<div class="phx-topic abstract-wrapper">Researcher Armstrong &amp; Associates says in an annual report it expects global 3PL revenue to hit $1.25 trillion this year as shippers try to build more flexible supply chains and mitigate risks. </div>

Researcher Armstrong & Associates says in an annual report it expects global 3PL revenue to hit $1.25 trillion this year as shippers try to build more flexible supply chains and mitigate risks.

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<div class="phx-topic">Volatility in global trade that is forcing shippers to rethink their supply chains will accelerate demand for domestic and international third-party logistics (3PL) services, according to logistics research firm Armstrong &amp; Associates. Global logistics firms are still recovering from 2023 when their combined revenue plummeted 21.4% after rising rapidly during the COVID-19 pandemic, Armstrong &amp; Associates said in its annual report on the top 50 domestic and global 3PLs as ranked by revenue, released last week. Amazon topped the list of both domestic and global 3PLs, with $156.2 billion in 3PL-related revenue, according to Armstrong. DHL Supply Chain &amp; Global Forwarding was second in the global 3PL rankings, followed by Kuehne + Nagel. C.H. Robinson Worldwide was second among the domestic 3PLs, followed by GXO Logistics and J.B. Hunt Transport Services. In 2024, the global 3PL market stabilized and grew 3.4% to $1.22 trillion. The risk created by trade uncertainty and expanding conflicts will help push global gross 3PL revenue up another 2.7% in 2025 to $1.25 trillion, according to Armstrong. That revenue should grow again by 4.9% in 2026 to $1.3 trillion, it said. In the US 3PL market, Armstrong expects 4.5% growth in 3PL revenue to $321.8 billion this year after a 2.8% gain last year that brought domestic 3PL revenue to $307.9 billion. <h3>Rising risks on multiple fronts </h3>The list of risks US importers and domestic shippers are trying to mitigate isn’t getting shorter. The Iranian government’s threat <a href="https://www.joc.com/article/closure-of-strait-of-hormuz-would-further-stretch-global-container-capacity-6025484">to close the Strait of Hormuz</a> amid Israel’s attack on the country could tie up already stretched global container capacity. Armstrong &amp; Associates’ data suggests some shippers are shifting focus to the risk of capacity shortages in North America should the impact of higher US tariffs result in tighter truck capacity as trucking companies trim capital spending on equipment. In 2024, international transportation management (ITM) was the fastest-growing sector of the US 3PL market, with revenue jumping 7.9% to $79.8 billion. This year, Armstrong expects dedicated contract carriage (DCC) to lead the market with 5.7% growth. That indicates shippers are increasingly concerned about the potential for a sharper turn in the truckload market when freight demand eventually shifts. With no immediate end to a three-year trucking downturn in sight, large carriers <a href="https://www.joc.com/article/large-truckload-carriers-make-capacity-cuts-but-trucks-reenter-the-market-6004177">continue to cut capacity</a>. The Journal of Commerce Truckload Capacity Index has dropped 18.3 percentage points as of the first quarter from its mid-2022 peak, and at 74.9 is as low as it’s been since 2014. Gross revenue in the US DCC market climbed 5.9% in 2024 to $31.5 billion. Armstrong estimates DCC gross revenue will reach $33.2 billion this year. That suggests shippers are once again looking to lock in capacity, as they did during COVID-19-related supply disruptions in 2021, to hedge against tariff-related reductions in over-the-road capacity. Contact William B. Cassidy at <a href="mailto:bill.cassidy@splgobal.com">bill.cassidy@splgobal</a>.com. </div>

Volatility in global trade that is forcing shippers to rethink their supply chains will accelerate demand for domestic and international third-party logistics (3PL) services, according to logistics research firm Armstrong & Associates. Global logistics firms are still recovering from 2023 when their combined revenue plummeted 21.4% after rising rapidly during the COVID-19 pandemic, Armstrong & Associates said in its annual report on the top 50 domestic and global 3PLs as ranked by revenue, released last week. Amazon topped the list of both domestic and global 3PLs, with $156.2 billion in 3PL-related revenue, according to Armstrong. DHL Supply Chain & Global Forwarding was second in the global 3PL rankings, followed by Kuehne + Nagel. C.H. Robinson Worldwide was second among the domestic 3PLs, followed by GXO Logistics and J.B. Hunt Transport Services. In 2024, the global 3PL market stabilized and grew 3.4% to $1.22 trillion. The risk created by trade uncertainty and expanding conflicts will help push global gross 3PL revenue up another 2.7% in 2025 to $1.25 trillion, according to Armstrong. That revenue should grow again by 4.9% in 2026 to $1.3 trillion, it said. In the US 3PL market, Armstrong expects 4.5% growth in 3PL revenue to $321.8 billion this year after a 2.8% gain last year that brought domestic 3PL revenue to $307.9 billion. Rising risks on multiple fronts The list of risks US importers and domestic shippers are trying to mitigate isn’t getting shorter. The Iranian government’s threat to close the Strait of Hormuz amid Israel’s attack on the country could tie up already stretched global container capacity. Armstrong & Associates’ data suggests some shippers are shifting focus to the risk of capacity shortages in North America should the impact of higher US tariffs result in tighter truck capacity as trucking companies trim capital spending on equipment. In 2024, international transportation management (ITM) was the fastest-growing sector of the US 3PL market, with revenue jumping 7.9% to $79.8 billion. This year, Armstrong expects dedicated contract carriage (DCC) to lead the market with 5.7% growth. That indicates shippers are increasingly concerned about the potential for a sharper turn in the truckload market when freight demand eventually shifts. With no immediate end to a three-year trucking downturn in sight, large carriers continue to cut capacity . The Journal of Commerce Truckload Capacity Index has dropped 18.3 percentage points as of the first quarter from its mid-2022 peak, and at 74.9 is as low as it’s been since 2014. Gross revenue in the US DCC market climbed 5.9% in 2024 to $31.5 billion. Armstrong estimates DCC gross revenue will reach $33.2 billion this year. That suggests shippers are once again looking to lock in capacity, as they did during COVID-19-related supply disruptions in 2021, to hedge against tariff-related reductions in over-the-road capacity. Contact William B. Cassidy at bill.cassidy@splgobal .com.

Transport, Trade and Regulation News

Supply chain

Multiplying supply chain risks drive growth for global, US-based logistics firms

<div class="phx-topic abstract-wrapper">A wide-ranging report commissioned by Canada’s Labor Ministry says British Columbia’s ports are vulnerable to strikes in part because of disparate longshore unions involved in contract talks. </div>

A wide-ranging report commissioned by Canada’s Labor Ministry says British Columbia’s ports are vulnerable to strikes in part because of disparate longshore unions involved in contract talks.

<div class="phx-topic">Fragmented union bargaining and government backstops during contract talks are factors behind the longshore strikes and other labor unrest that have gripped Canada’s West Coast ports during the last two years, a report commissioned by the Labor Ministry report has found. The report, released Thursday, suggests British Columbia’s longshore unions need to bargain with employers on a province-wide basis, rather than a port- or employer-specific basis, to avoid further unrest that jeopardizes Canada’s supply chains. It also urged early government intervention to head off strikes. The 156-page report, which was commissioned by the Labor Ministry and developed by Canadian labor relations experts Vincent Ready and Amanda Rogers, looks into the labor disputes that have hit British Columbia’s ports. It was commissioned in July 2023 by Labor Minister Steve MacKinnon after <a href="https://www.joc.com/article/ilwu-canadas-contract-rejection-thrusts-bc-ports-in-limbo-5216091">longshore workers rejected</a> a contract proposal that led to a <a href="https://www.joc.com/article/ilwu-canada-contract-ratification-ensures-bc-port-peace-5220992">13-day strike at Vancouver and other Canadian West Coast ports</a>. The inquiry found that while “there exists a mature bargaining relationship among the parties, it is far from healthy, and is marred by ongoing conflicts, misaligned priorities and a fiercely protectionist stance by the union.” Mike Leonard, president of the British Columbia Maritime Employers Association (BCMEA), said in a statement that if the report’s findings are put in place, it “will advance long-term stability at Canada’s West Coast ports to the benefit of all parties.” ILWU Canada could not immediately be reached to comment on the report. <h3>ILWU locals control talks </h3>The BCMEA negotiates contracts with the Canadian affiliate of the International Longshore and Warehouse Union (ILWU). ILWU Canada represents five separate, regional ILWU locals, which are the recognized bargaining agents with employers at different ports. While ILWU Canada is ostensibly the main negotiator, it is the locals who direct contract talks, vote on tentative agreements and determine whether to strike. ILWU Canada is not recognized by employers as a union and its president does not have a vote on contract matters. The report said that longshore labor negotiations would be more efficient if maritime employers could negotiate on a province-wide basis as “the current model of collective bargaining with different bargaining units is contributing to the frequency of labor disruptions.” It noted that other longshore unions in Canada negotiate province-wide contracts. The ILWU locals have maintained that different work conditions at each employer and port necessitate the need for regional representation. However, the report noted that ILWU local members can work at different ports throughout the province, indicating that work conditions at each location are similar enough for a province-wide contract. “While it is true each ILWU local maintains its own independent leadership and union members, the issuance of a geographic certification will not interfere with those arrangements,” the report said. It added that recognizing ILWU Canada or another entity as the main union representative “will bring stability and certainty to future rounds of bargaining.” <h3>Foremen role not distinct </h3>The Labor Ministry’s inquiry coincided with another work stoppage in November 2024, when the BCMEA shut out ILWU Local 514, which represents port foremen, <a href="https://www.joc.com/article/bc-container-ports-set-for-shutdown-after-foremen-begin-strike-5785499">after it took an illegal strike vote</a> during protracted negotiations with maritime employers. Local 514 has separate bargaining agreements with each of the province’s maritime employers and can negotiate with each one separately. However, Local 514 has “voluntarily” negotiated with the BCMEA for decades, the report said. Even though it started the last negotiations with the BCMEA, <a href="https://www.joc.com/article/dp-worlds-centerm-project-at-heart-of-employer-union-dispute-in-vancouver-5225162">Local 514 targeted one employer — DP World</a> — for a separate deal that led to the illegal strike vote. “The union’s conduct was an attempt to single out one employer, just as the parties acquired their right to strike or lock out, and subverted the collective bargaining process that was underway,” the report said. “The union cannot ride two horses at the same time and then pick the one that best suits its interests late in the race.” Local 514 maintains the foremen role is different enough than other longshore crafts for a separate union and contract. However, the report said foremen could also be rolled up into a province-wide contract because their jobs are not that different than other longshore workers. “We do not accept that the interests of ILWU Local 514 members are so distinct that they cannot effectively be advanced as part of a geographic certification that also includes longshore workers,” the report said. <h3>Government overshadows talks </h3>The report also took to task the default move of maritime employers and longshore unions to look to government intervention when contract negotiations break down. The report noted that the federal government has intervened in nine of 13 British Columbia port disputes since 1972. “This reliance on government intervention has created an environment where the safety net of binding arbitration overshadows the collective bargaining process,” the report said. The inquiry suggested that a “special mediator” be appointed early in the bargaining process. The special mediator would monitor the progress of talks and help usher them through before the government needs to force a deal on both sides. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>.</div>

Fragmented union bargaining and government backstops during contract talks are factors behind the longshore strikes and other labor unrest that have gripped Canada’s West Coast ports during the last two years, a report commissioned by the Labor Ministry report has found. The report, released Thursday, suggests British Columbia’s longshore unions need to bargain with employers on a province-wide basis, rather than a port- or employer-specific basis, to avoid further unrest that jeopardizes Canada’s supply chains. It also urged early government intervention to head off strikes. The 156-page report, which was commissioned by the Labor Ministry and developed by Canadian labor relations experts Vincent Ready and Amanda Rogers, looks into the labor disputes that have hit British Columbia’s ports. It was commissioned in July 2023 by Labor Minister Steve MacKinnon after longshore workers rejected a contract proposal that led to a 13-day strike at Vancouver and other Canadian West Coast ports . The inquiry found that while “there exists a mature bargaining relationship among the parties, it is far from healthy, and is marred by ongoing conflicts, misaligned priorities and a fiercely protectionist stance by the union.” Mike Leonard, president of the British Columbia Maritime Employers Association (BCMEA), said in a statement that if the report’s findings are put in place, it “will advance long-term stability at Canada’s West Coast ports to the benefit of all parties.” ILWU Canada could not immediately be reached to comment on the report. ILWU locals control talks The BCMEA negotiates contracts with the Canadian affiliate of the International Longshore and Warehouse Union (ILWU). ILWU Canada represents five separate, regional ILWU locals, which are the recognized bargaining agents with employers at different ports. While ILWU Canada is ostensibly the main negotiator, it is the locals who direct contract talks, vote on tentative agreements and determine whether to strike. ILWU Canada is not recognized by employers as a union and its president does not have a vote on contract matters. The report said that longshore labor negotiations would be more efficient if maritime employers could negotiate on a province-wide basis as “the current model of collective bargaining with different bargaining units is contributing to the frequency of labor disruptions.” It noted that other longshore unions in Canada negotiate province-wide contracts. The ILWU locals have maintained that different work conditions at each employer and port necessitate the need for regional representation. However, the report noted that ILWU local members can work at different ports throughout the province, indicating that work conditions at each location are similar enough for a province-wide contract. “While it is true each ILWU local maintains its own independent leadership and union members, the issuance of a geographic certification will not interfere with those arrangements,” the report said. It added that recognizing ILWU Canada or another entity as the main union representative “will bring stability and certainty to future rounds of bargaining.” Foremen role not distinct The Labor Ministry’s inquiry coincided with another work stoppage in November 2024, when the BCMEA shut out ILWU Local 514, which represents port foremen, after it took an illegal strike vote during protracted negotiations with maritime employers. Local 514 has separate bargaining agreements with each of the province’s maritime employers and can negotiate with each one separately. However, Local 514 has “voluntarily” negotiated with the BCMEA for decades, the report said. Even though it started the last negotiations with the BCMEA, Local 514 targeted one employer — DP World — for a separate deal that led to the illegal strike vote. “The union’s conduct was an attempt to single out one employer, just as the parties acquired their right to strike or lock out, and subverted the collective bargaining process that was underway,” the report said. “The union cannot ride two horses at the same time and then pick the one that best suits its interests late in the race.” Local 514 maintains the foremen role is different enough than other longshore crafts for a separate union and contract. However, the report said foremen could also be rolled up into a province-wide contract because their jobs are not that different than other longshore workers. “We do not accept that the interests of ILWU Local 514 members are so distinct that they cannot effectively be advanced as part of a geographic certification that also includes longshore workers,” the report said. Government overshadows talks The report also took to task the default move of maritime employers and longshore unions to look to government intervention when contract negotiations break down. The report noted that the federal government has intervened in nine of 13 British Columbia port disputes since 1972. “This reliance on government intervention has created an environment where the safety net of binding arbitration overshadows the collective bargaining process,” the report said. The inquiry suggested that a “special mediator” be appointed early in the bargaining process. The special mediator would monitor the progress of talks and help usher them through before the government needs to force a deal on both sides. Contact Michael Angell at michael.angell@spglobal.com .

Container Shipping News

Port News

North American ports

Longshore labor

Maritime

BC ports, longshore unions need new bargaining process: report

<div class="phx-topic abstract-wrapper">It is reasonable to assume the larger container carriers are now going to earn above historical returns, but they will not be immune from significant dips when supply significantly exceeds demand, writes Jeremy Masters.</div>

It is reasonable to assume the larger container carriers are now going to earn above historical returns, but they will not be immune from significant dips when supply significantly exceeds demand, writes Jeremy Masters.

<div class="phx-topic">For the early decades of container shipping, it was almost inconceivable that carriers could deliver a consistently good return on capital. Today, we see several carriers making profits that are the envy of other industries, and as recently reported by Alphaliner, six publicly-listed container carriers have a market valuation over $10 billion. Has the industry matured to the point where carriers can expect good returns to be the norm? <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6025533_0.1.jpg"></img></div>The answer is a qualified one. The major carriers are in a much stronger position to control the supply lever than they were <a href="https://www.joc.com/article/current-market-allows-top-ocean-carriers-to-strengthen-long-term-position-6016964">because of consolidation in the industry and reduction in the non-operating fleet</a>. The increase in vertical integration — which will take a dramatic step forward if the <a href="https://www.joc.com/article/panama-canal-mulls-developing-corozal-to-allay-neutrality-fears-over-hutchison-deal-6023330">acquisition of Hutchison Ports Holdings by Mediterranean Shipping Co.’s terminals subsidiary proceeds</a> — means that the big carriers are increasingly controlling an integral part of their product as well as its cost. The purchase of large amounts of new and secondhand tonnage in smaller sizes means that these carriers can also run their own regional and feeder systems off these acquired terminals — again controlling quality and cost. This becomes a powerful combination to compete against, and if a carrier outside the big league or a new entry wanted to emulate this set-up, the investment would be very large. That means there are some real barriers to entry. The position is different for operators in selected deep-sea trades, regional carriers and feeder specialists. These carriers can’t contend with volatile individual trades, have less control of supply and don’t have the resources available to ride out extended storms without withdrawing, or worse. They also have less control of their overall product because they don’t have the means to integrate vertically. Those who are agile and find the right niches can make a good return, but the stronger the big guys get, the more they can marginalize smaller operators or simply acquire them. We have a broadly two-tier industry then — the truly global carriers (and within them the bigger ones pursuing vertical integration who are getting stronger) — and the rest. And the punching power is widening. The picture is reasonably rosy for the big carriers, but they do not have it entirely their own way: <h3>Control of supply, not demand </h3>Trade growth does not follow the clear patterns seen in early containerization, and geopolitics makes it increasingly unpredictable. There are good reasons to believe that global demand for container space will stay up — even if there is a redistribution — but carriers cannot rely on robust trade growth. Newbuild orders in recent years have considerably exceeded anything that could be expected on the demand side, and at some point, the gap between supply and demand will be unbridgeable with major downward pressure on rates. <h3>High profits are an attraction </h3>Up until comparatively recently, many potential investors and operators in other transport modes could have looked at the containerized shipping industry as a bit of a basket case. As the fundamentals change in favor of the carriers, players with deep pockets may take another look. The purchase and upscaling of an existing player become possible. <h3>New business model </h3>Carriers have innovated considerably with physical products but have been rather conservative about adopting new ways to market their products. This could become a backdoor way for a smaller carrier to emerge into the big league or a company using a different model in another mode to make a significant entry. <h3>Environmental factors </h3>Carriers can be commended for making some tough decisions to invest in more environmentally friendly tonnage when the ultimate winners in the alternative fuels race are unclear. This could be quite damaging for those who have made less-than-optimal picks, or beneficial for a later entrant. Meanwhile, the purchase of considerable amounts of old secondhand tonnage may become a dubious investment for some carriers if environmental regulations and fees tighten further. There are clearly other factors, such as how individual companies are run, that could enter the picture. But the above are tangible threats that are difficult for carriers to quantify and even harder to control. Looking at the whole picture, it is reasonable to assume that the bigger container carriers are now going to earn above historical returns, but they will not be immune from significant dips when supply significantly exceeds demand. By virtue of their own recent success, they will also be facing fresh interest from aspirants within and outside the industry harboring ambitions to be at the top table — potentially touting a different business model. Perhaps not a golden age yet, but certainly an emergence from the dark ages. Contact Jeremy Masters at <a href="https://www.joc.com/article/jeremy@shippingmastershk.com">jeremy@shippingmastershk.com</a>.</div>

For the early decades of container shipping, it was almost inconceivable that carriers could deliver a consistently good return on capital. Today, we see several carriers making profits that are the envy of other industries, and as recently reported by Alphaliner, six publicly-listed container carriers have a market valuation over $10 billion. Has the industry matured to the point where carriers can expect good returns to be the norm? The answer is a qualified one. The major carriers are in a much stronger position to control the supply lever than they were because of consolidation in the industry and reduction in the non-operating fleet . The increase in vertical integration — which will take a dramatic step forward if the acquisition of Hutchison Ports Holdings by Mediterranean Shipping Co.’s terminals subsidiary proceeds — means that the big carriers are increasingly controlling an integral part of their product as well as its cost. The purchase of large amounts of new and secondhand tonnage in smaller sizes means that these carriers can also run their own regional and feeder systems off these acquired terminals — again controlling quality and cost. This becomes a powerful combination to compete against, and if a carrier outside the big league or a new entry wanted to emulate this set-up, the investment would be very large. That means there are some real barriers to entry. The position is different for operators in selected deep-sea trades, regional carriers and feeder specialists. These carriers can’t contend with volatile individual trades, have less control of supply and don’t have the resources available to ride out extended storms without withdrawing, or worse. They also have less control of their overall product because they don’t have the means to integrate vertically. Those who are agile and find the right niches can make a good return, but the stronger the big guys get, the more they can marginalize smaller operators or simply acquire them. We have a broadly two-tier industry then — the truly global carriers (and within them the bigger ones pursuing vertical integration who are getting stronger) — and the rest. And the punching power is widening. The picture is reasonably rosy for the big carriers, but they do not have it entirely their own way: Control of supply, not demand Trade growth does not follow the clear patterns seen in early containerization, and geopolitics makes it increasingly unpredictable. There are good reasons to believe that global demand for container space will stay up — even if there is a redistribution — but carriers cannot rely on robust trade growth. Newbuild orders in recent years have considerably exceeded anything that could be expected on the demand side, and at some point, the gap between supply and demand will be unbridgeable with major downward pressure on rates. High profits are an attraction Up until comparatively recently, many potential investors and operators in other transport modes could have looked at the containerized shipping industry as a bit of a basket case. As the fundamentals change in favor of the carriers, players with deep pockets may take another look. The purchase and upscaling of an existing player become possible. New business model Carriers have innovated considerably with physical products but have been rather conservative about adopting new ways to market their products. This could become a backdoor way for a smaller carrier to emerge into the big league or a company using a different model in another mode to make a significant entry. Environmental factors Carriers can be commended for making some tough decisions to invest in more environmentally friendly tonnage when the ultimate winners in the alternative fuels race are unclear. This could be quite damaging for those who have made less-than-optimal picks, or beneficial for a later entrant. Meanwhile, the purchase of considerable amounts of old secondhand tonnage may become a dubious investment for some carriers if environmental regulations and fees tighten further. There are clearly other factors, such as how individual companies are run, that could enter the picture. But the above are tangible threats that are difficult for carriers to quantify and even harder to control. Looking at the whole picture, it is reasonable to assume that the bigger container carriers are now going to earn above historical returns, but they will not be immune from significant dips when supply significantly exceeds demand. By virtue of their own recent success, they will also be facing fresh interest from aspirants within and outside the industry harboring ambitions to be at the top table — potentially touting a different business model. Perhaps not a golden age yet, but certainly an emergence from the dark ages. Contact Jeremy Masters at jeremy@shippingmastershk.com .

Container lines

Are we entering a ‘golden age’ for major ocean carriers?

<div class="phx-topic abstract-wrapper">While just 2% to 3% of global container traffic transits the key chokepoint, any restrictions would further tie up global vessel capacity and cut off the ports of Jebel Ali and Abu Dhabi. </div>

While just 2% to 3% of global container traffic transits the key chokepoint, any restrictions would further tie up global vessel capacity and cut off the ports of Jebel Ali and Abu Dhabi.

<div class="phx-topic">The Iranian government’s threat to close the Strait of Hormuz amid Israel’s attack on the country would tie up already stretched global container capacity, cut off Jebel Ali and Abu Dhabi ports and put upward pressure on bunker fuel costs. Just 2% to 3% of global container traffic moves through the vital chokepoint for crude oil transport, according to data from Container Trade Statistics (CTS). Nonetheless, a restriction on container traffic through the strait, making deployed tonnage ineffective, would put upward pressure on freight rates and extend transit times. Sea-Intelligence Maritime Analysis warned of major problems for container shipping should the strait be closed. “At the time of writing this, the two countries are exchanging continuous barrages of missiles and drones,” Sea-Intelligence CEO Alan Murphy wrote in the Sunday Spotlight newsletter. “For now, this has not led to any impact on commercial shipping in the Strait of Hormuz, and we should hope this to not become the case. If that happens, it will have a significant impact on container shipping flows to the major transshipment hubs in the region.” Dubai’s Jebel Ali was the 10th largest global container port as measured by volume in 2024, according to Alphaliner, while Khalifa is Abu Dhabi’s flagship container port. The container shipping market had already been stretched due to hostilities in the region, with container lines diverting away from the Gulf of Aden and Red Sea since late 2023 because of attacks from Houthi militants operating in Yemen. Most recently, carriers have repositioned capacity back to the trans-Pacific to handle rebounding Asia import volumes amid a pause in US tariffs. The idling of the global fleet is under 1% and the charter market for container ships remains elevated, according to analyst Alphaliner, reflecting stretched container capacity from not just Red Sea diversions, but port congestion in Europe, and, to a lesser degree, in Asia. According to Platts, a sister company of the Journal of Commerce within S&amp;P Global, more than 17 million barrels of crude oil each day move through the Strait of Hormuz, coming not just from Iran, but from Saudi Arabia, Kuwait, the UAE and Qatar. That is more than 20% of daily global crude production. “If the Strait of Hormuz was to close, in the midterm it would be disruptive to the oil and bunker industry if they’re not able to get crude product transported out of the Persian Gulf, which is going to lead to a price disruption,” said Michael Aldwell, Kuehne +Nagel’s executive vice president of sea logistics. “But stockpiles are not low, and I think overall, it would have to be closed for a longer period of time before it impacted prices in the longer term.” Crude oil prices, which jumped 7% Friday after Israel’s initial attack on Iran, were softer in early trading Monday. Benchmark Brent crude was trading at $71.37 per barrel, down about 4%, according to Bloomberg. Contact Mark Szakonyi at <a href="mailto:mark.szakonyi@spglobal.com">mark.szakonyi@spglobal.com</a>. </div>

The Iranian government’s threat to close the Strait of Hormuz amid Israel’s attack on the country would tie up already stretched global container capacity, cut off Jebel Ali and Abu Dhabi ports and put upward pressure on bunker fuel costs. Just 2% to 3% of global container traffic moves through the vital chokepoint for crude oil transport, according to data from Container Trade Statistics (CTS). Nonetheless, a restriction on container traffic through the strait, making deployed tonnage ineffective, would put upward pressure on freight rates and extend transit times. Sea-Intelligence Maritime Analysis warned of major problems for container shipping should the strait be closed. “At the time of writing this, the two countries are exchanging continuous barrages of missiles and drones,” Sea-Intelligence CEO Alan Murphy wrote in the Sunday Spotlight newsletter. “For now, this has not led to any impact on commercial shipping in the Strait of Hormuz, and we should hope this to not become the case. If that happens, it will have a significant impact on container shipping flows to the major transshipment hubs in the region.” Dubai’s Jebel Ali was the 10th largest global container port as measured by volume in 2024, according to Alphaliner, while Khalifa is Abu Dhabi’s flagship container port. The container shipping market had already been stretched due to hostilities in the region, with container lines diverting away from the Gulf of Aden and Red Sea since late 2023 because of attacks from Houthi militants operating in Yemen. Most recently, carriers have repositioned capacity back to the trans-Pacific to handle rebounding Asia import volumes amid a pause in US tariffs. The idling of the global fleet is under 1% and the charter market for container ships remains elevated, according to analyst Alphaliner, reflecting stretched container capacity from not just Red Sea diversions, but port congestion in Europe, and, to a lesser degree, in Asia. According to Platts, a sister company of the Journal of Commerce within S&P Global, more than 17 million barrels of crude oil each day move through the Strait of Hormuz, coming not just from Iran, but from Saudi Arabia, Kuwait, the UAE and Qatar. That is more than 20% of daily global crude production. “If the Strait of Hormuz was to close, in the midterm it would be disruptive to the oil and bunker industry if they’re not able to get crude product transported out of the Persian Gulf, which is going to lead to a price disruption,” said Michael Aldwell, Kuehne +Nagel’s executive vice president of sea logistics. “But stockpiles are not low, and I think overall, it would have to be closed for a longer period of time before it impacted prices in the longer term.” Crude oil prices, which jumped 7% Friday after Israel’s initial attack on Iran, were softer in early trading Monday. Benchmark Brent crude was trading at $71.37 per barrel, down about 4%, according to Bloomberg. Contact Mark Szakonyi at mark.szakonyi@spglobal.com .

International ports

Closure of Strait of Hormuz would further stretch global container capacity

<div class="phx-topic abstract-wrapper">The loss of An-124 heavy-lift air capacity will force a modal shift to ocean or a reduction in cargo sizes to fit into smaller craft, experts say.</div>

The loss of An-124 heavy-lift air capacity will force a modal shift to ocean or a reduction in cargo sizes to fit into smaller craft, experts say.

<div class="phx-topic">The clock is ticking on the medium-term availability of aircraft for heavy-lift cargoes, with soaring demand clashing with an aging specialized fleet and no clear path to replacing assets. Consensus among specialists in the sector is that the current An-124, while capable of life-extending modifications, has a finite lifespan. The An-124 is the world’s heaviest gross weight production cargo airplane currently operating. Luís Branco, managing director of project freight forwarder L Branco Lda, questioned the future of these heavy-lift air cargo workhorses. “Their life can be extended, but there will be some point in time when there can be no more extensions,” he said.Replacing these giants is a monumental task. “It costs not only millions to develop them, but years to design and then you need to find someone to finance it,” Branco added. Ruslan Bykovets, head of air transportation at Ukraine-based Antonov Airlines, operator of seven An-124s, said that the first of those aircraft will reach the end of its operational life in 2034. Bykovets told the Journal of Commerce that Antonov is working on a modernization program that will add 10 more years to their working life.However, Ritesh Nair, head of projects at project cargo forwarder Rhenus Projects, acknowledged the modernization program was just a “soft stop-gap arrangement.”International sanctions applied against Russia in response to its 2022 invasion of Ukraine have exacerbated the heavy-lift aircraft availability problem. “When sanctions were applied to Russia in 2022 the number of available fleet on the market dropped 60%,” Bykovets said. That dramatic reduction, coupled with rising demand, has inevitably led to higher air charter rates. <h3>Financiers and builders needed</h3>Market experts raise the question of who will build the next generation of heavy-lift aircraft, ruling out manufacturers such as Boeing or Airbus. Without new investment, Bykovets said heavy air freight cargoes will either need to be sent by sea — with much longer transit times — or cargoes will need to be dismantled to fit into 747s or 777s. However, he said the latter is not an option for extra heavy cargo, such as transformers or refinery station engines.When the An-124s were first manufactured, they were funded by the government for military purposes. “Any entrepreneur today would be a little skeptical about laying out so much money, so a government agency has to step in to be able to fund these,” Nair said. In the face of those challenges, he said “out of the box solutions” could be explored, such as cargo going “to where the aircraft is” instead of the other way around. Nair also championed consolidation. “Most of the charters that are happening are full charters, and a lot of space gets wasted,” he said. “So, can a couple of forwarders or even Antonov entertain other inquiries, bring two cargoes together and flying them out?”But Bykovets said that would not be feasible as each chartered An-124 flight is a unique project, noting that adding another piece of heavy-lift cargo to the same flight would mean "twice the amount of people needed to load it." Clients paying $1.5 million for a full charter would not want third-party cargo included in their chartered aircraft, he added. Despite the challenges, demand for heavy-lift air cargo remains robust. Bykovets identified military assets as the top cargo, followed by aerospace, adding that “the numbers of aerospace cargo has increased five times since COVID.” He said that oil and gas-linked air freight demand is starting to grow again, while heavy-lift air cargoes for the power market are also on the rise.Contact Carly Fields at <a href="mailto:carly.fields@spglobal.com">carly.fields@spglobal.com</a>.</div>

The clock is ticking on the medium-term availability of aircraft for heavy-lift cargoes, with soaring demand clashing with an aging specialized fleet and no clear path to replacing assets. Consensus among specialists in the sector is that the current An-124, while capable of life-extending modifications, has a finite lifespan. The An-124 is the world’s heaviest gross weight production cargo airplane currently operating. Luís Branco, managing director of project freight forwarder L Branco Lda, questioned the future of these heavy-lift air cargo workhorses. “Their life can be extended, but there will be some point in time when there can be no more extensions,” he said. Replacing these giants is a monumental task. “It costs not only millions to develop them, but years to design and then you need to find someone to finance it,” Branco added. Ruslan Bykovets, head of air transportation at Ukraine-based Antonov Airlines, operator of seven An-124s, said that the first of those aircraft will reach the end of its operational life in 2034. Bykovets told the Journal of Commerce that Antonov is working on a modernization program that will add 10 more years to their working life. However, Ritesh Nair, head of projects at project cargo forwarder Rhenus Projects, acknowledged the modernization program was just a “soft stop-gap arrangement.” International sanctions applied against Russia in response to its 2022 invasion of Ukraine have exacerbated the heavy-lift aircraft availability problem. “When sanctions were applied to Russia in 2022 the number of available fleet on the market dropped 60%,” Bykovets said. That dramatic reduction, coupled with rising demand, has inevitably led to higher air charter rates. Financiers and builders needed Market experts raise the question of who will build the next generation of heavy-lift aircraft, ruling out manufacturers such as Boeing or Airbus. Without new investment, Bykovets said heavy air freight cargoes will either need to be sent by sea — with much longer transit times — or cargoes will need to be dismantled to fit into 747s or 777s. However, he said the latter is not an option for extra heavy cargo, such as transformers or refinery station engines. When the An-124s were first manufactured, they were funded by the government for military purposes. “Any entrepreneur today would be a little skeptical about laying out so much money, so a government agency has to step in to be able to fund these,” Nair said. In the face of those challenges, he said “out of the box solutions” could be explored, such as cargo going “to where the aircraft is” instead of the other way around. Nair also championed consolidation. “Most of the charters that are happening are full charters, and a lot of space gets wasted,” he said. “So, can a couple of forwarders or even Antonov entertain other inquiries, bring two cargoes together and flying them out?” But Bykovets said that would not be feasible as each chartered An-124 flight is a unique project, noting that adding another piece of heavy-lift cargo to the same flight would mean "twice the amount of people needed to load it." Clients paying $1.5 million for a full charter would not want third-party cargo included in their chartered aircraft, he added. Despite the challenges, demand for heavy-lift air cargo remains robust. Bykovets identified military assets as the top cargo, followed by aerospace, adding that “the numbers of aerospace cargo has increased five times since COVID.” He said that oil and gas-linked air freight demand is starting to grow again, while heavy-lift air cargoes for the power market are also on the rise. Contact Carly Fields at carly.fields@spglobal.com .

Air Cargo

Heavy-haul transport

Project cargo

Breakbulk News

Market seeks to navigate medium-term cuts to heavy-lift air cargo capacity

<div class="phx-topic abstract-wrapper">OTR Capital argues DAT, the largest load board for truckload freight in North America, violated a non-compete clause when it acquired factoring company Outgo in May. </div>

OTR Capital argues DAT, the largest load board for truckload freight in North America, violated a non-compete clause when it acquired factoring company Outgo in May.

<div class="phx-topic">A court in Georgia has ordered DAT Freight &amp; Solutions to stop providing factoring service until a hearing can be held on whether DAT is violating a non-compete agreement with OTR Capital. DAT, the largest load board for truckload freight in North America, stressed that the June 10 order from the Superior Court of Cobb County is temporary. DAT is being sued by OTR. “We believe the suit is without merit and will defend ourselves vigorously,” DAT said in a statement Friday. “We are concerned that OTR’s actions directly impact the cash flow of our carrier customers,” it added. “Cash flow is the lifeblood of these small businesses, and any disruption to it can severely impede their operations.” Freight factoring is a financial service in which carriers sell their unpaid invoices to a third party that advances them the cash they are owed, generally in exchange for a single-digit percentage of the invoice amount. DAT has offered factoring services to its carrier customers since 2007 via external partnerships, most recently with OTR Solutions. DAT’s <a href="https://www.joc.com/article/dat-acquires-trucker-tools-in-move-to-reduce-load-board-driver-churn-5907848">acquisition of Outgo</a> last month led to the complaint from OTR. OTR Capital, a part of OTR Solutions, claimed the Outgo deal violated a non-compete clause in its agreement with DAT. In the June 10 ruling, Senior Judge Adele Grubbs ordered DAT not to compete with OTR through Outgo or any other factoring service. Grubbs also ordered DAT to cease providing any factoring services through Outgo. The order, issued in response to a request for emergency relief from OTR, lasts until a full hearing is held on the case. OTR, in a June 12 filing, claimed DAT has violated that order. “DAT has refused to expressly confirm that it has stopped providing all factoring services to its existing clients,” OTR said in the filing. The acquisition of Outgo is part of DAT’s efforts to expand its platform, grounded in truckload spot market load-matching. The acquisition was DAT’s second in six months, after it <a href="https://www.joc.com/article/dat-acquires-trucker-tools-in-move-to-reduce-load-board-driver-churn-5907848">acquired Trucker Tools</a>, a load visibility tool for brokers, in December. “As this is pending litigation, we have no further comment on the case itself at this time,” DAT said in its statement. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

A court in Georgia has ordered DAT Freight & Solutions to stop providing factoring service until a hearing can be held on whether DAT is violating a non-compete agreement with OTR Capital. DAT, the largest load board for truckload freight in North America, stressed that the June 10 order from the Superior Court of Cobb County is temporary. DAT is being sued by OTR. “We believe the suit is without merit and will defend ourselves vigorously,” DAT said in a statement Friday. “We are concerned that OTR’s actions directly impact the cash flow of our carrier customers,” it added. “Cash flow is the lifeblood of these small businesses, and any disruption to it can severely impede their operations.” Freight factoring is a financial service in which carriers sell their unpaid invoices to a third party that advances them the cash they are owed, generally in exchange for a single-digit percentage of the invoice amount. DAT has offered factoring services to its carrier customers since 2007 via external partnerships, most recently with OTR Solutions. DAT’s acquisition of Outgo last month led to the complaint from OTR. OTR Capital, a part of OTR Solutions, claimed the Outgo deal violated a non-compete clause in its agreement with DAT. In the June 10 ruling, Senior Judge Adele Grubbs ordered DAT not to compete with OTR through Outgo or any other factoring service. Grubbs also ordered DAT to cease providing any factoring services through Outgo. The order, issued in response to a request for emergency relief from OTR, lasts until a full hearing is held on the case. OTR, in a June 12 filing, claimed DAT has violated that order. “DAT has refused to expressly confirm that it has stopped providing all factoring services to its existing clients,” OTR said in the filing. The acquisition of Outgo is part of DAT’s efforts to expand its platform, grounded in truckload spot market load-matching. The acquisition was DAT’s second in six months, after it acquired Trucker Tools , a load visibility tool for brokers, in December. “As this is pending litigation, we have no further comment on the case itself at this time,” DAT said in its statement. Contact William B. Cassidy at bill.cassidy@spglobal.com .

Trucking News

Logistics Technology News

Truckload

Surface

Court orders DAT to temporarily halt trucking factoring service

<div class="phx-topic abstract-wrapper">As agricultural exports enter their traditional peak season, it is prudent to be proactive now — while there is still an empty container supply extant in North America. </div>

As agricultural exports enter their traditional peak season, it is prudent to be proactive now — while there is still an empty container supply extant in North America.

<div class="phx-topic">“Where Have All the Flowers Gone?” is a folk song written by American singer-songwriter Pete Seeger. Legend has it that he wrote it while on an airplane to play at Oberlin College, one of the few locations willing to defy the McCarthy hiring blacklist imposed on him. Subsequently, the song became a mainstay of the anti-war movement during the Vietnam War and has been covered by many artists and in many languages. The song utilizes the image of flowers and the cycle of life to depict the cyclical and destructive nature of war. And while I recognize that applying this metaphor to our industry’s cyclicality may be a step too far, I believe that the plaintive refrain, “Oh when will you/we ever learn; Oh, when will you/we ever learn?” certainly applies. In today’s transportation industry, there are very few of us that can remember the days of regulation when we struggled in an economy beset by stagflation. President Jimmy Carter then liberated our sector with deregulation. Because regulation — by design — was intended to ensure excess capacity, two decades of halcyon growth followed as this capacity was redeployed to productive applications. Along with globalization and outsourcing, logistics and supply chain management became industries in their own right, and intermodal was a key driver. However, about 25 years ago, the “free” capacity unleashed by deregulation had been consumed and growth needed to be supported by investment. Coincidentally, these changes took place against the aftermath of the 9/11 terrorist attack. A bipartisan blue-ribbon commission was established, and three years later, they released their report. The findings were extensive. The government was not prepared and did not know how to respond. Problems with intelligence collection, analysis, sharing across agencies, and a lack of coordination among federal agencies exacerbated the challenges. In fact, the whole structure represented a maze of siloed and disaggregated responsibilities. When I read the report, I was struck by the potential for a future commission assembled to write many of the same findings about the transportation network in our country. I actually wrote a white paper in 2004 claiming that it would be unnecessary to convene an investigation of the inevitable supply chain meltdown because it was already written. All that was necessary was to take the 9/11 report and replace “national security” with “supply chain.” <h3>COVID-19 drove changes </h3>Of course, our industry did nothing to address these structural shortcomings and muddled on until COVID-19 struck. At that time, it seemed that our entire industry adopted the “4C” excuse — everything was the fault of COVID, China, Congestion and Chassis. Everyone was surprised that such a terrible fate could befall our industry. Even worse, our industry seemed to be represented by our least qualified spokespeople and most of the media had no idea of basic facts. Somehow, we all survived that mess. Many of the problems impacted the entire network. The maelstrom of detention and demurrage bills gave rise to the Ocean Shipping Reform Act of 2022 (OSRA-22). It increased the authority of the Federal Maritime Commission (FMC) to promote the growth and development of US exports through an ocean transportation system that is competitive, efficient and economical. Beyond its mandate addressing complaints about detention and demurrage charges, OSRA-22 prohibits common ocean carriers, marine terminal operators or ocean transportation intermediaries from unreasonably refusing cargo space when available or resorting to other unfair or unjustly discriminatory methods. These protections were welcomed by the export community. However, we have to recognize that a complaint process after the fact may be insufficient to provide adequate protection if there is no effective remedy available. At times of high demand (and rates) for imports from Asia to North America, ocean carriers frequently evacuate all containers as soon as their import cargo is devanned. This moots the question of available space because there may be vessel space — but no empty containers.  As agricultural exports enter their traditional peak season, we believe that it is prudent to be proactive now, while there is still an empty container supply extant in North America. The Agriculture Transportation Coalition convenes June 16 for its annual meeting. I am sure Executive Director Peter Friedmann will have this high on the agenda; we do not want to be wondering where all the containers have gone. Contact Ted Prince at <a href="mailto:ted@tricitiesintermodal.com">ted@tricitiesintermodal.com</a>.</div>

“Where Have All the Flowers Gone?” is a folk song written by American singer-songwriter Pete Seeger. Legend has it that he wrote it while on an airplane to play at Oberlin College, one of the few locations willing to defy the McCarthy hiring blacklist imposed on him. Subsequently, the song became a mainstay of the anti-war movement during the Vietnam War and has been covered by many artists and in many languages. The song utilizes the image of flowers and the cycle of life to depict the cyclical and destructive nature of war. And while I recognize that applying this metaphor to our industry’s cyclicality may be a step too far, I believe that the plaintive refrain, “Oh when will you/we ever learn; Oh, when will you/we ever learn?” certainly applies. In today’s transportation industry, there are very few of us that can remember the days of regulation when we struggled in an economy beset by stagflation. President Jimmy Carter then liberated our sector with deregulation. Because regulation — by design — was intended to ensure excess capacity, two decades of halcyon growth followed as this capacity was redeployed to productive applications. Along with globalization and outsourcing, logistics and supply chain management became industries in their own right, and intermodal was a key driver. However, about 25 years ago, the “free” capacity unleashed by deregulation had been consumed and growth needed to be supported by investment. Coincidentally, these changes took place against the aftermath of the 9/11 terrorist attack. A bipartisan blue-ribbon commission was established, and three years later, they released their report. The findings were extensive. The government was not prepared and did not know how to respond. Problems with intelligence collection, analysis, sharing across agencies, and a lack of coordination among federal agencies exacerbated the challenges. In fact, the whole structure represented a maze of siloed and disaggregated responsibilities. When I read the report, I was struck by the potential for a future commission assembled to write many of the same findings about the transportation network in our country. I actually wrote a white paper in 2004 claiming that it would be unnecessary to convene an investigation of the inevitable supply chain meltdown because it was already written. All that was necessary was to take the 9/11 report and replace “national security” with “supply chain.” COVID-19 drove changes Of course, our industry did nothing to address these structural shortcomings and muddled on until COVID-19 struck. At that time, it seemed that our entire industry adopted the “4C” excuse — everything was the fault of COVID, China, Congestion and Chassis. Everyone was surprised that such a terrible fate could befall our industry. Even worse, our industry seemed to be represented by our least qualified spokespeople and most of the media had no idea of basic facts. Somehow, we all survived that mess. Many of the problems impacted the entire network. The maelstrom of detention and demurrage bills gave rise to the Ocean Shipping Reform Act of 2022 (OSRA-22). It increased the authority of the Federal Maritime Commission (FMC) to promote the growth and development of US exports through an ocean transportation system that is competitive, efficient and economical. Beyond its mandate addressing complaints about detention and demurrage charges, OSRA-22 prohibits common ocean carriers, marine terminal operators or ocean transportation intermediaries from unreasonably refusing cargo space when available or resorting to other unfair or unjustly discriminatory methods. These protections were welcomed by the export community. However, we have to recognize that a complaint process after the fact may be insufficient to provide adequate protection if there is no effective remedy available. At times of high demand (and rates) for imports from Asia to North America, ocean carriers frequently evacuate all containers as soon as their import cargo is devanned. This moots the question of available space because there may be vessel space — but no empty containers.  As agricultural exports enter their traditional peak season, we believe that it is prudent to be proactive now, while there is still an empty container supply extant in North America. The Agriculture Transportation Coalition convenes June 16 for its annual meeting. I am sure Executive Director Peter Friedmann will have this high on the agenda; we do not want to be wondering where all the containers have gone. Contact Ted Prince at ted@tricitiesintermodal.com .

Act now before we wonder where all the containers have gone

<div class="phx-topic abstract-wrapper">The Trump administration’s tariff policy is yet another milestone that has shaken the US economy over the past 60 years, writes Ted Prince. </div>

The Trump administration’s tariff policy is yet another milestone that has shaken the US economy over the past 60 years, writes Ted Prince.

<div class="phx-topic">Since the announcement of reciprocal tariffs on so-called “Liberation Day” last month, we have been bombarded by conflicting predictions of the possible benefits and disasters that may befall our country, our economy and our industry. What I find interesting is that the history of the past 60 years seems to have been forgotten. While there are many important dates, I will focus on four. <h3>Yanqui go home! </h3>I would start in April 1965, when President Lyndon Johnson deployed the Marines and 82nd Airborne to the Dominican Republic to quell a civil war that broke out after a military junta. While the intervention was intended to protect US nationals, mission creep led to the deployment of over 22,000 American troops. While the invasion successfully reinstalled a conservative government, it increased distrust of the US. At the same time, companies such as Hewlett Packard were rolling out a continuous pipeline of electronic innovations. Their intention was to near-shore manufacturing in Latin America; however, the prevalence of “Yanqui Go Home!” made them look elsewhere. Japan and then the “Four Tigers” (Singapore, Hong Kong, Taiwan and South Korea) became the factory sites instead. The Vietnam War had become the first containerized war, and plentiful equipment was available to load back to the US. While electronics required factories, much of the manufacturing was cottage industries. For example, importers of blue jeans were buying from hundreds of small vendors. Ocean carrier consolidators would send pickup trucks into the New Territories to pick up loose articles of clothing (some which no doubt had been made in China) for consolidation at their facilities adjacent to the Kwai Tsing container terminals. <h3>Voluntary restraint </h3>In May 1981, with the American auto industry mired in recession, Japanese car makers agreed to “voluntary export restraint,” which limited exports of passenger cars to the US. However, at the same time, they implemented a strategy of “transplants,” whereby cars were assembled in the US. Some might consider this an example of “reshoring;” however, it is not that simple. Initially, the plants were built in Japan, then disassembled, shipped to the US, and reassembled. Most of the parts (CKD: cars knocked down) came from Japan, so actual US content — other than labor — was minimal. Over time, suppliers proliferated along Interstates 65 and 75 to support these plants. However, many of these were also Japanese transplants. Some were joint ventures with US partners, but many were just US subsidiaries of Japanese manufacturers. Barry Bluestone and Bennett Harrison described this phenomenon in their 1982 work, “The Deindustrialization of America: Plant Closings, Community Abandonment, and the Dismantling of Basic Industry.” They pointed out the irony that the Japanese were successfully investing in US industrial sectors that scarcely a decade ago were said to be declining, uncompetitive, and suffering from deindustrialization. <h3>The Plaza Accord </h3>The Plaza Accord in September 1985 effectively devalued the dollar against other major currencies. Initially, the US trade deficit worsened, as imports rose in price with a devalued dollar. However, the devaluation made US exports cheaper for its trading partners to purchase, which grew the market in goods and services — which are unaccounted for in the current administration’s calculation. <h3>China and the WTO </h3>Finally, in 2001, China joined the World Trade Organization (WTO). What followed was a massive dislocation in trade as China built world-class factories and world-class ports to ship goods throughout the world. Some of those factories have since relocated to nations with cheaper labor. However, a whole ecosystem of suppliers has grown up that supports the manufacturing and assembly of sophisticated products. China’s development took over 30 years. It was no shortcut. It was also the result of extensive industrial policy similar to what Japan and the Four Tigers had done previously. Most importantly, these policies did not deviate for decades and supported a long-term strategy whereby investment could be made with confidence. Our current politics are such that it is impossible to invest in today’s doctrine because it may no longer be applicable by the time the factory opens in three to eight years. In the past 30 years, trade has increased dramatically as a share of gross domestic product (GDP). However, while most economists believe that this has been good for the economy, the general public’s outlook is less sanguine. In large part, this is because trade’s impacts can vary widely: localized changes in jobs (both gains and losses) and reduced prices of goods and services. Freight is inextricably linked to trade. It has transformed our industry. We will no doubt have a ringside seat to the policy that is evolving. Contact Ted Prince at <a href="mailto:ted@tricitiesintermodal.com">ted@tricitiesintermodal.com</a>. </div>

Since the announcement of reciprocal tariffs on so-called “Liberation Day” last month, we have been bombarded by conflicting predictions of the possible benefits and disasters that may befall our country, our economy and our industry. What I find interesting is that the history of the past 60 years seems to have been forgotten. While there are many important dates, I will focus on four. Yanqui go home! I would start in April 1965, when President Lyndon Johnson deployed the Marines and 82nd Airborne to the Dominican Republic to quell a civil war that broke out after a military junta. While the intervention was intended to protect US nationals, mission creep led to the deployment of over 22,000 American troops. While the invasion successfully reinstalled a conservative government, it increased distrust of the US. At the same time, companies such as Hewlett Packard were rolling out a continuous pipeline of electronic innovations. Their intention was to near-shore manufacturing in Latin America; however, the prevalence of “Yanqui Go Home!” made them look elsewhere. Japan and then the “Four Tigers” (Singapore, Hong Kong, Taiwan and South Korea) became the factory sites instead. The Vietnam War had become the first containerized war, and plentiful equipment was available to load back to the US. While electronics required factories, much of the manufacturing was cottage industries. For example, importers of blue jeans were buying from hundreds of small vendors. Ocean carrier consolidators would send pickup trucks into the New Territories to pick up loose articles of clothing (some which no doubt had been made in China) for consolidation at their facilities adjacent to the Kwai Tsing container terminals. Voluntary restraint In May 1981, with the American auto industry mired in recession, Japanese car makers agreed to “voluntary export restraint,” which limited exports of passenger cars to the US. However, at the same time, they implemented a strategy of “transplants,” whereby cars were assembled in the US. Some might consider this an example of “reshoring;” however, it is not that simple. Initially, the plants were built in Japan, then disassembled, shipped to the US, and reassembled. Most of the parts (CKD: cars knocked down) came from Japan, so actual US content — other than labor — was minimal. Over time, suppliers proliferated along Interstates 65 and 75 to support these plants. However, many of these were also Japanese transplants. Some were joint ventures with US partners, but many were just US subsidiaries of Japanese manufacturers. Barry Bluestone and Bennett Harrison described this phenomenon in their 1982 work, “The Deindustrialization of America: Plant Closings, Community Abandonment, and the Dismantling of Basic Industry.” They pointed out the irony that the Japanese were successfully investing in US industrial sectors that scarcely a decade ago were said to be declining, uncompetitive, and suffering from deindustrialization. The Plaza Accord The Plaza Accord in September 1985 effectively devalued the dollar against other major currencies. Initially, the US trade deficit worsened, as imports rose in price with a devalued dollar. However, the devaluation made US exports cheaper for its trading partners to purchase, which grew the market in goods and services — which are unaccounted for in the current administration’s calculation. China and the WTO Finally, in 2001, China joined the World Trade Organization (WTO). What followed was a massive dislocation in trade as China built world-class factories and world-class ports to ship goods throughout the world. Some of those factories have since relocated to nations with cheaper labor. However, a whole ecosystem of suppliers has grown up that supports the manufacturing and assembly of sophisticated products. China’s development took over 30 years. It was no shortcut. It was also the result of extensive industrial policy similar to what Japan and the Four Tigers had done previously. Most importantly, these policies did not deviate for decades and supported a long-term strategy whereby investment could be made with confidence. Our current politics are such that it is impossible to invest in today’s doctrine because it may no longer be applicable by the time the factory opens in three to eight years. In the past 30 years, trade has increased dramatically as a share of gross domestic product (GDP). However, while most economists believe that this has been good for the economy, the general public’s outlook is less sanguine. In large part, this is because trade’s impacts can vary widely: localized changes in jobs (both gains and losses) and reduced prices of goods and services. Freight is inextricably linked to trade. It has transformed our industry. We will no doubt have a ringside seat to the policy that is evolving. Contact Ted Prince at ted@tricitiesintermodal.com .

A history lesson while we watch current US trade policy unfold

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

North Asia to US West and East Coast container spot rates (Platts)

Platts North Asia to US East and West Coasts Weekly Gateway

<div class="phx-topic abstract-wrapper">Cargo landing at the country’s ports in July will be 20% higher than the forecast made just last month by the National Retail Federation and Hackett Associates. </div>

Cargo landing at the country’s ports in July will be 20% higher than the forecast made just last month by the National Retail Federation and Hackett Associates.

<div class="phx-topic">US retailers on Monday significantly upgraded import projections through August amid the temporary pauses in effect on the so-called reciprocal tariffs implemented by the Trump administration. Cargo landing at the country’s ports in July will be 20% higher than the <a href="https://www.joc.com/article/us-retailers-project-first-year-over-year-import-cut-in-19-months-as-tariffs-bite-6001817">forecast made in May</a> by the National Retail Federation (NRF) and Hackett Associates. Their June Global Port Tracker (GPT) shows the first upgrade to US import projections since February, before the first round of tariffs were announced in April. “Tariff reductions will lead to a surge in imports in June through August as importers take advantage of the various 90-day pauses,” Hackett Associates Founder Ben Hackett said. A pause on higher tariffs on most of the US’ trading partners is in effect until July 9, while the pause on the 145% tariff on imports from China is due to expire Aug. 14. The GPT’s updated forecast calls for July US imports of 2.13 million TEUs — up 20.3% from last month’s GPT but still well below the 2.32 million TEUs brought in during July 2024. Retailers expect August imports to reach 1.98 million TEUs, up 8.8% from May’s forecast. “[Shippers] are now looking to get those orders and cargo moving in order <a href="https://www.joc.com/article/ocean-carriers-bring-in-more-trans-pacific-container-services-amid-rate-surge-6012725">to bring as much merchandise</a> into the country as they can before the reciprocal tariff and additional China tariff pauses end in July and August,” said Jonathan Gold, NRF’s vice president for Supply Chain and Customs Policy. June import projections were also upgraded from the May GPT, with retailers expecting 17.5% higher volumes at 2.01 million TEUs. Preliminary May volumes of 1.91 million TEUs are expected to be 5.5% higher than forecast last month. <h3>A soft Q4 </h3>But the summer surge is expected to end given the uncertainty over what will happen once the temporary tariff reprieves expire. Retailers slightly downgraded import expectations for September to 1.78 million TEUs, which would also be a 21.6% drop compared with the year-ago month. And in its initial forecast for October, the GPT projects imports of 1.8 million TEUs, almost 20% lower than October 2024. “The peak for the winter holidays will come early this year, making it simultaneous with the peak for the back-to-school season,” Hackett said. “If higher tariffs are not delayed again, we can expect the final four months of the year to see declining volumes of imports.” The updated forecast brings the first-half projection for US imports to 12.54 million TEUs, up 3.4% from expectations made in May and 3.7% higher than actual first-half 2024 volumes. The GPT is published monthly using import data collected from 13 ports on the US East, West and Gulf coasts. Contact Laura Robb at <a href="mailto:Laura.Robb@spglobal.com">laura.robb@spglobal.com</a>.  </div>

US retailers on Monday significantly upgraded import projections through August amid the temporary pauses in effect on the so-called reciprocal tariffs implemented by the Trump administration. Cargo landing at the country’s ports in July will be 20% higher than the forecast made in May by the National Retail Federation (NRF) and Hackett Associates. Their June Global Port Tracker (GPT) shows the first upgrade to US import projections since February, before the first round of tariffs were announced in April. “Tariff reductions will lead to a surge in imports in June through August as importers take advantage of the various 90-day pauses,” Hackett Associates Founder Ben Hackett said. A pause on higher tariffs on most of the US’ trading partners is in effect until July 9, while the pause on the 145% tariff on imports from China is due to expire Aug. 14. The GPT’s updated forecast calls for July US imports of 2.13 million TEUs — up 20.3% from last month’s GPT but still well below the 2.32 million TEUs brought in during July 2024. Retailers expect August imports to reach 1.98 million TEUs, up 8.8% from May’s forecast. “[Shippers] are now looking to get those orders and cargo moving in order to bring as much merchandise into the country as they can before the reciprocal tariff and additional China tariff pauses end in July and August,” said Jonathan Gold, NRF’s vice president for Supply Chain and Customs Policy. June import projections were also upgraded from the May GPT, with retailers expecting 17.5% higher volumes at 2.01 million TEUs. Preliminary May volumes of 1.91 million TEUs are expected to be 5.5% higher than forecast last month. A soft Q4 But the summer surge is expected to end given the uncertainty over what will happen once the temporary tariff reprieves expire. Retailers slightly downgraded import expectations for September to 1.78 million TEUs, which would also be a 21.6% drop compared with the year-ago month. And in its initial forecast for October, the GPT projects imports of 1.8 million TEUs, almost 20% lower than October 2024. “The peak for the winter holidays will come early this year, making it simultaneous with the peak for the back-to-school season,” Hackett said. “If higher tariffs are not delayed again, we can expect the final four months of the year to see declining volumes of imports.” The updated forecast brings the first-half projection for US imports to 12.54 million TEUs, up 3.4% from expectations made in May and 3.7% higher than actual first-half 2024 volumes. The GPT is published monthly using import data collected from 13 ports on the US East, West and Gulf coasts. Contact Laura Robb at laura.robb@spglobal.com . 

Pause on tariffs prompts US retailers to upgrade summer import forecast

<div class="phx-topic abstract-wrapper">TRAC Intermodal, DCLI and FlexiVan Leasing began unstacking chassis shortly after the Trump administration last month announced a 90-day pause on the 145% tariffs on Chinese imports.</div>

TRAC Intermodal, DCLI and FlexiVan Leasing began unstacking chassis shortly after the Trump administration last month announced a 90-day pause on the 145% tariffs on Chinese imports.

<div class="phx-topic">As an expected wave of imports from China begins arriving at US ports in the coming weeks, the country’s three largest marine chassis providers say they are pulling idle equipment from storage, inspecting and repairing units, and repositioning chassis to key inland hubs to avoid a repeat of the shortages seen during the pandemic. TRAC Intermodal, DCLI and FlexiVan Leasing, the US’ top three lessors by fleet size, respectively, began unstacking chassis shortly after the Trump administration last month announced a 90-day pause on the 145% tariffs on Chinese imports. TRAC owns more than 200,000 marine chassis, while DCLI has about 140,000 units and FlexiVan about 120,000. None of the companies disclosed the number of chassis they’ve taken out of long-term storage, but each said the total is in the “tens of thousands.” “Our current utilization, our working fleet, is rather soft,” said Val Noel, chief operating officer of TRAC. “But we think this could be a little bit like a tsunami, and we want to have extra capacity to make sure we don’t have any service disruptions.” TRAC will focus on repairing and positioning chassis in Chicago, Dallas and Memphis. Noel said chassis placed into Memphis can be redeployed to Kansas City, St. Louis and Omaha, if necessary, while chassis in Chicago can be redirected to the Ohio Valley. DCLI began unstacking equipment in Southern California days after the tariff pause announcement and has since expanded the process to inland locations including Chicago, Dallas and Memphis. “We have safety stocks in place in key markets and are working with our vendors to ensure we have the repair capacity necessary to respond to this demand,” said Mike O’Malley, DCLI’s senior vice president of government and public relations. FlexiVan, which is exiting Southern California’s Pool of Pools, has focused on ensuring chassis availability for its core partner, Ocean Network Express (ONE). “[We are] working continuously to get pool chassis into a ready to use condition and fleeted into our private pool for ONE and other customers,” Flexi said in a statement to the Journal of Commerce. FlexiVan in late April opened its new private chassis pool serving the ports of Los Angeles and Long Beach, with FlexiVan Pool “designed to enhance our service capabilities for carriers and customers.” <h3>Getting repairs done now </h3>The chassis providers emphasized that pulling equipment out of long-term storage is not a one-day process. Units stacked for months, sometimes years, must undergo full inspections and safety checks, and in many cases, minor repairs before they are roadworthy. It can take several weeks to check lighting systems, brake lines, tires and structural components that can rust, corrode or suffer other weather-related fatigue. Technicians must also be available in sufficient numbers, and often work overtime, to meet repair deadlines. DCLI said it’s better prepared than during the pandemic because it did not significantly scale back repair operations with repair vendors when the market softened. DCLI said it learned how important it is to keep mechanics working even as volumes soften because widespread layoffs require rehiring and training later, which makes it difficult to complete repairs before a cargo surge. As a result, DCLI believes it can quickly inspect, repair and certify idle chassis without having to rebuild labor capacity from scratch. <h3>Communication is key </h3>Knowing when and where to deploy repaired units is crucial to prevent equipment shortages. Chassis providers rely on cargo forecasts from ocean carriers, railroads and shippers and data from the US Department of Transportation’s Freight Logistics Optimization Works (FLOW) initiative to position chassis ahead of surges. Under normal conditions, imports going to secondary cities such as Cincinnati, Columbus or St. Louis can be part of a block within a larger train to Chicago or Kansas City. During a surge, however, those cities may receive dedicated trains with double or triple the usual number of containers, flooding local terminals and straining chassis availability. “That’s one of the things that has beaten us in the past,” Noel acknowledged. “Normally a city might get a 3,000-foot block of containers, and during a surge it’s a 10,000-foot train. Both of our western roads (BNSF Railway and Union Pacific Railroad) have been super in partnering with us, letting us know what’s coming so we can be prepared.” The landscape has also changed in recent years in ways that may increase supply chain resiliency. More trucking companies and cargo owners now operate private chassis fleets, reducing their reliance on shared pool equipment. Railroads have also adjusted terminal operations, placing more import containers into grounded stacks, allowing cargo owners to retrieve loads using their own equipment and easing pressure on the public pools managed by DCLI, TRAC, and FlexiVan. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>.</div>

As an expected wave of imports from China begins arriving at US ports in the coming weeks, the country’s three largest marine chassis providers say they are pulling idle equipment from storage, inspecting and repairing units, and repositioning chassis to key inland hubs to avoid a repeat of the shortages seen during the pandemic. TRAC Intermodal, DCLI and FlexiVan Leasing, the US’ top three lessors by fleet size, respectively, began unstacking chassis shortly after the Trump administration last month announced a 90-day pause on the 145% tariffs on Chinese imports. TRAC owns more than 200,000 marine chassis, while DCLI has about 140,000 units and FlexiVan about 120,000. None of the companies disclosed the number of chassis they’ve taken out of long-term storage, but each said the total is in the “tens of thousands.” “Our current utilization, our working fleet, is rather soft,” said Val Noel, chief operating officer of TRAC. “But we think this could be a little bit like a tsunami, and we want to have extra capacity to make sure we don’t have any service disruptions.” TRAC will focus on repairing and positioning chassis in Chicago, Dallas and Memphis. Noel said chassis placed into Memphis can be redeployed to Kansas City, St. Louis and Omaha, if necessary, while chassis in Chicago can be redirected to the Ohio Valley. DCLI began unstacking equipment in Southern California days after the tariff pause announcement and has since expanded the process to inland locations including Chicago, Dallas and Memphis. “We have safety stocks in place in key markets and are working with our vendors to ensure we have the repair capacity necessary to respond to this demand,” said Mike O’Malley, DCLI’s senior vice president of government and public relations. FlexiVan, which is exiting Southern California’s Pool of Pools, has focused on ensuring chassis availability for its core partner, Ocean Network Express (ONE). “[We are] working continuously to get pool chassis into a ready to use condition and fleeted into our private pool for ONE and other customers,” Flexi said in a statement to the Journal of Commerce. FlexiVan in late April opened its new private chassis pool serving the ports of Los Angeles and Long Beach, with FlexiVan Pool “designed to enhance our service capabilities for carriers and customers.” Getting repairs done now The chassis providers emphasized that pulling equipment out of long-term storage is not a one-day process. Units stacked for months, sometimes years, must undergo full inspections and safety checks, and in many cases, minor repairs before they are roadworthy. It can take several weeks to check lighting systems, brake lines, tires and structural components that can rust, corrode or suffer other weather-related fatigue. Technicians must also be available in sufficient numbers, and often work overtime, to meet repair deadlines. DCLI said it’s better prepared than during the pandemic because it did not significantly scale back repair operations with repair vendors when the market softened. DCLI said it learned how important it is to keep mechanics working even as volumes soften because widespread layoffs require rehiring and training later, which makes it difficult to complete repairs before a cargo surge. As a result, DCLI believes it can quickly inspect, repair and certify idle chassis without having to rebuild labor capacity from scratch. Communication is key Knowing when and where to deploy repaired units is crucial to prevent equipment shortages. Chassis providers rely on cargo forecasts from ocean carriers, railroads and shippers and data from the US Department of Transportation’s Freight Logistics Optimization Works (FLOW) initiative to position chassis ahead of surges. Under normal conditions, imports going to secondary cities such as Cincinnati, Columbus or St. Louis can be part of a block within a larger train to Chicago or Kansas City. During a surge, however, those cities may receive dedicated trains with double or triple the usual number of containers, flooding local terminals and straining chassis availability. “That’s one of the things that has beaten us in the past,” Noel acknowledged. “Normally a city might get a 3,000-foot block of containers, and during a surge it’s a 10,000-foot train. Both of our western roads (BNSF Railway and Union Pacific Railroad) have been super in partnering with us, letting us know what’s coming so we can be prepared.” The landscape has also changed in recent years in ways that may increase supply chain resiliency. More trucking companies and cargo owners now operate private chassis fleets, reducing their reliance on shared pool equipment. Railroads have also adjusted terminal operations, placing more import containers into grounded stacks, allowing cargo owners to retrieve loads using their own equipment and easing pressure on the public pools managed by DCLI, TRAC, and FlexiVan. Contact Ari Ashe at ari.ashe@spglobal.com .

Drayage

US chassis providers getting equipment ready for US import surge

<div class="phx-topic abstract-wrapper">But a rise in demand for general cargo will not be enough to offset the sharp decline in e-commerce shipments that followed the US clampdown in May on low-value imports from China. </div>

But a rise in demand for general cargo will not be enough to offset the sharp decline in e-commerce shipments that followed the US clampdown in May on low-value imports from China.

<div class="phx-topic">MUNICH — Trans-Pacific air cargo demand is showing signs of recovery amid restocking efforts in the US, with airlines bringing back some of the freighter capacity that had been shifted out of the trade lane to serve strengthening general cargo markets. But the volume generated by seasonal tech product launches, semiconductors, perishables and pharma — and boosted by shippers being forced into the air <a href="https://www.joc.com/article/pause-in-tariff-hikes-drives-big-gains-in-trans-pacific-spot-rates-6017111">as China-US ocean space tightens</a> — will not replace the massive demand for e-commerce that filled dozens of freighters per day, according to Airbus. “E-commerce has been driving freight demand over the past years, and the big question out there is what’s going to happen to it,” Oliver von Tronchin, head of freighter marketing at the French aircraft manufacturer, told an Air Cargo Europe panel at the Transport Logistic exhibition this week. “What we are looking at is the change to the de minimis rule and the European equivalent, and if a $2.75 item is left with $100 flat fee from the US, people will not buy that item,” he added. After eliminating the duty-free exemption for low-value shipments from China valued at under $800 on May 2, the US on May 14 reduced the de minimis tariff on the low-value imports from 120% to 54%. Items sent via post from China to the US will be charged a flat fee of $100, regardless of value. The European Union is proposing a €2 handling fee for small parcels under €150 from China that would be paid by online retailers, such as Shein and Temu, but Brussels has not set an implementation date. In 2024, e-commerce shipments accounted for about 50% of China-to-US air freight volume, according to rate benchmarking platform Xeneta. Since the duty-free status of low-value Chinese imports was revoked in May, the volume has declined. The drop in trans-Pacific air freight is a leading factor in the International Air Transport Association’s (IATA’s) forecast of little to no growth in global air cargo volume for 2025, a huge climb down from the 12% jump in year over year demand in 2024. <h3>Challenge to match supply and demand </h3>Airlines are trying to match supply with demand, but those on the trans-Pacific are not being helped by the policy changes emanating from the White House. China-US tonnage in mid-May was down 25% year over year, with freighter capacity down 40%, according to Cargo Facts Consulting. As volume began to recover over the last two weeks, it encouraged carriers to bring back freighters, but with e-commerce demand muted, most of the returning lift was serving general cargo. C.H. Robinson noted in a market update this week that airlines were being cautious in adding capacity as demand recovers, with that balancing act expected to tighten available space and push rates higher throughout June, especially for non-priority shipments. The forwarder warned that end-of-quarter demand and tariff deadlines will likely create bottlenecks for last-minute bookings on China-US routes and advised shippers to explore alternate routes through Southeast Asia and book space two to three weeks in advance. The rising demand on the trans-Pacific can be seen in data from air cargo analyst Rotate, which shows an 11% increase in air cargo capacity on the Asia-North America route last week compared with the average capacity deployed over the previous four weeks. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="d1642275-60f0-447f-84f8-8fd17fcb6d8f"></dynamic-object></div>China to US spot rates are rising in tandem with the increasing demand; as of June 1, they were up 14% from the first week of May at $4.31 per kilogram, according to Xeneta. Nadeem Sultan, senior vice president of cargo planning and freighters at Emirates SkyCargo, said general air freight volume was growing on Asia-North America but airlines remained in a holding pattern regarding the tariffs. “We are seeing that demand rise, but right now, everybody is waiting until mid-August when the 90-day pause in [China] tariffs ends to see what the permanent rule is going to be,” he said. “Depending on what the politicians say over the coming weeks, corporate companies are going to decide how high the risk is and whether they should be frontloading or not,” Sultan added. “But it is too early for them to make that decision now and I would say by the middle of July we will have more clarity.” <h3>E-commerce is ‘a way of life’ </h3>While e-commerce volume is currently under pressure, airlines and aircraft manufacturers at Air Cargo Europe were bullish on future air cargo demand. “Overall, e-commerce is still robust and will still be a sizable driver within air freight in the years ahead,” von Tronchin said. “It has become a way of life, and we’re used to that way of life, and I don’t think any of us are necessarily going to change it.” Jannie Davel, CEO of MSC Air Cargo, agreed, noting that e-commerce would remain a core component of air freight, and that the market would rebalance, although not to the high demand of the past. Davel added that shippers of general cargo were also adapting to changing trade flows as the tariffs forced Asian manufacturers to adjust production strategies. “We are seeing a lot of high-tech manufacturing shifting out of China to South Asia, so even if the tariffs are maintained, the trade will still be there,” he said. “It will maybe take some time to adjust, but then it will balance out.” The bullish view on air cargo demand was shared by Boeing and Airbus. Even with the US-China trade war roiling international markets and changing demand patterns, the plane makers have left their 20-year market forecasts unchanged. John Purdoch, director of product marketing of freighters at Boeing, said all the fundamentals in the market remained in place to support long-term growth. “Over the next 20 years, almost 3,000 new freighters will enter the market in all segments, and over 800 of those in the large, wide-body space,” Purdoch said. “We believe we are on a long-term growth path of 4% growth year over year for the next 20 years.” Von Tronchin said Airbus was “in the long-term game,” adding that the current disruptions to the market were temporary. “Our global market forecast is for 20 years, and as we saw in COVID-19 and after the financial crisis, air cargo has always come back to a trend of 3% to 4% growth per year,” he said. “Air cargo will remain a growth industry, independent of the short-term effects we are seeing.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

MUNICH — Trans-Pacific air cargo demand is showing signs of recovery amid restocking efforts in the US, with airlines bringing back some of the freighter capacity that had been shifted out of the trade lane to serve strengthening general cargo markets. But the volume generated by seasonal tech product launches, semiconductors, perishables and pharma — and boosted by shippers being forced into the air as China-US ocean space tightens — will not replace the massive demand for e-commerce that filled dozens of freighters per day, according to Airbus. “E-commerce has been driving freight demand over the past years, and the big question out there is what’s going to happen to it,” Oliver von Tronchin, head of freighter marketing at the French aircraft manufacturer, told an Air Cargo Europe panel at the Transport Logistic exhibition this week. “What we are looking at is the change to the de minimis rule and the European equivalent, and if a $2.75 item is left with $100 flat fee from the US, people will not buy that item,” he added. After eliminating the duty-free exemption for low-value shipments from China valued at under $800 on May 2, the US on May 14 reduced the de minimis tariff on the low-value imports from 120% to 54%. Items sent via post from China to the US will be charged a flat fee of $100, regardless of value. The European Union is proposing a €2 handling fee for small parcels under €150 from China that would be paid by online retailers, such as Shein and Temu, but Brussels has not set an implementation date. In 2024, e-commerce shipments accounted for about 50% of China-to-US air freight volume, according to rate benchmarking platform Xeneta. Since the duty-free status of low-value Chinese imports was revoked in May, the volume has declined. The drop in trans-Pacific air freight is a leading factor in the International Air Transport Association’s (IATA’s) forecast of little to no growth in global air cargo volume for 2025, a huge climb down from the 12% jump in year over year demand in 2024. Challenge to match supply and demand Airlines are trying to match supply with demand, but those on the trans-Pacific are not being helped by the policy changes emanating from the White House. China-US tonnage in mid-May was down 25% year over year, with freighter capacity down 40%, according to Cargo Facts Consulting. As volume began to recover over the last two weeks, it encouraged carriers to bring back freighters, but with e-commerce demand muted, most of the returning lift was serving general cargo. C.H. Robinson noted in a market update this week that airlines were being cautious in adding capacity as demand recovers, with that balancing act expected to tighten available space and push rates higher throughout June, especially for non-priority shipments. The forwarder warned that end-of-quarter demand and tariff deadlines will likely create bottlenecks for last-minute bookings on China-US routes and advised shippers to explore alternate routes through Southeast Asia and book space two to three weeks in advance. The rising demand on the trans-Pacific can be seen in data from air cargo analyst Rotate, which shows an 11% increase in air cargo capacity on the Asia-North America route last week compared with the average capacity deployed over the previous four weeks. China to US spot rates are rising in tandem with the increasing demand; as of June 1, they were up 14% from the first week of May at $4.31 per kilogram, according to Xeneta. Nadeem Sultan, senior vice president of cargo planning and freighters at Emirates SkyCargo, said general air freight volume was growing on Asia-North America but airlines remained in a holding pattern regarding the tariffs. “We are seeing that demand rise, but right now, everybody is waiting until mid-August when the 90-day pause in [China] tariffs ends to see what the permanent rule is going to be,” he said. “Depending on what the politicians say over the coming weeks, corporate companies are going to decide how high the risk is and whether they should be frontloading or not,” Sultan added. “But it is too early for them to make that decision now and I would say by the middle of July we will have more clarity.” E-commerce is ‘a way of life’ While e-commerce volume is currently under pressure, airlines and aircraft manufacturers at Air Cargo Europe were bullish on future air cargo demand. “Overall, e-commerce is still robust and will still be a sizable driver within air freight in the years ahead,” von Tronchin said. “It has become a way of life, and we’re used to that way of life, and I don’t think any of us are necessarily going to change it.” Jannie Davel, CEO of MSC Air Cargo, agreed, noting that e-commerce would remain a core component of air freight, and that the market would rebalance, although not to the high demand of the past. Davel added that shippers of general cargo were also adapting to changing trade flows as the tariffs forced Asian manufacturers to adjust production strategies. “We are seeing a lot of high-tech manufacturing shifting out of China to South Asia, so even if the tariffs are maintained, the trade will still be there,” he said. “It will maybe take some time to adjust, but then it will balance out.” The bullish view on air cargo demand was shared by Boeing and Airbus. Even with the US-China trade war roiling international markets and changing demand patterns, the plane makers have left their 20-year market forecasts unchanged. John Purdoch, director of product marketing of freighters at Boeing, said all the fundamentals in the market remained in place to support long-term growth. “Over the next 20 years, almost 3,000 new freighters will enter the market in all segments, and over 800 of those in the large, wide-body space,” Purdoch said. “We believe we are on a long-term growth path of 4% growth year over year for the next 20 years.” Von Tronchin said Airbus was “in the long-term game,” adding that the current disruptions to the market were temporary. “Our global market forecast is for 20 years, and as we saw in COVID-19 and after the financial crisis, air cargo has always come back to a trend of 3% to 4% growth per year,” he said. “Air cargo will remain a growth industry, independent of the short-term effects we are seeing.” Contact Greg Knowler at greg.knowler@spglobal.com .

Signs of air cargo recovery on the trans-Pacific as freighter aircraft return

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

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Shippers save money, time with automated transportation bidding tools

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

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Filling the Supply Chain Education Gap with LTL Education Courses

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Quarterly Intelligence

<div class="phx-topic abstract-wrapper">The intermodal yard and attached warehouse park would be developed about 50 miles outside the city and are part of a $170 million investment plan unveiled by the railroad. </div>

The intermodal yard and attached warehouse park would be developed about 50 miles outside the city and are part of a $170 million investment plan unveiled by the railroad.

<div class="phx-topic">Canadian National (CN) said Wednesday it plans to invest $170 million in its Illinois rail operations, including the development of a long-planned logistics park outside of Chicago. CN said that along with track maintenance and other infrastructure projects in the state, the investment will go toward the construction of the “Chicago Logistics Hub,” a 900-acre development site about 50 miles outside Chicago. The site, located in the village of Channahon, will include an intermodal yard and a business park for warehouses, CN said in a statement. The railroad acquired the site when it bought the Elgin, Joliet and Eastern Railway in 2009. CN has previously said that acquiring rail trackage outside of the metropolitan Chicago region provides an advantage in transit times of up to 48 hours relative to other Class I railroads. “Our continued infrastructure investment in Illinois will help strengthen the resiliency and efficiency of our network across the state,” CN Chief Executive Tracy Robinson said in the statement. Earlier this year, CN completed a project to extend siding track for four miles in the Chicago area to improve fluidity and railcar capacity in the region. The $54 million siding project was part of CN’s 2024 capital budget in the state, including $15 million for containers and yard equipment and $10 million for its other intermodal hubs. CN is expected to break ground on the new hub this year, according to the village of Channahon, with the project scheduled to be completed in late 2027 or early 2028. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

Canadian National (CN) said Wednesday it plans to invest $170 million in its Illinois rail operations, including the development of a long-planned logistics park outside of Chicago. CN said that along with track maintenance and other infrastructure projects in the state, the investment will go toward the construction of the “Chicago Logistics Hub,” a 900-acre development site about 50 miles outside Chicago. The site, located in the village of Channahon, will include an intermodal yard and a business park for warehouses, CN said in a statement. The railroad acquired the site when it bought the Elgin, Joliet and Eastern Railway in 2009. CN has previously said that acquiring rail trackage outside of the metropolitan Chicago region provides an advantage in transit times of up to 48 hours relative to other Class I railroads. “Our continued infrastructure investment in Illinois will help strengthen the resiliency and efficiency of our network across the state,” CN Chief Executive Tracy Robinson said in the statement. Earlier this year, CN completed a project to extend siding track for four miles in the Chicago area to improve fluidity and railcar capacity in the region. The $54 million siding project was part of CN’s 2024 capital budget in the state, including $15 million for containers and yard equipment and $10 million for its other intermodal hubs. CN is expected to break ground on the new hub this year, according to the village of Channahon, with the project scheduled to be completed in late 2027 or early 2028. Contact Michael Angell at michael.angell@spglobal.com .

Intermodal providers

Rail News

Canadian National to move forward on new Chicago-area logistics hub

<div class="phx-topic abstract-wrapper">A widening spread between the West and East coasts comes as carriers have added fresh capacity, especially to Southern California, to take advantage of what had been a sharp jump in demand and rates following the US pause on higher tariffs against China.</div>

A widening spread between the West and East coasts comes as carriers have added fresh capacity, especially to Southern California, to take advantage of what had been a sharp jump in demand and rates following the US pause on higher tariffs against China.

<div class="phx-topic">Spot ocean rates on the eastbound trans-Pacific are diverging sharply this week, with prices to the US West Coast softening amid a fresh capacity injection and the East Coast market still showing strength. Rates to the West Coast were $5,700 per FEU as of June 9, down 6% on the week, according to Platts, a sister company of the Journal of Commerce within S&amp;P Global. East Coast rates, meanwhile, were up 4% at $7,400 per FEU. The $1,700 spread between the coasts is the widest variance since late January and comes as ocean carriers have moved capacity to Asia-West Coast routes to take advantage of what had been <a href="https://www.joc.com/article/pause-on-tariffs-prompts-us-retailers-to-upgrade-summer-import-forecast-6022230">a sharp jump in demand and rates following the 90-day pause</a> announced May 12 by the Trump administration on higher tariffs against China. “The rates for cargo coming into the Pacific Southwest are going down, but pricing to the US East Coast is actually going up,” Stephen A. Nothdurft, vice president of sales for North America at the forwarder MOL Consolidation Services, told the Journal of Commerce. “It’s due to all of these extra-loaders and services returning into rotation [to Los Angeles-Long Beach].” The spot rate variance between the two coasts is capacity-driven, Nothdurft said. “It’s a bit of an indication that the so-called ‘normal’ differential of $1,000 is all really based on supply and demand,” he said. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e8c13a3e-9f5a-412f-8741-adbf5e1a7779"></dynamic-object></div>A carrier executive told the Journal of Commerce that carriers have been “way too aggressive” in <a href="https://www.joc.com/article/ocean-carriers-bring-in-more-trans-pacific-container-services-amid-rate-surge-6012725">adding capacity to the West Coast</a>, especially Southern California. Vessels leaving Asia for Los Angeles-Long Beach have been “half-full,” driving spot rates lower, the executive said. He added that despite what the indexes say, the spot rates that are actually moving cargo today to the Southern California gateway are $4,000 to $5,000 per FEU. <h3>East Coast volumes to build, then taper quickly </h3>A second carrier executive expects volumes will build to the East Coast in the coming weeks because retailers there must ship their holiday merchandise soon in order to have goods on the store shelves for the Black Friday sales on the day after Thanksgiving. “The volumes are going to be there,” the source said, adding carriers in the coming weeks are likely to add capacity to key East Coast gateways such as New York-New Jersey and Savannah. Despite the uncertainty over tariffs that is likely to continue into July for most Asian countries and into August for China, retailers importing through East Coast ports have to finalize their year-end holiday orders with factories in Asia and ship the merchandise soon, said Kevin Parkerson, an industry consultant and former logistics manager at national retailers. “For the East Coast, the deadline is early August,” Parkerson said. Forwarders say that with the extensive frontloading of product that has already taken place, it is likely the increased imports through the East Coast will taper off by late July. “Time will tell, but I’m not 100% confident in the East Coast extending its imports for very long,” said Jason Cook, CEO of Ardent Global Logistics. Contact Laura Robb at <a href="mailto:laura.robb@spglobal.com">laura.robb@spglobal.com</a>.Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>.</div>

Spot ocean rates on the eastbound trans-Pacific are diverging sharply this week, with prices to the US West Coast softening amid a fresh capacity injection and the East Coast market still showing strength. Rates to the West Coast were $5,700 per FEU as of June 9, down 6% on the week, according to Platts, a sister company of the Journal of Commerce within S&P Global. East Coast rates, meanwhile, were up 4% at $7,400 per FEU. The $1,700 spread between the coasts is the widest variance since late January and comes as ocean carriers have moved capacity to Asia-West Coast routes to take advantage of what had been a sharp jump in demand and rates following the 90-day pause announced May 12 by the Trump administration on higher tariffs against China. “The rates for cargo coming into the Pacific Southwest are going down, but pricing to the US East Coast is actually going up,” Stephen A. Nothdurft, vice president of sales for North America at the forwarder MOL Consolidation Services, told the Journal of Commerce. “It’s due to all of these extra-loaders and services returning into rotation [to Los Angeles-Long Beach].” The spot rate variance between the two coasts is capacity-driven, Nothdurft said. “It’s a bit of an indication that the so-called ‘normal’ differential of $1,000 is all really based on supply and demand,” he said. A carrier executive told the Journal of Commerce that carriers have been “way too aggressive” in adding capacity to the West Coast , especially Southern California. Vessels leaving Asia for Los Angeles-Long Beach have been “half-full,” driving spot rates lower, the executive said. He added that despite what the indexes say, the spot rates that are actually moving cargo today to the Southern California gateway are $4,000 to $5,000 per FEU. East Coast volumes to build, then taper quickly A second carrier executive expects volumes will build to the East Coast in the coming weeks because retailers there must ship their holiday merchandise soon in order to have goods on the store shelves for the Black Friday sales on the day after Thanksgiving. “The volumes are going to be there,” the source said, adding carriers in the coming weeks are likely to add capacity to key East Coast gateways such as New York-New Jersey and Savannah. Despite the uncertainty over tariffs that is likely to continue into July for most Asian countries and into August for China, retailers importing through East Coast ports have to finalize their year-end holiday orders with factories in Asia and ship the merchandise soon, said Kevin Parkerson, an industry consultant and former logistics manager at national retailers. “For the East Coast, the deadline is early August,” Parkerson said. Forwarders say that with the extensive frontloading of product that has already taken place, it is likely the increased imports through the East Coast will taper off by late July. “Time will tell, but I’m not 100% confident in the East Coast extending its imports for very long,” said Jason Cook, CEO of Ardent Global Logistics. Contact Laura Robb at laura.robb@spglobal.com .Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .

Trans-Pacific

Asia-USWC spot rates weakening as vessel overcapacity takes hold

<div class="phx-topic abstract-wrapper">The railroad said the higher fees, which are temporary, are meant to keep terminals fluid amid the higher volume of imports expected to land in the US over the coming weeks.</div>

The railroad said the higher fees, which are temporary, are meant to keep terminals fluid amid the higher volume of imports expected to land in the US over the coming weeks.

<div class="phx-topic">Norfolk Southern Railway (NS) will temporarily increase storage fees on cargo owners who do not retrieve their containers promptly, a measure the railroad says is intended to preserve terminal fluidity amid an expected surge in freight volume. The higher storage fees, a form of demurrage, will apply to ocean containers available for pickup beginning July 7. NS said the storage fees will be rolled back to current levels once port activity slows down. Domestic intermodal loads are not affected. Under the fee structure, ocean containers left more than two days beyond the free-time window will incur daily penalties of $200 per day, double the standard $100 rate. The fee rises to $300 after six days, up from the usual $200. An importer that leaves a container at an NS terminal for seven days beyond the free-time allowance would pay $1,500 per box, compared with $900 under the standard storage scale. The free-time window won’t change. In major terminals, the shipper has the day of notification plus an additional 24 hours to get the container out without penalties. If NS notifies the shipper after 5 p.m. local time, the next calendar day is treated as the start of the free-time period. <h3>‘Well-positioned’ to handle volume surge </h3>Meanwhile, NS’ intermodal network has been steady so far this year. The railroad’s intermodal traffic, both international and domestic containers, was up 3.5% through the end of May compared with the first five months of last year, according to data from the Association of American Railroads. “If we have any kind of surge that folks have been talking about, we’re well-positioned to handle it,” Jason Zampi, NS’ CFO, said Tuesday at a Wells Fargo investors conference. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="46372146-c5b4-4ec6-b12b-784cbc5611a9"></dynamic-object></div>NS’ Intermodal Service Z-score, as measured by the Journal of Commerce, has hovered near zero, indicating service levels remain close to long-term norms dating back to 2017. The metric compares intermodal train speeds, intermodal trains holding, and loaded intermodal railcars idling for more than 48 hours each week with the railroad’s own historical averages, as reported to the US Surface Transportation Board. Intermodal train speeds have been faster than the long-term average in 12 of the first 22 weeks, while the number of loaded intermodal railcars sitting idle for more than 48 hours was evenly split — 11 weeks above average, 11 below. NS in January introduced a <a href="https://www.joc.com/article/norfolk-southern-launches-appointment-system-at-landers-terminal-5934009">mandatory appointment system</a> at its Landers terminal in Chicago for retrieving ocean containers from terminal stacks. The new system may face its most significant test yet in the coming weeks. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>.</div>

Norfolk Southern Railway (NS) will temporarily increase storage fees on cargo owners who do not retrieve their containers promptly, a measure the railroad says is intended to preserve terminal fluidity amid an expected surge in freight volume. The higher storage fees, a form of demurrage, will apply to ocean containers available for pickup beginning July 7. NS said the storage fees will be rolled back to current levels once port activity slows down. Domestic intermodal loads are not affected. Under the fee structure, ocean containers left more than two days beyond the free-time window will incur daily penalties of $200 per day, double the standard $100 rate. The fee rises to $300 after six days, up from the usual $200. An importer that leaves a container at an NS terminal for seven days beyond the free-time allowance would pay $1,500 per box, compared with $900 under the standard storage scale. The free-time window won’t change. In major terminals, the shipper has the day of notification plus an additional 24 hours to get the container out without penalties. If NS notifies the shipper after 5 p.m. local time, the next calendar day is treated as the start of the free-time period. ‘Well-positioned’ to handle volume surge Meanwhile, NS’ intermodal network has been steady so far this year. The railroad’s intermodal traffic, both international and domestic containers, was up 3.5% through the end of May compared with the first five months of last year, according to data from the Association of American Railroads. “If we have any kind of surge that folks have been talking about, we’re well-positioned to handle it,” Jason Zampi, NS’ CFO, said Tuesday at a Wells Fargo investors conference. NS’ Intermodal Service Z-score, as measured by the Journal of Commerce, has hovered near zero, indicating service levels remain close to long-term norms dating back to 2017. The metric compares intermodal train speeds, intermodal trains holding, and loaded intermodal railcars idling for more than 48 hours each week with the railroad’s own historical averages, as reported to the US Surface Transportation Board. Intermodal train speeds have been faster than the long-term average in 12 of the first 22 weeks, while the number of loaded intermodal railcars sitting idle for more than 48 hours was evenly split — 11 weeks above average, 11 below. NS in January introduced a mandatory appointment system at its Landers terminal in Chicago for retrieving ocean containers from terminal stacks. The new system may face its most significant test yet in the coming weeks. Contact Ari Ashe at ari.ashe@spglobal.com .

North-American rail

Norfolk Southern will raise container storage fees ahead of expected surge

<div class="phx-topic abstract-wrapper">Sea-Intelligence said elevated freight rates are drawing small carriers to the eastbound trade lane, but the additional capacity should dwindle by mid-August. </div>

Sea-Intelligence said elevated freight rates are drawing small carriers to the eastbound trade lane, but the additional capacity should dwindle by mid-August.

<div class="phx-topic">Niche container lines are ramping up weekly capacity in the trans-Pacific at a rate similar to the surge of 2021 and 2022, drawn by the lure of strong ocean freight rates. But that capacity is expected to quickly ebb as rates ease throughout the summer, according to consultancy Sea-Intelligence Maritime Analysis. Sea-Intelligence said Thursday it expects niche ocean carriers to provide 4.6% of the weekly capacity in the trans-Pacific by the end of June. That would top the 4.5% those carriers deployed at the start of September 2021. The draw for the niche carriers is the strength in spot freight rates, Sea-Intelligence said, although those rates have <a href="https://www.joc.com/article/asia-uswc-spot-rates-weakening-as-vessel-overcapacity-takes-hold-6022847">already started to soften amid the broader injection of fresh capacity</a>. The North Asia-to-US West Coast trade lane saw spot ocean freight rates at $5,633 per FEU as of June 11, down 7% on the week, according to Platts, a sister company of the Journal of Commerce within S&amp;P Global. Spot freight rates had risen threefold since bottoming out at $1,600 in late March. “During the height of the pandemic, the [Asia-North America West Coast (NAWC)] trade lane saw a slew of new entrants — carriers which had no previous footprint on Asia-NAWC and were only there to seize an opportunity that had presented itself in the form of unnaturally high freight rates,” Sea-Intelligence Chief Executive Alan Murphy said. Murphy added that capacity “is back at the level” seen during the height of the pandemic. “This means that the current market conditions are such that these new entrants feel that there is an opportunity reminiscent of the global pandemic,” he said. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e8c13a3e-9f5a-412f-8741-adbf5e1a7779"></dynamic-object></div>Some niche carriers have remained in the trans-Pacific since 2022, seeking to offer regularly scheduled liner service instead of ad hoc calls. SeaLead Shipping and T.S. Lines launched <a href="https://www.joc.com/article/two-niche-ocean-carriers-team-up-in-trans-pacific-as-rates-remain-high-5703158">a jointly-operated trans-Pacific service</a> into the Port of Long Beach almost one year ago when freight rates hovered near $6,000 per FEU. Hede Shipping has also regularly offered <a href="https://www.joc.com/article/chinese-niche-carrier-to-launch-shanghai-los-angeles-expedited-service-next-week-5222119">a premium express service</a> to Los Angeles since March 2024. However, Sea-Intelligence sees the current surge in niche carrier capacity ending faster than it did during 2021–22. Sea-Intelligence data shows that weekly niche carriers will account for 3.8% of capacity by the end of July, with that amount dropping to 2.6% by mid-August. The drawdown coincides with expectations that <a href="https://www.joc.com/article/pause-in-tariff-hikes-drives-big-gains-in-trans-pacific-spot-rates-6017111">imports from Asia will peak around late summer</a> as the Trump administration’s 90-day reprieve on Chinese tariffs expires. “If history is anything to go by, we will see these carriers remove capacity as quickly as it was introduced once the market conditions start to normalize,” Murphy said. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

Niche container lines are ramping up weekly capacity in the trans-Pacific at a rate similar to the surge of 2021 and 2022, drawn by the lure of strong ocean freight rates. But that capacity is expected to quickly ebb as rates ease throughout the summer, according to consultancy Sea-Intelligence Maritime Analysis. Sea-Intelligence said Thursday it expects niche ocean carriers to provide 4.6% of the weekly capacity in the trans-Pacific by the end of June. That would top the 4.5% those carriers deployed at the start of September 2021. The draw for the niche carriers is the strength in spot freight rates, Sea-Intelligence said, although those rates have already started to soften amid the broader injection of fresh capacity . The North Asia-to-US West Coast trade lane saw spot ocean freight rates at $5,633 per FEU as of June 11, down 7% on the week, according to Platts, a sister company of the Journal of Commerce within S&P Global. Spot freight rates had risen threefold since bottoming out at $1,600 in late March. “During the height of the pandemic, the [Asia-North America West Coast (NAWC)] trade lane saw a slew of new entrants — carriers which had no previous footprint on Asia-NAWC and were only there to seize an opportunity that had presented itself in the form of unnaturally high freight rates,” Sea-Intelligence Chief Executive Alan Murphy said. Murphy added that capacity “is back at the level” seen during the height of the pandemic. “This means that the current market conditions are such that these new entrants feel that there is an opportunity reminiscent of the global pandemic,” he said. Some niche carriers have remained in the trans-Pacific since 2022, seeking to offer regularly scheduled liner service instead of ad hoc calls. SeaLead Shipping and T.S. Lines launched a jointly-operated trans-Pacific service into the Port of Long Beach almost one year ago when freight rates hovered near $6,000 per FEU. Hede Shipping has also regularly offered a premium express service to Los Angeles since March 2024. However, Sea-Intelligence sees the current surge in niche carrier capacity ending faster than it did during 2021–22. Sea-Intelligence data shows that weekly niche carriers will account for 3.8% of capacity by the end of July, with that amount dropping to 2.6% by mid-August. The drawdown coincides with expectations that imports from Asia will peak around late summer as the Trump administration’s 90-day reprieve on Chinese tariffs expires. “If history is anything to go by, we will see these carriers remove capacity as quickly as it was introduced once the market conditions start to normalize,” Murphy said. Contact Michael Angell at michael.angell@spglobal.com .

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