points such as automation after what was described as a demoralizing experience over the last week, when they were prevented at every turn from returning to direct bargaining with the union — a practice that was standard procedure for decades in negotiating prior contracts — and ultimately saw their unified position on wages and the need to negotiate in person disintegrate on Thursday on orders from some carrier headquarters. Pressure from the White House The USMX board members — both carriers and marine terminal operators — displayed unity in holding firm on their approximately 50% wage increase offer despite intense pressure during multiple virtual and in-person meetings with the Biden administration over the past two weeks. They were then overruled on Oct. 3 by carrier head offices following a group CEO-only virtual meeting held early in the early morning hours of Oct. 3 EST, according to one source. That White House pressure manifested itself in what management sources said was a two-week, gradually intensifying campaign by Biden administration officials, including Transportation Secretary Pete Buttigieg, Acting Labor Secretary Julie Su and White House Chief of Staff Jeff Zients. What started as what executives described as a polite phone call from Su to the USMX a few weeks before the strike led to a series of more senior-level meetings with industry officials and ultimately to a group CEO-only conference call, after which the tentative deal was swiftly concluded. It included USMX senior staff and board members being summoned to Washington on short notice as well as separate conference calls with US-based carrier CEOs and marine terminal operator CEOs. Throughout the series of meetings, according to sources, Biden administration officials consistently voiced the same or similar messages as that of the union: basically, that because carriers earned record profits during the pandemic, it is their duty pay up to avoid further disruption at the ports. Ever-present, officials said, was the upcoming presidential election and what appeared to be a determination by the administration to avoid a politically damaging distraction in the final weeks of the campaign, which is what they feared from a protracted strike. Now, USMX will have to regroup, as negotiations with the union will likely resume in the coming weeks after what had been a cordial, even cooperative working relationship that led to several contracts and labor peace since 1977 shattered over the course of the last several months, culminating in the strike last week. Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

Container Shipping News

Port News

North American ports

Marine terminals

Longshore labor

Despite tentative wage deal, USMX and ILA have bumpy road ahead on other key issues

<div class="phx-topic abstract-wrapper">Strong demand on the trans-Pacific and Asia-Europe trade lanes through a volatile third quarter has left the Chinese carrier on course for another highly profitable year.</div>

Strong demand on the trans-Pacific and Asia-Europe trade lanes through a volatile third quarter has left the Chinese carrier on course for another highly profitable year.

<div class="phx-topic">Cosco Shipping expects to report a net profit of $6.17 billion for the first nine months of 2024, a 67% increase year over year, with its performance lifted by strong third-quarter peak season demand on the trans-Pacific and Asia-Europe trade lanes, the China state-owned carrier said Monday. In a preliminary filing to the Hong Kong and Shanghai exchanges, Cosco revealed its earnings before interest and taxes (EBIT) for the nine-month period is expected to increase 63% year over year to almost $8 billion. The estimated earnings were released as Cosco Shipping subsidiary OOCL reported its third-quarter operational update in which a 73% increase in revenue and elevated freight rates drove up the top line result despite a moderate 3.6% rise in volumes. Profit and loss figures were not provided. OOCL reported overall third-quarter revenue of $3 billion and volume of 1.9 million TEUs as average revenue per TEU increased 67.6% year over year. The trans-Pacific dominated OOCL’s Q3 result, with revenue of $1.2 billion — double the same period last year — and volume on the trade lane up 15.6% at 551,896 TEUs. Asia-Europe revenue also doubled in the third quarter despite volume falling 12% to 347,135 TEUs as shippers moved cargo early to mitigate Red Sea-related delays. OOCL’s largest trade lane by volume — intra-Asia combined with Asia-Australasia — reported a 5.3% drop in Q3 volume at 922,219 TEUs, although revenue was up 48% at $880 million. Trans-Atlantic volume was down 5.5% at 111,591 TEUs with revenue falling 10.4% to $144 million. The nine-month performance kept OOCL firmly on course for another strong annual result, with total revenue up 23.4% at $7.3 billion. January to September volume rose 2.6% to 5.6 million TEUs and the average revenue per TEU was up 20.3% compared with the same period last year. The trans-Pacific and intra-Asia/Australasia trades did the heavy lifting in the nine-month period. OOCL’s trans-Pacific volume rose 8.3% to 1.5 million TEUs and revenue increased 51% to $2.9 billion, while intra-Asia/Australasia volume of 2.7 million TEUs was up 7.7% and revenue increased 9.2% to $2.1 billion. OOCL’s Asia-Europe volume through September dropped 12.4% to just over 1 million TEUs with revenue rising 36.4% to $1.8 billion, while trans-Atlantic volume fell 4% to 359,784 TEUs and revenue slumped 36% to $452 million. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com. ">greg.knowler@spglobal.com.</a></div>

Cosco Shipping expects to report a net profit of $6.17 billion for the first nine months of 2024, a 67% increase year over year, with its performance lifted by strong third-quarter peak season demand on the trans-Pacific and Asia-Europe trade lanes, the China state-owned carrier said Monday. In a preliminary filing to the Hong Kong and Shanghai exchanges, Cosco revealed its earnings before interest and taxes (EBIT) for the nine-month period is expected to increase 63% year over year to almost $8 billion. The estimated earnings were released as Cosco Shipping subsidiary OOCL reported its third-quarter operational update in which a 73% increase in revenue and elevated freight rates drove up the top line result despite a moderate 3.6% rise in volumes. Profit and loss figures were not provided. OOCL reported overall third-quarter revenue of $3 billion and volume of 1.9 million TEUs as average revenue per TEU increased 67.6% year over year. The trans-Pacific dominated OOCL’s Q3 result, with revenue of $1.2 billion — double the same period last year — and volume on the trade lane up 15.6% at 551,896 TEUs. Asia-Europe revenue also doubled in the third quarter despite volume falling 12% to 347,135 TEUs as shippers moved cargo early to mitigate Red Sea-related delays. OOCL’s largest trade lane by volume — intra-Asia combined with Asia-Australasia — reported a 5.3% drop in Q3 volume at 922,219 TEUs, although revenue was up 48% at $880 million. Trans-Atlantic volume was down 5.5% at 111,591 TEUs with revenue falling 10.4% to $144 million. The nine-month performance kept OOCL firmly on course for another strong annual result, with total revenue up 23.4% at $7.3 billion. January to September volume rose 2.6% to 5.6 million TEUs and the average revenue per TEU was up 20.3% compared with the same period last year. The trans-Pacific and intra-Asia/Australasia trades did the heavy lifting in the nine-month period. OOCL’s trans-Pacific volume rose 8.3% to 1.5 million TEUs and revenue increased 51% to $2.9 billion, while intra-Asia/Australasia volume of 2.7 million TEUs was up 7.7% and revenue increased 9.2% to $2.1 billion. OOCL’s Asia-Europe volume through September dropped 12.4% to just over 1 million TEUs with revenue rising 36.4% to $1.8 billion, while trans-Atlantic volume fell 4% to 359,784 TEUs and revenue slumped 36% to $452 million. Contact Greg Knowler at greg.knowler@spglobal.com.

Peak season surge drives up Cosco’s estimated nine-month earnings

<div class="phx-topic abstract-wrapper">Shippers on the trans-Atlantic will find space in short supply by the end of October with bottlenecks on both ends of the trade lane reducing capacity.</div>

Shippers on the trans-Atlantic will find space in short supply by the end of October with bottlenecks on both ends of the trade lane reducing capacity.

<div class="phx-topic">Ship delays resulting from the three-day strike at ports along the US East and Gulf coasts last week will come on top of port congestion across several European hubs, significantly reducing the available trans-Atlantic capacity this month. Sea-Intelligence Maritime Analysis noted that capacity from Mediterranean and North European routes was already heading for a 10% to 14% reduction by the end of October, but additional post-strike delays in clearing waiting ships would dramatically increase the capacity cuts. “We can see that North European shippers should prepare for a capacity reduction of up to 14% in week 44,” the analyst noted in its Sunday Spotlight newsletter. “If clearing the USEC congestion adds another four days, this could potentially reach a temporary capacity reduction of up to 30%.” The three-day strike will reduce Mediterranean-US East Coast capacity by 10% in week 43 starting Oct. 21, with a full-week effect from worsening congestion resulting in a short-term 24% reduction in capacity, Sea-Intelligence noted. Maritime employers and the International Longshoremen’s Association (ILA) <a href="https://www.joc.com/article/ila-usmx-agree-on-new-wage-offer-and-contract-extension-that-reopens-ports-5741882">reached a tentative deal</a> to reopen container terminals at East and Gulf coast ports on Oct. 3 following a strike that began at midnight Oct. 1. Ports up and down the US East and Gulf coasts <a href="https://www.joc.com/article/us-east-gulf-coast-ports-confident-of-smooth-post-strike-reopening-5742607">expect a generally smooth resumption of cargo flows</a>, noting that they have spare capacity and expect minimal disruptions in processing a <a href="https://www.joc.com/article/ships-backing-up-outside-of-strike-shut-us-east-gulf-ports-5741090">backlog of more than 60 ships</a>. Reduced volumes through the ports due to frontloading and diversions ahead of the strike threat — and the relatively short duration of the stoppage — will make the return to pre-disruption fluidity a matter of days, rather than weeks. <h3>Domino effect </h3>But the domino effect on the trans-Atlantic trade lane will be exacerbated by port congestion in North Europe. Kuehne + Nagel’s digital ocean shipping platform SeaExplorer indicates “heavily disrupted operations” at Hamburg. “The yard utilization is at 112% with back-to-back vessel arrivals until mid-October,” a SeaExplorer advisory noted, with rail waiting times at Container Terminal Burchardkai (CTB), Hamburg’s largest terminal, nearly 14 hours. Operations at Southampton in the UK are also classed as “heavily disrupted” by the K+N platform as high import volumes are creating bottlenecks in clearing containers, with disruption also reported at London Gateway. Several ports in the Mediterranean are experiencing “slightly disrupted operations,” including Barcelona and transshipment hub Algeciras. The inland transport of containers in Europe is also being affected by severe flooding that last month impacted transportation networks and container terminal depots in central Europe. Seasonal low water levels on the Rhine River are also affecting container movement. Inland barge operator Contargo last week reported handling delays of 73 hours at Rotterdam and 33 hours at Antwerp. Rate levels on the trans-Atlantic took off last week, with North Europe to the US East Coast prices rising $600 to $2,700 per FEU, up 157% year over year, according to Platts, a sister company of the Journal of Commerce within S&amp;P Global. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Ship delays resulting from the three-day strike at ports along the US East and Gulf coasts last week will come on top of port congestion across several European hubs, significantly reducing the available trans-Atlantic capacity this month. Sea-Intelligence Maritime Analysis noted that capacity from Mediterranean and North European routes was already heading for a 10% to 14% reduction by the end of October, but additional post-strike delays in clearing waiting ships would dramatically increase the capacity cuts. “We can see that North European shippers should prepare for a capacity reduction of up to 14% in week 44,” the analyst noted in its Sunday Spotlight newsletter. “If clearing the USEC congestion adds another four days, this could potentially reach a temporary capacity reduction of up to 30%.” The three-day strike will reduce Mediterranean-US East Coast capacity by 10% in week 43 starting Oct. 21, with a full-week effect from worsening congestion resulting in a short-term 24% reduction in capacity, Sea-Intelligence noted. Maritime employers and the International Longshoremen’s Association (ILA) reached a tentative deal to reopen container terminals at East and Gulf coast ports on Oct. 3 following a strike that began at midnight Oct. 1. Ports up and down the US East and Gulf coasts expect a generally smooth resumption of cargo flows , noting that they have spare capacity and expect minimal disruptions in processing a backlog of more than 60 ships . Reduced volumes through the ports due to frontloading and diversions ahead of the strike threat — and the relatively short duration of the stoppage — will make the return to pre-disruption fluidity a matter of days, rather than weeks. Domino effect But the domino effect on the trans-Atlantic trade lane will be exacerbated by port congestion in North Europe. Kuehne + Nagel’s digital ocean shipping platform SeaExplorer indicates “heavily disrupted operations” at Hamburg. “The yard utilization is at 112% with back-to-back vessel arrivals until mid-October,” a SeaExplorer advisory noted, with rail waiting times at Container Terminal Burchardkai (CTB), Hamburg’s largest terminal, nearly 14 hours. Operations at Southampton in the UK are also classed as “heavily disrupted” by the K+N platform as high import volumes are creating bottlenecks in clearing containers, with disruption also reported at London Gateway. Several ports in the Mediterranean are experiencing “slightly disrupted operations,” including Barcelona and transshipment hub Algeciras. The inland transport of containers in Europe is also being affected by severe flooding that last month impacted transportation networks and container terminal depots in central Europe. Seasonal low water levels on the Rhine River are also affecting container movement. Inland barge operator Contargo last week reported handling delays of 73 hours at Rotterdam and 33 hours at Antwerp. Rate levels on the trans-Atlantic took off last week, with North Europe to the US East Coast prices rising $600 to $2,700 per FEU, up 157% year over year, according to Platts, a sister company of the Journal of Commerce within S&P Global. Contact Greg Knowler at greg.knowler@spglobal.com .

Trans-Atlantic

US port strike, Europe congestion heralds trans-Atlantic capacity crunch

<div class="phx-topic abstract-wrapper">Figuring out why growth in intermodal volumes between Mexico and the US is significantly lagging that of trucking demand will be crucial to unlocking one of intermodal’s biggest growth opportunities, writes Journal of Commerce analyst Larry Gross.</div>

Figuring out why growth in intermodal volumes between Mexico and the US is significantly lagging that of trucking demand will be crucial to unlocking one of intermodal’s biggest growth opportunities, writes Journal of Commerce analyst Larry Gross.

<div class="phx-topic">Tracking intermodal rail volumes in the major North American geographies, one thing that catches the eye is the relatively poor performance of intermodal in the US-Mexico cross border market. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5743859_0.1.jpg"></img></div>Cross-border steel-wheel revenue moves fell 8.5% year over year in the first eight months of 2024 and have run behind 2023 levels every month so far in 2024 except for April, according to data from the Intermodal Association of North America’s (IANA’s) European Technical Standard Order (ETSO) database. This seems at odds with news coverage speaking of a “boom” in the volume of freight crossing the border, driven by near-shoring and “tariff washing” of Chinese goods moving to the US via Mexico. What does the data say? <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="0c651159-75ec-4432-8bdb-1de275383c98"></dynamic-object></div>According to the US Bureau of Transportation Statistics (BTS), the number of “loaded truck containers” — a data set that includes dry vans, refrigerated trucks, flatbeds, etc., both straight trucks and semis — entering the US from Mexico grew 93% year over year in the first half, a clear signal that the market is indeed booming. But again, this compares with an 8.5% decline in cross-border intermodal volumes, which begs the question: why is there such a large disparity in demand for trucking and intermodal? One theory is that there is a reporting issue in the IANA numbers. It is possible that volume is being trucked across the border and then put on the rails to travel farther inland. But if that were the case, revenue moves out of the US South Central region would be rising quickly, and they aren’t. In fact, year-to-date through August, outbound South Central revenue moves have ticked up 1.2%, a substandard performance compared with the 2.9% year-over-year gain in total domestic volumes for the same period. It could be an issue of capacity — i.e., a lack of containers being made available in Mexico to load — due to the heavy imbalance between northbound and southbound traffic. Or it could be a lack of demand in a market where the current intermodal value proposition of service consistency, speed and savings versus truck is simply missing the target. Either way, answering this question will be important for railroads and intermodal providers, as the cross-border market represents one of the major growth opportunities currently available to intermodal. Contact Larry Gross at <a href="mailto:lgross@intermodalindepth.com">lgross@intermodalindepth.com</a>. </div>

Tracking intermodal rail volumes in the major North American geographies, one thing that catches the eye is the relatively poor performance of intermodal in the US-Mexico cross border market. Cross-border steel-wheel revenue moves fell 8.5% year over year in the first eight months of 2024 and have run behind 2023 levels every month so far in 2024 except for April, according to data from the Intermodal Association of North America’s (IANA’s) European Technical Standard Order (ETSO) database. This seems at odds with news coverage speaking of a “boom” in the volume of freight crossing the border, driven by near-shoring and “tariff washing” of Chinese goods moving to the US via Mexico. What does the data say? According to the US Bureau of Transportation Statistics (BTS), the number of “loaded truck containers” — a data set that includes dry vans, refrigerated trucks, flatbeds, etc., both straight trucks and semis — entering the US from Mexico grew 93% year over year in the first half, a clear signal that the market is indeed booming. But again, this compares with an 8.5% decline in cross-border intermodal volumes, which begs the question: why is there such a large disparity in demand for trucking and intermodal? One theory is that there is a reporting issue in the IANA numbers. It is possible that volume is being trucked across the border and then put on the rails to travel farther inland. But if that were the case, revenue moves out of the US South Central region would be rising quickly, and they aren’t. In fact, year-to-date through August, outbound South Central revenue moves have ticked up 1.2%, a substandard performance compared with the 2.9% year-over-year gain in total domestic volumes for the same period. It could be an issue of capacity — i.e., a lack of containers being made available in Mexico to load — due to the heavy imbalance between northbound and southbound traffic. Or it could be a lack of demand in a market where the current intermodal value proposition of service consistency, speed and savings versus truck is simply missing the target. Either way, answering this question will be important for railroads and intermodal providers, as the cross-border market represents one of the major growth opportunities currently available to intermodal. Contact Larry Gross at lgross@intermodalindepth.com .

Surface

Rail News

Intermodal providers

North-American rail

Intermodal underperforming in booming Mexico-US market

<div class="phx-topic abstract-wrapper">Ports on the US East and Gulf coasts say they have spare capacity and expect minor disruptions as they process more than 60 ships backlogged by a three-day strike</div>

Ports on the US East and Gulf coasts say they have spare capacity and expect minor disruptions as they process more than 60 ships backlogged by a three-day strike

<div class="phx-topic">Ports up and down the US East and Gulf coasts expect a generally smooth resumption of cargo flow after reopening early Friday morning thanks to a tentative agreement Thursday that ended a three-day dockworker strike. The International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX), which represents maritime employers, said in a joint statement late Thursday they “have reached a tentative agreement on wages and have agreed to extend the master contract until Jan. 15, 2025, to return to the bargaining table to negotiate all other outstanding issues.” Port leaders say they have spare capacity and expect minimal disruptions in processing a backlog of <a href="https://www.joc.com/article/ships-backing-up-outside-of-strike-shut-us-east-gulf-ports-5741090">more than 60 ships</a>. Reduced volumes through the ports due to frontloading and diversions out of fear of the Oct. 1 strike threat — and the relatively short duration of the strike — will make the return to pre-disruption fluidity a matter of days, rather than weeks. In a Friday press conference, Bethann Rooney, port director for the Port Authority of New York and New Jersey, downplayed concerns about the impact of the strike on the East Coast’s busiest port, noting that the port often closes for two to three days for snow during winter. ”After a closure, we’ve been able to recover in a very quick way,” Rooney said. “I have not seen it take one week for every day of closure.” The total backlog of containers offshore and on the ground in New York-New Jersey amounts to about one week worth of volume at the port. The 19-ship backlog should be cleared by the end of next week, along with servicing ships that are still heading to the port, Rooney said. To the south, there was no waiting line for trucks at the Port of Savannah nor delays in discharging and loading at berths and the Mason Mega-rail facility, Georgia Ports Authority spokesman Tom Boyd said Friday. The port is offering weekend gates. At the Port of Baltimore, officials also compared the operational impact of the stoppage to a winter weather-driven interruption. The Maryland Port Administration, which has extended hours to include Saturday to deal with the backlog, said delayed vessels are being “quickly assimilated into the schedule.” The Port of Virginia said it has opened its reservation system and expects a return to normal operations within 24 hours, “with many components of the operation being restarted in parallel.” <h3>Labor peace ... for now </h3>The <a href="https://www.joc.com/article/ila-usmx-agree-on-new-wage-offer-and-contract-extension-that-reopens-ports-5741882">tentative agreement between the ILA and the USMX</a> ends a nearly two-year standoff over a new six-year master contract covering 45,000 longshore workers. The agreement ensures labor peace for 90 days, giving both sides time to wrestle with how automation is addressed in the contract. The two sides have agreed on economic terms, however, with container lines represented by the USMX agreeing to hike dockworker pay by more than 60%. The three-month extension, something <a href="https://www.joc.com/article/ila-usmx-remain-at-odds-over-dockworker-wage-increases-daggett-5215515">ILA President Harold Daggett had vehemently opposed</a> in the lead up to expiration of the existing contract on Sept. 30, removes any peak season pressure for the upcoming holiday shopping season. Most goods needed for Black Friday and up until Christmas moved through the East and Gulf coasts before the strike, with toys and electronics coming through the West Coast now. The end of the three-day strike, which grabbed global and popular attention, also takes political pressure off the Biden administration, and by extension, the presidential campaign of Vice President Kamala Harris. With election polling ending Nov. 5, President Joe Biden <a href="https://www.joc.com/article/white-houses-executive-lever-to-prevent-port-strike-is-politically-toxic-5733927">refused to break the strike</a> and risk antagonizing organizing labor and <a href="https://www.joc.com/article/house-republicans-shippers-up-pressure-on-biden-to-stop-us-port-strike-5740135">made no attempt to hide his support of the ILA</a> and scorn for “foreign-owned” ocean carriers. Public attention and emotions rose in the lead up to the tentative agreement. The ILA drew the ire of some for not working ports handling relief supplies for Hurricane Helene in the US Southeast. The union pledged $100,000 to the American Red Cross and asked its locals to contribute as well. The threat of a port takeover from Florida Gov. Ron DeSantis ratcheted up pressure to end the strike. Overnight, Daggett grabbed global attention, and much of it was negative. The New York Post published aerial photos of Daggett’s Sparta, NJ, home, along with his address and details of the union leader’s two salaries as president of the international and a New Jersey ILA local that amount to $900,000 per year. The next day, the ILA said in a statement that Daggett and other union leaders received “threats of violence” directed against them. There was also the doxing of USMX President Dave Adam by publishing his address and phone number on X, formerly Twitter. <h3>The automation elephant </h3>While a tentative agreement has been reached, some details haven’t been released, much less worked. Sources have told the Journal of Commerce the USMX offered longshore workers an average $4-per-hour per-year increase to get talks restarted. The offer amounts to a 61.5% increase in the top tier of longshore wages. The USMX’s last offer prior to the strike was a $3-per-hour hike, equal to a 46% raise over the life of the six-year contract, according to a White House presentation shared with the Journal of Commerce last week. Back in June, the USMX initially offered <a href="https://www.joc.com/article/port-employers-urge-ila-to-return-to-contract-talks-5723976">the ILA a $2.50-per-hour (38%) raise</a>, which the <a href="https://www.joc.com/article/ila-halts-talks-over-new-contract-until-maersk-apm-clarify-port-it-projects-5244243">union flatly rejected</a> before breaking off talks. However, the tentative agreement does not address one of the key sticking points between the ILA and USMX: <a href="https://www.joc.com/article/conflicting-post-pandemic-worldviews-bring-ila-employers-to-historic-strike-5738509">automation</a>. The ILA has repeatedly said that it wants a complete ban on any automation project that would eliminate longshore jobs, while the USMX says it wants to keep language from the current contract that allows semi-automation projects to go ahead with the union’s consent. “Unless an agreement is reached on ILA’s very vocal demands to limit automation, disruption and uncertainty could return in January,” Peter Friedmann, executive director of the Agriculture Transportation Coalition said in a statement Friday. “Some who shifted to the West Coast gateways may stay there until the automation negotiations are resolved.” Contact Michael Angell at <a href="michael.angell@spglobal.com">michael.angell@spglobal.com</a>. Contact Laura Robb at <a href="laura.robb@spglobal.com. ">laura.robb@spglobal.com.</a>Contact Mark Szakonyi at <a href="mark.szakonyi@spglobal.com">mark.szakonyi@spglobal.com</a>. </div>

Ports up and down the US East and Gulf coasts expect a generally smooth resumption of cargo flow after reopening early Friday morning thanks to a tentative agreement Thursday that ended a three-day dockworker strike. The International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX), which represents maritime employers, said in a joint statement late Thursday they “have reached a tentative agreement on wages and have agreed to extend the master contract until Jan. 15, 2025, to return to the bargaining table to negotiate all other outstanding issues.” Port leaders say they have spare capacity and expect minimal disruptions in processing a backlog of more than 60 ships . Reduced volumes through the ports due to frontloading and diversions out of fear of the Oct. 1 strike threat — and the relatively short duration of the strike — will make the return to pre-disruption fluidity a matter of days, rather than weeks. In a Friday press conference, Bethann Rooney, port director for the Port Authority of New York and New Jersey, downplayed concerns about the impact of the strike on the East Coast’s busiest port, noting that the port often closes for two to three days for snow during winter. ”After a closure, we’ve been able to recover in a very quick way,” Rooney said. “I have not seen it take one week for every day of closure.” The total backlog of containers offshore and on the ground in New York-New Jersey amounts to about one week worth of volume at the port. The 19-ship backlog should be cleared by the end of next week, along with servicing ships that are still heading to the port, Rooney said. To the south, there was no waiting line for trucks at the Port of Savannah nor delays in discharging and loading at berths and the Mason Mega-rail facility, Georgia Ports Authority spokesman Tom Boyd said Friday. The port is offering weekend gates. At the Port of Baltimore, officials also compared the operational impact of the stoppage to a winter weather-driven interruption. The Maryland Port Administration, which has extended hours to include Saturday to deal with the backlog, said delayed vessels are being “quickly assimilated into the schedule.” The Port of Virginia said it has opened its reservation system and expects a return to normal operations within 24 hours, “with many components of the operation being restarted in parallel.” Labor peace ... for now The tentative agreement between the ILA and the USMX ends a nearly two-year standoff over a new six-year master contract covering 45,000 longshore workers. The agreement ensures labor peace for 90 days, giving both sides time to wrestle with how automation is addressed in the contract. The two sides have agreed on economic terms, however, with container lines represented by the USMX agreeing to hike dockworker pay by more than 60%. The three-month extension, something ILA President Harold Daggett had vehemently opposed in the lead up to expiration of the existing contract on Sept. 30, removes any peak season pressure for the upcoming holiday shopping season. Most goods needed for Black Friday and up until Christmas moved through the East and Gulf coasts before the strike, with toys and electronics coming through the West Coast now. The end of the three-day strike, which grabbed global and popular attention, also takes political pressure off the Biden administration, and by extension, the presidential campaign of Vice President Kamala Harris. With election polling ending Nov. 5, President Joe Biden refused to break the strike and risk antagonizing organizing labor and made no attempt to hide his support of the ILA and scorn for “foreign-owned” ocean carriers. Public attention and emotions rose in the lead up to the tentative agreement. The ILA drew the ire of some for not working ports handling relief supplies for Hurricane Helene in the US Southeast. The union pledged $100,000 to the American Red Cross and asked its locals to contribute as well. The threat of a port takeover from Florida Gov. Ron DeSantis ratcheted up pressure to end the strike. Overnight, Daggett grabbed global attention, and much of it was negative. The New York Post published aerial photos of Daggett’s Sparta, NJ, home, along with his address and details of the union leader’s two salaries as president of the international and a New Jersey ILA local that amount to $900,000 per year. The next day, the ILA said in a statement that Daggett and other union leaders received “threats of violence” directed against them. There was also the doxing of USMX President Dave Adam by publishing his address and phone number on X, formerly Twitter. The automation elephant While a tentative agreement has been reached, some details haven’t been released, much less worked. Sources have told the Journal of Commerce the USMX offered longshore workers an average $4-per-hour per-year increase to get talks restarted. The offer amounts to a 61.5% increase in the top tier of longshore wages. The USMX’s last offer prior to the strike was a $3-per-hour hike, equal to a 46% raise over the life of the six-year contract, according to a White House presentation shared with the Journal of Commerce last week. Back in June, the USMX initially offered the ILA a $2.50-per-hour (38%) raise , which the union flatly rejected before breaking off talks. However, the tentative agreement does not address one of the key sticking points between the ILA and USMX: automation . The ILA has repeatedly said that it wants a complete ban on any automation project that would eliminate longshore jobs, while the USMX says it wants to keep language from the current contract that allows semi-automation projects to go ahead with the union’s consent. “Unless an agreement is reached on ILA’s very vocal demands to limit automation, disruption and uncertainty could return in January,” Peter Friedmann, executive director of the Agriculture Transportation Coalition said in a statement Friday. “Some who shifted to the West Coast gateways may stay there until the automation negotiations are resolved.” Contact Michael Angell at michael.angell@spglobal.com . Contact Laura Robb at laura.robb@spglobal.com. Contact Mark Szakonyi at mark.szakonyi@spglobal.com .

Drayage

US East, Gulf coast ports confident of smooth post-strike reopening

<div class="phx-topic abstract-wrapper">Post-election uncertainties in Europe have shined a light on complex problems hampering heavy transport across the EU, writes Ton Klijn, director of the European Association of Abnormal Road Transport and Mobile Cranes (ESTA). </div>

Post-election uncertainties in Europe have shined a light on complex problems hampering heavy transport across the EU, writes Ton Klijn, director of the European Association of Abnormal Road Transport and Mobile Cranes (ESTA).

<div class="phx-topic">Long-called-for reforms of the EU’s fragmented and dysfunctional heavy transport industry regulations appeared to be finally coming to fruition earlier this summer, but now these reforms are up in the air. As Europe struggles to boost its economies and respond to global economic challenges, the need for fundamental reform of the rules and regulations governing heavy and abnormal freight transportation has never been greater. Unusable roads and bridges combined with unnecessary, often protectionist, local regulations make the business of moving heavy cargo in Europe less efficient and less safe. Unfortunately, the arrival of new officials and politicians following the elections in June have upset hopes for revisions to the dry-sounding regulation Weights and Dimensions Directive 96/53/EC, intended to standardize heavy-duty transport. These revisions would have addressed the chronic dysfunctions plaguing engineered and heavy-haul transport in Europe, just as similar issues constrict heavy transport in the US. We at ESTA, Europe’s association for the abnormal — i.e., heavy-haul — road transport and mobile crane rental industry, hope that the reform process has just slowed and not stalled. The heavy transport industry may be small in economic terms, but it packs a big punch, and we want to remind our political leaders of that fact. To keep the pressure for reformation on, ESTA published our first ever transport manifesto for change in early September. Our priorities are the harmonization of rules for abnormal road transport, securing access to safe and secure parking spaces, the adoption of sector-specific rules and elimination of country-specific barriers, and the establishment of abnormal load corridors. Regularizing regulations Heavy-transport vehicles are already required to comply with certain rules on weights and dimensions to ensure safety; prevent damage to roads, bridges and tunnels; and ensure fair competition. EU member states should not be able to prevent vehicles that comply with these limits from performing international transport operations within their territories. But in practice — as anyone working in heavy transport knows all too well — heavy and abnormal transport operators and their clients face a plethora of petty, unnecessary and bureaucratic restrictions across the EU. These restrictions differ not just between countries but often between districts, and these local and arbitrary rules often are enforced for what can only be described as protectionist reasons. How can it be sensible, for example, that the rules for marking and lighting abnormal transports are different in every EU country? Why is a side marking board required to be 50 x 50 centimeters in one country but 42.5 x 42.5 centimeters just over the neighboring border? In a similar vein, some regional German authorities say that a permit is invalid if a load weighs 5% less or is 15 centimeters smaller than in the documentation. You read that correctly: these regulations apply when loads are lighter or smaller than expected, despite smaller, lighter loads posing no additional threat to weak roads and bridges, nor to traffic and buildings along the route. Such regulations lack any semblance of common sense. Abnormal road transport operators are regularly confronted with country-specific measures that do not improve safety and hamper the competitiveness and efficiency of the heavy-haul sector. These measures include differing national rules on “angles morts” — blind spots for truck drivers — language requirements for drivers, licensing of drivers of abnormal transport vehicle combinations, marking of escort vehicles and training of the escort vehicle drivers, as well as country-specific provisions on insurance and bank guarantees. These and similar measures should be evaluated at the European level and, where necessary, harmonized or abolished. Heavy transport corridors needed A crucial issue that is not covered by Weights and Dimensions Directive 96/53/EC but desperately needs to be addressed is Europe’s endemic failure to invest sufficiently in infrastructure, especially in the maintenance of roads and bridges. This is severely impacting a wide range of industries. For example, delivering offshore wind turbines from factory to port is often a hugely expensive, unnecessarily time-consuming and complex process that frequently requires navigating detours to avoid weak bridges. ESTA has long called for the establishment of Europe-wide heavy transport corridors on which scarce funds could be focused. This is, interestingly, an idea that NATO has also been discreetly lobbying for, presumably so its heavy military and other equipment could be easily moved in times of need. In a fast-changing and volatile world, the next five years will be crucial, not just for ESTA and our members but for Europe’s wider economy. We need the single market to function. At present, this is more fiction than reality. Apart from infrastructure investment, the measures we are calling for — and those listed in the revised directive — require little in the way of funds. What we need above all is clear, long-term thinking and the political will to effect change. Ton Klijn is director of the European Association of Abnormal Road Transport and Mobile Cranes (ESTA). Contact him at <a href="mailto:director@estaeurope.eu">director@estaeurope.eu.</a></div>

Long-called-for reforms of the EU’s fragmented and dysfunctional heavy transport industry regulations appeared to be finally coming to fruition earlier this summer, but now these reforms are up in the air. As Europe struggles to boost its economies and respond to global economic challenges, the need for fundamental reform of the rules and regulations governing heavy and abnormal freight transportation has never been greater. Unusable roads and bridges combined with unnecessary, often protectionist, local regulations make the business of moving heavy cargo in Europe less efficient and less safe. Unfortunately, the arrival of new officials and politicians following the elections in June have upset hopes for revisions to the dry-sounding regulation Weights and Dimensions Directive 96/53/EC, intended to standardize heavy-duty transport. These revisions would have addressed the chronic dysfunctions plaguing engineered and heavy-haul transport in Europe, just as similar issues constrict heavy transport in the US. We at ESTA, Europe’s association for the abnormal — i.e., heavy-haul — road transport and mobile crane rental industry, hope that the reform process has just slowed and not stalled. The heavy transport industry may be small in economic terms, but it packs a big punch, and we want to remind our political leaders of that fact. To keep the pressure for reformation on, ESTA published our first ever transport manifesto for change in early September. Our priorities are the harmonization of rules for abnormal road transport, securing access to safe and secure parking spaces, the adoption of sector-specific rules and elimination of country-specific barriers, and the establishment of abnormal load corridors. Regularizing regulations Heavy-transport vehicles are already required to comply with certain rules on weights and dimensions to ensure safety; prevent damage to roads, bridges and tunnels; and ensure fair competition. EU member states should not be able to prevent vehicles that comply with these limits from performing international transport operations within their territories. But in practice — as anyone working in heavy transport knows all too well — heavy and abnormal transport operators and their clients face a plethora of petty, unnecessary and bureaucratic restrictions across the EU. These restrictions differ not just between countries but often between districts, and these local and arbitrary rules often are enforced for what can only be described as protectionist reasons. How can it be sensible, for example, that the rules for marking and lighting abnormal transports are different in every EU country? Why is a side marking board required to be 50 x 50 centimeters in one country but 42.5 x 42.5 centimeters just over the neighboring border? In a similar vein, some regional German authorities say that a permit is invalid if a load weighs 5% less or is 15 centimeters smaller than in the documentation. You read that correctly: these regulations apply when loads are lighter or smaller than expected, despite smaller, lighter loads posing no additional threat to weak roads and bridges, nor to traffic and buildings along the route. Such regulations lack any semblance of common sense. Abnormal road transport operators are regularly confronted with country-specific measures that do not improve safety and hamper the competitiveness and efficiency of the heavy-haul sector. These measures include differing national rules on “angles morts” — blind spots for truck drivers — language requirements for drivers, licensing of drivers of abnormal transport vehicle combinations, marking of escort vehicles and training of the escort vehicle drivers, as well as country-specific provisions on insurance and bank guarantees. These and similar measures should be evaluated at the European level and, where necessary, harmonized or abolished. Heavy transport corridors needed A crucial issue that is not covered by Weights and Dimensions Directive 96/53/EC but desperately needs to be addressed is Europe’s endemic failure to invest sufficiently in infrastructure, especially in the maintenance of roads and bridges. This is severely impacting a wide range of industries. For example, delivering offshore wind turbines from factory to port is often a hugely expensive, unnecessarily time-consuming and complex process that frequently requires navigating detours to avoid weak bridges. ESTA has long called for the establishment of Europe-wide heavy transport corridors on which scarce funds could be focused. This is, interestingly, an idea that NATO has also been discreetly lobbying for, presumably so its heavy military and other equipment could be easily moved in times of need. In a fast-changing and volatile world, the next five years will be crucial, not just for ESTA and our members but for Europe’s wider economy. We need the single market to function. At present, this is more fiction than reality. Apart from infrastructure investment, the measures we are calling for — and those listed in the revised directive — require little in the way of funds. What we need above all is clear, long-term thinking and the political will to effect change. Ton Klijn is director of the European Association of Abnormal Road Transport and Mobile Cranes (ESTA). Contact him at director@estaeurope.eu.

Trucking News

Heavy-haul transport

Project cargo

Breakbulk News

EU cannot afford to dither on heavy transport reform: ESTA chief

<div class="phx-topic abstract-wrapper"> Alone among the modes, the railroads are not able to say “no” to the demands of interior point intermodal (IPI), most recently seen in the surge of imports through the US Pacific Northwest and the congestion that followed, writes intermodal analyst Larry Gross. </div>

Alone among the modes, the railroads are not able to say “no” to the demands of interior point intermodal (IPI), most recently seen in the surge of imports through the US Pacific Northwest and the congestion that followed, writes intermodal analyst Larry Gross.

<div class="phx-topic">Container dwell times are up in the Pacific Northwest (PNW) and the undertone of grumbling regarding the railroads’ inability to meet market demands can be heard. But is it reasonable to expect the railroads to be able to react to such giant swings in the market? There’s no doubt <a href="https://www.joc.com/article/rail-container-dwells-in-seattle-tacoma-still-high-but-relief-in-sight-5721796">that imports continue to run strong</a>. Loaded inbound TEUs arriving in the ports of the United States and Western Canada were up more than 18% in July versus 2023. The fact that we are not seeing similar increases in domestic truck demand suggests that there are some special factors at work driving imports. Most likely we are seeing the compound effect of strong retail sales (much more important for imports than for trucking in general) magnified by the desire of importers to get their goods in place earlier than normal. This is a sensible reaction to congestion concerns, the potential US East Coast port strike at the end of September, and the looming threat of big tariff increases, depending on the results of the presidential election. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="77c5d7bd-d3ce-4657-bd57-1af4e55919d8"></dynamic-object></div>But that’s not all, because the share of that import surge that is arriving in the PNW saw a huge spike in June, rising to 5.3% of all inbound loaded TEUs versus an average share over the past 12 months of 4.3%. It has since settled back to average in July but that big bump is still working its way through the system. <h3>Driving the shift </h3>There are good reasons why importers turned to the PNW as a preferred option for freight out of Asia bound for the North American interior. Neighboring Western Canadian ports, normally a sizeable player for freight bound for the US Midwest, were hampered by the prospect of a rail strike on both Canadian National Railway and Canadian Pacific Kansas City (CPKC). While the situation <a href="https://www.joc.com/article/canadian-rail-workers-back-on-job-after-failed-challenge-to-binding-arbitration-5712234">has recently been settled by government intervention</a> (at least for the moment, pending the resolution of legal challenges to the arbitration requirement by the union), from a routing perspective, the next month or two are already baked in. Importers have made their decisions, and the freight is inbound to alternative ports versus Vancouver and Prince Rupert. Things will eventually normalize but not before the bulk of peak season has passed. Southern California is another routing option, but Los Angeles and Long Beach have had their own share of congestion already. What this all means is that there has been a huge upswing in IPI volume moving east out of the Northwest region, as shown by the two charts below. Over the past 6 months, monthly international container originations out of the region have increased by 60%, with July coming in 41% above the prior year. Twenty-thousand more ISO boxes flowed out of the region in July than did in January, roughly 100 more 200-unit trains or about four or five per working day. Based on these numbers, I would say that the railroads have performed quite impressively. <h3>Take it or take it </h3>Alone among the modes, the railroads are not in a position to say ‘no’ to the demands of IPI. No-one seems surprised when the steamship lines roll cargo from one vessel to another during periods of peak demand. Sometimes extra loaders are scheduled, when the ocean carrier deems it to be profitable, but there is certainly not the expectation that the liner companies will automatically ramp up their sailing schedule when demand warrants. Similarly, truckers only accept the loads that they have the capacity to handle. This is normal, expected behavior and the BCO response typically is to start working their way down the company’s list of preferred carriers to place the overflow. But that’s not how IPI works for the railroads. They don’t have the opportunity or ability to say no. The cargo arrives in the port and the expectation is that the railroad will forward it inland without delay, no matter how much volatility or variation in demand. If there is some good news in all this, it’s that it appears that the pressure may be easing. TEUs arriving in PNW ports dropped over 15% from June to July. This has yet to be reflected in the IPI originations but likely we will see some relief when the August figures come out. Further, to the extent that a good chunk of this surge represents up-streamed volume, we should see a more rapid fall-off in demand in the coming months than the normal seasonal drop. Contact Larry Gross at <a href="mailto:lgross@iintermodalindepth.com">lgross@intermodalindepth.com</a>. </div>

Container dwell times are up in the Pacific Northwest (PNW) and the undertone of grumbling regarding the railroads’ inability to meet market demands can be heard. But is it reasonable to expect the railroads to be able to react to such giant swings in the market? There’s no doubt that imports continue to run strong . Loaded inbound TEUs arriving in the ports of the United States and Western Canada were up more than 18% in July versus 2023. The fact that we are not seeing similar increases in domestic truck demand suggests that there are some special factors at work driving imports. Most likely we are seeing the compound effect of strong retail sales (much more important for imports than for trucking in general) magnified by the desire of importers to get their goods in place earlier than normal. This is a sensible reaction to congestion concerns, the potential US East Coast port strike at the end of September, and the looming threat of big tariff increases, depending on the results of the presidential election. But that’s not all, because the share of that import surge that is arriving in the PNW saw a huge spike in June, rising to 5.3% of all inbound loaded TEUs versus an average share over the past 12 months of 4.3%. It has since settled back to average in July but that big bump is still working its way through the system. Driving the shift There are good reasons why importers turned to the PNW as a preferred option for freight out of Asia bound for the North American interior. Neighboring Western Canadian ports, normally a sizeable player for freight bound for the US Midwest, were hampered by the prospect of a rail strike on both Canadian National Railway and Canadian Pacific Kansas City (CPKC). While the situation has recently been settled by government intervention (at least for the moment, pending the resolution of legal challenges to the arbitration requirement by the union), from a routing perspective, the next month or two are already baked in. Importers have made their decisions, and the freight is inbound to alternative ports versus Vancouver and Prince Rupert. Things will eventually normalize but not before the bulk of peak season has passed. Southern California is another routing option, but Los Angeles and Long Beach have had their own share of congestion already. What this all means is that there has been a huge upswing in IPI volume moving east out of the Northwest region, as shown by the two charts below. Over the past 6 months, monthly international container originations out of the region have increased by 60%, with July coming in 41% above the prior year. Twenty-thousand more ISO boxes flowed out of the region in July than did in January, roughly 100 more 200-unit trains or about four or five per working day. Based on these numbers, I would say that the railroads have performed quite impressively. Take it or take it Alone among the modes, the railroads are not in a position to say ‘no’ to the demands of IPI. No-one seems surprised when the steamship lines roll cargo from one vessel to another during periods of peak demand. Sometimes extra loaders are scheduled, when the ocean carrier deems it to be profitable, but there is certainly not the expectation that the liner companies will automatically ramp up their sailing schedule when demand warrants. Similarly, truckers only accept the loads that they have the capacity to handle. This is normal, expected behavior and the BCO response typically is to start working their way down the company’s list of preferred carriers to place the overflow. But that’s not how IPI works for the railroads. They don’t have the opportunity or ability to say no. The cargo arrives in the port and the expectation is that the railroad will forward it inland without delay, no matter how much volatility or variation in demand. If there is some good news in all this, it’s that it appears that the pressure may be easing. TEUs arriving in PNW ports dropped over 15% from June to July. This has yet to be reflected in the IPI originations but likely we will see some relief when the August figures come out. Further, to the extent that a good chunk of this surge represents up-streamed volume, we should see a more rapid fall-off in demand in the coming months than the normal seasonal drop. Contact Larry Gross at lgross@intermodalindepth.com .

Rails have limited recourse to PNW import surge: analyst

West

East

Gulf

PIERS containerized US import and export volumes is the transportation industry’s largest US waterborne trade data set, covering 100 percent of US port locations. Every day, the PIERS team processes an average of nearly 60,000 bills of lading filed with US Customs and Border Protection (CBP) and integrates this transactional trade data with standardized company details. PIERS contains US trade data going back to 2003. [PIERS](https://www.spglobal.com/marketintelligence/en/mi/products/piers.html)

Coastal share of US containerized imports from Asia (PIERS)

PIERS TEU market share US coastal imports from Asia (YTD) Gateway

<div class="phx-topic abstract-wrapper">Maritime employers and the union representing some 45,000 East and Gulf coast dockworkers have reportedly closed the gap in wage expectations to just $1 per hour per year.</div>

Maritime employers and the union representing some 45,000 East and Gulf coast dockworkers have reportedly closed the gap in wage expectations to just $1 per hour per year.

<div class="phx-topic">Maritime employers and the International Longshoremen’s Association (ILA) have reached a tentative deal to reopen container terminals at East and Gulf coast ports after trading new wage offers that would bring dockworker pay up over 60%. Longshore workers will work under a three-month contract extension until a formal deal is reached. Official announcement of the breakthrough is expected Thursday evening, sources told the Journal of Commerce. The White House is scheduled to host a briefing Friday morning on the port strike. The ILA and United States Maritime Alliance (USMX), the employer group that represents ocean carrier and terminal operators in longshore contract negotiations, have yet to respond for a request for comment.Ports are expected to reopen Friday. The USMX is offering the ILA an average $4-per-hour increase to get talks restarted on the condition that the ILA agrees to an extension through January 15 on the current contract that would allow ports to reopen while negotiations resume. ILA President Harold Daggett has repeatedly said <a href="">union members would not work under a contract extension</a>.The offer represents a 62% increase in top wages for longshore workers. The USMX gave Biden administration officials a glimpse of their previous offer before the union rejected it on Monday, setting off the first strike along East and Gulf coast ports in 47 years. According to the presentation delivered last week at the White House during a meeting with USMX officials, employers were willing to offer the ILA a $3-per-hour raise in each year of the six-year contract, a total raise of $18 per hour (46%) over the contract’s term.The USMX said in its last statement prior to the strike its latest offer would “increase wages by nearly 50 percent,” although it did not detail the exact dollar amount. The offer is an improvement on <a href="">the $2.50-per-hour (38%) raise the USMX proposed in its first counteroffer to the union and would bring average wages</a>, including overtime and container royalties, to $500,000 per year for a dockworker at the Port of New York and New Jersey.The offer terms also would raise entry-level wages for new ILA members from $20 per hour to $30 per hour.However, <a href="https://www.joc.com/article/ila-seeking-huge-wage-hike-from-maritime-employers-sources-5703094">the union sought a $5-per-hour (77%) wage hike</a>, based on the record profits recorded by ocean carriers during the COVID-19 pandemic. This is a developing story and may be updated as new information is received.Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>.		Contact Mark Szakonyi at <a href="mailto:mark.szakonyi@spglobal.com">mark.szakonyi@spglobal.com</a>.</div>

Maritime employers and the International Longshoremen’s Association (ILA) have reached a tentative deal to reopen container terminals at East and Gulf coast ports after trading new wage offers that would bring dockworker pay up over 60%. Longshore workers will work under a three-month contract extension until a formal deal is reached. Official announcement of the breakthrough is expected Thursday evening, sources told the Journal of Commerce. The White House is scheduled to host a briefing Friday morning on the port strike. The ILA and United States Maritime Alliance (USMX), the employer group that represents ocean carrier and terminal operators in longshore contract negotiations, have yet to respond for a request for comment. Ports are expected to reopen Friday. The USMX is offering the ILA an average $4-per-hour increase to get talks restarted on the condition that the ILA agrees to an extension through January 15 on the current contract that would allow ports to reopen while negotiations resume. ILA President Harold Daggett has repeatedly said union members would not work under a contract extension . The offer represents a 62% increase in top wages for longshore workers. The USMX gave Biden administration officials a glimpse of their previous offer before the union rejected it on Monday, setting off the first strike along East and Gulf coast ports in 47 years. According to the presentation delivered last week at the White House during a meeting with USMX officials, employers were willing to offer the ILA a $3-per-hour raise in each year of the six-year contract, a total raise of $18 per hour (46%) over the contract’s term. The USMX said in its last statement prior to the strike its latest offer would “increase wages by nearly 50 percent,” although it did not detail the exact dollar amount. The offer is an improvement on the $2.50-per-hour (38%) raise the USMX proposed in its first counteroffer to the union and would bring average wages , including overtime and container royalties, to $500,000 per year for a dockworker at the Port of New York and New Jersey. The offer terms also would raise entry-level wages for new ILA members from $20 per hour to $30 per hour. However, the union sought a $5-per-hour (77%) wage hike , based on the record profits recorded by ocean carriers during the COVID-19 pandemic. This is a developing story and may be updated as new information is received. Contact Michael Angell at michael.angell@spglobal.com . Contact Mark Szakonyi at mark.szakonyi@spglobal.com .

ILA, USMX agree on new wage offer and contract extension that reopens ports

<div class="phx-topic abstract-wrapper">Although ongoing softness in the US freight economy is tempering forecasts for higher truck pricing, both truckload and less-than-truckload carriers expect pricing gains next year.</div>

Although ongoing softness in the US freight economy is tempering forecasts for higher truck pricing, both truckload and less-than-truckload carriers expect pricing gains next year.

<div class="phx-topic">CHICAGO — There’s no quick recovery ahead for the US truckload sector, either in terms of pricing or demand, executives from several logistics companies said Tuesday at the Journal of Commerce Inland Distribution Conference 2024 (Inland24). “I hear a lot about optimism for the truckload market for 2025, but I can’t find it yet in our numbers,” said Kendra Walker, CEO of Truckstop.com, a freight marketplace and technology platform. Still, truckload carriers are expecting rates to rise in 2025 after two straight years of declines. Executives at the Inland24 conference forecast annualized contract rate increases in the mid-single-digit percentage range. Spot truckload rates, however, are still bouncing along the bottom they hit in mid-2023, increasing only slightly over year-ago levels, according to data from load-board operators Truckstop.com and DAT Freight &amp; Analytics and third-party logistics operators. “Typically, the spot market leads the rest of the market,” Walker said, with contract truckload rates following rising short-term pricing. But to date, “it has not been there,” she said. Excess capacity has been an anchor on spot truckload rates, Walker said. “Small truckers are really hanging on,” she said. “I don’t know if they made a whole bunch of money in 2021 and 2022 or learned to handle multiple gigs at once, but they are very resilient.” Despite a slight spike in December 2023, national average dry-van truckload spot rates have remained in a relatively narrow range of $1.52 per mile to $1.74 per mile over the last 12 months, according to data from DAT Freight and Analytics.<div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="7913ae35-f907-405d-a645-ba3eeb52151c"></dynamic-object></div>Total broker-posted spot rates in Truckstop.com’s system rose 0.3% from the previous week in the week that ended Sept. 27, but those rates were still down 4.8% year over year at $2.19 per mile, including fuel surcharges. That points to a slow start to an upcycle, Walker said, although others expect a faster pace. “About half our brokerage customers believe spot rates are going to come back in the next five to six months,” Walker said. “At the same time, they say that 2024 is a tougher year than 2023 and they expect margins to continue to compress through the first quarter.” <h3>Extended forecasts </h3>A shift in market conditions that sends truckload spot rates upward has been forecast repeatedly over the past two years, and that forecast has slipped from early 2024 to early 2025. “We’ve been predicting an inflection within three months for twelve months now,” said Adam Miller, CEO of Knight-Swift Transportation Holdings. “It feels like we’re getting closer to a balance” between supply and demand, he said. “In the second quarter, we saw some surge demand, with customers looking to lock up capacity for a certain time,” Miller said. “We hadn’t seen that since 2021.” Knight-Swift is the largest US truckload service provider and owns, among other carriers, Swift Transportation, Knight Transportation and U.S. Xpress Enterprises. In an on-stage interview, Miller said he agreed with a forecast for low- to mid-single-digit percentage increases in truckload contract rates in early 2025. “I don’t see us getting to double-digit levels, but we could go to mid-single-digit increases,” he said. “I think we’ll be positioned for a rate season where rates go up mid-single digits and build from there” over the course of the year. “It would be the reverse of what happened in 2023,” when rates dropped from January through mid-year, Miller noted. Jim Filter, group president of transportation and logistics for Schneider National, said the truckload market “is a little closer to equilibrium than people believe, because we’re seeing signs of seasonality. Perhaps not an inflection, but at least seasonality.” <h3>Storm warnings </h3>An extended <a href="https://www.joc.com/article/ships-backing-up-outside-of-strike-shut-us-east-gulf-ports-5741090">dockworker strike at East and Gulf coast ports</a> and <a href="https://www.joc.com/article/hurricane-helene-to-tighten-truckload-capacity-beyond-us-southeast-5740081">damage from Hurricane Helene</a> could accelerate a pricing inflection, speakers and attendees at Inland24 said. “There was a lot of emphasis on pre-pulling shipments from ports before the strike began,” said Joel Henry, CEO of nationwide drayage provider IMC Companies. “There’s probably seven to 10 days of freight already inland that we can deliver to keep customers fluid. After 10 days, it gets tough.” Hurricane Helene made landfall in Florida Sept. 26 and caused massive damage across several states as far north as North Carolina. “You are already seeing an impact on out-of-route miles,” said Drew Wilkerson, CEO of logistics provider RXO. North American truckload carriers, who saw revenue on average drop a projected 4.6% this year will see their top line rise 7.2% in 2025, propelled by higher rates, Lee Klaskow, senior analyst for logistics at Bloomberg Intelligence said at Inland24. Less-than-truckload (LTL) carriers will fare even better, Klaskow said. LTL revenues dropped an average of 6.3% in 2023 but will rise 4.9% in 2024 and 7.6% next year, he said. LTL executives at Inland 24 said they expect rates to rise by mid-single-digit percentages in 2025, with LTL capacity still at lower levels than in 2023, before Yellow’s bankruptcy. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>. </div>

CHICAGO — There’s no quick recovery ahead for the US truckload sector, either in terms of pricing or demand, executives from several logistics companies said Tuesday at the Journal of Commerce Inland Distribution Conference 2024 (Inland24). “I hear a lot about optimism for the truckload market for 2025, but I can’t find it yet in our numbers,” said Kendra Walker, CEO of Truckstop.com, a freight marketplace and technology platform. Still, truckload carriers are expecting rates to rise in 2025 after two straight years of declines. Executives at the Inland24 conference forecast annualized contract rate increases in the mid-single-digit percentage range. Spot truckload rates, however, are still bouncing along the bottom they hit in mid-2023, increasing only slightly over year-ago levels, according to data from load-board operators Truckstop.com and DAT Freight & Analytics and third-party logistics operators. “Typically, the spot market leads the rest of the market,” Walker said, with contract truckload rates following rising short-term pricing. But to date, “it has not been there,” she said. Excess capacity has been an anchor on spot truckload rates, Walker said. “Small truckers are really hanging on,” she said. “I don’t know if they made a whole bunch of money in 2021 and 2022 or learned to handle multiple gigs at once, but they are very resilient.” Despite a slight spike in December 2023, national average dry-van truckload spot rates have remained in a relatively narrow range of $1.52 per mile to $1.74 per mile over the last 12 months, according to data from DAT Freight and Analytics. Total broker-posted spot rates in Truckstop.com’s system rose 0.3% from the previous week in the week that ended Sept. 27, but those rates were still down 4.8% year over year at $2.19 per mile, including fuel surcharges. That points to a slow start to an upcycle, Walker said, although others expect a faster pace. “About half our brokerage customers believe spot rates are going to come back in the next five to six months,” Walker said. “At the same time, they say that 2024 is a tougher year than 2023 and they expect margins to continue to compress through the first quarter.” Extended forecasts A shift in market conditions that sends truckload spot rates upward has been forecast repeatedly over the past two years, and that forecast has slipped from early 2024 to early 2025. “We’ve been predicting an inflection within three months for twelve months now,” said Adam Miller, CEO of Knight-Swift Transportation Holdings. “It feels like we’re getting closer to a balance” between supply and demand, he said. “In the second quarter, we saw some surge demand, with customers looking to lock up capacity for a certain time,” Miller said. “We hadn’t seen that since 2021.” Knight-Swift is the largest US truckload service provider and owns, among other carriers, Swift Transportation, Knight Transportation and U.S. Xpress Enterprises. In an on-stage interview, Miller said he agreed with a forecast for low- to mid-single-digit percentage increases in truckload contract rates in early 2025. “I don’t see us getting to double-digit levels, but we could go to mid-single-digit increases,” he said. “I think we’ll be positioned for a rate season where rates go up mid-single digits and build from there” over the course of the year. “It would be the reverse of what happened in 2023,” when rates dropped from January through mid-year, Miller noted. Jim Filter, group president of transportation and logistics for Schneider National, said the truckload market “is a little closer to equilibrium than people believe, because we’re seeing signs of seasonality. Perhaps not an inflection, but at least seasonality.” Storm warnings An extended dockworker strike at East and Gulf coast ports and damage from Hurricane Helene could accelerate a pricing inflection, speakers and attendees at Inland24 said. “There was a lot of emphasis on pre-pulling shipments from ports before the strike began,” said Joel Henry, CEO of nationwide drayage provider IMC Companies. “There’s probably seven to 10 days of freight already inland that we can deliver to keep customers fluid. After 10 days, it gets tough.” Hurricane Helene made landfall in Florida Sept. 26 and caused massive damage across several states as far north as North Carolina. “You are already seeing an impact on out-of-route miles,” said Drew Wilkerson, CEO of logistics provider RXO. North American truckload carriers, who saw revenue on average drop a projected 4.6% this year will see their top line rise 7.2% in 2025, propelled by higher rates, Lee Klaskow, senior analyst for logistics at Bloomberg Intelligence said at Inland24. Less-than-truckload (LTL) carriers will fare even better, Klaskow said. LTL revenues dropped an average of 6.3% in 2023 but will rise 4.9% in 2024 and 7.6% next year, he said. LTL executives at Inland 24 said they expect rates to rise by mid-single-digit percentages in 2025, with LTL capacity still at lower levels than in 2023, before Yellow’s bankruptcy. Contact William B. Cassidy at bill.cassidy@spglobal.com .

Truckload

US truckload carriers expect first rate hike in two years in 2025

<div class="phx-topic abstract-wrapper">Deutsche Bahn’s supervisory board approved DSV’s $16 billion acquisition of rival forwarder DB Schenker despite opposition from union members on the board.</div>

Deutsche Bahn’s supervisory board approved DSV’s $16 billion acquisition of rival forwarder DB Schenker despite opposition from union members on the board.

<div class="phx-topic">Forwarder DSV’s acquisition of rival DB Schenker to create the world’s largest logistics company took a further step forward Wednesday after receiving the green light from both the German federal government and Deutsche Bahn’s (DB’s) supervisory board. The latter approval came despite opposition from the two members of EVG, Germany’s top rail and transport union, that sit on DB’s supervisory board. The deal is still dependent on regulatory approvals, a process that is expected to be completed by the second quarter of 2025, according to a DSV statement Wednesday welcoming the DB board decision. “We are very pleased that Deutsche Bahn has confirmed that their two conditions for approving the sale of Schenker to DSV have been obtained,” DSV CEO Jens Lund said in the statement. “This means that we can continue our efforts to be ready for closing this transformational transaction according to the agreed plans.” The sale has an enterprise value of €14.3 billion ($15.8 billion), but expected interest income due until the deal is closed could boost the value to $16.4 billion, DB said in a separate statement Wednesday. <h3>‘Outvoted by owners’ </h3>The sale was approved by a majority of DB’s 20-member supervisory board, but two — Deputy Board Chairman Martin Burkert and Cosima Ingenschay — voted against the sale. Burkert is chairman of EVG in addition to his role on DB’s supervisory board, while Ingenschay is deputy head of EVG. During the vote meeting, Burkert called the sale “a serious strategic mistake,” adding that EVG “again presented our fundamental arguments against the sale of Schenker and made clear the advantage of retaining Schenker in the rail system.” “Unfortunately, we as the employee side were outvoted by owners and employers,” he added. Burkert said the union is now demanding commitments from DB on how the company will use the proceeds from the DB Schenker sale, including cutting debt and investing in new vehicles and services. DB declined to comment further on the sale and the union’s opposition to the deal when contacted by the Journal of Commerce. Approval of the sale came nearly three weeks after DB’s management board <a href="https://www.joc.com/article/dsv-takeover-signals-end-to-150-years-of-db-schenker-brand-5730873">signed an agreement with DSV</a> to dispose of its logistics subsidiary in preference to a rival bid by private equity outfit CVC Capital Partners. CVC made several attempts to increase its bid after the deadline, but DB dismissed these as “inferior” to DSV’s offer. DB launched its sale process for DB Schenker last December. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

Forwarder DSV’s acquisition of rival DB Schenker to create the world’s largest logistics company took a further step forward Wednesday after receiving the green light from both the German federal government and Deutsche Bahn’s (DB’s) supervisory board. The latter approval came despite opposition from the two members of EVG, Germany’s top rail and transport union, that sit on DB’s supervisory board. The deal is still dependent on regulatory approvals, a process that is expected to be completed by the second quarter of 2025, according to a DSV statement Wednesday welcoming the DB board decision. “We are very pleased that Deutsche Bahn has confirmed that their two conditions for approving the sale of Schenker to DSV have been obtained,” DSV CEO Jens Lund said in the statement. “This means that we can continue our efforts to be ready for closing this transformational transaction according to the agreed plans.” The sale has an enterprise value of €14.3 billion ($15.8 billion), but expected interest income due until the deal is closed could boost the value to $16.4 billion, DB said in a separate statement Wednesday. ‘Outvoted by owners’ The sale was approved by a majority of DB’s 20-member supervisory board, but two — Deputy Board Chairman Martin Burkert and Cosima Ingenschay — voted against the sale. Burkert is chairman of EVG in addition to his role on DB’s supervisory board, while Ingenschay is deputy head of EVG. During the vote meeting, Burkert called the sale “a serious strategic mistake,” adding that EVG “again presented our fundamental arguments against the sale of Schenker and made clear the advantage of retaining Schenker in the rail system.” “Unfortunately, we as the employee side were outvoted by owners and employers,” he added. Burkert said the union is now demanding commitments from DB on how the company will use the proceeds from the DB Schenker sale, including cutting debt and investing in new vehicles and services. DB declined to comment further on the sale and the union’s opposition to the deal when contacted by the Journal of Commerce. Approval of the sale came nearly three weeks after DB’s management board signed an agreement with DSV to dispose of its logistics subsidiary in preference to a rival bid by private equity outfit CVC Capital Partners. CVC made several attempts to increase its bid after the deadline, but DB dismissed these as “inferior” to DSV’s offer. DB launched its sale process for DB Schenker last December. Contact Keith Wallis at keithwallis@hotmail.com .

Air Cargo

Air Cargo Forwarder News

Forwarding

Government, board approvals clear way for DSV-DB Schenker merger

Subscribe today and save 20%
Use code STSW20 at checkout
Valid for first year of subscription

Subscribe Now - Free Trials - Wide Box

SUBSCRIBE AND SAVE

Upgrade to Gold today for just $795
Use code GUW795 at checkout
Valid for first year of subscription

Upgrade Subscription - Wide Box

Save 20% on TPM25

Access Journal of Commerce content for 30 days.

Free Trial - Wide Box

Start a Free Trial Today

Subscribe Now - Anonymous - Wide Box

SUBSCRIBE TODAY

Register today to redeem your Gold subscriber discount!

TPM Discount - Gold

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

SMC3rates_shutterstock_5247046.jpg

Shippers save money, time with automated transportation bidding tools

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

SMC3rates_shutterstock_5247046 (1).jpg

Filling the Supply Chain Education Gap with LTL Education Courses

20% OFF ON TPM25; Register today and redeem your Gold subscriber discount!

TPM Discount - Gold 

20% OFF ON TPM25

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

Subscribe Now - Anonymous - Offer Box

Subscribe Today

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

Free Trial - Offer Box

Free Trial

SUBSCRIBE AND SAVE: Use code STSW20 at checkout and save 20% on any plan


Subscribe Now - Free Trials - Offer Box

SAVE 20% ON TPM25: Upgrade to a Gold subscription today for just $795 using code GUW795 at checkout

Upgrade Subscription - Offer Box

Upgrade Subscription

The premier conference for the global container shipping and supply chain community

TPM Conference - Rectangle Box

Attend TPM25

A premium access outlook critical to shippers and transportation providers

QI Report - Rectangle Box

Quarterly Intelligence

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

Breakbulk Report - Rectangle Box

Breakbulk Quarterly

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

ISI Report - Rectangle Box

Intermodal Savings Index

Customers scoring their intermodal partners to identify the best service providers

Intermodal Service Scorecard - Rectangle Box

Intermodal Service Scorecard

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

Gateway - Rectangle Box

Gateway

<div class="phx-topic abstract-wrapper">The International Longshoremen’s Association (ILA) rejected a last-minute offer from maritime employers that included higher wages and retirement contributions, as the first strike by East and Gulf coast port workers since 1977 got underway. </div>

The International Longshoremen’s Association (ILA) rejected a last-minute offer from maritime employers that included higher wages and retirement contributions, as the first strike by East and Gulf coast port workers since 1977 got underway.

<div class="phx-topic">ELIZABETH, NJ — The head of the International Longshoremen’s Association (ILA) in the early hours of Tuesday pledged he would secure a “great contract” that he would like to complete by the end of the month, just hours after hundreds of union dockworkers at US East and Gulf coast ports went on strike at midnight. “Whether it’s one week, two — I’m hoping by three it’s over, I’m hoping — you are making history here,” ILA President Harold Daggett told the crowd, noting the significance of the union’s first strike since 1977. “We are going to walk away with a great contract.” The ILA rebuffed a last-minute contract extension from maritime employers that aimed to head off the strike. Daggett has said previously the ILA would neither work past the expiration of the current contract nor extend it. The union said in a statement early Tuesday morning the United States Maritime Alliance’s (USMX) latest offer “fell far short of what ILA rank-and-file members are <a href="">demanding in wages</a> and <a href="https://www.joc.com/article/ila-halts-talks-over-new-contract-until-maersk-apm-clarify-port-it-projects-5244243">protections against automation</a>.” The strike, which has forced <a href="https://www.joc.com/article/some-us-ports-extending-gate-hours-ahead-of-strike-deadline-5730261">the closure of all major container terminals from Maine to Texas</a>, has scrambled the expected arrival during October of 62 container ships originally destined for ports along the East and Gulf coasts, according to Sea-web, a sister product of the Journal of Commerce within S&amp;P Global. The total capacity of those vessels is approximately 485,725 TEUs. Ships are already planning to discharge cargo at non-affected ports. Hapag-Lloyd said Monday that vessels in its Caribbean Express Service that would have called the Port of Virginia this week now plan to call Canada’s Port of Saint John. In addition, the carrier’s South America East Coast Service is now preparing to call Mexico’s Port of Altamira instead of the US Gulf Coast ports it normally calls. <h3>Digging in </h3>Speaking outside of APM Terminals in Elizabeth, NJ, where he walked a picket line in 1977 as a longshore worker, Daggett said the contract offers from employers “didn’t work out, so I told them, ‘So long and goodbye.’” Although no new talks are scheduled, ILA leadership is “always willing to sit down when the right number is offered,” he added. Daggett braced union members for the impact of what will be the first strike for the vast majority of them, recounting how the 1977 strike lasted three months and stemmed from the union’s demand for an 80 cent-per-hour raise. “Back then, the companies didn’t make the kind of money they do today,” he said. “They might have made $10 million; now, it’s billions, off our backs.” Daggett also maintained the union’s stance against marine terminal operators implementing any form of automation. He said the rollout of automated straddle carriers at APM Terminals’ Los Angeles facility cost up to 1,000 longshore jobs, vowing that the ILA would seek even stricter contract protections regarding automation than it had previously. “If it was up to them, [maritime employers] would like to see automation up and down in every port, from here to Houston,” Daggett said. “That is never going to happen with me. I’ve got strong language that’s going to go into the new contract.” Daggett said he’s hoping to get those protections against automation — and the economic terms of the contract — in place before a mid-October meeting of the ILA and the International Dockworkers Council (IDC) in Portugal. He said the ILA would join efforts by other overseas dockworker unions to halt further port automation. “I’m going to go to Portugal along with every maritime union and take these companies on over automation,” Daggett said. “If they want to automate a pier in Chile, we’re shutting them down for three weeks around the world.” Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

ELIZABETH, NJ — The head of the International Longshoremen’s Association (ILA) in the early hours of Tuesday pledged he would secure a “great contract” that he would like to complete by the end of the month, just hours after hundreds of union dockworkers at US East and Gulf coast ports went on strike at midnight. “Whether it’s one week, two — I’m hoping by three it’s over, I’m hoping — you are making history here,” ILA President Harold Daggett told the crowd, noting the significance of the union’s first strike since 1977. “We are going to walk away with a great contract.” The ILA rebuffed a last-minute contract extension from maritime employers that aimed to head off the strike. Daggett has said previously the ILA would neither work past the expiration of the current contract nor extend it. The union said in a statement early Tuesday morning the United States Maritime Alliance’s (USMX) latest offer “fell far short of what ILA rank-and-file members are demanding in wages and protections against automation .” The strike, which has forced the closure of all major container terminals from Maine to Texas , has scrambled the expected arrival during October of 62 container ships originally destined for ports along the East and Gulf coasts, according to Sea-web, a sister product of the Journal of Commerce within S&P Global. The total capacity of those vessels is approximately 485,725 TEUs. Ships are already planning to discharge cargo at non-affected ports. Hapag-Lloyd said Monday that vessels in its Caribbean Express Service that would have called the Port of Virginia this week now plan to call Canada’s Port of Saint John. In addition, the carrier’s South America East Coast Service is now preparing to call Mexico’s Port of Altamira instead of the US Gulf Coast ports it normally calls. Digging in Speaking outside of APM Terminals in Elizabeth, NJ, where he walked a picket line in 1977 as a longshore worker, Daggett said the contract offers from employers “didn’t work out, so I told them, ‘So long and goodbye.’” Although no new talks are scheduled, ILA leadership is “always willing to sit down when the right number is offered,” he added. Daggett braced union members for the impact of what will be the first strike for the vast majority of them, recounting how the 1977 strike lasted three months and stemmed from the union’s demand for an 80 cent-per-hour raise. “Back then, the companies didn’t make the kind of money they do today,” he said. “They might have made $10 million; now, it’s billions, off our backs.” Daggett also maintained the union’s stance against marine terminal operators implementing any form of automation. He said the rollout of automated straddle carriers at APM Terminals’ Los Angeles facility cost up to 1,000 longshore jobs, vowing that the ILA would seek even stricter contract protections regarding automation than it had previously. “If it was up to them, [maritime employers] would like to see automation up and down in every port, from here to Houston,” Daggett said. “That is never going to happen with me. I’ve got strong language that’s going to go into the new contract.” Daggett said he’s hoping to get those protections against automation — and the economic terms of the contract — in place before a mid-October meeting of the ILA and the International Dockworkers Council (IDC) in Portugal. He said the ILA would join efforts by other overseas dockworker unions to halt further port automation. “I’m going to go to Portugal along with every maritime union and take these companies on over automation,” Daggett said. “If they want to automate a pier in Chile, we’re shutting them down for three weeks around the world.” Contact Michael Angell at michael.angell@spglobal.com .

ILA’s Daggett promises dockworkers ‘great contract’ as strike begins

<div class="phx-topic abstract-wrapper">Ocean carriers appear to be banking on a short port strike, allowing ships to remain on scheduled calls or sit at anchorage, but those plans could change if East and Gulf ports remain closed through the end of the week. </div>

Ocean carriers appear to be banking on a short port strike, allowing ships to remain on scheduled calls or sit at anchorage, but those plans could change if East and Gulf ports remain closed through the end of the week.

<div class="phx-topic">Container ship anchorages are growing outside of US East and Gulf coast ports on the second day of a dockworker strike, with carriers offering limited options to avoid delays and currently planning to divert only a handful of vessels to alternative ports. As of Wednesday, at least 64 container ships were scheduled to call one of the 15 US ports affected by <a href="https://www.joc.com/article/ilas-daggett-promises-dockworkers-great-contract-as-strike-begins-5739618">striking members of the International Longshoremen’s Association</a> (ILA), according to data from Sea-web, a sister product of the Journal of Commerce within S&amp;P Global. As the largest strike-affected port and first call on most weekly services, half of the ships are destined for the Port of New York and New Jersey, with estimated arrivals until Nov. 1, Sea-web data show. In the first week of October, some 13 ships are scheduled to arrive at the New York-New Jersey port.In addition to those ships, Sea-web data shows another 13 ships are currently at the ports, sitting at anchorage, with nine outside the Port of Savannah alone. The Georgia Ports Authority said in a statement Wednesday that when Savannah reopens, it will have the yard space to deal with the backlog. The vessels are operated by carrier members of the United States Maritime Alliance (USMX), the employer organization that negotiates collectively with the ILA. It does not include smaller carriers that are not affiliated with the USMX, nor vessels that call non-ILA marine terminals. Sea-web data looks at port destinations listed through automatic identification systems with an expected arrival by Nov. 1. Thus far, carriers have made minimal changes to vessel schedules due to the strike. Hapag-Lloyd advised shippers Tuesday that two vessels in its Caribbean Express Service (CES) that would have called the Port of Virginia this month will now call Canada’s Port of Saint John. The carrier’s US Gulf-South America (GS1) service that calls Houston and New Orleans will instead discharge at the Mexican ports of Altamira or Veracruz over the next two weeks. Maersk advised shippers Tuesday that it has “mapped out specific possible vessel-level contingencies that will be actioned depending on the duration of the labor dispute.” Maersk has not outlined specific diversions yet, but one of the vessels in its Asia-US East Coast TP16 service, the 8,540-TEU Seroja Lima, currently adrift outside the New York-New Jersey port, will now head to the Bahamas Port of Freeport, with an expected arrival of Oct. 8, according to the vessel’s latest schedule update from Maersk. CMA CGM declared force majeure at the outset of the strike, which in many bills of lading allows carriers to discharge cargo wherever is most convenient. If the strike continues, carriers will likely have to make new routing decisions by the end of the week, according to Sea-Intelligence Maritime Analysis. The backlog will equate to approximately 400,000 TEUs, or 1.4% of global capacity, the loss of which would “push up freight rates, not just on the trades to the US, but likely across all major deep-sea trades,” Sea-Intelligence CEO Alan Murphy said in a report released Wednesday. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>.</div>

Container ship anchorages are growing outside of US East and Gulf coast ports on the second day of a dockworker strike, with carriers offering limited options to avoid delays and currently planning to divert only a handful of vessels to alternative ports. As of Wednesday, at least 64 container ships were scheduled to call one of the 15 US ports affected by striking members of the International Longshoremen’s Association (ILA), according to data from Sea-web, a sister product of the Journal of Commerce within S&P Global. As the largest strike-affected port and first call on most weekly services, half of the ships are destined for the Port of New York and New Jersey, with estimated arrivals until Nov. 1, Sea-web data show. In the first week of October, some 13 ships are scheduled to arrive at the New York-New Jersey port. In addition to those ships, Sea-web data shows another 13 ships are currently at the ports, sitting at anchorage, with nine outside the Port of Savannah alone. The Georgia Ports Authority said in a statement Wednesday that when Savannah reopens, it will have the yard space to deal with the backlog. The vessels are operated by carrier members of the United States Maritime Alliance (USMX), the employer organization that negotiates collectively with the ILA. It does not include smaller carriers that are not affiliated with the USMX, nor vessels that call non-ILA marine terminals. Sea-web data looks at port destinations listed through automatic identification systems with an expected arrival by Nov. 1. Thus far, carriers have made minimal changes to vessel schedules due to the strike. Hapag-Lloyd advised shippers Tuesday that two vessels in its Caribbean Express Service (CES) that would have called the Port of Virginia this month will now call Canada’s Port of Saint John. The carrier’s US Gulf-South America (GS1) service that calls Houston and New Orleans will instead discharge at the Mexican ports of Altamira or Veracruz over the next two weeks. Maersk advised shippers Tuesday that it has “mapped out specific possible vessel-level contingencies that will be actioned depending on the duration of the labor dispute.” Maersk has not outlined specific diversions yet, but one of the vessels in its Asia-US East Coast TP16 service, the 8,540-TEU Seroja Lima, currently adrift outside the New York-New Jersey port, will now head to the Bahamas Port of Freeport, with an expected arrival of Oct. 8, according to the vessel’s latest schedule update from Maersk. CMA CGM declared force majeure at the outset of the strike, which in many bills of lading allows carriers to discharge cargo wherever is most convenient. If the strike continues, carriers will likely have to make new routing decisions by the end of the week, according to Sea-Intelligence Maritime Analysis. The backlog will equate to approximately 400,000 TEUs, or 1.4% of global capacity, the loss of which would “push up freight rates, not just on the trades to the US, but likely across all major deep-sea trades,” Sea-Intelligence CEO Alan Murphy said in a report released Wednesday. Contact Michael Angell at michael.angell@spglobal.com .

Ships backing up outside of strike-shut US East, Gulf ports

<div class="phx-topic abstract-wrapper">The Biden administration’s message of support for striking longshore workers — and inferring of carrier price gouging — shuts down any hopes for a federal government intervention in the short term, writes Journal of Commerce Executive Editor Mark Szakonyi. </div>

The Biden administration’s message of support for striking longshore workers — and inferring of carrier price gouging — shuts down any hopes for a federal government intervention in the short term, writes Journal of Commerce Executive Editor Mark Szakonyi.

<div class="phx-topic">The Biden administration’s vocal support of longshore labor in contract negotiations on the <a href="https://www.joc.com/article/ilas-daggett-promises-dockworkers-great-contract-as-strike-begins-5739618">first day the US East and Gulf coast strike</a> was reminiscent of its rhetoric against ocean carriers during the height of US port congestion. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5740856_0.1.jpg"></img></div>That Republican presidential nominee Donald Trump also voiced his support for the International Longshoremen’s Association (ILA) on the same day underscores how quickly political winds are turning against ocean carriers again, just as they did during the worst of pandemic-induced US port congestion two years ago The political pressure, however, hasn’t swayed the carrier members of the United States Maritime Alliance (USMX) from resisting the scale of salary increases the International Longshoremen’s Association is seeking. The USMX is also rejecting anything that hampers their ability to operate ports more efficiently through technology. The Tuesday statements from President Joe Biden, Vice President Kamala Harris, Acting Labor Secretary Julie Su and Transportation Secretary Pete Buttigieg slammed the door on any hopes of the administration changing its mind in the short term on its avowal to not stop the strike invoking the Taft-Hartley Act. That doesn’t mean the administration’s calculus won’t change as the strike persists. White House Press Secretary Karine Jean-Pierre added the conditional “at this time” when reemphasizing her boss’ opposition to the executive action. Jean Pierre <a href="https://www.youtube.com/watch?v=SFOkmkd0kjM">ducked a question</a> during a Wednesday press conference on whether the Biden administration was as involved as it had been during the last two rounds of longshore contract negotiations on the US West Coast. Trump on Tuesday said dockworkers “were decimated by this inflation, just like everybody else in our country and beyond,” as <a href="https://www.reuters.com/world/us/us-east-coast-dockworkers-head-toward-strike-after-deal-deadline-passes-2024-10-01/">reported by Reuters</a>. Harris, the Democratic presidential who <a href="https://www.joc.com/article/anxious-white-house-weighing-options-as-ila-contract-deadline-nears-5725622">doesn’t want to risk turning off labor supporters</a> a month from the election, said in a Tuesday statement that after making record-profit, “foreign-owned” container lines need to give ILA a greater share of the windfall. On the first day of the strike, President Biden went further than in past proclamations that he would not intercede in negotiations between the ILA and USMX, warning that his administration would “be monitoring for any price gouging action that benefits foreign ocean carriers, including those on the USMX board.” Su said the employer group has “refused to put an offer on the table that reflects workers’ sacrifice and contributions to their employers’ profits.” In a separate statement, Buttigieg called on ocean carriers to withdraw surcharges. Most container lines are levying congestion surcharges of $1,000 to $3,000 per FEU for cargo destined for US East and Gulf coast ports, but the earliest won’t take effect until Oct. 8. The US Federal Maritime Commission (FMC) hasn’t received any requests from carriers to waive the 30-day notice period for surcharges, unlike in February when it approved emergency surcharges tied to Red Sea disruptions. At the time, some <a href="https://www.joc.com/article/fmc-should-guard-against-carrier-profit-center-from-red-sea-surcharges-agtc-chief-5215146">shippers criticized the agency</a> for waiving the Red Sea surcharges through almost immediately. FMC Chairman Daniel Maffei has advised the commision that he and his fellow four commissioners should be able to review any requests to waive the 30-day notice period, an agency spokesman told Journal of Commerce on Wednesay. <h3>‘Foreign-owned’ carrier deja vu </h3>Biden hasn’t been so publicly aligned against container lines since he accused them of “overcharging American businesses and consumers” and contributing to inflation due to a lack of competition during his State of the Union speech in March 2022. Four months later, the president signed landmark container shipping reform legislation that put greater regulatory scrutiny on ocean carriers. Yet, ocean carriers have plenty of reason to hold the line, even under White House pressure. Operating in one of the costliest western markets, members of the USMX have been offered a 50% pay increase over a six-year contract — an increase from an earlier offer of a 32% wage hike. The ILA is seeking a 77% pay increase over the same period. Ocean carriers believe the International Longshore and Warehouse Union will seek similar levels of pay on the US West Coast to whatever the ILA receives. Container lines also want clearer pathway for marine terminals along the East and Gulf coasts to introduce technology that would improve productivity, or at the very least “retain the current language around automation and semi-automation,” the USMX said Monday. No US ports are within the world’s most 50 efficient, as measured by the S&amp;P Port Performance Program. That brings higher operating costs compounded by the <a href="https://www.joc.com/article/lack-of-terminal-handling-charges-emerges-as-a-factor-in-ila-talks-5733652">quirk of carriers being unable to impose terminal handling charges</a>, and boosting terminal capacity by expanding acreage isn’t feasible for many ports near high-cost urban centers. “If it was up to them, [maritime employers] would like to see automation up and down in every port, from here to Houston,” ILA president Harold Daggett said in the early hours of the strike in Elizabeth, NJ. “That is never going to happen with me. I’ve got strong language that’s going to go into the new contract.” Similar to Biden, Daggett has sought to portray the container lines as greedy, claiming Monday that ocean rates on an unspecified lane had swung to $30,000 per FEU from just $6,000 per FEU several weeks ago. None of the major container indices, including Drewry and the Shanghai Containerized Freight Index, have registered such highs or price swings on US container trades. Container lines are seeking to recoup the higher costs of not having a functioning network, with at least 60 ships outside US East and Gulf coast ports as of Wednesday. They can take small solace that it’s the FMC, not the White House, that can determine whether surcharges tied to the strike are unreasonable under US shipping law. For the FMC, which doesn’t have the authority to regulate pricing, it will be easier to make calls on complaints of unreasonable detention and demurrage. The incentive principle won’t put consignees or shippers on the hook if there’s no way to pick up or return equipment to a closed terminal, the FMC reminded the industry in a Sept. 23 notice. Even so, the Biden administration’s warnings may stave off some of the carriers’ more aggressive surcharges. At the very least, it’s another reminder of the high cost of operating in the world’s richest country with few allies in the White House. Contact Mark Szakonyi at <a href="mark.szakonyi@spglobal.com">mark.szakonyi@spglobal.com</a>. </div>

The Biden administration’s vocal support of longshore labor in contract negotiations on the first day the US East and Gulf coast strike was reminiscent of its rhetoric against ocean carriers during the height of US port congestion. That Republican presidential nominee Donald Trump also voiced his support for the International Longshoremen’s Association (ILA) on the same day underscores how quickly political winds are turning against ocean carriers again, just as they did during the worst of pandemic-induced US port congestion two years ago The political pressure, however, hasn’t swayed the carrier members of the United States Maritime Alliance (USMX) from resisting the scale of salary increases the International Longshoremen’s Association is seeking. The USMX is also rejecting anything that hampers their ability to operate ports more efficiently through technology. The Tuesday statements from President Joe Biden, Vice President Kamala Harris, Acting Labor Secretary Julie Su and Transportation Secretary Pete Buttigieg slammed the door on any hopes of the administration changing its mind in the short term on its avowal to not stop the strike invoking the Taft-Hartley Act. That doesn’t mean the administration’s calculus won’t change as the strike persists. White House Press Secretary Karine Jean-Pierre added the conditional “at this time” when reemphasizing her boss’ opposition to the executive action. Jean Pierre ducked a question during a Wednesday press conference on whether the Biden administration was as involved as it had been during the last two rounds of longshore contract negotiations on the US West Coast. Trump on Tuesday said dockworkers “were decimated by this inflation, just like everybody else in our country and beyond,” as reported by Reuters . Harris, the Democratic presidential who doesn’t want to risk turning off labor supporters a month from the election, said in a Tuesday statement that after making record-profit, “foreign-owned” container lines need to give ILA a greater share of the windfall. On the first day of the strike, President Biden went further than in past proclamations that he would not intercede in negotiations between the ILA and USMX, warning that his administration would “be monitoring for any price gouging action that benefits foreign ocean carriers, including those on the USMX board.” Su said the employer group has “refused to put an offer on the table that reflects workers’ sacrifice and contributions to their employers’ profits.” In a separate statement, Buttigieg called on ocean carriers to withdraw surcharges. Most container lines are levying congestion surcharges of $1,000 to $3,000 per FEU for cargo destined for US East and Gulf coast ports, but the earliest won’t take effect until Oct. 8. The US Federal Maritime Commission (FMC) hasn’t received any requests from carriers to waive the 30-day notice period for surcharges, unlike in February when it approved emergency surcharges tied to Red Sea disruptions. At the time, some shippers criticized the agency for waiving the Red Sea surcharges through almost immediately. FMC Chairman Daniel Maffei has advised the commision that he and his fellow four commissioners should be able to review any requests to waive the 30-day notice period, an agency spokesman told Journal of Commerce on Wednesay. ‘Foreign-owned’ carrier deja vu Biden hasn’t been so publicly aligned against container lines since he accused them of “overcharging American businesses and consumers” and contributing to inflation due to a lack of competition during his State of the Union speech in March 2022. Four months later, the president signed landmark container shipping reform legislation that put greater regulatory scrutiny on ocean carriers. Yet, ocean carriers have plenty of reason to hold the line, even under White House pressure. Operating in one of the costliest western markets, members of the USMX have been offered a 50% pay increase over a six-year contract — an increase from an earlier offer of a 32% wage hike. The ILA is seeking a 77% pay increase over the same period. Ocean carriers believe the International Longshore and Warehouse Union will seek similar levels of pay on the US West Coast to whatever the ILA receives. Container lines also want clearer pathway for marine terminals along the East and Gulf coasts to introduce technology that would improve productivity, or at the very least “retain the current language around automation and semi-automation,” the USMX said Monday. No US ports are within the world’s most 50 efficient, as measured by the S&P Port Performance Program. That brings higher operating costs compounded by the quirk of carriers being unable to impose terminal handling charges , and boosting terminal capacity by expanding acreage isn’t feasible for many ports near high-cost urban centers. “If it was up to them, [maritime employers] would like to see automation up and down in every port, from here to Houston,” ILA president Harold Daggett said in the early hours of the strike in Elizabeth, NJ. “That is never going to happen with me. I’ve got strong language that’s going to go into the new contract.” Similar to Biden, Daggett has sought to portray the container lines as greedy, claiming Monday that ocean rates on an unspecified lane had swung to $30,000 per FEU from just $6,000 per FEU several weeks ago. None of the major container indices, including Drewry and the Shanghai Containerized Freight Index, have registered such highs or price swings on US container trades. Container lines are seeking to recoup the higher costs of not having a functioning network, with at least 60 ships outside US East and Gulf coast ports as of Wednesday. They can take small solace that it’s the FMC, not the White House, that can determine whether surcharges tied to the strike are unreasonable under US shipping law. For the FMC, which doesn’t have the authority to regulate pricing, it will be easier to make calls on complaints of unreasonable detention and demurrage. The incentive principle won’t put consignees or shippers on the hook if there’s no way to pick up or return equipment to a closed terminal, the FMC reminded the industry in a Sept. 23 notice. Even so, the Biden administration’s warnings may stave off some of the carriers’ more aggressive surcharges. At the very least, it’s another reminder of the high cost of operating in the world’s richest country with few allies in the White House. Contact Mark Szakonyi at mark.szakonyi@spglobal.com .

Strike bullet dodged for now, but raises questions of market resilience: analyst

Featured Gateway Chart

Essential Reads

ILA, USMX agree on new wage offer and contract extension that reopens ports

US truckload carriers expect first rate hike in two years in 2025

Government, board approvals clear way for DSV-DB Schenker merger

Recent Commentary

EU cannot afford to dither on heavy transport reform: ESTA chief

Rails have limited recourse to PNW import surge: analyst

Top 5 Most Read Stories