<div class="phx-topic abstract-wrapper">National drayage providers experiencing a sharp decline in orders as US tariffs come into effect now warn that a second-half rebound could be just as disruptive. </div>

National drayage providers experiencing a sharp decline in orders as US tariffs come into effect now warn that a second-half rebound could be just as disruptive.

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<div class="phx-topic">Drayage providers who handled the early 2025 surge of US-bound cargo booked ahead of US tariffs are now bracing for a significant drop in business that will begin in May and potentially last into the third quarter. They’re also girding for a disruptive import rebound once trade disputes abate. “What happens in the third quarter is going to be the big story,” said Paul Brashier, vice president of global supply chain for ITS Logistics, a Reno, Nevada-based third-party logistics provider offering over-the-road truckload and drayage services. Once US trade disputes with China and other trading partners are resolved, “there will be a wave of freight that will stress the system,” Brashier said. “We’re pretty much looking at a similar event as we saw with COVID in 2020. There will be pent-up demand.” Indeed, container shipping lines are already warning that a rebound in Asian imports following the expected plunge linked to the US-China trade dispute may <a href="https://www.joc.com/article/container-lines-warn-of-congestion-threat-when-asia-imports-rebound-5993793">overwhelm major US ports</a>. The biggest danger, they say, could be a lack of capacity outside port gates to handle a rapid acceleration in freight. That concern starts at drayage. “We’re warning customers to be very strategic with their dray partners,” said Ken Kellaway, CEO of RoadOne IntermodaLogistics, a nationwide drayage provider with headquarters near Boston. “If we lose drivers over the next 30 to 45 days, it will take weeks to get them back,” Kellaway said. “Shippers will be in trouble if we can’t preserve the capacity we have in the system today.” He said a freight “whiplash” could hit US ports as early as mid-June. <h3>Potential for a ‘reset’ </h3>US drayage capacity appears to be <a href="https://www.joc.com/article/shrinking-us-drayage-capacity-to-continue-outstripping-demand-5971095">slowly shrinking from a 2022 high</a>, with some of those losses attributed to the migration of owner-operators to the security of larger carriers. Still, excess drayage capacity persists, putting pressure on already-low rates. However, the Trump administration’s efforts to reshape global trade could reset the drayage market, especially if trade negotiations drag on without a resolution or a lowering of tariff rates that would encourage beneficial cargo owners (BCOs) to boost US imports. “The market’s been soft anyway, so a lot of small drayage companies are struggling with cash flow, taking any freight to keep going,” said Joel Henry, CEO of IMC Logistics, a nationwide drayage provider with headquarters near Memphis. “Now without the volume, they’ll not even have that cash flow,” Henry said. That could push small carriers that have stayed in business despite low rates the past two years out of the market, tightening capacity immediately when a rebound hits US ports. “I think there’s going to be a shakeout in capacity in the next month,” said Brian Kempisty, co-founder of drayage broker Port X Logistics, based in Buffalo, New York. “It could be three months, but when freight comes back, it will come back with a vengeance.” <h3>Drayage on the edge </h3>With the trajectory of trade disputes with China and other countries uncertain, many shippers in April canceled or postponed purchase orders from China. That big pause will lead to a real plunge in drayage demand at US ports and inland rail ramps. The US imposed combined tariffs of 145% on China on April 2, and China in turn imposed a 125% tariff on many US goods, including agricultural products. Another tranche of reciprocal tariffs on trading partners around the globe was paused for 90 days until July 9. And importers are also dealing with a 10% tariff on goods from almost all US trading partners, as well as 25% tariffs on steel, aluminum and automotive products and 25% tariffs on <a href="https://www.joc.com/article/tariff-uncertainty-pushing-up-transportation-costs-at-us-mexico-border-5984698">other goods from Mexico and Canada</a> that took effect in March. Bookings for containers headed from China to the US <a href="https://www.joc.com/article/trans-pacific-capacity-cuts-accelerating-amid-sharp-reduction-in-chinese-cargo-5992769">dropped nearly 54%</a> during the week of April 21–28 versus the comparable week in March, according to maritime visibility provider Vizion and data and analytics company Dun &amp; Bradstreet. “One of our large customers who imports through Savannah shared with us that they canceled all their purchase orders from China for the next 30 days,” said Kent Williams, executive vice president of sales and marketing for Cookeville, Tennessee-based Averitt. The regional trucking and drayage provider, which drays about 45,000 containers a year in the Southeast, saw its drayage business jump 10% to 12% year over year in the first quarter as customers rushed goods to the US ahead of the tariffs. In the past month, as the tariffs on China took effect, Averitt’s drayage volumes have dropped 5% year over year. “There’s a real fear it could get worse,” Williams said. “All the canceled bookings and blanked sailings are about to hit the supply chain in a big way.” The effects of the trade war on drayage are just becoming apparent, said Port X’s Kempisty. “Freight that sailed April 1,” just before the US tariffs on China took effect, “is arriving in the US now,” he said. But that will be the last frontloaded freight from China. “In drayage, we’re at the front end of this,” said Kempisty. The initial impact will be on the West Coast, but it won’t be long before inland markets begin to see volumes drop. “Inland drayage markets in Chicago and Kansas City are going to see a fairly substantial decline in the next couple of weeks,” he said. IMC Logistics, <a href="https://www.joc.com/article/kn-acquires-majority-stake-in-big-us-drayage-provider-5817584">purchased by global forwarder</a> Kuehne + Nagel last November, saw its drayage volume drop 14.2% in the last seven days as of Tuesday, and 8.1% in the last 30 days. “We’re seeing double-digit decreases in the orders we’re tracing,” Henry said. Added RoadOne’s Kellaway: “We haven’t seen the business fall off yet, but we know it’s coming.” Over the next few weeks, RoadOne anticipates its drayage volumes will drop 30% on the West Coast, 20% in the Midwest and 15% on the East Coast. “We could see a three- to four-week lull in volumes, so we’re moving equipment around,” he said. <h3>How long a decline? </h3>Other drayage providers offered similar forecasts of shipment decline, but no one has a clear idea of how long it will last. Guesses — it’s hard to call them estimates — have ranged from three weeks to three months or longer, in worst-case scenarios. The monthly Global Port Tracker produced by the National Retail Foundation (NRF) and Hackett Associates in April predicted US retail imports will be down 20% year over year in the second half of 2025, with a 20.2% decline in May and a 26.6% drop in June. “Even if there’s a [US-China] agreement today, there will still be this period where there will be less work coming inbound to the ports, with less drays, less transload, less truckload and less-than-truckload [LTL],” said Williams. “All this is already in motion.” The longer the “lull” or “pause” in Asian imports lasts, the bigger the long-term impact on drayage. And the bigger the rebound may be when trade disputes are settled. “If we get agreements before July, we could have an aggressive second half of the year,” Keith Prather, managing partner at Armada Capital Intelligence, said during an SMC3 webinar Tuesday on tariffs, the economy and the LTL sector. A big enough freight snap could boost not only drayage but other transportation modes out of what’s now a four-year freight downturn. “I look forward to dealing with the congestion,” said Henry. “That’s a much better challenge than this decline, because our driver base will be stable.” Contact William B. Cassidy at <a href="Mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.Associate editor Laura Robb contributed to this story. </div>

Drayage providers who handled the early 2025 surge of US-bound cargo booked ahead of US tariffs are now bracing for a significant drop in business that will begin in May and potentially last into the third quarter. They’re also girding for a disruptive import rebound once trade disputes abate. “What happens in the third quarter is going to be the big story,” said Paul Brashier, vice president of global supply chain for ITS Logistics, a Reno, Nevada-based third-party logistics provider offering over-the-road truckload and drayage services. Once US trade disputes with China and other trading partners are resolved, “there will be a wave of freight that will stress the system,” Brashier said. “We’re pretty much looking at a similar event as we saw with COVID in 2020. There will be pent-up demand.” Indeed, container shipping lines are already warning that a rebound in Asian imports following the expected plunge linked to the US-China trade dispute may overwhelm major US ports . The biggest danger, they say, could be a lack of capacity outside port gates to handle a rapid acceleration in freight. That concern starts at drayage. “We’re warning customers to be very strategic with their dray partners,” said Ken Kellaway, CEO of RoadOne IntermodaLogistics, a nationwide drayage provider with headquarters near Boston. “If we lose drivers over the next 30 to 45 days, it will take weeks to get them back,” Kellaway said. “Shippers will be in trouble if we can’t preserve the capacity we have in the system today.” He said a freight “whiplash” could hit US ports as early as mid-June. Potential for a ‘reset’ US drayage capacity appears to be slowly shrinking from a 2022 high , with some of those losses attributed to the migration of owner-operators to the security of larger carriers. Still, excess drayage capacity persists, putting pressure on already-low rates. However, the Trump administration’s efforts to reshape global trade could reset the drayage market, especially if trade negotiations drag on without a resolution or a lowering of tariff rates that would encourage beneficial cargo owners (BCOs) to boost US imports. “The market’s been soft anyway, so a lot of small drayage companies are struggling with cash flow, taking any freight to keep going,” said Joel Henry, CEO of IMC Logistics, a nationwide drayage provider with headquarters near Memphis. “Now without the volume, they’ll not even have that cash flow,” Henry said. That could push small carriers that have stayed in business despite low rates the past two years out of the market, tightening capacity immediately when a rebound hits US ports. “I think there’s going to be a shakeout in capacity in the next month,” said Brian Kempisty, co-founder of drayage broker Port X Logistics, based in Buffalo, New York. “It could be three months, but when freight comes back, it will come back with a vengeance.” Drayage on the edge With the trajectory of trade disputes with China and other countries uncertain, many shippers in April canceled or postponed purchase orders from China. That big pause will lead to a real plunge in drayage demand at US ports and inland rail ramps. The US imposed combined tariffs of 145% on China on April 2, and China in turn imposed a 125% tariff on many US goods, including agricultural products. Another tranche of reciprocal tariffs on trading partners around the globe was paused for 90 days until July 9. And importers are also dealing with a 10% tariff on goods from almost all US trading partners, as well as 25% tariffs on steel, aluminum and automotive products and 25% tariffs on other goods from Mexico and Canada that took effect in March. Bookings for containers headed from China to the US dropped nearly 54% during the week of April 21–28 versus the comparable week in March, according to maritime visibility provider Vizion and data and analytics company Dun & Bradstreet. “One of our large customers who imports through Savannah shared with us that they canceled all their purchase orders from China for the next 30 days,” said Kent Williams, executive vice president of sales and marketing for Cookeville, Tennessee-based Averitt. The regional trucking and drayage provider, which drays about 45,000 containers a year in the Southeast, saw its drayage business jump 10% to 12% year over year in the first quarter as customers rushed goods to the US ahead of the tariffs. In the past month, as the tariffs on China took effect, Averitt’s drayage volumes have dropped 5% year over year. “There’s a real fear it could get worse,” Williams said. “All the canceled bookings and blanked sailings are about to hit the supply chain in a big way.” The effects of the trade war on drayage are just becoming apparent, said Port X’s Kempisty. “Freight that sailed April 1,” just before the US tariffs on China took effect, “is arriving in the US now,” he said. But that will be the last frontloaded freight from China. “In drayage, we’re at the front end of this,” said Kempisty. The initial impact will be on the West Coast, but it won’t be long before inland markets begin to see volumes drop. “Inland drayage markets in Chicago and Kansas City are going to see a fairly substantial decline in the next couple of weeks,” he said. IMC Logistics, purchased by global forwarder Kuehne + Nagel last November, saw its drayage volume drop 14.2% in the last seven days as of Tuesday, and 8.1% in the last 30 days. “We’re seeing double-digit decreases in the orders we’re tracing,” Henry said. Added RoadOne’s Kellaway: “We haven’t seen the business fall off yet, but we know it’s coming.” Over the next few weeks, RoadOne anticipates its drayage volumes will drop 30% on the West Coast, 20% in the Midwest and 15% on the East Coast. “We could see a three- to four-week lull in volumes, so we’re moving equipment around,” he said. How long a decline? Other drayage providers offered similar forecasts of shipment decline, but no one has a clear idea of how long it will last. Guesses — it’s hard to call them estimates — have ranged from three weeks to three months or longer, in worst-case scenarios. The monthly Global Port Tracker produced by the National Retail Foundation (NRF) and Hackett Associates in April predicted US retail imports will be down 20% year over year in the second half of 2025, with a 20.2% decline in May and a 26.6% drop in June. “Even if there’s a [US-China] agreement today, there will still be this period where there will be less work coming inbound to the ports, with less drays, less transload, less truckload and less-than-truckload [LTL],” said Williams. “All this is already in motion.” The longer the “lull” or “pause” in Asian imports lasts, the bigger the long-term impact on drayage. And the bigger the rebound may be when trade disputes are settled. “If we get agreements before July, we could have an aggressive second half of the year,” Keith Prather, managing partner at Armada Capital Intelligence, said during an SMC3 webinar Tuesday on tariffs, the economy and the LTL sector. A big enough freight snap could boost not only drayage but other transportation modes out of what’s now a four-year freight downturn. “I look forward to dealing with the congestion,” said Henry. “That’s a much better challenge than this decline, because our driver base will be stable.” Contact William B. Cassidy at bill.cassidy@spglobal.com .Associate editor Laura Robb contributed to this story.

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US drayage providers bracing for container plunge say rebound could reset market

<div class="phx-topic abstract-wrapper">The carrier and competitor Hapag-Lloyd announced strong financial results Wednesday, but both said the success of early 2025 won’t be replicated through the balance of the year given market headwinds linked to the global trade conflict. </div>

The carrier and competitor Hapag-Lloyd announced strong financial results Wednesday, but both said the success of early 2025 won’t be replicated through the balance of the year given market headwinds linked to the global trade conflict.

<div class="phx-topic">Ocean Network Express (ONE) on Wednesday slashed its fiscal year 2025 profit forecast by more than 75%, citing economic instability linked to the global tariff war ignited by the Trump administration. Singapore-based ONE said it now expects full-year profits of about $250 million, down from an earlier estimate of $1.1 billion. A fiscal first-half profit of about $350 million will be followed by a $100 million net loss in the last six months of its fiscal year, the carrier projects. ONE’s 2025 fiscal year began April 1 and ends March 31, 2026. The carrier said the huge downgrade in profit expectations was made after considering “potential headwinds such as weakened cargo volumes in specific trade lanes and reductions in freight rates across global markets” due to heightened geopolitical and economy uncertainty. Fiscal year 2025 revenues will likely be about $8.5 billion in the carrier’s first-half period and $8 billion between October and March, down from its earlier forecast of $9.5 billion in the first half and $8.5 billion in the second. <h3>Big jump in FY’24 profit </h3>ONE revealed its revised forecasts as part of its fiscal 2024 annual results, which showed a 336% increase in net profit to $4.2 billion, up from $972 million in the prior-year period. Revenue climbed 32% to $19.2 billion, while liftings rose 6% to 12.75 million TEUs. Cargo volumes from Asia to North America increased 13.4% in January and February year over year, likely due to robust demand on strong US consumer spending and frontloading by importers in anticipation of tariff hikes, ONE said. But volumes have fallen on major trade lanes since the Lunar New Year amid “a tendency to hold off on shipments due to uncertainty about the outlook,” the carrier said. While continued vessel diversions around the Cape of Good Hope led to tight vessel supply in January, weakened cargo demand since then has led to a vessel oversupply, it added. The latest economic data from China released Wednesday confirm the slowdown in trade. China’s Purchasing Managers Index (PMI) dropped to 49 in April from 50.5 in March as the US-led tariff and trade dispute impacted output. China’s new orders index also contracted in April, to 49.2 from 52.4 in March, reflecting a dearth of new contracts. <h3>Hagag-Lloyd warns of ‘considerable uncertainty’ </h3>Echoing ONE’s view of the container market, Hapag-Lloyd CEO Rolf Habben Jansen said Wednesday the current market was characterized by uncertainty. “We therefore continue to expect lower results for 2025 as a whole,” he said in a statement announcing the carrier’s first-quarter results. Earnings forecasts for 2025 that were released in January remain unchanged, for now. Hapag-Lloyd still expects group earnings before interest, tax, depreciation and amortization (EBITDA) to range between $2.5 billion and $4 billion, with group earnings before interest and tax (EBIT) of between zero and $1.5 billion. “This forecast remains subject to considerable uncertainty due to the volatile development of freight rates and major geopolitical challenges,” the carrier said. “Both the ongoing tense situation in the Red Sea and the global trade conflict could have a significant impact on supply and demand in container shipping and thus also on Hapag-Lloyd’s earnings performance.” Despite the market challenges, Habben Jansen said Hapag-Lloyd “got off to a good start in the first quarter.” The carrier saw a 15% increase in group revenue to $5.3 billion in the quarter, from $4.6 billion a year ago. Its average freight rates rose to $1,450 per TEU against $1,359/TEU, while liftings climbed to 3.3 million TEUs from 3 million TEUs in the year-earlier period. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>.</div>

Ocean Network Express (ONE) on Wednesday slashed its fiscal year 2025 profit forecast by more than 75%, citing economic instability linked to the global tariff war ignited by the Trump administration. Singapore-based ONE said it now expects full-year profits of about $250 million, down from an earlier estimate of $1.1 billion. A fiscal first-half profit of about $350 million will be followed by a $100 million net loss in the last six months of its fiscal year, the carrier projects. ONE’s 2025 fiscal year began April 1 and ends March 31, 2026. The carrier said the huge downgrade in profit expectations was made after considering “potential headwinds such as weakened cargo volumes in specific trade lanes and reductions in freight rates across global markets” due to heightened geopolitical and economy uncertainty. Fiscal year 2025 revenues will likely be about $8.5 billion in the carrier’s first-half period and $8 billion between October and March, down from its earlier forecast of $9.5 billion in the first half and $8.5 billion in the second. Big jump in FY’24 profit ONE revealed its revised forecasts as part of its fiscal 2024 annual results, which showed a 336% increase in net profit to $4.2 billion, up from $972 million in the prior-year period. Revenue climbed 32% to $19.2 billion, while liftings rose 6% to 12.75 million TEUs. Cargo volumes from Asia to North America increased 13.4% in January and February year over year, likely due to robust demand on strong US consumer spending and frontloading by importers in anticipation of tariff hikes, ONE said. But volumes have fallen on major trade lanes since the Lunar New Year amid “a tendency to hold off on shipments due to uncertainty about the outlook,” the carrier said. While continued vessel diversions around the Cape of Good Hope led to tight vessel supply in January, weakened cargo demand since then has led to a vessel oversupply, it added. The latest economic data from China released Wednesday confirm the slowdown in trade. China’s Purchasing Managers Index (PMI) dropped to 49 in April from 50.5 in March as the US-led tariff and trade dispute impacted output. China’s new orders index also contracted in April, to 49.2 from 52.4 in March, reflecting a dearth of new contracts. Hagag-Lloyd warns of ‘considerable uncertainty’ Echoing ONE’s view of the container market, Hapag-Lloyd CEO Rolf Habben Jansen said Wednesday the current market was characterized by uncertainty. “We therefore continue to expect lower results for 2025 as a whole,” he said in a statement announcing the carrier’s first-quarter results. Earnings forecasts for 2025 that were released in January remain unchanged, for now. Hapag-Lloyd still expects group earnings before interest, tax, depreciation and amortization (EBITDA) to range between $2.5 billion and $4 billion, with group earnings before interest and tax (EBIT) of between zero and $1.5 billion. “This forecast remains subject to considerable uncertainty due to the volatile development of freight rates and major geopolitical challenges,” the carrier said. “Both the ongoing tense situation in the Red Sea and the global trade conflict could have a significant impact on supply and demand in container shipping and thus also on Hapag-Lloyd’s earnings performance.” Despite the market challenges, Habben Jansen said Hapag-Lloyd “got off to a good start in the first quarter.” The carrier saw a 15% increase in group revenue to $5.3 billion in the quarter, from $4.6 billion a year ago. Its average freight rates rose to $1,450 per TEU against $1,359/TEU, while liftings climbed to 3.3 million TEUs from 3 million TEUs in the year-earlier period. Contact Keith Wallis at keithwallis@hotmail.com .

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ONE makes big cut in FY 2025 profit forecast due to economic uncertainty

<div class="phx-topic abstract-wrapper">After getting the year off to a solid start in the first quarter, Jens Lund said the real work begins now to bring the two global forwarders together under the DSV brand.</div>

After getting the year off to a solid start in the first quarter, Jens Lund said the real work begins now to bring the two global forwarders together under the DSV brand.

<div class="phx-topic">DSV completed its all-cash $16.25 billion takeover of DB Schenker Wednesday and began a multi-year journey to integrate its largest-ever acquisition in a process CEO Jens Lund described as “a mammoth test” for the combined forwarding group. “You’ve furnished the capital, and now we have to deliver on the business plan,” Lund told investors on DSV’s first-quarter earnings call after reporting a strong start to the year. DSV’s first-quarter revenue increased 8.2% year over year to $6.3 billion, while gross profit was up 6.2% at $1.7 billion. Its earnings before interest and taxes (EBIT) rose 4.8% to $588 million and net profit for the first three months came in at $428 million, up 17.5% year over year. Ocean volume of 653,000 TEUs in the first quarter was up 3% year over year, but gross profit per TEU increased 14% to $503 million. Air freight volume remained flat through the first quarter at 334,000 tons, with gross profit per ton rising 5% to $1,400. Although DSV executives emphasized the solid start to the year, the DB Schenker acquisition from parent Deutsche Bahn dominated the earnings call. Financial analysts were particularly focused on the synergies that would result from the combined company and the high costs of the integration. CFO Michael Ebbe said DSV “has only just received the keys” to DB Schenker, and while the synergies are expected to reach $1.37 billion by 2028 when the integration is completed, more details would be provided later this year. The synergies relate to the savings from a consolidation of operations, logistics facilities, back-office functions, finance and IT infrastructure. “But I think it’s important to notice that this acquisition is different from what we have previously done and the synergies are split over a broader area,” Ebbe said. “Because there is a sizable business in road and in solutions that means that in terms of consolidation of warehouses and equipment, it is a bigger than what we have done before.” The solutions business will be renamed “contract logistics.” <h3>Huge scale of combined networks </h3>DB Schenker is DSV’s largest acquisition by a huge margin, having previously taken over <a href="https://www.joc.com/article/size-equals-value-in-fragmented-market-dsvs-andersen-5248808">Agility’s Global Integrated Logistics (GIL) in 2021 for $4.2 billion</a>, <a href="https://www.joc.com/article/newly-combined-dsv-panalpina-targets-trans-pacific-trade-5226703">Panalpina in 2019 for $4.6 billion</a> and <a href="https://www.joc.com/article/dsv-buys-uti-for-135-billion-5205537">UTi in 2015 for $1.35 billion</a>. The integration and restructuring process is expected to cost $1.67 billion with up to $380 million to be recorded under “special items” on this year’s financials. The high cost of the integration process is hardly surprising, with Lund outlining the enormous scale of the combined networks. DSV’s 73,500 employees will be joined by DB Schenker’s 85,800 staff; DB Schenker will add annual revenue of $22 billion to DSV’s $25.5 billion (based on 2024 results); annual air freight volume will rise from 1.4 million tons to 2.4 million tons; sea freight volume will increase from 2.7 million TEUs to 4.5 million TEUs; road freight revenue will grow from the current $6.14 billion to $8.6 billion and total warehousing space will expand from 9.2 million square meters to 17.7 million square meters. The combined entity also comes with a round of appointments with <a href="https://www.joc.com/article/last-regulatory-hurdles-cleared-for-dsv-takeover-of-db-schenker-5985387">executives being promoted from both DSV and DB Schenker</a>. <h3>Global uncertainty impacts full-year profit forecasts </h3>DSV’s EBIT prediction for 2025 has been significantly revised upward and is now expected to be between $3 billion and $3.2 billion, up almost 25% compared with the guidance issued at the start of the year and entirely related to the expected Schenker impact. The underlying DSV standalone guidance was left unchanged, following <a href="https://www.joc.com/article/kuehne-nagels-financial-crystal-ball-clouded-by-us-tariff-disruption-5990729">similar moves by rivals Kuehne + Nagel</a> and DHL, who also decided not to tamper with their full-year profitability expectations in such an uncertain geopolitical environment. But Ebbe played down the impact to DSV of the US-China trade dispute, despite having 25% of its overall trade exposed to the US market. “The US is a significant market for us, but total direct China-US trade for us is around 5% of our total, so we will stick to our [post-closing] guidance, and also on DSV’s standalone guidance,” he said. <h3>DHL wary of tariff effects </h3>Meanwhile, the DHL Group on Wednesday posted 2.8% year-over-year growth in first-quarter revenue of $23.6 billion, while EBIT was up 4.5% at $1.555 billion. DHL is still expecting a full-year operating result of at least $6.8 billion in 2025, but that came with a large caveat. “We explicitly do not account for potential effects from changes in tariffs and trade policies, which could have significant negative, but also positive, impacts on our business,” DHL Group CFO Melanie Kreis said in a statement on the first-quarter results. DHL Global Forwarding posted a 3.2% year-over-year increase in revenue in the first quarter to $5.2 billion, but EBIT plunged 23% to $298 million as economic weakness in Germany and the European road freight business dragged down earnings. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

DSV completed its all-cash $16.25 billion takeover of DB Schenker Wednesday and began a multi-year journey to integrate its largest-ever acquisition in a process CEO Jens Lund described as “a mammoth test” for the combined forwarding group. “You’ve furnished the capital, and now we have to deliver on the business plan,” Lund told investors on DSV’s first-quarter earnings call after reporting a strong start to the year. DSV’s first-quarter revenue increased 8.2% year over year to $6.3 billion, while gross profit was up 6.2% at $1.7 billion. Its earnings before interest and taxes (EBIT) rose 4.8% to $588 million and net profit for the first three months came in at $428 million, up 17.5% year over year. Ocean volume of 653,000 TEUs in the first quarter was up 3% year over year, but gross profit per TEU increased 14% to $503 million. Air freight volume remained flat through the first quarter at 334,000 tons, with gross profit per ton rising 5% to $1,400. Although DSV executives emphasized the solid start to the year, the DB Schenker acquisition from parent Deutsche Bahn dominated the earnings call. Financial analysts were particularly focused on the synergies that would result from the combined company and the high costs of the integration. CFO Michael Ebbe said DSV “has only just received the keys” to DB Schenker, and while the synergies are expected to reach $1.37 billion by 2028 when the integration is completed, more details would be provided later this year. The synergies relate to the savings from a consolidation of operations, logistics facilities, back-office functions, finance and IT infrastructure. “But I think it’s important to notice that this acquisition is different from what we have previously done and the synergies are split over a broader area,” Ebbe said. “Because there is a sizable business in road and in solutions that means that in terms of consolidation of warehouses and equipment, it is a bigger than what we have done before.” The solutions business will be renamed “contract logistics.” Huge scale of combined networks DB Schenker is DSV’s largest acquisition by a huge margin, having previously taken over Agility’s Global Integrated Logistics (GIL) in 2021 for $4.2 billion , Panalpina in 2019 for $4.6 billion and UTi in 2015 for $1.35 billion . The integration and restructuring process is expected to cost $1.67 billion with up to $380 million to be recorded under “special items” on this year’s financials. The high cost of the integration process is hardly surprising, with Lund outlining the enormous scale of the combined networks. DSV’s 73,500 employees will be joined by DB Schenker’s 85,800 staff; DB Schenker will add annual revenue of $22 billion to DSV’s $25.5 billion (based on 2024 results); annual air freight volume will rise from 1.4 million tons to 2.4 million tons; sea freight volume will increase from 2.7 million TEUs to 4.5 million TEUs; road freight revenue will grow from the current $6.14 billion to $8.6 billion and total warehousing space will expand from 9.2 million square meters to 17.7 million square meters. The combined entity also comes with a round of appointments with executives being promoted from both DSV and DB Schenker . Global uncertainty impacts full-year profit forecasts DSV’s EBIT prediction for 2025 has been significantly revised upward and is now expected to be between $3 billion and $3.2 billion, up almost 25% compared with the guidance issued at the start of the year and entirely related to the expected Schenker impact. The underlying DSV standalone guidance was left unchanged, following similar moves by rivals Kuehne + Nagel and DHL, who also decided not to tamper with their full-year profitability expectations in such an uncertain geopolitical environment. But Ebbe played down the impact to DSV of the US-China trade dispute, despite having 25% of its overall trade exposed to the US market. “The US is a significant market for us, but total direct China-US trade for us is around 5% of our total, so we will stick to our [post-closing] guidance, and also on DSV’s standalone guidance,” he said. DHL wary of tariff effects Meanwhile, the DHL Group on Wednesday posted 2.8% year-over-year growth in first-quarter revenue of $23.6 billion, while EBIT was up 4.5% at $1.555 billion. DHL is still expecting a full-year operating result of at least $6.8 billion in 2025, but that came with a large caveat. “We explicitly do not account for potential effects from changes in tariffs and trade policies, which could have significant negative, but also positive, impacts on our business,” DHL Group CFO Melanie Kreis said in a statement on the first-quarter results. DHL Global Forwarding posted a 3.2% year-over-year increase in revenue in the first quarter to $5.2 billion, but EBIT plunged 23% to $298 million as economic weakness in Germany and the European road freight business dragged down earnings. Contact Greg Knowler at greg.knowler@spglobal.com .

Supply chain

Forwarding

DSV embarks on ‘mammoth test’ as DB Schenker integration begins: CEO

<div class="phx-topic abstract-wrapper">It is the second acquisition this week by a CMA CGM subsidiary following CEVA Logistics’ takeover of Turkish forwarder Borusan Tedarik, with both deals aimed at extending the carrier’s end-to-end supply chain control.</div>

It is the second acquisition this week by a CMA CGM subsidiary following CEVA Logistics’ takeover of Turkish forwarder Borusan Tedarik, with both deals aimed at extending the carrier’s end-to-end supply chain control.

<div class="phx-topic">CMA CGM Air Cargo on Wednesday said it has acquired the cargo operations of longtime partner Air Belgium, adding four freighters to its fast-growing fleet covering Europe, Asia and the US. It is the second acquisition this week by a CMA CGM subsidiary following CEVA Logistics’ <a href="https://www.joc.com/article/ceva-expands-reach-in-turkey-with-440-million-acquisition-5992136">$440 million takeover of Turkish forwarder Borusan Tedarik</a> that was announced Monday. Both deals are aimed at extending the Marseilles-based carrier’s control of its end-to-end supply chain. Terms of the Air Belgium deal were not disclosed. “The acquisition of Air Belgium marks an important step in the expansion of the CMA CGM Group’s air freight operations in Europe and worldwide,” Damien Mazaudier, executive vice president of the air division at CMA CGM Group, said in a statement. “It immediately strengthens our air capacity while addressing current logistical challenges,” Mazaudier added, noting that it improved CMA CGM Air Cargo’s ability “to anticipate market evolutions.” The acquisition will come as a relief to troubled Air Belgium, which has been struggling to find financial stability after undergoing judicial restructuring and discontinuing its passenger business to focus on cargo in 2023. The transfer of assets to CMA CGM followed approval by the Brabant Wallon Commercial Court earlier this month of a binding offer for the takeover of Air Belgium’s cargo operations. The CMA CGM subsidiary pledged to retain the Air Belgium brand, as well as preserve 124 jobs, including 72 pilot positions. Air Belgium’s four freighters, two Airbus 330-243Fs and two Boeing 747-8Fs, will join the nine cargo planes currently operated by CMA CGM Air Cargo — four Boeing 777Fs, three Airbus A330Fs and two Boeing 747Fs. Another Boeing 777F will join the fleet soon and eight Airbus A350Fs are scheduled to be delivered from 2027. <h3>Strategic hubs in Europe, US </h3>When CMA CGM launched its foray into the air cargo market in 2021, it outsourced operations of its four A330F aircraft to Air Belgium out of Liege while CMA CGM Air Cargo waited for approval of its own French air operator certificate to establish its Paris Charles de Gaulle hub. CMA CGM Air Cargo will operate out of strategic hubs in Liege, Paris and Chicago. The airline has regular weekly services with two B777F aircraft operating from Paris to Hong Kong and Shanghai and one A330F to Zhengzhou. Alongside the expansion of Europe services, CMA CGM has established an air freight hub in Chicago, served by two B777Fs operated by Atlas Air under the CMA CGM Air Cargo brand, with another three aircraft “to be added soon,” CMA CGM’s Wednesday statement noted. These new freighters are intended to strengthen the group’s presence on trans-Pacific routes and support the expansion of cargo activities in the American market. However, it is not a good time to be adding air freight capacity to the trans-Pacific, where <a href="https://www.joc.com/article/air-cargo-volumes-fall-on-trans-pacific-as-us-de-minimis-changes-loom-5993599">volume from China to the US has fallen sharply</a> ahead of the Trump administration’s May 2 elimination of the duty-free exemption for low-value shipments. The huge demand for e-commerce on the trans-Pacific filled hundreds of freighters leaving China every day, and that capacity is being released into the market. Some freighters are being absorbed by US tariff exemptions for smartphones and other tech products imported from China, as well as from high demand in the semiconductor sector. But airlines are shifting much of the released capacity to other trade lanes. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

CMA CGM Air Cargo on Wednesday said it has acquired the cargo operations of longtime partner Air Belgium, adding four freighters to its fast-growing fleet covering Europe, Asia and the US. It is the second acquisition this week by a CMA CGM subsidiary following CEVA Logistics’ $440 million takeover of Turkish forwarder Borusan Tedarik that was announced Monday. Both deals are aimed at extending the Marseilles-based carrier’s control of its end-to-end supply chain. Terms of the Air Belgium deal were not disclosed. “The acquisition of Air Belgium marks an important step in the expansion of the CMA CGM Group’s air freight operations in Europe and worldwide,” Damien Mazaudier, executive vice president of the air division at CMA CGM Group, said in a statement. “It immediately strengthens our air capacity while addressing current logistical challenges,” Mazaudier added, noting that it improved CMA CGM Air Cargo’s ability “to anticipate market evolutions.” The acquisition will come as a relief to troubled Air Belgium, which has been struggling to find financial stability after undergoing judicial restructuring and discontinuing its passenger business to focus on cargo in 2023. The transfer of assets to CMA CGM followed approval by the Brabant Wallon Commercial Court earlier this month of a binding offer for the takeover of Air Belgium’s cargo operations. The CMA CGM subsidiary pledged to retain the Air Belgium brand, as well as preserve 124 jobs, including 72 pilot positions. Air Belgium’s four freighters, two Airbus 330-243Fs and two Boeing 747-8Fs, will join the nine cargo planes currently operated by CMA CGM Air Cargo — four Boeing 777Fs, three Airbus A330Fs and two Boeing 747Fs. Another Boeing 777F will join the fleet soon and eight Airbus A350Fs are scheduled to be delivered from 2027. Strategic hubs in Europe, US When CMA CGM launched its foray into the air cargo market in 2021, it outsourced operations of its four A330F aircraft to Air Belgium out of Liege while CMA CGM Air Cargo waited for approval of its own French air operator certificate to establish its Paris Charles de Gaulle hub. CMA CGM Air Cargo will operate out of strategic hubs in Liege, Paris and Chicago. The airline has regular weekly services with two B777F aircraft operating from Paris to Hong Kong and Shanghai and one A330F to Zhengzhou. Alongside the expansion of Europe services, CMA CGM has established an air freight hub in Chicago, served by two B777Fs operated by Atlas Air under the CMA CGM Air Cargo brand, with another three aircraft “to be added soon,” CMA CGM’s Wednesday statement noted. These new freighters are intended to strengthen the group’s presence on trans-Pacific routes and support the expansion of cargo activities in the American market. However, it is not a good time to be adding air freight capacity to the trans-Pacific, where volume from China to the US has fallen sharply ahead of the Trump administration’s May 2 elimination of the duty-free exemption for low-value shipments. The huge demand for e-commerce on the trans-Pacific filled hundreds of freighters leaving China every day, and that capacity is being released into the market. Some freighters are being absorbed by US tariff exemptions for smartphones and other tech products imported from China, as well as from high demand in the semiconductor sector. But airlines are shifting much of the released capacity to other trade lanes. Contact Greg Knowler at greg.knowler@spglobal.com .

Air Cargo Carriers News

Air Cargo

CMA CGM expands air cargo fleet with Air Belgium takeover

<div class="phx-topic abstract-wrapper">US ports and support infrastructure such as warehouses and rail connections aren’t better equipped to handle import surges than they were during the pandemic when record volumes drove congestion to historic highs, carrier executives said this week.</div>

US ports and support infrastructure such as warehouses and rail connections aren’t better equipped to handle import surges than they were during the pandemic when record volumes drove congestion to historic highs, carrier executives said this week.

<div class="phx-topic">Container line executives warn that the inevitable rebound in Asian imports that will come at some point after the expected plunge in volumes linked to US tariffs may overwhelm major US ports because the supporting systems aren’t significantly better prepared than they were during the pandemic. The timing and scale of the rebound isn’t yet known. But import volumes from Asia are expected to recover eventually either because tariffs are eased or cargo owners ultimately decide there is no relief coming and eat the higher costs due to a need to replenish inventories. “Regardless of whether the demand will go up two times or come back to a level of about eight weeks ago, the system is not fundamentally better than it was five years ago,” Charles van der Steene, president of Maersk North America, said at the Georgia International Trade Conference this week. “Right now ... volumes are down [30%-40%] and if that goes up, the sheer surge will test the system and disruption cannot be avoided.” Similar to during the pandemic, the sharpest limits to capacity during an import surge will be less at the marine terminals and more outside the truck gates. There, importers and consignees could face limited availability of warehousing and chassis, while a rush of international intermodal could sap rail car supply, carrier executives told the conference. “If our terminals start working at 70%, 80%, 90% capacity and beyond on a regular basis for weeks, the system will crumble,” said Fabio Santucci, president of US operations for Mediterranean Shipping Co. Santucci added that if import dwell times at marine terminals exceed 10 days, ports can’t dig out of backlogs. <h3>‘Uncertainty’ the key word </h3>Stuart Sandlin, Hapag-Lloyd’s North America president, fears a rise in abandoned containers as some US exporters walk away from Chinese contracts due to 125% retaliatory Chinese tariffs on low-value US commodities. Even more alarming would be if US importers begin to abandon higher-value cargo, something he said would signal a potential wave of bankruptcies. Some smaller US importers are already struggling with backing a larger surety bond thanks to higher US tariff costs. <a href="https://www.joc.com/article/trans-pacific-capacity-cuts-accelerating-amid-sharp-reduction-in-chinese-cargo-5992769">Estimates of the plunge in China bookings from carriers and forwarders range from 30% to up to 50%</a>. The resumption of shipping last week from China by Walmart, Target and other big box retailers after they paused US shipments earlier in the month suggests a rebound is already building, executives at two major carriers told the Journal of Commerce. “I think the key word is ‘uncertainty,’” Santucci told the conference. “Sixty to 70% of customers are reevaluating shipment out of China. They’re either pausing [or] they’ve asked for shipments to be brought back to China.” He said customers are requesting changes to import and inland delivery destinations while containers “are on the water,” adding there’s been a spike in requests to hold shipments at transshipment ports before being loaded onto US-bound vessels. Contact Mark Szakonyi at <a href="mailto:mark.szakonyi@spglobal.com">mark.szakonyi@spglobal.com</a>. </div>

Container line executives warn that the inevitable rebound in Asian imports that will come at some point after the expected plunge in volumes linked to US tariffs may overwhelm major US ports because the supporting systems aren’t significantly better prepared than they were during the pandemic. The timing and scale of the rebound isn’t yet known. But import volumes from Asia are expected to recover eventually either because tariffs are eased or cargo owners ultimately decide there is no relief coming and eat the higher costs due to a need to replenish inventories. “Regardless of whether the demand will go up two times or come back to a level of about eight weeks ago, the system is not fundamentally better than it was five years ago,” Charles van der Steene, president of Maersk North America, said at the Georgia International Trade Conference this week. “Right now ... volumes are down [30%-40%] and if that goes up, the sheer surge will test the system and disruption cannot be avoided.” Similar to during the pandemic, the sharpest limits to capacity during an import surge will be less at the marine terminals and more outside the truck gates. There, importers and consignees could face limited availability of warehousing and chassis, while a rush of international intermodal could sap rail car supply, carrier executives told the conference. “If our terminals start working at 70%, 80%, 90% capacity and beyond on a regular basis for weeks, the system will crumble,” said Fabio Santucci, president of US operations for Mediterranean Shipping Co. Santucci added that if import dwell times at marine terminals exceed 10 days, ports can’t dig out of backlogs. ‘Uncertainty’ the key word Stuart Sandlin, Hapag-Lloyd’s North America president, fears a rise in abandoned containers as some US exporters walk away from Chinese contracts due to 125% retaliatory Chinese tariffs on low-value US commodities. Even more alarming would be if US importers begin to abandon higher-value cargo, something he said would signal a potential wave of bankruptcies. Some smaller US importers are already struggling with backing a larger surety bond thanks to higher US tariff costs. Estimates of the plunge in China bookings from carriers and forwarders range from 30% to up to 50% . The resumption of shipping last week from China by Walmart, Target and other big box retailers after they paused US shipments earlier in the month suggests a rebound is already building, executives at two major carriers told the Journal of Commerce. “I think the key word is ‘uncertainty,’” Santucci told the conference. “Sixty to 70% of customers are reevaluating shipment out of China. They’re either pausing [or] they’ve asked for shipments to be brought back to China.” He said customers are requesting changes to import and inland delivery destinations while containers “are on the water,” adding there’s been a spike in requests to hold shipments at transshipment ports before being loaded onto US-bound vessels. Contact Mark Szakonyi at mark.szakonyi@spglobal.com .

Port infrastructure

North American ports

Container lines warn of congestion threat when Asia imports rebound

<div class="phx-topic abstract-wrapper">Direct services to Asia and the EU have pulled more resin cargoes away from Houston, but the Gulf Coast is still the main route to the South American market.</div>

Direct services to Asia and the EU have pulled more resin cargoes away from Houston, but the Gulf Coast is still the main route to the South American market.

<div class="phx-topic">While the Port of Houston still reigns as top gateway, resins shippers are increasingly tapping southeast US ports, thanks to their big-ship capacity and strong connectivity in east-west trades. However, President Donald Trump’s tariff actions risk cutting into the steady growth of US resin exports and have virtually shut off US exporters’ largest market, China, given the buyer’s 125% retaliatory tariffs. That is coming after a year of modest but steady growth; containerized US chemical and plastic resin exports expanded 1.2% in 2024, the third consecutive annual increase and in line with the sector’s five-year compound average growth of 2.1%, according to PIERS, a sister company of the Journal of Commerce within S&amp;P Global. Plastic resins, including polyethylene and polypropylene, represent 57% of US chemical exports. “It was a fairly decent year of growth,” said Shruthi Vangipuram, a senior research analyst at consultancy Wood Mackenzie. “Not extraordinary, but there were still major participants for US exports.” With almost all US production concentrated in the Gulf Coast region, resin traders and distributors heavily rely on Houston as their main export gateway. Houston handled about 41.8% of US chemical exports last year and has seen shipments increase at an average annual rate of 6.8% over the last five years, according to PIERS. The ports of Los Angeles and Long Beach still occupy the No. 2 spot for exports thanks to their proximity to China and high capacity. Even so, chemical exports out of the busiest US port complex have been in decline as shippers seek less congested gateways with easier rail access. Houston’s long-term export growth rates nearly match those of the ports of Charleston and Savannah, the third- and fourth-busiest export gateways for US chemicals in 2024. The two ports’ continued growth follows <a href="https://www.joc.com/article/new-plants-put-savannah-on-track-to-double-resin-exports-5236055">millions in investments</a> to set up nearby warehouses and facilities for packaging resins into shipping containers. <h3>‘Outgrowing’ the Gulf </h3>An ocean logistics manager for a global resins distributor and trader told the Journal of Commerce that an increasing share of his company’s exports are moving through Southeast ports thanks to the diversity of container services and routes for exports. While Houston still has a solid lead in north-south shipments, bigger vessels calling the Southeast allow more capacity on east-west trades. “We have been sending more rail cars to Savannah,” the source said. The company is moving cargoes destined for Asia, Europe, the Mediterranean and Africa through Savannah and those headed to Latin America through Houston, he added. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="298da152-273a-4ab2-8500-4925940e4b0c"></dynamic-object></div>Houston is working to add vessel capacity through its “Project 11,” which entails widening and dredging the Houston Ship Channel. Ships will have bi-directional navigation on the channel, allowing for faster berth calls. But with the channel’s depth at about 46 feet, larger post-Panamax vessels will still be somewhat limited in their ability to call Houston. “The resin business has already outgrown Houston,” the logistics manager said. “There’s just not enough capacity.” North-south trades, however, likely still managed to push Houston’s export volumes higher in 2024. Chemical volumes from the US to Brazil, for example, grew 22% last year. Vangipuram said Argentina and Colombia are also growing consumers of US resins. “Latin America is the [resins] export destination of choice for the US,” Vangipuram said. But the north-south resin trade out of the US Gulf poses its own challenges, the ocean logistics manager said, particularly with alliance carriers and those that have slot exchange deals for capacity. Because of port congestion in Brazil, many ships in north-south trades have been off schedule. Ocean carriers try to make up for the time by skipping calls at transshipment ports in the Caribbean and South America, but that can leave cargo booked through slot swaps or alliances stranded. “If the ships are coming a week late out of Brazil and the carrier has to make up time, what they are going to do is omit the other carrier’s transshipment port,” the logistics manager said. He said the cargo rolls and delays were most common at the ports of Kingston, Jamaica, and Cartagena, Colombia. With direct services to the other two largest US resins markets, Asia and Europe, shipments out of Southeast ports are not seeing similar issues. But overseas retaliation to the Trump administration’s tariffs is likely to have a major impact on the resins trade this year. After Trump put a 90-day pause on 20% reciprocal tariffs on goods from the European Union, the trading bloc similarly backed down from its own retaliatory measures. While the EU may exempt US resins from any retaliatory duties due to the region’s dependence on imports, the logistics manager said a prolonged trade war could favor resin producers in the Middle East. “Our team in Europe said that resins won’t be on the list for retaliation against US,” the manager said. “But no one has showed me anything yet that resins have been exempted. Until then, we’re being very cautious.” Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

While the Port of Houston still reigns as top gateway, resins shippers are increasingly tapping southeast US ports, thanks to their big-ship capacity and strong connectivity in east-west trades. However, President Donald Trump’s tariff actions risk cutting into the steady growth of US resin exports and have virtually shut off US exporters’ largest market, China, given the buyer’s 125% retaliatory tariffs. That is coming after a year of modest but steady growth; containerized US chemical and plastic resin exports expanded 1.2% in 2024, the third consecutive annual increase and in line with the sector’s five-year compound average growth of 2.1%, according to PIERS, a sister company of the Journal of Commerce within S&P Global. Plastic resins, including polyethylene and polypropylene, represent 57% of US chemical exports. “It was a fairly decent year of growth,” said Shruthi Vangipuram, a senior research analyst at consultancy Wood Mackenzie. “Not extraordinary, but there were still major participants for US exports.” With almost all US production concentrated in the Gulf Coast region, resin traders and distributors heavily rely on Houston as their main export gateway. Houston handled about 41.8% of US chemical exports last year and has seen shipments increase at an average annual rate of 6.8% over the last five years, according to PIERS. The ports of Los Angeles and Long Beach still occupy the No. 2 spot for exports thanks to their proximity to China and high capacity. Even so, chemical exports out of the busiest US port complex have been in decline as shippers seek less congested gateways with easier rail access. Houston’s long-term export growth rates nearly match those of the ports of Charleston and Savannah, the third- and fourth-busiest export gateways for US chemicals in 2024. The two ports’ continued growth follows millions in investments to set up nearby warehouses and facilities for packaging resins into shipping containers. ‘Outgrowing’ the Gulf An ocean logistics manager for a global resins distributor and trader told the Journal of Commerce that an increasing share of his company’s exports are moving through Southeast ports thanks to the diversity of container services and routes for exports. While Houston still has a solid lead in north-south shipments, bigger vessels calling the Southeast allow more capacity on east-west trades. “We have been sending more rail cars to Savannah,” the source said. The company is moving cargoes destined for Asia, Europe, the Mediterranean and Africa through Savannah and those headed to Latin America through Houston, he added. Houston is working to add vessel capacity through its “Project 11,” which entails widening and dredging the Houston Ship Channel. Ships will have bi-directional navigation on the channel, allowing for faster berth calls. But with the channel’s depth at about 46 feet, larger post-Panamax vessels will still be somewhat limited in their ability to call Houston. “The resin business has already outgrown Houston,” the logistics manager said. “There’s just not enough capacity.” North-south trades, however, likely still managed to push Houston’s export volumes higher in 2024. Chemical volumes from the US to Brazil, for example, grew 22% last year. Vangipuram said Argentina and Colombia are also growing consumers of US resins. “Latin America is the [resins] export destination of choice for the US,” Vangipuram said. But the north-south resin trade out of the US Gulf poses its own challenges, the ocean logistics manager said, particularly with alliance carriers and those that have slot exchange deals for capacity. Because of port congestion in Brazil, many ships in north-south trades have been off schedule. Ocean carriers try to make up for the time by skipping calls at transshipment ports in the Caribbean and South America, but that can leave cargo booked through slot swaps or alliances stranded. “If the ships are coming a week late out of Brazil and the carrier has to make up time, what they are going to do is omit the other carrier’s transshipment port,” the logistics manager said. He said the cargo rolls and delays were most common at the ports of Kingston, Jamaica, and Cartagena, Colombia. With direct services to the other two largest US resins markets, Asia and Europe, shipments out of Southeast ports are not seeing similar issues. But overseas retaliation to the Trump administration’s tariffs is likely to have a major impact on the resins trade this year. After Trump put a 90-day pause on 20% reciprocal tariffs on goods from the European Union, the trading bloc similarly backed down from its own retaliatory measures. While the EU may exempt US resins from any retaliatory duties due to the region’s dependence on imports, the logistics manager said a prolonged trade war could favor resin producers in the Middle East. “Our team in Europe said that resins won’t be on the list for retaliation against US,” the manager said. “But no one has showed me anything yet that resins have been exempted. Until then, we’re being very cautious.” Contact Michael Angell at michael.angell@spglobal.com .

Tariffs jeopardize resin volume gains for US Southeast ports

<div class="phx-topic abstract-wrapper">The continued growth of the San Pedro Bay ports — and the inter-related rail and logistics systems — are vital to a healthy US supply chain, writes the CEO of the Alameda Corridor Transportation Authority.</div>

The continued growth of the San Pedro Bay ports — and the inter-related rail and logistics systems — are vital to a healthy US supply chain, writes the CEO of the Alameda Corridor Transportation Authority.

<div class="phx-topic">The first-quarter surge of cargo flowing into West Coast ports has prompted a key realization — the rail system serving the massive number of exports and imports that come through Southern California has expanded and modernized enough to keep current supply chains functioning, at least for now. The ports of Long Beach and Los Angeles, known as the San Pedro Bay (SPB) Ports, have invested $10 billion, including $4 billion on port rail, and have expanded their infrastructure to support intermodal cargo with efficient connectivity to the US heartland. A vital component of this effort is the Alameda Corridor — a $2 billion investment by SPB Ports to mitigate the impact on local communities and improve the efficiency of rail operations. Import volumes at SPB Ports have grown 3% annually since 2000, doubling volumes over 24 years. During that same period, rail volumes increased 2.5% annually, such that in 2024, rail handled 60% of SPB imports (28% on-dock, 32% off-dock). That rail volume is greater than the total at any other US port — a significant component of the supply chain. In 2024, we saw that SPB handled record cargo and ships were processed without delay. Throughout the 2024 surge, SPB proved itself to be a reliable gateway with available capacity and minimal risk. Rail dwell times at SPB Port terminals were carefully monitored and managed, peaking for two months at a nine-day average. And the ports’ commitment is not waning. To handle forecast cargo demand, they are investing $2.5 billion more in moving cargo efficiently by rail, including the Pier B On-dock Rail Support Facility and several on-dock modernization projects. Despite a looming tariff-related downturn, now is not the time to delay investments. Past downturns, such as the 2009 global recession, seemed insurmountable at the time. But long-term and consistent investments proved prudent as evidenced by the uninterrupted flow of cargo from the recent surge in shipments. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="b2536aba-789d-42cd-9870-4ede2743577b"></dynamic-object></div>The ports’ intermodal rail improvements, totaling $3 billion, initiated on-dock rail and expanded infrastructure to support intermodal cargo with efficient connectivity inland. The Alameda Corridor was built to handle volumes forecast to double in the next 20 to 30 years. Western railroads have made comparable investments in the transcontinental railway, and they are enhancing the supply chain with a much broader network of intermodal distribution points west of the Mississippi River. These advances, when combined with enhanced logistics technology, aimed to reduce cargo dwell times and improve transcontinental shipping time. Upcoming investment in the SPB rail system includes $2.5 billion in programmed projects, which encompass the lessons learned over several decades of port rail operations and intensive performance evaluation. The SPB gateway incorporates several intermodal components: the on-dock rail yards, support rail yards and the rail network connecting those yards, which are the focus of a continuous rail enhancement program; the investments by Union Pacific and BNSF on their transcontinental railways; and the development of new multi-modal logistics centers serving as western distribution hubs, including BNSF Railway’s Barstow International Gateway and other projects in California, Arizona, Utah, Colorado, New Mexico and Texas. The speed and efficiency of cargo movement remains the number one priority for all interested parties. The continued growth of SPB — and the inter-related rail and logistics systems — are vital to a healthy US supply chain. We cannot be lulled by disruptions that may result in a temporary reduction in flow. Continued investments in intermodal rail are vital to a healthy supply chain. Contact Michael Leue at <a href="mailto:PR@ACTA.org">PR@ACTA.org</a>.</div>

The first-quarter surge of cargo flowing into West Coast ports has prompted a key realization — the rail system serving the massive number of exports and imports that come through Southern California has expanded and modernized enough to keep current supply chains functioning, at least for now. The ports of Long Beach and Los Angeles, known as the San Pedro Bay (SPB) Ports, have invested $10 billion, including $4 billion on port rail, and have expanded their infrastructure to support intermodal cargo with efficient connectivity to the US heartland. A vital component of this effort is the Alameda Corridor — a $2 billion investment by SPB Ports to mitigate the impact on local communities and improve the efficiency of rail operations. Import volumes at SPB Ports have grown 3% annually since 2000, doubling volumes over 24 years. During that same period, rail volumes increased 2.5% annually, such that in 2024, rail handled 60% of SPB imports (28% on-dock, 32% off-dock). That rail volume is greater than the total at any other US port — a significant component of the supply chain. In 2024, we saw that SPB handled record cargo and ships were processed without delay. Throughout the 2024 surge, SPB proved itself to be a reliable gateway with available capacity and minimal risk. Rail dwell times at SPB Port terminals were carefully monitored and managed, peaking for two months at a nine-day average. And the ports’ commitment is not waning. To handle forecast cargo demand, they are investing $2.5 billion more in moving cargo efficiently by rail, including the Pier B On-dock Rail Support Facility and several on-dock modernization projects. Despite a looming tariff-related downturn, now is not the time to delay investments. Past downturns, such as the 2009 global recession, seemed insurmountable at the time. But long-term and consistent investments proved prudent as evidenced by the uninterrupted flow of cargo from the recent surge in shipments. The ports’ intermodal rail improvements, totaling $3 billion, initiated on-dock rail and expanded infrastructure to support intermodal cargo with efficient connectivity inland. The Alameda Corridor was built to handle volumes forecast to double in the next 20 to 30 years. Western railroads have made comparable investments in the transcontinental railway, and they are enhancing the supply chain with a much broader network of intermodal distribution points west of the Mississippi River. These advances, when combined with enhanced logistics technology, aimed to reduce cargo dwell times and improve transcontinental shipping time. Upcoming investment in the SPB rail system includes $2.5 billion in programmed projects, which encompass the lessons learned over several decades of port rail operations and intensive performance evaluation. The SPB gateway incorporates several intermodal components: the on-dock rail yards, support rail yards and the rail network connecting those yards, which are the focus of a continuous rail enhancement program; the investments by Union Pacific and BNSF on their transcontinental railways; and the development of new multi-modal logistics centers serving as western distribution hubs, including BNSF Railway’s Barstow International Gateway and other projects in California, Arizona, Utah, Colorado, New Mexico and Texas. The speed and efficiency of cargo movement remains the number one priority for all interested parties. The continued growth of SPB — and the inter-related rail and logistics systems — are vital to a healthy US supply chain. We cannot be lulled by disruptions that may result in a temporary reduction in flow. Continued investments in intermodal rail are vital to a healthy supply chain. Contact Michael Leue at PR@ACTA.org .

North-American rail

Continued rail investment needed to keep boosting LA-LB port growth

<div class="phx-topic abstract-wrapper">There is widespread recognition that the industry has been caught in the jaws of a historically unprecedented freight recession — rate deflation accompanied by cost inflation — and if carriers are to return to historical levels of profitability, there is a need for rate and volume increases to deliver top-line growth. </div>

There is widespread recognition that the industry has been caught in the jaws of a historically unprecedented freight recession — rate deflation accompanied by cost inflation — and if carriers are to return to historical levels of profitability, there is a need for rate and volume increases to deliver top-line growth.

<div class="phx-topic">The surface freight transportation industry is now pinning its hope on economic recovery — for the third straight year — on an expected recovery in the second half of the year. The industry consensus calls for incremental improvement in truckload rates driven by gradual improvement in sector fundamentals throughout the year. Nevertheless, the most recent results of many public truckload stocks have been sobering. Although some carriers observed some “green shoots” during peak season, post-election gains have been given back — and then some. Multiples are below historic norms, and fleet sizes continue to contract — despite several years of shrinkage. There is widespread recognition that the industry has been caught in the jaws of a historically unprecedented freight recession caused by rate deflation accompanied by cost inflation. If carriers are to return to historical levels of profitability, there is a need for rate and volume increases to deliver top-line growth. To analyze this dichotomy, I utilized “An Analysis of the Operational Cost of Trucking: 2024 Update.” Prepared by the American Transportation Research Institute (ATRI), this annual report casts a wide net in respondent type, size and operating model; provides historical context for almost the past 20 years and is remarkably transparent when compared with other self-anointed experts. The first chart explains this difference by looking at two distinct metrics: driver cost per hour and fuel cost per mile. Fuel costs have deviated wildly over this period, whereas driver cost has been steadily increasing. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="b372d175-2a73-40b7-83a0-f350f63093d1"></dynamic-object></div>Nevertheless, in an environment where trucking costs are on an inexorable inflationary arc, how have rates remained so depressed? I believe that the issue is that the trucking market is less “free” since the COVID-19 pandemic. A free market exists when supply and demand (through “voluntary exchange”) determine economic outcomes. Buyers and sellers are free to trade goods and services free of governmental intervention or market dominance by one side: monopoly, oligopoly or monopsony. A free market also requires the freedom of firms to enter that market because there are no barriers of entry. Since deregulation, the truckload market has had this freedom. However, market freedom also permits firms to freely depart from the market without any barriers to exit. This has not necessarily been the case since the pandemic. At the smallest increment of production, an individual with a commercial driver’s license could acquire a tractor and trailer, obtain insurance, register with the government and be in business. If the business did not work out, the individual could hand the keys to the equipment lender and be on with their life. COVID changed these dynamics. Equipment was wildly expensive and lenders required more security than just the underlying asset. New entrants needed to pledge their homes or life savings. When the market turned, there was no exit possible because they were “upside down.” The asset was worth less than they paid for it. These owner-operators are now forced into an untenable situation. Having no exit, their only choice is to keep driving until the market changes. Because survival — not profitability — is the goal, their floor price is what I call “direct cash costs.” In the ATRI model, this is fuel, insurance, permits/licenses and tolls. Costs such as equipment payments, maintenance and repair and tires are deferred until the end. I call them “episodic cash.” Driver wages and benefits are notional. The second chart shows how these costs have tracked the past 10 years. I have also included traditional truckload and intermodal. The former has no episodic cash. Maintenance is maintained, and equipment cost is deferred by parking equipment. Non-asset intermodal is all “direct cash” because all components are purchased. Bimodal intermodal providers are not shown, but they would be between traditional truckload and non-asset intermodal. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="7c8a9981-9386-4062-844d-cd07eb8ea529"></dynamic-object></div>The second chart also explains the freight recession. The traditional economies of scale enjoyed by large truckload carriers over owner-operators are meaningless when costs are not “apples to apples.” The same applies to intermodal’s competitive advantage. The intermodal line may be a little high; however, we have not seen a widespread willingness of railroads to cut their rates. This situation is not The Flying Dutchman, a phantom ship doomed to sail forever. Eventually, the equipment will be retired, and “normal” market conditions will return. Until then, this market situation is likely to maintain. Contact Ted Prince at <a href="mailto:ted@tricitiesintermodal.com">ted@tricitiesintermodal.com</a>.</div>

The surface freight transportation industry is now pinning its hope on economic recovery — for the third straight year — on an expected recovery in the second half of the year. The industry consensus calls for incremental improvement in truckload rates driven by gradual improvement in sector fundamentals throughout the year. Nevertheless, the most recent results of many public truckload stocks have been sobering. Although some carriers observed some “green shoots” during peak season, post-election gains have been given back — and then some. Multiples are below historic norms, and fleet sizes continue to contract — despite several years of shrinkage. There is widespread recognition that the industry has been caught in the jaws of a historically unprecedented freight recession caused by rate deflation accompanied by cost inflation. If carriers are to return to historical levels of profitability, there is a need for rate and volume increases to deliver top-line growth. To analyze this dichotomy, I utilized “An Analysis of the Operational Cost of Trucking: 2024 Update.” Prepared by the American Transportation Research Institute (ATRI), this annual report casts a wide net in respondent type, size and operating model; provides historical context for almost the past 20 years and is remarkably transparent when compared with other self-anointed experts. The first chart explains this difference by looking at two distinct metrics: driver cost per hour and fuel cost per mile. Fuel costs have deviated wildly over this period, whereas driver cost has been steadily increasing. Nevertheless, in an environment where trucking costs are on an inexorable inflationary arc, how have rates remained so depressed? I believe that the issue is that the trucking market is less “free” since the COVID-19 pandemic. A free market exists when supply and demand (through “voluntary exchange”) determine economic outcomes. Buyers and sellers are free to trade goods and services free of governmental intervention or market dominance by one side: monopoly, oligopoly or monopsony. A free market also requires the freedom of firms to enter that market because there are no barriers of entry. Since deregulation, the truckload market has had this freedom. However, market freedom also permits firms to freely depart from the market without any barriers to exit. This has not necessarily been the case since the pandemic. At the smallest increment of production, an individual with a commercial driver’s license could acquire a tractor and trailer, obtain insurance, register with the government and be in business. If the business did not work out, the individual could hand the keys to the equipment lender and be on with their life. COVID changed these dynamics. Equipment was wildly expensive and lenders required more security than just the underlying asset. New entrants needed to pledge their homes or life savings. When the market turned, there was no exit possible because they were “upside down.” The asset was worth less than they paid for it. These owner-operators are now forced into an untenable situation. Having no exit, their only choice is to keep driving until the market changes. Because survival — not profitability — is the goal, their floor price is what I call “direct cash costs.” In the ATRI model, this is fuel, insurance, permits/licenses and tolls. Costs such as equipment payments, maintenance and repair and tires are deferred until the end. I call them “episodic cash.” Driver wages and benefits are notional. The second chart shows how these costs have tracked the past 10 years. I have also included traditional truckload and intermodal. The former has no episodic cash. Maintenance is maintained, and equipment cost is deferred by parking equipment. Non-asset intermodal is all “direct cash” because all components are purchased. Bimodal intermodal providers are not shown, but they would be between traditional truckload and non-asset intermodal. The second chart also explains the freight recession. The traditional economies of scale enjoyed by large truckload carriers over owner-operators are meaningless when costs are not “apples to apples.” The same applies to intermodal’s competitive advantage. The intermodal line may be a little high; however, we have not seen a widespread willingness of railroads to cut their rates. This situation is not The Flying Dutchman, a phantom ship doomed to sail forever. Eventually, the equipment will be retired, and “normal” market conditions will return. Until then, this market situation is likely to maintain. Contact Ted Prince at ted@tricitiesintermodal.com .

Surface industry faces obstacles on way to hoped-for H2 recovery

GEP and S&P Global produce this index from S&P Global’s purchasing managers’ index (PMI) surveys. The variables are the JP Morgan Global Quantity of Purchases Index, the All Items Supply Shortages Indicator, the Transport Price Pressure Indicator and Manufacturing PMI Comments Tracker data, stockpiling levels due to supply or price concerns and backlog activity due to staff and item shortages. [GEP](https://www.gep.com/knowledge-bank/global-supply-chain-volatility-index)

GEP Global Supply Chain Volatility Index (GEP and S&P Global)

GEP Global Supply Chain Volatility Index Gateway

<div class="phx-topic abstract-wrapper">Carriers and importers are dealing with confusion over how tariffs in general, and the trade war between Washington and Beijing specifically, will affect commerce on the US’ busiest trade lane over the next 12 months.</div>

Carriers and importers are dealing with confusion over how tariffs in general, and the trade war between Washington and Beijing specifically, will affect commerce on the US’ busiest trade lane over the next 12 months.

<div class="phx-topic">Uncertainty over the Trump administration’s ever-changing tariff policy is claiming another casualty: the traditional timeline for the signing of annual service contracts between ocean carriers and importers in the eastbound trans-Pacific. Sources tell the Journal of Commerce the typical timeline for locking up deals, most of which begin May 1, has been delayed by at least two weeks. The reason? Confusion over how tariffs in general, and the trade war between Washington and Beijing specifically, will affect commerce on the US’ busiest trade lane over the next 12 months. “The tariff tiff is complicating matters,” said Ben Coleman, president of the forwarder Teampower Logistics. While ocean carriers and their largest retail customers are continuing to disagree over pricing levels in the 2025–26 service contract negotiations, the tariff uncertainty is causing hesitation among shippers who need to make a final decision on the volumes they will import as part of the so-called minimum quantity commitments (MQCs) that must be adhered to during the life of the contracts. Adding another two weeks this late in the negotiating cycle before carriers sign contracts with their largest customers is unusual, Kevin Parkerson, a consultant and former logistics manager at national retailers, told the Journal of Commerce. “Typically by April 23 this should all be done,” he said. On pricing matters, the largest retailers are said to be locked in a standoff with carriers over a $100-per-FEU difference in rates for their 2025–26 service contracts. Carriers are refusing to budge from the $1,600-per-FEU floor for West Coast trade and $2,600 per FEU to the East Coast that <a href="https://www.joc.com/article/trans-pac-gri-offers-resistance-to-retailers-push-for-lower-contract-rates-5977200">they negotiated earlier this month</a>, forwarders and industry consultants say. In the contracts that they have not already signed, some big-box retailers want to pay no more than $1,500 per FEU to the West Coast. “The big guys are on hold,” Parkerson said. “They’re digging in.” Container lines and major US importers generally conclude annual service contract talks by early April, with non-vessel-operating common carriers (NVOs) nailing down their own contracts by late April or early May. Carriers normally extend existing contracts beyond the typical April 30 end for smaller importers and NVOs who are in the final stages of contract talks. The revised timeline will extend those negotiations past the May 1 start date for many of the new contracts. While many of the second- and third-tier importers and NVOs have either concluded negotiations with their core carriers or are close to finalizing them at rates ranging from $1,600 to $1,900 per FEU or higher to the West Coast, they are waiting for the largest retailers to set the floor for rates before they sign the agreements, sources say. A second industry consultant who formerly served as a logistics manager at national retailers said $100 per FEU may not sound like a game-breaker. However, “If you’re shipping a couple of hundred thousand containers, that’s a lot of money,” he noted. <h3>Blank sailings prop up spot rates </h3>Meanwhile, NVOs say carriers are emboldened by the current level of spot and freight-all-kinds (FAK) rates from Asia to the US, which remain higher than the existing 2024–25 service contract rates <a href="https://www.joc.com/article/asia-us-blank-sailing-forecast-for-may-increasing-amid-cancellations-5988996">despite a 37% drop in bookings from China</a> since March 31. The spot rate to the West Coast on Wednesday was $2,067 per FEU, with rates to the East Coast at $3,067 per FEU, according to Platts, a Journal of Commerce sister company within S&amp;P Global. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e56fd23a-cfad-4929-899f-b91371ff9fc0"></dynamic-object></div>With US imports from China plummeting because of the tariffs, carriers announced the blanking of dozens of sailings through May, which forwarders say will keep spot rates elevated through the remainder of the service contracting season. Meanwhile, if negotiations with the largest retailers drag on past May 1, carriers are expected to extend existing contracts with their core customers until the new deals are signed. “But if this continues on for a while, eventually you’re going to get a bubble,” the second consultant said, adding that there will be a rush by importers and NVOs to sign their contracts. That could force rates higher in May. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>.</div>

Uncertainty over the Trump administration’s ever-changing tariff policy is claiming another casualty: the traditional timeline for the signing of annual service contracts between ocean carriers and importers in the eastbound trans-Pacific. Sources tell the Journal of Commerce the typical timeline for locking up deals, most of which begin May 1, has been delayed by at least two weeks. The reason? Confusion over how tariffs in general, and the trade war between Washington and Beijing specifically, will affect commerce on the US’ busiest trade lane over the next 12 months. “The tariff tiff is complicating matters,” said Ben Coleman, president of the forwarder Teampower Logistics. While ocean carriers and their largest retail customers are continuing to disagree over pricing levels in the 2025–26 service contract negotiations, the tariff uncertainty is causing hesitation among shippers who need to make a final decision on the volumes they will import as part of the so-called minimum quantity commitments (MQCs) that must be adhered to during the life of the contracts. Adding another two weeks this late in the negotiating cycle before carriers sign contracts with their largest customers is unusual, Kevin Parkerson, a consultant and former logistics manager at national retailers, told the Journal of Commerce. “Typically by April 23 this should all be done,” he said. On pricing matters, the largest retailers are said to be locked in a standoff with carriers over a $100-per-FEU difference in rates for their 2025–26 service contracts. Carriers are refusing to budge from the $1,600-per-FEU floor for West Coast trade and $2,600 per FEU to the East Coast that they negotiated earlier this month , forwarders and industry consultants say. In the contracts that they have not already signed, some big-box retailers want to pay no more than $1,500 per FEU to the West Coast. “The big guys are on hold,” Parkerson said. “They’re digging in.” Container lines and major US importers generally conclude annual service contract talks by early April, with non-vessel-operating common carriers (NVOs) nailing down their own contracts by late April or early May. Carriers normally extend existing contracts beyond the typical April 30 end for smaller importers and NVOs who are in the final stages of contract talks. The revised timeline will extend those negotiations past the May 1 start date for many of the new contracts. While many of the second- and third-tier importers and NVOs have either concluded negotiations with their core carriers or are close to finalizing them at rates ranging from $1,600 to $1,900 per FEU or higher to the West Coast, they are waiting for the largest retailers to set the floor for rates before they sign the agreements, sources say. A second industry consultant who formerly served as a logistics manager at national retailers said $100 per FEU may not sound like a game-breaker. However, “If you’re shipping a couple of hundred thousand containers, that’s a lot of money,” he noted. Blank sailings prop up spot rates Meanwhile, NVOs say carriers are emboldened by the current level of spot and freight-all-kinds (FAK) rates from Asia to the US, which remain higher than the existing 2024–25 service contract rates despite a 37% drop in bookings from China since March 31. The spot rate to the West Coast on Wednesday was $2,067 per FEU, with rates to the East Coast at $3,067 per FEU, according to Platts, a Journal of Commerce sister company within S&P Global. With US imports from China plummeting because of the tariffs, carriers announced the blanking of dozens of sailings through May, which forwarders say will keep spot rates elevated through the remainder of the service contracting season. Meanwhile, if negotiations with the largest retailers drag on past May 1, carriers are expected to extend existing contracts with their core customers until the new deals are signed. “But if this continues on for a while, eventually you’re going to get a bubble,” the second consultant said, adding that there will be a rush by importers and NVOs to sign their contracts. That could force rates higher in May. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .

Transport, Trade and Regulation News

Tariff uncertainty disrupting timeline for trans-Pacific service contract talks

<div class="phx-topic abstract-wrapper">The analyst downgraded its container handling outlook following similar moves on global and US economic growth by the IMF and WTO this week.</div>

The analyst downgraded its container handling outlook following similar moves on global and US economic growth by the IMF and WTO this week.

<div class="phx-topic">Significant downgrades in both global and US economic growth this year and next will translate into dramatic declines in container volumes, especially on the trans-Pacific trade that is facing the combined impact of US tariffs on Beijing and fees that will be levied on Chinese-built tonnage calling the US. The International Monetary Fund (IMF) earlier this week downgraded its US GDP outlook for 2025 to 1.8% from the 2.7% forecast made in January, with the world economic outlook for the year cut to 2.8% from 3.3%. The World Trade Organization (WTO) is predicting global merchandise trade will contract by 0.2% this year under current conditions. Those data points have prompted maritime consultancy Drewry to unveil a “much more pessimistic” outlook for container demand than its forecast just a month ago. “We’re now expecting global container handling to decrease by 1% in 2025, approximately the same level of contraction that the market saw in 2020 with COVID, and it would be only the third year with any annual decline since Drewry’s records started back in 1979,” Simon Heaney, Drewry’s senior manager of container research, told a container shipping outlook webinar Thursday. The 1% decline in global container handling is a downward revision from the 2.3% growth the analyst expected last month. Drewry is also expecting a substantial decline in eastbound Asia-North America container throughput that it now predicts will drop by 7.3% this year compared with 2.1% growth expected in March. While China will also be hit hard by the US actions, it will bounce back quicker than the North American markets, according to the analyst. Drewry’s revised outlook for China is a decline in container volume of 4.8% this year, but its ability to find new markets to offset the loss of US trade will see growth in container volume of 1.6% in 2026. Heaney said the revised forecast was made with the caveat that policy decisions or executive orders on trade made by the Trump administration had no “quality of permanence.” “In the absence of any sort of coherent master plan, we’re left trying to decide the end-game strategy for ourselves, wondering whether there are any conditions at all, whether it’s a looming economic recession or negative public opinion under which this US administration might hesitate and reverse course,” he said. “That question remains unanswered as of today, meaning that any predictions we make for the container shipping market, or any market for that matter, have an extremely short shelf life,” Heaney added. “I’d say we’re in coin flip territory.” <h3>Deployment changes and dislocations </h3>The “reciprocal” US tariffs of 145% on China that went into effect April 9 and the 10% across-the-board tariffs on all US trading partners, as well as the US ship fees on Chinese carriers and China-built vessels, will have a pronounced impact on inbound and outbound US trade, according to container shipping analyst John McCown. “My view is that it is almost certain there will be a double-digit percentage reduction in annual volume for all of 2025 compared to 2024,” McCown wrote in his monthly McCown Report released this week. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e56fd23a-cfad-4929-899f-b91371ff9fc0"></dynamic-object></div>McCown, the founder of private equity firm Blue Alpha Capital, said although the increased costs from tariffs and the ship fee plan would find their way to US consumers, those catalysts would also influence container shipping rates and pricing. “While reduced demand generally puts downward pressure on pricing, we have seen in the past that [vessel] deployment changes and dislocations can result in upwards pressure,” he said. “In addition, it is reasonable to assume that the container shipping industry will aggressively sideline capacity.” McCown pointed to the 81 trans-Pacific sailings blanked in April that were far above the 51 sailings blanked during the height of the pandemic. “This concern regarding reduced demand was confirmed in a recent report showing staggering reductions in the upcoming week of Asia to West Coast loads of 28% and Asia to East Coast loads of 42%,” he noted. The Wall Street Journal reported Wednesday that the White House is considering slashing the tariffs on China, in some cases by more than half, to de-escalate the trade war with Beijing. But whether shippers would quickly resume bookings is unclear as West Coast ports still expect volumes to drop sharply in the coming weeks. And China on Thursday labeled as “fake news” any suggestions by the Trump administration that the two sides were engaged in talks meant to end the trade conflict. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Significant downgrades in both global and US economic growth this year and next will translate into dramatic declines in container volumes, especially on the trans-Pacific trade that is facing the combined impact of US tariffs on Beijing and fees that will be levied on Chinese-built tonnage calling the US. The International Monetary Fund (IMF) earlier this week downgraded its US GDP outlook for 2025 to 1.8% from the 2.7% forecast made in January, with the world economic outlook for the year cut to 2.8% from 3.3%. The World Trade Organization (WTO) is predicting global merchandise trade will contract by 0.2% this year under current conditions. Those data points have prompted maritime consultancy Drewry to unveil a “much more pessimistic” outlook for container demand than its forecast just a month ago. “We’re now expecting global container handling to decrease by 1% in 2025, approximately the same level of contraction that the market saw in 2020 with COVID, and it would be only the third year with any annual decline since Drewry’s records started back in 1979,” Simon Heaney, Drewry’s senior manager of container research, told a container shipping outlook webinar Thursday. The 1% decline in global container handling is a downward revision from the 2.3% growth the analyst expected last month. Drewry is also expecting a substantial decline in eastbound Asia-North America container throughput that it now predicts will drop by 7.3% this year compared with 2.1% growth expected in March. While China will also be hit hard by the US actions, it will bounce back quicker than the North American markets, according to the analyst. Drewry’s revised outlook for China is a decline in container volume of 4.8% this year, but its ability to find new markets to offset the loss of US trade will see growth in container volume of 1.6% in 2026. Heaney said the revised forecast was made with the caveat that policy decisions or executive orders on trade made by the Trump administration had no “quality of permanence.” “In the absence of any sort of coherent master plan, we’re left trying to decide the end-game strategy for ourselves, wondering whether there are any conditions at all, whether it’s a looming economic recession or negative public opinion under which this US administration might hesitate and reverse course,” he said. “That question remains unanswered as of today, meaning that any predictions we make for the container shipping market, or any market for that matter, have an extremely short shelf life,” Heaney added. “I’d say we’re in coin flip territory.” Deployment changes and dislocations The “reciprocal” US tariffs of 145% on China that went into effect April 9 and the 10% across-the-board tariffs on all US trading partners, as well as the US ship fees on Chinese carriers and China-built vessels, will have a pronounced impact on inbound and outbound US trade, according to container shipping analyst John McCown. “My view is that it is almost certain there will be a double-digit percentage reduction in annual volume for all of 2025 compared to 2024,” McCown wrote in his monthly McCown Report released this week. McCown, the founder of private equity firm Blue Alpha Capital, said although the increased costs from tariffs and the ship fee plan would find their way to US consumers, those catalysts would also influence container shipping rates and pricing. “While reduced demand generally puts downward pressure on pricing, we have seen in the past that [vessel] deployment changes and dislocations can result in upwards pressure,” he said. “In addition, it is reasonable to assume that the container shipping industry will aggressively sideline capacity.” McCown pointed to the 81 trans-Pacific sailings blanked in April that were far above the 51 sailings blanked during the height of the pandemic. “This concern regarding reduced demand was confirmed in a recent report showing staggering reductions in the upcoming week of Asia to West Coast loads of 28% and Asia to East Coast loads of 42%,” he noted. The Wall Street Journal reported Wednesday that the White House is considering slashing the tariffs on China, in some cases by more than half, to de-escalate the trade war with Beijing. But whether shippers would quickly resume bookings is unclear as West Coast ports still expect volumes to drop sharply in the coming weeks. And China on Thursday labeled as “fake news” any suggestions by the Trump administration that the two sides were engaged in talks meant to end the trade conflict. Contact Greg Knowler at greg.knowler@spglobal.com .

Fallout from US-China trade war to depress trans-Pacific volumes: Drewry

<div class="phx-topic abstract-wrapper">Disruption caused by trade wars will reach deep into global supply chains, depressing an already uncertain outlook for the US freight economy. </div>

Disruption caused by trade wars will reach deep into global supply chains, depressing an already uncertain outlook for the US freight economy.

<div class="phx-topic">The tailwinds that brought a strong increase in US imports and certain exports last year have turned to cold, hard headwinds this year as disruptions caused by the Trump administration’s tariffs take root and multiply. The shock waves from those tariffs are rippling from ports in Asia and Europe through freight docks deep in industrial America. The latest shock came from the US Trade Representative (USTR), which said April 18 it will <a href="https://www.joc.com/article/scaled-back-ustr-port-tariff-to-hit-chinese-carriers-hardest-5987549">charge entrance fees for China-based ocean carriers</a> and lines operating Chinese-built ships calling at US ports based on cargo capacity or container volume. Given the chaotic rollout of President Donald Trump’s trade policies, the outlook for the US freight economy in the second half of 2025 isn’t just cloudy — it’s reached a point of uncertainty that is crippling shippers’ ability to plan. US shippers “are waiting for the dust to settle to determine how tariffs might influence and change their short- and long-term business strategies,” Spencer Frazier, executive vice president of sales at J.B. Hunt Transport Services, said during an earnings call April 15. S&amp;P Global, the parent company of the Journal of Commerce, in April pulled down its US GDP growth forecasts for 2025 and 2026 from 1.9% in both years to 1.3% and 1.5%, respectively, thanks in part to expectations that tariffs will result in higher inflation. Although the risk of a recession in the US has diminished, US policy volatility and related economic uncertainties are likely to linger into the year, S&amp;P Global said. On land, the so-called freight recession that began in 2022, sending trucking and intermodal rates tumbling by double-digit percentages, is entering its fourth consecutive year. Shippers will maintain pricing power in the truckload and intermodal rail segments in 2025, but they’re also going to make, ship and sell less. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="9fd84e22-d76c-4e34-8c52-c038bd25ad91"></dynamic-object></div>Despite an uptick in truckload spot rates early this year, led by flatbed spot rates, truckload pricing is still bouncing along a bottom it reached in 2023. Less-than-truckload (LTL) pricing has been elevated since the collapse of Yellow in 2023, but volumes remain essentially flat aside from some tariff-driven frontloading. The question isn’t whether trucking volumes will decline in the second quarter or second half of 2025, but by how much. That may trigger a broader loss of truck capacity. <h3>Blanking and canceling </h3>On the seas, the Trump administration’s multi-front trade war has already led to a drop in shipments, compounding the disruption caused by attacks on shipping in the Red Sea, where the US is escalating attacks on Houthis in Yemen. Ocean freight rates have fallen steeply in the first four months of 2025. Average spot pricing from Asia to the US West Coast of $2,050 per FEU in the week of April 18 was down 61% from the beginning of the year and 74.8% from its most recent peak in July 2024, according to Platts, a sister product of the Journal of Commerce within S&amp;P Global. Asia-US East Coast spot rates have sunk 53.7% since Jan. 1 and 69.4% from last summer to $3,100 per FEU. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="cbb65e03-1d9b-43c6-97ee-0afa0e7dfc1d"></dynamic-object></div>A slew of booking cancellations by US importers is leading ocean carriers to <a href="https://www.joc.com/article/trans-pacific-blank-sailings-set-to-rise-after-china-bookings-drop-sharply-5984166">blank more voyages</a> in the eastbound trans-Pacific. Some ships are leaving China half-empty. The scale-back in US-bound imports from China is affecting the entire ocean carrier industry. “People are canceling and putting cargo [from] China on pause,” a source at a trans-Pacific container line who asked not to be identified told the Journal of Commerce in April. The broad pause in bookings and orders extends beyond China to other sourcing origins. Amazon, for example, has canceled orders of goods ranging from beach chairs and scooters to air conditioners from Vietnam and Thailand, as well as China, according to a report from Bloomberg. Retailer Five Below paused orders from China in April as those tariffs escalated, CFO Kristy Chipman told analysts during a March 19 call. “The breadth and magnitude of the tariffs are significant given that approximately 60% of our total cost of goods are imported from China, either directly or through our domestic vendors,” Chipman said. Trans-Pacific air cargo traffic, meanwhile, is expected to increase through May 2 as importers rush to beat the end of the exclusion from tariffs for low-value imports. After that final spurt of frontloading, tariffs and the loss of the de minimis exemption for shipments from China and Hong Kong are expected to <a href="https://www.joc.com/article/prepare-for-period-of-panic-in-trans-pacific-air-cargo-market-tiaca-5978829">drag on demand</a>. Limited blank sailings have been announced on the trans-Atlantic trade in the coming weeks, with just 7,124 TEUs from North Europe to the US East and Gulf coasts <a href="https://www.joc.com/article/early-signs-of-rising-tariff-driven-demand-emerge-on-the-trans-atlantic-5986678">scheduled to be withdrawn</a> in May, according to maritime data provider eeSea. “It seems as if carriers are pushing up capacity to cater for whatever frontloading may be needed by European exporters,” said Peter Sand, chief analyst at rate benchmarking platform Xeneta. <h3>A bubble about to burst </h3>In 2024, containerized US imports jumped 15.3% to 27.7 million TEUs, while exports rose 0.9% to 11.3 million TEUs, according to PIERS, also part of S&amp;P Global. Manufactured goods, machinery and mechanical products and minerals rode atop the wave of imports, spiking 17.6%, 14.8% and 11.4%, respectively. Goods were still pouring into the US in the first three months of 2025, with container imports rising 9.2% year over year, according to PIERS, but retailers say the import wave is collapsing as the race to beat the US tariffs ends. The Global Port Tracker report, produced by the National Retail Federation (NRF) and Hackett Associates, forecasts imports to plunge 20.5% in May, 26.6% in June, 27% in July and 26.7% in August. “At present, we expect to see imports begin to decline by May and that they will drop dramatically during the remainder of the year,” Hackett Associates Founder Ben Hackett said in the April Global Port Tracker report. The NRF and Hackett project inbound container shipments will fall 20% in the second half from the year-ago period, which would result in a full-year decline of 15% or more, approximately equal to last year’s gain. Exporters are feeling the effects of tariffs, too, especially those shipping <a href="https://www.joc.com/article/uncertain-trade-environment-especially-fraught-for-us-ag-shippers-5987561">US agricultural and forestry products</a>. China, the largest US market for those products, levied a 125% tariff on them in retaliation for new US tariffs. Bookings for US exports to China for the week of April 15 <a href="https://www.joc.com/article/us-exporters-see-rise-in-canceled-orders-from-chinese-buyers-amid-trade-war-5986165">were down 5.4%</a> from the prior week at 17,220 TEUs, according to maritime visibility provider Vizion and data and analytics company Dun &amp; Bradstreet. “In [the] short term, I think we’re going to see a lot of agriculture exporting shift [from China] to other countries,” Peter Friedmann, executive director of the Agriculture Transportation Coalition (AgTC), said in an interview with the Journal of Commerce. A drop in the value of the US dollar — down about 5% against other major world currencies after April’s tariff announcements — could help exporters sell goods overseas, but retaliatory tariffs and backlash among foreign consumers will likely dampen any currency gains. Such backlash has already occurred in Canada, where retailers have withdrawn American-made items from whiskey to diapers from their shelves. <h3>Manufacturing losing momentum </h3>Fewer US imports mean fewer intermodal containers moving inland to Chicago or Dallas and fewer truckload and LTL shipments. But a continued decline in US factory output will have an even greater impact on demand for trucking and rail services. Almost 60% of US truck tonnage is tied to industrial output, according to US Census Bureau data. North America manufacturing output fell at one of the steepest rates seen in the past two years in March, according to S&amp;P Global, with broad-based production losses in the US, Canada and Mexico. The US Manufacturing Purchasing Managers’ Index (PMI) from S&amp;P Global dropped to 50.2 in March from 52.7 in February and 51.2 in January. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e4bcb827-f97b-43d7-a4df-83a0b6ac9b48"></dynamic-object></div>Optimism surrounding the Trump administration and the need to “front run” tariffs buoyed manufacturers in the first two months of the year, but “cracks are now starting to appear,” S&amp;P Global said in its PMI release in April. The longer trade disputes last, the more US manufacturers will have difficulty finding specific components, including some that are critical to production, said Michael Regan, chief relationship officer at logistics company and shipper consultant TranzAct Technologies, citing Chinese-made magnets used in automotive transmissions as an example. “These are ‘dirty magnets’ produced from rare earth metals, and China is limiting their export,” Regan told the Journal of Commerce in mid-April. “A company I know has enough inventory to last only through July.” <h3>Resilient, but worried </h3>US consumer spending has been relatively steadfast so far this year, supported by continued wage increases and low unemployment. US retail sales grew 1.4% month over month in March, the biggest monthly increase since January 2023. Excluding sales of cars and trucks and automotive parts, retail sales only rose 0.5% from February, according to US Census Bureau data. But those results fly in the face of consumer sentiment. The University of Michigan Index of Consumer Sentiment dropped 11% sequentially in April, its fourth consecutive monthly decline. The Conference Board’s monthly index of consumer expectations dropped 9.6 points in March to 65.2, its lowest level in 12 years and far below the threshold of 80 that usually signals a recession ahead. Unlike in 2024, the consumer “is not feeling great,” NRF Chief Economist Jack Kleinhenz said in a statement in mid-April, but the NRF still expects US retail sales to rise this year with or without tariffs. The retailers’ association forecasts retail sales will grow between 2.7% and 3.7% year over year to between $5.42 trillion and $5.48 trillion. What’s more, there’s no expectation the disputes will end in the near future, and even if they do, damage has already been done that will take time to repair. The Trump administration’s goals, whether achievable or not, are part of a long-term strategy that is likely to survive weekly or even daily policy flips. As long as tariff uncertainty and trade wars linger, however, it will be more difficult to find a catalyst that will increase freight demand in the US. That’s pushing hopes for a freight recovery farther into 2026. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>. Journal of Commerce editors Ari Ashe, Greg Knowler, Bill Mongelluzzo and Laura Robb contributed to this report, along with Research Analyst Cathy Morrow Roberson. </div>

The tailwinds that brought a strong increase in US imports and certain exports last year have turned to cold, hard headwinds this year as disruptions caused by the Trump administration’s tariffs take root and multiply. The shock waves from those tariffs are rippling from ports in Asia and Europe through freight docks deep in industrial America. The latest shock came from the US Trade Representative (USTR), which said April 18 it will charge entrance fees for China-based ocean carriers and lines operating Chinese-built ships calling at US ports based on cargo capacity or container volume. Given the chaotic rollout of President Donald Trump’s trade policies, the outlook for the US freight economy in the second half of 2025 isn’t just cloudy — it’s reached a point of uncertainty that is crippling shippers’ ability to plan. US shippers “are waiting for the dust to settle to determine how tariffs might influence and change their short- and long-term business strategies,” Spencer Frazier, executive vice president of sales at J.B. Hunt Transport Services, said during an earnings call April 15. S&P Global, the parent company of the Journal of Commerce, in April pulled down its US GDP growth forecasts for 2025 and 2026 from 1.9% in both years to 1.3% and 1.5%, respectively, thanks in part to expectations that tariffs will result in higher inflation. Although the risk of a recession in the US has diminished, US policy volatility and related economic uncertainties are likely to linger into the year, S&P Global said. On land, the so-called freight recession that began in 2022, sending trucking and intermodal rates tumbling by double-digit percentages, is entering its fourth consecutive year. Shippers will maintain pricing power in the truckload and intermodal rail segments in 2025, but they’re also going to make, ship and sell less. Despite an uptick in truckload spot rates early this year, led by flatbed spot rates, truckload pricing is still bouncing along a bottom it reached in 2023. Less-than-truckload (LTL) pricing has been elevated since the collapse of Yellow in 2023, but volumes remain essentially flat aside from some tariff-driven frontloading. The question isn’t whether trucking volumes will decline in the second quarter or second half of 2025, but by how much. That may trigger a broader loss of truck capacity. Blanking and canceling On the seas, the Trump administration’s multi-front trade war has already led to a drop in shipments, compounding the disruption caused by attacks on shipping in the Red Sea, where the US is escalating attacks on Houthis in Yemen. Ocean freight rates have fallen steeply in the first four months of 2025. Average spot pricing from Asia to the US West Coast of $2,050 per FEU in the week of April 18 was down 61% from the beginning of the year and 74.8% from its most recent peak in July 2024, according to Platts, a sister product of the Journal of Commerce within S&P Global. Asia-US East Coast spot rates have sunk 53.7% since Jan. 1 and 69.4% from last summer to $3,100 per FEU. A slew of booking cancellations by US importers is leading ocean carriers to blank more voyages in the eastbound trans-Pacific. Some ships are leaving China half-empty. The scale-back in US-bound imports from China is affecting the entire ocean carrier industry. “People are canceling and putting cargo [from] China on pause,” a source at a trans-Pacific container line who asked not to be identified told the Journal of Commerce in April. The broad pause in bookings and orders extends beyond China to other sourcing origins. Amazon, for example, has canceled orders of goods ranging from beach chairs and scooters to air conditioners from Vietnam and Thailand, as well as China, according to a report from Bloomberg. Retailer Five Below paused orders from China in April as those tariffs escalated, CFO Kristy Chipman told analysts during a March 19 call. “The breadth and magnitude of the tariffs are significant given that approximately 60% of our total cost of goods are imported from China, either directly or through our domestic vendors,” Chipman said. Trans-Pacific air cargo traffic, meanwhile, is expected to increase through May 2 as importers rush to beat the end of the exclusion from tariffs for low-value imports. After that final spurt of frontloading, tariffs and the loss of the de minimis exemption for shipments from China and Hong Kong are expected to drag on demand . Limited blank sailings have been announced on the trans-Atlantic trade in the coming weeks, with just 7,124 TEUs from North Europe to the US East and Gulf coasts scheduled to be withdrawn in May, according to maritime data provider eeSea. “It seems as if carriers are pushing up capacity to cater for whatever frontloading may be needed by European exporters,” said Peter Sand, chief analyst at rate benchmarking platform Xeneta. A bubble about to burst In 2024, containerized US imports jumped 15.3% to 27.7 million TEUs, while exports rose 0.9% to 11.3 million TEUs, according to PIERS, also part of S&P Global. Manufactured goods, machinery and mechanical products and minerals rode atop the wave of imports, spiking 17.6%, 14.8% and 11.4%, respectively. Goods were still pouring into the US in the first three months of 2025, with container imports rising 9.2% year over year, according to PIERS, but retailers say the import wave is collapsing as the race to beat the US tariffs ends. The Global Port Tracker report, produced by the National Retail Federation (NRF) and Hackett Associates, forecasts imports to plunge 20.5% in May, 26.6% in June, 27% in July and 26.7% in August. “At present, we expect to see imports begin to decline by May and that they will drop dramatically during the remainder of the year,” Hackett Associates Founder Ben Hackett said in the April Global Port Tracker report. The NRF and Hackett project inbound container shipments will fall 20% in the second half from the year-ago period, which would result in a full-year decline of 15% or more, approximately equal to last year’s gain. Exporters are feeling the effects of tariffs, too, especially those shipping US agricultural and forestry products . China, the largest US market for those products, levied a 125% tariff on them in retaliation for new US tariffs. Bookings for US exports to China for the week of April 15 were down 5.4% from the prior week at 17,220 TEUs, according to maritime visibility provider Vizion and data and analytics company Dun & Bradstreet. “In [the] short term, I think we’re going to see a lot of agriculture exporting shift [from China] to other countries,” Peter Friedmann, executive director of the Agriculture Transportation Coalition (AgTC), said in an interview with the Journal of Commerce. A drop in the value of the US dollar — down about 5% against other major world currencies after April’s tariff announcements — could help exporters sell goods overseas, but retaliatory tariffs and backlash among foreign consumers will likely dampen any currency gains. Such backlash has already occurred in Canada, where retailers have withdrawn American-made items from whiskey to diapers from their shelves. Manufacturing losing momentum Fewer US imports mean fewer intermodal containers moving inland to Chicago or Dallas and fewer truckload and LTL shipments. But a continued decline in US factory output will have an even greater impact on demand for trucking and rail services. Almost 60% of US truck tonnage is tied to industrial output, according to US Census Bureau data. North America manufacturing output fell at one of the steepest rates seen in the past two years in March, according to S&P Global, with broad-based production losses in the US, Canada and Mexico. The US Manufacturing Purchasing Managers’ Index (PMI) from S&P Global dropped to 50.2 in March from 52.7 in February and 51.2 in January. Optimism surrounding the Trump administration and the need to “front run” tariffs buoyed manufacturers in the first two months of the year, but “cracks are now starting to appear,” S&P Global said in its PMI release in April. The longer trade disputes last, the more US manufacturers will have difficulty finding specific components, including some that are critical to production, said Michael Regan, chief relationship officer at logistics company and shipper consultant TranzAct Technologies, citing Chinese-made magnets used in automotive transmissions as an example. “These are ‘dirty magnets’ produced from rare earth metals, and China is limiting their export,” Regan told the Journal of Commerce in mid-April. “A company I know has enough inventory to last only through July.” Resilient, but worried US consumer spending has been relatively steadfast so far this year, supported by continued wage increases and low unemployment. US retail sales grew 1.4% month over month in March, the biggest monthly increase since January 2023. Excluding sales of cars and trucks and automotive parts, retail sales only rose 0.5% from February, according to US Census Bureau data. But those results fly in the face of consumer sentiment. The University of Michigan Index of Consumer Sentiment dropped 11% sequentially in April, its fourth consecutive monthly decline. The Conference Board’s monthly index of consumer expectations dropped 9.6 points in March to 65.2, its lowest level in 12 years and far below the threshold of 80 that usually signals a recession ahead. Unlike in 2024, the consumer “is not feeling great,” NRF Chief Economist Jack Kleinhenz said in a statement in mid-April, but the NRF still expects US retail sales to rise this year with or without tariffs. The retailers’ association forecasts retail sales will grow between 2.7% and 3.7% year over year to between $5.42 trillion and $5.48 trillion. What’s more, there’s no expectation the disputes will end in the near future, and even if they do, damage has already been done that will take time to repair. The Trump administration’s goals, whether achievable or not, are part of a long-term strategy that is likely to survive weekly or even daily policy flips. As long as tariff uncertainty and trade wars linger, however, it will be more difficult to find a catalyst that will increase freight demand in the US. That’s pushing hopes for a freight recovery farther into 2026. Contact William B. Cassidy at bill.cassidy@spglobal.com . Journal of Commerce editors Ari Ashe, Greg Knowler, Bill Mongelluzzo and Laura Robb contributed to this report, along with Research Analyst Cathy Morrow Roberson.

Tariff-related disruption spreading as US shippers ‘pause’ plans

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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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<div class="phx-topic abstract-wrapper">Amid the US-China trade dispute, inquiries for bonded storage north of the border have increased four-fold this month, according to one Canada-based third-party logistics provider.</div>

Amid the US-China trade dispute, inquiries for bonded storage north of the border have increased four-fold this month, according to one Canada-based third-party logistics provider.

<div class="phx-topic">US importers are snatching up bonded warehousing in Canada to store freight from China and temporarily avoid paying hefty tariffs on the goods in the hopes the levies are significantly eased before those products need to be in the US. Amid the US-China trade dispute, inquiries for bonded storage in Canada have increased four-fold this month, according to Canadian third-party logistics provider 18 Wheels Warehousing and Trucking. There is no readily available data on bonded storage, but several companies said they’re seeing bonded warehousing space in high demand. “We’ve observed a significant increase in demand for bonded storage solutions in both the US and Canada as a direct response to the US tariffs on Chinese imports,” Brian Riley, senior vice president of Customs House Brokerage at supply chain management company GEODIS, told the Journal of Commerce. “Companies are actively exploring bonded warehouses in both countries to mitigate the impact of these tariffs.” Bonded warehousing, sometimes known as customs warehousing, offers shippers a secure storage facility where imported goods can be stored without paying import duties until they are released — not to be confused with free trade zones (FTZs), said Riley. “FTZs didn’t present a viable alternative due to the duty implications upon submission, unlike bonded warehouses where duties are only applicable upon withdrawal of the goods,” he said. Michael Kotendzhi, CEO of 18 Wheels, attributed the increase in Canadian warehousing to several factors, including the lack of bonded warehousing available in the US, a shipper’s ability to avoid the US tariffs entirely by finding a non-US buyer for the cargo, and the US dollar’s buying power in Canada. “The buying power with the US dollar in Canada is strong,” he said. <h3>Strategic move </h3>One freight forwarder said his customers are looking at bonded warehousing in Canada after they sought to divert their US-bound cargo to Canada, which is not an option. Instead, the forwarder recommends that shippers unload their cargo in the US and move it “in bond” — thus delaying the payment of tariffs — to bonded storage in Canada. “You can’t divert it,” said the forwarder. “You can stop it in the US and move it in bond to Canada — but you can’t take a container that’s destined for a US port and then divert it now to a Canadian port. You can stop it in the US and move it in bond to Canada so that you don’t have to pay the US tariffs.” Riley said while Canadian bonded warehousing is emerging as a strategic alternative when US options are constrained, the decision is ultimately driven by a combination of tariff implications, logistical efficiency and overall cost-effectiveness. “For instance, a company targeting the US Northwest might consider a bonded warehouse in Vancouver as a practical solution if they face limitations in securing space in the Seattle, Tacoma or Portland areas,” he said. “This allows them to hold their goods and then export them to the US when the logistics and cost factors are more favorable.” Forwarders agreed that a growing number of shippers are using the bonded warehouse option as a temporary solution in the hope the tariffs on goods from China are reduced soon. Indeed, <a href="https://www.wsj.com/politics/policy/white-house-considers-slashing-china-tariffs-to-de-escalate-trade-war-6f875d69?mod=WSJ_home_mediumtopper_pos_1">The Wall Street Journal reported Wednesday morning</a> that the White House is considering slashing the tariffs, in some cases by more than half, to de-escalate the trade war with Beijing. “The expectation is that this will get some sort of resolution at some point,” said Landon Bibeau, CEO of freight forwarder OEC Group Canada. “And so rather than pay 145% tariffs, hopefully [shippers] can [reduce that cost] or find other customers in Canada.” Contact Laura Robb at <a href="mailto:Laura.Robb@spglobal.com">laura.robb@spglobal.com</a>.</div>

US importers are snatching up bonded warehousing in Canada to store freight from China and temporarily avoid paying hefty tariffs on the goods in the hopes the levies are significantly eased before those products need to be in the US. Amid the US-China trade dispute, inquiries for bonded storage in Canada have increased four-fold this month, according to Canadian third-party logistics provider 18 Wheels Warehousing and Trucking. There is no readily available data on bonded storage, but several companies said they’re seeing bonded warehousing space in high demand. “We’ve observed a significant increase in demand for bonded storage solutions in both the US and Canada as a direct response to the US tariffs on Chinese imports,” Brian Riley, senior vice president of Customs House Brokerage at supply chain management company GEODIS, told the Journal of Commerce. “Companies are actively exploring bonded warehouses in both countries to mitigate the impact of these tariffs.” Bonded warehousing, sometimes known as customs warehousing, offers shippers a secure storage facility where imported goods can be stored without paying import duties until they are released — not to be confused with free trade zones (FTZs), said Riley. “FTZs didn’t present a viable alternative due to the duty implications upon submission, unlike bonded warehouses where duties are only applicable upon withdrawal of the goods,” he said. Michael Kotendzhi, CEO of 18 Wheels, attributed the increase in Canadian warehousing to several factors, including the lack of bonded warehousing available in the US, a shipper’s ability to avoid the US tariffs entirely by finding a non-US buyer for the cargo, and the US dollar’s buying power in Canada. “The buying power with the US dollar in Canada is strong,” he said. Strategic move One freight forwarder said his customers are looking at bonded warehousing in Canada after they sought to divert their US-bound cargo to Canada, which is not an option. Instead, the forwarder recommends that shippers unload their cargo in the US and move it “in bond” — thus delaying the payment of tariffs — to bonded storage in Canada. “You can’t divert it,” said the forwarder. “You can stop it in the US and move it in bond to Canada — but you can’t take a container that’s destined for a US port and then divert it now to a Canadian port. You can stop it in the US and move it in bond to Canada so that you don’t have to pay the US tariffs.” Riley said while Canadian bonded warehousing is emerging as a strategic alternative when US options are constrained, the decision is ultimately driven by a combination of tariff implications, logistical efficiency and overall cost-effectiveness. “For instance, a company targeting the US Northwest might consider a bonded warehouse in Vancouver as a practical solution if they face limitations in securing space in the Seattle, Tacoma or Portland areas,” he said. “This allows them to hold their goods and then export them to the US when the logistics and cost factors are more favorable.” Forwarders agreed that a growing number of shippers are using the bonded warehouse option as a temporary solution in the hope the tariffs on goods from China are reduced soon. Indeed, The Wall Street Journal reported Wednesday morning that the White House is considering slashing the tariffs, in some cases by more than half, to de-escalate the trade war with Beijing. “The expectation is that this will get some sort of resolution at some point,” said Landon Bibeau, CEO of freight forwarder OEC Group Canada. “And so rather than pay 145% tariffs, hopefully [shippers] can [reduce that cost] or find other customers in Canada.” Contact Laura Robb at laura.robb@spglobal.com .

US importers turn to Canadian bonded storage to delay payment of tariffs

<div class="phx-topic abstract-wrapper">Insufficient volumes, including on the lane between the Port of Virginia and Memphis, have forced the railroad to reallocate resources to areas where it believes container business will grow in the future.</div>

Insufficient volumes, including on the lane between the Port of Virginia and Memphis, have forced the railroad to reallocate resources to areas where it believes container business will grow in the future.

<div class="phx-topic">Norfolk Southern Railway (NS) will eliminate international intermodal service on more than 20 routes along the US East Coast, including trains between the Port of Virginia and the key inland hub of Memphis, due to insufficient container volumes. The service changes will take effect May 31, according to a notice NS sent to customers that was obtained by the Journal of Commerce. The railroad did not make a formal public announcement but confirmed the details. “By reallocating those resources, we’re reinforcing our broader network to better serve our customers and to ensure we are investing in growth where it’s most impactful,” Norfolk Southern said in a statement to the Journal of Commerce. The railroad said the services could be restored if a business case arises. Among the affected lanes are two notable routes: the Port of Virginia to Memphis and Chicago to Jacksonville. Norfolk Southern launched trains from Virginia to Memphis with <a href="https://www.joc.com/article/new-ns-norfolk-memphis-service-aims-to-grab-east-coast-cargo-shift-5202715">much fanfare in March 2023</a>, but the service never caught on among ocean carriers or shippers who had other options via the ports of Charleston and Savannah. “While we initially saw some interest from the international community for Port of Virginia-Memphis service, the volume ultimately was not strong enough to support the service sustainably over the long term,” NS said. “Our commitment to supporting international trade through the Port of Virginia remains strong, and we continue to focus on providing reliable, high-quality service for the lanes where customers need it most.” The Virginia Port Authority did not respond to requests for comment. <h3>Onward business to Puerto Rico affected </h3>NS will also discontinue service between Chicago and Jacksonville, which will impact onward business to Puerto Rico. Each year, Norfolk Southern and CSX Transportation move an estimated 16,000 to 22,000 ocean containers between Chicago and Jacksonville, according to a Journal of Commerce analysis of data from the US Surface Transportation Board. While the lane was heavily utilized southbound into Florida, northbound demand remained limited. Jacksonville serves as the launching point for Jones Act services to Puerto Rico operated by Crowley Maritime, Tote Maritime and Trailer Bridge. “Ultimately, the low density of international volumes challenged our ability to provide the consistent and reliable service product that our customers expect,” NS said in its statement on the Chicago-Jacksonville service. “We have been in close communication with our ocean carrier partners to fully understand their needs and priorities. We’ve worked to ensure they have access to alternative service options that continue to support critical trade flows, including the important Puerto Rico market.” While Norfolk Southern will discontinue international trains, CSX will remain an option for shippers moving ocean boxes between Chicago and Jacksonville. NS will still operate domestic intermodal trains between the two cities for 53-foot containers or ocean boxes with local drayage arrangements from its Jacksonville terminal. The other lanes affected by the Norfolk Southern service changes handled minimal international container traffic. For example, international trains will no longer run between Atlanta and Chicago — a high-volume domestic intermodal route that is served by ports in Baltimore, New York-New Jersey and Virginia for ocean freight. NS will also terminate international service between the Port of Charleston and Huntsville, Alabama, although service will continue from Savannah. The railroad also plans to convert the Norfolk Portlock Yard exclusively for domestic intermodal operations, shifting a small amount of remaining international cargo back to on-dock facilities within the Port of Virginia. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>. </div>

Norfolk Southern Railway (NS) will eliminate international intermodal service on more than 20 routes along the US East Coast, including trains between the Port of Virginia and the key inland hub of Memphis, due to insufficient container volumes. The service changes will take effect May 31, according to a notice NS sent to customers that was obtained by the Journal of Commerce. The railroad did not make a formal public announcement but confirmed the details. “By reallocating those resources, we’re reinforcing our broader network to better serve our customers and to ensure we are investing in growth where it’s most impactful,” Norfolk Southern said in a statement to the Journal of Commerce. The railroad said the services could be restored if a business case arises. Among the affected lanes are two notable routes: the Port of Virginia to Memphis and Chicago to Jacksonville. Norfolk Southern launched trains from Virginia to Memphis with much fanfare in March 2023 , but the service never caught on among ocean carriers or shippers who had other options via the ports of Charleston and Savannah. “While we initially saw some interest from the international community for Port of Virginia-Memphis service, the volume ultimately was not strong enough to support the service sustainably over the long term,” NS said. “Our commitment to supporting international trade through the Port of Virginia remains strong, and we continue to focus on providing reliable, high-quality service for the lanes where customers need it most.” The Virginia Port Authority did not respond to requests for comment. Onward business to Puerto Rico affected NS will also discontinue service between Chicago and Jacksonville, which will impact onward business to Puerto Rico. Each year, Norfolk Southern and CSX Transportation move an estimated 16,000 to 22,000 ocean containers between Chicago and Jacksonville, according to a Journal of Commerce analysis of data from the US Surface Transportation Board. While the lane was heavily utilized southbound into Florida, northbound demand remained limited. Jacksonville serves as the launching point for Jones Act services to Puerto Rico operated by Crowley Maritime, Tote Maritime and Trailer Bridge. “Ultimately, the low density of international volumes challenged our ability to provide the consistent and reliable service product that our customers expect,” NS said in its statement on the Chicago-Jacksonville service. “We have been in close communication with our ocean carrier partners to fully understand their needs and priorities. We’ve worked to ensure they have access to alternative service options that continue to support critical trade flows, including the important Puerto Rico market.” While Norfolk Southern will discontinue international trains, CSX will remain an option for shippers moving ocean boxes between Chicago and Jacksonville. NS will still operate domestic intermodal trains between the two cities for 53-foot containers or ocean boxes with local drayage arrangements from its Jacksonville terminal. The other lanes affected by the Norfolk Southern service changes handled minimal international container traffic. For example, international trains will no longer run between Atlanta and Chicago — a high-volume domestic intermodal route that is served by ports in Baltimore, New York-New Jersey and Virginia for ocean freight. NS will also terminate international service between the Port of Charleston and Huntsville, Alabama, although service will continue from Savannah. The railroad also plans to convert the Norfolk Portlock Yard exclusively for domestic intermodal operations, shifting a small amount of remaining international cargo back to on-dock facilities within the Port of Virginia. Contact Ari Ashe at ari.ashe@spglobal.com .

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<div class="phx-topic abstract-wrapper">With far fewer US-bound goods leaving Chinese docks, carriers have accelerated the raft of blank sailings and service suspensions that began earlier this month, sources tell the Journal of Commerce. </div>

With far fewer US-bound goods leaving Chinese docks, carriers have accelerated the raft of blank sailings and service suspensions that began earlier this month, sources tell the Journal of Commerce.

<div class="phx-topic">Ocean carriers are continuing to remove vessel capacity from the trans-Pacific at a significant clip as the trade dispute between the US and China ignited by the Trump administration’s tariffs shows no sign of ending anytime soon. With far fewer US-bound goods leaving Chinese docks, carriers have accelerated the raft of blank sailings and service suspensions that began earlier this month, sources tell the Journal of Commerce. Bookings for China to the US have dropped nearly 54% during the week of April 21–28 versus the comparable week in March, according to maritime visibility provider Vizion and data and analytics company Dun &amp; Bradstreet. Carriers Zim Integrated Shipping Services, Mediterranean Shipping Co., and Premier Alliance members HMM, Ocean Network Express (ONE) and Yang Ming have all announced capacity reductions on the trade as <a href="https://www.joc.com/article/tariff-related-disruption-spreading-as-us-shippers-pause-plans-5989017">volumes plummet</a>. “Carriers have gotten much better at managing capacity,” said Sanjay Tejwani, CEO of consulting firm 365 Logistics. “There has been a <a href="https://www.joc.com/article/fallout-from-us-china-trade-war-to-depress-trans-pacific-volumes-drewry-5990686">massive volume drop</a> [from China], but despite that, rates are at a healthy level. The carriers now know how to manage that capacity to avoid a collapse like we saw during [and before the COVID-19 pandemic.]” On the service side, the capacity cuts that were in full force in April are expected at minimum to be maintained into May, according to sources. Zim and MSC removed about 100,000 TEUs from the trans-Pacific trade lane in April, with Zim pulling out about 35,000 TEUs in capacity by suspending its ZX2 service, which connects Asia to the West Coast of North America. According to maritime intelligence provider eeSea, MSC’s Orient service was also suspended in April — effectively removing about 77,000 TEUs from the trade. Meanwhile, the PS5 service from the Premier Alliance — which had been positioned for a May launch — has been postponed indefinitely. “In my conversations with carriers, they’re very big on pulling capacity out of the China lane and into other Southeast Asian lanes,” said a US-based source with a non-vessel-operating common carrier (NVO). <h3>Southeast Asia bookings on the rise </h3>With US importers looking for a cheaper alternative to China, bookings for cargo from Southeast Asia have increased, according to Vizion. Bookings climbed more than 20% during the week of April 21 compared with two weeks earlier. Blanked sailings are also <a href="https://www.joc.com/article/trans-pacific-blank-sailings-set-to-rise-after-china-bookings-drop-sharply-5984166">gaining momentum</a>. Data from eeSea shows nearly 14% of trans-Pacific capacity was blanked during April, with 18% of the lane’s capacity poised to be blanked in May. Furthermore, port calls on the greater trans-Pacific trade have dropped significantly. Additional eeSea data shows the number of port calls made on the trade has been falling steadily since the second week of April, with more than 25% of calls eliminated during the two weeks between April 7–21. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="5538048b-e61f-4422-98ed-d121799010bb"></dynamic-object></div>Ocean carriers are also reducing service frequency to manage capacity. Ocean Alliance member Cosco Shipping will start offering its Bohai service into the Port of Long Beach bi-weekly instead of weekly at least through mid-June. Other Ocean Alliance services, such as Evergreen Marine’s HTW express service from Southeastern China, are continuing weekly calls, as the alliance also calls in Malaysia, Vietnam and Taiwan. Cosco is likewise maintaining weekly service on its Yangtse service from South China under the Ocean Alliance because it includes two calls in Vietnam. But with the capacity removals, there are concerns about long-term impacts to schedule reliability if volumes resume too quickly. “As they pull [capacity] out, if the tariffs go away, it’s going to be hard to get [services] back up and running,” said the NVO source. Contact Laura Robb at <a href="mailto:Laura.Robb@spglobal.com">laura.robb@spglobal.com</a>.  </div>

Ocean carriers are continuing to remove vessel capacity from the trans-Pacific at a significant clip as the trade dispute between the US and China ignited by the Trump administration’s tariffs shows no sign of ending anytime soon. With far fewer US-bound goods leaving Chinese docks, carriers have accelerated the raft of blank sailings and service suspensions that began earlier this month, sources tell the Journal of Commerce. Bookings for China to the US have dropped nearly 54% during the week of April 21–28 versus the comparable week in March, according to maritime visibility provider Vizion and data and analytics company Dun & Bradstreet. Carriers Zim Integrated Shipping Services, Mediterranean Shipping Co., and Premier Alliance members HMM, Ocean Network Express (ONE) and Yang Ming have all announced capacity reductions on the trade as volumes plummet . “Carriers have gotten much better at managing capacity,” said Sanjay Tejwani, CEO of consulting firm 365 Logistics. “There has been a massive volume drop [from China], but despite that, rates are at a healthy level. The carriers now know how to manage that capacity to avoid a collapse like we saw during [and before the COVID-19 pandemic.]” On the service side, the capacity cuts that were in full force in April are expected at minimum to be maintained into May, according to sources. Zim and MSC removed about 100,000 TEUs from the trans-Pacific trade lane in April, with Zim pulling out about 35,000 TEUs in capacity by suspending its ZX2 service, which connects Asia to the West Coast of North America. According to maritime intelligence provider eeSea, MSC’s Orient service was also suspended in April — effectively removing about 77,000 TEUs from the trade. Meanwhile, the PS5 service from the Premier Alliance — which had been positioned for a May launch — has been postponed indefinitely. “In my conversations with carriers, they’re very big on pulling capacity out of the China lane and into other Southeast Asian lanes,” said a US-based source with a non-vessel-operating common carrier (NVO). Southeast Asia bookings on the rise With US importers looking for a cheaper alternative to China, bookings for cargo from Southeast Asia have increased, according to Vizion. Bookings climbed more than 20% during the week of April 21 compared with two weeks earlier. Blanked sailings are also gaining momentum . Data from eeSea shows nearly 14% of trans-Pacific capacity was blanked during April, with 18% of the lane’s capacity poised to be blanked in May. Furthermore, port calls on the greater trans-Pacific trade have dropped significantly. Additional eeSea data shows the number of port calls made on the trade has been falling steadily since the second week of April, with more than 25% of calls eliminated during the two weeks between April 7–21. Ocean carriers are also reducing service frequency to manage capacity. Ocean Alliance member Cosco Shipping will start offering its Bohai service into the Port of Long Beach bi-weekly instead of weekly at least through mid-June. Other Ocean Alliance services, such as Evergreen Marine’s HTW express service from Southeastern China, are continuing weekly calls, as the alliance also calls in Malaysia, Vietnam and Taiwan. Cosco is likewise maintaining weekly service on its Yangtse service from South China under the Ocean Alliance because it includes two calls in Vietnam. But with the capacity removals, there are concerns about long-term impacts to schedule reliability if volumes resume too quickly. “As they pull [capacity] out, if the tariffs go away, it’s going to be hard to get [services] back up and running,” said the NVO source. Contact Laura Robb at laura.robb@spglobal.com . 

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