<div class="phx-topic abstract-wrapper">The Biden administration is targeting textile and apparel goods moving via a duty-free program by proposing tariffs while seeking more data on sub-$800 shipments. </div>

The Biden administration is targeting textile and apparel goods moving via a duty-free program by proposing tariffs while seeking more data on sub-$800 shipments.

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<div class="phx-topic">The Biden administration on Friday said it would be taking steps to target apparel and textile imports using the so-called “de minimis” exemption and called on Congress to pass legislation that would rein in the volume of duty-free packages entering the US. The White House is proposing rulemaking that would apply section 301 tariffs to de minimis shipments, a part of US trade law that allows single shipments valued at less than $800 to move duty-free and with fewer data submission requirements. Currently, section 301 tariffs cover approximately 40% of US imports from China, including 70% of Chinese textile and apparel imports to the US. “Some e-commerce platforms and other foreign sellers circumvent these tariffs by shipping items from China to the United States claiming the de minimis exemption,” the White House said in a statement. “If finalized, these goods would no longer be eligible for the de minimis exemption.” The actions come amid intensifying scrutiny over a flood of de minimis shipments pouring into the US. The volume of such shipments doubled in the first half of 2024, according to a dashboard maintained by US Customs and Border Protection (CBP). The dashboard shows that more than 87% of de minimis shipments move via air to the US, with most of the remainder going by truckload and a small portion going via ocean. Aside from seeking to curtail apparel and textile products using the de minimis exemption, the proposed rulemaking seeks to access more information on the shippers and receivers of goods. That includes a proposal to require specific, additional data for de minimis shipments, including the 10-digit tariff classification number and the person claiming the de minimis exemption, to “improve targeting of de minimis shipments and facilitate expedited clearance of lawful de minimis shipments,” the White House said. “These new requirements would help CBP protect consumers from goods that do not meet regulatory health and safety standards and protect US businesses from unfair competition against imported goods that would otherwise be charged duties or restricted from entry,” the White House added. A separate part of the rulemaking would require importers of consumer products to file Certificates of Compliance (CoC) electronically with CBP and the Consumer Product Safety Commission (CPSC), including for de minimis shipments. Aside from its own efforts to stymie de minimis volume, the Biden administration also said Congress should prioritize legislation that would exclude from de minimis eligibility import-sensitive products, specifically textile and apparel products. Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. </div>

The Biden administration on Friday said it would be taking steps to target apparel and textile imports using the so-called “de minimis” exemption and called on Congress to pass legislation that would rein in the volume of duty-free packages entering the US. The White House is proposing rulemaking that would apply section 301 tariffs to de minimis shipments, a part of US trade law that allows single shipments valued at less than $800 to move duty-free and with fewer data submission requirements. Currently, section 301 tariffs cover approximately 40% of US imports from China, including 70% of Chinese textile and apparel imports to the US. “Some e-commerce platforms and other foreign sellers circumvent these tariffs by shipping items from China to the United States claiming the de minimis exemption,” the White House said in a statement. “If finalized, these goods would no longer be eligible for the de minimis exemption.” The actions come amid intensifying scrutiny over a flood of de minimis shipments pouring into the US. The volume of such shipments doubled in the first half of 2024, according to a dashboard maintained by US Customs and Border Protection (CBP). The dashboard shows that more than 87% of de minimis shipments move via air to the US, with most of the remainder going by truckload and a small portion going via ocean. Aside from seeking to curtail apparel and textile products using the de minimis exemption, the proposed rulemaking seeks to access more information on the shippers and receivers of goods. That includes a proposal to require specific, additional data for de minimis shipments, including the 10-digit tariff classification number and the person claiming the de minimis exemption, to “improve targeting of de minimis shipments and facilitate expedited clearance of lawful de minimis shipments,” the White House said. “These new requirements would help CBP protect consumers from goods that do not meet regulatory health and safety standards and protect US businesses from unfair competition against imported goods that would otherwise be charged duties or restricted from entry,” the White House added. A separate part of the rulemaking would require importers of consumer products to file Certificates of Compliance (CoC) electronically with CBP and the Consumer Product Safety Commission (CPSC), including for de minimis shipments. Aside from its own efforts to stymie de minimis volume, the Biden administration also said Congress should prioritize legislation that would exclude from de minimis eligibility import-sensitive products, specifically textile and apparel products. Contact Eric Johnson at eric.johnson@spglobal.com .

Transport, Trade and Regulation News

White House takes aim at growing threat of ‘de minimis’ imports

<div class="phx-topic abstract-wrapper">It’s a play by carriers to tempt NVOs with a reopened annual contract that, while higher than the deal they signed last spring, is still below current spot rates that have fallen from an early-summer peak.</div>

It’s a play by carriers to tempt NVOs with a reopened annual contract that, while higher than the deal they signed last spring, is still below current spot rates that have fallen from an early-summer peak.

<div class="phx-topic">Ocean carriers in the eastbound trans-Pacific are increasingly confident that a rate war can be avoided through the Lunar New Year period when many factories in Asia will close for about two weeks beginning in late January. They are concerned, however, that spot rates may not rebound as they normally do in the spring because carriers are scheduled to add at least <a href="https://www.joc.com/article/container-shipping-still-has-an-overcapacity-problem-but-its-far-from-insurmountable-5234357">1.6 million TEUs of new capacity to the global fleet in 2024–25.</a>As a result, non-vessel-operating common carriers (NVOs) say some liners have approached them with offers to renegotiate their 2024–25 fixed rate, also known as named account contracts, most of which are set to expire on April 30. It’s a play by carriers to tempt NVOs with a reopened annual contract that, while higher than the deal they signed last spring, is still below current spot rates that have fallen from an early-summer peak. “We’ve had a couple of carriers approach us with that offer,” said Kurt McElroy, executive vice president of the NVO Kerry Apex. Current NVO named account rates range from about $1,600 to about $2,000 per FEU. If the NVO agrees to pay an additional $1,000 per FEU, carriers are offering to lock in the new rate through the contract expiration date of April 30. This would give NVOs a hedge if imports increase and they exceed their fixed rate allocations. When that happened in June, NVOs were paying freight-all-kinds (FAK) rates in excess of $6,000 per FEU. Terms and conditions of the contract, such as increasing the minimum quantity commitments (MQCs), are usually negotiable, McElroy said. Jon Monroe, who serves as an adviser to NVOs, said forwarders could use the contract re-negotiation as an opportunity to increase their MQCs and lock in the fixed rates for the next six months. In other words, if the named account rate is $2,000 per FEU to the West Coast and the NVO agrees to pay $3,000 and possibly increase the MQC, the NVO will have locked in a favorable fixed rate for the life of the contract, Monroe said. However, an opposite scenario could also play out, according to Rachel Shames, vice president for pricing and procurement at the NVO CV International. If FAK rates tumble, as they did this January, the NVO would save money by just paying the FAK rate. “There’s a good chance [FAK] rates will keep falling,” Shames said. “You have to look at what your risks are. Nobody knows what the last six months of these contracts will look like.” <h3>Frontloading for spring ‘25 </h3>Meanwhile, the frontloading of spring ‘25 merchandise by retailers could lift US import volumes from Asia during the normally slack months of November and December and prevent a collapse of spot rates later this year in the eastbound trans-Pacific, forwarders say. Imports of merchandise linked to Valentine’s Day and spring activities that would normally begin shipping in December should start moving two months earlier in October, said James Caradonna, executive vice president of the forwarder M&amp;R Spedag Group. That’s a similar cadence to year-end holiday merchandise that began arriving at US ports in June this year rather than in August. “The entire 12-month cycle is shifting several months earlier,” Caradonna told the Journal of Commerce. “There’s almost no ‘normal’ now,” said Shames, noting that carriers this year began levying <a href="https://www.joc.com/article/loading-worries-drive-early-peak-season-frenzy-on-eastbound-trans-pacific-5192196">peak season surcharges (PSSs) in June</a> rather than in August, traditionally the beginning of the peak shipping season. Carriers are likewise optimistic about import volumes from Asia in the fourth quarter. The eastbound trans-Pacific “still looks pretty healthy from our perspective, between now and the end of the year,” George Goldman, president and CEO at CMA CGM North America, told the Journal of Commerce. “The reality is there was more cargo in the system than we all anticipated.” <h3>Normal cadence disrupted </h3>The normal seasonal cadence on the Asia-North American trades has been disrupted by longshore labor, geopolitical conflicts and weather-related events dating back to last fall. The threat of a <a href="https://www.joc.com/article/port-employers-urge-ila-to-return-to-contract-talks-5723976">strike by the International Longshoremen’s Association</a> against maritime employers along the East and Gulf coasts was a dominant factor in forcing retailers to frontload fall and year-end holiday merchandise this past spring. The labor threat <a href="https://www.joc.com/article/canadian-rail-workers-back-on-job-after-failed-challenge-to-binding-arbitration-5712234">extended to the Canadian rail industry as well.</a><a href="https://www.joc.com/article/maersk-to-resume-panama-canal-transits-on-oc1-service-as-vessel-restrictions-ease-5225404">Drought restrictions along the Panama Canal</a> have been a factor, as are the ongoing attacks by Houthi militants <a href="https://www.joc.com/article/container-shipping-market-continues-to-be-reset-by-ongoing-red-sea-crisis-5713700">on vessels transiting the Red Sea</a> that forced most container carriers to re-route vessels around the southern tip of Africa, adding time and cost to all-water services that would have gone through the Suez Canal. Freight rates in the eastbound trans-Pacific have been fluctuating all year. The spot rate from Asia to the West Coast spiked to $8,133 per FEU in early July after a series of general rate increases (GRIs) but is now down to $4,500 per FEU, according to Platts, a Journal of Commerce sister company within S&amp;P Global. The East Coast spot rate surged to $10,133 per FEU on July 5 but has fallen to $5,600 per FEU, according to Platts. Amid the rising rates, carriers this <a href="https://www.joc.com/article/asia-uswc-spot-rates-edge-lower-as-new-capacity-takes-edge-off-overheated-market-5192314">year launched or re-instated 10 services from Asia to the West Coast</a>. Liners are also <a href="https://www.joc.com/article/carriers-to-deploy-extra-loaders-to-los-angeles-long-beach-amid-import-surge-5714861">running 28 single-voyage extra-loader vessels</a> to the ports of Los Angeles and Long Beach — 14 to each port — in September and October. As a result, NVOs say they are encountering no space limitations to the West Coast. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e7a65aab-9aac-4f07-9b74-1793746c01ef"></dynamic-object></div>“We’re getting all of the space we need,” Caradonna said. Vessel capacity has been tight to the East Coast, but since most of the holiday season merchandise was shipped from Asian load ports before Sept. 1, NVOs said space is now opening on the all-water services on the trade lane. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com ">bill.mongelluzzo@spglobal.com</a>.</div>

Ocean carriers in the eastbound trans-Pacific are increasingly confident that a rate war can be avoided through the Lunar New Year period when many factories in Asia will close for about two weeks beginning in late January. They are concerned, however, that spot rates may not rebound as they normally do in the spring because carriers are scheduled to add at least 1.6 million TEUs of new capacity to the global fleet in 2024–25. As a result, non-vessel-operating common carriers (NVOs) say some liners have approached them with offers to renegotiate their 2024–25 fixed rate, also known as named account contracts, most of which are set to expire on April 30. It’s a play by carriers to tempt NVOs with a reopened annual contract that, while higher than the deal they signed last spring, is still below current spot rates that have fallen from an early-summer peak. “We’ve had a couple of carriers approach us with that offer,” said Kurt McElroy, executive vice president of the NVO Kerry Apex. Current NVO named account rates range from about $1,600 to about $2,000 per FEU. If the NVO agrees to pay an additional $1,000 per FEU, carriers are offering to lock in the new rate through the contract expiration date of April 30. This would give NVOs a hedge if imports increase and they exceed their fixed rate allocations. When that happened in June, NVOs were paying freight-all-kinds (FAK) rates in excess of $6,000 per FEU. Terms and conditions of the contract, such as increasing the minimum quantity commitments (MQCs), are usually negotiable, McElroy said. Jon Monroe, who serves as an adviser to NVOs, said forwarders could use the contract re-negotiation as an opportunity to increase their MQCs and lock in the fixed rates for the next six months. In other words, if the named account rate is $2,000 per FEU to the West Coast and the NVO agrees to pay $3,000 and possibly increase the MQC, the NVO will have locked in a favorable fixed rate for the life of the contract, Monroe said. However, an opposite scenario could also play out, according to Rachel Shames, vice president for pricing and procurement at the NVO CV International. If FAK rates tumble, as they did this January, the NVO would save money by just paying the FAK rate. “There’s a good chance [FAK] rates will keep falling,” Shames said. “You have to look at what your risks are. Nobody knows what the last six months of these contracts will look like.” Frontloading for spring ‘25 Meanwhile, the frontloading of spring ‘25 merchandise by retailers could lift US import volumes from Asia during the normally slack months of November and December and prevent a collapse of spot rates later this year in the eastbound trans-Pacific, forwarders say. Imports of merchandise linked to Valentine’s Day and spring activities that would normally begin shipping in December should start moving two months earlier in October, said James Caradonna, executive vice president of the forwarder M&R Spedag Group. That’s a similar cadence to year-end holiday merchandise that began arriving at US ports in June this year rather than in August. “The entire 12-month cycle is shifting several months earlier,” Caradonna told the Journal of Commerce. “There’s almost no ‘normal’ now,” said Shames, noting that carriers this year began levying peak season surcharges (PSSs) in June rather than in August, traditionally the beginning of the peak shipping season. Carriers are likewise optimistic about import volumes from Asia in the fourth quarter. The eastbound trans-Pacific “still looks pretty healthy from our perspective, between now and the end of the year,” George Goldman, president and CEO at CMA CGM North America, told the Journal of Commerce. “The reality is there was more cargo in the system than we all anticipated.” Normal cadence disrupted The normal seasonal cadence on the Asia-North American trades has been disrupted by longshore labor, geopolitical conflicts and weather-related events dating back to last fall. The threat of a strike by the International Longshoremen’s Association against maritime employers along the East and Gulf coasts was a dominant factor in forcing retailers to frontload fall and year-end holiday merchandise this past spring. The labor threat extended to the Canadian rail industry as well. Drought restrictions along the Panama Canal have been a factor, as are the ongoing attacks by Houthi militants on vessels transiting the Red Sea that forced most container carriers to re-route vessels around the southern tip of Africa, adding time and cost to all-water services that would have gone through the Suez Canal. Freight rates in the eastbound trans-Pacific have been fluctuating all year. The spot rate from Asia to the West Coast spiked to $8,133 per FEU in early July after a series of general rate increases (GRIs) but is now down to $4,500 per FEU, according to Platts, a Journal of Commerce sister company within S&P Global. The East Coast spot rate surged to $10,133 per FEU on July 5 but has fallen to $5,600 per FEU, according to Platts. Amid the rising rates, carriers this year launched or re-instated 10 services from Asia to the West Coast . Liners are also running 28 single-voyage extra-loader vessels to the ports of Los Angeles and Long Beach — 14 to each port — in September and October. As a result, NVOs say they are encountering no space limitations to the West Coast. “We’re getting all of the space we need,” Caradonna said. Vessel capacity has been tight to the East Coast, but since most of the holiday season merchandise was shipped from Asian load ports before Sept. 1, NVOs said space is now opening on the all-water services on the trade lane. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .

Container Shipping News

Container lines

Trans-Pacific

Maritime

Some carriers seek to reopen 2024–25 fixed-rate contracts in trans-Pac: NVOs

<div class="phx-topic abstract-wrapper">DSV knocked the unions’ preferred bidder, private equity firm CVC Capital Partners, out of the race, but the forwarder’s bid now needs approval from the German parliament.</div>

DSV knocked the unions’ preferred bidder, private equity firm CVC Capital Partners, out of the race, but the forwarder’s bid now needs approval from the German parliament.

<div class="phx-topic">German transport unions and the country’s parliament are the remaining obstacles to Danish forwarder DSV finalizing its €14.3 billion ($15.9 billion) acquisition of DB Schenker that was announced Friday. The agreement will go to the Supervisory Board of Deutsche Bahn, DB Schenker’s parent company, which is expected to be a formality. But the deal also needs to go before the German federal government, where concerns over job losses after the takeover mean the final decision from the Bundestag parliament is no rubber stamp.Those concerns last week brought DB Schenker employees out on the streets in major centers around Germany in protest, with the United Services Union, known as ver.di, campaigning over the past few weeks in favor of a competing bid from private equity firm CVC Capital Partners.“For us, it is essential that as many jobs as possible are retained at the end of the sales process,” a ver.di spokesperson told the Journal of Commerce Friday. “The transaction has not yet been completed as important decisions of the supervisory board of the Deutsche Bahn and the budget committee of the Bundestag are still pending,” the spokesman added.The union and government are sensitive to job losses as Germany’s export-driven economy stagnates and large industrial sectors such as chemicals and automotives face plant closures.All major acquisitions come with cuts in headcount, and DSV’s huge takeovers have been no exception. DSV acquired UTi in 2015 for $1.35 billion, Panalpina in 2019 for $4.6 billion and Agility’s Global Integrated Logistics (GIL) in 2021 for $4.2 billion. As the acquisitions were integrated into DSV, significant job losses were reported, although DSV has contested a 2023 research report that put the redundancies at 45%.A combined DSV-DB Schenker entity will have close to 150,000 employees around the world with about a 50:50 split; both DSV and Deutsche Bahn have insisted no jobs will be lost, at least initially. <h3>Sweetening the pot</h3>To sweeten its bid and placate both the unions and the German government, DSV included social commitments to DB Schenker jobs in the acquisition agreement as well as a pledge to invest €1 billion in Germany over the next three to five years, “which will contribute to ensuring long-term growth and job creation.”“DSV has entered social undertakings in relation to the employees of Schenker in Germany, which will apply for two years after closing,” DSV said in a statement.With the job protections in place and expected business growth, Deutsche Bahn even anticipated that in five years the combined organization would have more employees in Germany than DB Schenker and DSV have today.In a move to further reassure unions and the federal government, Deutsche Bahn said in a statement Friday that Germany “will become an even more important market in the new organization” with central functions to be retained, including those at DB Schenker’s head office in the German city of Essen.The transaction is expected to be completed in the second quarter of 2025 once all regulatory approvals have been obtained. Until the closing of the transaction, DSV and DB Schenker will remain two separate companies conducting business as usual.Proceeds from the sale will remain entirely within the loss-making DB Group and will be used to reduce the rail operator’s significant debt burden.The acquisition will turn DSV into the world’s largest forwarder, with the addition of DB Schenker’s air and sea business taking the combined container handling to 4.3 million TEUs, with 2.4 million metric tons of air freight.DB Schenker will add 8.5 million square meters of warehousing capacity to DSV’s portfolio, with the combined space totaling 17.5 million square meters across 60 countries.Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>.</div>

German transport unions and the country’s parliament are the remaining obstacles to Danish forwarder DSV finalizing its €14.3 billion ($15.9 billion) acquisition of DB Schenker that was announced Friday. The agreement will go to the Supervisory Board of Deutsche Bahn, DB Schenker’s parent company, which is expected to be a formality. But the deal also needs to go before the German federal government, where concerns over job losses after the takeover mean the final decision from the Bundestag parliament is no rubber stamp. Those concerns last week brought DB Schenker employees out on the streets in major centers around Germany in protest, with the United Services Union, known as ver.di, campaigning over the past few weeks in favor of a competing bid from private equity firm CVC Capital Partners. “For us, it is essential that as many jobs as possible are retained at the end of the sales process,” a ver.di spokesperson told the Journal of Commerce Friday. “The transaction has not yet been completed as important decisions of the supervisory board of the Deutsche Bahn and the budget committee of the Bundestag are still pending,” the spokesman added. The union and government are sensitive to job losses as Germany’s export-driven economy stagnates and large industrial sectors such as chemicals and automotives face plant closures. All major acquisitions come with cuts in headcount, and DSV’s huge takeovers have been no exception. DSV acquired UTi in 2015 for $1.35 billion, Panalpina in 2019 for $4.6 billion and Agility’s Global Integrated Logistics (GIL) in 2021 for $4.2 billion. As the acquisitions were integrated into DSV, significant job losses were reported, although DSV has contested a 2023 research report that put the redundancies at 45%. A combined DSV-DB Schenker entity will have close to 150,000 employees around the world with about a 50:50 split; both DSV and Deutsche Bahn have insisted no jobs will be lost, at least initially. Sweetening the pot To sweeten its bid and placate both the unions and the German government, DSV included social commitments to DB Schenker jobs in the acquisition agreement as well as a pledge to invest €1 billion in Germany over the next three to five years, “which will contribute to ensuring long-term growth and job creation.” “DSV has entered social undertakings in relation to the employees of Schenker in Germany, which will apply for two years after closing,” DSV said in a statement. With the job protections in place and expected business growth, Deutsche Bahn even anticipated that in five years the combined organization would have more employees in Germany than DB Schenker and DSV have today. In a move to further reassure unions and the federal government, Deutsche Bahn said in a statement Friday that Germany “will become an even more important market in the new organization” with central functions to be retained, including those at DB Schenker’s head office in the German city of Essen. The transaction is expected to be completed in the second quarter of 2025 once all regulatory approvals have been obtained. Until the closing of the transaction, DSV and DB Schenker will remain two separate companies conducting business as usual. Proceeds from the sale will remain entirely within the loss-making DB Group and will be used to reduce the rail operator’s significant debt burden. The acquisition will turn DSV into the world’s largest forwarder, with the addition of DB Schenker’s air and sea business taking the combined container handling to 4.3 million TEUs, with 2.4 million metric tons of air freight. DB Schenker will add 8.5 million square meters of warehousing capacity to DSV’s portfolio, with the combined space totaling 17.5 million square meters across 60 countries. Contact Greg Knowler at greg.knowler@spglobal.com .

Forwarding

Supply chain

Union, government hurdles ahead in DSV’s $16 billion takeover of DB Schenker

<div class="phx-topic abstract-wrapper">A soft freight economy and improved shipper scheduling and loading procedures are contributing to a decline in driver detention time, the American Transportation Research Institute says in a new study.</div>

A soft freight economy and improved shipper scheduling and loading procedures are contributing to a decline in driver detention time, the American Transportation Research Institute says in a new study.

<div class="phx-topic">Truck driver detention at shipper and consignee docks is decreasing, thanks in part to the soft freight market, but detention is still causing significant supply chain inefficiencies and costing drivers and trucking companies money, according to a new report. The American Transportation Research Institute (ATRI) report, released this week, said the frequency of driver detention dropped 6.5 percentage points between 2014 and 2023. ATRI’s last detention study, released in 2019, <a href="https://www.joc.com/article/shippers-delaying-us-truck-drivers-longer-survey-5244159">found detention increasing</a>. The new study shows some trends reversing. “Significant detention of two hours or more became considerably less common, dropping by 11.4 percentage points between 2014 and 2023,” ATRI said in its report. Detention is commonly defined as holding a driver two hours beyond an agreed-upon dwell time. The percentage of drivers detained for more than four hours dropped from 7.7% in 2014 to 4.9% in 2023, after peaking at 9.4% in 2018, ATRI said. Still, the percentage of truckers held one to two hours beyond agreed dwell time rose from 24.5% in 2014 to 29.4% last year. But detention isn’t just a driver or carrier problem; it’s often a sign of upstream supply chain problems. And detention can spread inefficiencies across multiple shippers, tightening capacity, delaying freight deliveries and ultimately driving up shipping costs. The data collected by ATRI suggest shippers are doing a better job of moving truck drivers in and out of their facilities quickly, whether through increased use of drop-and-hook trailer pools, better dock and yard management or faster live loading and unloading. Less freight, however, also means less congestion at receiving and delivery locations and less detention time. Detention has historically peaked alongside demand for trucking services in years such as 2014, 2018, 2021 and 2022 — all trucking boom years. “We’ve seen shippers make some improvements even on appointment scheduling using software, but we are in a freight downturn, and that’s probably impacting the numbers,” said Alex Leslie, ATRI’s senior research associate and principal author of the study. <h3>A $3.6 billion unpaid bill </h3>Truck driver detention is a “cascading” problem, Leslie told the Journal of Commerce. Drivers, carriers, brokers and shippers are all affected when drivers and loads are detained. “It’s a tough problem because a lot of the onus falls on shippers, though not entirely,” he said. Truck drivers also are affected by detention before and after stops, often increasing their speed to reach a facility where they might be detained and then speeding to get to their next stop within their daily hours of service, he said. Although ATRI noted long-term improvement, truck drivers surveyed by the research institute still were detained in 39.3% of all stops last year. On average, drivers were detained in one out of 10 stops, the research organization said. That’s costing trucking firms $3.6 billion in direct, unrecovered expenses, ATRI said. Before the pandemic, ATRI’s estimate had been closer to $1 billion. The ATRI study, based on driver surveys and GPS data from more than one million trucks, found truckload drivers on average spend 173 hours in detention each year, or more than 15 days of hours-of-service driving time. ATRI put indirect annual productivity losses attributable to detention at $11.5 billion. As a result, “more trucks and drivers are needed to maintain the freight status quo because of detention,” ATRI said. Excess capacity in the truckload market may absorb lost productivity when demand is slack, but that could change quickly if demand rises. <h3>Regulatory attention </h3>The Federal Motor Carrier Safety Administration (FMCSA), which has studied the driver detention since 2012, is also <a href="https://www.joc.com/article/us-regulators-digging-deeper-into-truck-driver-detention-data-5221695">returning to the problem</a>. The FMCSA launched a study of detention’s impact last year that is expected to be completed in 2025. A decade ago, FMCSA considered <a href="https://www.joc.com/article/fmcsa-chief-warns-us-shippers-dont-delay-drivers-5245226">regulatory solutions</a> to driver detention. Then-FMCSA Administrator Anne S. Ferro claimed detention contributed to safety problems, including speeding and the risk of accidents. This time, the agency is digging into data from electronic logging devices (ELDs) that were <a href="https://www.joc.com/article/elds-not-yet-denting-us-truck-detention-5231511">mandated in 2018</a>. The FMCSA study involves 80 carriers and 2,500 truck drivers. A non-rulemaking docket on the study was opened in August 2023 and updated in February. The FMCSA is looking for solutions it can offer to the private sector to reduce detention, but increased scrutiny on Capitol Hill could translate to legislative and regulatory action that affects how shippers manage detention and the loading and unloading of trailers. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

Truck driver detention at shipper and consignee docks is decreasing, thanks in part to the soft freight market, but detention is still causing significant supply chain inefficiencies and costing drivers and trucking companies money, according to a new report. The American Transportation Research Institute (ATRI) report, released this week, said the frequency of driver detention dropped 6.5 percentage points between 2014 and 2023. ATRI’s last detention study, released in 2019, found detention increasing . The new study shows some trends reversing. “Significant detention of two hours or more became considerably less common, dropping by 11.4 percentage points between 2014 and 2023,” ATRI said in its report. Detention is commonly defined as holding a driver two hours beyond an agreed-upon dwell time. The percentage of drivers detained for more than four hours dropped from 7.7% in 2014 to 4.9% in 2023, after peaking at 9.4% in 2018, ATRI said. Still, the percentage of truckers held one to two hours beyond agreed dwell time rose from 24.5% in 2014 to 29.4% last year. But detention isn’t just a driver or carrier problem; it’s often a sign of upstream supply chain problems. And detention can spread inefficiencies across multiple shippers, tightening capacity, delaying freight deliveries and ultimately driving up shipping costs. The data collected by ATRI suggest shippers are doing a better job of moving truck drivers in and out of their facilities quickly, whether through increased use of drop-and-hook trailer pools, better dock and yard management or faster live loading and unloading. Less freight, however, also means less congestion at receiving and delivery locations and less detention time. Detention has historically peaked alongside demand for trucking services in years such as 2014, 2018, 2021 and 2022 — all trucking boom years. “We’ve seen shippers make some improvements even on appointment scheduling using software, but we are in a freight downturn, and that’s probably impacting the numbers,” said Alex Leslie, ATRI’s senior research associate and principal author of the study. A $3.6 billion unpaid bill Truck driver detention is a “cascading” problem, Leslie told the Journal of Commerce. Drivers, carriers, brokers and shippers are all affected when drivers and loads are detained. “It’s a tough problem because a lot of the onus falls on shippers, though not entirely,” he said. Truck drivers also are affected by detention before and after stops, often increasing their speed to reach a facility where they might be detained and then speeding to get to their next stop within their daily hours of service, he said. Although ATRI noted long-term improvement, truck drivers surveyed by the research institute still were detained in 39.3% of all stops last year. On average, drivers were detained in one out of 10 stops, the research organization said. That’s costing trucking firms $3.6 billion in direct, unrecovered expenses, ATRI said. Before the pandemic, ATRI’s estimate had been closer to $1 billion. The ATRI study, based on driver surveys and GPS data from more than one million trucks, found truckload drivers on average spend 173 hours in detention each year, or more than 15 days of hours-of-service driving time. ATRI put indirect annual productivity losses attributable to detention at $11.5 billion. As a result, “more trucks and drivers are needed to maintain the freight status quo because of detention,” ATRI said. Excess capacity in the truckload market may absorb lost productivity when demand is slack, but that could change quickly if demand rises. Regulatory attention The Federal Motor Carrier Safety Administration (FMCSA), which has studied the driver detention since 2012, is also returning to the problem . The FMCSA launched a study of detention’s impact last year that is expected to be completed in 2025. A decade ago, FMCSA considered regulatory solutions to driver detention. Then-FMCSA Administrator Anne S. Ferro claimed detention contributed to safety problems, including speeding and the risk of accidents. This time, the agency is digging into data from electronic logging devices (ELDs) that were mandated in 2018 . The FMCSA study involves 80 carriers and 2,500 truck drivers. A non-rulemaking docket on the study was opened in August 2023 and updated in February. The FMCSA is looking for solutions it can offer to the private sector to reduce detention, but increased scrutiny on Capitol Hill could translate to legislative and regulatory action that affects how shippers manage detention and the loading and unloading of trailers. Contact William B. Cassidy at bill.cassidy@spglobal.com .

Trucking News

Trucking labor

Surface

Truck driver detention by US shippers decreasing, but costs rising: study

<div class="phx-topic abstract-wrapper">The report aims to bolster the case for heightened cyber-security efforts at US ports, which the congressmen who authored the report say are vulnerable to Chinese espionage. </div>

The report aims to bolster the case for heightened cyber-security efforts at US ports, which the congressmen who authored the report say are vulnerable to Chinese espionage.

<div class="phx-topic">China’s leading ship-to-shore crane maker — which has strong ties to the country’s military — pressured US port customers to allow remote monitoring of cranes that contained pre-installed cellular modems, according to a new Congressional report. The report aims to bolster the case for heightened cyber-security efforts at US ports, which the congressmen who authored the report say are vulnerable to Chinese espionage. House Republicans Mark Green of Tennessee, Carlos Gimenez of Florida and John Moolenaar of Michigan, who are members of various committees charged with homeland and maritime security, issued a joint report Thursday about the heavy reliance of US ports on cranes manufactured by Shanghai Zhenhua Heavy Industries (ZPMC), which has a nearly 80% market share of US ship-to-shore cranes. The report said US ports and terminal operators are “pressured” by ZPMC to provide remote access to the company’s cranes after purchase. Not allowing remote access to the cranes, which is ostensibly aimed at providing diagnostics for maintenance, “is difficult for customers who are looking to get the lowest price or guarantee a robust warranty policy,” the report said. ZPMC “has repeatedly requested remote access to its STS cranes operating at various US ports, with a particular focus on those located on the West Coast,” the report said, noting West Coast ports would play a vital role in supplying Taiwan if a conflict breaks out with China. ZPMC cranes also typically come pre-installed with cellular modems for collecting usage data, the report said. The modems are even installed when a customer declines remote diagnostic and monitoring services as part of their procurement contract, the report explained, adding that ZPMC itself claims it does not install the modems. “These modems — although not necessary for the operation of the cranes — created an obscure method to collect information, and bypass firewalls in a manner that could potentially disrupt port operations,” the report said. “The exact identity of those responsible for installing the modems, while likely ZPMC, remains unclear.” <h2>Ties to China’s military </h2>The report highlighted the close ties that ZPMC and other state-owned enterprises such as Cosco Shipping and China Merchants Group has to China’s People’s Liberation Army (PLA). ZPMC, whose parent company is involved in the construction of military bases in the South China Sea, provided a heavy-lift ship that the PLA used in a maritime exercise, according to the congressional report. ZPMC’s cranes are also manufactured near a site where the PLA builds its most advanced warships, the report said, adding that ZPMC is required to comply with a Chinese law that allows the government to request any corporate data. The report follows hearings that House security committees conducted last year about the vulnerabilities of US ports to Chinese espionage. In the wake of those hearings, US ports were required to submit cybersecurity plans to the US Coast Guard, while the Maritime Administration warned ports about the risk of Chinese-made cranes. Along with ongoing monitoring of Chinese port cranes in the US, the report’s authors recommended fostering a homegrown crane manufacturer. In response to the earlier hearings on the matter, <a href="https://www.joc.com/article/white-house-counters-risk-of-chinese-port-cranes-with-20-billion-for-us-sourcing-5200230">the Biden Administration in February pledged $20 billion in government support to create a domestic manufacturer</a>. To further that goal, <a href="https://www.joc.com/article/us-ports-hit-back-at-white-house-move-to-levy-new-tariff-on-chinese-cranes-5192168">the White House also proposed a 25% tariff on Chinese-made cranes to incentivize US production</a>. Contact Michael Angell at <a href="michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

China’s leading ship-to-shore crane maker — which has strong ties to the country’s military — pressured US port customers to allow remote monitoring of cranes that contained pre-installed cellular modems, according to a new Congressional report. The report aims to bolster the case for heightened cyber-security efforts at US ports, which the congressmen who authored the report say are vulnerable to Chinese espionage. House Republicans Mark Green of Tennessee, Carlos Gimenez of Florida and John Moolenaar of Michigan, who are members of various committees charged with homeland and maritime security, issued a joint report Thursday about the heavy reliance of US ports on cranes manufactured by Shanghai Zhenhua Heavy Industries (ZPMC), which has a nearly 80% market share of US ship-to-shore cranes. The report said US ports and terminal operators are “pressured” by ZPMC to provide remote access to the company’s cranes after purchase. Not allowing remote access to the cranes, which is ostensibly aimed at providing diagnostics for maintenance, “is difficult for customers who are looking to get the lowest price or guarantee a robust warranty policy,” the report said. ZPMC “has repeatedly requested remote access to its STS cranes operating at various US ports, with a particular focus on those located on the West Coast,” the report said, noting West Coast ports would play a vital role in supplying Taiwan if a conflict breaks out with China. ZPMC cranes also typically come pre-installed with cellular modems for collecting usage data, the report said. The modems are even installed when a customer declines remote diagnostic and monitoring services as part of their procurement contract, the report explained, adding that ZPMC itself claims it does not install the modems. “These modems — although not necessary for the operation of the cranes — created an obscure method to collect information, and bypass firewalls in a manner that could potentially disrupt port operations,” the report said. “The exact identity of those responsible for installing the modems, while likely ZPMC, remains unclear.” Ties to China’s military The report highlighted the close ties that ZPMC and other state-owned enterprises such as Cosco Shipping and China Merchants Group has to China’s People’s Liberation Army (PLA). ZPMC, whose parent company is involved in the construction of military bases in the South China Sea, provided a heavy-lift ship that the PLA used in a maritime exercise, according to the congressional report. ZPMC’s cranes are also manufactured near a site where the PLA builds its most advanced warships, the report said, adding that ZPMC is required to comply with a Chinese law that allows the government to request any corporate data. The report follows hearings that House security committees conducted last year about the vulnerabilities of US ports to Chinese espionage. In the wake of those hearings, US ports were required to submit cybersecurity plans to the US Coast Guard, while the Maritime Administration warned ports about the risk of Chinese-made cranes. Along with ongoing monitoring of Chinese port cranes in the US, the report’s authors recommended fostering a homegrown crane manufacturer. In response to the earlier hearings on the matter, the Biden Administration in February pledged $20 billion in government support to create a domestic manufacturer . To further that goal, the White House also proposed a 25% tariff on Chinese-made cranes to incentivize US production . Contact Michael Angell at michael.angell@spglobal.com .

Port infrastructure

Marine terminals

North American ports

 ZPMC ‘pressures’ US ports for remote crane access: House report

<div class="phx-topic abstract-wrapper">The carrier this week unveiled a comprehensive network coverage plan, coupled with two slot-swap agreements, that it described as “independent, competitive and complete.” </div>

The carrier this week unveiled a comprehensive network coverage plan, coupled with two slot-swap agreements, that it described as “independent, competitive and complete.”

<div class="phx-topic">Mediterranean Shipping Co.’s ability to roll out a standalone east-west ocean network able to compete with the reshaped alliances, and to offer both Red Sea and Suez Canal service options, indicates the immense scale the carrier has built over the last few years. The world’s largest container carrier will exit its 2M Alliance with Maersk that expires in January next year, and in preparation for its new direction unveiled this week a comprehensive network coverage plan, coupled with two slot-swap agreements, that MSC described as “independent, competitive and complete.” With a fleet capacity of 6 million TEUs at its disposal and another 2 million TEUs on the order book the Geneva-based carrier will deploy its vessels on services across the major trade lanes, using strategic slot-sharing deals to plug any loopholes. “We are announcing a comprehensive standalone network and coupling with that two slot swaps [<a href="https://www.joc.com/article/msc-strikes-asia-europe-slot-share-with-former-thea-members-5723585">with the new Premier Alliance</a> and Zim Integrated Shipping Services],” MSC CEO Soren Toft told the Journal of Commerce this week. “We believe we can give a better extended product than being 100% on our own,” he added. MSC will provide the independent network beginning in February, wielding “full operational control” over 34 loops across five trades: Asia-North America West Coast (four), Asia-North America East Coast (six), Asia-Europe (seven), Asia-Mediterranean (six) and trans-Atlantic (11). The carrier will offer customers separate routings via the Suez Canal and the Cape of Good Hope, providing over 1,900 direct port pairs on the Suez option and over 1,800 around southern Africa. Toft said the Red Sea and Suez options for Asia-Europe, Asia-Med and Asia-East Coast were included to cover fourth-quarter contract negotiations on the trade lanes, although he did not expect any change in the Red Sea situation by the time the new network is rolled out in February. <h2>Alliance shakeup</h2>The break-up of 2M has led to the largest alliance shakeup in 10 years. Hapag-Lloyd’s exit from THE Alliance to join Maersk in the Gemini Cooperation led to Ocean Network Express (ONE), Yang Ming Marine and HMM rebranding the vessel-sharing agreement to Premier Alliance. Premier and Gemini will also be launched in February. While Gemini has <a href="https://www.joc.com/article/geminis-hub-and-spoke-model-aims-to-eliminate-blank-sailings-hapag-lloyd-5241030">staked its future on a hub-and-spoke model</a> that will be structured around dozens of shuttles moving containers to and from the main hub ports in key regions, Toft said MSC will remain true to its traditional direct port-to-port services. ”We are very focused on our direct corridors, and I believe there is still a significant demand for direct solutions,” he said, adding that the new network will reduce transshipment, “which generally is a cost customers don’t like.” Toft was magnanimous about the Gemini strategy but said it was not a path MSC would be likely to follow. Contact Greg Knowler at <a href="greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Mediterranean Shipping Co.’s ability to roll out a standalone east-west ocean network able to compete with the reshaped alliances, and to offer both Red Sea and Suez Canal service options, indicates the immense scale the carrier has built over the last few years. The world’s largest container carrier will exit its 2M Alliance with Maersk that expires in January next year, and in preparation for its new direction unveiled this week a comprehensive network coverage plan, coupled with two slot-swap agreements, that MSC described as “independent, competitive and complete.” With a fleet capacity of 6 million TEUs at its disposal and another 2 million TEUs on the order book the Geneva-based carrier will deploy its vessels on services across the major trade lanes, using strategic slot-sharing deals to plug any loopholes. “We are announcing a comprehensive standalone network and coupling with that two slot swaps [ with the new Premier Alliance and Zim Integrated Shipping Services],” MSC CEO Soren Toft told the Journal of Commerce this week. “We believe we can give a better extended product than being 100% on our own,” he added. MSC will provide the independent network beginning in February, wielding “full operational control” over 34 loops across five trades: Asia-North America West Coast (four), Asia-North America East Coast (six), Asia-Europe (seven), Asia-Mediterranean (six) and trans-Atlantic (11). The carrier will offer customers separate routings via the Suez Canal and the Cape of Good Hope, providing over 1,900 direct port pairs on the Suez option and over 1,800 around southern Africa. Toft said the Red Sea and Suez options for Asia-Europe, Asia-Med and Asia-East Coast were included to cover fourth-quarter contract negotiations on the trade lanes, although he did not expect any change in the Red Sea situation by the time the new network is rolled out in February. Alliance shakeup The break-up of 2M has led to the largest alliance shakeup in 10 years. Hapag-Lloyd’s exit from THE Alliance to join Maersk in the Gemini Cooperation led to Ocean Network Express (ONE), Yang Ming Marine and HMM rebranding the vessel-sharing agreement to Premier Alliance. Premier and Gemini will also be launched in February. While Gemini has staked its future on a hub-and-spoke model that will be structured around dozens of shuttles moving containers to and from the main hub ports in key regions, Toft said MSC will remain true to its traditional direct port-to-port services. ”We are very focused on our direct corridors, and I believe there is still a significant demand for direct solutions,” he said, adding that the new network will reduce transshipment, “which generally is a cost customers don’t like.” Toft was magnanimous about the Gemini strategy but said it was not a path MSC would be likely to follow. Contact Greg Knowler at greg.knowler@spglobal.com .

MSC’s global scale enables standalone network coverage

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

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

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

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

Intermodal providers

Rails have limited recourse to PNW import surge: analyst

<div class="phx-topic abstract-wrapper">The holy grail of end-to-end enablement within the container shipping booking process remains elusive, and automation can’t fix that, writes consultant John McCauley.</div>

The holy grail of end-to-end enablement within the container shipping booking process remains elusive, and automation can’t fix that, writes consultant John McCauley.

<div class="phx-topic">Don’t automate broken container processes, fix them first. That adage is as relevant now as ever as container shipping is swept up in the broader global AI fever. The fragmentation of shipping processes upstream and downstream is as equally problematic as the often-differing data standards across all actors, albeit with ongoing efforts to improve the data part through, for example, the Digital Container Shipping Association. That the standard booking process to place and receive confirmation of an order has improved significantly is a testimony to both the simplicity of the process and the advancement of multiple channels of access. (I am deliberately not addressing specialist booking processes for out of gauge or dangerous goods that require specific non-technology enabled processes). However, the booking process for most participants is a small part of wider processes and it is here that the process breaks down and the holy grail of end-to-end enablement remains elusive. Here is a typical example: Supplier A receives an order in its enterprise resource system (ERP) system from Customer B. The order has a unique reference set of characters, as does the automated purchase order generated toward the carrier either directly or through a non-vessel-operating common carrier (NVO). The order is placed with the carrier and acceptance is confirmed. If the ERP is not connected to the aggregated order process technology (e.g. CargoWise, Infor/GTN, et al.) then some form of interface mapping is required. If the data is incomplete or contains errors, then the flow stops, and A cannot confirm the order to B without intervention. If A is not using an aggregated technology and connects to each carrier individually, then the issues multiply. If any of these fail or are unreliable, manual monitoring and/or backup is needed. That this simple part of the process is broken does not include the major issues relating to reliability. Let’s assume the order placed by A is accepted. What percentage likelihood is there that the order will be shipped in full on the vessel nominated and/or on the ETA date scheduled and therefore with a likelihood of arrival at the next stage in the chain within an acceptable margin of on time to 48 hours’ delay? If you are lucky enough to be a last port load to first port arrival, then the transit time can be met but the other components are less likely to be achieved. If not, the reliability likelihood diminishes. The time for loading and discharging a vessel requires firm and reliable dates to plan at origin the production, storage, loading and domestic transportation, while at the receiving end, depending on the product, use receipt, inventory planning, sale, storage or any other number of dependent processes. <h3>Favoring other modes </h3>But here are the bigger points. Firstly, for many beneficial cargo owners (BCOs), movement of goods by container is a small part of their overall transportation volume. Far greater volume is sent by other modes, particularly road, and often this is the mode of transport directly interfacing with end-customers. So, for many BCOs, container shipping is at best a niche activity requiring specialist knowledge, and as with so much of logistics, only ever matters in a crisis such as a lack of space, rolled cargo, stratospheric price hikes, etc. For those that rely on container shipping for the functioning of their supply chain, such as retail customers, the profile is much higher. For me, there are the three main reasons why BCOs choose to favor other modes of transport when investing in a transportation management system (TMS). Firstly, the sheer volume of road transportation and its customer impact leads to this mode receiving top priority for TMS investment and enhancement. Secondly, the broken processes of container shipping (with its low likelihood of ever truly improving) will always play against any container TMS investment. Finally, people understand road, rail and air, but ocean shipping less so. So when we say that road transport “on time in full” is 95% and container shipping globally is about 60%, eyes glaze over as the logistics expert tries to summarize the difference. The typical investment criteria, aside from financial, will be “Does it help my customers, reliably and consistently?” and “Will it lead to efficiency in the end-to-end process?” Regrettably, the answer to both of these is “not enough.” Contact John McCauley at <a href="mailto:john-mccauley1@outlook.com">john-mccauley1@outlook.com</a>. John McCauley, formerly a long-standing vice president of transportation and logistics at Cargill, now consults for shippers. </div>

Don’t automate broken container processes, fix them first. That adage is as relevant now as ever as container shipping is swept up in the broader global AI fever. The fragmentation of shipping processes upstream and downstream is as equally problematic as the often-differing data standards across all actors, albeit with ongoing efforts to improve the data part through, for example, the Digital Container Shipping Association. That the standard booking process to place and receive confirmation of an order has improved significantly is a testimony to both the simplicity of the process and the advancement of multiple channels of access. (I am deliberately not addressing specialist booking processes for out of gauge or dangerous goods that require specific non-technology enabled processes). However, the booking process for most participants is a small part of wider processes and it is here that the process breaks down and the holy grail of end-to-end enablement remains elusive. Here is a typical example: Supplier A receives an order in its enterprise resource system (ERP) system from Customer B. The order has a unique reference set of characters, as does the automated purchase order generated toward the carrier either directly or through a non-vessel-operating common carrier (NVO). The order is placed with the carrier and acceptance is confirmed. If the ERP is not connected to the aggregated order process technology (e.g. CargoWise, Infor/GTN, et al.) then some form of interface mapping is required. If the data is incomplete or contains errors, then the flow stops, and A cannot confirm the order to B without intervention. If A is not using an aggregated technology and connects to each carrier individually, then the issues multiply. If any of these fail or are unreliable, manual monitoring and/or backup is needed. That this simple part of the process is broken does not include the major issues relating to reliability. Let’s assume the order placed by A is accepted. What percentage likelihood is there that the order will be shipped in full on the vessel nominated and/or on the ETA date scheduled and therefore with a likelihood of arrival at the next stage in the chain within an acceptable margin of on time to 48 hours’ delay? If you are lucky enough to be a last port load to first port arrival, then the transit time can be met but the other components are less likely to be achieved. If not, the reliability likelihood diminishes. The time for loading and discharging a vessel requires firm and reliable dates to plan at origin the production, storage, loading and domestic transportation, while at the receiving end, depending on the product, use receipt, inventory planning, sale, storage or any other number of dependent processes. Favoring other modes But here are the bigger points. Firstly, for many beneficial cargo owners (BCOs), movement of goods by container is a small part of their overall transportation volume. Far greater volume is sent by other modes, particularly road, and often this is the mode of transport directly interfacing with end-customers. So, for many BCOs, container shipping is at best a niche activity requiring specialist knowledge, and as with so much of logistics, only ever matters in a crisis such as a lack of space, rolled cargo, stratospheric price hikes, etc. For those that rely on container shipping for the functioning of their supply chain, such as retail customers, the profile is much higher. For me, there are the three main reasons why BCOs choose to favor other modes of transport when investing in a transportation management system (TMS). Firstly, the sheer volume of road transportation and its customer impact leads to this mode receiving top priority for TMS investment and enhancement. Secondly, the broken processes of container shipping (with its low likelihood of ever truly improving) will always play against any container TMS investment. Finally, people understand road, rail and air, but ocean shipping less so. So when we say that road transport “on time in full” is 95% and container shipping globally is about 60%, eyes glaze over as the logistics expert tries to summarize the difference. The typical investment criteria, aside from financial, will be “Does it help my customers, reliably and consistently?” and “Will it lead to efficiency in the end-to-end process?” Regrettably, the answer to both of these is “not enough.” Contact John McCauley at john-mccauley1@outlook.com . John McCauley, formerly a long-standing vice president of transportation and logistics at Cargill, now consults for shippers.

Solutions to the ‘broken processes’ of container shipping remain elusive: analyst

Positive inventory 

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Negative inventory

Median inventory

The BlueGrace Logistics Confidence Index measures expected industry expansion or contraction based on revenue forecasts, inventory levels, and order volumes ahead of each quarter. Informed by shippers across various industries and reflects all modes of transport, the LCI comprises data related to customers’ expectations and confidence in their organization’s financial growth or stagnation, level of inventory and warehouse capacity. [BlueGrace Logistics](https://mybluegrace.com/report/bluegrace-logistics-confidence-index/)

US shipper inventory sentiment index (BlueGrace Logistics)

Shipper Inventory Sentiment (BlueGrace Logistics)

<div class="phx-topic abstract-wrapper">Mediterranean Shipping Co. is wasting no time utilizing its huge scale, striking major slot sharing agreements on the Asia-Europe with new Premiere alliance members.</div>

Mediterranean Shipping Co. is wasting no time utilizing its huge scale, striking major slot sharing agreements on the Asia-Europe with new Premiere alliance members.

<div class="phx-topic">Mediterranean Shipping Co. is teaming up with Ocean Network Express (ONE), HMM and Yang Ming Marine Transportation on the Asia-Europe trades with a slot exchange covering nine services from February 2025 when current alliance arrangements end, the carriers said Monday. The move comes as ONE and its partners confirmed their Premier Alliance would replace THE Alliance when Hapag-Lloyd leaves to join Maersk in the Gemini Cooperation in February. MSC also confirmed Monday that it would remain largely independent when Maersk departs their 2M tie-up. The Premier Alliance will initially operate for five years.The post-2M arrangement indicates MSC has lost no time using the huge scale it has built up in the past few years to land slot deals with the new Premier Alliance. In the past few years, MSC has ordered more than 2 million TEUs of newbuilding capacity and acquired almost 400 secondhand ships, overtaking Maersk as the world’s largest container shipping company.ONE said the Premier Alliance slot exchanges with MSC will enable the carriers to provide more direct coverage and more frequent sailings in the Asia-North Europe and Mediterranean container trades. The agreement takes effect in February. Both MSC and the Premier Alliance confirmed they would focus on direct port-to-port coverage in their statements Monday, in contrast to <a href="https://www.joc.com/article/geminis-hub-and-spoke-model-aims-to-eliminate-blank-sailings-hapag-lloyd-5241030">the hub-and-spoke service network proposed by Gemini Cooperation</a>. The Premier Alliance carriers said their co-operation will cover mainline services across the major East-West trade lanes: Asia-North America West Coast; Asia-North America East Coast; Asia-Mediterranean; Asia-North Europe; and Asia-Middle East. <h3>‘Full control of network’</h3>Separately, MSC said it will assume “full operational control of its network” that will have 34 loops across five trades covering Asia-North America, Asia-Europe and the Mediterranean and the trans-Atlantic.The carrier said it will offer customers separate routings via the Suez Canal and the Cape of Good Hope. These will provide over 1,900 direct port pairs on the Suez Canal option and over 1,800 on the southern Africa routing.Lars Jensen, CEO of Vespucci Maritime, <a href="https://www.linkedin.com/posts/larsjensenvespuccimaritime_facilitating-east-west-trade-exports-from-activity-7238839531997720576-gAcI?utm_source=share&amp;utm_medium=member_desktop">noted on LinkedIn</a> that MSC’s slot arrangement means that while it has some shared services on the Asia-Europe trade, there are some that are not.“Premier for example has two services, FP1 and FN2, connecting Japan to North Europe, whereas MSC does not. Overall, Premier and MSC share four services on Asia-North Europe. MSC’s Albatross, Britannia and Griffin services are not shared with Premier,” Jensen wrote.On Asia-Mediterranean, MSC has six services, whereas Premier has slots on four. MSC’s stand-alone services are Jade and Phoenix. Premier Alliance has no standalone services from the Far East. On the MD3/Tiger (service), only MSC has port calls in the Middle East on the backhaul. On the MD4/Dragon (service), only MSC has port calls in West Africa, India and Sri Lanka on the backhaul, Jensen explained.The Premier carriers said a comprehensive update for all the services covered in the major trade lanes will be announced separately. The alliance offers a wider array of services and enhanced coverage of more than 80 direct port calls, according to ONE. Contact Keith Wallis at <a href="mailto:keith.wallis@hotmail.com.">keith.wallis@hotmail.com</a>.</div>

Mediterranean Shipping Co. is teaming up with Ocean Network Express (ONE), HMM and Yang Ming Marine Transportation on the Asia-Europe trades with a slot exchange covering nine services from February 2025 when current alliance arrangements end, the carriers said Monday. The move comes as ONE and its partners confirmed their Premier Alliance would replace THE Alliance when Hapag-Lloyd leaves to join Maersk in the Gemini Cooperation in February. MSC also confirmed Monday that it would remain largely independent when Maersk departs their 2M tie-up. The Premier Alliance will initially operate for five years. The post-2M arrangement indicates MSC has lost no time using the huge scale it has built up in the past few years to land slot deals with the new Premier Alliance. In the past few years, MSC has ordered more than 2 million TEUs of newbuilding capacity and acquired almost 400 secondhand ships, overtaking Maersk as the world’s largest container shipping company. ONE said the Premier Alliance slot exchanges with MSC will enable the carriers to provide more direct coverage and more frequent sailings in the Asia-North Europe and Mediterranean container trades. The agreement takes effect in February. Both MSC and the Premier Alliance confirmed they would focus on direct port-to-port coverage in their statements Monday, in contrast to the hub-and-spoke service network proposed by Gemini Cooperation . The Premier Alliance carriers said their co-operation will cover mainline services across the major East-West trade lanes: Asia-North America West Coast; Asia-North America East Coast; Asia-Mediterranean; Asia-North Europe; and Asia-Middle East. ‘Full control of network’ Separately, MSC said it will assume “full operational control of its network” that will have 34 loops across five trades covering Asia-North America, Asia-Europe and the Mediterranean and the trans-Atlantic. The carrier said it will offer customers separate routings via the Suez Canal and the Cape of Good Hope. These will provide over 1,900 direct port pairs on the Suez Canal option and over 1,800 on the southern Africa routing. Lars Jensen, CEO of Vespucci Maritime, noted on LinkedIn that MSC’s slot arrangement means that while it has some shared services on the Asia-Europe trade, there are some that are not. “Premier for example has two services, FP1 and FN2, connecting Japan to North Europe, whereas MSC does not. Overall, Premier and MSC share four services on Asia-North Europe. MSC’s Albatross, Britannia and Griffin services are not shared with Premier,” Jensen wrote. On Asia-Mediterranean, MSC has six services, whereas Premier has slots on four. MSC’s stand-alone services are Jade and Phoenix. Premier Alliance has no standalone services from the Far East. On the MD3/Tiger (service), only MSC has port calls in the Middle East on the backhaul. On the MD4/Dragon (service), only MSC has port calls in West Africa, India and Sri Lanka on the backhaul, Jensen explained. The Premier carriers said a comprehensive update for all the services covered in the major trade lanes will be announced separately. The alliance offers a wider array of services and enhanced coverage of more than 80 direct port calls, according to ONE. Contact Keith Wallis at keith.wallis@hotmail.com .

Trans-Atlantic

Asia-Europe

MSC strikes Asia-Europe slot share with former THEA members

<div class="phx-topic abstract-wrapper">Spot rates from Asia to the US East Coast are dropping faster than in past years as carriers route discretionary shipments to the West Coast to avoid getting caught up in a threatened dockworker strike on the East and Gulf coasts.</div>

Spot rates from Asia to the US East Coast are dropping faster than in past years as carriers route discretionary shipments to the West Coast to avoid getting caught up in a threatened dockworker strike on the East and Gulf coasts.

<div class="phx-topic">A front-loading of shipments ahead of a threatened port strike threat, coupled with intensified rate pressures, is sending Asia container spot rates to the East Coast plunging faster than usual on the trade lane. Container spot rates from Asia to the US East and Gulf coasts fell $2,300 per FEU this week, much faster than in past years, as peak-season shipments on all-water services drop off and retailers, fearing a dockworker strike on the East and Gulf coasts on Oct. 1, shift discretionary cargo to the West Coast. Furthermore, carriers this year are utilizing special or “bullet” rates to compete for cargo in what has become a slowing market from Asia to the East Coast. “It’s the bullet rates that are driving behavior,” a carrier executive speaking anonymously told the Journal of Commerce Monday. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e7a65aab-9aac-4f07-9b74-1793746c01ef"></dynamic-object></div>The East Coast spot rate paid by importers and the freight all kinds (FAK) rate paid by forwarders dropped to $6,200 per FEU from $8,500 last week, according to Platts, a Journal of Commerce sister company within S&amp;P Global. “Now the carriers are willing to wheel and deal,” Jon Monroe, who serves as an advisor to non-vessel-operating common carriers (NVOs), told the Journal of Commerce Monday. Monroe said some carriers, concerned about excess capacity emerging later this year, are approaching certain customers about locking these new rates into service contracts that would run through April 30, 2025. Many of the 2025–26 service contracts in the eastbound trans-Pacific will take effect on May 1 next year. Normally about 60% of the imports in the eastbound trans-Pacific <a href="https://www.joc.com/article/trans-pacific-rate-push-tests-health-of-early-peak-season-5704825">move under lower-cost contract rates</a>, although when space is tight, that percentage can drop as low as 45%. West Coast spot/FAK rates dropped $600 per FEU to $4,800, according to Platts. However, West Coast rates could stabilize or even move higher in the coming weeks as retailers ship holiday merchandise on the shorter trans-Pacific routings to the West Coast and retailers react to growing International Longshoremen’s Association (ILA) strike threats. “West Coast rates definitely could go up depending upon what goes on with the ILA,” Monroe said. In the past two years, East Coast spot rates by mid-September dropped by about $1,000 per FEU from late August, which marks the end of the traditional peak season to the East Coast. In 2021, when the US economy was recovering from COVID, spot rates increased by about $1,000 from late August. <h3>Bullet rates, new capacity, drive rates lower </h3>However, this year carriers have been offering a <a href="https://www.joc.com/article/capacity-boost-on-trans-pacific-pushes-carriers-to-compete-for-cargo-5711329">plethora of special rates</a> — bullet rates, commodity rates, voyage-specific rates and blended rates to secure business in what has become a highly competitive market in the trans-Pacific. “It’s so chaotic. Everyone keeps chasing the lower rates,” a second carrier executive told the Journal of Commerce Friday. Carriers last month signaled their intention to compete fiercely for business this peak season through their bullet rates to the West Coast, and now these special rates are flooding the East Coast trade lanes. “It’s nothing unexpected. We were already seeing signs of carriers not being able to hold the rates. Bullet discounts were already there,” said Christian Sur, executive vice president ocean freight/contract logistics at the NVO Unique Logistics International. Carriers this year launched or reinstated 10 services from Asia to the West Coast and have deployed dozens of “extra-loader” vessels in the trade. Except for smaller importers and NVOs, most shippers in the trans-Pacific have access to special rates that are offered by the large alliance carriers and discounted rates offered by the smaller non-alliance carriers. Although carriers did not enter any new services to the East Coast, retailers front-loaded holiday merchandise in June and July as the threat of an ILA strike intensified. Another NVO, speaking anonymously, said several carriers as of last week had posted bullet rates from Asia to the East Coast of $5,500 to $5,800 per FEU. West Coast bullet rates were in the range of $4,400 to $4,900 per FEU. Retailers forecast that US imports in September will be especially strong, increasing 14% over September 2023. Imports in October are forecast to be up 1.3% year over year, according to the Global Port Tracker released Monday by the National Retail Federation and Hackett Associates. October was the busiest month of 2023. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>.</div>

A front-loading of shipments ahead of a threatened port strike threat, coupled with intensified rate pressures, is sending Asia container spot rates to the East Coast plunging faster than usual on the trade lane. Container spot rates from Asia to the US East and Gulf coasts fell $2,300 per FEU this week, much faster than in past years, as peak-season shipments on all-water services drop off and retailers, fearing a dockworker strike on the East and Gulf coasts on Oct. 1, shift discretionary cargo to the West Coast. Furthermore, carriers this year are utilizing special or “bullet” rates to compete for cargo in what has become a slowing market from Asia to the East Coast. “It’s the bullet rates that are driving behavior,” a carrier executive speaking anonymously told the Journal of Commerce Monday. The East Coast spot rate paid by importers and the freight all kinds (FAK) rate paid by forwarders dropped to $6,200 per FEU from $8,500 last week, according to Platts, a Journal of Commerce sister company within S&P Global. “Now the carriers are willing to wheel and deal,” Jon Monroe, who serves as an advisor to non-vessel-operating common carriers (NVOs), told the Journal of Commerce Monday. Monroe said some carriers, concerned about excess capacity emerging later this year, are approaching certain customers about locking these new rates into service contracts that would run through April 30, 2025. Many of the 2025–26 service contracts in the eastbound trans-Pacific will take effect on May 1 next year. Normally about 60% of the imports in the eastbound trans-Pacific move under lower-cost contract rates , although when space is tight, that percentage can drop as low as 45%. West Coast spot/FAK rates dropped $600 per FEU to $4,800, according to Platts. However, West Coast rates could stabilize or even move higher in the coming weeks as retailers ship holiday merchandise on the shorter trans-Pacific routings to the West Coast and retailers react to growing International Longshoremen’s Association (ILA) strike threats. “West Coast rates definitely could go up depending upon what goes on with the ILA,” Monroe said. In the past two years, East Coast spot rates by mid-September dropped by about $1,000 per FEU from late August, which marks the end of the traditional peak season to the East Coast. In 2021, when the US economy was recovering from COVID, spot rates increased by about $1,000 from late August. Bullet rates, new capacity, drive rates lower However, this year carriers have been offering a plethora of special rates — bullet rates, commodity rates, voyage-specific rates and blended rates to secure business in what has become a highly competitive market in the trans-Pacific. “It’s so chaotic. Everyone keeps chasing the lower rates,” a second carrier executive told the Journal of Commerce Friday. Carriers last month signaled their intention to compete fiercely for business this peak season through their bullet rates to the West Coast, and now these special rates are flooding the East Coast trade lanes. “It’s nothing unexpected. We were already seeing signs of carriers not being able to hold the rates. Bullet discounts were already there,” said Christian Sur, executive vice president ocean freight/contract logistics at the NVO Unique Logistics International. Carriers this year launched or reinstated 10 services from Asia to the West Coast and have deployed dozens of “extra-loader” vessels in the trade. Except for smaller importers and NVOs, most shippers in the trans-Pacific have access to special rates that are offered by the large alliance carriers and discounted rates offered by the smaller non-alliance carriers. Although carriers did not enter any new services to the East Coast, retailers front-loaded holiday merchandise in June and July as the threat of an ILA strike intensified. Another NVO, speaking anonymously, said several carriers as of last week had posted bullet rates from Asia to the East Coast of $5,500 to $5,800 per FEU. West Coast bullet rates were in the range of $4,400 to $4,900 per FEU. Retailers forecast that US imports in September will be especially strong, increasing 14% over September 2023. Imports in October are forecast to be up 1.3% year over year, according to the Global Port Tracker released Monday by the National Retail Federation and Hackett Associates. October was the busiest month of 2023. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .

East Coast spot rates plunge as peak-season imports shift to West Coast

<div class="phx-topic abstract-wrapper">East and Gulf coast maritime employers laid out their terms for signing a new contract with longshore workers, but they warned the ‘signal’ to strike is clear. </div>

East and Gulf coast maritime employers laid out their terms for signing a new contract with longshore workers, but they warned the ‘signal’ to strike is clear.

<div class="phx-topic">Ocean carriers and marine terminal operators are calling on the International Longshoremen’s Association (ILA) to reopen contract talks, saying their latest offer aims to avert a strike across East and Gulf Coast ports. Despite this, maritime employers also signaled pessimism about avoiding a shutdown, as the union pointed to demands above what are on offer. On Friday, the United States Maritime Alliance (USMX), which represents maritime employers across East and Gulf coast ports, said it “remains committed and prepared to resume negotiations with the ILA on a new master contract before the current agreement expires and to avoid a strike” on Oct. 1, 2024. However, the ILA said in a statement Saturday that it turned down the USMX’s entry-level wage offer as inadequate, saying new workers cannot earn a decent living due to the uncertain hours of longshore work. The USMX said that its offer included “industry leading wage increases,” which it did not quantify. However, sources familiar with the talks have said that <a href="https://www.joc.com/article/ila-unmoved-by-latest-industry-leading-wage-offer-from-usmx-5703227">employers are offering a nearly 39% increase over the contract’s six-year term, or $2.50 per hour per year</a>. The ILA is said to be looking for an increase twice as large. In addition to overall wages, the USMX said it would increase entry-level wages, currently $20 per hour, for longshore workers by an unspecified amount. The USMX also pledged to increase retirement contributions and maintain existing healthcare plans. The offer also includes an extension of the current master contract’s language that bars the development of fully automated terminals and equipment and requires consulting the ILA for any implementation of semi-automation at marine terminals. Even while it laid its offer, the USMX said that the union “continues to strongly signal that <a href="https://www.joc.com/article/ila-locals-prepping-for-coordinated-strike-at-us-east-gulf-coast-ports-5721164">it has already made the decision to call a strike</a>.” “We hope the ILA will reopen dialogue and share its current contract demands so we can work together on a new deal,” the USMX said. “Our offer demonstrates a willingness by our members to reach a new deal before the end of this month.” <h2>‘We outright reject’ </h2>Maritime employers “have taken advantage of a low entry wage and a tiered progression system for 30 years,” the ILA said. “We outright reject their position on the new entry wage.” “We are at the beck and call of the ships,” the ILA said. “No ships mean no work. Our rank-and-file members are not on a salary, they work when the ships are docked at berth.” While acknowledging that the USMX offers to increase retirement benefits, the ILA specifically called for an increase in local pension benefits funded through higher container royalties on hours worked and tonnage handled. The union also called for enhanced health coverage, including the maintenance of benefits for members at risk of losing health coverage. The ILA also demanded even stricter language about automation in the new contract, calling for an outright ban on semi-automation as well. The union alleges that <a href="https://www.joc.com/article/ila-halts-talks-over-new-contract-until-maersk-apm-clarify-port-it-projects-5244243">marine terminals have been automating clerical functions and other work processes without notification</a>, violating the intent of the current contract’s workforce protections. “We don’t want any form of semi-automation or full automation,” the ILA said. “We want ironclad language, and we want the intent of that language in writing.” The union also called out terminal operators for the use of in-equipment cameras and other workplace surveillance equipment, saying such equipment is an intrusion on privacy, especially for female longshore workers. “These employers are creating a hostile work environment under the guise of safety, and we won’t stand for it,” the ILA said. Contact Michael Angell at <a href="michael.angell@spglobal.com">michael.angell@spglobal.com</a>.</div>

Ocean carriers and marine terminal operators are calling on the International Longshoremen’s Association (ILA) to reopen contract talks, saying their latest offer aims to avert a strike across East and Gulf Coast ports. Despite this, maritime employers also signaled pessimism about avoiding a shutdown, as the union pointed to demands above what are on offer. On Friday, the United States Maritime Alliance (USMX), which represents maritime employers across East and Gulf coast ports, said it “remains committed and prepared to resume negotiations with the ILA on a new master contract before the current agreement expires and to avoid a strike” on Oct. 1, 2024. However, the ILA said in a statement Saturday that it turned down the USMX’s entry-level wage offer as inadequate, saying new workers cannot earn a decent living due to the uncertain hours of longshore work. The USMX said that its offer included “industry leading wage increases,” which it did not quantify. However, sources familiar with the talks have said that employers are offering a nearly 39% increase over the contract’s six-year term, or $2.50 per hour per year . The ILA is said to be looking for an increase twice as large. In addition to overall wages, the USMX said it would increase entry-level wages, currently $20 per hour, for longshore workers by an unspecified amount. The USMX also pledged to increase retirement contributions and maintain existing healthcare plans. The offer also includes an extension of the current master contract’s language that bars the development of fully automated terminals and equipment and requires consulting the ILA for any implementation of semi-automation at marine terminals. Even while it laid its offer, the USMX said that the union “continues to strongly signal that it has already made the decision to call a strike .” “We hope the ILA will reopen dialogue and share its current contract demands so we can work together on a new deal,” the USMX said. “Our offer demonstrates a willingness by our members to reach a new deal before the end of this month.” ‘We outright reject’ Maritime employers “have taken advantage of a low entry wage and a tiered progression system for 30 years,” the ILA said. “We outright reject their position on the new entry wage.” “We are at the beck and call of the ships,” the ILA said. “No ships mean no work. Our rank-and-file members are not on a salary, they work when the ships are docked at berth.” While acknowledging that the USMX offers to increase retirement benefits, the ILA specifically called for an increase in local pension benefits funded through higher container royalties on hours worked and tonnage handled. The union also called for enhanced health coverage, including the maintenance of benefits for members at risk of losing health coverage. The ILA also demanded even stricter language about automation in the new contract, calling for an outright ban on semi-automation as well. The union alleges that marine terminals have been automating clerical functions and other work processes without notification , violating the intent of the current contract’s workforce protections. “We don’t want any form of semi-automation or full automation,” the ILA said. “We want ironclad language, and we want the intent of that language in writing.” The union also called out terminal operators for the use of in-equipment cameras and other workplace surveillance equipment, saying such equipment is an intrusion on privacy, especially for female longshore workers. “These employers are creating a hostile work environment under the guise of safety, and we won’t stand for it,” the ILA said. Contact Michael Angell at michael.angell@spglobal.com .

Longshore labor

 Port employers urge ILA to return to contract talks

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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;SMC³’s LTL Online Education program&nbsp;and view the 2021 hybrid schedule, featuring live industry experts,&nbsp;here.

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<div class="phx-topic abstract-wrapper">For shippers fending off one supply chain shock after another, all the while trying to keep inventory and other supply costs in control, what is happening on the carrier front for them is yet another headache, and one not likely curable any time soon.</div>

For shippers fending off one supply chain shock after another, all the while trying to keep inventory and other supply costs in control, what is happening on the carrier front for them is yet another headache, and one not likely curable any time soon.

<div class="phx-topic">It started when the pandemic swiftly <a href="https://www.joc.com/article/post-covid-market-shocks-challenge-long-held-container-shipping-truisms-5192158">disabused shippers of the assumed status quo</a> that supply chains are cost effective and consistent, even if this form of value creation for them came, through no fault of their own, at the expense of value destruction for carriers. It continued when out of the pandemic came not the respite shippers were hoping for, but rather a form of perpetual upheaval such that the next disruptive event is fully expected but the source, severity, onset and duration remains a mystery. Taken together, those factors have recast supply chains as chronically at risk, clashing with corporate leaders’ aversion to investing in resilience — an insurance policy of buffer stock, front-loading and technology that may all be for naught if the next expected shock were to somehow not materialize. But even then, the coast isn’t clear. Newly perilous terrain confronts shippers — not from the dangerous external world of geopolitics, climate, natural disaster or public health, but rather from within the industry itself. Those same carriers who could be reliably counted on to over-order on tonnage and then mercilessly raid each other’s cargo to fill those ships at whatever price have, many believe, emerged out of the pandemic as a different industry where this behavior can longer be taken as a given. Many industry sources were asked in recent months if they believe there are aspects of carrier behavior that are new and permanent, irrespective of the ebbs and flows of the market. Not universally, but overwhelmingly, the answer has been “yes.” <h3>Strained relationships </h3>The big context — but not the whole story — is consolidation and the refinement of alliances as able adjustors of short-term capacity. All those years of below-par profits led to wave after wave of mergers, acquisition and bankruptcy such that the top 10 carriers control over 84% of global capacity, according to maritime analyst Alphaliner. Heavy concentration for sure, but also leaving room for further consolidation that senior industry figures believe is still possible. But for shippers, the implications go beyond the simple reality of consolidation and alliances. Among other things, consolidation means what once was a big piece of business for a carrier has become progressively smaller as the customer’s share of a carrier’s book of business shrinks. A beneficial cargo owner (BCO) shipping 25,000 containers and spending $50 million on ocean freight annually sounds big, but it does not hold the level of importance it once did for the largest carriers. If even some of the largest shippers are less important than they once were, then hopefully the relationship could hang on other factors such as trust, win-win relationships and collaboration. (A pause here while the reader chokes back laughter) The shipper-carrier relationship has always been strained and confrontational at some level. That is freight transportation writ large. But veterans believe that within container shipping, it has sunk to a new low from which it will be hard to recover. How many truly strategic relationships does a carrier have, a senior executive at one of the largest lines was asked over the summer. The answer was none, or virtually none. <h3>Loyalty is rare </h3>With few exceptions, carriers and shippers are not riding the cyclical waves together. The zero-sum game where my gain is your loss and vice versa, is the default. A few large BCOs got stuck so badly during COVID-19 that they saw the light and became converts, but not many. The expectation at this point among carriers is simple and stark: Shippers will take full advantage when the opportunity presents itself. The expectation among shippers is — or should be — that carriers will do the same. Signed, legally vetted contracts are not at the end of the day enforceable, as inexplicable as that may sound. Can the government step in to change that? The answer will be a long time coming. Too many carriers walk away from signed agreements when space gets tight, denying space on ships to contracted customers in favor of spot market business. Too many customers — often directed from the C-suite — walk away from those same signed agreements when a better deal is to be had on the open market. Those carriers who thought they could “invest” in customer relationships during the height of the pandemic by honoring contracts that other carriers didn’t learned the costly lesson that loyalty is rare, a concept embraced by a much smaller segment of the shipping public than what was thought. For shippers fending off one supply chain shock after another, all the while trying to keep inventory and other supply costs in control, what is happening on the carrier front for them is yet another headache, and one not likely curable any time soon. Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>. </div>

It started when the pandemic swiftly disabused shippers of the assumed status quo that supply chains are cost effective and consistent, even if this form of value creation for them came, through no fault of their own, at the expense of value destruction for carriers. It continued when out of the pandemic came not the respite shippers were hoping for, but rather a form of perpetual upheaval such that the next disruptive event is fully expected but the source, severity, onset and duration remains a mystery. Taken together, those factors have recast supply chains as chronically at risk, clashing with corporate leaders’ aversion to investing in resilience — an insurance policy of buffer stock, front-loading and technology that may all be for naught if the next expected shock were to somehow not materialize. But even then, the coast isn’t clear. Newly perilous terrain confronts shippers — not from the dangerous external world of geopolitics, climate, natural disaster or public health, but rather from within the industry itself. Those same carriers who could be reliably counted on to over-order on tonnage and then mercilessly raid each other’s cargo to fill those ships at whatever price have, many believe, emerged out of the pandemic as a different industry where this behavior can longer be taken as a given. Many industry sources were asked in recent months if they believe there are aspects of carrier behavior that are new and permanent, irrespective of the ebbs and flows of the market. Not universally, but overwhelmingly, the answer has been “yes.” Strained relationships The big context — but not the whole story — is consolidation and the refinement of alliances as able adjustors of short-term capacity. All those years of below-par profits led to wave after wave of mergers, acquisition and bankruptcy such that the top 10 carriers control over 84% of global capacity, according to maritime analyst Alphaliner. Heavy concentration for sure, but also leaving room for further consolidation that senior industry figures believe is still possible. But for shippers, the implications go beyond the simple reality of consolidation and alliances. Among other things, consolidation means what once was a big piece of business for a carrier has become progressively smaller as the customer’s share of a carrier’s book of business shrinks. A beneficial cargo owner (BCO) shipping 25,000 containers and spending $50 million on ocean freight annually sounds big, but it does not hold the level of importance it once did for the largest carriers. If even some of the largest shippers are less important than they once were, then hopefully the relationship could hang on other factors such as trust, win-win relationships and collaboration. (A pause here while the reader chokes back laughter) The shipper-carrier relationship has always been strained and confrontational at some level. That is freight transportation writ large. But veterans believe that within container shipping, it has sunk to a new low from which it will be hard to recover. How many truly strategic relationships does a carrier have, a senior executive at one of the largest lines was asked over the summer. The answer was none, or virtually none. Loyalty is rare With few exceptions, carriers and shippers are not riding the cyclical waves together. The zero-sum game where my gain is your loss and vice versa, is the default. A few large BCOs got stuck so badly during COVID-19 that they saw the light and became converts, but not many. The expectation at this point among carriers is simple and stark: Shippers will take full advantage when the opportunity presents itself. The expectation among shippers is — or should be — that carriers will do the same. Signed, legally vetted contracts are not at the end of the day enforceable, as inexplicable as that may sound. Can the government step in to change that? The answer will be a long time coming. Too many carriers walk away from signed agreements when space gets tight, denying space on ships to contracted customers in favor of spot market business. Too many customers — often directed from the C-suite — walk away from those same signed agreements when a better deal is to be had on the open market. Those carriers who thought they could “invest” in customer relationships during the height of the pandemic by honoring contracts that other carriers didn’t learned the costly lesson that loyalty is rare, a concept embraced by a much smaller segment of the shipping public than what was thought. For shippers fending off one supply chain shock after another, all the while trying to keep inventory and other supply costs in control, what is happening on the carrier front for them is yet another headache, and one not likely curable any time soon. Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

Tale of woe for ocean container shippers going from bad to worse

<div class="phx-topic abstract-wrapper">As the threat of a US port strike approaches, the Biden administration must walk a particularly precarious line: Don’t upset union voters ahead of the presidential election while protecting the economy and an image of responsible economic stewardship. </div>

As the threat of a US port strike approaches, the Biden administration must walk a particularly precarious line: Don’t upset union voters ahead of the presidential election while protecting the economy and an image of responsible economic stewardship.

<div class="phx-topic">US labor secretaries have been key to breaking deadlocks in longshore labor negotiations, including on the West Coast in 2015 and 2023. But this latest impasse, threatening a strike at East and Gulf coast ports, forces the White House to walk particularly precarious line: Don’t upset union voters ahead of a presidential election while protecting the economy and an image of responsible economic stewardship. The slowing but still expanding US economy — voters’ top election concern — can hardly afford labor disruption impacting $588 billion in annual trade, according to S&amp;P Global Market Intelligence. Yet the White House can’t be seen not respecting the collective bargaining process or intervene before the International Longshoremen’s Association’s (ILA’s) contact expires at midnight on Sept. 30. The ILA, which has yet to endorse a presidential candidate, has pledged to strike Oct 1. if a new contract isn’t reached. The ILA and waterfront employers in past bargaining cycles have been able to reach agreement on a new contract or an extension before the deadline, with no strike since 1977. This <a href="https://www.joc.com/article/little-cause-for-optimism-as-clock-ticks-toward-ila-contract-expiration-5721695">time it’s looking less likely that one side will capitulate</a> in the final hour amid the waning peak season. The White House has, until recently, had to pay more attention to West Coast labor negotiations, where the ILA’s counterpart, the International Longshore and Warehouse Union (ILWU), is widely seen as more militant and can do more damage to supply chains from Asia. Unlike the ILWU, which kept working beyond its contract expiration — albeit slower due to tit-for-tat actions with employers — the ILA will not. There has been less outreach from the White House to the ILA and the employer group US Maritime Alliance (USMX) than with their West Coast counterparts during the past two bargaining cycles, according to two people familiar with negotiations. Then-Labor Secretary Marty Walsh began stressing the importance of a West Coast deal early on during visits to the ports of Los Angeles and Long Beach in November 2021, and later the ports of Seattle and Tacoma in April 2022. Commerce Secretary Gina Raimondo and Transportation Secretary Pete Buttigieg were also involved in West Coast talks. Importantly, Walsh’s successor, Julie Su, is credited with pushing both sides to reach a tentative agreement in June 2023. The Biden administration’s role in the West Coast negotiations didn’t go unnoticed by the ILA. President Harold Daggett told locals last November that President Joe Biden forced the ILWU’s hand in accepting a deal. That same month, Daggett met with former president Donald Trump to “hear what he had to say.” <h2>Ratcheting up the pressure </h2>During a longshore negotiating cycle, the While House has generally followed a familiar script in coaxing and then pressuring longshore labor and employers to reach a deal, according to one source involved in past bargaining on behalf of employers. The Labor Department first tells both sides it will be monitoring negotiations. If pressure needs to be ratcheted up, the Labor Department, with possibly their Commerce and Transportation counterparts in tow, calls a meeting with union and employer leaders to stress the importance of uninterrupted cargo flow to the national economy. The increased pressure the White House puts on both sides can give longshore labor negotiators cover to agree to contract elements the rank-and-file might not normally support without federal pressure. If that fails to break a deadlock, the White House can threaten to call leaders from both sides to Washington. Then-Labor Secretary Tom Perez did just that on Feb. 20, 2015, during a previous West Coast bargaining cycle; the ILWU and Pacific Maritime Association agreed to a tentative deal later that day. Federal officials can also put pressure on employers by warning it will call the CEOs of major lines to Washington if a deal isn’t reached. The federal government has not needed to press too hard on past ILA negotiations, nor has there been a suspension of negotiations so close to a presidential election. The nuclear option of invoking the Taft-Hartley Act to bring an immediate end to any strike by the ILA will be weighed against the political harm caused to the Democrats’ courting of union votes, the Retail Industry Leaders Association (RILA) said in a recent statement. Amid a slowing economy with stalled job growth and heightened unemployment, President George W. Bush invoked Taft-Hartley to end an 11-day lockout at West Coast ports in 2002.The Biden administration’s decision will “ultimately hinge on balancing the national economy against union interests,” according to the RILA. Biden, who has prided himself as the most pro-union president in modern times, has shown a willingness to avert transport labor disruption. In late September 2022, he stepped in during the final hours before union rail workers were set to launch a nationwide strike — less than two months before key mid-term elections — and brokered a tentative deal that was eventually approved by rank-and-file. The political stakes are only higher now. Contact Mark Szakonyi at <a href="mailto:mark.szakonyi@spglobal.com">mark.szakonyi@spglobal.com</a>. </div>

US labor secretaries have been key to breaking deadlocks in longshore labor negotiations, including on the West Coast in 2015 and 2023. But this latest impasse, threatening a strike at East and Gulf coast ports, forces the White House to walk particularly precarious line: Don’t upset union voters ahead of a presidential election while protecting the economy and an image of responsible economic stewardship. The slowing but still expanding US economy — voters’ top election concern — can hardly afford labor disruption impacting $588 billion in annual trade, according to S&P Global Market Intelligence. Yet the White House can’t be seen not respecting the collective bargaining process or intervene before the International Longshoremen’s Association’s (ILA’s) contact expires at midnight on Sept. 30. The ILA, which has yet to endorse a presidential candidate, has pledged to strike Oct 1. if a new contract isn’t reached. The ILA and waterfront employers in past bargaining cycles have been able to reach agreement on a new contract or an extension before the deadline, with no strike since 1977. This time it’s looking less likely that one side will capitulate in the final hour amid the waning peak season. The White House has, until recently, had to pay more attention to West Coast labor negotiations, where the ILA’s counterpart, the International Longshore and Warehouse Union (ILWU), is widely seen as more militant and can do more damage to supply chains from Asia. Unlike the ILWU, which kept working beyond its contract expiration — albeit slower due to tit-for-tat actions with employers — the ILA will not. There has been less outreach from the White House to the ILA and the employer group US Maritime Alliance (USMX) than with their West Coast counterparts during the past two bargaining cycles, according to two people familiar with negotiations. Then-Labor Secretary Marty Walsh began stressing the importance of a West Coast deal early on during visits to the ports of Los Angeles and Long Beach in November 2021, and later the ports of Seattle and Tacoma in April 2022. Commerce Secretary Gina Raimondo and Transportation Secretary Pete Buttigieg were also involved in West Coast talks. Importantly, Walsh’s successor, Julie Su, is credited with pushing both sides to reach a tentative agreement in June 2023. The Biden administration’s role in the West Coast negotiations didn’t go unnoticed by the ILA. President Harold Daggett told locals last November that President Joe Biden forced the ILWU’s hand in accepting a deal. That same month, Daggett met with former president Donald Trump to “hear what he had to say.” Ratcheting up the pressure During a longshore negotiating cycle, the While House has generally followed a familiar script in coaxing and then pressuring longshore labor and employers to reach a deal, according to one source involved in past bargaining on behalf of employers. The Labor Department first tells both sides it will be monitoring negotiations. If pressure needs to be ratcheted up, the Labor Department, with possibly their Commerce and Transportation counterparts in tow, calls a meeting with union and employer leaders to stress the importance of uninterrupted cargo flow to the national economy. The increased pressure the White House puts on both sides can give longshore labor negotiators cover to agree to contract elements the rank-and-file might not normally support without federal pressure. If that fails to break a deadlock, the White House can threaten to call leaders from both sides to Washington. Then-Labor Secretary Tom Perez did just that on Feb. 20, 2015, during a previous West Coast bargaining cycle; the ILWU and Pacific Maritime Association agreed to a tentative deal later that day. Federal officials can also put pressure on employers by warning it will call the CEOs of major lines to Washington if a deal isn’t reached. The federal government has not needed to press too hard on past ILA negotiations, nor has there been a suspension of negotiations so close to a presidential election. The nuclear option of invoking the Taft-Hartley Act to bring an immediate end to any strike by the ILA will be weighed against the political harm caused to the Democrats’ courting of union votes, the Retail Industry Leaders Association (RILA) said in a recent statement. Amid a slowing economy with stalled job growth and heightened unemployment, President George W. Bush invoked Taft-Hartley to end an 11-day lockout at West Coast ports in 2002. The Biden administration’s decision will “ultimately hinge on balancing the national economy against union interests,” according to the RILA. Biden, who has prided himself as the most pro-union president in modern times, has shown a willingness to avert transport labor disruption. In late September 2022, he stepped in during the final hours before union rail workers were set to launch a nationwide strike — less than two months before key mid-term elections — and brokered a tentative deal that was eventually approved by rank-and-file. The political stakes are only higher now. Contact Mark Szakonyi at mark.szakonyi@spglobal.com .

Port News

Anxious White House weighing options as ILA contract deadline nears

<div class="phx-topic abstract-wrapper">With just three weeks to go until the union’s master contract with port employers expires, US importers are scrambling for options but are finding there are no ideal alternatives.</div>

With just three weeks to go until the union’s master contract with port employers expires, US importers are scrambling for options but are finding there are no ideal alternatives.

<div class="phx-topic">Shippers and forwarders on the trans-Atlantic are testing alternatives to ports along the US East and Gulf coasts ahead of a potential dockworker strike beginning Oct. 1. But there is a resignation that there are few viable options if both seaboards are down.The International Longshoremen’s Association (ILA) this week firmed up its strike mobilization plans should there be no agreement with port employers on a new master contract before the existing deal expires on Sept. 30.And with just three weeks to go, US importers and their service providers are scrambling for options but are finding there are no ideal alternatives.“In Canada, we have been testing the services, getting truckers set up for the alternative to rail even though the rail strike has been resolved for now,” Alison Leavitt, managing director of the Wine and Spirits Shippers Association (WSSA), told a Journal of Commerce webinar on Thursday.”We are looking at routing through Halifax, Montreal, even a little bit through St. John, where CN [Canadian National Railway] services have grown into the Chicago area,” Leavitt added. “There are some options, but it’s just going to be a huge problem should a strike occur.”Stephanie Loomis, head of ocean freight-North America at Germany-headquartered Rhenus Logistics, agreed that Canadian ports were an alternative to the US East Coast with the Canadian rail strike averted for now.“In Canada we have a stopgap, at least for a little while, and I think it is a viable option,” Loomis told the Journal of Commerce webinar. “Mexico is not really an option. In fact, it is a terrible option.“As we get closer and closer to Sept. 30, if there’s no resolution, we are going to see people start moving things to the West Coast,” she added. “But I don’t know if there is a better option other than holding off and waiting to see how long this might last.” <h3>Clash with robust volumes from Asia</h3>Diverting European imports to the US West Coast was the only viable alternative open to US importers from Europe, according to Eric Oak, senior analyst for supply chain at S&amp;P Global Market Intelligence. But the rerouted cargo would clash with robust eastbound trans-Pacific volume, he said. ”Shipments from North Europe to the West Coast are going to be competing with a massive amount of Asian cargo that’s coming through and looking for berth space and time in port,” Oak said.And once any possible strike ends, ships arriving from Europe would be competing for access to the recovering East and Gulf coast ports with the far greater numbers of vessels from Asia.“Ports in Asia really outmatch any ports in Europe in terms of total volume and that is the main traffic coming into the East Coast,” Oak told the webinar. “While trans-Atlantic trade is important, Asian imports are large competitors for slots in the ports.”<h3>September window closing for European imports</h3>Imports from Europe will need to be on the water by next week at the latest or the cargo will not arrive on the US East or Gulf coasts before Sept. 30, while Asian imports bound for those ports that are not already halfway to the US will not make it before the end of the month.However, with just three weeks before a potential port shutdown, there are no space constraints on the westbound trans-Atlantic routes that would indicate a significant amount of cargo was being loaded early."We can still move cargo every single week out of Europe right now,” Leavitt said. “There is no backlog of cargo that is getting rolled each week, and that is interesting. There has been a little frontloading, but on the trans-Atlantic it has not been overwhelming.”A sign that cargo owners may be starting to advance shipments are the sharply rising spot rates. Some carriers levied a peak season surcharge of $500 per FEU from Sept. 1 that saw the spot market spike 20% to its current level of $2,186 per FEU, according to rate benchmarking platform Xeneta. Loomis said a peak season surcharge on the trans-Atlantic was not something she has seen before, but the carriers were able to successfully implement the increase."The last couple of increase [attempts] really fell flat on the trans-Atlantic because there just hasn’t been the volume and the carriers didn’t pull enough capacity, but September went through, and I think a lot of it has to do with the [strike] fear in the market,” she said.The latest available data for trans-Atlantic westbound traffic is for July and shows a 4.2% year-over-year increase in volume from North Europe and a 2% increase in Mediterranean volume, according to Platts, a sister company of the Journal of Commerce within S&amp;P Global.Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com.">greg.knowler@spglobal.com.</a></div>

Shippers and forwarders on the trans-Atlantic are testing alternatives to ports along the US East and Gulf coasts ahead of a potential dockworker strike beginning Oct. 1. But there is a resignation that there are few viable options if both seaboards are down. The International Longshoremen’s Association (ILA) this week firmed up its strike mobilization plans should there be no agreement with port employers on a new master contract before the existing deal expires on Sept. 30. And with just three weeks to go, US importers and their service providers are scrambling for options but are finding there are no ideal alternatives. “In Canada, we have been testing the services, getting truckers set up for the alternative to rail even though the rail strike has been resolved for now,” Alison Leavitt, managing director of the Wine and Spirits Shippers Association (WSSA), told a Journal of Commerce webinar on Thursday. ”We are looking at routing through Halifax, Montreal, even a little bit through St. John, where CN [Canadian National Railway] services have grown into the Chicago area,” Leavitt added. “There are some options, but it’s just going to be a huge problem should a strike occur.” Stephanie Loomis, head of ocean freight-North America at Germany-headquartered Rhenus Logistics, agreed that Canadian ports were an alternative to the US East Coast with the Canadian rail strike averted for now. “In Canada we have a stopgap, at least for a little while, and I think it is a viable option,” Loomis told the Journal of Commerce webinar. “Mexico is not really an option. In fact, it is a terrible option. “As we get closer and closer to Sept. 30, if there’s no resolution, we are going to see people start moving things to the West Coast,” she added. “But I don’t know if there is a better option other than holding off and waiting to see how long this might last.” Clash with robust volumes from Asia Diverting European imports to the US West Coast was the only viable alternative open to US importers from Europe, according to Eric Oak, senior analyst for supply chain at S&P Global Market Intelligence. But the rerouted cargo would clash with robust eastbound trans-Pacific volume, he said. ”Shipments from North Europe to the West Coast are going to be competing with a massive amount of Asian cargo that’s coming through and looking for berth space and time in port,” Oak said. And once any possible strike ends, ships arriving from Europe would be competing for access to the recovering East and Gulf coast ports with the far greater numbers of vessels from Asia. “Ports in Asia really outmatch any ports in Europe in terms of total volume and that is the main traffic coming into the East Coast,” Oak told the webinar. “While trans-Atlantic trade is important, Asian imports are large competitors for slots in the ports.” September window closing for European imports Imports from Europe will need to be on the water by next week at the latest or the cargo will not arrive on the US East or Gulf coasts before Sept. 30, while Asian imports bound for those ports that are not already halfway to the US will not make it before the end of the month. However, with just three weeks before a potential port shutdown, there are no space constraints on the westbound trans-Atlantic routes that would indicate a significant amount of cargo was being loaded early. "We can still move cargo every single week out of Europe right now,” Leavitt said. “There is no backlog of cargo that is getting rolled each week, and that is interesting. There has been a little frontloading, but on the trans-Atlantic it has not been overwhelming.” A sign that cargo owners may be starting to advance shipments are the sharply rising spot rates. Some carriers levied a peak season surcharge of $500 per FEU from Sept. 1 that saw the spot market spike 20% to its current level of $2,186 per FEU, according to rate benchmarking platform Xeneta. Loomis said a peak season surcharge on the trans-Atlantic was not something she has seen before, but the carriers were able to successfully implement the increase. "The last couple of increase [attempts] really fell flat on the trans-Atlantic because there just hasn’t been the volume and the carriers didn’t pull enough capacity, but September went through, and I think a lot of it has to do with the [strike] fear in the market,” she said. The latest available data for trans-Atlantic westbound traffic is for July and shows a 4.2% year-over-year increase in volume from North Europe and a 2% increase in Mediterranean volume, according to Platts, a sister company of the Journal of Commerce within S&P Global. Contact Greg Knowler at greg.knowler@spglobal.com.

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