<div class="phx-topic abstract-wrapper">The Global Port Tracker now projects US imports this month will hit 2.31 million TEUs, up 14% from the same month a year ago; last month’s report expected the year-over-year increase for September to be 6.5%. </div>

The Global Port Tracker now projects US imports this month will hit 2.31 million TEUs, up 14% from the same month a year ago; last month’s report expected the year-over-year increase for September to be 6.5%.

Feature image

<div class="phx-topic">US retailers have significantly upgraded their forecast for US imports in September as shippers look to frontload cargo ahead of a threatened strike on Oct. 1 by dockworkers along the East and Gulf coasts. And while August’s numbers from the Global Port Tracker (GPT) are not yet final, retailers project that US imports last month came in at 2.37 million TEUs, up almost 21% year over year and the highest since the record of 2.4 million TEUs in May 2022. GPT, published by the National Retail Federation (NRF) and Hackett Associates, now projects US imports this month will hit 2.31 million TEUs, up 14% from the same month one year ago. Last month’s GPT expected the year-over-year increase for September to be 6.5%. “Many retailers have brought cargo in early and shifted to alternate ports as a precaution, but it is vital that labor and management at East Coast and Gulf Coast ports actually sit down at the negotiating table and bargain in good faith for a new contract so we can avoid a disruption of any kind when their contract expires,” Jonathan Gold, the NRF’s vice president for Supply Chain and Customs Policy, said in a statement Monday. Ocean carriers and marine terminal <a href="https://www.joc.com/article/port-employers-urge-ila-to-return-to-contract-talks-5723976">operators have called on the International Longshoremen’s Association (ILA) to reopen contract talks</a>, but acknowledged pessimism about avoiding a shutdown on Oct. 1 that would cripple ports along the East and Gulf coasts. The current ILA contract expires Sept. 30. “A strike would be another blow to the supply chain as it continues to face challenges, and to the nation’s economy at a time when inflation is finally coming down and the Fed is poised to lower interest rates,” Gold said. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="57ed83f5-70e1-4b4d-92e1-7697aa830148"></dynamic-object></div>The big upgrade for September’s imports came as fresh data from PIERS, a sister product of the Journal of Commerce within S&amp;P Global, showed that US imports from Asia in August came in at 1.71 million TEUs, down slightly from July but still up 18.5% year over year. West Coast import volumes from Asia were up more than 22.2% through the first eight months of 2024, while volumes into the East Coast grew 9.8% and Gulf imports rose 8.3%. If the GPT forecasts prove correct, it will mean that 2024 will have had seven consecutive months of import levels at or above 2 million TEUs — the longest such stretch since a 19-month period during the height of the pandemic. The projections would bring total US imports for 2024 to just under 25 million TEUs, a 12.3% increase from 2023. While demand has been resilient, <a href="https://www.joc.com/article/carriers-to-deploy-extra-loaders-to-los-angeles-long-beach-amid-import-surge-5714861">new capacity deployments</a> have pulled down spot rates to the West Coast but have since leveled. Comparatively, <a href="https://www.joc.com/article/east-coast-spot-rates-plunge-as-peak-season-imports-shift-to-west-coast-5723993">East Coast spot rates plunged faster than usual on the trade lane.</a>Contact Laura Robb at <a href="mailto:laura.robb@spglobal.com">laura.robb@spglobal.com</a>. </div>

US retailers have significantly upgraded their forecast for US imports in September as shippers look to frontload cargo ahead of a threatened strike on Oct. 1 by dockworkers along the East and Gulf coasts. And while August’s numbers from the Global Port Tracker (GPT) are not yet final, retailers project that US imports last month came in at 2.37 million TEUs, up almost 21% year over year and the highest since the record of 2.4 million TEUs in May 2022. GPT, published by the National Retail Federation (NRF) and Hackett Associates, now projects US imports this month will hit 2.31 million TEUs, up 14% from the same month one year ago. Last month’s GPT expected the year-over-year increase for September to be 6.5%. “Many retailers have brought cargo in early and shifted to alternate ports as a precaution, but it is vital that labor and management at East Coast and Gulf Coast ports actually sit down at the negotiating table and bargain in good faith for a new contract so we can avoid a disruption of any kind when their contract expires,” Jonathan Gold, the NRF’s vice president for Supply Chain and Customs Policy, said in a statement Monday. Ocean carriers and marine terminal operators have called on the International Longshoremen’s Association (ILA) to reopen contract talks , but acknowledged pessimism about avoiding a shutdown on Oct. 1 that would cripple ports along the East and Gulf coasts. The current ILA contract expires Sept. 30. “A strike would be another blow to the supply chain as it continues to face challenges, and to the nation’s economy at a time when inflation is finally coming down and the Fed is poised to lower interest rates,” Gold said. The big upgrade for September’s imports came as fresh data from PIERS, a sister product of the Journal of Commerce within S&P Global, showed that US imports from Asia in August came in at 1.71 million TEUs, down slightly from July but still up 18.5% year over year. West Coast import volumes from Asia were up more than 22.2% through the first eight months of 2024, while volumes into the East Coast grew 9.8% and Gulf imports rose 8.3%. If the GPT forecasts prove correct, it will mean that 2024 will have had seven consecutive months of import levels at or above 2 million TEUs — the longest such stretch since a 19-month period during the height of the pandemic. The projections would bring total US imports for 2024 to just under 25 million TEUs, a 12.3% increase from 2023. While demand has been resilient, new capacity deployments have pulled down spot rates to the West Coast but have since leveled. Comparatively, East Coast spot rates plunged faster than usual on the trade lane. Contact Laura Robb at laura.robb@spglobal.com .

Container Shipping News

Port News

Container lines

Trans-Pacific

Maritime

US retailers give big upgrade to September import forecast amid strike threat

<div class="phx-topic abstract-wrapper">The revised service plan from partners Hapag-Lloyd and Maersk includes scenarios via both the Cape of Good Hope and Suez Canal, with a decision due next month on which option will be chosen when the alliance launches in February.</div>

The revised service plan from partners Hapag-Lloyd and Maersk includes scenarios via both the Cape of Good Hope and Suez Canal, with a decision due next month on which option will be chosen when the alliance launches in February.

<div class="phx-topic">Ports in Asia are among the winners, regaining direct calls on several services, in the Gemini Cooperation’s updated service network released Tuesday that offers shippers alternative routings via the Cape of Good Hope and the Suez Canal. The new network was announced <a href="https://www.joc.com/article/fmc-wont-block-gemini-alliance-but-vows-tight-monitoring-5724939">a day after the US Federal Maritime Commission said the Maersk/Hapag-Lloyd partnership agreement took effect</a> following a lengthy assessment period. The revised Gemini network also came <a href="https://www.joc.com/article/msc-strikes-asia-europe-slot-share-with-former-thea-members-5723585">a day after the new Premier Alliance created by soon-to-be former THE Alliance carriers</a>, plus Mediterranean Shipping Co. as a slot charter partner, announced its February 2025 service schedule. That schedule also gave Suez and southern Africa routings, but focused on direct port-to-port calls instead of Gemini’s hub-and-spoke approach. Gemini said Tuesday it will announce next month whether the Cape of Good Hope or Suez Canal option would be used when the alliance is formally launched next February. The carriers said the alternative Cape of Good Hope network around southern Africa was released “due to the ongoing disruptions in the Red Sea.” The Suez Canal-based network would provide 27 mainline and 30 shuttle services using a combined fleet of 300 ships totaling 3.4 million TEUs on seven east-west trades covering Asia-US, Asia-North Europe, Asia-Mediterranean, Asia-Middle East, Middle East-India, Europe and the trans-Atlantic. By comparison, the Cape of Good Hope network covers the same seven trades but involves 341 ships totaling 3.7 million TEUs deployed on 29 mainline and 30 shuttle services. The extra vessels deployed on the southern Africa routing provide “an indication of the capacity absorption from the Red Sea crisis,” Lars Jensen, CEO of Vespucci Maritime and a Journal of Commerce analyst, said in a LinkedIn post Tuesday. Jensen pointed out the Suez network has eight Asia-Europe services, whereas the Cape of Good Hope only has seven services, while the Suez routing has 10 Pacific services, one more than the Cape network. Hapag-Lloyd CEO Rolf Habben Jansen in August confirmed that tweaks were being made to the Gemini service network for “operational reasons.” <h3>Busan, Vung Tau regain hub status </h3>South Korea’s Busan and Vung Tau in southern Vietnam are the main beneficiaries in the new schedules, having won back hub status after being relegated to largely feeder ports when Gemini released its initial network last January. Busan has been included among the direct calls in revised schedules for six trans-Pacific services on both the Suez Canal and Cape of Good Hope options. Vung Tau has been added to three mainline trans-Pacific services via the Suez Canal, but just two on those operating via the Cape of Good Hope. But even in the new Gemini network, Busan will still lose all its existing mainline calls by Maersk and Hapag-Lloyd on Asia-Europe and Asia-Mediterranean services, instead relying on feeder services to Shanghai and Tanjung Pelepas via Qingdao. Another significant change is that Hong Kong has now been dropped completely from the Gemini network in the revised plan after it was downgraded to a feeder port in the January schedule. Instead, shippers will have to truck or barge cargo independently of the Gemini carriers if they want to connect with their services at Yantian. Hutchison Port Holdings has already anticipated a loss of cargo through Hong Kong’s Kwai Chung container terminals when some of Maersk’s and Hapag-Lloyd’s throughput currently handled in Hong Kong will shift to Yantian after the Gemini partnership starts. ”The clear winner from the announced new networks appears to be the shippers,” Jensen said in his LinkedIn post. “The networks are quite different in their design, hence offering a more diverse range of products to choose from.” But Peter Sand, chief analyst for rate benchmarking platform Xeneta, said carriers are likely more focused on efficiencies. ”While we hope for this to improve the service offerings to customers, we also realize that the carriers are optimizing their networks to operational fleet efficiency more than anything else,” Sand told the Journal of Commerce Tuesday. ”As I have said numerous times, each carrier has to focus on its particular strengths because they can’t service everyone to the extent that shippers require to be treated,” he added. “Even MSC must find partners.” “Reliability, connectivity and sustainability are the keywords in the networks we are presenting today, and we are pleased that we now can give our customers full transparency about how we will deliver a best-in-class ocean network so they can begin planning despite a highly dynamic situation,” Habben Jansen said in a statement announcing the updated network Tuesday. He previously said Hapag-Lloyd and Maersk would start selling space on the Gemini network this month and start taking bookings from December ahead of Gemini’s February launch. Habben Jansen expected the transition of vessels and ships from the Gemini carriers’ existing commitments with THE Alliance and 2M Alliance to take about three months. Maersk CEO Vincent Clerc said Gemini’s schedule reliability target remains unchanged at 90% irrespective of which network is phased in from February. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

Ports in Asia are among the winners, regaining direct calls on several services, in the Gemini Cooperation’s updated service network released Tuesday that offers shippers alternative routings via the Cape of Good Hope and the Suez Canal. The new network was announced a day after the US Federal Maritime Commission said the Maersk/Hapag-Lloyd partnership agreement took effect following a lengthy assessment period. The revised Gemini network also came a day after the new Premier Alliance created by soon-to-be former THE Alliance carriers , plus Mediterranean Shipping Co. as a slot charter partner, announced its February 2025 service schedule. That schedule also gave Suez and southern Africa routings, but focused on direct port-to-port calls instead of Gemini’s hub-and-spoke approach. Gemini said Tuesday it will announce next month whether the Cape of Good Hope or Suez Canal option would be used when the alliance is formally launched next February. The carriers said the alternative Cape of Good Hope network around southern Africa was released “due to the ongoing disruptions in the Red Sea.” The Suez Canal-based network would provide 27 mainline and 30 shuttle services using a combined fleet of 300 ships totaling 3.4 million TEUs on seven east-west trades covering Asia-US, Asia-North Europe, Asia-Mediterranean, Asia-Middle East, Middle East-India, Europe and the trans-Atlantic. By comparison, the Cape of Good Hope network covers the same seven trades but involves 341 ships totaling 3.7 million TEUs deployed on 29 mainline and 30 shuttle services. The extra vessels deployed on the southern Africa routing provide “an indication of the capacity absorption from the Red Sea crisis,” Lars Jensen, CEO of Vespucci Maritime and a Journal of Commerce analyst, said in a LinkedIn post Tuesday. Jensen pointed out the Suez network has eight Asia-Europe services, whereas the Cape of Good Hope only has seven services, while the Suez routing has 10 Pacific services, one more than the Cape network. Hapag-Lloyd CEO Rolf Habben Jansen in August confirmed that tweaks were being made to the Gemini service network for “operational reasons.” Busan, Vung Tau regain hub status South Korea’s Busan and Vung Tau in southern Vietnam are the main beneficiaries in the new schedules, having won back hub status after being relegated to largely feeder ports when Gemini released its initial network last January. Busan has been included among the direct calls in revised schedules for six trans-Pacific services on both the Suez Canal and Cape of Good Hope options. Vung Tau has been added to three mainline trans-Pacific services via the Suez Canal, but just two on those operating via the Cape of Good Hope. But even in the new Gemini network, Busan will still lose all its existing mainline calls by Maersk and Hapag-Lloyd on Asia-Europe and Asia-Mediterranean services, instead relying on feeder services to Shanghai and Tanjung Pelepas via Qingdao. Another significant change is that Hong Kong has now been dropped completely from the Gemini network in the revised plan after it was downgraded to a feeder port in the January schedule. Instead, shippers will have to truck or barge cargo independently of the Gemini carriers if they want to connect with their services at Yantian. Hutchison Port Holdings has already anticipated a loss of cargo through Hong Kong’s Kwai Chung container terminals when some of Maersk’s and Hapag-Lloyd’s throughput currently handled in Hong Kong will shift to Yantian after the Gemini partnership starts. ”The clear winner from the announced new networks appears to be the shippers,” Jensen said in his LinkedIn post. “The networks are quite different in their design, hence offering a more diverse range of products to choose from.” But Peter Sand, chief analyst for rate benchmarking platform Xeneta, said carriers are likely more focused on efficiencies. ”While we hope for this to improve the service offerings to customers, we also realize that the carriers are optimizing their networks to operational fleet efficiency more than anything else,” Sand told the Journal of Commerce Tuesday. ”As I have said numerous times, each carrier has to focus on its particular strengths because they can’t service everyone to the extent that shippers require to be treated,” he added. “Even MSC must find partners.” “Reliability, connectivity and sustainability are the keywords in the networks we are presenting today, and we are pleased that we now can give our customers full transparency about how we will deliver a best-in-class ocean network so they can begin planning despite a highly dynamic situation,” Habben Jansen said in a statement announcing the updated network Tuesday. He previously said Hapag-Lloyd and Maersk would start selling space on the Gemini network this month and start taking bookings from December ahead of Gemini’s February launch. Habben Jansen expected the transition of vessels and ships from the Gemini carriers’ existing commitments with THE Alliance and 2M Alliance to take about three months. Maersk CEO Vincent Clerc said Gemini’s schedule reliability target remains unchanged at 90% irrespective of which network is phased in from February. Contact Keith Wallis at keithwallis@hotmail.com .

Asian ports at the fore in updated Gemini alliance network schedule

<div class="phx-topic abstract-wrapper">The US maritime regulator sees no reason to block the new vessel-sharing alliance run by Maersk and Hapag-Lloyd, but the agency’s head still has concerns about the deal.</div>

The US maritime regulator sees no reason to block the new vessel-sharing alliance run by Maersk and Hapag-Lloyd, but the agency’s head still has concerns about the deal.

<div class="phx-topic">The US Federal Maritime Commission (FMC) has signed off on the Maersk/Hapag-Lloyd vessel-sharing alliance that will start early next year, but the agency’s chief warned the ocean carriers they will be watched for how they treat US shippers. The FMC said Monday it will not seek to block Gemini, <a href="https://www.joc.com/article/maersk-hapag-lloyd-launch-new-gemini-cooperation-partnership-5225857">Maersk and Hapag-Lloyd’s new vessel-sharing agreement for trades between the US, Asia, Europe and the Middle East</a>, allowing the agreement to go into immediate effect after its filing with the FMC. Gemini’s actual services are set to debut in February 2025. The FMC asked the two companies in July to provide extra details about how Gemini would work due to <a href="https://www.joc.com/article/fmc-wants-maersk-hapag-lloyd-to-provide-more-details-on-gemini-alliance-5192298">concerns about the anti-competitive effect of the second- and fifth-largest ocean carriers by capacity pooling their vessels</a>. While it found no anti-competitive issues, the FMC said Gemini “will be subject to extensive commission monitoring.” FMC Chairman Daniel Maffei went further, though, saying in a separate statement Monday that despite the agency’s decision, he still has “questions and concerns” about Gemini’s potential effect on shippers. While the statutory time for Gemini’s review is over, he reiterated the agency’s call about ongoing oversight of the new alliance. “I have questions and concerns about whether the Gemini Cooperation agreement filed with the FMC has, or will, result in anti-competitive consequences that violate the [US] Shipping Act,” Maffei said. “I have joined my colleagues in ordering FMC staff to engage in immediate and ongoing rigorous monitoring of the Gemini Cooperation agreement to ensure that it doesn’t illegally impact US importers, exporters, covered service providers and consumers.” Contact Michael Angell at <a href="michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

The US Federal Maritime Commission (FMC) has signed off on the Maersk/Hapag-Lloyd vessel-sharing alliance that will start early next year, but the agency’s chief warned the ocean carriers they will be watched for how they treat US shippers. The FMC said Monday it will not seek to block Gemini, Maersk and Hapag-Lloyd’s new vessel-sharing agreement for trades between the US, Asia, Europe and the Middle East , allowing the agreement to go into immediate effect after its filing with the FMC. Gemini’s actual services are set to debut in February 2025. The FMC asked the two companies in July to provide extra details about how Gemini would work due to concerns about the anti-competitive effect of the second- and fifth-largest ocean carriers by capacity pooling their vessels . While it found no anti-competitive issues, the FMC said Gemini “will be subject to extensive commission monitoring.” FMC Chairman Daniel Maffei went further, though, saying in a separate statement Monday that despite the agency’s decision, he still has “questions and concerns” about Gemini’s potential effect on shippers. While the statutory time for Gemini’s review is over, he reiterated the agency’s call about ongoing oversight of the new alliance. “I have questions and concerns about whether the Gemini Cooperation agreement filed with the FMC has, or will, result in anti-competitive consequences that violate the [US] Shipping Act,” Maffei said. “I have joined my colleagues in ordering FMC staff to engage in immediate and ongoing rigorous monitoring of the Gemini Cooperation agreement to ensure that it doesn’t illegally impact US importers, exporters, covered service providers and consumers.” Contact Michael Angell at michael.angell@spglobal.com .

Transport, Trade and Regulation News

FMC won’t block Gemini alliance, but vows tight monitoring

<div class="phx-topic abstract-wrapper">Most of the investment will be allocated to expanding the container shipping division that aims to grow to 130 ships in the next five years. </div>

Most of the investment will be allocated to expanding the container shipping division that aims to grow to 130 ships in the next five years.

<div class="phx-topic">HMM will spend $17.5 billion over the next five years — more than half of that investment on new container ships and equipment — as the carrier on Tuesday put a price to the massive mid- to long-term strategic plan <a href="https://www.joc.com/article/hmm-unveils-ambitious-plan-to-double-container-fleet-capacity-by-2030-5241007">announced back in April</a>.The South Korean flagship will spend $9.5 billion on 70 new container ships and container equipment with the “sustainable growth plan” covering its container, bulk and logistics segments with a target of achieving net-zero emissions across operations by 2045. “We remain committed to developing a resilient business portfolio and positioning ourselves as a global leader in eco-friendly shipping for the future,” Kim Kyung Bae, HMM president and CEO, said in a statement. HMM’s newbuilding plan will take the carrier’s fleet to 130 vessels by 2030 that it said would “prepare for the reorganization of global shipping alliances and strengthen the core business’ competitiveness.” “To meet the market’s demand for eco-friendly transportation, HMM aims to acquire around 70 green vessels by 2030 and establish a carbon-neutral ecosystem across all transportation segments by 2045,” the HMM statement said, adding that $1.3 billion of the investment in container shipping will be spent on new equipment. HMM remains a highly profitable carrier, <a href="https://www.joc.com/article/hmm-reports-soaring-profitability-but-warns-of-growing-market-challenges-5703223">with first-half operating profitability up 125% year over year</a> at $770 million as the carrier saw average rate levels up 55% year over year, the highest among the ocean carriers. HMM plans to allocate $3.1 billion to shipping and logistics infrastructure and will extend existing terminals and acquire additional terminals to accommodate the growing capacity. In its 2045 net-zero goal, HMM will spend $750 million on retrofitting ship engines, securing a supply chain for green fuels and improving operational stability and efficiency through digitalization. HMM, currently ranked the world’s eighth-largest container line by capacity, has an in-service fleet totaling 829,426 TEUs, with another 251,427 TEUs on order, according to Sea-web, a sister product of the Journal of Commerce within S&amp;P Global. <a href="https://www.joc.com/article/most-newbuild-capacity-headed-asia-europe-amid-ongoing-diversions_20240715.html">The carrier deployed seven 13,000-TEU ships from Asia to the US West and East coasts in the first half</a> and will bring another five vessels of the same capacity online in the second half. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

HMM will spend $17.5 billion over the next five years — more than half of that investment on new container ships and equipment — as the carrier on Tuesday put a price to the massive mid- to long-term strategic plan announced back in April . The South Korean flagship will spend $9.5 billion on 70 new container ships and container equipment with the “sustainable growth plan” covering its container, bulk and logistics segments with a target of achieving net-zero emissions across operations by 2045. “We remain committed to developing a resilient business portfolio and positioning ourselves as a global leader in eco-friendly shipping for the future,” Kim Kyung Bae, HMM president and CEO, said in a statement. HMM’s newbuilding plan will take the carrier’s fleet to 130 vessels by 2030 that it said would “prepare for the reorganization of global shipping alliances and strengthen the core business’ competitiveness.” “To meet the market’s demand for eco-friendly transportation, HMM aims to acquire around 70 green vessels by 2030 and establish a carbon-neutral ecosystem across all transportation segments by 2045,” the HMM statement said, adding that $1.3 billion of the investment in container shipping will be spent on new equipment. HMM remains a highly profitable carrier, with first-half operating profitability up 125% year over year at $770 million as the carrier saw average rate levels up 55% year over year, the highest among the ocean carriers. HMM plans to allocate $3.1 billion to shipping and logistics infrastructure and will extend existing terminals and acquire additional terminals to accommodate the growing capacity. In its 2045 net-zero goal, HMM will spend $750 million on retrofitting ship engines, securing a supply chain for green fuels and improving operational stability and efficiency through digitalization. HMM, currently ranked the world’s eighth-largest container line by capacity, has an in-service fleet totaling 829,426 TEUs, with another 251,427 TEUs on order, according to Sea-web, a sister product of the Journal of Commerce within S&P Global. The carrier deployed seven 13,000-TEU ships from Asia to the US West and East coasts in the first half and will bring another five vessels of the same capacity online in the second half. Contact Greg Knowler at greg.knowler@spglobal.com .

HMM to spend $17.5 billion on fleet, equipment by 2030

<div class="phx-topic abstract-wrapper">Shipper-paid spot truckload rates out of Southern California rose 6 cents per mile in August from July, despite the national shipper-paid spot rate average falling 6 cents during the same period.</div>

Shipper-paid spot truckload rates out of Southern California rose 6 cents per mile in August from July, despite the national shipper-paid spot rate average falling 6 cents during the same period.

<div class="phx-topic">As cargo from Southern California ports moves further inland, demand for trucks and intermodal rail capacity is surging in the region, driving up prices across all modes of surface transportation. Shipper-paid spot truckload rates out of Southern California rose 6 cents per mile in August from July, despite the national shipper-paid spot rate average falling 6 cents during the same period, according to a Journal of Commerce analysis of data from Cargo Chief, DAT Freight and Analytics, Sunset Transportation, and digital broker Loadsmart. Shippers paid $2.80 per mile, including fuel, on average in August on one-off spot hauls originating in Southern California, according to the Journal of Commerce analysis. This was the first time the spot price out of the region went up between July and August since 2022. Last August, the average shipper paid $2.61 per mile on the same freight lanes. Truckload spot rates typically drop from July to August because the push to sell merchandise between Memorial Day and July 4th is over and goods for Halloween, Thanksgiving, and December holidays don’t ship until after Labor Day. Shippers paid $2.34 per mile on average across the US in August, down from $2.40 in July. <h3>Loads up 20% from year ago </h3>There are several factors that could explain why outbound rates from Southern California climbed while national rates fell, including the inland flow of imports on trains and trucks. “If you look at California outbound, loads are up 20% year over year and rates are up between 8% and 9%, which is extraordinary in this market given the national rates,” said Dean Croke, principal analyst at DAT Freight &amp; Analytics. “I was waiting for this to happen when the import numbers took off in May and ocean capacity tightened. I didn’t think it would take so long to work through the domestic supply chain, but we’re seeing the peak season earlier than normal.” Intermodal demand has also increased in Southern California, prompting private asset-owners such as Hub Group, J.B. Hunt Transport Services, Schneider National, STG Logistics, and Swift Intermodal to assess surcharges on select shippers exceeding the volume in their contracts. Union Pacific Railroad also <a href="https://www.google.com/url?sa=t&amp;rct=j&amp;q=&amp;esrc=s&amp;source=web&amp;cd=&amp;ved=2ahUKEwix_rzY0riIAxURMVkFHZkVKDMQFnoECBIQAQ&amp;url=https%3A%2F%2Fwww.joc.com%2Farticle%2Fup-joins-peers-in-assessing-peak-season-surcharges-for-southern-california-5709819&amp;usg=AOvVaw3JkR6sEKGNZxlJ1uCdeyAY&amp;opi=89978449">instituted a fee</a> of $300 on high-volume shippers and $500 on low-volume shippers who exceed their contractual allotments. Some shippers might find that trucking rates are comparable to or cheaper than intermodal on excess loads subject to the surcharge. Typically, an intermodal shipper saves about $1,500 compared with truckload when shipping from Southern California to the eastern half of the US. However, if the shipper faces a $1,500 rail surcharge, that load may end up traveling by truck instead. Croke said demand and rates may also cool off before the holiday season because capacity on ocean vessels has loosened since May. There are also other factors influencing truck rates in California that have no nexus to port volume or rail, including an <a href="https://www.joc.com/article/california-clean-air-rules-imperil-potential-la-lb-port-relief-valve-5713662">increasing dissatisfaction</a> with operating in the state because of regulations. “There is less long-haul capacity in California, or carriers wanting to come into California, and with even stricter regulations from the Environmental Protection Agency in 2027, it’s becoming too expensive for some of these smaller fleets to keep operating in the state,” Croke said. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>.</div>

As cargo from Southern California ports moves further inland, demand for trucks and intermodal rail capacity is surging in the region, driving up prices across all modes of surface transportation. Shipper-paid spot truckload rates out of Southern California rose 6 cents per mile in August from July, despite the national shipper-paid spot rate average falling 6 cents during the same period, according to a Journal of Commerce analysis of data from Cargo Chief, DAT Freight and Analytics, Sunset Transportation, and digital broker Loadsmart. Shippers paid $2.80 per mile, including fuel, on average in August on one-off spot hauls originating in Southern California, according to the Journal of Commerce analysis. This was the first time the spot price out of the region went up between July and August since 2022. Last August, the average shipper paid $2.61 per mile on the same freight lanes. Truckload spot rates typically drop from July to August because the push to sell merchandise between Memorial Day and July 4th is over and goods for Halloween, Thanksgiving, and December holidays don’t ship until after Labor Day. Shippers paid $2.34 per mile on average across the US in August, down from $2.40 in July. Loads up 20% from year ago There are several factors that could explain why outbound rates from Southern California climbed while national rates fell, including the inland flow of imports on trains and trucks. “If you look at California outbound, loads are up 20% year over year and rates are up between 8% and 9%, which is extraordinary in this market given the national rates,” said Dean Croke, principal analyst at DAT Freight & Analytics. “I was waiting for this to happen when the import numbers took off in May and ocean capacity tightened. I didn’t think it would take so long to work through the domestic supply chain, but we’re seeing the peak season earlier than normal.” Intermodal demand has also increased in Southern California, prompting private asset-owners such as Hub Group, J.B. Hunt Transport Services, Schneider National, STG Logistics, and Swift Intermodal to assess surcharges on select shippers exceeding the volume in their contracts. Union Pacific Railroad also instituted a fee of $300 on high-volume shippers and $500 on low-volume shippers who exceed their contractual allotments. Some shippers might find that trucking rates are comparable to or cheaper than intermodal on excess loads subject to the surcharge. Typically, an intermodal shipper saves about $1,500 compared with truckload when shipping from Southern California to the eastern half of the US. However, if the shipper faces a $1,500 rail surcharge, that load may end up traveling by truck instead. Croke said demand and rates may also cool off before the holiday season because capacity on ocean vessels has loosened since May. There are also other factors influencing truck rates in California that have no nexus to port volume or rail, including an increasing dissatisfaction with operating in the state because of regulations. “There is less long-haul capacity in California, or carriers wanting to come into California, and with even stricter regulations from the Environmental Protection Agency in 2027, it’s becoming too expensive for some of these smaller fleets to keep operating in the state,” Croke said. Contact Ari Ashe at ari.ashe@spglobal.com .

Truckload

Import surge pushing Los Angeles outbound spot truck rates higher

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

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

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

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

Trans-Atlantic

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

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

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

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

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

Intermodal providers

Rails have limited recourse to PNW import surge: analyst

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

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

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

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

Supply chain

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

<div class="phx-topic abstract-wrapper">Chinese online marketplaces have hit on a rich vein of business-to-customer volumes, with the current boom in international air freight driven by cross-border e-commerce rather than a recovery of traditional manufacturing.</div>

Chinese online marketplaces have hit on a rich vein of business-to-customer volumes, with the current boom in international air freight driven by cross-border e-commerce rather than a recovery of traditional manufacturing.

<div class="phx-topic">Barring changes to import duty rules in the US and Europe, e-commerce platforms will keep driving up air cargo volumes while soaking up capacity and pushing up rates for the foreseeable future — even if consumer demand falters. The enormity of sales driven by Chinese retail marketplace platforms such as Temu, Shein, Tmall and Taobao as they connect with an exploding consumer base is creating a new dynamic for an air cargo industry accustomed to seasonal patterns, not a perpetual peak season. In the short term, the entrants are crowding the market, but rising rates and tight space may spur other shippers to consider lower-cost — but slower — transport modes in the long term. “Even with sluggish GDP growth, you see these massive air freight volumes because there’s a new business model that consumers are tapping into,” Niall van de Wouw, chief air freight officer at rate benchmarking platform Xeneta, told the Journal of Commerce.Two of the more visible Chinese cross-border e-commerce marketplaces, Temu and Shein, offer inexpensive products made to order and exclusively use air freight to transport huge numbers of packages to the major markets of the US and Europe. Industry estimates suggest e-commerce accounts for 20% of global air freight volume, with the volume exported from China alone enough to fill 50 to 80 freighter aircraft every day.Van de Wouw said even with economic conditions and inflation slowing consumer spending, it is becoming less relevant how much people were spending on goods as opposed to the way in which they were spending.“If you spend £100 on the high street [downtown], there is a 95% chance the goods you are buying will have come in by ocean,” he said. “But if you spend £80, or 20% less on the online platforms, it might be that 95% of it is by air freight.” A market update by Australia-based consultancy Trade and Transport Group found overall international air cargo tonnage handled at Asia-Pacific airports was up almost 14% from January through July. Most of that growth in volume was in China, which was up 32% year over year in the first seven months of 2024; Hong Kong volume was up 24% in the same period. Other locations in Northeast Asia did not see the same level of growth.“One of the key drivers behind the recent strong performance in global international air cargo has been an increase in cross border e-commerce traffic rather than a recovery in traditional manufacturing-driven supply chain cargo,” the consultancy found.<h3>Regulatory crosshairs center on online platforms</h3>A potential threat to the e-commerce bull run is the growing regulatory scrutiny into business-to-customer (B2C) online platforms, with calls to lower de minimis value thresholds in the US and Europe that allow the platforms to avoid import duties. Other suggestions from regulators include imposing a tax on certain commodities that are purchased online.But even if legislation lowers the de minimis levels, cross-border e-commerce is here to stay and will continue to grow, van de Wouw said.“There are millions of US consumers who are not forced, but voluntarily buy stuff on these platforms,” he said. “The Chinese companies aren’t pushing packages into the US; they are being pulled in by consumers. While a lot of the regulatory focus is on the online platforms avoiding tax, that is a result of their business model, not a founding principle of their business.”Brian Bourke, CCO at SEKO Logistics, said stiffer regulations may cause changes in air cargo, but he agreed that the general growth trend of cross-border e-commerce would continue regardless.“This is all very fluid and all in flux,” Bourke told the Journal of Commerce. “A lot of this demand is driven by the Internet and smartphones and those things aren’t going away. And the rising middle class around the world isn’t going anywhere, either.”While the cross-border e-commerce boom has been highly beneficial for airlines, forwarders have not been able to capitalize on the huge volume out of China that is filling much of the available air freight capacity. For instance, despite being one of the world’s largest global forwarders, Kuehne + Nagel’s e-commerce volume was “in the single digits,” a spokesperson said.Similarly, DSV CEO Jens Lund said in a July 24 earnings call that the forwarder is “not very present” in the e-commerce market, despite the Denmark-based company being among the top five global air freight forwarders by volume.The forwarder involvement comes down to a question of value-add, according to Glyn Hughes, director general of The International Air Cargo Association (Tiaca). Hughes said forwarders have established sophisticated systems to deal with complex border management procedures and compliance to move large volumes, mostly on a business-to-business (B2B) basis.“The e-commerce shipments are mostly general cargo that often falls under di minimis levels, so border management is less of an issue,” he told the Journal of Commerce. “Most e-commerce shipments comprise hundreds, if not thousands, of individual consignments that need some form of final-mile solution. “Considering the low-cost aspect associated with the original online purchase is often guided by the e-platform in the first place, the value-add by a forwarder is limited,” Hughes added.<h3>‘Weaponizing’ supply chains</h3>Lund noted during DSV’s earnings call that “many of these e-commerce companies have a direct relation with some of the carriers because they would produce certain fixed volumes in certain areas.”Bourke described that as Chinese platforms using their large volume of cargo to bypass forwarders and contract directly with airlines, a process he called “weaponizing” their supply chains.“The Chinese marketplaces recognize that companies don’t compete, supply chains compete,” he said. “But there are always opportunities for forwarders — if we don’t have one leg of a supply chain, we might have the other two and we are always there to fill in any gaps.”Bourke noted as an example that many forwarders were focused on serving specialized vertical markets and said that trend would continue, regardless of the volume being generated by e-commerce.“Changing global regulations pose challenges, but whether it’s pharmaceuticals, chemicals, e-commerce, biotechnology or medical devices, all require specific expertise and if it aligns with your company’s strategy, it will make sense,” he said. Marc Meier, managing director for air and sea logistics in Europe, the Middle East and Africa for Germany-based forwarder Dachser, said the Chinese online marketplaces operated their supply chains directly, a strategy that leaves little room for a forwarder.“We do not like it but given the current market conditions we do not really have a choice,” he said. “Regarding European customs and last-mile capabilities, you need to be able to produce [services] with very low costs as these shipments are smaller and lighter than the European average,” Meier added. “For that you need an automated customs process and high-speed sorting facilities. As far as I know, only DHL and Hermes have those capabilities.”Meier did not believe the Temu-Shein model would last, with regulatory changes likely to make it unviable. But he was confident that e-commerce as part of global air freight would continue its growth trajectory and that more sustainable business models would emerge. To snare a greater share of the cross-border market, Dachser is investing in its own asset-free e-commerce solution called Global Sky Express that will offer long-haul transport, customs clearance and optimized last- and first-mile solutions.While forwarders puzzle over how to capture more of the B2C business, any conversation around e-commerce and how long air freight can depend on its volume always comes back to the growing regulatory attention being placed on Chinese imports. The US de minimis value threshold is set at a generous $800, but van de Wouw said even if that level was reduced to $150, most products being ordered online would still fall below the benchmark. “Temu and Shein have tapped into a rich vein of business,” he noted. “They are catering to millions of consumers in the US and Europe and if they don’t supply them, somebody else will step in. Trade follows the path of least resistance, and someone will find a way to link the consumers in Europe and the US to these manufacturers in China.”The only caveat, van de Wouw said, was whether the online platforms would be financially sustainable in the long term, “but there is no visibility on that.”Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com. ">greg.knowler@spglobal.com.</a></div>

Barring changes to import duty rules in the US and Europe, e-commerce platforms will keep driving up air cargo volumes while soaking up capacity and pushing up rates for the foreseeable future — even if consumer demand falters. The enormity of sales driven by Chinese retail marketplace platforms such as Temu, Shein, Tmall and Taobao as they connect with an exploding consumer base is creating a new dynamic for an air cargo industry accustomed to seasonal patterns, not a perpetual peak season. In the short term, the entrants are crowding the market, but rising rates and tight space may spur other shippers to consider lower-cost — but slower — transport modes in the long term. “Even with sluggish GDP growth, you see these massive air freight volumes because there’s a new business model that consumers are tapping into,” Niall van de Wouw, chief air freight officer at rate benchmarking platform Xeneta, told the Journal of Commerce. Two of the more visible Chinese cross-border e-commerce marketplaces, Temu and Shein, offer inexpensive products made to order and exclusively use air freight to transport huge numbers of packages to the major markets of the US and Europe. Industry estimates suggest e-commerce accounts for 20% of global air freight volume, with the volume exported from China alone enough to fill 50 to 80 freighter aircraft every day. Van de Wouw said even with economic conditions and inflation slowing consumer spending, it is becoming less relevant how much people were spending on goods as opposed to the way in which they were spending. “If you spend £100 on the high street [downtown], there is a 95% chance the goods you are buying will have come in by ocean,” he said. “But if you spend £80, or 20% less on the online platforms, it might be that 95% of it is by air freight.” A market update by Australia-based consultancy Trade and Transport Group found overall international air cargo tonnage handled at Asia-Pacific airports was up almost 14% from January through July. Most of that growth in volume was in China, which was up 32% year over year in the first seven months of 2024; Hong Kong volume was up 24% in the same period. Other locations in Northeast Asia did not see the same level of growth. “One of the key drivers behind the recent strong performance in global international air cargo has been an increase in cross border e-commerce traffic rather than a recovery in traditional manufacturing-driven supply chain cargo,” the consultancy found. Regulatory crosshairs center on online platforms A potential threat to the e-commerce bull run is the growing regulatory scrutiny into business-to-customer (B2C) online platforms, with calls to lower de minimis value thresholds in the US and Europe that allow the platforms to avoid import duties. Other suggestions from regulators include imposing a tax on certain commodities that are purchased online. But even if legislation lowers the de minimis levels, cross-border e-commerce is here to stay and will continue to grow, van de Wouw said. “There are millions of US consumers who are not forced, but voluntarily buy stuff on these platforms,” he said. “The Chinese companies aren’t pushing packages into the US; they are being pulled in by consumers. While a lot of the regulatory focus is on the online platforms avoiding tax, that is a result of their business model, not a founding principle of their business.” Brian Bourke, CCO at SEKO Logistics, said stiffer regulations may cause changes in air cargo, but he agreed that the general growth trend of cross-border e-commerce would continue regardless. “This is all very fluid and all in flux,” Bourke told the Journal of Commerce. “A lot of this demand is driven by the Internet and smartphones and those things aren’t going away. And the rising middle class around the world isn’t going anywhere, either.” While the cross-border e-commerce boom has been highly beneficial for airlines, forwarders have not been able to capitalize on the huge volume out of China that is filling much of the available air freight capacity. For instance, despite being one of the world’s largest global forwarders, Kuehne + Nagel’s e-commerce volume was “in the single digits,” a spokesperson said. Similarly, DSV CEO Jens Lund said in a July 24 earnings call that the forwarder is “not very present” in the e-commerce market, despite the Denmark-based company being among the top five global air freight forwarders by volume. The forwarder involvement comes down to a question of value-add, according to Glyn Hughes, director general of The International Air Cargo Association (Tiaca). Hughes said forwarders have established sophisticated systems to deal with complex border management procedures and compliance to move large volumes, mostly on a business-to-business (B2B) basis. “The e-commerce shipments are mostly general cargo that often falls under di minimis levels, so border management is less of an issue,” he told the Journal of Commerce. “Most e-commerce shipments comprise hundreds, if not thousands, of individual consignments that need some form of final-mile solution. “Considering the low-cost aspect associated with the original online purchase is often guided by the e-platform in the first place, the value-add by a forwarder is limited,” Hughes added. ‘Weaponizing’ supply chains Lund noted during DSV’s earnings call that “many of these e-commerce companies have a direct relation with some of the carriers because they would produce certain fixed volumes in certain areas.” Bourke described that as Chinese platforms using their large volume of cargo to bypass forwarders and contract directly with airlines, a process he called “weaponizing” their supply chains. “The Chinese marketplaces recognize that companies don’t compete, supply chains compete,” he said. “But there are always opportunities for forwarders — if we don’t have one leg of a supply chain, we might have the other two and we are always there to fill in any gaps.” Bourke noted as an example that many forwarders were focused on serving specialized vertical markets and said that trend would continue, regardless of the volume being generated by e-commerce. “Changing global regulations pose challenges, but whether it’s pharmaceuticals, chemicals, e-commerce, biotechnology or medical devices, all require specific expertise and if it aligns with your company’s strategy, it will make sense,” he said. Marc Meier, managing director for air and sea logistics in Europe, the Middle East and Africa for Germany-based forwarder Dachser, said the Chinese online marketplaces operated their supply chains directly, a strategy that leaves little room for a forwarder. “We do not like it but given the current market conditions we do not really have a choice,” he said. “Regarding European customs and last-mile capabilities, you need to be able to produce [services] with very low costs as these shipments are smaller and lighter than the European average,” Meier added. “For that you need an automated customs process and high-speed sorting facilities. As far as I know, only DHL and Hermes have those capabilities.” Meier did not believe the Temu-Shein model would last, with regulatory changes likely to make it unviable. But he was confident that e-commerce as part of global air freight would continue its growth trajectory and that more sustainable business models would emerge. To snare a greater share of the cross-border market, Dachser is investing in its own asset-free e-commerce solution called Global Sky Express that will offer long-haul transport, customs clearance and optimized last- and first-mile solutions. While forwarders puzzle over how to capture more of the B2C business, any conversation around e-commerce and how long air freight can depend on its volume always comes back to the growing regulatory attention being placed on Chinese imports. The US de minimis value threshold is set at a generous $800, but van de Wouw said even if that level was reduced to $150, most products being ordered online would still fall below the benchmark. “Temu and Shein have tapped into a rich vein of business,” he noted. “They are catering to millions of consumers in the US and Europe and if they don’t supply them, somebody else will step in. Trade follows the path of least resistance, and someone will find a way to link the consumers in Europe and the US to these manufacturers in China.” The only caveat, van de Wouw said, was whether the online platforms would be financially sustainable in the long term, “but there is no visibility on that.” Contact Greg Knowler at greg.knowler@spglobal.com.

Air Cargo Forwarder News

Air Cargo Carriers News

Air Cargo

Air cargo shrugs off seasonality to ride wave of e-commerce demand

<div class="phx-topic abstract-wrapper">Carriers on Thursday announced general rate increases of $200 to $400 per FEU, although forwarders say the GRIs could deteriorate quickly due to options such as voyage-specific “bullet” rates and lower pricing offered by non-alliance carriers.</div>

Carriers on Thursday announced general rate increases of $200 to $400 per FEU, although forwarders say the GRIs could deteriorate quickly due to options such as voyage-specific “bullet” rates and lower pricing offered by non-alliance carriers.

3688340_FI.jpg

<div class="phx-topic">The degree to which container lines can increase spot rates from Asia to the US in the coming week will determine the strength of the trans-Pacific market for the remainder of the peak shipping season this fall. The frontloading of import cargo for a variety of reasons <a href="https://www.joc.com/article/q2-asian-import-growth-shines-light-frontloading-us-retailers_20240719.html">ushered in an earlier peak season this year</a>, starting in early spring rather than late summer. Injections of new capacity to the US West Coast have helped <a href="https://www.joc.com/article/trans-pac-rate-stall-raises-questions-about-staying-power-h1-volume-surge_20240717.html">push down container spot rates for the last five weeks</a>, according to various pricing indexes. Carriers and non-vessel-operating common carriers (NVOs) said the coming week should determine if carriers have established a floor for spot rates to the West Coast or if the additional capacity drags pricing farther below the high-water mark set in early July. Normally, about 60% of eastbound trans-Pacific volumes move under contract rates and the other 40% under spot rates, according to industry sources. However, when space is tight, as it was this spring, carriers favor higher-paying spot and FAK cargo, so only about 45% of the total volume moves under the lower-paying contract and named-account rates. Carriers and NVOs said Thursday most lines are seeking general rate increases (GRIs) of $200 to $400 per FEU that would go into effect Sept. 1. The current spot rates carriers are quoting to customers are in the range of $7,100 to $7,200 per FEU to the West Coast and $9,800 to $9,900 per FEU to the East Coast, a carrier executive who asked not to be identified told the Journal of Commerce.However, some major carriers are under-cutting the spot rates by offering voyage-specific “bullet” rates of just over $6,000 per FEU from major load ports in China to the West Coast, and smaller lines that entered the trans-Pacific in the past two months are offering similar rates for all sailings, said Kurt McElroy, executive vice president of the NVO Kerry Apex. “We’re trying to make sense of the rates these carriers are filing,” he said. “They’re taking the FAK [freight all kinds] rates up even though they’re posting lower bullet rates that are valid through next week.” After <a href="https://www.joc.com/article/carriers-cutting-back-vessel-space-allotments-nvos-retailers-sources_20240624.html">five straight GRIs beginning on May 1</a>, average Asia-US spot rates peaked at $8,133 per FEU to the West Coast and $10,133 per FEU to the East Coast in the week of July 5, according to Platts, a sister product of the Journal of Commerce within S&amp;P Global. As of Friday, average pricing had slipped to $6,000 per FEU to the West Coast and $9,000 per FEU to the East Coast, according to Platts.<div class="wrapper-full"><dynamic-object type="jocchartid" resource-id="24a15208-df26-4f76-b962-48cb3f7fa718"></dynamic-object></div>Shippers and NVOs have a wider range of rates available to them today than in previous markets, a second carrier executive based in North America said. These options include special bullet and port pair-specific rates offered by the larger alliance member carriers, lower rates offered by the smaller lines that entered the trans-Pacific in recent months and single-voyage “extra-loader” vessels that some carriers have deployed this summer, the carrier executive said. Matson Navigation, for example, deployed an extra-loader vessel on its weekly service from China to Long Beach earlier this summer and plans to launch another. “The second was added in response to continuing solid customer demand for our differentiate service,” a company spokesman told the Journal of Commerce. Matson offers expedited transit and special ground handling of containers at its terminal in Long Beach. Carriers have <a href="https://www.joc.com/article/service-additions-trans-pacific-drive-big-boost-july-deployed-capacity_20240716.html">commenced or re-instated 10 services from Asia to the West Coast</a> so far this year. “This means rates will come down,” said an NVO who asked not to be identified. “We already have offers [from carriers] below $6,000 [per FEU].” Rachel Shames, vice president, pricing and procurement at forwarder CV International, said some lines “are still trying to increase rates for NVOs. If it happens, it may last maybe a day or two.” James Caradonna, executive vice president of the NVO M&amp;R Spedag Group agreed. “It’s tough to see the GRIs sticking for very long,” he said, citing the additional capacity that has come into the trade. <h2>East Coast volumes still strong </h2>Carriers and NVOs say the East Coast GRIs may last for another week or two, but the decline in spot and FAK rates that began in mid-July should accelerate later this month. Generally, import volumes on all-water services to the East Coast peak in August. That’s because the 30-day voyage from Asia to the East Coast plus the additional weeks needed to move holiday merchandise through the inland supply chain to the stores for Black Friday sales require that shipments leave Asia in August. This year, retailers face the <a href="https://www.joc.com/article/nervous-us-shippers-have-few-options-face-port-strike-threat_20240801.html">added risk of a strike by the International Longshoremen’s Association (ILA)</a> when its existing contract with East and Gulf coast employers expires on Sept. 30. Speaking on the carrier’s earnings call Wednesday, Hapag-Lloyd CEO Rolf Habben Jensen <a href="https://www.joc.com/article/ila-strike-possibility-has-risen-recent-months-hapag-lloyd-ceo_20240814.html">warned that the probability of an ILA strike has increased since spring</a>. Caradonna said volumes that will move to the East Coast in the next two weeks “are the strongest we’ve seen,” but the growth should taper off quickly after that because retailers will not risk being caught up in a potential ILA strike. “I’m surprised the East Coast volumes are still staying strong,” the first carrier executive said. “We have only another week before it will be too risky [to ship to the East Coast].” Through July, US imports from Asia have grown 17.8% year over year, with shipments to the East Coast rising 12.8% and West Coast volumes up 22.1% from the first seven months of 2023, according to PIERS, also part of S&amp;P Global. <h2>NVOs feel brunt of GRIs </h2>Spot rate fluctuations and GRIs in the trans-Pacific have the greatest impact on NVOs. That’s because most cargo owners ship a large percentage of their annual volume under the service contracts they negotiate with carriers each spring. The contract rate for midsize shippers in the contracts, most of which took effect on May 1, is <a href="https://www.joc.com/article/importers-try-push-cargo-contract-rates-trans-pac-spot-market-surges_20240606.html">about $1,500 to $1,700 per FEU.</a>Major retailers were better shielded than NVOs and smaller shippers from rising container spot rates when space was especially tight in May and June. However, large and midsize shippers in recent weeks report they have gotten a greater share of their contact allocations as space loosened, especially to the West Coast. Furthermore, larger cargo owners attempt to ship a high percentage of their annual volume under contract. “We purposely don’t contract 100%, so we can have some flexibility to take advantage of opportunistic pricing,” Brian Grass, CFO of Helen of Troy, which sells food preparation, storage and cooking products, said during a July 9 earnings call. “But somewhere near 80% is contracted into the next fiscal year, so we feel good about that and the protection it provides.” Floor &amp; Decor similarly said its dedicated capacity gained through longer contracts has insulated the home furnishings company from the higher spot rates. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>.</div>

The degree to which container lines can increase spot rates from Asia to the US in the coming week will determine the strength of the trans-Pacific market for the remainder of the peak shipping season this fall. The frontloading of import cargo for a variety of reasons ushered in an earlier peak season this year , starting in early spring rather than late summer. Injections of new capacity to the US West Coast have helped push down container spot rates for the last five weeks , according to various pricing indexes. Carriers and non-vessel-operating common carriers (NVOs) said the coming week should determine if carriers have established a floor for spot rates to the West Coast or if the additional capacity drags pricing farther below the high-water mark set in early July. Normally, about 60% of eastbound trans-Pacific volumes move under contract rates and the other 40% under spot rates, according to industry sources. However, when space is tight, as it was this spring, carriers favor higher-paying spot and FAK cargo, so only about 45% of the total volume moves under the lower-paying contract and named-account rates. Carriers and NVOs said Thursday most lines are seeking general rate increases (GRIs) of $200 to $400 per FEU that would go into effect Sept. 1. The current spot rates carriers are quoting to customers are in the range of $7,100 to $7,200 per FEU to the West Coast and $9,800 to $9,900 per FEU to the East Coast, a carrier executive who asked not to be identified told the Journal of Commerce. However, some major carriers are under-cutting the spot rates by offering voyage-specific “bullet” rates of just over $6,000 per FEU from major load ports in China to the West Coast, and smaller lines that entered the trans-Pacific in the past two months are offering similar rates for all sailings, said Kurt McElroy, executive vice president of the NVO Kerry Apex. “We’re trying to make sense of the rates these carriers are filing,” he said. “They’re taking the FAK [freight all kinds] rates up even though they’re posting lower bullet rates that are valid through next week.” After five straight GRIs beginning on May 1 , average Asia-US spot rates peaked at $8,133 per FEU to the West Coast and $10,133 per FEU to the East Coast in the week of July 5, according to Platts, a sister product of the Journal of Commerce within S&P Global. As of Friday, average pricing had slipped to $6,000 per FEU to the West Coast and $9,000 per FEU to the East Coast, according to Platts. Shippers and NVOs have a wider range of rates available to them today than in previous markets, a second carrier executive based in North America said. These options include special bullet and port pair-specific rates offered by the larger alliance member carriers, lower rates offered by the smaller lines that entered the trans-Pacific in recent months and single-voyage “extra-loader” vessels that some carriers have deployed this summer, the carrier executive said. Matson Navigation, for example, deployed an extra-loader vessel on its weekly service from China to Long Beach earlier this summer and plans to launch another. “The second was added in response to continuing solid customer demand for our differentiate service,” a company spokesman told the Journal of Commerce. Matson offers expedited transit and special ground handling of containers at its terminal in Long Beach. Carriers have commenced or re-instated 10 services from Asia to the West Coast so far this year. “This means rates will come down,” said an NVO who asked not to be identified. “We already have offers [from carriers] below $6,000 [per FEU].” Rachel Shames, vice president, pricing and procurement at forwarder CV International, said some lines “are still trying to increase rates for NVOs. If it happens, it may last maybe a day or two.” James Caradonna, executive vice president of the NVO M&R Spedag Group agreed. “It’s tough to see the GRIs sticking for very long,” he said, citing the additional capacity that has come into the trade. East Coast volumes still strong Carriers and NVOs say the East Coast GRIs may last for another week or two, but the decline in spot and FAK rates that began in mid-July should accelerate later this month. Generally, import volumes on all-water services to the East Coast peak in August. That’s because the 30-day voyage from Asia to the East Coast plus the additional weeks needed to move holiday merchandise through the inland supply chain to the stores for Black Friday sales require that shipments leave Asia in August. This year, retailers face the added risk of a strike by the International Longshoremen’s Association (ILA) when its existing contract with East and Gulf coast employers expires on Sept. 30. Speaking on the carrier’s earnings call Wednesday, Hapag-Lloyd CEO Rolf Habben Jensen warned that the probability of an ILA strike has increased since spring . Caradonna said volumes that will move to the East Coast in the next two weeks “are the strongest we’ve seen,” but the growth should taper off quickly after that because retailers will not risk being caught up in a potential ILA strike. “I’m surprised the East Coast volumes are still staying strong,” the first carrier executive said. “We have only another week before it will be too risky [to ship to the East Coast].” Through July, US imports from Asia have grown 17.8% year over year, with shipments to the East Coast rising 12.8% and West Coast volumes up 22.1% from the first seven months of 2023, according to PIERS, also part of S&P Global. NVOs feel brunt of GRIs Spot rate fluctuations and GRIs in the trans-Pacific have the greatest impact on NVOs. That’s because most cargo owners ship a large percentage of their annual volume under the service contracts they negotiate with carriers each spring. The contract rate for midsize shippers in the contracts, most of which took effect on May 1, is about $1,500 to $1,700 per FEU. Major retailers were better shielded than NVOs and smaller shippers from rising container spot rates when space was especially tight in May and June. However, large and midsize shippers in recent weeks report they have gotten a greater share of their contact allocations as space loosened, especially to the West Coast. Furthermore, larger cargo owners attempt to ship a high percentage of their annual volume under contract. “We purposely don’t contract 100%, so we can have some flexibility to take advantage of opportunistic pricing,” Brian Grass, CFO of Helen of Troy, which sells food preparation, storage and cooking products, said during a July 9 earnings call. “But somewhere near 80% is contracted into the next fiscal year, so we feel good about that and the protection it provides.” Floor & Decor similarly said its dedicated capacity gained through longer contracts has insulated the home furnishings company from the higher spot rates. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .

Trans-Pacific rate push tests health of early peak season

<div class="phx-topic abstract-wrapper">After making significant investments in developing its methanol pathway over the past few years, and just a week after making a huge order for LNG-capable ships, the carrier is now looking into the feasibility of using nuclear energy in its vessels.</div>

After making significant investments in developing its methanol pathway over the past few years, and just a week after making a huge order for LNG-capable ships, the carrier is now looking into the feasibility of using nuclear energy in its vessels.

3688335_FI.jpg

<div class="phx-topic">Maersk has joined a regulatory study into the potential for nuclear-powered container ships to operate feeder services in Europe, adding yet another low-to-zero emissions technology to its growing list of possible fuels of the future. Classification society Lloyd’s Register and nuclear power solutions provider Core Power have launched a joint study into the updated safety rules and improved operational and regulatory understanding needed for the application of nuclear power in container shipping. Maersk has agreed to be part of the study. “Nuclear power holds a number of challenges related to ... safety, waste management and regulatory acceptance across regions, and so far, the downsides have clearly outweighed the benefits of the technology,” Ole Graa Jakobsen, head of fleet technology at A.P. Moller-Maersk, said Thursday in a joint statement with Lloyd’s Register and Core Power. “If these challenges can be addressed by development of the new so-called fourth-generation reactor designs, nuclear power could potentially mature into another possible decarbonization pathway for the logistics industry 10 to 15 years in the future,” he added. The potential addition of nuclear power to its decarbonization plans is another deviation from the carrier’s deep dive into methanol over the past few years. <div class="wrapper-full"><dynamic-object type="jocchartid" resource-id="56e4274d-b573-4f74-b8a2-79841b2287ff"></dynamic-object></div>Maersk has invested heavily in methanol-fuelled ships with 22 methanol-enabled vessels on the order book following the delivery of the 16,000-TEU Ane Maersk and 2,100-TEU Laura Maersk. <a href="https://www.joc.com/article/maersk-signs-pact-develop-methanol-bunkering-japans-yokohama-port_20231228.html">Supply for its methanol fleet</a> has also been locked in with a series of deals with producers in key European and Asian locations. Then last week Maersk made the surprising announcement that it was placing <a href="https://www.joc.com/article/maersks-lng-order-hedges-bet-green-fuel-technology-ceo_20240808.html">an 800,000 TEU order for dual-fuel vessels</a> capable of running on conventional bunkers and liquefied natural gas (LNG) if required, and on bio-LNG, a cleaner version of the fuel. Three years ago, <a href="https://www.joc.com/article/maersk-slashes-decade-net-zero-emissions-target_20220112.html">Maersk ruled out using LNG as a transitional fuel</a> with the carrier’s head of decarbonization, Morten Bo Christiansen, telling the Journal of Commerce that LNG was a fossil fuel. “LNG emits less CO2, but on the ship it emits methane, [which] is a worse greenhouse gas [than that emitted by traditional maritime fuel oil], and in the production of LNG there is methane slip, so if we look at the lifecycle impact of LNG it is not a solution,” he said in January 2022. However, when Maersk CEO Vincent Clerc was asked <a href="https://www.joc.com/article/lag-higher-contract-rates-drive-second-half-profitability-maersk-cfo_20240807.html">during an interim earnings call with analysts</a> last week about the LNG ship orders, he said it was “to hedge some of the bets we are making on technology.” <h2>‘No net-zero without nuclear’ </h2>Mikal Bøe, CEO of Core Power, said nuclear power had vast potential to transform the maritime sector, but it was crucial to establish the standards framework for commercial insurability of floating nuclear power plants and nuclear-powered ships that would operate in nearshore environments, ports and waterways. “There’s no net-zero without nuclear,” was his blunt assessment of the alternative fuels being explored by the shipping industry. Lloyd’s Register’s Fuel for Thought: Nuclear report released in July highlighted the challenges of regulation and safety considerations that must be addressed before any widespread commercial adoption of nuclear energy as a source of maritime fuel could proceed. “Nuclear propulsion has been used for seven decades by navies and a few state-owned cargo ships and icebreakers, with an unparalleled safety record,” the report noted. “Commercial use has yet to be realized, but advanced nuclear technology is being developed that will be suitable for safe deployment on a new generation of large, efficient cargo ships that can sail at higher speeds with zero emissions.” The report found that nuclear power has the potential to enable emissions-free shipping while extending the life cycle of vessels and removing the uncertainty of fuel and refueling infrastructure development. Lloyd’s Register described the development of small modular reactors as “a step change” for nuclear applications in shipping. “The scale of the challenge presented by <a href="https://www.joc.com/article/revised-imo-emissions-targets-set-clear-timeline-shipping-groups_20230707.html">the revision of the Greenhouse Gas [GHG] strategy</a> by the International Maritime Organization [IMO] has put nuclear firmly on the agenda,” the Lloyd’s Register study noted. Contact Greg Knowler at <a href="mailto:greg.knowler@ihsmarkit.com">greg.knowler@spglobal.com</a>. </div>

Maersk has joined a regulatory study into the potential for nuclear-powered container ships to operate feeder services in Europe, adding yet another low-to-zero emissions technology to its growing list of possible fuels of the future. Classification society Lloyd’s Register and nuclear power solutions provider Core Power have launched a joint study into the updated safety rules and improved operational and regulatory understanding needed for the application of nuclear power in container shipping. Maersk has agreed to be part of the study. “Nuclear power holds a number of challenges related to ... safety, waste management and regulatory acceptance across regions, and so far, the downsides have clearly outweighed the benefits of the technology,” Ole Graa Jakobsen, head of fleet technology at A.P. Moller-Maersk, said Thursday in a joint statement with Lloyd’s Register and Core Power. “If these challenges can be addressed by development of the new so-called fourth-generation reactor designs, nuclear power could potentially mature into another possible decarbonization pathway for the logistics industry 10 to 15 years in the future,” he added. The potential addition of nuclear power to its decarbonization plans is another deviation from the carrier’s deep dive into methanol over the past few years. Maersk has invested heavily in methanol-fuelled ships with 22 methanol-enabled vessels on the order book following the delivery of the 16,000-TEU Ane Maersk and 2,100-TEU Laura Maersk. Supply for its methanol fleet has also been locked in with a series of deals with producers in key European and Asian locations. Then last week Maersk made the surprising announcement that it was placing an 800,000 TEU order for dual-fuel vessels capable of running on conventional bunkers and liquefied natural gas (LNG) if required, and on bio-LNG, a cleaner version of the fuel. Three years ago, Maersk ruled out using LNG as a transitional fuel with the carrier’s head of decarbonization, Morten Bo Christiansen, telling the Journal of Commerce that LNG was a fossil fuel. “LNG emits less CO2, but on the ship it emits methane, [which] is a worse greenhouse gas [than that emitted by traditional maritime fuel oil], and in the production of LNG there is methane slip, so if we look at the lifecycle impact of LNG it is not a solution,” he said in January 2022. However, when Maersk CEO Vincent Clerc was asked during an interim earnings call with analysts last week about the LNG ship orders, he said it was “to hedge some of the bets we are making on technology.” ‘No net-zero without nuclear’ Mikal Bøe, CEO of Core Power, said nuclear power had vast potential to transform the maritime sector, but it was crucial to establish the standards framework for commercial insurability of floating nuclear power plants and nuclear-powered ships that would operate in nearshore environments, ports and waterways. “There’s no net-zero without nuclear,” was his blunt assessment of the alternative fuels being explored by the shipping industry. Lloyd’s Register’s Fuel for Thought: Nuclear report released in July highlighted the challenges of regulation and safety considerations that must be addressed before any widespread commercial adoption of nuclear energy as a source of maritime fuel could proceed. “Nuclear propulsion has been used for seven decades by navies and a few state-owned cargo ships and icebreakers, with an unparalleled safety record,” the report noted. “Commercial use has yet to be realized, but advanced nuclear technology is being developed that will be suitable for safe deployment on a new generation of large, efficient cargo ships that can sail at higher speeds with zero emissions.” The report found that nuclear power has the potential to enable emissions-free shipping while extending the life cycle of vessels and removing the uncertainty of fuel and refueling infrastructure development. Lloyd’s Register described the development of small modular reactors as “a step change” for nuclear applications in shipping. “The scale of the challenge presented by the revision of the Greenhouse Gas [GHG] strategy by the International Maritime Organization [IMO] has put nuclear firmly on the agenda,” the Lloyd’s Register study noted. Contact Greg Knowler at greg.knowler@spglobal.com .

Maersk adds nuclear power to its growing list of new fuel potentials

Notes: Drewry's Multipurpose Time Charter Index is based on time charter rates received from brokers, weighted across three vessel size segments: 5,000-7,500 dwt, 10,000-15,000 dwt, and 15,000-20,000 dwt.

Index

{name}: 
{dateX.formatDate('MMM, yyyy')}: ${valueY} 
Y-o-Y: {year_over_year_change.formatNumber('#.0%')}

Forecast

Forecast: 
{dateX.formatDate('MMM, yyyy')}: ${index_forecast_next_month_two.formatNumber('###,###')}

The Drewry Multipurpose Time Charter Index tracks one-year period charter rates across a basket of vessel types and sizes and forecasts the market movement over the coming month. The vessel types include breakbulk and project cargo ships. [Drewry](https://drewry.co.uk)

Multipurpose time charter index and forecast (Drewry)

Multipurpose Time Charter Index MPV (Drewry) Gateway

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

Subscribe Now - Free Trials - Wide Box

SUBSCRIBE AND SAVE

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

Upgrade Subscription - Wide Box

Save 20% on TPM25

Access Journal of Commerce content for 30 days.

Free Trial - Wide Box

Start a Free Trial Today

Subscribe Now - Anonymous - Wide Box

SUBSCRIBE TODAY

Arm your team with the most trusted information portal for the international container shipping industry.

Group Subscriptions - Wide Box

Get into a group subscription today

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

SMC3rates_shutterstock_5247046.jpg

Shippers save money, time with automated transportation bidding tools

SAVE 20% ON TPM25
Upgrade to Gold today for just $795
Use code GUW795 at checkout
Valid for first year of subscription

Upgrade Subscription - Offer Box

Upgrade Subscription

SUBSCRIBE TODAY
Choose a plan that works best for you!

Subscribe Now - Anonymous - Offer Box

Subscribe Today

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


Subscribe Now - Free Trials - Offer Box

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

Free Trial - Offer Box

Free Trial

GET INTO A GROUP SUBSCRIPTION
Arm your team with unlimited Journal of Commerce content

Group Subscriptions - Offer Box

Group Subscriptions

A must-attend conference for shippers & logistics providers moving goods inland

Inland Conference - Rectangle Box

Attend Inland24

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

TPM Conference - Rectangle Box

Attend TPM25

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

Gateway - Rectangle Box - Anonymous & Trial

Gateway

A premium access outlook critical to shippers and transportation providers

QI Report - Rectangle Box - Non-Gold

Quarterly Intelligence

QI Report - Rectangle Box - Gold

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

ISI Report - Rectangle Box - Non-Gold

Intermodal Savings Index

ISI Report - Rectangle Box - Gold

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

Breakbulk Report - Rectangle Box - Non-Gold

Breakbulk Quarterly

Breakbulk Report - Rectangle Box - Gold

Customers scoring their intermodal partners to identify the best service providers

Intermodal Service Scorecard - Rectangle Box - Non-Gold

Intermodal Service Scorecard

Intermodal Service Scorecard - Rectangle Box - Gold

Gateway - Rectangle Box - Subscribers

<div class="phx-topic abstract-wrapper">The International Longshoremen’s Association is starting to coordinate local labor actions as its executive leaders note the ongoing “impasse” in talks with maritime employers. </div>

The International Longshoremen’s Association is starting to coordinate local labor actions as its executive leaders note the ongoing “impasse” in talks with maritime employers.

<div class="phx-topic">Teaneck, NJ — The International Longshoremen’s Association (ILA) on Thursday appointed local vice presidents to head committees that will coordinate labor actions at East and Gulf coast ports if a new contract isn’t reached by the end of the month. Union leadership the day prior warned the ILA and its employers are “very, very far apart” on “economic” terms, namely wages, as well as automation. The 13 committees are part of a strike mobilization plan outlined during a two-day meeting in Teaneck, NJ, where local union officials threw their support behind the union’s executive leadership negotiating stance against maritime employers, represented by the United States Maritime Alliance (USMX). In a video message posted on YouTube Wednesday, ILA Executive Vice President Dennis Daggett said the union and employers are “at an impasse.” As of Thursday, no bargaining talks have been scheduled between the ILA and USMX, according to sources familiar with the negotiations. “We can’t even get past the economics of a new contract,” Dennis Daggett said. “We are very, very far apart. Our members showed the world just how valuable our work is during the pandemic, and the carriers and terminals came out of that time with record profits, and they don’t want to share that with our members.” Wages are a key sticking point in the current contract talks. The ILA is reportedly looking for <a href="https://www.joc.com/article/ila-unmoved-by-latest-industry-leading-wage-offer-from-usmx-5703227">a 78% increase in its top wage rate</a>, or a $5 per hour increase each year over the contract’s six-year term. The USMX, which represents terminal operators and ocean carriers in ILA contract negotiations, is said to be offering an increase of about half of that, approximately 40%. During the previous two agreements, the ILA secured a $1 per hour wage increase each year. “Sisters and brothers, it will be monumental if we are without a new master contract to replace the current one that expires in three weeks and four days,” ILA President Harold Daggett said in prepared remarks to the meeting. “We must be prepared if we have to hit the streets on Tuesday, Oct. 1, 2024.” <h2>Automation still a sticking point </h2>Aside from wages, Dennis Daggett said other contract terms have also not been settled. He said the union also wants stronger contract language that protects union jobs against semi-automation and automation at marine terminals. The ILA has accused <a href="https://www.joc.com/article/ila-halts-talks-over-new-contract-until-maersk-apm-clarify-port-it-projects-5244243">Maersk’s APM Terminals subsidiary of violating the current master contract</a> by implementing automation technology at its Port of Mobile facility. “We have protections against full- and semi-automation in the current contract,” Daggett said. “But we want to tighten up those protections because we have found out that terminal operators are sliding in certain automation that we believe is a violation of the current contract.” The ILA may also be looking to further its work jurisdiction outside of ports. Dennis Daggett said the union and maritime employers differ on what work ILA members can perform once a container leaves a marine terminal, adding that a wider work jurisdiction is critical to maintaining and growing longshore jobs. “There’s a right of control issue here because carriers and terminal operators believe they relinquish all responsibility once a container is out of the terminal,” he said. “We don’t believe that’s the case. If we don’t resolve that issue, it doesn’t matter if we have a $100-per-hour raise, we won’t have jobs in the future.” Contact Michael Angell at <a href="michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

Teaneck, NJ — The International Longshoremen’s Association (ILA) on Thursday appointed local vice presidents to head committees that will coordinate labor actions at East and Gulf coast ports if a new contract isn’t reached by the end of the month. Union leadership the day prior warned the ILA and its employers are “very, very far apart” on “economic” terms, namely wages, as well as automation. The 13 committees are part of a strike mobilization plan outlined during a two-day meeting in Teaneck, NJ, where local union officials threw their support behind the union’s executive leadership negotiating stance against maritime employers, represented by the United States Maritime Alliance (USMX). In a video message posted on YouTube Wednesday, ILA Executive Vice President Dennis Daggett said the union and employers are “at an impasse.” As of Thursday, no bargaining talks have been scheduled between the ILA and USMX, according to sources familiar with the negotiations. “We can’t even get past the economics of a new contract,” Dennis Daggett said. “We are very, very far apart. Our members showed the world just how valuable our work is during the pandemic, and the carriers and terminals came out of that time with record profits, and they don’t want to share that with our members.” Wages are a key sticking point in the current contract talks. The ILA is reportedly looking for a 78% increase in its top wage rate , or a $5 per hour increase each year over the contract’s six-year term. The USMX, which represents terminal operators and ocean carriers in ILA contract negotiations, is said to be offering an increase of about half of that, approximately 40%. During the previous two agreements, the ILA secured a $1 per hour wage increase each year. “Sisters and brothers, it will be monumental if we are without a new master contract to replace the current one that expires in three weeks and four days,” ILA President Harold Daggett said in prepared remarks to the meeting. “We must be prepared if we have to hit the streets on Tuesday, Oct. 1, 2024.” Automation still a sticking point Aside from wages, Dennis Daggett said other contract terms have also not been settled. He said the union also wants stronger contract language that protects union jobs against semi-automation and automation at marine terminals. The ILA has accused Maersk’s APM Terminals subsidiary of violating the current master contract by implementing automation technology at its Port of Mobile facility. “We have protections against full- and semi-automation in the current contract,” Daggett said. “But we want to tighten up those protections because we have found out that terminal operators are sliding in certain automation that we believe is a violation of the current contract.” The ILA may also be looking to further its work jurisdiction outside of ports. Dennis Daggett said the union and maritime employers differ on what work ILA members can perform once a container leaves a marine terminal, adding that a wider work jurisdiction is critical to maintaining and growing longshore jobs. “There’s a right of control issue here because carriers and terminal operators believe they relinquish all responsibility once a container is out of the terminal,” he said. “We don’t believe that’s the case. If we don’t resolve that issue, it doesn’t matter if we have a $100-per-hour raise, we won’t have jobs in the future.” Contact Michael Angell at michael.angell@spglobal.com .

Marine terminals

Longshore labor

North American ports

ILA locals prepping for coordinated strike at US East, Gulf coast ports

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

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

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

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

Forwarding

Trans-Atlantic shippers test contingency plans as ILA strike threat grows

<div class="phx-topic abstract-wrapper">Despite sources telling the Journal of Commerce that management has reached out more than 10 times since June seeking new talks, none have been scheduled and there now appears to be little motivation on the part of management or labor to secure a deal to avert a strike.</div>

Despite sources telling the Journal of Commerce that management has reached out more than 10 times since June seeking new talks, none have been scheduled and there now appears to be little motivation on the part of management or labor to secure a deal to avert a strike.

<div class="phx-topic">Less than a month before dockworkers on the US East and Gulf coasts could walk off the job if a new contract is not agreed to by Sept. 30 at midnight, a sense of dread has descended on the industry — and for good reason. Despite sources telling the Journal of Commerce that the management group United States Maritime Alliance (USMX) has reached out more than 10 times seeking new talks since June when the International Longshoremen’s Association (ILA) suspended negotiations over a <a href="https://www.joc.com/article/ila-halts-talks-over-new-contract-until-maersk-apm-clarify-port-it-projects-5244243">local dispute in Mobile</a>, no new talks have been scheduled and there appears to be little motivation on the part of management or labor to secure a deal to avert a strike. The ILA contends that employers weren’t prepared for negotiations when both sides met more than a year-and-a-half ago and admitted as much. Employers “are still not prepared to acknowledge the record profits their member companies publicly report,” said ILA spokesman James McNamara. Calling the scenario a “brewing storm,” the Retail Industry Leaders Association <a href="https://www.rila.org/blog/2024/09/looming-port-strike-what-means-us-economy">said this week</a>, “The importance of keeping these ports operational cannot be overstated, especially as the peak holiday season approaches.” The comment underscores the point that while some <a href="https://www.joc.com/article/trans-atlantic-shippers-test-contingency-plans-as-ila-strike-threat-grows-5721629">shippers have diverted cargo to alternative gateways</a> to avoid the possibility of a strike, there are still large volumes of cargo unable to be diverted away from East and Gulf coasts that would be impacted. If there is one point management and labor agree on, it is the two sides <a href="https://www.joc.com/article/ila-locals-prepping-for-coordinated-strike-at-us-east-gulf-coast-ports-5721164">being “very, very far apart” on wages</a>, the core issue in this negotiating round. There is no serious discussion on port automation, for example, with management largely accepting that meaningful progress on automation is not in the cards in container-handling ports from Maine to Texas under the current union leadership. Management’s current offer of a nearly 32% pay increase over six years contrasts with the union’s current demand for a 78% increase based on its view that it deserves a share of carriers’ historic profits earned during the pandemic. Yet with no talks scheduled and no outside mediation occurring — yet — the clock is ticking ever more loudly toward Oct. 1, when, in the absence of an agreement, 60% of US container volume representing $588 billion in annualized trade value would come to a screeching halt. “Our members showed the world just how valuable our work is during the pandemic, and the carriers and terminals came out of that time with record profits, and they don’t want to share that with our members,” ILA Executive Vice President Dennis Daggett said in a video message <a href="https://www.youtube.com/results?search_query=dennis+daggett&amp;sp=EgIIAw%253D%253D">posted on YouTube Wednesday.</a>Ocean carrier officials told the Journal of Commerce this week they do not want to see a work stoppage, given the adverse impact it would have on customers, their own operations and the economy. Yet in contrast to many prior longshore labor negotiating rounds over the past 25 years, when carriers typically capitulated at the bargaining table in the interest of keeping cargo flowing, the USMX appears unwilling, at least thus far, to give in to union demands in order to avoid serious disruption. <h3>Focus shifts to Washington </h3>In the background for carriers, although not front and center, is a resignation that can be summed up as “what will be, will be.” Carrier head offices have learned since COVID-19 that they make real money not when cargo is flowing smoothly, but rather when it slows or stops. They were on the receiving end of sharp political attacks during COVID-19 from President Joe Biden himself, while Congress in 2022 <a href="https://www.joc.com/article/biden-signs-osra-22-shipping-reform-into-law-5194881">passed the first significant shipping legislation since 1998</a> over carrier objections, in contrast to the consensus between shippers and carriers that was the basis of earlier legislation going back decades. With no negotiations scheduled and the two sides remaining far apart on terms, the focus will begin shifting to Washington in the coming weeks. Multiple federal agencies are well aware of the state of play and the political implications of a serious economic event just weeks before a high stakes presidential election. Daggett has made it clear he wants no part of Biden administration intervention, seeing its involvement in West Coast negotiations in 2023 as resulting in a lower pay increase — 32% over six years — than dockworkers deserved or were capable of achieving. Although no clear signal has emerged about how Washington will approach the issue, sources tell the Journal of Commerce it will be a priority for the administration to seek a resolution. But that will not happen by way of Biden invoking the Taft-Hartley Act, which allows him to force workers back on the job, as that would be perceived as an anti-labor act that could alienate the crucial labor vote on Nov. 5. Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>. </div>

Less than a month before dockworkers on the US East and Gulf coasts could walk off the job if a new contract is not agreed to by Sept. 30 at midnight, a sense of dread has descended on the industry — and for good reason. Despite sources telling the Journal of Commerce that the management group United States Maritime Alliance (USMX) has reached out more than 10 times seeking new talks since June when the International Longshoremen’s Association (ILA) suspended negotiations over a local dispute in Mobile , no new talks have been scheduled and there appears to be little motivation on the part of management or labor to secure a deal to avert a strike. The ILA contends that employers weren’t prepared for negotiations when both sides met more than a year-and-a-half ago and admitted as much. Employers “are still not prepared to acknowledge the record profits their member companies publicly report,” said ILA spokesman James McNamara. Calling the scenario a “brewing storm,” the Retail Industry Leaders Association said this week , “The importance of keeping these ports operational cannot be overstated, especially as the peak holiday season approaches.” The comment underscores the point that while some shippers have diverted cargo to alternative gateways to avoid the possibility of a strike, there are still large volumes of cargo unable to be diverted away from East and Gulf coasts that would be impacted. If there is one point management and labor agree on, it is the two sides being “very, very far apart” on wages , the core issue in this negotiating round. There is no serious discussion on port automation, for example, with management largely accepting that meaningful progress on automation is not in the cards in container-handling ports from Maine to Texas under the current union leadership. Management’s current offer of a nearly 32% pay increase over six years contrasts with the union’s current demand for a 78% increase based on its view that it deserves a share of carriers’ historic profits earned during the pandemic. Yet with no talks scheduled and no outside mediation occurring — yet — the clock is ticking ever more loudly toward Oct. 1, when, in the absence of an agreement, 60% of US container volume representing $588 billion in annualized trade value would come to a screeching halt. “Our members showed the world just how valuable our work is during the pandemic, and the carriers and terminals came out of that time with record profits, and they don’t want to share that with our members,” ILA Executive Vice President Dennis Daggett said in a video message posted on YouTube Wednesday. Ocean carrier officials told the Journal of Commerce this week they do not want to see a work stoppage, given the adverse impact it would have on customers, their own operations and the economy. Yet in contrast to many prior longshore labor negotiating rounds over the past 25 years, when carriers typically capitulated at the bargaining table in the interest of keeping cargo flowing, the USMX appears unwilling, at least thus far, to give in to union demands in order to avoid serious disruption. Focus shifts to Washington In the background for carriers, although not front and center, is a resignation that can be summed up as “what will be, will be.” Carrier head offices have learned since COVID-19 that they make real money not when cargo is flowing smoothly, but rather when it slows or stops. They were on the receiving end of sharp political attacks during COVID-19 from President Joe Biden himself, while Congress in 2022 passed the first significant shipping legislation since 1998 over carrier objections, in contrast to the consensus between shippers and carriers that was the basis of earlier legislation going back decades. With no negotiations scheduled and the two sides remaining far apart on terms, the focus will begin shifting to Washington in the coming weeks. Multiple federal agencies are well aware of the state of play and the political implications of a serious economic event just weeks before a high stakes presidential election. Daggett has made it clear he wants no part of Biden administration intervention, seeing its involvement in West Coast negotiations in 2023 as resulting in a lower pay increase — 32% over six years — than dockworkers deserved or were capable of achieving. Although no clear signal has emerged about how Washington will approach the issue, sources tell the Journal of Commerce it will be a priority for the administration to seek a resolution. But that will not happen by way of Biden invoking the Taft-Hartley Act, which allows him to force workers back on the job, as that would be perceived as an anti-labor act that could alienate the crucial labor vote on Nov. 5. Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

Little cause for optimism as clock ticks toward ILA contract expiration

<div class="phx-topic abstract-wrapper">The possible sale of DHL Freight’s US regional LTL arm to Jack Cooper would be the latest in a series of acquisitions aimed at building larger LTL networks. </div>

The possible sale of DHL Freight’s US regional LTL arm to Jack Cooper would be the latest in a series of acquisitions aimed at building larger LTL networks.

<div class="phx-topic">After trying twice to buy properties from bankrupt Yellow, Jack Cooper Investments may have finally found a route into the less-than-truckload (LTL) sector. The owner of unionized auto hauler Jack Cooper Transport is in talks to buy Standard Forwarding, a unionized midwestern regional LTL carrier owned by DHL Freight, a unit of Deutsche Post DHL. Standard had about $98 million in revenue in 2023 and is 36th in the Journal of Commerce / SJ Consulting Group rankings of the largest US and Canadian LTL trucking companies. Its employees are members of the International Brotherhood of Teamsters, as are the workers at Jack Cooper Transport. “Jack Cooper is always looking to expand services for customers and they’re always in the market to save Teamsters jobs,” a spokesperson for Jack Cooper Investments told the Journal of Commerce Tuesday. “It is very early in the process of these discussions,” the spokesperson said. The potential acquisition is the latest sign of consolidation among smaller to midsized carriers within an LTL sector that is healthier than the larger truckload market. Both <a href="https://www.joc.com/article/us-ltl-sector-growth-efficiencies-still-fueled-by-loss-of-yellow-5715785">profits and pricing</a> in general are higher year over year for LTL carriers. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="7ba72aea-0475-49be-84b7-64f238502e7e"></dynamic-object></div>“You’re going to see more small carriers being acquired,” Satish Jindel, president of transportation research firm SJ Consulting Group told the Journal of Commerce. “Smaller carriers are going to need investment to help upgrade their technology.” In the past month, Knight Swift Transportation Holdings acquired <a href="https://www.joc.com/article/knight-swift-acquisition-expands-ltl-network-coast-to-coast-5703164">Dependable Highway Express</a> (DHE) in California, extending its LTL footprint to the West Coast. California-based DC Logistics acquired Netherlands-based parcel carrier GLS’s LTL operation in California. Consolidation among smaller LTL carriers is concentrating revenue and volume in an already capacity-constrained sector. Smaller LTL carriers were <a href="https://www.prod.int.joc.com/article/journal-of-commerce-rankings-ltl-sector-revenue-drops-despite-yellow-distortion-5199865">among the fastest-growing companies</a> in this year’s top LTL trucking company rankings. Those carriers often provide regional and highly specialized services, such as expedited LTL. In 2013, the 10 smallest carriers in the Journal of Commerce / SJ Consulting Group LTL carrier rankings had $849 million in combined revenue. By 2023, that amount had grown to $1.1 billion. <h3>Getting a foot in the door </h3>Jack Cooper Transport has been looking for a way to break into the LTL business since the collapse of Yellow in July 2023. The company originally wanted to purchase Yellow’s equipment and terminals and restart the bankrupt carrier as a “going concern.” After that plan was <a href="https://www.joc.com/article/yellow-attorneys-quash-going-concern-bid-for-ltl-network-equipment-5241377">rejected by Yellow</a>, the auto hauler came back with an offer to buy a smaller number of terminals in the Midwest, but that was also turned down. “Acquiring Standard Forwarding is a much better approach than trying to start a new carrier from scratch,” Jindel said. “Standard has people who know how to run an LTL operation, and their employees are already Teamsters,” Jindel said. “Now Jack Cooper can acquire Yellow terminals if they become available, bolt them onto Standard’s network and grow organically.” A Standard Forwarding acquisition — if it happens — would give Jack Cooper 14 terminals and a foot in the door of the hard-to-enter North American LTL market. Standard has 350 trucks and more than 900 trailers, according to information filed with the Federal Motor Carrier Safety Administration. DHL has owned Standard Forwarding <a href="https://www.prod.int.joc.com/article/deutsche-post-dhl-buys-ltl-trucker-5204287">since 2011</a>. The carrier’s terminals are in Illinois, Indiana, Iowa, Minnesota and Wisconsin. The fact that both companies have a Teamsters workforce makes Jack Cooper a more likely buyer for Standard Forwarding than most LTL providers. There are only two Teamster-organized LTL providers among the top 10 carriers — TForce Freight and ABF Freight Systems. “There are a lot of contingencies to consider, but [we] are hopeful that the conversations will continue,” the Jack Cooper spokesperson said. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

After trying twice to buy properties from bankrupt Yellow, Jack Cooper Investments may have finally found a route into the less-than-truckload (LTL) sector. The owner of unionized auto hauler Jack Cooper Transport is in talks to buy Standard Forwarding, a unionized midwestern regional LTL carrier owned by DHL Freight, a unit of Deutsche Post DHL. Standard had about $98 million in revenue in 2023 and is 36th in the Journal of Commerce / SJ Consulting Group rankings of the largest US and Canadian LTL trucking companies. Its employees are members of the International Brotherhood of Teamsters, as are the workers at Jack Cooper Transport. “Jack Cooper is always looking to expand services for customers and they’re always in the market to save Teamsters jobs,” a spokesperson for Jack Cooper Investments told the Journal of Commerce Tuesday. “It is very early in the process of these discussions,” the spokesperson said. The potential acquisition is the latest sign of consolidation among smaller to midsized carriers within an LTL sector that is healthier than the larger truckload market. Both profits and pricing in general are higher year over year for LTL carriers. “You’re going to see more small carriers being acquired,” Satish Jindel, president of transportation research firm SJ Consulting Group told the Journal of Commerce. “Smaller carriers are going to need investment to help upgrade their technology.” In the past month, Knight Swift Transportation Holdings acquired Dependable Highway Express (DHE) in California, extending its LTL footprint to the West Coast. California-based DC Logistics acquired Netherlands-based parcel carrier GLS’s LTL operation in California. Consolidation among smaller LTL carriers is concentrating revenue and volume in an already capacity-constrained sector. Smaller LTL carriers were among the fastest-growing companies in this year’s top LTL trucking company rankings. Those carriers often provide regional and highly specialized services, such as expedited LTL. In 2013, the 10 smallest carriers in the Journal of Commerce / SJ Consulting Group LTL carrier rankings had $849 million in combined revenue. By 2023, that amount had grown to $1.1 billion. Getting a foot in the door Jack Cooper Transport has been looking for a way to break into the LTL business since the collapse of Yellow in July 2023. The company originally wanted to purchase Yellow’s equipment and terminals and restart the bankrupt carrier as a “going concern.” After that plan was rejected by Yellow , the auto hauler came back with an offer to buy a smaller number of terminals in the Midwest, but that was also turned down. “Acquiring Standard Forwarding is a much better approach than trying to start a new carrier from scratch,” Jindel said. “Standard has people who know how to run an LTL operation, and their employees are already Teamsters,” Jindel said. “Now Jack Cooper can acquire Yellow terminals if they become available, bolt them onto Standard’s network and grow organically.” A Standard Forwarding acquisition — if it happens — would give Jack Cooper 14 terminals and a foot in the door of the hard-to-enter North American LTL market. Standard has 350 trucks and more than 900 trailers, according to information filed with the Federal Motor Carrier Safety Administration. DHL has owned Standard Forwarding since 2011 . The carrier’s terminals are in Illinois, Indiana, Iowa, Minnesota and Wisconsin. The fact that both companies have a Teamsters workforce makes Jack Cooper a more likely buyer for Standard Forwarding than most LTL providers. There are only two Teamster-organized LTL providers among the top 10 carriers — TForce Freight and ABF Freight Systems. “There are a lot of contingencies to consider, but [we] are hopeful that the conversations will continue,” the Jack Cooper spokesperson said. Contact William B. Cassidy at bill.cassidy@spglobal.com .

Trucking News

Surface

Standard Forwarding deal would speed consolidation among small LTL carriers

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

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

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

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

US retailers give big upgrade to September import forecast amid strike threat

Featured Gateway Chart

Essential Reads

Air cargo shrugs off seasonality to ride wave of e-commerce demand

Trans-Pacific rate push tests health of early peak season

Maersk adds nuclear power to its growing list of new fuel potentials

Recent Commentary

Rails have limited recourse to PNW import surge: analyst

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

Top 5 Most Read Stories