<div class="phx-topic abstract-wrapper">An alliance of global shippers is calling on the IMO to use the April gathering of its Marine Environment Protection Committee to meet the “urgency of the moment” when it comes to lowering emissions from shipping.</div>

An alliance of global shippers is calling on the IMO to use the April gathering of its Marine Environment Protection Committee to meet the “urgency of the moment” when it comes to lowering emissions from shipping.

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<div class="phx-topic">An alliance of global cargo owners is urging the International Maritime Organization (IMO) to use its upcoming Marine Environment Protection Committee (MEPC) meeting to approve “a clear, comprehensive, globally consistent set of measures” that will accelerate the transition to clean energy. The 176 member states of the IMO will gather <a href="https://www.joc.com/article/us-in-holding-pattern-over-imo-membership-dnv-5967501">for the 83rd MEPC meeting</a> April 7-11 in London, where topping the agenda will be the design of a greenhouse gas (GHG) fuel intensity regulation and an economic measure for taxing carbon emissions. It is critical that the meeting ends with consensus over both “mid-term measures,” said Ingrid Irigoyen, president and CEO of the Zero Emission Maritime Buyers Alliance (ZEMBA). “Given shipping’s essential role in global trade and private sector actors ready to invest in innovative fuels and technologies under the right conditions, it is critical the IMO succeeds in delivering much-needed regulatory clarity and incentivizes the most scalable, long-term solutions,” Irigoyen wrote in an open letter to IMO Secretary-General Arsenio Dominguez. She pointed out that the 40 global freight buyers within ZEMBA who rely on maritime shipping embarked on their own first-mover initiative in March 2023 to accelerate the market for low- and zero-emission fuels and urged the IMO to match the urgency shown by the private sector shippers. <h3>‘Urgency of the moment’ </h3>The inaugural tender from ZEMBA, <a href="https://www.joc.com/article/hapag-lloyd-wins-asia-europe-green-shipping-tender-to-launch-next-year-5240949">won by Hapag-Lloyd</a>, is expected to prevent at least 82,000 metric tonnes of carbon dioxide equivalent (CO2e) emissions in 2025 and 2026 through deployment of waste-based, third-party certified maritime biomethane sourced from landfill gas and livestock manure. ZEMBA’s second tender, launched in February, is far more ambitious and seeks commitments from ocean carriers to power at least 80 billion tonne-nautical miles of ocean shipping using e-fuels. “Our private sector partners are moving quickly to match the urgency of the moment, and we encourage the IMO to act with deliberate speed and ambition as well,” Irigoyen wrote in the open letter. “As global employers and customers of the shipping industry, freight buyers have a significant stake in the sector’s energy transition and the decisions that the IMO will make this year,” she added. The IMO in 2023 revised its roadmap for the industry’s transition that set an end goal of net-zero greenhouse gas (GHG) emissions by or around 2050 and includes key checkpoints for the journey: at least a 20% GHG emissions reduction, and striving for 30%, by 2030; and at least a 70% GHG emissions reduction, striving for 80%, by 2040. The checkpoints are compared to a 2008 GHG emissions baseline. Drawing on the experience gained from ZEMBA, Irigoyen said it was critical that consensus was received over aligning the mid-term measures with the trajectories laid out in the GHG strategy. She said the fuel standard must apply to a full “well-to-wake" lifecycle, and the mid-term measures must be designed with adequate financial incentives to foster a viable market for long-term scalable fuels and technologies essential to shipping’s transition. “Miscalibration of the financial rewards for fuels and technologies risks locking the sector into unsustainable short-term options, undermining market confidence and increasing the cost of the transition overall,” she wrote. Irigoyen also urged the IMO meeting to develop a “transparent, robust fuel certification framework” with the IMO data collection system updated to support transparent and effective reporting under the mid-term measures. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com.</a></div>

An alliance of global cargo owners is urging the International Maritime Organization (IMO) to use its upcoming Marine Environment Protection Committee (MEPC) meeting to approve “a clear, comprehensive, globally consistent set of measures” that will accelerate the transition to clean energy. The 176 member states of the IMO will gather for the 83rd MEPC meeting April 7-11 in London, where topping the agenda will be the design of a greenhouse gas (GHG) fuel intensity regulation and an economic measure for taxing carbon emissions. It is critical that the meeting ends with consensus over both “mid-term measures,” said Ingrid Irigoyen, president and CEO of the Zero Emission Maritime Buyers Alliance (ZEMBA). “Given shipping’s essential role in global trade and private sector actors ready to invest in innovative fuels and technologies under the right conditions, it is critical the IMO succeeds in delivering much-needed regulatory clarity and incentivizes the most scalable, long-term solutions,” Irigoyen wrote in an open letter to IMO Secretary-General Arsenio Dominguez. She pointed out that the 40 global freight buyers within ZEMBA who rely on maritime shipping embarked on their own first-mover initiative in March 2023 to accelerate the market for low- and zero-emission fuels and urged the IMO to match the urgency shown by the private sector shippers. ‘Urgency of the moment’ The inaugural tender from ZEMBA, won by Hapag-Lloyd , is expected to prevent at least 82,000 metric tonnes of carbon dioxide equivalent (CO2e) emissions in 2025 and 2026 through deployment of waste-based, third-party certified maritime biomethane sourced from landfill gas and livestock manure. ZEMBA’s second tender, launched in February, is far more ambitious and seeks commitments from ocean carriers to power at least 80 billion tonne-nautical miles of ocean shipping using e-fuels. “Our private sector partners are moving quickly to match the urgency of the moment, and we encourage the IMO to act with deliberate speed and ambition as well,” Irigoyen wrote in the open letter. “As global employers and customers of the shipping industry, freight buyers have a significant stake in the sector’s energy transition and the decisions that the IMO will make this year,” she added. The IMO in 2023 revised its roadmap for the industry’s transition that set an end goal of net-zero greenhouse gas (GHG) emissions by or around 2050 and includes key checkpoints for the journey: at least a 20% GHG emissions reduction, and striving for 30%, by 2030; and at least a 70% GHG emissions reduction, striving for 80%, by 2040. The checkpoints are compared to a 2008 GHG emissions baseline. Drawing on the experience gained from ZEMBA, Irigoyen said it was critical that consensus was received over aligning the mid-term measures with the trajectories laid out in the GHG strategy. She said the fuel standard must apply to a full “well-to-wake" lifecycle, and the mid-term measures must be designed with adequate financial incentives to foster a viable market for long-term scalable fuels and technologies essential to shipping’s transition. “Miscalibration of the financial rewards for fuels and technologies risks locking the sector into unsustainable short-term options, undermining market confidence and increasing the cost of the transition overall,” she wrote. Irigoyen also urged the IMO meeting to develop a “transparent, robust fuel certification framework” with the IMO data collection system updated to support transparent and effective reporting under the mid-term measures. Contact Greg Knowler at  greg.knowler@spglobal.com.

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Container Shipping News

Cargo owners push IMO on measures to accelerate energy transition

<div class="phx-topic abstract-wrapper">Capacity improvements at the New Jersey facility will include optimization of the terminal layout, rebuilding berths at a higher level to allow for anticipated increases in the sea level and replacing existing cargo-handling equipment with zero-emission, electric machines.</div>

Capacity improvements at the New Jersey facility will include optimization of the terminal layout, rebuilding berths at a higher level to allow for anticipated increases in the sea level and replacing existing cargo-handling equipment with zero-emission, electric machines.

<div class="phx-topic">APM Terminals will invest more than $500 million to improve cargo handling capacity at its 350-acre Elizabeth terminal after it agreed to a 33-year lease extension with the Port Authority of New York and New Jersey, the two parties announced Monday. The current lease, which was due to expire in December 2029, will be extended to December 2062, according to the new agreement. The deal will be voted on by the port authority’s board of commissioners on March 27. APM Terminals said the capacity improvements will include optimization of the terminal layout, rebuilding the berths at a higher level to allow for anticipated increases in sea level and replacing existing cargo-handling equipment with zero-emission, electric machines. Elizabeth has a current terminal capacity of 2.3 million TEUs over 6,000 feet of wharfage. Specifics of the planned capacity growth at the New Jersey facility were not disclosed. Work to optimize the terminal layout and invest in the electrification of equipment will begin in the coming weeks as soon as the new lease is signed, an APM Terminals spokesperson told the Journal of Commerce. “The optimization of the layout and electrification will take place over the next several years as the terminal is modernized,” the spokesperson said. “Optimization entails improving the densification of the terminal to be able to efficiently handle higher cargo volumes within the same footprint.” The construction work at the terminal will result in an increase in jobs at the facility. “The modernization improvements will result in a significant capacity increase and our experience shows that the biggest driver of longshore employment is increases in volume growth,” the APM spokesperson said. “As a result, we expect our workforce on the terminal to expand as our volumes increase due to these investments.” The Elizabeth terminal handles more than 25% of the annual container throughput at the port’s terminals, which saw combined volumes rise 11.5% last year to 8.7 million TEUs. The Port Authority said the investment supports its 2050 port master plan, which anticipates cargo volumes doubling or tripling by mid-century. “This lease extension secures transformative infrastructure and capacity enhancements at the second-largest container terminal in the East Coast’s busiest port,” Port Authority Executive Director Rick Cotton said in a statement. “These commitments will enable the Port of New York and New Jersey to move more goods, create more jobs and further cement its role as an essential driver of our region’s economy and our nation’s supply chain.” <h3>Fixed berthing windows </h3>The APM Terminals spokesperson said the new Gemini Cooperation network of Maersk and Hapag-Lloyd is expected to slightly increase cargo volumes at the Elizabeth terminal when fully implemented. APM is owned by A.P. Moller–Maersk. APM Terminals is also introducing fixed berthing windows at dedicated berths for Gemini vessels and those of other carriers. “Keeping all services at dedicated and separate berths consistently will isolate port delays,” the spokesperson said, adding that if a vessel arrives late due to bad weather it will only affect other vessels calling at that specific berth. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>.</div>

APM Terminals will invest more than $500 million to improve cargo handling capacity at its 350-acre Elizabeth terminal after it agreed to a 33-year lease extension with the Port Authority of New York and New Jersey, the two parties announced Monday. The current lease, which was due to expire in December 2029, will be extended to December 2062, according to the new agreement. The deal will be voted on by the port authority’s board of commissioners on March 27. APM Terminals said the capacity improvements will include optimization of the terminal layout, rebuilding the berths at a higher level to allow for anticipated increases in sea level and replacing existing cargo-handling equipment with zero-emission, electric machines. Elizabeth has a current terminal capacity of 2.3 million TEUs over 6,000 feet of wharfage. Specifics of the planned capacity growth at the New Jersey facility were not disclosed. Work to optimize the terminal layout and invest in the electrification of equipment will begin in the coming weeks as soon as the new lease is signed, an APM Terminals spokesperson told the Journal of Commerce. “The optimization of the layout and electrification will take place over the next several years as the terminal is modernized,” the spokesperson said. “Optimization entails improving the densification of the terminal to be able to efficiently handle higher cargo volumes within the same footprint.” The construction work at the terminal will result in an increase in jobs at the facility. “The modernization improvements will result in a significant capacity increase and our experience shows that the biggest driver of longshore employment is increases in volume growth,” the APM spokesperson said. “As a result, we expect our workforce on the terminal to expand as our volumes increase due to these investments.” The Elizabeth terminal handles more than 25% of the annual container throughput at the port’s terminals, which saw combined volumes rise 11.5% last year to 8.7 million TEUs. The Port Authority said the investment supports its 2050 port master plan, which anticipates cargo volumes doubling or tripling by mid-century. “This lease extension secures transformative infrastructure and capacity enhancements at the second-largest container terminal in the East Coast’s busiest port,” Port Authority Executive Director Rick Cotton said in a statement. “These commitments will enable the Port of New York and New Jersey to move more goods, create more jobs and further cement its role as an essential driver of our region’s economy and our nation’s supply chain.” Fixed berthing windows The APM Terminals spokesperson said the new Gemini Cooperation network of Maersk and Hapag-Lloyd is expected to slightly increase cargo volumes at the Elizabeth terminal when fully implemented. APM is owned by A.P. Moller–Maersk. APM Terminals is also introducing fixed berthing windows at dedicated berths for Gemini vessels and those of other carriers. “Keeping all services at dedicated and separate berths consistently will isolate port delays,” the spokesperson said, adding that if a vessel arrives late due to bad weather it will only affect other vessels calling at that specific berth. Contact Keith Wallis at keithwallis@hotmail.com .

Port News

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Marine terminals

Maritime

APM to spend $500 million to enhance cargo handling at Elizabeth terminal

<div class="phx-topic abstract-wrapper">The top 10 carriers for imports collectively hauled 2.43 million TEUs into the Gulf Coast last year and had a market share of almost 94%, according to the latest Journal of Commerce rankings. </div>

The top 10 carriers for imports collectively hauled 2.43 million TEUs into the Gulf Coast last year and had a market share of almost 94%, according to the latest Journal of Commerce rankings.

<div class="phx-topic">Maersk held its top position in the Journal of Commerce’s rankings of the top 10 carriers importing into US Gulf ports in 2024 — but the carrier was bumped by Mediterranean Shipping Co. from the top slot for exports. Maersk imported 513,016 TEUs to Gulf Coast ports last year, down 0.5% from 2023. Similarly, its import market share fell slightly to 19.1% from 20.6%. MSC maintained the second spot in the Gulf Coast rankings, hauling 476,387 TEUs, up 8.3% from 2023. The carrier claimed 17.8% of the import market share, up slightly from 17.6% in 2023. CMA CGM was in third with 407,626 TEUs and a 15.2% market share for Gulf imports — up from 13.9% in 2023. The carrier also increased its Gulf Coast import volumes by 17.2%. Meanwhile, the combined Cosco Shipping/OOCL was good for fourth with 270,340 TEUs imported to the Gulf Coast, up 11.7% from the year prior. Its share of the regional import market climbed to 10.1% from 9.7%. The fifth slot for imports was maintained by Hapag-Lloyd, which held an 8.8% market share with 234,939 TEUs imported, an almost 9% jump from 2023. In sixth, Ocean Network Express (ONE) imported 149,397 TEUs to the Gulf Coast in 2024, up more than 10% over the year. It held 5.6% of the market share, up from 5.4% in 2023. Carriers in spots seven and eight swapped places in 2024, with Evergreen Marine edging out Zim Integrated Shipping Services with 4.8% of the market share and 129,105 TEUs imported. Zim brought in 123,000 TEUs, good for a 4.6% market share. Dole/Tropical Fruit Americas held 2.9% of the market share in 2024, down slightly from 2023, and moved 78,863 TEUs. Del Monte’s market share was essentially unchanged at about 2.1% with 55,046 TEUs brought into the Gulf Coast. Overall, the top five carriers bringing in US Gulf Coast imports hauled 1.90 million TEUs in 2024, accounting for 71% of the total market share. The top 10 carriers collectively hauled 2.43 million TEUs into the Gulf Coast, up 7.4% from 2023, and had a market share of 93.6%. <h3>MSC leads in US Gulf exports </h3>MSC held 24.1% of the export market share in 2024, up from 21.8% in 2023. The carrier moved 459,789 TEUs from the Gulf Coast, up 14.5% over the year. Maersk, bumped to second place for exports, held 22.7% of the market share — unchanged from 2023 — with 433,483 TEUs. Its volumes increased by 5% from 2023. Spots three through 10 on the list were unchanged compared with 2023. In total, exports from the Gulf Coast reached 1.91 million TEUs in 2024, up 3.8% from 2023. Of that total, the top 10 carriers hauled 1.81 million TEUs — up more than 5% from 2023. <h3>Houston top Gulf port </h3>Meanwhile, <a href="https://www.joc.com/article/us-gulf-coast-ports-expanding-to-handle-continued-volume-growth-5911512">Houston’s chokehold on Gulf Coast imports continued</a> in 2024, bringing in 1.89 million TEUs, an 8.4% year-over-year increase and good for more than 70% of the Gulf import market share in 2024. The Port of Mobile maintained its position at number two for Gulf Coast imports with just under 11% of the market share at 291,121 TEUs, up 2% from 2023. Tampa Bay climbed into the top three for the first time with 4.8% of Gulf Coast imports, at 129,571 TEUs, besting New Orleans’ 4.4% market share and 119,348 TEUs. Tampa Bay demonstrated the most year-over-year import growth for Gulf Coast imports, with volumes climbing 15.6%. Rankings on the export side stayed largely unchanged compared with 2023. Houston continued to dominate Gulf Coast exports in 2024 with nearly 75% of the market share. It moved out 1.4 million TEUs during the year, up 6.1% from 2023. New Orleans and Mobile continued to hold second and third place, respectively, with 237,536 TEUs and 159,148 TEUs. Each had year-over-year changes of less than 2.5%. Overall, Gulf Coast ports imported 2.68 million TEUs, up 7.1% from 2023. Exports reached 1.91 million TEUs, gaining 3.8% over the year. Contact Laura Robb at <a href="mailto:Laura.Robb@spglobal.com">laura.robb@spglobal.com</a>.  </div>

Maersk held its top position in the Journal of Commerce’s rankings of the top 10 carriers importing into US Gulf ports in 2024 — but the carrier was bumped by Mediterranean Shipping Co. from the top slot for exports. Maersk imported 513,016 TEUs to Gulf Coast ports last year, down 0.5% from 2023. Similarly, its import market share fell slightly to 19.1% from 20.6%. MSC maintained the second spot in the Gulf Coast rankings, hauling 476,387 TEUs, up 8.3% from 2023. The carrier claimed 17.8% of the import market share, up slightly from 17.6% in 2023. CMA CGM was in third with 407,626 TEUs and a 15.2% market share for Gulf imports — up from 13.9% in 2023. The carrier also increased its Gulf Coast import volumes by 17.2%. Meanwhile, the combined Cosco Shipping/OOCL was good for fourth with 270,340 TEUs imported to the Gulf Coast, up 11.7% from the year prior. Its share of the regional import market climbed to 10.1% from 9.7%. The fifth slot for imports was maintained by Hapag-Lloyd, which held an 8.8% market share with 234,939 TEUs imported, an almost 9% jump from 2023. In sixth, Ocean Network Express (ONE) imported 149,397 TEUs to the Gulf Coast in 2024, up more than 10% over the year. It held 5.6% of the market share, up from 5.4% in 2023. Carriers in spots seven and eight swapped places in 2024, with Evergreen Marine edging out Zim Integrated Shipping Services with 4.8% of the market share and 129,105 TEUs imported. Zim brought in 123,000 TEUs, good for a 4.6% market share. Dole/Tropical Fruit Americas held 2.9% of the market share in 2024, down slightly from 2023, and moved 78,863 TEUs. Del Monte’s market share was essentially unchanged at about 2.1% with 55,046 TEUs brought into the Gulf Coast. Overall, the top five carriers bringing in US Gulf Coast imports hauled 1.90 million TEUs in 2024, accounting for 71% of the total market share. The top 10 carriers collectively hauled 2.43 million TEUs into the Gulf Coast, up 7.4% from 2023, and had a market share of 93.6%. MSC leads in US Gulf exports MSC held 24.1% of the export market share in 2024, up from 21.8% in 2023. The carrier moved 459,789 TEUs from the Gulf Coast, up 14.5% over the year. Maersk, bumped to second place for exports, held 22.7% of the market share — unchanged from 2023 — with 433,483 TEUs. Its volumes increased by 5% from 2023. Spots three through 10 on the list were unchanged compared with 2023. In total, exports from the Gulf Coast reached 1.91 million TEUs in 2024, up 3.8% from 2023. Of that total, the top 10 carriers hauled 1.81 million TEUs — up more than 5% from 2023. Houston top Gulf port Meanwhile, Houston’s chokehold on Gulf Coast imports continued in 2024, bringing in 1.89 million TEUs, an 8.4% year-over-year increase and good for more than 70% of the Gulf import market share in 2024. The Port of Mobile maintained its position at number two for Gulf Coast imports with just under 11% of the market share at 291,121 TEUs, up 2% from 2023. Tampa Bay climbed into the top three for the first time with 4.8% of Gulf Coast imports, at 129,571 TEUs, besting New Orleans’ 4.4% market share and 119,348 TEUs. Tampa Bay demonstrated the most year-over-year import growth for Gulf Coast imports, with volumes climbing 15.6%. Rankings on the export side stayed largely unchanged compared with 2023. Houston continued to dominate Gulf Coast exports in 2024 with nearly 75% of the market share. It moved out 1.4 million TEUs during the year, up 6.1% from 2023. New Orleans and Mobile continued to hold second and third place, respectively, with 237,536 TEUs and 159,148 TEUs. Each had year-over-year changes of less than 2.5%. Overall, Gulf Coast ports imported 2.68 million TEUs, up 7.1% from 2023. Exports reached 1.91 million TEUs, gaining 3.8% over the year. Contact Laura Robb at laura.robb@spglobal.com . 

Trans-Atlantic

Trans-Pacific

Maersk holds top spot for US Gulf import carriers in 2024; MSC leads for exports

<div class="phx-topic abstract-wrapper">While there is no strong demand trigger for LTL freight on the horizon, providers continue to add terminals and lanes to growing networks. </div>

While there is no strong demand trigger for LTL freight on the horizon, providers continue to add terminals and lanes to growing networks.

<div class="phx-topic">US freight demand is declining, but less-than-truckload (LTL) carriers keep building, adding terminals and lanes at a time when they might be expected to rein in expansion plans. Instead of hedging against uncertainty, LTL trucking companies say they are positioning themselves for the upswing in freight demand they hope will come sometime this year. “For the first time in decades, nobody is seeing the traditional March peak for LTL,” Chris Jamroz, CEO of Roadrunner, told the Journal of Commerce. “It used to be that anybody who had a pulse could deliver a great result in LTL in March.” Not this year. Four of the top 10 publicly owned LTL companies reported declines in shipments and tonnage in January and February, with only one, Saia, reporting gains, including a 5.5% increase in shipments — almost certainly market share gains from competitors. Shipments at FedEx Freight, the largest US LTL provider, fell 4.7% year over year in the quarter that ended Feb. 28. Shipments were down 5.9% from a year ago at Old Dominion Freight Line (ODFL) in January and February and were 6.2% lower at XPO in February. Shipments per day were down 1% in January and February at ABF Freight System, but the ArcBest subsidiary’s tonnage slipped 6%, according to its mid-quarter report. ABF in February began hauling more heavy-weight truckload-rated shipments to bolster its volumes.The Cass Freight Shipments Index, a broad measure of freight volume that blends LTL, truckload and rail shipments, was down 5.5% year over year in February and 9.5% from two years ago. The annualized decline was 8.2% in January. Although data for early March isn’t available yet, LTL executives and shippers point to little change in freight demand. LTL executives who spoke with the Journal of Commerce but did not want to be identified say freight volumes were down by low single-digit percentages from a year ago. Those executives are still optimistic, though, partly because they are winning contractual rate hikes, as they have been since <a href="https://www.joc.com/article/us-ltl-sector-growth-efficiencies-still-fueled-by-loss-of-yellow-5715785">bankrupt LTL provider Yellow collapsed</a> in 2023. The US long-haul LTL producer price index (PPI) rose 6.3% from a year ago in January and 6.1% in February. The measure of all-inclusive LTL selling prices is now at its highest point ever, having recovered from a 12% slide between June 2022 and April 2023. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="eea5e7a8-7e1e-4d7c-9068-ac1fc2db0a5e"></dynamic-object></div>The LTL PPI is now 12.3% higher than it was when Yellow shut down in July 2023. That makes it easier for LTL carriers to begin building toward a demand recovery. “We still see a soft domestic economy, but it feels like it’s improving,” Adam Satterfield, CFO of Old Dominion Freight Line, told the Journal of Commerce. “Sequentially, we saw shipments and tonnage improve more than average from January to February.” <h3>Larger, denser LTL networks</h3>ODFL spent $664 million over the past two years on its service center network — without buying terminals from Yellow. “We continue to add capacity,” said Satterfield. “Capacity is an important part of the equation in the first year of an economic inflection.” After two slow years, ODFL has “more excess capacity than we’ve ever had,” at about 30%, Satterfield said. “But we still have a robust capex [capital expenditure] plan,” he added. “Investing in new service centers is a key part of our strategy, and we want to stay ahead of the curve.” ODFL opened four facilities in 2024 and has several service centers under construction that can be opened when the market heats up, he said. Other carriers, including regional LTL providers Dayton Freight Lines, A. Duie Pyle and Averitt <a href="https://www.joc.com/article/ltl-carriers-expanding-networks-to-prepare-for-long-term-growth-5915148">are opening or expanding service centers</a> to gain greater freight density and expand next-day and same-day service. Yellow continues to sell the last of its terminals. There is still less LTL capacity available than there was before Yellow’s exit, Satterfield said. That is helping to keep LTL pricing elevated. Roadrunner, which is leasing a former Yellow terminal in Atlanta, one of its network hubs, last week expanded by adding 278 lanes, its largest expansion since its current restructuring began in 2021. One-third of those 278 new lanes are more than 1,000 miles long, originating at the company’s hubs in Atlanta, Detroit, Nashville, Cleveland and Grand Rapids, Michigan. The new lanes aren’t a reaction to rising demand, however; they’re all about prepositioning for coming demand. LTL carriers are also prepping for the eventual spinoff of FedEx Freight as an independent carrier in 2026 and a possible LTL play by Amazon. “We’re at the bottom of the trough, but we will go up, and we want to be positioned to respond to shippers very fast,” Jamroz said. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>. </div>

US freight demand is declining, but less-than-truckload (LTL) carriers keep building, adding terminals and lanes at a time when they might be expected to rein in expansion plans. Instead of hedging against uncertainty, LTL trucking companies say they are positioning themselves for the upswing in freight demand they hope will come sometime this year. “For the first time in decades, nobody is seeing the traditional March peak for LTL,” Chris Jamroz, CEO of Roadrunner, told the Journal of Commerce. “It used to be that anybody who had a pulse could deliver a great result in LTL in March.” Not this year. Four of the top 10 publicly owned LTL companies reported declines in shipments and tonnage in January and February, with only one, Saia, reporting gains, including a 5.5% increase in shipments — almost certainly market share gains from competitors. Shipments at FedEx Freight, the largest US LTL provider, fell 4.7% year over year in the quarter that ended Feb. 28. Shipments were down 5.9% from a year ago at Old Dominion Freight Line (ODFL) in January and February and were 6.2% lower at XPO in February. Shipments per day were down 1% in January and February at ABF Freight System, but the ArcBest subsidiary’s tonnage slipped 6%, according to its mid-quarter report. ABF in February began hauling more heavy-weight truckload-rated shipments to bolster its volumes. The Cass Freight Shipments Index, a broad measure of freight volume that blends LTL, truckload and rail shipments, was down 5.5% year over year in February and 9.5% from two years ago. The annualized decline was 8.2% in January. Although data for early March isn’t available yet, LTL executives and shippers point to little change in freight demand. LTL executives who spoke with the Journal of Commerce but did not want to be identified say freight volumes were down by low single-digit percentages from a year ago. Those executives are still optimistic, though, partly because they are winning contractual rate hikes, as they have been since bankrupt LTL provider Yellow collapsed in 2023. The US long-haul LTL producer price index (PPI) rose 6.3% from a year ago in January and 6.1% in February. The measure of all-inclusive LTL selling prices is now at its highest point ever, having recovered from a 12% slide between June 2022 and April 2023. The LTL PPI is now 12.3% higher than it was when Yellow shut down in July 2023. That makes it easier for LTL carriers to begin building toward a demand recovery. “We still see a soft domestic economy, but it feels like it’s improving,” Adam Satterfield, CFO of Old Dominion Freight Line, told the Journal of Commerce. “Sequentially, we saw shipments and tonnage improve more than average from January to February.” Larger, denser LTL networks ODFL spent $664 million over the past two years on its service center network — without buying terminals from Yellow. “We continue to add capacity,” said Satterfield. “Capacity is an important part of the equation in the first year of an economic inflection.” After two slow years, ODFL has “more excess capacity than we’ve ever had,” at about 30%, Satterfield said. “But we still have a robust capex [capital expenditure] plan,” he added. “Investing in new service centers is a key part of our strategy, and we want to stay ahead of the curve.” ODFL opened four facilities in 2024 and has several service centers under construction that can be opened when the market heats up, he said. Other carriers, including regional LTL providers Dayton Freight Lines, A. Duie Pyle and Averitt are opening or expanding service centers to gain greater freight density and expand next-day and same-day service. Yellow continues to sell the last of its terminals. There is still less LTL capacity available than there was before Yellow’s exit, Satterfield said. That is helping to keep LTL pricing elevated. Roadrunner, which is leasing a former Yellow terminal in Atlanta, one of its network hubs, last week expanded by adding 278 lanes, its largest expansion since its current restructuring began in 2021. One-third of those 278 new lanes are more than 1,000 miles long, originating at the company’s hubs in Atlanta, Detroit, Nashville, Cleveland and Grand Rapids, Michigan. The new lanes aren’t a reaction to rising demand, however; they’re all about prepositioning for coming demand. LTL carriers are also prepping for the eventual spinoff of FedEx Freight as an independent carrier in 2026 and a possible LTL play by Amazon. “We’re at the bottom of the trough, but we will go up, and we want to be positioned to respond to shippers very fast,” Jamroz said. Contact William B. Cassidy at bill.cassidy@spglobal.com .

Trucking News

Surface

US LTL getting in position for higher freight demand — when it comes

<div class="phx-topic abstract-wrapper">Why the impact is so potentially profound is the way carriers would likely respond to a scenario in which a fuel standard is imposed on them, but no automatically higher cost is imposed on shippers to pay, writes Peter Tirschwell.</div>

Why the impact is so potentially profound is the way carriers would likely respond to a scenario in which a fuel standard is imposed on them, but no automatically higher cost is imposed on shippers to pay, writes Peter Tirschwell.

<div class="phx-topic">What happens at the International Maritime Organization’s (IMO’s) Marine and Environment Protection Committee (MEPC) meeting in early April will have profound implications for shippers, dwarfing the impact, for example, of proposed fines on Chinese ships calling at US ports. The reason is the possibility, if not the likelihood, that IMO negotiators will fail to agree to a meaningful carbon tax on shipping, instead choosing to achieve the organization’s goal of net-zero emissions by or around 2050 via a fuel standard. IMO watchers say the standard is all but certain to gain the necessary support of member states in April. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5968479_0.1.jpg"></img></div>Opposition by certain powerful member states to a fuel levy makes it “exceedingly unlikely” that the tax will be part of the final MEPC agreement, Eirik Nyhus, environment director at the classification society DNV, said on a recent podcast. Here is why that is critical: A fuel standard mandating a reduction in carbon intensity over time to reach the 2050 goal is similar conceptually to the IMO 2020 low-sulfur fuel requirement. The message to shipowners was, and would be again: “Here’s the requirement, and if it means higher fuel costs it’s on you to mitigate those costs or pass higher costs on to your customers.” That is why, according to S&amp;P Global Market Intelligence, 25% of container ships are now fitted with scrubbers that remove sulfur from vessel emissions while enabling ships to run on traditional bunkers versus higher-cost low sulfur fuel oil. The message to the industry would be identical if the IMO failed to reach consensus on a carbon tax, which is controversial among IMO member states, and proceeded with a fuel standard-type regulation to put teeth behind its 2050 goal. The showdown will occur at the 83rd MEPC meeting on April 7–11. <h3>How would carriers respond to a fuel standard? </h3>A fuel standard, on the other hand, is not seen as controversial. “There appears to be broad support across the numerous member states that we will agree to a legally binding greenhouse gas intensity limit for the fuels themselves which would take effect in 2028 and become increasingly stringent as you move to 2050,” Bryan Wood-Thomas, vice president for environmental policy at the World Shipping Council (WSC), told TPM25 in early March. Why the impact is so potentially profound is the way carriers would likely respond to a scenario in which a fuel standard is imposed on them — to increasingly use fuels that at least today are much higher priced than traditional bunkers — but no automatically higher cost is imposed on shippers to pay. Carriers would have no choice but to go all out to protect their interests, which, practically speaking, means flexing their muscles on capacity to keep the market as tight as possible and rates as high as possible to offset the higher cost of zero- or low-carbon bunkers. That is increasingly familiar territory for carriers. The trajectory of the past 25 years of container shipping shows carriers steadily ratcheting up capacity management through their own actions — slow steaming, idling, blank sailings, scrapping — increasingly aided by external phenomena in the form of pandemics, geopolitics and climate change. “Since 2019, carriers have built a revenue model around inefficiency,” said Peter Creeden, a longtime senior Hamburg Sud operations executive now leading Sydney-based consultant MPC International. “Their focus is not on supply chain efficiency but on leveraging inefficiencies to sustain profitability.” <h3>‘Dependent on customers to ... pay for’ energy transition </h3>The incentive for carriers to act to mitigate periodic waves of overcapacity is clear: Costs of alternative fuels will be higher for longer because major energy producers have made it clear that in the absence of a fuel tax — what they consider to be a bona fide demand signal — they will limit investments in production capacity. The possibility that methanol prices would remain high due to a high level of uncertainty regarding regulation, said Maersk CEO Vincent Clerc, <a href="https://www.joc.com/article/maersks-lng-order-hedges-bet-on-green-fuel-technology-ceo-5703200">led the company last year to pivot its fleet renewal to LNG ships</a>, a fuel it had long disparaged as inadequate in the energy transition. Underlying the need of carriers to ensure market advantage to fund any IMO-mandated energy transition is a lack of uptake from shippers to fund the transition themselves. Maersk Chairman Robert Uggla told shareholders on March 18 it is “clear that we are dependent on customers to support and pay for” the energy transition, and that “the biggest challenge ... we face [is] the cost gap between clean and traditional fuels.” Without the cost gap being closed or narrowed — the point of a fuel tax — the uptake among customers is, and will likely continue to be, limited. Hapag-Lloyd CEO Rolf Habben Jansen, meanwhile, has reported progress with the carrier’s biofuel-based sustainability product Ship Green that allows shippers to decarbonize 25%, 50% or 100% of what they move with the liner. Volumes last year doubled to 200,000 TEUs, or 1.6% of the carrier’s total volume. Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>.Senior Editor Greg Knowler contributed to this analysis. </div>

What happens at the International Maritime Organization’s (IMO’s) Marine and Environment Protection Committee (MEPC) meeting in early April will have profound implications for shippers, dwarfing the impact, for example, of proposed fines on Chinese ships calling at US ports. The reason is the possibility, if not the likelihood, that IMO negotiators will fail to agree to a meaningful carbon tax on shipping, instead choosing to achieve the organization’s goal of net-zero emissions by or around 2050 via a fuel standard. IMO watchers say the standard is all but certain to gain the necessary support of member states in April. Opposition by certain powerful member states to a fuel levy makes it “exceedingly unlikely” that the tax will be part of the final MEPC agreement, Eirik Nyhus, environment director at the classification society DNV, said on a recent podcast. Here is why that is critical: A fuel standard mandating a reduction in carbon intensity over time to reach the 2050 goal is similar conceptually to the IMO 2020 low-sulfur fuel requirement. The message to shipowners was, and would be again: “Here’s the requirement, and if it means higher fuel costs it’s on you to mitigate those costs or pass higher costs on to your customers.” That is why, according to S&P Global Market Intelligence, 25% of container ships are now fitted with scrubbers that remove sulfur from vessel emissions while enabling ships to run on traditional bunkers versus higher-cost low sulfur fuel oil. The message to the industry would be identical if the IMO failed to reach consensus on a carbon tax, which is controversial among IMO member states, and proceeded with a fuel standard-type regulation to put teeth behind its 2050 goal. The showdown will occur at the 83rd MEPC meeting on April 7–11. How would carriers respond to a fuel standard? A fuel standard, on the other hand, is not seen as controversial. “There appears to be broad support across the numerous member states that we will agree to a legally binding greenhouse gas intensity limit for the fuels themselves which would take effect in 2028 and become increasingly stringent as you move to 2050,” Bryan Wood-Thomas, vice president for environmental policy at the World Shipping Council (WSC), told TPM25 in early March. Why the impact is so potentially profound is the way carriers would likely respond to a scenario in which a fuel standard is imposed on them — to increasingly use fuels that at least today are much higher priced than traditional bunkers — but no automatically higher cost is imposed on shippers to pay. Carriers would have no choice but to go all out to protect their interests, which, practically speaking, means flexing their muscles on capacity to keep the market as tight as possible and rates as high as possible to offset the higher cost of zero- or low-carbon bunkers. That is increasingly familiar territory for carriers. The trajectory of the past 25 years of container shipping shows carriers steadily ratcheting up capacity management through their own actions — slow steaming, idling, blank sailings, scrapping — increasingly aided by external phenomena in the form of pandemics, geopolitics and climate change. “Since 2019, carriers have built a revenue model around inefficiency,” said Peter Creeden, a longtime senior Hamburg Sud operations executive now leading Sydney-based consultant MPC International. “Their focus is not on supply chain efficiency but on leveraging inefficiencies to sustain profitability.” ‘Dependent on customers to ... pay for’ energy transition The incentive for carriers to act to mitigate periodic waves of overcapacity is clear: Costs of alternative fuels will be higher for longer because major energy producers have made it clear that in the absence of a fuel tax — what they consider to be a bona fide demand signal — they will limit investments in production capacity. The possibility that methanol prices would remain high due to a high level of uncertainty regarding regulation, said Maersk CEO Vincent Clerc, led the company last year to pivot its fleet renewal to LNG ships , a fuel it had long disparaged as inadequate in the energy transition. Underlying the need of carriers to ensure market advantage to fund any IMO-mandated energy transition is a lack of uptake from shippers to fund the transition themselves. Maersk Chairman Robert Uggla told shareholders on March 18 it is “clear that we are dependent on customers to support and pay for” the energy transition, and that “the biggest challenge ... we face [is] the cost gap between clean and traditional fuels.” Without the cost gap being closed or narrowed — the point of a fuel tax — the uptake among customers is, and will likely continue to be, limited. Hapag-Lloyd CEO Rolf Habben Jansen, meanwhile, has reported progress with the carrier’s biofuel-based sustainability product Ship Green that allows shippers to decarbonize 25%, 50% or 100% of what they move with the liner. Volumes last year doubled to 200,000 TEUs, or 1.6% of the carrier’s total volume. Contact Peter Tirschwell at peter.tirschwell@spglobal.com .Senior Editor Greg Knowler contributed to this analysis.

Likelihood of IMO fuel standard set to reshape container shipping market

<div class="phx-topic abstract-wrapper">Cosco said changes in the shipping alliances this year will trigger competition in digitization and decarbonization.</div>

Cosco said changes in the shipping alliances this year will trigger competition in digitization and decarbonization.

<div class="phx-topic">Cosco Shipping Holdings said Friday that the industry will experience “profound changes in global cargo flow patterns” due to tariff- and trade-related policies after reporting strong profits in 2024. Container shipping demand growth is set to moderate this year, the carrier said, thanks to the combined effects of an easing of “global inflationary pressures and accommodative monetary policies in Europe and the United States.” The carrier, the fourth-largest by tonnage, according to Alphaliner, said changes among the major container shipping alliances are expected to trigger increased competition this year, “particularly in two strategic arenas: digitalized supply chains and green and low-carbon development initiatives.” That came as Cosco reported a 106% increase in net profit, to $6.8 billion, last year, on revenues that rose 33% to $32 billion thanks to significantly higher freight rates and a 10% year-over-year increase in total container volumes. Average revenue per TEU on international routes climbed 30% to $1,055 per TEU. Industrywide operating profits reached nearly $60 billion in 2024, according to estimates from Sea-Intelligence Maritime Analysis, but analysts are <a href="https://www.joc.com/article/oversupplied-ocean-carriers-sailing-into-new-downcycle-analysts-5963852">warning of a downcycle beginning this year</a>. The state-owned carrier said it will accelerate the scaled development of its dual-brand fleet, consisting of Cosco Shipping Lines and Hong Kong-based subsidiary Orient Overseas Container Line (OOCL), after it ordered a dozen 14,000-TEU methanol dual-fuel container ships last year. Cosco Shipping Lines accounted for approximately two-thirds ($4.3 billion) of the $6.8 billion in reported profits last year, with the balance coming from OOCL and terminal arm Cosco Shipping Port, which saw its net profit slip 5% to $309 million. Revenue gains were led by the trans-Pacific trade, which spiked 63% to $9 billion on a 13% jump in volumes. Asia-Europe revenue rose 41% to $6.4 billion despite a 13% drop in liftings, a reflection of operational capacity cuts stemming from vessels diverting around the Cape of Good Hope to avoid Houthi militant attacks in the Red Sea area. Revenue from intra-Asia, including Australia, climbed 23% to $7.4 billion on volumes that increased 11%. Earnings from other trades, including the trans-Atlantic and Latin America, grew 27% year over year to $4.5 billion as liftings rose 10%.Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

Cosco Shipping Holdings said Friday that the industry will experience “profound changes in global cargo flow patterns” due to tariff- and trade-related policies after reporting strong profits in 2024. Container shipping demand growth is set to moderate this year, the carrier said, thanks to the combined effects of an easing of “global inflationary pressures and accommodative monetary policies in Europe and the United States.” The carrier, the fourth-largest by tonnage, according to Alphaliner, said changes among the major container shipping alliances are expected to trigger increased competition this year, “particularly in two strategic arenas: digitalized supply chains and green and low-carbon development initiatives.” That came as Cosco reported a 106% increase in net profit, to $6.8 billion, last year, on revenues that rose 33% to $32 billion thanks to significantly higher freight rates and a 10% year-over-year increase in total container volumes. Average revenue per TEU on international routes climbed 30% to $1,055 per TEU. Industrywide operating profits reached nearly $60 billion in 2024, according to estimates from Sea-Intelligence Maritime Analysis, but analysts are warning of a downcycle beginning this year . The state-owned carrier said it will accelerate the scaled development of its dual-brand fleet, consisting of Cosco Shipping Lines and Hong Kong-based subsidiary Orient Overseas Container Line (OOCL), after it ordered a dozen 14,000-TEU methanol dual-fuel container ships last year. Cosco Shipping Lines accounted for approximately two-thirds ($4.3 billion) of the $6.8 billion in reported profits last year, with the balance coming from OOCL and terminal arm Cosco Shipping Port, which saw its net profit slip 5% to $309 million. Revenue gains were led by the trans-Pacific trade, which spiked 63% to $9 billion on a 13% jump in volumes. Asia-Europe revenue rose 41% to $6.4 billion despite a 13% drop in liftings, a reflection of operational capacity cuts stemming from vessels diverting around the Cape of Good Hope to avoid Houthi militant attacks in the Red Sea area. Revenue from intra-Asia, including Australia, climbed 23% to $7.4 billion on volumes that increased 11%. Earnings from other trades, including the trans-Atlantic and Latin America, grew 27% year over year to $4.5 billion as liftings rose 10%. Contact Keith Wallis at keithwallis@hotmail.com .

Asia-Europe

Escalating tariffs will cause ‘profound’ trade pattern changes: Cosco

<div class="phx-topic abstract-wrapper">No matter what changes occur, a FedEx Freight spinoff as a standalone LTL carrier will be good for the entire industry, writes Satish Jindel.</div>

No matter what changes occur, a FedEx Freight spinoff as a standalone LTL carrier will be good for the entire industry, writes Satish Jindel.

<div class="phx-topic">On June 25, 2024, during an earnings call, FedEx leaders announced that the company’s board had authorized management to explore options for a sale or spinoff of FedEx Freight, and that a decision would be announced by the end of the year. On Dec. 19, <a href="https://www.joc.com/article/fedex-freight-spinoff-is-latest-move-to-reshape-us-ltl-market-5909683">the leadership announced that a spinoff</a> was the best option and would be completed over 18 months. Why tell the shareholders and the less-than-truckload (LTL) market of this move if it is not happening for many months? Now, competitors and shippers can prepare for the various changes that could result from the FedEx Freight spinoff. Competing carriers and shippers should benefit from FedEx’s Priority and Economy services getting merged for a number of reasons. While the parcel market supports express and ground services, the FedEx Express volume has been shrinking for many years, with FedEx Ground now representing over 80% of total parcel volume. So, if there is a rationale to merge the Express and Ground parcel networks, FedEx Freight’s Priority and Economy services should also be merged. The premium for the Priority service price is so small that it does not make up for the various costs related to offering two services. If the two services were so appealing and financially rewarding, other LTL carriers would have done the same. Yet after 12 years, no other LTL carrier has followed suit. Many LTL carriers with just one service are generating operating margins better than 14.5% of FedEx Freight. As the LTL industry speeds up the transit times on high-volume lanes, the gap between Priority and Economy services will shrink. <h3>Greater role for technology </h3>While the parent company wants to spin it off as FedEx Freight, expect the new board to rename it American Freightways. With relief from intercompany charges of $528 million during fiscal year 2024 paid to FedEx Corporation for marketing, sales, technology and billing support, the spinoff will save FedEx Freight a few hundred million dollars by handling those corporate support functions itself. If it uses that money to go for greater market share with pricing initiatives, it could be good news for shippers. Shippers should get ready for a greater role of technology. With the National Motor Freight Traffic Association finally adopting dimensional pricing, there will be a greater need by shippers and carriers to capture shipment dimensions. This change should ensure more accurate billing and reduce the cost for auditing all freight bills for proper classification. With shippers being required to pay greater attention to the dimensions of the pallets, they can expect FedEx Freight support to improve their palletizing just as FedEx helps parcel customers improve their packaging. Because there are practically no appointment deliveries in the parcel business, expect FedEx Freight to embrace opportunities with AI to reduce the number of appointment deliveries, which should help shippers avoid charges for such service. We can also expect FedEx Freight to take greater interest in participating in LTL industry conferences and contributing its shipment data to SMC3’s national LTL database. No matter which of these changes occur, a FedEx Freight spinoff as a standalone LTL carrier will be good for the entire industry. And for those wondering why FedEx needs 18 months to spin off Freight, just imagine the pressure on the board and leadership that may find that investors are valuing its LTL business at a higher market cap than its parcel business, which is generating just a 5.5% margin compared with 14.5% for LTL business. Contact Satish Jindel at <a href="mailto:info@shipmatrix.com">info@shipmatrix.com</a>. </div>

On June 25, 2024, during an earnings call, FedEx leaders announced that the company’s board had authorized management to explore options for a sale or spinoff of FedEx Freight, and that a decision would be announced by the end of the year. On Dec. 19, the leadership announced that a spinoff was the best option and would be completed over 18 months. Why tell the shareholders and the less-than-truckload (LTL) market of this move if it is not happening for many months? Now, competitors and shippers can prepare for the various changes that could result from the FedEx Freight spinoff. Competing carriers and shippers should benefit from FedEx’s Priority and Economy services getting merged for a number of reasons. While the parcel market supports express and ground services, the FedEx Express volume has been shrinking for many years, with FedEx Ground now representing over 80% of total parcel volume. So, if there is a rationale to merge the Express and Ground parcel networks, FedEx Freight’s Priority and Economy services should also be merged. The premium for the Priority service price is so small that it does not make up for the various costs related to offering two services. If the two services were so appealing and financially rewarding, other LTL carriers would have done the same. Yet after 12 years, no other LTL carrier has followed suit. Many LTL carriers with just one service are generating operating margins better than 14.5% of FedEx Freight. As the LTL industry speeds up the transit times on high-volume lanes, the gap between Priority and Economy services will shrink. Greater role for technology While the parent company wants to spin it off as FedEx Freight, expect the new board to rename it American Freightways. With relief from intercompany charges of $528 million during fiscal year 2024 paid to FedEx Corporation for marketing, sales, technology and billing support, the spinoff will save FedEx Freight a few hundred million dollars by handling those corporate support functions itself. If it uses that money to go for greater market share with pricing initiatives, it could be good news for shippers. Shippers should get ready for a greater role of technology. With the National Motor Freight Traffic Association finally adopting dimensional pricing, there will be a greater need by shippers and carriers to capture shipment dimensions. This change should ensure more accurate billing and reduce the cost for auditing all freight bills for proper classification. With shippers being required to pay greater attention to the dimensions of the pallets, they can expect FedEx Freight support to improve their palletizing just as FedEx helps parcel customers improve their packaging. Because there are practically no appointment deliveries in the parcel business, expect FedEx Freight to embrace opportunities with AI to reduce the number of appointment deliveries, which should help shippers avoid charges for such service. We can also expect FedEx Freight to take greater interest in participating in LTL industry conferences and contributing its shipment data to SMC3’s national LTL database. No matter which of these changes occur, a FedEx Freight spinoff as a standalone LTL carrier will be good for the entire industry. And for those wondering why FedEx needs 18 months to spin off Freight, just imagine the pressure on the board and leadership that may find that investors are valuing its LTL business at a higher market cap than its parcel business, which is generating just a 5.5% margin compared with 14.5% for LTL business. Contact Satish Jindel at info@shipmatrix.com .

How the LTL market could evolve as the FedEx Freight spinoff plays out

<div class="phx-topic abstract-wrapper">What we have today in containerization is the opposite of Malcom McLean’s vision, writes Ted Prince — a vertically integrated enterprise of cost centers has been replaced by a network of profit centers that closely resembles the intermodal rail world.</div>

What we have today in containerization is the opposite of Malcom McLean’s vision, writes Ted Prince — a vertically integrated enterprise of cost centers has been replaced by a network of profit centers that closely resembles the intermodal rail world.

<div class="phx-topic">The Journal of Commerce’s roots extend back to 1827, when Samuel Morse and partners started a newspaper in New York. In 1844, Morse effectively started the telecommunications revolution. His first telegraph message asked, “What hath God wrought?” To many, the answer to that question might have been the development of containerization by Malcom McLean of Maxton, North Carolina. McLean’s transportation roots were in less-than-truckload (LTL). He was an early pioneer; McLean Trucking was founded in 1934 — the same year as the Motor Carrier Act of 1934 — and at one time was the fourth-largest motor carrier in the United States. This Motor Carrier Act followed traditional regulatory thinking. To ensure sufficient capacity, carriers were granted monopolies in the form of operating authorities. With tobacco a highly rated commodity, this was an incredibly lucrative business. These profits supported the acquisition of other motor carriers and the seed capital to start containerization. What the hagiography of McLean frequently omits is that he was not perfect. He twice “bet the company” on oil prices — and got it wrong both times. The development of high-speed container ships known as SL-7s were deployed in 1972 and 1973 during the first fuel shock. The ships’ high operating costs destroyed any profitability, and they were sold to the United States Navy in 1981 and 1982. In 1969, McLean sold Sea-Land to R.J. Reynolds Tobacco Company. In 1978, McLean purchased United States Lines and built a fleet of 4,400-TEU container ships. These were the largest ships at the time and were designed to operate in around-the-world services. Following the second oil shock of 1979, these vessels were designed to be fuel-efficient — albeit slow. When oil prices cratered five years later, so did US Lines. <h3>A ‘grander strategy’</h3>While the SL-7s and EconoShips are well-known aspects of McLean’s legacy, I think it is worthwhile exploring his grander strategy. SeaLand was vertically integrated — deploying his ships, calling his terminals, utilizing cranes of his specifications, carrying his containers, and moving on his chassis. While this model was emulated by many of those that followed, it is worthwhile to think about what has changed since then — and what it means today. Independent vessel strings are mostly a thing of the past. Vessel-sharing agreements (VSAs) have given way to global alliances — not to mention outright acquisitions. SeaLand–Maersk was an early VSA that ultimately led to Maersk acquiring SeaLand. This is a reflection of the need for economies of scope and scale — alongside density and service frequency — that are table stakes in today’s liner shipping world. By the early 1960s, McLean’s concept for standardized shipping containers gave rise to the container leasing industry. Sea Containers was an early entrant that was followed by others. This was a reflection that the capital-intensive nature of liner shipping made it almost impossible for a carrier to invest in everything. It was also a realization that economies of scale were sometimes beyond the reach of a single entity. While the chassis was necessary to provide pickup and delivery, carrier provision of chassis was limited to the United States. McLean was a trucker at heart and couldn’t imagine not having his own wheels. This decision haunted the industry for decades. Finally, in 2012, Maersk sold its chassis-leasing subsidiary, Direct ChassisLink, Inc. (DCLI), to a private equity firm. In an industry where most want to be second, almost every other line followed. Marine terminals were the last to be unbundled — perhaps because lines viewed them as their “crown jewels,” or perhaps because of their high price tags. These investments became popular with infrastructure funds and their pension fund investors. What we have today is the opposite of McLean’s vision. A vertically integrated enterprise of cost centers has been replaced by a network of profit centers that closely resembles the intermodal rail world. Whereas the former would inevitably cross-subsidize separate components through intricate transfer pricing, the latter has created a world of cutthroat capitalism. The impacts are not always clear. Container and chassis providers claim that they offer savings; however, their line customers may not agree — perhaps because they lack the sophistication to ascertain the true cost of ownership and operation. The impact on marine terminals is much more pervasive. Whereas an ocean carrier might have previously absorbed some additional costs (e.g., extra gates, third shifts, etc.) in a holistic service perspective, today’s terminals have owners that demand profitability across the spectrum. Our industry, despite its global scale, is still relatively young. We are living Joseph Schumpeter’s theory of creative destruction that he believed is essential for capitalism and economic growth. New innovations replace old ones. McLean’s innovations were essential, but not timeless. Our industry is essential, and the only certainty is change. Contact Ted Prince at <a href="mailto:ted@tricitiesintermodal.com">ted@tricitiesintermodal.com</a>.</div>

The Journal of Commerce’s roots extend back to 1827, when Samuel Morse and partners started a newspaper in New York. In 1844, Morse effectively started the telecommunications revolution. His first telegraph message asked, “What hath God wrought?” To many, the answer to that question might have been the development of containerization by Malcom McLean of Maxton, North Carolina. McLean’s transportation roots were in less-than-truckload (LTL). He was an early pioneer; McLean Trucking was founded in 1934 — the same year as the Motor Carrier Act of 1934 — and at one time was the fourth-largest motor carrier in the United States. This Motor Carrier Act followed traditional regulatory thinking. To ensure sufficient capacity, carriers were granted monopolies in the form of operating authorities. With tobacco a highly rated commodity, this was an incredibly lucrative business. These profits supported the acquisition of other motor carriers and the seed capital to start containerization. What the hagiography of McLean frequently omits is that he was not perfect. He twice “bet the company” on oil prices — and got it wrong both times. The development of high-speed container ships known as SL-7s were deployed in 1972 and 1973 during the first fuel shock. The ships’ high operating costs destroyed any profitability, and they were sold to the United States Navy in 1981 and 1982. In 1969, McLean sold Sea-Land to R.J. Reynolds Tobacco Company. In 1978, McLean purchased United States Lines and built a fleet of 4,400-TEU container ships. These were the largest ships at the time and were designed to operate in around-the-world services. Following the second oil shock of 1979, these vessels were designed to be fuel-efficient — albeit slow. When oil prices cratered five years later, so did US Lines. A ‘grander strategy’ While the SL-7s and EconoShips are well-known aspects of McLean’s legacy, I think it is worthwhile exploring his grander strategy. SeaLand was vertically integrated — deploying his ships, calling his terminals, utilizing cranes of his specifications, carrying his containers, and moving on his chassis. While this model was emulated by many of those that followed, it is worthwhile to think about what has changed since then — and what it means today. Independent vessel strings are mostly a thing of the past. Vessel-sharing agreements (VSAs) have given way to global alliances — not to mention outright acquisitions. SeaLand–Maersk was an early VSA that ultimately led to Maersk acquiring SeaLand. This is a reflection of the need for economies of scope and scale — alongside density and service frequency — that are table stakes in today’s liner shipping world. By the early 1960s, McLean’s concept for standardized shipping containers gave rise to the container leasing industry. Sea Containers was an early entrant that was followed by others. This was a reflection that the capital-intensive nature of liner shipping made it almost impossible for a carrier to invest in everything. It was also a realization that economies of scale were sometimes beyond the reach of a single entity. While the chassis was necessary to provide pickup and delivery, carrier provision of chassis was limited to the United States. McLean was a trucker at heart and couldn’t imagine not having his own wheels. This decision haunted the industry for decades. Finally, in 2012, Maersk sold its chassis-leasing subsidiary, Direct ChassisLink, Inc. (DCLI), to a private equity firm. In an industry where most want to be second, almost every other line followed. Marine terminals were the last to be unbundled — perhaps because lines viewed them as their “crown jewels,” or perhaps because of their high price tags. These investments became popular with infrastructure funds and their pension fund investors. What we have today is the opposite of McLean’s vision. A vertically integrated enterprise of cost centers has been replaced by a network of profit centers that closely resembles the intermodal rail world. Whereas the former would inevitably cross-subsidize separate components through intricate transfer pricing, the latter has created a world of cutthroat capitalism. The impacts are not always clear. Container and chassis providers claim that they offer savings; however, their line customers may not agree — perhaps because they lack the sophistication to ascertain the true cost of ownership and operation. The impact on marine terminals is much more pervasive. Whereas an ocean carrier might have previously absorbed some additional costs (e.g., extra gates, third shifts, etc.) in a holistic service perspective, today’s terminals have owners that demand profitability across the spectrum. Our industry, despite its global scale, is still relatively young. We are living Joseph Schumpeter’s theory of creative destruction that he believed is essential for capitalism and economic growth. New innovations replace old ones. McLean’s innovations were essential, but not timeless. Our industry is essential, and the only certainty is change. Contact Ted Prince at ted@tricitiesintermodal.com .

Supply chain

In appreciation of McLean’s essential, although not timeless, innovations

S&P Global Platts editors engaging with market participants to assess the current value of freight-all-kinds (FAK) rates on major container trades produce container spot rates. The rates include bunker adjustment factors, general rate increases and emergency rare restoration. They also include low-sulfur fuel, equipment imbalance and repositioning surcharges. The rates exclude terminal handling, port security, overweight container, delivery, and detention and demurrage charges. [Platts](https://www.spglobal.com/commodityinsights)

North Europe to US East Coast container spot rates (Platts)

Platts North Europe to US East Coast Weekly Gateway

<div class="phx-topic abstract-wrapper">The IMO is a specialized agency of the United Nations, which potentially puts the organization in the crosshairs of the new administration that is reassessing all its UN positions and policies. </div>

The IMO is a specialized agency of the United Nations, which potentially puts the organization in the crosshairs of the new administration that is reassessing all its UN positions and policies.

<div class="phx-topic">A crucial April meeting of the International Maritime Organization (IMO) will be the first during President Trump’s second term, with the US currently “in a holding pattern” regarding continued membership of the IMO, according to classification society DNV. The 176 member states of the IMO will gather at the 83rd Marine Environment Protection Committee (MEPC) meeting in London from April 7–11 to design a greenhouse gas (GHG) fuel intensity regulation and settle on an economic measure for taxing carbon emissions, with both measures aiming for implementation in 2027. Eirik Nyhus, director for environment and maritime at DNV, said in an MEPC update this week that <a href="https://www.joc.com/article/progress-on-carbon-pricing-on-track-despite-us-stance-on-green-initiatives-imo-5929236">the US position regarding the IMO</a> going forward remained unclear. At the last meeting of the IMO’s Intersessional Working Group on Reduction of Greenhouse Gas Emissions from Ships (ISWG-GHG 18) in late February, Nyhus said the US did not take the floor until the very end, stating that the new administration was reassessing all its United Nations positions and policies. The IMO is a specialized agency of the UN. The Trump administration is also in the process of withdrawing from the Paris Agreement climate change accord, part of a broader initiative of “reviewing for rescission all regulations that impose undue burdens on energy production and use.” A spokesperson for the IMO told the Journal of Commerce this week that “any member state can withdraw from the organization, as outlined in Article 73 of the IMO Convention, though they would still be bound by the treaties to which they are party.” Still, Nyhus played down the significance of a potential US withdrawal with the IMO having far more important issues to focus on. “While the US has turned into a bit of a wild card, I cannot see this being a showstopper [at MEPC] in any way,” he noted. “Many issues, big and small, remain under negotiation, with the two most challenging ones being the design of the greenhouse gas fuel intensity regulation and the choice of economic measure. The discussions remain intensely political,” he added. The goal is to have a net zero framework ready for approval at MEPC 83 in London, and there is pressure on member states to finalize the legal framework around a fuel standard and economic measure with implementation planned for October. If the measures do not roll out in October, it will place the IMO’s interim emissions reduction targets at risk. Ocean carriers are watching the MEPC deliberations closely — many have had to invest huge sums in dual-fuel ships able to run on cleaner energy despite the lack of regulations to narrow the gap between fossil fuels and the alternatives. “We <a href="https://www.joc.com/article/lack-of-clarity-over-clean-energy-supply-driving-dual-fuel-ship-orders-5747200">have to take decisions on decarbonizing our fleet</a> over the next 20, 25 or 30 years, and we believe that the direction that we have chosen remains valid,” Hapag-Lloyd CEO Rolf Habben Jansen told reporters at the carrier’s annual results presentation Thursday. “That means trying to reduce our emissions significantly until 2030 and also to stick to our target to be net carbon neutral by 2045.” <h3>No deal is not an option </h3>Andy Wibroe, lead regulatory specialist at classification society Lloyd’s Register, said in an MEPC update this week that one of the main issues to be resolved in April is how shipowners and operators will pay for GHG emissions from their ships on a well-to-wake basis. Funds coming from whatever carbon-charging measure is agreed upon are essential to support the development and scale up of a new generation of carbon-free marine fuels, which remain significantly more expensive than traditional fossil fuels. Another crucial point is the support for developing countries and remote island states through the energy transition in shipping. Wibroe highlighted the divisions between two camps — those who believe in a technical measure built around a fuel standard that generates revenue from under-compliant ships paying for credits to make up the compliance deficit, and the others who want a flat carbon emissions fee to guarantee revenue and reduce the cost gap between fuel types. Small island nations oppose both approaches because they believe the fuel standard measure will not generate enough funding to support “a just and equitable transition,” and because they rely on sea trade for everything, the carbon tax will cost them out of existence. Navigating a way through the divisions among member states will not be easy, but Lloyd’s Register said the IMO cannot be seen to close this milestone MEPC meeting on a “no deal” basis. “It is not expected to be a hostile meeting, but there are many heated discussions already taking place in back rooms and corridors that will continue in the lead up to the meeting,” Wibroe said. “It is anticipated, however, that the IMO is still likely to close MEPC 83 with a consensus.” Nyhus had the same view that by the time MEPC delegates emerge on April 11 from their London Embankment bunker at the IMO headquarters in London they will have reached a deal of some kind. “It looks pretty certain that this is going to come down to the wire at MEPC 83 with a very real possibility that the meeting at some point simply will be presented with a take it or leave it proposal,” was Nyhus’ assessment. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

A crucial April meeting of the International Maritime Organization (IMO) will be the first during President Trump’s second term, with the US currently “in a holding pattern” regarding continued membership of the IMO, according to classification society DNV. The 176 member states of the IMO will gather at the 83rd Marine Environment Protection Committee (MEPC) meeting in London from April 7–11 to design a greenhouse gas (GHG) fuel intensity regulation and settle on an economic measure for taxing carbon emissions, with both measures aiming for implementation in 2027. Eirik Nyhus, director for environment and maritime at DNV, said in an MEPC update this week that the US position regarding the IMO going forward remained unclear. At the last meeting of the IMO’s Intersessional Working Group on Reduction of Greenhouse Gas Emissions from Ships (ISWG-GHG 18) in late February, Nyhus said the US did not take the floor until the very end, stating that the new administration was reassessing all its United Nations positions and policies. The IMO is a specialized agency of the UN. The Trump administration is also in the process of withdrawing from the Paris Agreement climate change accord, part of a broader initiative of “reviewing for rescission all regulations that impose undue burdens on energy production and use.” A spokesperson for the IMO told the Journal of Commerce this week that “any member state can withdraw from the organization, as outlined in Article 73 of the IMO Convention, though they would still be bound by the treaties to which they are party.” Still, Nyhus played down the significance of a potential US withdrawal with the IMO having far more important issues to focus on. “While the US has turned into a bit of a wild card, I cannot see this being a showstopper [at MEPC] in any way,” he noted. “Many issues, big and small, remain under negotiation, with the two most challenging ones being the design of the greenhouse gas fuel intensity regulation and the choice of economic measure. The discussions remain intensely political,” he added. The goal is to have a net zero framework ready for approval at MEPC 83 in London, and there is pressure on member states to finalize the legal framework around a fuel standard and economic measure with implementation planned for October. If the measures do not roll out in October, it will place the IMO’s interim emissions reduction targets at risk. Ocean carriers are watching the MEPC deliberations closely — many have had to invest huge sums in dual-fuel ships able to run on cleaner energy despite the lack of regulations to narrow the gap between fossil fuels and the alternatives. “We have to take decisions on decarbonizing our fleet over the next 20, 25 or 30 years, and we believe that the direction that we have chosen remains valid,” Hapag-Lloyd CEO Rolf Habben Jansen told reporters at the carrier’s annual results presentation Thursday. “That means trying to reduce our emissions significantly until 2030 and also to stick to our target to be net carbon neutral by 2045.” No deal is not an option Andy Wibroe, lead regulatory specialist at classification society Lloyd’s Register, said in an MEPC update this week that one of the main issues to be resolved in April is how shipowners and operators will pay for GHG emissions from their ships on a well-to-wake basis. Funds coming from whatever carbon-charging measure is agreed upon are essential to support the development and scale up of a new generation of carbon-free marine fuels, which remain significantly more expensive than traditional fossil fuels. Another crucial point is the support for developing countries and remote island states through the energy transition in shipping. Wibroe highlighted the divisions between two camps — those who believe in a technical measure built around a fuel standard that generates revenue from under-compliant ships paying for credits to make up the compliance deficit, and the others who want a flat carbon emissions fee to guarantee revenue and reduce the cost gap between fuel types. Small island nations oppose both approaches because they believe the fuel standard measure will not generate enough funding to support “a just and equitable transition,” and because they rely on sea trade for everything, the carbon tax will cost them out of existence. Navigating a way through the divisions among member states will not be easy, but Lloyd’s Register said the IMO cannot be seen to close this milestone MEPC meeting on a “no deal” basis. “It is not expected to be a hostile meeting, but there are many heated discussions already taking place in back rooms and corridors that will continue in the lead up to the meeting,” Wibroe said. “It is anticipated, however, that the IMO is still likely to close MEPC 83 with a consensus.” Nyhus had the same view that by the time MEPC delegates emerge on April 11 from their London Embankment bunker at the IMO headquarters in London they will have reached a deal of some kind. “It looks pretty certain that this is going to come down to the wire at MEPC 83 with a very real possibility that the meeting at some point simply will be presented with a take it or leave it proposal,” was Nyhus’ assessment. Contact Greg Knowler at greg.knowler@spglobal.com .

US in ‘holding pattern’ over IMO membership: DNV

<div class="phx-topic abstract-wrapper">The growing backlog of boxes awaiting a return to Asia has resulted in finger pointing among stakeholders over how best to address the problem.</div>

The growing backlog of boxes awaiting a return to Asia has resulted in finger pointing among stakeholders over how best to address the problem.

<div class="phx-topic">The surge in imports landing in Southern California during January amid a rush to beat new US tariffs and Lunar New Year factory closures has resulted in a significant buildup of empty containers awaiting a return trip to Asia in drayage yards and marine terminals. The growing backlog has also resulted in finger pointing among stakeholders over how to address the problem. The empties are creating a costly logistics problem for drayage operators in Southern California, according to Matt Schrap, CEO of the Harbor Trucking Association. Schrap said many of the empties are sitting on chassis at the yards of drayage operators, taking up space and inhibiting the return of the equipment before free storage time runs out at the marine terminals. One way to address the problem is for marine terminals to open more appointment slots for truckers so they can return the containers and chassis before detention and demurrage charges kick in, Schrap told the Journal of Commerce. “If you can’t get an appointment, you have to pay the late fees and demurrage fees,” he said. The threat of tariffs from the new Trump administration and an earlier-than-normal Lunar New Year that began Jan. 29 resulted in a cargo rush in Southern California at the start of the year. Imports from Asia were up 31.3% in Long Beach in January and 12.6% in Los Angeles year over year, according to PIERS, a Journal of Commerce sister product within S&amp;P Global. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="23e67c9e-b9d6-4eb9-a4ca-6b3ac6e2cb07"></dynamic-object></div>At the same time, US exports through Southern California are down, so most of the containers must be returned to Asia empty. Gene Seroka, executive director of the Port of Los Angeles, told a press conference this week that exports in February from Los Angeles were down 18% year over year, while empty containers were up 16%. <h3>Trucker appointment slots a factor </h3>Because the empties cannot be returned to Asia quickly enough to prevent the containers from accumulating at the marine terminals, they have created a backlog at some terminals and at drayage operators’ facilities in Southern California. “Volumes are high. We get it,” Schrap said. But Schrap said the marine terminals continue to make it difficult for truckers to get sufficient appointment slots for empty container returns. Also, he noted, some terminals will only allow an empty to be returned if the trucker also picks up a loaded inbound container, a process known as a dual transaction. Terminal operators disagree with Schrap’s assessment. They note that Los Angeles-Long Beach is the only US port complex to consistently keep its gates open for 10 shifts each week. The terminals said they offer sufficient appointments to handle empty container returns, but a number of slots go unfilled each day because many truckers do not want to make appointments at inconvenient times, such as late at night or on weekends. SSA Marine, which operates three of the six container terminals in Long Beach, intentionally caps its truck traffic during the day gates in order to push more truck calls into the night shift. If SSA and other terminals didn’t do that, the freeways from the port would be overwhelmed during daytime hours, said Sal Ferrigno, SSA’s vice president in Southern California. Ferrigno said SSA attempts to maintain a mix of 55% of truck calls during the day shift and 45% at night. However, drayage companies are not using most of the nighttime slots that are available to them. “Those guys need to work at night,” Ferrigno said. Schrap said the empty container situation varies from ocean carrier to ocean carrier and terminal to terminal. Alan McCorkle, president of Yusen Terminals in Los Angeles, said containers have been flowing freely at his facility despite the January cargo surge and a February that was stronger than usual. Yusen, according to McCorkle, continues to experience unused trucker appointment slots during the terminal’s day and evening shifts. About 6% to 12% of its daytime appointment slots go unfilled or are no-shows, and about 16% to 20% of its nighttime appointments are not used, he said. Yet another factor at work this time of year is that terminals must catch up with the backlog of empty containers that occurs when ocean carriers blank sailings during the Lunar New Year lull, said Noel Hacegaba, COO at the Port of Long Beach. “Terminals, in an effort to manage blank sailings, are limiting the return of empties,” he said. “Because of the strong influx of imports in recent months, there are more empties across the system that need to be repositioned back to Asia.” <h3>Who should pay for container storage? </h3>Schrap said an even greater problem for truckers is “a complete unwillingness” by ocean carriers and intermodal equipment providers to pay drayage companies for storing their containers and chassis until the units can be returned to the terminals. “History has shown that it is cheaper for [equipment providers] to stage boxes at motor carrier yards [at no cost] as opposed to finding off/near-dock return locations or paying the MTO [marine terminal operator] to store them,” Schrap said. Seroka noted that according to the Pool of Pools, which is operated by the three largest chassis providers in Southern California, the average chassis street dwell time in the region is about six days. “We’d like to see it at four days,” Seroka said. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>.</div>

The surge in imports landing in Southern California during January amid a rush to beat new US tariffs and Lunar New Year factory closures has resulted in a significant buildup of empty containers awaiting a return trip to Asia in drayage yards and marine terminals. The growing backlog has also resulted in finger pointing among stakeholders over how to address the problem. The empties are creating a costly logistics problem for drayage operators in Southern California, according to Matt Schrap, CEO of the Harbor Trucking Association. Schrap said many of the empties are sitting on chassis at the yards of drayage operators, taking up space and inhibiting the return of the equipment before free storage time runs out at the marine terminals. One way to address the problem is for marine terminals to open more appointment slots for truckers so they can return the containers and chassis before detention and demurrage charges kick in, Schrap told the Journal of Commerce. “If you can’t get an appointment, you have to pay the late fees and demurrage fees,” he said. The threat of tariffs from the new Trump administration and an earlier-than-normal Lunar New Year that began Jan. 29 resulted in a cargo rush in Southern California at the start of the year. Imports from Asia were up 31.3% in Long Beach in January and 12.6% in Los Angeles year over year, according to PIERS, a Journal of Commerce sister product within S&P Global. At the same time, US exports through Southern California are down, so most of the containers must be returned to Asia empty. Gene Seroka, executive director of the Port of Los Angeles, told a press conference this week that exports in February from Los Angeles were down 18% year over year, while empty containers were up 16%. Trucker appointment slots a factor Because the empties cannot be returned to Asia quickly enough to prevent the containers from accumulating at the marine terminals, they have created a backlog at some terminals and at drayage operators’ facilities in Southern California. “Volumes are high. We get it,” Schrap said. But Schrap said the marine terminals continue to make it difficult for truckers to get sufficient appointment slots for empty container returns. Also, he noted, some terminals will only allow an empty to be returned if the trucker also picks up a loaded inbound container, a process known as a dual transaction. Terminal operators disagree with Schrap’s assessment. They note that Los Angeles-Long Beach is the only US port complex to consistently keep its gates open for 10 shifts each week. The terminals said they offer sufficient appointments to handle empty container returns, but a number of slots go unfilled each day because many truckers do not want to make appointments at inconvenient times, such as late at night or on weekends. SSA Marine, which operates three of the six container terminals in Long Beach, intentionally caps its truck traffic during the day gates in order to push more truck calls into the night shift. If SSA and other terminals didn’t do that, the freeways from the port would be overwhelmed during daytime hours, said Sal Ferrigno, SSA’s vice president in Southern California. Ferrigno said SSA attempts to maintain a mix of 55% of truck calls during the day shift and 45% at night. However, drayage companies are not using most of the nighttime slots that are available to them. “Those guys need to work at night,” Ferrigno said. Schrap said the empty container situation varies from ocean carrier to ocean carrier and terminal to terminal. Alan McCorkle, president of Yusen Terminals in Los Angeles, said containers have been flowing freely at his facility despite the January cargo surge and a February that was stronger than usual. Yusen, according to McCorkle, continues to experience unused trucker appointment slots during the terminal’s day and evening shifts. About 6% to 12% of its daytime appointment slots go unfilled or are no-shows, and about 16% to 20% of its nighttime appointments are not used, he said. Yet another factor at work this time of year is that terminals must catch up with the backlog of empty containers that occurs when ocean carriers blank sailings during the Lunar New Year lull, said Noel Hacegaba, COO at the Port of Long Beach. “Terminals, in an effort to manage blank sailings, are limiting the return of empties,” he said. “Because of the strong influx of imports in recent months, there are more empties across the system that need to be repositioned back to Asia.” Who should pay for container storage? Schrap said an even greater problem for truckers is “a complete unwillingness” by ocean carriers and intermodal equipment providers to pay drayage companies for storing their containers and chassis until the units can be returned to the terminals. “History has shown that it is cheaper for [equipment providers] to stage boxes at motor carrier yards [at no cost] as opposed to finding off/near-dock return locations or paying the MTO [marine terminal operator] to store them,” Schrap said. Seroka noted that according to the Pool of Pools, which is operated by the three largest chassis providers in Southern California, the average chassis street dwell time in the region is about six days. “We’d like to see it at four days,” Seroka said. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .

Empty containers piling up in Los Angeles-Long Beach after January import surge

<div class="phx-topic abstract-wrapper">The latest salvo in the US-induced global tariff war comes as the EU said Thursday that a 50% tax on imports of US-produced whiskey will take effect from mid-April.</div>

The latest salvo in the US-induced global tariff war comes as the EU said Thursday that a 50% tax on imports of US-produced whiskey will take effect from mid-April.

<div class="phx-topic">A coalition of US wine importers, retailers and restaurants has told members to suspend all shipments from the European Union until greater clarity emerges on the level of tariffs to be imposed on European wine and spirits by the Trump administration. That comes as the EU said Thursday that a 50% tax on imports of US-produced whiskey will take effect from mid-April, a reciprocal measure that was in response to tariffs placed on all steel and aluminium imports to the US. After the EU announced its tariff on US whiskey, Donald Trump threatened to raise tariffs to 200% on wine and spirits imports from the “hostile and abusive” EU. The threat was enough for the US Wine Trade Alliance (USWTA), a collection of hundreds of importers, to issue a notice on Wednesday urging importers to halt all shipments of wine, beer and spirits from the EU. USWTA fears the tariffs on the beverages could be imposed from April 2. Alison Leavitt, managing director of the US-based Wine and Spirits Shippers’ Association, said many other companies have also stopped their orders from the EU or have requested a stop on shipments. “The uncertainty is the biggest problem, and it is hugely disruptive,” Leavitt told the Journal of Commerce. “The tariffs will have a devastating impact on the [US] wine business.” Europe sends wine valued at more than €4.5 billion ($4.89 billion) a year to the US, according to European wine industry representative Comité Européen des Entreprises Vins. <h3>No guarantee of on-time arrival </h3>Leavitt said for US importers, anything that is not already on the water will not arrive before the beginning of April, and even then, there is no guarantee that the shipments will be on time. “Many containers booked to arrive pre-April 1 are not going to arrive in time based on the massive delays caused by the ocean carrier disruption with almost all vessels delayed by seven to 14 days over the last weeks,” she said, adding that some companies were arranging air freight for high-value goods. Ocean carriers are in the midst of a reshuffling of alliances, with new services being phased in and often running in parallel with old services. Carriers have warned previously that disruption was likely during the transition period that will only be completed by the summer. But if there are lengthy delays on the trans-Atlantic, they will not be coming from Gemini Cooperation members Hapag-Lloyd and Maersk, according to Rolf Habben Jansen, CEO of Hapag-Lloyd. “As far as the Gemini voyages are concerned, when we look at the schedule reliability data, we are looking at very high on-time arrival percentages in North America,” he said Thursday during the carrier’s 2024 annual results press conference. He added that across the Gemini network, schedule reliability is currently near 90%. Habben Jansen said there was also no sign of a slowdown in volume on the Europe to US routes, with this week having the strongest bookings since Gemini was launched on Feb. 1. “It is normal people would think a little bit harder about whether to ramp up volume when we see high tariffs coming, but so far we do not see declines in bookings [on the trans-Atlantic],” he said. <h3>Rate increases, surcharges coming in April </h3>Meanwhile, ocean carriers are lining up trans-Atlantic rate increases and “peak season surcharges” in April that, if accepted by the market, will significantly ramp up price levels that have been declining steadily since late December. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="fa309dd3-ee6c-427e-9173-66d782c66dbf"></dynamic-object></div>Mediterranean Shipping Co. set its freight-all-kinds (FAK) rate from Antwerp to New York at a hefty $7,000 per FEU, while CMA CGM’s Rotterdam to New York rate was set at $3,026/FEU. For context, the North Europe to US East Coast spot rate this week was at $2,000/FEU, down 13% since the beginning of the year, according to Platts, a sister company of the Journal of Commerce within S&amp;P Global. On the Mediterranean-US trade lane, Gemini partners Maersk and Hapag-Lloyd announced separate peak season surcharges. From April 5, Hapag-Lloyd will add $750 to all types of containers and Maersk will charge $400 per box. Rate benchmarking platform Xeneta this week assessed average spot rates from the Mediterranean to the US East Coast at $3,355/FEU, down 8.4% since Jan. 1. The latest available trans-Atlantic volume data is for February, so any frontloading to get ahead of the tariffs to be imposed on the European Union on April 2 by the Trump administration is not yet reflected in the data. February volume fell 8.7% year over year to 154,090 TEUs, according to PIERS, also part of S&amp;P Global. On Mediterranean to US routes, volume edged up 1.7% year over year to 128,230 TEUs. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

A coalition of US wine importers, retailers and restaurants has told members to suspend all shipments from the European Union until greater clarity emerges on the level of tariffs to be imposed on European wine and spirits by the Trump administration. That comes as the EU said Thursday that a 50% tax on imports of US-produced whiskey will take effect from mid-April, a reciprocal measure that was in response to tariffs placed on all steel and aluminium imports to the US. After the EU announced its tariff on US whiskey, Donald Trump threatened to raise tariffs to 200% on wine and spirits imports from the “hostile and abusive” EU. The threat was enough for the US Wine Trade Alliance (USWTA), a collection of hundreds of importers, to issue a notice on Wednesday urging importers to halt all shipments of wine, beer and spirits from the EU. USWTA fears the tariffs on the beverages could be imposed from April 2. Alison Leavitt, managing director of the US-based Wine and Spirits Shippers’ Association, said many other companies have also stopped their orders from the EU or have requested a stop on shipments. “The uncertainty is the biggest problem, and it is hugely disruptive,” Leavitt told the Journal of Commerce. “The tariffs will have a devastating impact on the [US] wine business.” Europe sends wine valued at more than €4.5 billion ($4.89 billion) a year to the US, according to European wine industry representative Comité Européen des Entreprises Vins. No guarantee of on-time arrival Leavitt said for US importers, anything that is not already on the water will not arrive before the beginning of April, and even then, there is no guarantee that the shipments will be on time. “Many containers booked to arrive pre-April 1 are not going to arrive in time based on the massive delays caused by the ocean carrier disruption with almost all vessels delayed by seven to 14 days over the last weeks,” she said, adding that some companies were arranging air freight for high-value goods. Ocean carriers are in the midst of a reshuffling of alliances, with new services being phased in and often running in parallel with old services. Carriers have warned previously that disruption was likely during the transition period that will only be completed by the summer. But if there are lengthy delays on the trans-Atlantic, they will not be coming from Gemini Cooperation members Hapag-Lloyd and Maersk, according to Rolf Habben Jansen, CEO of Hapag-Lloyd. “As far as the Gemini voyages are concerned, when we look at the schedule reliability data, we are looking at very high on-time arrival percentages in North America,” he said Thursday during the carrier’s 2024 annual results press conference. He added that across the Gemini network, schedule reliability is currently near 90%. Habben Jansen said there was also no sign of a slowdown in volume on the Europe to US routes, with this week having the strongest bookings since Gemini was launched on Feb. 1. “It is normal people would think a little bit harder about whether to ramp up volume when we see high tariffs coming, but so far we do not see declines in bookings [on the trans-Atlantic],” he said. Rate increases, surcharges coming in April Meanwhile, ocean carriers are lining up trans-Atlantic rate increases and “peak season surcharges” in April that, if accepted by the market, will significantly ramp up price levels that have been declining steadily since late December. Mediterranean Shipping Co. set its freight-all-kinds (FAK) rate from Antwerp to New York at a hefty $7,000 per FEU, while CMA CGM’s Rotterdam to New York rate was set at $3,026/FEU. For context, the North Europe to US East Coast spot rate this week was at $2,000/FEU, down 13% since the beginning of the year, according to Platts, a sister company of the Journal of Commerce within S&P Global. On the Mediterranean-US trade lane, Gemini partners Maersk and Hapag-Lloyd announced separate peak season surcharges. From April 5, Hapag-Lloyd will add $750 to all types of containers and Maersk will charge $400 per box. Rate benchmarking platform Xeneta this week assessed average spot rates from the Mediterranean to the US East Coast at $3,355/FEU, down 8.4% since Jan. 1. The latest available trans-Atlantic volume data is for February, so any frontloading to get ahead of the tariffs to be imposed on the European Union on April 2 by the Trump administration is not yet reflected in the data. February volume fell 8.7% year over year to 154,090 TEUs, according to PIERS, also part of S&P Global. On Mediterranean to US routes, volume edged up 1.7% year over year to 128,230 TEUs. Contact Greg Knowler at greg.knowler@spglobal.com .

Jittery US wine coalition urges hold on EU imports over Trump tariff threat

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

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Shippers save money, time with automated transportation bidding tools

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

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Filling the Supply Chain Education Gap with LTL Education Courses

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Quarterly Intelligence

<div class="phx-topic abstract-wrapper">US maritime interests said the proposed fees on Chinese ships would hit a variety of low-value, niche trades that can’t absorb the costs.</div>

US maritime interests said the proposed fees on Chinese ships would hit a variety of low-value, niche trades that can’t absorb the costs.

<div class="phx-topic">While major container lines and their major customers are not speaking out much about the Trump administration’s proposed fees of about $1 million per US port call on Chinese vessels, shippers involved in smaller maritime and container trades are lashing out directly against the proposal through a comment period ending Monday. In comments filed with US Trade Representative (USTR) prior to a Monday hearing on the proposed fees, maritime interests said it will hit swathes of the economy outside the container trade and will even hurt the US-based maritime industry, which relies on Chinese ships. The USTR hearing comes after a year-long investigation found that <a href="https://www.joc.com/article/us-port-fees-could-hit-chinese-ships-under-trump-trade-proposal-5949409">China heavily subsidized its shipbuilding industry to take a dominant market share</a>. Last month, the USTR outlined a broad array of possible remedies, including collecting fees on Chinese carriers calling US ports, collecting other fees on non-Chinese carriers with Chinese ships in their fleet or newbuild orders in China, and requiring that US-flag vessels carry more exports. After the public hearing, the USTR will make a final determination on which of the penalties to enforce. The USTR has received more than 200 submissions ahead of Monday’s hearing on the impact of those penalties. The majority of commenters argue against any type of penalties, citing the potential for much higher shipping costs on trades that can least afford them and the reduction of services as Chinese ships avoid US ports. Many of the submissions highlighted that US-based ocean carriers also have Chinese-built ships in their fleets, with some of these fleets serving small regional markets such as the Caribbean, or dry and liquid bulk trades that will also be swept up in the port fees. There are 448 ships currently in service that are built in China and owned and operated by US ocean carriers, according to Sea-Web, a sister company of the Journal of Commerce within S&amp;P Global. Dry bulk ships make up about one-third of that total. There are also about 90 Chinese-built container and general cargo ships in US-based fleets, Sea-web data show. Although the Jones Act bars these ships from transporting goods between US ports, carriers such as Tropical Shipping and Seaboard Marine can serve international ports in the Caribbean and Central America from US ports. <h3>Caribbean sees end to shipping services </h3>A number of Florida ports and Caribbean-based shippers said USTR’s proposed penalties would cripple trade throughout the region. While the port fees could easily be absorbed across multiple cargoes on large ships, smaller vessels and shippers would take a big hit if a fee is charged regardless of the size of the ship and the value of the cargo. Carriers that serve Caribbean markets with Chinese ships “would effectively be out of business and so would all the islands and countries they trade with,” West Indian Marine Group said in its comment. “Islands and countries in the Caribbean would not be able to survive and exist because all trade is supplied from the USA.” Other niche carriers said they would not be able to serve the US market if fees on Chinese ships are levied. Atlantic Container Line, which has five ships in the trans-Atlantic trade, said only Chinese shipyards were willing to build its ships, which can switch between handling containers, breakbulk and roll-on, roll-off cargoes. “ACL would be forced to terminate its US service, close its American offices, lay off its American staff and redeploy its ships to non-US trades,” the company said in its submission. Container lines that remain in the US trade will likely have to pass on those charges to customers, the International Chamber of Shipping (ICS) said in its submission. It said the port fees could add $600 to $800 to the cost of each shipping container moved through US ports as the USTR proposal would impact nearly all container vessel calls to the US. “While some reorganization and substitution may be possible to avoid exposure to fees, it would be impossible for container liners to avoid the disproportionately high fees proposed, and costs would be passed on to US charterers and consumers,” the ICS said. The proposed fees would also cause large ocean carriers to change their service networks, the American Association of Port Authorities (AAPA) said in its submission to the USTR. It said container lines could increase calls to Canadian and Mexican ports to avoid the fees while reducing US port calls. <a href="https://www.joc.com/article/us-port-tax-would-scramble-ocean-services-raise-shipper-costs-drewry-5952046">That would strain big US ports and leave others with vastly reduced business, all while increasing costs to shippers</a>, the AAPA said. “This would cause significant congestion at large ports and the collapse of business lines at small and medium-sized ports. The results would be higher inflation, more unemployment, and higher trade deficits,” the AAPA said. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

While major container lines and their major customers are not speaking out much about the Trump administration’s proposed fees of about $1 million per US port call on Chinese vessels, shippers involved in smaller maritime and container trades are lashing out directly against the proposal through a comment period ending Monday. In comments filed with US Trade Representative (USTR) prior to a Monday hearing on the proposed fees, maritime interests said it will hit swathes of the economy outside the container trade and will even hurt the US-based maritime industry, which relies on Chinese ships. The USTR hearing comes after a year-long investigation found that China heavily subsidized its shipbuilding industry to take a dominant market share . Last month, the USTR outlined a broad array of possible remedies, including collecting fees on Chinese carriers calling US ports, collecting other fees on non-Chinese carriers with Chinese ships in their fleet or newbuild orders in China, and requiring that US-flag vessels carry more exports. After the public hearing, the USTR will make a final determination on which of the penalties to enforce. The USTR has received more than 200 submissions ahead of Monday’s hearing on the impact of those penalties. The majority of commenters argue against any type of penalties, citing the potential for much higher shipping costs on trades that can least afford them and the reduction of services as Chinese ships avoid US ports. Many of the submissions highlighted that US-based ocean carriers also have Chinese-built ships in their fleets, with some of these fleets serving small regional markets such as the Caribbean, or dry and liquid bulk trades that will also be swept up in the port fees. There are 448 ships currently in service that are built in China and owned and operated by US ocean carriers, according to Sea-Web, a sister company of the Journal of Commerce within S&P Global. Dry bulk ships make up about one-third of that total. There are also about 90 Chinese-built container and general cargo ships in US-based fleets, Sea-web data show. Although the Jones Act bars these ships from transporting goods between US ports, carriers such as Tropical Shipping and Seaboard Marine can serve international ports in the Caribbean and Central America from US ports. Caribbean sees end to shipping services A number of Florida ports and Caribbean-based shippers said USTR’s proposed penalties would cripple trade throughout the region. While the port fees could easily be absorbed across multiple cargoes on large ships, smaller vessels and shippers would take a big hit if a fee is charged regardless of the size of the ship and the value of the cargo. Carriers that serve Caribbean markets with Chinese ships “would effectively be out of business and so would all the islands and countries they trade with,” West Indian Marine Group said in its comment. “Islands and countries in the Caribbean would not be able to survive and exist because all trade is supplied from the USA.” Other niche carriers said they would not be able to serve the US market if fees on Chinese ships are levied. Atlantic Container Line, which has five ships in the trans-Atlantic trade, said only Chinese shipyards were willing to build its ships, which can switch between handling containers, breakbulk and roll-on, roll-off cargoes. “ACL would be forced to terminate its US service, close its American offices, lay off its American staff and redeploy its ships to non-US trades,” the company said in its submission. Container lines that remain in the US trade will likely have to pass on those charges to customers, the International Chamber of Shipping (ICS) said in its submission. It said the port fees could add $600 to $800 to the cost of each shipping container moved through US ports as the USTR proposal would impact nearly all container vessel calls to the US. “While some reorganization and substitution may be possible to avoid exposure to fees, it would be impossible for container liners to avoid the disproportionately high fees proposed, and costs would be passed on to US charterers and consumers,” the ICS said. The proposed fees would also cause large ocean carriers to change their service networks, the American Association of Port Authorities (AAPA) said in its submission to the USTR. It said container lines could increase calls to Canadian and Mexican ports to avoid the fees while reducing US port calls. That would strain big US ports and leave others with vastly reduced business, all while increasing costs to shippers , the AAPA said. “This would cause significant congestion at large ports and the collapse of business lines at small and medium-sized ports. The results would be higher inflation, more unemployment, and higher trade deficits,” the AAPA said. Contact Michael Angell at michael.angell@spglobal.com .

USTR’s China tonnage tax would squeeze smaller trades: stakeholders

<div class="phx-topic abstract-wrapper">Despite banking a collective operating profit of about $60 billion in 2024, a worsening supply-demand imbalance could make the next three years difficult for the container shipping industry.</div>

Despite banking a collective operating profit of about $60 billion in 2024, a worsening supply-demand imbalance could make the next three years difficult for the container shipping industry.

<div class="phx-topic">Container shipping is plunging into another downcycle with an oversupply of capacity and weakening demand hanging over the industry, leaving little to slow the slide in rates on major trades that analysts say has declined beyond seasonal norms. Despite reporting a highly profitable 2024 — operating profit will be near $60 billion across the industry, according to estimates from Sea-Intelligence Maritime Analysis — analysts are predicting a sharp downturn beginning this year. “We think we are entering a multi-year period of losses as the industry grapples with overcapacity,” J.P. Morgan wrote in a market update Monday, noting that the losses will likely emerge even if capacity does not fully return to the Red Sea this year. “Our demand-supply analysis now points to a 30% reduction in freight rates year over year in 2025 [down from the previous estimate of negative 15%],” the bank’s transport analysts wrote. “This leads to ocean EBIT [earnings before interest and taxes] losses emerging during 2025 and in our view persisting into the next three years, as vessel deliveries re-accelerate in 2027.” On the trans-Pacific, North Asia-US West Coast rates are down 65% since early January, falling an additional $400 last week to $1,800 per FEU. North Asia-US East Coast rates of $2,800/FEU lost $500 in the past week and are down 58% so far this year, according to Platts, a sister company of the Journal of Commerce within S&amp;P Global. Similarly, Asia-North Europe spot rates are down 50% since the beginning of January at $2,549/FEU and are now $148/FEU below the long-term contract rate, according to rate benchmarking platform Xeneta. <h3>Short-lived rate increases </h3>Carriers levied freight-all-kinds (FAK) increases on Asia-North Europe on March 1, but it had little effect on the oversupplied market, according to Peter Sand, Xeneta’s chief analyst. “The short-lived uptick in spot rates at the start of March suggests a weakness in the market and demonstrates the difficulties carriers will face in capacity management during 2025,” Sand said in a market update, adding that a similar weakening of rates can be seen on the Asia-to-US West and East coast trades despite a series of general rate increases (GRIs). <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e60581e5-a2c4-45df-a59f-3fe2b770f471"></dynamic-object></div>Maersk CEO Vincent Clerc <a href="https://www.joc.com/article/excess-capacity-hangs-over-recovering-container-market-maersk-ceo-5214234">said during the carrier’s earnings call</a> earlier this month that no matter how long the Red Sea disruption lasted, the fundamentals of increasing overcapacity in container shipping would “eventually” prevail and could start hitting the market as early as the third quarter. “Even if the situation on the Red Sea was to endure for two years, three years or four years, the current orderbook would eventually be bigger than what we expect market growth to be,” Clerc said. <h3>Flurry of air strikes on Houthi positions </h3>The container shipping order book is currently just over 7 million TEUs, representing 25% of the existing fleet, according to S&amp;P Global’s Sea-web, sister company of the Journal of Commerce, with the supply-demand imbalance expected to be particularly acute over the next two years. Niels Rasmussen, chief shipping analyst at shipping association BIMCO, had forecast cargo volume growth at 3% to 4% in both 2024 and 2025, which will be easily outstripped by fleet growth that was due to top 9.5% in 2024 and is forecast for 4.9% in 2025. An estimated 10% of global capacity has been absorbed by the longer transits around southern Africa to avoid the Red Sea. The Houthi’s move last week to renew attacks on Israeli-linked ships and a flurry of air strikes from US warplanes on the militants’ positions in Yemen over the weekend highlighted the ongoing volatility in the region. “The next incremental addition in capacity will result near term from the reopening of the Red Sea, which we think will likely happen in 2026 as it will take time for the full capacity to return,” J.P. Morgan noted in its update. The bank has forecast 2% growth in global volume this year, with volume rising 5% in the first quarter before falling to 1% growth for the remaining quarters of 2025. “We continue to see the freight backdrop as challenging and it remains subject to heightened demand risks as we enter a global trade war, given recent announcements of reciprocal tariffs with business confidence subject to downside risks,” J.P. Morgan said. John McCown, founder of private equity firm Blue Alpha Capital, agreed in his McCown Report released earlier this month. “The year 2025 could be a return to the roller coaster volume swings that most of us had hoped were in the past,” he wrote. “Whether it’s the Panama Canal situation, the complex reciprocal tariffs or the initiative <a href="https://www.joc.com/article/us-port-tax-would-scramble-ocean-services-raise-shipper-costs-drewry-5952046">to tax ships with a Chinese connection</a> each time they call on a US port, these initiatives inject chaos, uncertainty and unnecessary costs into the container supply chain.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Container shipping is plunging into another downcycle with an oversupply of capacity and weakening demand hanging over the industry, leaving little to slow the slide in rates on major trades that analysts say has declined beyond seasonal norms. Despite reporting a highly profitable 2024 — operating profit will be near $60 billion across the industry, according to estimates from Sea-Intelligence Maritime Analysis — analysts are predicting a sharp downturn beginning this year. “We think we are entering a multi-year period of losses as the industry grapples with overcapacity,” J.P. Morgan wrote in a market update Monday, noting that the losses will likely emerge even if capacity does not fully return to the Red Sea this year. “Our demand-supply analysis now points to a 30% reduction in freight rates year over year in 2025 [down from the previous estimate of negative 15%],” the bank’s transport analysts wrote. “This leads to ocean EBIT [earnings before interest and taxes] losses emerging during 2025 and in our view persisting into the next three years, as vessel deliveries re-accelerate in 2027.” On the trans-Pacific, North Asia-US West Coast rates are down 65% since early January, falling an additional $400 last week to $1,800 per FEU. North Asia-US East Coast rates of $2,800/FEU lost $500 in the past week and are down 58% so far this year, according to Platts, a sister company of the Journal of Commerce within S&P Global. Similarly, Asia-North Europe spot rates are down 50% since the beginning of January at $2,549/FEU and are now $148/FEU below the long-term contract rate, according to rate benchmarking platform Xeneta. Short-lived rate increases Carriers levied freight-all-kinds (FAK) increases on Asia-North Europe on March 1, but it had little effect on the oversupplied market, according to Peter Sand, Xeneta’s chief analyst. “The short-lived uptick in spot rates at the start of March suggests a weakness in the market and demonstrates the difficulties carriers will face in capacity management during 2025,” Sand said in a market update, adding that a similar weakening of rates can be seen on the Asia-to-US West and East coast trades despite a series of general rate increases (GRIs). Maersk CEO Vincent Clerc said during the carrier’s earnings call earlier this month that no matter how long the Red Sea disruption lasted, the fundamentals of increasing overcapacity in container shipping would “eventually” prevail and could start hitting the market as early as the third quarter. “Even if the situation on the Red Sea was to endure for two years, three years or four years, the current orderbook would eventually be bigger than what we expect market growth to be,” Clerc said. Flurry of air strikes on Houthi positions The container shipping order book is currently just over 7 million TEUs, representing 25% of the existing fleet, according to S&P Global’s Sea-web, sister company of the Journal of Commerce, with the supply-demand imbalance expected to be particularly acute over the next two years. Niels Rasmussen, chief shipping analyst at shipping association BIMCO, had forecast cargo volume growth at 3% to 4% in both 2024 and 2025, which will be easily outstripped by fleet growth that was due to top 9.5% in 2024 and is forecast for 4.9% in 2025. An estimated 10% of global capacity has been absorbed by the longer transits around southern Africa to avoid the Red Sea. The Houthi’s move last week to renew attacks on Israeli-linked ships and a flurry of air strikes from US warplanes on the militants’ positions in Yemen over the weekend highlighted the ongoing volatility in the region. “The next incremental addition in capacity will result near term from the reopening of the Red Sea, which we think will likely happen in 2026 as it will take time for the full capacity to return,” J.P. Morgan noted in its update. The bank has forecast 2% growth in global volume this year, with volume rising 5% in the first quarter before falling to 1% growth for the remaining quarters of 2025. “We continue to see the freight backdrop as challenging and it remains subject to heightened demand risks as we enter a global trade war, given recent announcements of reciprocal tariffs with business confidence subject to downside risks,” J.P. Morgan said. John McCown, founder of private equity firm Blue Alpha Capital, agreed in his McCown Report released earlier this month. “The year 2025 could be a return to the roller coaster volume swings that most of us had hoped were in the past,” he wrote. “Whether it’s the Panama Canal situation, the complex reciprocal tariffs or the initiative to tax ships with a Chinese connection each time they call on a US port, these initiatives inject chaos, uncertainty and unnecessary costs into the container supply chain.” Contact Greg Knowler at greg.knowler@spglobal.com .

Forwarding

Oversupplied ocean carriers sailing into new downcycle: analysts

<div class="phx-topic abstract-wrapper">A revision to monthly employment data shows a smaller pool of employees at for-hire trucking companies and a potential tilt toward brokers and small carriers. </div>

A revision to monthly employment data shows a smaller pool of employees at for-hire trucking companies and a potential tilt toward brokers and small carriers.

<div class="phx-topic">US employment data for February revealed a larger-than-expected shortfall in trucking employment, throwing light on a structural change in the US trucking market. The shortfall implies that truckload capacity — at least at larger carriers — could tighten more quickly when demand rises. It also underscores a shift in employment and resources from larger carriers <a href="https://www.joc.com/article/small-us-trucking-firms-winning-battle-for-drivers-5226976">to smaller trucking firms</a>, a shift that may be permanent. That has implications for shippers and freight brokers planning for 2025 and beyond. Currently, shippers tell the Journal of Commerce they have not had trouble finding truckload capacity, and that truckload pricing, while rising, is climbing only by low single digits. An annual revision of employment data by the US Bureau of Labor Statistics (BLS) found trucking employment had been over-reported in the period from 2022 through 2024, with the number of motor-carrier employees inflated by as much as 2% to 4%. The revision pulled down trucking employment numbers as far back as 2022 and left for-hire trucking payrolls at their lowest point since May 2021. With 1.49 million employees in February, those payroll numbers were lower than in the pre-pandemic year of 2019. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="73158b3f-ee15-4c69-8e63-176108dda90a"></dynamic-object></div>The extent of the shortfall is evident in the Journal of Commerce For-Hire Trucking Employment Index. In January, pre-revision, the index reading was 101.4, based on a pool of about 1.55 million workers. Post-revision, the index reading dropped 3% to 98.4, based on a pool of about 1.49 million trucking employees. The index is based on the average trucking employment in the fourth quarter of 2018, non-seasonally adjusted. “We saw this coming,” Avery Vise, vice president of trucking at FTR Transportation Intelligence, told the Journal of Commerce. A growing divergence between the BLS’ monthly payroll report and its quarterly employment census was <a href="https://www.joc.com/article/divergent-data-suggests-us-trucking-jobs-lower-than-reported-5729235">reported last fall</a>. The quarterly BLS Census of Employment and Wages (QCEW) is based on unemployment insurance filings, while the monthly Current Employment Statistics (CES) report draws on a large but random sample of business, including trucking companies. The monthly survey is benchmarked to the much broader QCEW, and in the past the trend lines of the two reports have closely matched, said Jason Miller, professor of supply chain management at Michigan State University. That began to change in 2022. “My general sense right now is that capacity is around where it was in 2019, with freight volumes also around those levels,” Miller said. “That would suggest we will have a year where capacity is generally available, with usual seasonal tightening.” The monthly BLS employment survey captures payroll data from carriers “with probably 10 trucks or more,” FTR’s Vise said. He also believes capacity among those motor carriers is essentially back to pre-pandemic levels, both in terms of drivers and trucks in their fleets. <h3>More small carriers </h3>However, the number of small carriers with one to five trucks is about 35% higher than before 2020, Vise said. That has kept the supply-demand balance in the shipper’s favor. “We still have a capacity overhang,” he said, but it’s on the small carrier side of the market. Truckload carriers with one to five trucks represent 90% of the truckload market, but carriers with 100 trucks or more account for half of all truckload capacity, Vise said. In past cycles, excess small carrier capacity exits as the market slogs through its trough. That hasn’t happened to the same extent as in previous cycles this time around. First, an unprecedented number of small carriers entered the market from 2020 through 2022, and “small carrier capacity is much more resilient” than it used to be, Vise said. “We’re trained to think of capacity in terms of how many trucks are out there for major truckload companies, but there’s been a structural change there,” said Vise. Large truckload carriers slashed truck capacity starting in 2022. Fleet cuts were evident in the Journal of Commerce Truckload Capacity Index, which is based on truck counts at publicly owned companies. The index dropped 17.5 points from 2022 through 2024. The number of motor carrier authorities — held mostly by small firms — rose by 128,115 from 2019 through the end of 2022, and then fell by 39,481 through last month, according to the US Federal Motor Carrier Safety Administration (FMCSA). There were still 88,634 more carriers on the books last month than at the end of 2019, the FMCSA data shows. Those carriers typically work with third-party brokers to secure freight, and they’ve managed to survive a freight and rate downturn that has lasted three years. “The truckload sector reached a point recently where half of all drivers in the for-hire fleets drove for the one to 100 truck fleets,” Jeff Tucker, CEO of logistics provider Tucker Company Worldwide, said at the Journal of Commerce’s TPM25 conference earlier this month. “The average size of those fleets was one to five trucks, and you wouldn’t touch those fleets unless you’re a broker,” Tucker said. Drivers have been gradually shifting to small carriers since the 2008–09 recession, and more quickly since 2020, he said. “The spot market has become a platform for brokers to do business with their small carrier partners, and the brokers are going to market in a much more even footing with truckload carriers,” FTR’s Vise said in a separate interview last week. “Until the last few years, getting the next load was very difficult” for small carriers, he said. “Today, there’s a lot more visibility. Small carriers now can eke out more utilization which means the market can absorb more freight without increases in rates.” And the shift seen in that trend might be “permanent, or long-standing,” he said. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

US employment data for February revealed a larger-than-expected shortfall in trucking employment, throwing light on a structural change in the US trucking market. The shortfall implies that truckload capacity — at least at larger carriers — could tighten more quickly when demand rises. It also underscores a shift in employment and resources from larger carriers to smaller trucking firms , a shift that may be permanent. That has implications for shippers and freight brokers planning for 2025 and beyond. Currently, shippers tell the Journal of Commerce they have not had trouble finding truckload capacity, and that truckload pricing, while rising, is climbing only by low single digits. An annual revision of employment data by the US Bureau of Labor Statistics (BLS) found trucking employment had been over-reported in the period from 2022 through 2024, with the number of motor-carrier employees inflated by as much as 2% to 4%. The revision pulled down trucking employment numbers as far back as 2022 and left for-hire trucking payrolls at their lowest point since May 2021. With 1.49 million employees in February, those payroll numbers were lower than in the pre-pandemic year of 2019. The extent of the shortfall is evident in the Journal of Commerce For-Hire Trucking Employment Index. In January, pre-revision, the index reading was 101.4, based on a pool of about 1.55 million workers. Post-revision, the index reading dropped 3% to 98.4, based on a pool of about 1.49 million trucking employees. The index is based on the average trucking employment in the fourth quarter of 2018, non-seasonally adjusted. “We saw this coming,” Avery Vise, vice president of trucking at FTR Transportation Intelligence, told the Journal of Commerce. A growing divergence between the BLS’ monthly payroll report and its quarterly employment census was reported last fall . The quarterly BLS Census of Employment and Wages (QCEW) is based on unemployment insurance filings, while the monthly Current Employment Statistics (CES) report draws on a large but random sample of business, including trucking companies. The monthly survey is benchmarked to the much broader QCEW, and in the past the trend lines of the two reports have closely matched, said Jason Miller, professor of supply chain management at Michigan State University. That began to change in 2022. “My general sense right now is that capacity is around where it was in 2019, with freight volumes also around those levels,” Miller said. “That would suggest we will have a year where capacity is generally available, with usual seasonal tightening.” The monthly BLS employment survey captures payroll data from carriers “with probably 10 trucks or more,” FTR’s Vise said. He also believes capacity among those motor carriers is essentially back to pre-pandemic levels, both in terms of drivers and trucks in their fleets. More small carriers However, the number of small carriers with one to five trucks is about 35% higher than before 2020, Vise said. That has kept the supply-demand balance in the shipper’s favor. “We still have a capacity overhang,” he said, but it’s on the small carrier side of the market. Truckload carriers with one to five trucks represent 90% of the truckload market, but carriers with 100 trucks or more account for half of all truckload capacity, Vise said. In past cycles, excess small carrier capacity exits as the market slogs through its trough. That hasn’t happened to the same extent as in previous cycles this time around. First, an unprecedented number of small carriers entered the market from 2020 through 2022, and “small carrier capacity is much more resilient” than it used to be, Vise said. “We’re trained to think of capacity in terms of how many trucks are out there for major truckload companies, but there’s been a structural change there,” said Vise. Large truckload carriers slashed truck capacity starting in 2022. Fleet cuts were evident in the Journal of Commerce Truckload Capacity Index, which is based on truck counts at publicly owned companies. The index dropped 17.5 points from 2022 through 2024. The number of motor carrier authorities — held mostly by small firms — rose by 128,115 from 2019 through the end of 2022, and then fell by 39,481 through last month, according to the US Federal Motor Carrier Safety Administration (FMCSA). There were still 88,634 more carriers on the books last month than at the end of 2019, the FMCSA data shows. Those carriers typically work with third-party brokers to secure freight, and they’ve managed to survive a freight and rate downturn that has lasted three years. “The truckload sector reached a point recently where half of all drivers in the for-hire fleets drove for the one to 100 truck fleets,” Jeff Tucker, CEO of logistics provider Tucker Company Worldwide, said at the Journal of Commerce’s TPM25 conference earlier this month. “The average size of those fleets was one to five trucks, and you wouldn’t touch those fleets unless you’re a broker,” Tucker said. Drivers have been gradually shifting to small carriers since the 2008–09 recession, and more quickly since 2020, he said. “The spot market has become a platform for brokers to do business with their small carrier partners, and the brokers are going to market in a much more even footing with truckload carriers,” FTR’s Vise said in a separate interview last week. “Until the last few years, getting the next load was very difficult” for small carriers, he said. “Today, there’s a lot more visibility. Small carriers now can eke out more utilization which means the market can absorb more freight without increases in rates.” And the shift seen in that trend might be “permanent, or long-standing,” he said. Contact William B. Cassidy at bill.cassidy@spglobal.com .

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