<div class="phx-topic abstract-wrapper">The February launch date coincides with the start of services by the Premier Alliance formed by ONE, HMM and Yang Ming.</div>

The February launch date coincides with the start of services by the Premier Alliance formed by ONE, HMM and Yang Ming.

Feature image

<div class="phx-topic">Wan Hai Lines is planning to expand its trans-Pacific network after agreeing to a slot exchange deal with Ocean Network Express (ONE) on the latter’s Pacific South 6 service linking China with Long Beach and Oakland, the Taiwanese carrier said. The slot exchange will begin in February. The launch date coincides with the start of services by the Premier Alliance formed by ONE, HMM and Yang Ming Marine Transport to replace THE Alliance following the departure of Hapag-Lloyd to join Maersk in the Gemini Cooperation. While the launch of the Premier Alliance is now in abeyance after the <a href="https://www.joc.com/article/fmc-halts-premier-alliance-start-for-more-information-5877293">US Federal Maritime Commission’s (FMC’s) announcement Friday</a> that it will stop the partnership from going ahead while it seeks further information to assess the competitive impact, the three carriers can continue their THE Alliance group. The FMC’s agreement with THE Alliance does not expire until April 1, 2030, FMC documents show. The port rotation given by Wan Hai reflects ONE’s existing PS6 service with calls at Shanghai-Ningbo-Long Beach-Oakland-Shanghai-Ningbo. Wan Hai said the PS6 service will “provide a direct connection from Asia to the US West Coast,” with an express 16- to 18-day transit from Shanghai to Southern California. It will augment Wan Hai’s two existing services — its trans-Pacific West Coast AP1 service and its around-the-world US East Coast-Asia-America 7 service. Due to the new PS6 loop, Wan Hai said it will amend the rotation of its AP1 service by dropping Shanghai and Ningbo beginning in February to improve transit times for customers in Vietnam, Taiwan and southern China. The new rotation will be Haiphong-Cai Mep (Vietnam)-Shekou-Xiamen-Taipei-Los Angeles-Oakland-Shekou-Haiphong. Both the PS6 slot exchange and AP1 service changes are part of Wan Hai’s 2025 trans-Pacific service improvements. The carrier has been deriving an increasing share of revenue from its US services. Revenues from Wan Hai’s US trade more than doubled to $560 million in the first half of this year from the year-ago period. The US market contributed 28% of the carrier’s $2 billion in overall first-half revenues against 16% of the $1.5 billion in revenue generated in the prior-year period. US volumes showed only modest growth to 11% of total liftings in the first half, from 10% in the first six months of last year. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

Wan Hai Lines is planning to expand its trans-Pacific network after agreeing to a slot exchange deal with Ocean Network Express (ONE) on the latter’s Pacific South 6 service linking China with Long Beach and Oakland, the Taiwanese carrier said. The slot exchange will begin in February. The launch date coincides with the start of services by the Premier Alliance formed by ONE, HMM and Yang Ming Marine Transport to replace THE Alliance following the departure of Hapag-Lloyd to join Maersk in the Gemini Cooperation. While the launch of the Premier Alliance is now in abeyance after the US Federal Maritime Commission’s (FMC’s) announcement Friday that it will stop the partnership from going ahead while it seeks further information to assess the competitive impact, the three carriers can continue their THE Alliance group. The FMC’s agreement with THE Alliance does not expire until April 1, 2030, FMC documents show. The port rotation given by Wan Hai reflects ONE’s existing PS6 service with calls at Shanghai-Ningbo-Long Beach-Oakland-Shanghai-Ningbo. Wan Hai said the PS6 service will “provide a direct connection from Asia to the US West Coast,” with an express 16- to 18-day transit from Shanghai to Southern California. It will augment Wan Hai’s two existing services — its trans-Pacific West Coast AP1 service and its around-the-world US East Coast-Asia-America 7 service. Due to the new PS6 loop, Wan Hai said it will amend the rotation of its AP1 service by dropping Shanghai and Ningbo beginning in February to improve transit times for customers in Vietnam, Taiwan and southern China. The new rotation will be Haiphong-Cai Mep (Vietnam)-Shekou-Xiamen-Taipei-Los Angeles-Oakland-Shekou-Haiphong. Both the PS6 slot exchange and AP1 service changes are part of Wan Hai’s 2025 trans-Pacific service improvements. The carrier has been deriving an increasing share of revenue from its US services. Revenues from Wan Hai’s US trade more than doubled to $560 million in the first half of this year from the year-ago period. The US market contributed 28% of the carrier’s $2 billion in overall first-half revenues against 16% of the $1.5 billion in revenue generated in the prior-year period. US volumes showed only modest growth to 11% of total liftings in the first half, from 10% in the first six months of last year. Contact Keith Wallis at keithwallis@hotmail.com .

Container Shipping News

Container lines

Trans-Pacific

Maritime

Wan Hai to expand US trans-Pacific services with ONE slot charter deal

<div class="phx-topic abstract-wrapper">While carriers can offset some operating costs by raising rate levels, reducing carbon emissions on voyages that are taking two weeks longer is becoming increasingly important as decarbonization regulations tighten.</div>

While carriers can offset some operating costs by raising rate levels, reducing carbon emissions on voyages that are taking two weeks longer is becoming increasingly important as decarbonization regulations tighten.

<div class="phx-topic">Container shipping is sailing into its second year of diverting around southern Africa, and with no sign of stability returning to the Red Sea — or the Middle East in general — carriers and their customers are facing up to another year of disruption and tight capacity. The longer voyages are raising carrier operating costs and absorbing all available capacity, as well as increasing greenhouse gas emissions even as regulatory pressure builds on carriers to reduce them. At the same time, shippers are having to factor longer transit times and large rate increases into their annual Asia-Europe contracts. Those market complexities were highlighted by Hapag-Lloyd CEO Rolf Habben Jansen, who told customers during a briefing Monday that the higher costs of sailing around the Cape of Good Hope was influencing 2025 annual contracts. “Asia-Europe contracts are being closed on average at significantly higher rates than we saw last year, which is logical as most of those contracts were closed prior to the Red Sea situation,” he said. The rising long-term rate increases are not yet being reflected by the indices, but global bank HSBC noted in a recent market report that it is expecting to see “a significant step-up in contract rates in 2025 compared to 2024.” <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="ef167537-108b-4e1b-ac11-43e99f815839"></dynamic-object></div>Long-term rates between China and North Europe have remained near $2,900 per FEU since early October in contrast with the average spot rate that has risen by more than $1,500 per FEU over the same period, according to rate benchmarking platform Xeneta. Data from Platts, a sister company of the Journal of Commerce within S&amp;P Global, shows average spot rates from Asia to North Europe easing last week, falling $200 to settle at $5,000 per FEU on Dec. 6. Spot rates from Asia to the Mediterranean remained unchanged at $5,400/FEU. <h3>Decarbonization pressure builds </h3>While carriers can offset some operating costs by raising rate levels, reducing carbon emissions on voyages that are taking two weeks longer is becoming increasingly important as decarbonization regulations tighten. In 2025, compliance with <a href="https://www.joc.com/article/european-parliament-approves-shipping-ets-but-stakeholders-wary-5202492">Europe’s emissions trading system (ETS)</a> will see carriers being taxed on 70% of their carbon emissions, up from 40% this year. From 2026 onward, 100% of carbon emissions will be taxed. The rise in ETS surcharges will come on top of the new fuel intensity regulation <a href="https://www.joc.com/article/container-carriers-to-shoulder-bulk-of-europe-fuel-intensity-rule-5192246">FuelEU Maritime</a> that from Jan. 1 will force carriers to increase their use of more costly lower-emission fuels. The impact on carriers’ carbon footprint in the third quarter of this year was captured by the Xeneta and Marine Benchmark Carbon Emissions Index (CEI) that measures emissions across Xeneta’s top 13 ocean container shipping trades. The index hit 107.9 points in the third quarter, the highest on record and up 12.2% from a year ago before the Red Sea crisis. “We will all have to reduce emissions, and because the availability of green fuels is limited, I do expect that between now and 2030 we will have to find ways to make our network more efficient and to slow ships down,” Habben Jansen told the Hapag-Lloyd customer briefing. He said that slowing down would have “a massive impact” on reducing emissions, noting an industry-wide slowdown of ships by 3 knots would cut the current overall container shipping fleet emissions by more than 20%. Sea-Intelligence Maritime Analysis noted in its Sunday Spotlight newsletter that from January to October, the average global sailing distance of a container had increased 17.4% compared with a transit where the Suez routing would have been used. Carriers are deploying all the capacity they can find to offset the tonnage being absorbed by the longer transit times, with the average idle fleet at just 0.7% of the total global fleet for much of the year, Sea-Intelligence said in its newsletter. ”Once the idle fleet gets below roughly 2%, the rate becomes more volatile, and once we cross a threshold of roughly 1% idle vessels, the volatility becomes extreme,” the analyst noted. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com.</a></div>

Container shipping is sailing into its second year of diverting around southern Africa, and with no sign of stability returning to the Red Sea — or the Middle East in general — carriers and their customers are facing up to another year of disruption and tight capacity. The longer voyages are raising carrier operating costs and absorbing all available capacity, as well as increasing greenhouse gas emissions even as regulatory pressure builds on carriers to reduce them. At the same time, shippers are having to factor longer transit times and large rate increases into their annual Asia-Europe contracts. Those market complexities were highlighted by Hapag-Lloyd CEO Rolf Habben Jansen, who told customers during a briefing Monday that the higher costs of sailing around the Cape of Good Hope was influencing 2025 annual contracts. “Asia-Europe contracts are being closed on average at significantly higher rates than we saw last year, which is logical as most of those contracts were closed prior to the Red Sea situation,” he said. The rising long-term rate increases are not yet being reflected by the indices, but global bank HSBC noted in a recent market report that it is expecting to see “a significant step-up in contract rates in 2025 compared to 2024.” Long-term rates between China and North Europe have remained near $2,900 per FEU since early October in contrast with the average spot rate that has risen by more than $1,500 per FEU over the same period, according to rate benchmarking platform Xeneta. Data from Platts, a sister company of the Journal of Commerce within S&P Global, shows average spot rates from Asia to North Europe easing last week, falling $200 to settle at $5,000 per FEU on Dec. 6. Spot rates from Asia to the Mediterranean remained unchanged at $5,400/FEU. Decarbonization pressure builds While carriers can offset some operating costs by raising rate levels, reducing carbon emissions on voyages that are taking two weeks longer is becoming increasingly important as decarbonization regulations tighten. In 2025, compliance with Europe’s emissions trading system (ETS) will see carriers being taxed on 70% of their carbon emissions, up from 40% this year. From 2026 onward, 100% of carbon emissions will be taxed. The rise in ETS surcharges will come on top of the new fuel intensity regulation FuelEU Maritime that from Jan. 1 will force carriers to increase their use of more costly lower-emission fuels. The impact on carriers’ carbon footprint in the third quarter of this year was captured by the Xeneta and Marine Benchmark Carbon Emissions Index (CEI) that measures emissions across Xeneta’s top 13 ocean container shipping trades. The index hit 107.9 points in the third quarter, the highest on record and up 12.2% from a year ago before the Red Sea crisis. “We will all have to reduce emissions, and because the availability of green fuels is limited, I do expect that between now and 2030 we will have to find ways to make our network more efficient and to slow ships down,” Habben Jansen told the Hapag-Lloyd customer briefing. He said that slowing down would have “a massive impact” on reducing emissions, noting an industry-wide slowdown of ships by 3 knots would cut the current overall container shipping fleet emissions by more than 20%. Sea-Intelligence Maritime Analysis noted in its Sunday Spotlight newsletter that from January to October, the average global sailing distance of a container had increased 17.4% compared with a transit where the Suez routing would have been used. Carriers are deploying all the capacity they can find to offset the tonnage being absorbed by the longer transit times, with the average idle fleet at just 0.7% of the total global fleet for much of the year, Sea-Intelligence said in its newsletter. ”Once the idle fleet gets below roughly 2%, the rate becomes more volatile, and once we cross a threshold of roughly 1% idle vessels, the volatility becomes extreme,” the analyst noted. Contact Greg Knowler at greg.knowler@spglobal.com.

Asia-Europe

Ongoing Red Sea effect reaches deep into Asia-Europe trade lane

<div class="phx-topic abstract-wrapper">A growing need to replace aging US hydropower units adds weight to project demand from the renewable energy sector.</div>

A growing need to replace aging US hydropower units adds weight to project demand from the renewable energy sector.

<div class="phx-topic">Efforts to restore aging hydropower facilities across the US have been part of an uptick in project activity, helping feed the growing renewable energy segment driving breakbulk and project cargo demand.The latest hydro project news came Dec. 2, when renewable energy equipment manufacturer GE Vernova announced a deal with Dominion Energy to modernize two of the five hydropower units at the nearly 100-year-old Saluda Hydro power plant, which Dominion operates in South Carolina. The first unit is expected to be retrofitted by 2027. Dominion Energy South Carolina spokesperson Matt Long told the Journal of Commerce that Dominion is making major upgrades to the Saluda units to ensure their long-term reliability and operations.The upgrades are part of a multi-year restoration effort Dominion is working on at the 203-MW Saluda plant, as well as a piece of Dominion’s overall hydropower strategy. Including the Saluda plant, Dominion operates nine hydroelectric facilities across its territories in Virginia, North Carolina and South Carolina. According to Dominion’s latest annual report, hydro accounted for 5%-11% of its energy supply sources in those territories. “Hydropower will continue to play a key role in Dominion Energy’s increasingly clean energy portfolio,” Long said.<h3>Renewed interest in hydro</h3>US hydropower generation is on track to rise by 6% in 2024 after falling last year to its lowest level since 2001, according to an April analysis by the US Energy Information Administration (EIA). Growth is expected in nearly every part of the country, with the largest hydropower increases coming in the Southeast, Northwest and the Rockies.Hydropower accounts for about 27% of total US renewable electricity generated in the United States and nearly 6% of total US electricity, according to the US Department of Energy (DOE). Defined as the production of electricity through the force of moving water — often when released through a dam or reservoir — hydropower is a centuries-old method used to generate power. But in recent years, hydro has garnered interest as a renewable energy solution, alongside wind, solar, nuclear, geothermal and biomass resources.Part of that solution entails updating the US’ aging hydropower infrastructure, as several facilities are over a century old and surpassing their lifespan of 50 to 100 years. But there are also new hydro facilities in development, including four proposed projects in rural Alaska and Washington State that received $76 million in federal funding in February.Under President Joe Biden’s administration, the Infrastructure Investment and Jobs Act carved out $553.6 million for projects to maintain and enhance existing hydroelectric facilities. Along with ensuring the facilities will continue to provide electricity, the funding would also enable hydro plants to integrate renewable energy sources including wind and solar. In September, the DOE selected 293 hydroelectric projects across 33 states to receive up to $430 million in incentives to upgrade existing facilities. A second round of program funding will be announced in 2025.<h3>Supply chain limitations</h3>The modernization of existing hydropower facilities, along with new construction, could drive expansion of domestic manufacturing and foreign investments in the US hydropower supply chain, according to the DOE.But there are vulnerabilities that the supply chain will need to overcome. “Severely limited or nonexistent domestic suppliers,” unpredictable demand signals, and “inequitable” foreign competition were identified as major gaps in the domestic hydropower supply chain in an August 2024 analysis by the DOE. About half of hydropower facilities are federally owned, with the other half split between public and private entities, according to the National Hydropower Association.There are indications that federal support for US hydropower development could continue under the administration of President-elect Donald Trump, although it’s unclear what that might look like. Whereas Trump has fiercely opposed offshore wind as a solution to meet US energy needs, he has advocated for advancing hydropower as a renewable energy resource. Trump’s campaign agenda indicated that the president-elect “will champion America’s great dams and hydroelectric power,” although did not provide specific plans.Contact Autumn Cafiero Giusti at <a href="mailto:autumn@autumngiusti.com">autumn@autumngiusti.com</a>.</div>

Efforts to restore aging hydropower facilities across the US have been part of an uptick in project activity, helping feed the growing renewable energy segment driving breakbulk and project cargo demand. The latest hydro project news came Dec. 2, when renewable energy equipment manufacturer GE Vernova announced a deal with Dominion Energy to modernize two of the five hydropower units at the nearly 100-year-old Saluda Hydro power plant, which Dominion operates in South Carolina. The first unit is expected to be retrofitted by 2027. Dominion Energy South Carolina spokesperson Matt Long told the Journal of Commerce that Dominion is making major upgrades to the Saluda units to ensure their long-term reliability and operations. The upgrades are part of a multi-year restoration effort Dominion is working on at the 203-MW Saluda plant, as well as a piece of Dominion’s overall hydropower strategy. Including the Saluda plant, Dominion operates nine hydroelectric facilities across its territories in Virginia, North Carolina and South Carolina. According to Dominion’s latest annual report, hydro accounted for 5%-11% of its energy supply sources in those territories. “Hydropower will continue to play a key role in Dominion Energy’s increasingly clean energy portfolio,” Long said. Renewed interest in hydro US hydropower generation is on track to rise by 6% in 2024 after falling last year to its lowest level since 2001, according to an April analysis by the US Energy Information Administration (EIA). Growth is expected in nearly every part of the country, with the largest hydropower increases coming in the Southeast, Northwest and the Rockies. Hydropower accounts for about 27% of total US renewable electricity generated in the United States and nearly 6% of total US electricity, according to the US Department of Energy (DOE). Defined as the production of electricity through the force of moving water — often when released through a dam or reservoir — hydropower is a centuries-old method used to generate power. But in recent years, hydro has garnered interest as a renewable energy solution, alongside wind, solar, nuclear, geothermal and biomass resources. Part of that solution entails updating the US’ aging hydropower infrastructure, as several facilities are over a century old and surpassing their lifespan of 50 to 100 years. But there are also new hydro facilities in development, including four proposed projects in rural Alaska and Washington State that received $76 million in federal funding in February. Under President Joe Biden’s administration, the Infrastructure Investment and Jobs Act carved out $553.6 million for projects to maintain and enhance existing hydroelectric facilities. Along with ensuring the facilities will continue to provide electricity, the funding would also enable hydro plants to integrate renewable energy sources including wind and solar. In September, the DOE selected 293 hydroelectric projects across 33 states to receive up to $430 million in incentives to upgrade existing facilities. A second round of program funding will be announced in 2025. Supply chain limitations The modernization of existing hydropower facilities, along with new construction, could drive expansion of domestic manufacturing and foreign investments in the US hydropower supply chain, according to the DOE. But there are vulnerabilities that the supply chain will need to overcome. “Severely limited or nonexistent domestic suppliers,” unpredictable demand signals, and “inequitable” foreign competition were identified as major gaps in the domestic hydropower supply chain in an August 2024 analysis by the DOE. About half of hydropower facilities are federally owned, with the other half split between public and private entities, according to the National Hydropower Association. There are indications that federal support for US hydropower development could continue under the administration of President-elect Donald Trump, although it’s unclear what that might look like. Whereas Trump has fiercely opposed offshore wind as a solution to meet US energy needs, he has advocated for advancing hydropower as a renewable energy resource. Trump’s campaign agenda indicated that the president-elect “will champion America’s great dams and hydroelectric power,” although did not provide specific plans. Contact Autumn Cafiero Giusti at autumn@autumngiusti.com .

Energy projects

Project cargo

Breakbulk News

US hydropower restoration projects offer stimulus for project cargo demand

<div class="phx-topic abstract-wrapper">Industrial projects reliant on imported steel are expected to feel the pinch of an import and quality crackdown in the country.</div>

Industrial projects reliant on imported steel are expected to feel the pinch of an import and quality crackdown in the country.

<div class="phx-topic">Breakbulk imports into India have been disrupted by the double whammy of a clampdown on inbound steel trade and more stringent quality requirements, with concerns of a knock-on effect on industrial projects.Steel products make up a significant portion of Indian breakbulk trade, and volume fluctuations directly impact marine terminals equipped with multipurpose berths. Smaller steel lots are also shipped in containers, contributing incremental traffic for liner calls and box terminals. Importers told the Journal of Commerce they faced considerable customs clearance delays for steel consignments landed at various Indian docks through October, with officials unwilling to issue the mandatory quality approval or a “no objection certificate” (NOC) due to a lack of clarity over the policy. Following the release of updated guidelines in late November, most stranded cargoes have been flushed out, but not without consignees incurring substantial additional port charges, including ground rent and storage fees, sources said. The policy change is said to be an outcome of hard lobbying from local steelmakers, who were pushing policymakers to curb the influx of cheap imports flooding the Indian market. India’s steel imports surged 41% year over year in the first half of fiscal year 2024–25 (April–September), according to India Ministry of Steel data.While welcoming government measures to safeguard domestic interests, industry sources said protectionist sentiment could negatively impact the nascent steel sector, a segment critical to an Indian economy seeking sustained growth. <h3>EPCs, forwarders count cost of trade curbs</h3>“India's contemplation of a 25% import duty on steel … could have significant implications for micro small-to-medium enterprises that rely on steel as a key raw material,” Ajay Sahai, director general at the Federation of Indian Export Organizations, told the Journal of Commerce. “The government must strike a workable balance between the two sides.”A supply chain expert with knowledge of steel industry dynamics said stricter norms and a possible 25% safeguard duty on India’s steel imports “will drastically strain steel supply.”“It’s not that India is highly dependent on imports, but it’s the availability of low-priced imported steel that drives the supply side,” the source said. Sources also highlighted the significance of steel-consuming sectors such as engineering, automobile and construction for the national flagship “Make-in-India” program. “All of this [politics] is creating a lot of uncertainty, which has significant repercussions for everyone in the steel supply chain,” another industry analyst told the Journal of Commerce. “It’s just not helping the market.” Local freight forwarders in India active in the steel trade also raised concerns over the regulatory complexities and the potential business impact. “Online data uploading on the steel import monitoring system [SIM], a prerequisite to clearance, is now the importer’s responsibility, which is painful and adds costs,” said Manoj Subramanian, senior general manager of corporate sales at Mumbai-based Flyjac Logistics. “The strain could affect various ongoing infrastructure projects, including metro and bullet rail developments, and if the stalemate continues, projects lined up in the renewable energy sector will also likely take a hit.” Contact Bency Matthew at <a href="mailto:bencymathew@gmail.com">bencymathew@gmail.com</a>.</div>

Breakbulk imports into India have been disrupted by the double whammy of a clampdown on inbound steel trade and more stringent quality requirements, with concerns of a knock-on effect on industrial projects. Steel products make up a significant portion of Indian breakbulk trade, and volume fluctuations directly impact marine terminals equipped with multipurpose berths. Smaller steel lots are also shipped in containers, contributing incremental traffic for liner calls and box terminals. Importers told the Journal of Commerce they faced considerable customs clearance delays for steel consignments landed at various Indian docks through October, with officials unwilling to issue the mandatory quality approval or a “no objection certificate” (NOC) due to a lack of clarity over the policy. Following the release of updated guidelines in late November, most stranded cargoes have been flushed out, but not without consignees incurring substantial additional port charges, including ground rent and storage fees, sources said. The policy change is said to be an outcome of hard lobbying from local steelmakers, who were pushing policymakers to curb the influx of cheap imports flooding the Indian market. India’s steel imports surged 41% year over year in the first half of fiscal year 2024–25 (April–September), according to India Ministry of Steel data. While welcoming government measures to safeguard domestic interests, industry sources said protectionist sentiment could negatively impact the nascent steel sector, a segment critical to an Indian economy seeking sustained growth. EPCs, forwarders count cost of trade curbs “India's contemplation of a 25% import duty on steel … could have significant implications for micro small-to-medium enterprises that rely on steel as a key raw material,” Ajay Sahai, director general at the Federation of Indian Export Organizations, told the Journal of Commerce. “The government must strike a workable balance between the two sides.” A supply chain expert with knowledge of steel industry dynamics said stricter norms and a possible 25% safeguard duty on India’s steel imports “will drastically strain steel supply.” “It’s not that India is highly dependent on imports, but it’s the availability of low-priced imported steel that drives the supply side,” the source said. Sources also highlighted the significance of steel-consuming sectors such as engineering, automobile and construction for the national flagship “Make-in-India” program. “All of this [politics] is creating a lot of uncertainty, which has significant repercussions for everyone in the steel supply chain,” another industry analyst told the Journal of Commerce. “It’s just not helping the market.” Local freight forwarders in India active in the steel trade also raised concerns over the regulatory complexities and the potential business impact. “Online data uploading on the steel import monitoring system [SIM], a prerequisite to clearance, is now the importer’s responsibility, which is painful and adds costs,” said Manoj Subramanian, senior general manager of corporate sales at Mumbai-based Flyjac Logistics. “The strain could affect various ongoing infrastructure projects, including metro and bullet rail developments, and if the stalemate continues, projects lined up in the renewable energy sector will also likely take a hit.” Contact Bency Matthew at bencymathew@gmail.com .

Breakbulk carriers

Breakbulk ports

Breakbulk trade stymied by India’s steel import curbs

<div class="phx-topic abstract-wrapper">The Federal Maritime Commission said that it needs more information about the new grouping of ocean carriers known as the Premier Alliance before the vessel-sharing agreement can begin in February on US trades. </div>

The Federal Maritime Commission said that it needs more information about the new grouping of ocean carriers known as the Premier Alliance before the vessel-sharing agreement can begin in February on US trades.

<div class="phx-topic">The Federal Maritime Commission (FMC) on Friday has halted Premier Alliance from becoming effective next week as scheduled, citing insufficient information on the alliance set to sail in February. The FMC said the proposed agreement from Ocean Network Express, HMM and Yang Ming “lacks sufficient detail to allow for a complete analysis of potential competitive impacts and whether the agreement fully complies with all statutory requirements.” The Premier Alliance on Friday released details of its <a href="https://www.joc.com/article/north-america-trade-to-dominate-premier-alliances-network-launch-in-february-5877233">new network</a>. Premier members had been partners in the THE Alliance with Hapag-Lloyd. But with Hapag-Lloyd’s decision to bolt THE Alliance in favor of joining Maersk in the 2M Cooperation, the three carriers <a href="https://www.joc.com/article/msc-strikes-asia-europe-slot-share-with-former-thea-members-5723585">banded together</a> in September under a new name and with a slot-sharing agreement in the trans-Pacific trade with Mediterranean Shipping Co. The FMC has a 45-day window from when it collects the information to issue the formal go-ahead for the Premier Alliance, and any shippers wishing to weigh in will be able to do so during a 15-day window that starts next week. Such requests for additional information from the FMC are common, with the Gemini Cooperation <a href="https://www.joc.com/article/fmc-wants-maersk-hapag-lloyd-to-provide-more-details-on-gemini-alliance-5192298">itself having received</a> one in July. The agency later determined there were no competitive impacts to Gemini but vowed to keep <a href="https://www.joc.com/article/fmc-wont-block-gemini-alliance-but-vows-tight-monitoring-5724939">an eye</a> on the new alliance. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com ">michael.angell@spglobal.com</a>. </div>

The Federal Maritime Commission (FMC) on Friday has halted Premier Alliance from becoming effective next week as scheduled, citing insufficient information on the alliance set to sail in February. The FMC said the proposed agreement from Ocean Network Express, HMM and Yang Ming “lacks sufficient detail to allow for a complete analysis of potential competitive impacts and whether the agreement fully complies with all statutory requirements.” The Premier Alliance on Friday released details of its new network . Premier members had been partners in the THE Alliance with Hapag-Lloyd. But with Hapag-Lloyd’s decision to bolt THE Alliance in favor of joining Maersk in the 2M Cooperation, the three carriers banded together in September under a new name and with a slot-sharing agreement in the trans-Pacific trade with Mediterranean Shipping Co. The FMC has a 45-day window from when it collects the information to issue the formal go-ahead for the Premier Alliance, and any shippers wishing to weigh in will be able to do so during a 15-day window that starts next week. Such requests for additional information from the FMC are common, with the Gemini Cooperation itself having received one in July. The agency later determined there were no competitive impacts to Gemini but vowed to keep an eye on the new alliance. Contact Michael Angell at michael.angell@spglobal.com .

Transport, Trade and Regulation News

FMC halts Premier Alliance start for more information

<div class="phx-topic abstract-wrapper">The Asia-North America trade will be featured on 13 of the initial 24 services inaugurated by the ONE-HMM-Yang Ming partnership.</div>

The Asia-North America trade will be featured on 13 of the initial 24 services inaugurated by the ONE-HMM-Yang Ming partnership.

<div class="phx-topic">The Asia-North America trade will be the cornerstone of the Premier Alliance's network when it launches its initial 24 services in February, according to schedules released Friday by alliance members Ocean Network Express (ONE) and HMM. The first tranche of services will cover four main east-west trades — trans-Pacific, Asia-Europe, Asia-Mediterranean and Asia-Middle East, the schedules showed. Taiwan’s Yang Ming Marine Transport is the third member of the Premier Alliance. Network documents released by ONE show the Premier Alliance will eventually grow to operate 34 services transiting via the Cape of Good Hope, with 29 services on the Red Sea/Suez Canal transit option. The alliance has not yet announced which routing it will choose for the February launch, although the Maersk/Hapag-Lloyd Gemini Cooperation <a href="https://www.joc.com/article/maersk-rules-out-suez-canal-routings-for-gemini-launch-5746470">has already opted to transit via southern Africa</a> given the still-unsettled security situation in the Red Sea and Gulf of Aden. The Asia-North America trade will dominate the Premier Alliance network whichever routing is selected, with 13 services out of the initial 24 focused on the Americas trade.The first sailing to the US West Coast will be on Feb. 3 when the 8,084-TEU Conti Conquest deployed on the Pacific Southwest 3 service departs Singapore. The first sailing to the US East Coast will be by the 13,870-TEU One Manchester operating the EC3 service that will depart Thailand’s Laem Chabang port on Feb. 8. Vessel schedules show nine services will operate to the West Coast in February, with four to the East Coast. Alliance carriers have not yet released details of March sailings from Asia. The alliance carriers said the launch of two further services — Pacific Southwest 5 (PS5) and Pacific Northwest 4 (PN4) — between Asia and the West Coast have been postponed until May; none of the carriers gave an explanation for the delay. Instead, the Premier Alliance will strengthen coverage of three other West Coast services with extra port calls. The Premier Alliance network also shows seven services on the Asia-Europe trade, of which six will be inaugurated in February, and seven on the Asia-Mediterranean/Middle East loop, with five launched in February. The number of services on the Asia-Europe and Asia-Mediterranean routes will remain the same whether the Cape of Good Hope or Red Sea/Suez Canal routing is chosen. The first Asia-Europe sailing by the new alliance will be made by the 8,212-TEU One Henry Hudson on the Far East Pacific 1 service that will depart Shimizu, Japan, on Feb. 4. The 15,908-TEU MSC Venice, deployed on the MD3 service, will inaugurate the first sailing on Premier’s Asia-Mediterranean trade when it departs Xingang in China on Feb. 2. Mediterranean Shipping Co. <a href="https://www.joc.com/article/mscs-global-scale-enables-standalone-network-coverage-5726563">has a slot-swap arrangement</a> with the Premier Alliance. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

The Asia-North America trade will be the cornerstone of the Premier Alliance's network when it launches its initial 24 services in February, according to schedules released Friday by alliance members Ocean Network Express (ONE) and HMM. The first tranche of services will cover four main east-west trades — trans-Pacific, Asia-Europe, Asia-Mediterranean and Asia-Middle East, the schedules showed. Taiwan’s Yang Ming Marine Transport is the third member of the Premier Alliance. Network documents released by ONE show the Premier Alliance will eventually grow to operate 34 services transiting via the Cape of Good Hope, with 29 services on the Red Sea/Suez Canal transit option. The alliance has not yet announced which routing it will choose for the February launch, although the Maersk/Hapag-Lloyd Gemini Cooperation has already opted to transit via southern Africa given the still-unsettled security situation in the Red Sea and Gulf of Aden. The Asia-North America trade will dominate the Premier Alliance network whichever routing is selected, with 13 services out of the initial 24 focused on the Americas trade. The first sailing to the US West Coast will be on Feb. 3 when the 8,084-TEU Conti Conquest deployed on the Pacific Southwest 3 service departs Singapore. The first sailing to the US East Coast will be by the 13,870-TEU One Manchester operating the EC3 service that will depart Thailand’s Laem Chabang port on Feb. 8. Vessel schedules show nine services will operate to the West Coast in February, with four to the East Coast. Alliance carriers have not yet released details of March sailings from Asia. The alliance carriers said the launch of two further services — Pacific Southwest 5 (PS5) and Pacific Northwest 4 (PN4) — between Asia and the West Coast have been postponed until May; none of the carriers gave an explanation for the delay. Instead, the Premier Alliance will strengthen coverage of three other West Coast services with extra port calls. The Premier Alliance network also shows seven services on the Asia-Europe trade, of which six will be inaugurated in February, and seven on the Asia-Mediterranean/Middle East loop, with five launched in February. The number of services on the Asia-Europe and Asia-Mediterranean routes will remain the same whether the Cape of Good Hope or Red Sea/Suez Canal routing is chosen. The first Asia-Europe sailing by the new alliance will be made by the 8,212-TEU One Henry Hudson on the Far East Pacific 1 service that will depart Shimizu, Japan, on Feb. 4. The 15,908-TEU MSC Venice, deployed on the MD3 service, will inaugurate the first sailing on Premier’s Asia-Mediterranean trade when it departs Xingang in China on Feb. 2. Mediterranean Shipping Co. has a slot-swap arrangement with the Premier Alliance. Contact Keith Wallis at keithwallis@hotmail.com .

North America trade to dominate Premier Alliance’s network launch in February

<div class="phx-topic abstract-wrapper">The cyclical nature of container shipping hasn’t changed, but the industry has reached a point in which the big carriers can look forward to good long-term returns on investment and outside investor parties looking for a way in, writes Jeremy Masters. </div>

The cyclical nature of container shipping hasn’t changed, but the industry has reached a point in which the big carriers can look forward to good long-term returns on investment and outside investor parties looking for a way in, writes Jeremy Masters.

<div class="phx-topic">The industry has, in recent years, produced some eye-popping profits. It hasn’t always been that way. For a very long period since the advent of containerization, carriers made very poor average returns on investment. The consolidation of the industry after the 2016 demise of Hanjin started to tip the scales more in favor of the carriers, but COVID-19 and the Red Sea crisis, with their attendant implications for capacity demand exceeding supply, opened the door to mega returns, albeit temporary. The cyclical nature of the business has not changed (and it would not be surprising to see red ink next year) but we have reached a point now where the big carriers can look forward to good long-term returns on investment and investor parties outside the industry taking note. There are limited routes to ownership, however. The most obvious observation is that the barriers to entry are now high to starting a new carrier, particularly if the aspirant wants to acquire new capacity and operate in the major east-west container trades. Even if a new carrier emerges, with the possible exception of the Premier alliance, it is unlikely that the other consortiums would entertain a new entrant. Slot charters may be possible, but a new entrant would have to bring sufficient tonnage to the table that Mediterranean Shipping Co. and the three consortiums would see it in their interest to cooperate. The bill for getting critical mass is big. Fourteen 24,000-TEU ships to support a single Asia to Europe loop will cost approximately $3.5 billion at current newbuilding prices. Secondhand ships could be targeted, but older vessels operating conventional fuels are going to be an increasing issue in many trades. The charter market is expensive and particularly constrained in the larger, newer built sizes. Then there is the matter of operating such ships. Running a carrier is a complex task and expertise will be required in general management, finance, marketing and sales, vessel operations, container management, etc. — some of it in multiple geographies. A major stake in an existing top 10 carrier is a possibility, avoiding an injection of new disruptive capacity. But if a controlling interest is desired as well as freedom from government encumbrances then the list of potential targets will likely be small or even nil. Of course, if red ink really starts to flow among the major carriers, the selling price will tend to be more reasonable and home country governments and other interests will have to be more flexible, although their preference will undoubtedly be to find a domestic solution. A more viable approach might then be to enter regional trades by launching a new carrier or buying existing ones, and then stealthily advance into a deep sea route. For example, an entrant could serve intra-Asia first before expanding to regional trades such as in intra-East Mediterranean and the Black Sea. A new entrant could then launch a deepsea service between the two trades once operations are stable and could go on to gradually connect more markets with the same formula. Current carriers have employed similar techniques but tended in the opposite direction, with the main trades driving regional acquisitions or setting up regional networks to strengthen the overall network. Venturing into the territory of the carriers outside the top 10 may be more financially manageable and more easily achievable, but it doesn’t necessarily offer a competitive edge. For the more risk-accepting investors, the route to more rapid penetration and high returns would be to bring a new business model to the market. One area that is ripe for a disrupter is the ongoing conflict between carriers and their clients in the selling/buying of assured future space at an assured rate. Any carrier that can present a reliable and flexible model that ties both sides in will attract not just regular business but also some degree of speculative hedging business. The bottom line then is that the biggest carriers are in a very strong position now, and it’s tough to see a new entrant to the industry — even a cash rich one — being able to buy into the top echelons. There is still room in the industry, however, to enter the regional trades in a substantive way and to build outward. Alternatively, for those prepared to challenge the existing commercial model there could be a very successful future. The joke used to be that you could make a small fortune in container shipping by starting with a big one. Today there really is the possibility of going the other way. Contact Jeremy Masters at <a href="jeremy@shippingmastershk.com">jeremy@shippingmastershk.com</a>. </div>

The industry has, in recent years, produced some eye-popping profits. It hasn’t always been that way. For a very long period since the advent of containerization, carriers made very poor average returns on investment. The consolidation of the industry after the 2016 demise of Hanjin started to tip the scales more in favor of the carriers, but COVID-19 and the Red Sea crisis, with their attendant implications for capacity demand exceeding supply, opened the door to mega returns, albeit temporary. The cyclical nature of the business has not changed (and it would not be surprising to see red ink next year) but we have reached a point now where the big carriers can look forward to good long-term returns on investment and investor parties outside the industry taking note. There are limited routes to ownership, however. The most obvious observation is that the barriers to entry are now high to starting a new carrier, particularly if the aspirant wants to acquire new capacity and operate in the major east-west container trades. Even if a new carrier emerges, with the possible exception of the Premier alliance, it is unlikely that the other consortiums would entertain a new entrant. Slot charters may be possible, but a new entrant would have to bring sufficient tonnage to the table that Mediterranean Shipping Co. and the three consortiums would see it in their interest to cooperate. The bill for getting critical mass is big. Fourteen 24,000-TEU ships to support a single Asia to Europe loop will cost approximately $3.5 billion at current newbuilding prices. Secondhand ships could be targeted, but older vessels operating conventional fuels are going to be an increasing issue in many trades. The charter market is expensive and particularly constrained in the larger, newer built sizes. Then there is the matter of operating such ships. Running a carrier is a complex task and expertise will be required in general management, finance, marketing and sales, vessel operations, container management, etc. — some of it in multiple geographies. A major stake in an existing top 10 carrier is a possibility, avoiding an injection of new disruptive capacity. But if a controlling interest is desired as well as freedom from government encumbrances then the list of potential targets will likely be small or even nil. Of course, if red ink really starts to flow among the major carriers, the selling price will tend to be more reasonable and home country governments and other interests will have to be more flexible, although their preference will undoubtedly be to find a domestic solution. A more viable approach might then be to enter regional trades by launching a new carrier or buying existing ones, and then stealthily advance into a deep sea route. For example, an entrant could serve intra-Asia first before expanding to regional trades such as in intra-East Mediterranean and the Black Sea. A new entrant could then launch a deepsea service between the two trades once operations are stable and could go on to gradually connect more markets with the same formula. Current carriers have employed similar techniques but tended in the opposite direction, with the main trades driving regional acquisitions or setting up regional networks to strengthen the overall network. Venturing into the territory of the carriers outside the top 10 may be more financially manageable and more easily achievable, but it doesn’t necessarily offer a competitive edge. For the more risk-accepting investors, the route to more rapid penetration and high returns would be to bring a new business model to the market. One area that is ripe for a disrupter is the ongoing conflict between carriers and their clients in the selling/buying of assured future space at an assured rate. Any carrier that can present a reliable and flexible model that ties both sides in will attract not just regular business but also some degree of speculative hedging business. The bottom line then is that the biggest carriers are in a very strong position now, and it’s tough to see a new entrant to the industry — even a cash rich one — being able to buy into the top echelons. There is still room in the industry, however, to enter the regional trades in a substantive way and to build outward. Alternatively, for those prepared to challenge the existing commercial model there could be a very successful future. The joke used to be that you could make a small fortune in container shipping by starting with a big one. Today there really is the possibility of going the other way. Contact Jeremy Masters at jeremy@shippingmastershk.com .

New entrants have few paths into container shipping

<div class="phx-topic abstract-wrapper">It’s hard to see a world where AI isn’t a necessary component for financial durability in a sector that will always grapple with the volatility of freight rates and the ebbs and flows of demand and volumes. </div>

It’s hard to see a world where AI isn’t a necessary component for financial durability in a sector that will always grapple with the volatility of freight rates and the ebbs and flows of demand and volumes.

<div class="phx-topic">The last two years have been characterized by flat demand, volatile rates and increased costs in the logistics industry. But executives looking at data and comparing it with the pre-COVID era should bear in mind that one thing is vastly different this time around: We’re in the throes of a new technological wave around artificial intelligence (AI) that sets the stage for a meaningfully different environment of business building. AI has dominated discussions across industries in the last two years as buyers seek to separate signal from noise. This has sparked both enthusiasm and skepticism. Is AI in supply chain management merely a temporary trend, or does it possess the potential for lasting impact? Moreover, which AI applications are most likely to transform supply chain operations in the long run? At a supply chain conference earlier this year, I asked a room of about 200 executives how many were using generative AI in their everyday jobs. Almost every single hand went up. What was once a new, scary technology is proving to provide operational leverage in a period where margins are under secular pressure. Among service-intensive logistics services providers (LSPs) such as forwarders and freight brokers, AI is proving to be a valuable asset for coping with a litany of freight operations and back-office tasks. It turns out this tooling can help increase productivity in a way that reduces the cost to serve, or the expense required to execute a shipment. While it’s early days, we’re seeing harsh skepticism now turning into praise as early indicators of AI’s return on investment (ROI) are hard to ignore in an environment where companies have typically managed long-term margins through phases of retrenching and expansion. Given the service orientation of the supply chain, sales enablement is a key area of focus. We know of one upstart who has developed their own AI voice agent to handle preliminary sales calls on behalf of insurance brokers placing trucking liability policies. That is expected to improve sales conversions by at least 25% when rolled out across the organization. In another instance, a large freight broker mentioned cost reductions of 20% by having a voice agent qualify inbound calls from truckers looking for freight. This helps carrier sales professionals focus only on the higher-value carriers they believe fit their network and the needs of their shipper-clients. <h3>Understanding the promise of AI </h3>Lastly, emerging new business models are galvanizing the disruptive nature of AI. The adage among investors is to dub this new business model as “service-as-software.” It simply means that software now does the work rather than enabling it. Business models reflect that by simply “charging for the work,” allowing companies to bill directly for automated processes. That’s a shift akin to the previous migration to software-as-a-service (SaaS), but with an operational twist. Take customs brokerage and trade compliance, for example. Regardless of your politics, it’s clear that trade regulation will increase in complexity in the years to come. But the supply of customs brokers has been relatively flat, with more than 5,000 retirements expected by the end of the decade. Customs brokerage businesses are hard to manage to profitability and are often a loss-leader to cross-sell other freight services given how loyal customers can be to their customs broker. We’ve seen several startups develop an AI-native ability to broker customs at gross margins in excess of 50% and handle volumes per employee two to three times greater than incumbents. They’re also able to tie that to trade compliance workflows so organizations can make more informed decisions around sourcing and distribution to manage expenses while staying within the parameters of the law. We’re still in the early innings of understanding the promise AI brings to the supply chain, as well as how to develop and scale key processes around its capabilities. The thing that’s clear to me is that we cannot view the business environment and operational best practices of a bygone era as the baseline for the future. AI is something that’s here to stay and brings with it a large promise for an industry as service-heavy as supply chain. Data from these early deployments suggests that smaller teams can handle more volume without forsaking customer outcomes. If this continues, it’s hard to see a world where AI isn’t a necessary component for financial durability in a sector that will always grapple with the volatility of rates and the ebbs and flows of demand and freight volumes. Contact Santosh Sankar at <a href="mailto:santosh@dynamo.vc ">santosh@dynamo.vc</a>.</div>

The last two years have been characterized by flat demand, volatile rates and increased costs in the logistics industry. But executives looking at data and comparing it with the pre-COVID era should bear in mind that one thing is vastly different this time around: We’re in the throes of a new technological wave around artificial intelligence (AI) that sets the stage for a meaningfully different environment of business building. AI has dominated discussions across industries in the last two years as buyers seek to separate signal from noise. This has sparked both enthusiasm and skepticism. Is AI in supply chain management merely a temporary trend, or does it possess the potential for lasting impact? Moreover, which AI applications are most likely to transform supply chain operations in the long run? At a supply chain conference earlier this year, I asked a room of about 200 executives how many were using generative AI in their everyday jobs. Almost every single hand went up. What was once a new, scary technology is proving to provide operational leverage in a period where margins are under secular pressure. Among service-intensive logistics services providers (LSPs) such as forwarders and freight brokers, AI is proving to be a valuable asset for coping with a litany of freight operations and back-office tasks. It turns out this tooling can help increase productivity in a way that reduces the cost to serve, or the expense required to execute a shipment. While it’s early days, we’re seeing harsh skepticism now turning into praise as early indicators of AI’s return on investment (ROI) are hard to ignore in an environment where companies have typically managed long-term margins through phases of retrenching and expansion. Given the service orientation of the supply chain, sales enablement is a key area of focus. We know of one upstart who has developed their own AI voice agent to handle preliminary sales calls on behalf of insurance brokers placing trucking liability policies. That is expected to improve sales conversions by at least 25% when rolled out across the organization. In another instance, a large freight broker mentioned cost reductions of 20% by having a voice agent qualify inbound calls from truckers looking for freight. This helps carrier sales professionals focus only on the higher-value carriers they believe fit their network and the needs of their shipper-clients. Understanding the promise of AI Lastly, emerging new business models are galvanizing the disruptive nature of AI. The adage among investors is to dub this new business model as “service-as-software.” It simply means that software now does the work rather than enabling it. Business models reflect that by simply “charging for the work,” allowing companies to bill directly for automated processes. That’s a shift akin to the previous migration to software-as-a-service (SaaS), but with an operational twist. Take customs brokerage and trade compliance, for example. Regardless of your politics, it’s clear that trade regulation will increase in complexity in the years to come. But the supply of customs brokers has been relatively flat, with more than 5,000 retirements expected by the end of the decade. Customs brokerage businesses are hard to manage to profitability and are often a loss-leader to cross-sell other freight services given how loyal customers can be to their customs broker. We’ve seen several startups develop an AI-native ability to broker customs at gross margins in excess of 50% and handle volumes per employee two to three times greater than incumbents. They’re also able to tie that to trade compliance workflows so organizations can make more informed decisions around sourcing and distribution to manage expenses while staying within the parameters of the law. We’re still in the early innings of understanding the promise AI brings to the supply chain, as well as how to develop and scale key processes around its capabilities. The thing that’s clear to me is that we cannot view the business environment and operational best practices of a bygone era as the baseline for the future. AI is something that’s here to stay and brings with it a large promise for an industry as service-heavy as supply chain. Data from these early deployments suggests that smaller teams can handle more volume without forsaking customer outcomes. If this continues, it’s hard to see a world where AI isn’t a necessary component for financial durability in a sector that will always grapple with the volatility of rates and the ebbs and flows of demand and freight volumes. Contact Santosh Sankar at santosh@dynamo.vc .

Logistics Technology News

Supply chains embrace the AI takeover to slash costs

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

North Asia to UK and Mediterranean container spot rates (Platts)

Platts North Asia to Mediterranean and UK Continent Weekly Gateway

<div class="phx-topic abstract-wrapper">A host of factors can raise transit times on the 11,000-plus-kilometer rail network, undermining the trust of cargo owners that is a crucial selling point of the Asia-Europe connection.</div>

A host of factors can raise transit times on the 11,000-plus-kilometer rail network, undermining the trust of cargo owners that is a crucial selling point of the Asia-Europe connection.

<div class="phx-topic">VIENNA — The ability to deliver on promised schedules remains one of the main challenges facing rail transport providers on the so-called middle corridor connecting China and Europe, according to executives at an intercontinental rail conference here last week. But on-time performance was the point of an iceberg of underlying reliability challenges, attendees at the European Silk Road Summit in Vienna were told. ”As long as everything goes well, the customer is happy, but if something goes wrong, the customer will start to doubt rail more than they would do for sea freight,” said Alona Toprak, managing director at DB Cargo Eurasia. Containerized freight on the middle corridor uses multiple cargo handovers — from rail to ferry to road and back to rail — with delays at key modal change points. Cross-border customs issues can add to delays, with volatile rates and equipment imbalances all placing service level promises under pressure. Still, meeting those promises is a selling point for the intercontinental rail network that cannot be compromised, logistics executives warned delegates. Thomas Kargl, director of Eurasian logistics provider Smartlog, told the summit that rail services from China to Europe had always suffered from a lack of reliability and it took much consulting time with shippers to change that impression. “If I say we are running between 12 and 15 days, we must hold that time,” Kargl said. “To attract customers, they must recognize that rail is available and is reliable. We are talking about containers valued at hundreds of thousands of dollars, so an increase of the transit time by a few days will tie up a lot of capital.” Toprak agreed and said customers of high-value products moving by rail had high expectations and were “very demanding.” DB Cargo Eurasia introduced an express rail service from China to Europe at the end of 2023 and expanded the offering this year. Toprak said it was now possible to offer shippers a nine-day transit time from China to the Malaszewicze rail hub in Poland via the northern corridor that was attractive to e-commerce, but it also raised the reliability bar even higher. ”The lead time of nine days is a real option for e-commerce, but if we promise nine days, we must stick to it because if not the customer will be penalized, lose money and then the service will not be trusted,” she said. <h3>Peak time delays </h3>There are several hurdles that must be overcome by service providers offering fast rail transit times, especially on the middle corridor with the intermodal requirements and the repeated border crossings, Kargl noted. China’s railways have a different gauge to those used in Europe that requires cargo to be transhipped at the China-Kazakhstan border and again at European entry points. At peak times, that can lead to delays. The service providers must also manage other factors, including the documentation for shipments and ensuring it is communicated electronically to all customs authorities along the route. In addition, sufficient equipment and access to rolling stock need to be guaranteed, while the provision of advance bookings and cargo closing times need to be ensured. “If you manage this all in a smooth way, the nine days transit will be reachable 80% of the time,” Kargl said. Following the Russian invasion of Ukraine in February 2022, containerized trade on the northern route from China to North Europe largely dried up. Most of the cargo was moved to ocean, but forwarders and rail freight operators began testing the middle corridor that runs from China through Central Asia, across the Caspian and Black seas, and on into Turkey or Eastern Europe. While some cargo has returned to the northern route through Russia, concerns over sanctions breaches and moral opposition to contributing revenue to Russian Railways is limiting volume. However, Kelvin Tang, the head of global cross-border business and multimodal leader at CEVA Logistics, said shipping containerized cargo on the middle corridor was not just a political solution, it was a product offering. “If customers can accept 60 days transit, they will choose ocean, but if they want 30 days or less, they need to choose rail,” Tang told the summit. “If rail service becomes more stable with reliable lead times and competitive prices, it will become more attractive.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

VIENNA — The ability to deliver on promised schedules remains one of the main challenges facing rail transport providers on the so-called middle corridor connecting China and Europe, according to executives at an intercontinental rail conference here last week. But on-time performance was the point of an iceberg of underlying reliability challenges, attendees at the European Silk Road Summit in Vienna were told. ”As long as everything goes well, the customer is happy, but if something goes wrong, the customer will start to doubt rail more than they would do for sea freight,” said Alona Toprak, managing director at DB Cargo Eurasia. Containerized freight on the middle corridor uses multiple cargo handovers — from rail to ferry to road and back to rail — with delays at key modal change points. Cross-border customs issues can add to delays, with volatile rates and equipment imbalances all placing service level promises under pressure. Still, meeting those promises is a selling point for the intercontinental rail network that cannot be compromised, logistics executives warned delegates. Thomas Kargl, director of Eurasian logistics provider Smartlog, told the summit that rail services from China to Europe had always suffered from a lack of reliability and it took much consulting time with shippers to change that impression. “If I say we are running between 12 and 15 days, we must hold that time,” Kargl said. “To attract customers, they must recognize that rail is available and is reliable. We are talking about containers valued at hundreds of thousands of dollars, so an increase of the transit time by a few days will tie up a lot of capital.” Toprak agreed and said customers of high-value products moving by rail had high expectations and were “very demanding.” DB Cargo Eurasia introduced an express rail service from China to Europe at the end of 2023 and expanded the offering this year. Toprak said it was now possible to offer shippers a nine-day transit time from China to the Malaszewicze rail hub in Poland via the northern corridor that was attractive to e-commerce, but it also raised the reliability bar even higher. ”The lead time of nine days is a real option for e-commerce, but if we promise nine days, we must stick to it because if not the customer will be penalized, lose money and then the service will not be trusted,” she said. Peak time delays There are several hurdles that must be overcome by service providers offering fast rail transit times, especially on the middle corridor with the intermodal requirements and the repeated border crossings, Kargl noted. China’s railways have a different gauge to those used in Europe that requires cargo to be transhipped at the China-Kazakhstan border and again at European entry points. At peak times, that can lead to delays. The service providers must also manage other factors, including the documentation for shipments and ensuring it is communicated electronically to all customs authorities along the route. In addition, sufficient equipment and access to rolling stock need to be guaranteed, while the provision of advance bookings and cargo closing times need to be ensured. “If you manage this all in a smooth way, the nine days transit will be reachable 80% of the time,” Kargl said. Following the Russian invasion of Ukraine in February 2022, containerized trade on the northern route from China to North Europe largely dried up. Most of the cargo was moved to ocean, but forwarders and rail freight operators began testing the middle corridor that runs from China through Central Asia, across the Caspian and Black seas, and on into Turkey or Eastern Europe. While some cargo has returned to the northern route through Russia, concerns over sanctions breaches and moral opposition to contributing revenue to Russian Railways is limiting volume. However, Kelvin Tang, the head of global cross-border business and multimodal leader at CEVA Logistics, said shipping containerized cargo on the middle corridor was not just a political solution, it was a product offering. “If customers can accept 60 days transit, they will choose ocean, but if they want 30 days or less, they need to choose rail,” Tang told the summit. “If rail service becomes more stable with reliable lead times and competitive prices, it will become more attractive.” Contact Greg Knowler at greg.knowler@spglobal.com .

Rail News

Forwarding

International rail

Surface

Schedule reliability remains key challenge for China-Europe rail

<div class="phx-topic abstract-wrapper">Hapag-Lloyd has contracted with a Chinese energy producer for green methanol to power five 10,100-TEU chartered ships with methanol dual-fuel propulsion systems.</div>

Hapag-Lloyd has contracted with a Chinese energy producer for green methanol to power five 10,100-TEU chartered ships with methanol dual-fuel propulsion systems.

<div class="phx-topic">Chinese energy producer Goldwind will be supplying both members of the <a href="https://www.joc.com/article/hapag-lloyd-says-gemini-alliance-cargo-bookings-to-open-dec-3-5846853">Gemini Cooperation</a> with green methanol from 2026. Hapag-Lloyd will receive 250,000 tons per year in a deal signed this week while its partner <a href="https://www.joc.com/article/maersk-inks-new-methanol-sourcing-deal-with-chinese-supplier-5234419">Maersk will get 500,000 tons a year</a> according to an agreement made last year. The green methanol will consist of a blend of bio- and e-methanol and enable a greenhouse gas (GHG) emissions reduction of at least 70%, Hapag-Lloyd said in a statement Thursday. “With the agreement, we are securing a significant proportion of our requirements for green fuels,” said Hapag-Lloyd CEO Rolf Habben Jansen. “This will bring us an important step closer to our goal of achieving net-zero fleet operations by 2045.” Hapag-Lloyd and Seaspan are converting five 10,100-TEU charter ships to a methanol dual-fuel propulsion system that will be ready in 2026. The carrier also made a recent order for 24 dual-fuel vessels capable of sailing on liquefied natural gas (LNG). By 2030, Hapag-Lloyd aims to reduce the absolute GHG emissions of the fleet by about one-third compared with 2022. Compared with conventional fuels, the ordered quantity of green methanol can save a total of up to 400,000 metric tons of CO2e emissions in fleet operations per year. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="1a054077-7728-4ffd-abb8-b7aff17c3235"></dynamic-object></div>Hapag-Lloyd’s decarbonization credentials were burnished by its recent <a href="https://www.joc.com/article/hapag-lloyd-wins-asia-europe-green-shipping-tender-to-launch-next-year-5240949">winning of a tender from the Zero Emission Maritime Buyers Alliance</a> (ZEMBA) aimed at fast-tracking commercial deployment of green shipping services at scale to create a competitive market for those services. About 70% of the total 1.7 million TEUs of ship orders made so far this year were for ships capable of sailing on methanol, LNG or hydrogen, according to Sea-web, a sister company of the Journal of Commerce within S&amp;P Global. The need to keep fuel options open and avoid being locked into one pathway was illustrated <a href="https://www.joc.com/article/maersks-lng-order-hedges-bet-on-green-fuel-technology-ceo-5703200">in a recent Maersk order for dual-fuel vessels totaling 800,000 TEUs</a> capable of sailing on methanol as well as LNG. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Chinese energy producer Goldwind will be supplying both members of the Gemini Cooperation with green methanol from 2026. Hapag-Lloyd will receive 250,000 tons per year in a deal signed this week while its partner Maersk will get 500,000 tons a year according to an agreement made last year. The green methanol will consist of a blend of bio- and e-methanol and enable a greenhouse gas (GHG) emissions reduction of at least 70%, Hapag-Lloyd said in a statement Thursday. “With the agreement, we are securing a significant proportion of our requirements for green fuels,” said Hapag-Lloyd CEO Rolf Habben Jansen. “This will bring us an important step closer to our goal of achieving net-zero fleet operations by 2045.” Hapag-Lloyd and Seaspan are converting five 10,100-TEU charter ships to a methanol dual-fuel propulsion system that will be ready in 2026. The carrier also made a recent order for 24 dual-fuel vessels capable of sailing on liquefied natural gas (LNG). By 2030, Hapag-Lloyd aims to reduce the absolute GHG emissions of the fleet by about one-third compared with 2022. Compared with conventional fuels, the ordered quantity of green methanol can save a total of up to 400,000 metric tons of CO2e emissions in fleet operations per year. Hapag-Lloyd’s decarbonization credentials were burnished by its recent winning of a tender from the Zero Emission Maritime Buyers Alliance (ZEMBA) aimed at fast-tracking commercial deployment of green shipping services at scale to create a competitive market for those services. About 70% of the total 1.7 million TEUs of ship orders made so far this year were for ships capable of sailing on methanol, LNG or hydrogen, according to Sea-web, a sister company of the Journal of Commerce within S&P Global. The need to keep fuel options open and avoid being locked into one pathway was illustrated in a recent Maersk order for dual-fuel vessels totaling 800,000 TEUs capable of sailing on methanol as well as LNG. Contact Greg Knowler at greg.knowler@spglobal.com .

Hapag-Lloyd joins Maersk in Chinese methanol supply deal

<div class="phx-topic abstract-wrapper">NYSHEX is making a renewed effort to solve the fundamental problem of ocean container supply chains, promoting the use of index-linked contracts to build contract integrity and certainty. </div>

NYSHEX is making a renewed effort to solve the fundamental problem of ocean container supply chains, promoting the use of index-linked contracts to build contract integrity and certainty.

<div class="phx-topic">From its origins over a decade ago, NYSHEX, founded and led by Gordon Downes, has always aimed to advance a simple yet stubbornly elusive concept in container shipping: integrity of contracts. Incomprehensible to outsiders, signed contracts — many pages long and vetted by lawyers — are unenforceable when confronted by the real-world forces of supply and demand and volatile pricing. “The big problem that prompted us to start NYSHEX is contracts in our industry don’t perform,” Downes told the Journal of Commerce. In many cases, the shipper or carrier fails to live up to the contract terms, whether that be a carrier unwilling to provide vessel space or a shipper steering cargo to other carriers or non-vessel-operating common carriers (NVOs) to obtain a lower rate, thus failing to deliver the agreed-upon volumes. Triggers for failed contracts occur when spot rates deviate significantly from contract rates and carriers blank sailings or omit ports on short notice due to changes in demand, creating shortfalls in available capacity. Downes said ocean container contracts have just a 65% fulfillment rate. Although such practices undermine trust and stress relationships to the breaking point, no scenario results in serious consequences for the offending party. Litigation or government enforcement remain rare outside of a tiny handful of highly publicized cases. Originally, NYSHEX, founded by Downes in 2015 “to solve the problem of poor contract fulfillment,” aimed to create an exchange whereby mutually committed — meaning enforceable — contracts could be executed by shippers, NVOs and carriers under full approval of the US Federal Maritime Commission (FMC) and the auspices of the NYSHEX brand. To the limited extent the market availed itself of such contracts, they worked: in the vast majority of cases, both parties lived up to what they committed to. Still, the penalties meant to ensure compliance “can put a lot of strain on relationships, especially when the spot rates are so volatile,” Downes said. But while the concept found some uptake, demand was cyclical and could not overcome at scale the market forces that, in peculiar container shipping mentality, frequently lead each side to seek near-term pricing gain, if it is to be had, at the expense of longer-term certainty of space or volumes. Whether it’s an obsessively procurement-based mindset on the part of shippers in seeking to drive prices lower whenever possible, or carriers seeing better opportunities on the spot market, sacrifices in pursuit of certainty have yet to take hold on an industrywide level. If there was ever a moment for that mentality to be challenged, it was the pandemic, which showed shippers how quickly and painfully vessel space can dry up in a crisis. And yet the problem remains. <h3>New technology and products</h3>But NYSHEX persevered with its original vision, even if that meant applying it in new ways. The company developed technology that enables parties to monitor contract performance, drawing them into a real-time collaborative environment where issues can be identified and resolved on the spot, versus after the fact during increasingly infrequent quarterly performance reviews. In other words, if contracts can be mutually monitored in real time, the odds are better the parties will comply. Now NYSHEX is delving yet further into solving the fundamental problem: promoting the use of index-linked contracts as a way to build contract integrity and certainty into ocean container supply chains. In announcing a Series C funding round last week, NYSHEX made a strong statement that there is traction in the idea, however long it may have been around. The funding round attracted participation from existing investors, including Goldman Sachs, and new ones, including the Intercontinental Exchange (NYSE:ICE), a leading exchange operator which will calculate the new indices based on actual rates paid by shippers. Other container freight rate indices tend to be based on traditional price discovery performed by analysts. It said it will launch a new series of indices and tools to administer index-linked contracts. The question, then, is whether index-linked contracts are able to move the industry forward in addressing the continuing core problem of a lack of contract integrity. Linking pricing to an index means shippers’ rates face less risk of falling out of the range of prevailing rates and cargo being left behind at origin. But there is less budget certainty which clashes with annual budgeting cycles at beneficial cargo owners (BCOs). And while there are futures contracts traded, such as an active market of day traders on the Shanghai International Energy Exchange (INE China), which launched trading in a Containerized Freight Index Futures Contract in 2023, they haven’t built the liquidity or credibility to be of interest to BCO finance teams who would engage in hedging against adverse movements in ocean rates. And carriers have been outspoken about their declining interest in container freight futures. Index-linked contracts have a history of going in and out of fashion; they fell into fashion during the pandemic when shippers were desperate for space but fell out once the extremes of the disruptions were over. Also holding back index-linked contracts are shipper and carrier lawyers needing to come to agree on terms and conditions, frequently a difficult hurdle to overcome. Now, amid a continuing tight market fueled by Red Sea reroutings and robust 2024 volumes, there is more talk of using index-linked contracts. But just as it was before, that could just be cyclical. Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>.</div>

From its origins over a decade ago, NYSHEX, founded and led by Gordon Downes, has always aimed to advance a simple yet stubbornly elusive concept in container shipping: integrity of contracts. Incomprehensible to outsiders, signed contracts — many pages long and vetted by lawyers — are unenforceable when confronted by the real-world forces of supply and demand and volatile pricing. “The big problem that prompted us to start NYSHEX is contracts in our industry don’t perform,” Downes told the Journal of Commerce. In many cases, the shipper or carrier fails to live up to the contract terms, whether that be a carrier unwilling to provide vessel space or a shipper steering cargo to other carriers or non-vessel-operating common carriers (NVOs) to obtain a lower rate, thus failing to deliver the agreed-upon volumes. Triggers for failed contracts occur when spot rates deviate significantly from contract rates and carriers blank sailings or omit ports on short notice due to changes in demand, creating shortfalls in available capacity. Downes said ocean container contracts have just a 65% fulfillment rate. Although such practices undermine trust and stress relationships to the breaking point, no scenario results in serious consequences for the offending party. Litigation or government enforcement remain rare outside of a tiny handful of highly publicized cases. Originally, NYSHEX, founded by Downes in 2015 “to solve the problem of poor contract fulfillment,” aimed to create an exchange whereby mutually committed — meaning enforceable — contracts could be executed by shippers, NVOs and carriers under full approval of the US Federal Maritime Commission (FMC) and the auspices of the NYSHEX brand. To the limited extent the market availed itself of such contracts, they worked: in the vast majority of cases, both parties lived up to what they committed to. Still, the penalties meant to ensure compliance “can put a lot of strain on relationships, especially when the spot rates are so volatile,” Downes said. But while the concept found some uptake, demand was cyclical and could not overcome at scale the market forces that, in peculiar container shipping mentality, frequently lead each side to seek near-term pricing gain, if it is to be had, at the expense of longer-term certainty of space or volumes. Whether it’s an obsessively procurement-based mindset on the part of shippers in seeking to drive prices lower whenever possible, or carriers seeing better opportunities on the spot market, sacrifices in pursuit of certainty have yet to take hold on an industrywide level. If there was ever a moment for that mentality to be challenged, it was the pandemic, which showed shippers how quickly and painfully vessel space can dry up in a crisis. And yet the problem remains. New technology and products But NYSHEX persevered with its original vision, even if that meant applying it in new ways. The company developed technology that enables parties to monitor contract performance, drawing them into a real-time collaborative environment where issues can be identified and resolved on the spot, versus after the fact during increasingly infrequent quarterly performance reviews. In other words, if contracts can be mutually monitored in real time, the odds are better the parties will comply. Now NYSHEX is delving yet further into solving the fundamental problem: promoting the use of index-linked contracts as a way to build contract integrity and certainty into ocean container supply chains. In announcing a Series C funding round last week, NYSHEX made a strong statement that there is traction in the idea, however long it may have been around. The funding round attracted participation from existing investors, including Goldman Sachs, and new ones, including the Intercontinental Exchange (NYSE:ICE), a leading exchange operator which will calculate the new indices based on actual rates paid by shippers. Other container freight rate indices tend to be based on traditional price discovery performed by analysts. It said it will launch a new series of indices and tools to administer index-linked contracts. The question, then, is whether index-linked contracts are able to move the industry forward in addressing the continuing core problem of a lack of contract integrity. Linking pricing to an index means shippers’ rates face less risk of falling out of the range of prevailing rates and cargo being left behind at origin. But there is less budget certainty which clashes with annual budgeting cycles at beneficial cargo owners (BCOs). And while there are futures contracts traded, such as an active market of day traders on the Shanghai International Energy Exchange (INE China), which launched trading in a Containerized Freight Index Futures Contract in 2023, they haven’t built the liquidity or credibility to be of interest to BCO finance teams who would engage in hedging against adverse movements in ocean rates. And carriers have been outspoken about their declining interest in container freight futures. Index-linked contracts have a history of going in and out of fashion; they fell into fashion during the pandemic when shippers were desperate for space but fell out once the extremes of the disruptions were over. Also holding back index-linked contracts are shipper and carrier lawyers needing to come to agree on terms and conditions, frequently a difficult hurdle to overcome. Now, amid a continuing tight market fueled by Red Sea reroutings and robust 2024 volumes, there is more talk of using index-linked contracts. But just as it was before, that could just be cyclical. Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

NYSHEX keeps core vision while evolving in volatile container shipping market

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

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Shippers save money, time with automated transportation bidding tools

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

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Filling the Supply Chain Education Gap with LTL Education Courses

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<div class="phx-topic abstract-wrapper">The union representing 45,000 longshore workers along the East and Gulf coasts is seeking to block technology that management says is critical for land-constrained ports to handle larger ships. </div>

The union representing 45,000 longshore workers along the East and Gulf coasts is seeking to block technology that management says is critical for land-constrained ports to handle larger ships.

<div class="phx-topic">Rail-mounted gantry cranes (RMGs) at container terminals have emerged as the deciding factor for the International Longshoremen’s Association (ILA) in whether they will agree to a new master contract that avoids another port strike in January. The union was unable to block the introduction of RMGs at two East Coast ports under three previous contracts but sees their further usage as a line in the sand in current contract talks. The semi-automated RMGs — which have been in use in the US since 2007 — are seen as the key method for land-constrained terminals, particularly those near urban East Coast ports, to expand. And now they are at the heart of another longshore labor dispute in North America. In a statement Monday, ILA Executive Vice President Dennis Daggett singled out RMGs for being “at the center of this [current] impasse” with the US Maritime Alliance (USMX) over resuming talks for <a href="https://www.joc.com/article/ila-usmx-agree-on-new-wage-offer-and-contract-extension-that-reopens-ports-5741882">a new master contract before a Jan. 15 deadline when the existing contract extension expires</a>. <a href="https://www.joc.com/article/ila-breaks-off-contract-talks-accuses-usmx-of-semi-automation-push-5810392">The union broke off talks with the USMX</a> over what it said was the employer group’s push for “semi automation” language in the new contract. Daggett said the equipment has failed to show it can outperform individual longshore machine operators. And in addition to taking away jobs, the RMGs, he said, are a target for hacking. He cast the fight against RMGs as existential for a union that under two previous administrations did not challenge the equipment’s rollout at the ports of Norfolk, Virginia, and Bayonne, New Jersey. “The ILA is not against progress, innovation, or modernization, but we cannot support technology that jeopardizes jobs, threatens national security, and puts the future of the workforce at risk,” Daggett said. “This is a pivotal moment in our history,” he added. “The decisions we make today will determine the future for generations to come.” No talks between the ILA and USMX are currently scheduled. <h3>‘Sold the ILA a vision’ </h3>RMGs, two of which will straddle a long row of stacked containers, move boxes forward and backward between the berth and truck lanes. As truckers enter the terminal, the RMG picks out the box from each stack and delivers it to the front of the row for mounting on chassis, or in reverse for loading operations. Stacks can also be “groomed” by RMGs overnight to push containers for morning delivery to the front of the row. RMGs allow for much denser container yards as less space is required for the operation of straddle carriers or rubber tire gantry cranes, which require an individual operator on the machine. In contrast, the RMG is operated remotely from an office, with an operator also capable of operating several RMGs at once depending on volume. RMG operations are considered safer as fewer workers are required in the yard around rolling machinery. Breaks and shift changes can also be done faster as RMG operators just move away from desks rather than yard equipment. Maersk’s APM Terminals subsidiary was the first to roll out RMG technology in the US when it began developing the Portsmouth marine terminal in Norfolk. Opened in 2007, APM Portsmouth, which had design capacity of 1.5 million TEUs on 291 acres of land, originally had 30 RMG cranes and six ship-to-shore cranes. The Portsmouth terminal was developed years earlier under the then-current 1996–2001 master contract between the USMX and ILA under its previous president John Bowers. That contract had no language about technology. Daggett said in his Monday statement that “under a different ILA administration, the employers introduced semi-automated RMGs at a greenfield terminal on the East Coast.” “They sold the ILA a vision that this new terminal would create thousands of jobs,” Daggett said. “It was a loophole that came at a cost to ILA members and their families.” Increasingly aware of the potential for job losses, the union’s 2004–2010 master contract was the first to contain terms addressing technology usage at container terminals. Those original contract terms did not outright bar marine terminals from implementing new technology but require management to notify the affected local and the international longshore union about the new technology and work with the unions to mitigate any job losses. The ILA has the right to contest any technology implementation through a grievance process before a three-member panel comprised of ILA and USMX representatives and an arbitrator. <h3>Canal expansion drove RMG growth on East Coast </h3>APM eventually sold Portsmouth in 2014 to Alinda Capital Partners and a UK-based pension fund, which renamed it the Virginia International Gateway (VIG). The buyers said at the time the acquisition of the VIG was due to its “<a href="https://www.joc.com/article/apm-terminals-facility-in-virginia-to-be-sold-5195342">modern design and high levels of automation, which ensure that the facility will be a key component of the port’s infrastructure now and in the future</a>.” In 2016, as the Panama Canal’s expansion opened up the East Coast to larger ships, the Virginia Port Authority, which operates the VIG, began installing another 26 RMGs and four new ship-to-shore cranes that increased its capacity by another 500,000 TEUs. About that time, Virginia also began to convert the south berth of the nearby Norfolk International Terminal into an RMG operation. In 2014, Global Container Terminals (GCT) debuted the installation of 20 RMGs as part of a $325 million expansion of its Bayonne container terminal that also added 70 acres to its 100-acre footprint. The expansion more than doubled Bayonne’s effective capacity from 435,000 container lifts to 1.1 million container lifts per year, making what Bayonne’s executives called the most “<a href="https://www.joc.com/article/nys-global-terminal-ila-in-arbitration-5219271">technologically advanced terminal in the United States.</a>” The rollout at Bayonne was not entirely without controversy, though. The ILA and GCT had to enter arbitration over whether <a href="https://www.joc.com/article/nys-global-terminal-ila-in-arbitration-5219271">the union had jurisdiction over an RMG safety device that required truckers to press a button that they were in a safe area when a container was being loaded</a>. The 2012–2018 master contract negotiated by ILA President Harold Daggett, Dennis’ father, did not contain an outright ban on any type of automation at marine terminals or the RMGs at Bayonne. However, the language around technology implementation became stricter, requiring that any automation project at a marine terminal go before a 10-member committee of ILA and USMX members that would study the workforce effects of automation. By the time of the 2018–2024 contract, the ILA negotiated a prohibition on full automation at ports but still left the question of semi-automation technology open to collective bargaining. “We had learned from these mistakes,” Dennis Daggett said. “Under new leadership, the ILA secured workforce protections and guarantees, ensuring that automation would no longer be implemented without consideration of its impact on jobs. These agreements set clear limits on how far technology could go in replacing human labor.” <h3>Ports ‘must evolve’ </h3>The USMX, however, has laid out an opposite stance, seeing the ability to implement new technology as critical for land-constrained US ports and their workers to remain competitive. It, too, noted that RMGs were allowed under previous agreements and allowed one unidentified terminal to double its container throughput. “Port operations must evolve, and embracing modern technology is critical to this evolution,” the USMX said in a statement Tuesday in response to the ILA’s statement. “Due to the lack of available new land in most ports, the only way for US East and Gulf coast ports to handle more volume is to densify terminals.” “USMX is not, nor has it ever been, seeking to eliminate jobs, but to simply implement and maintain the use of equipment and technology already allowed under the current contract agreement and already widely in use, including at some USMX ports,” it added. Daggett said that the densification argument is designed to deflect from the job losses stemming from RMGs, which still require longshore workers at either end to move containers from the ship or onto chassis. Daggett said there’s no evidence that terminals with RMG technology are more efficient, adding that RMGs face the risk of hacking attacks due to their reliance on communications networks rather than longshore workers inside an operator’s cab. His warning comes after the ports of <a href="https://www.joc.com/article/port-of-houston-aims-for-thursday-reopening-after-gate-outage-5249163">Houston</a> and <a href="https://www.joc.com/article/sc-ports-chief-outlines-plans-for-charleston-to-hit-10-million-teu-mark-5749894">Charleston</a> experienced multi-day gate outages that have gone mostly unexplained. “This isn’t about safety or productivity, it’s about job elimination,” he said. “The ILA has proven through data and real-world operations that RMGs are not more productive than traditional equipment operated by human workers.” Since their rollout, the VIG now has 56 RMGs and can handle 2.2 million TEUs per year on approximately the same amount of land it had since 2007. Virginia’s NIT now has 96 RMGs that allow it to handle 3.6 million TEUs per year on some 378 acres of land. GCT Bayonne handles about 1 million TEUs per year with its 20 RMGs. <a href="https://www.joc.com/article/gct-adding-berth-for-ultra-large-ships-to-new-jersey-terminal-5224198">A third berth that will open in 2025</a> also means additional RMGs at the site that will further increase its capacity. <a href="https://www.joc.com/article/cma-cgms-ny-nj-home-offers-it-southeast-asia-trade-growth-saade-5226190">CMA CGM purchased GCT Bayonne last year, citing its efficiency</a>. A New Jersey terminal management source who asked not to be identified said that it’s not a matter of RMG operations being more efficient, but rather that it allows them to make the best use of available land and keep up with other operators. Maher Terminals, the largest privately operated marine terminal on the East Coast, uses over 200 straddle carriers operated individually to move over 3 million TEUs per year. But it has 450 acres of land to do so. The Bayonne terminal only moves one-third of that volume, but it does so on one-third of the land mass. “If you look at man-hours per lift, there’s very little difference,” the source said. RMGs have also been implemented at <a href="https://www.joc.com/article/us-ports-eye-more-automation-as-discharges-from-large-vessels-intensify-5213519">the fully automated Long Beach Container Terminal on the US West Coast</a>, which has been the target of longshore union criticisms over productivity. <a href="https://www.joc.com/article/centerm-terminal-expansion-gives-vancouver-critical-boost-in-capacity-5227056">DP World has also rolled out RMG technology at its Centerm facility in Vancouver</a>, following a similar rollout of RMGs at the nearby GCT Deltaport facility in 2020. Longshore foremen at the Port of Vancouver, however, <a href="https://www.joc.com/article/dp-worlds-centerm-project-at-heart-of-employer-union-dispute-in-vancouver-5225162">have unsuccessfully tried to negotiate a new staffing agreement with DP World</a> over the RMG introduction, resulting in a port-wide lockout that ended as <a href="https://www.joc.com/article/bc-ports-to-reopen-but-longshore-union-plans-challenge-to-back-to-work-order-5810473">both sides have been forced by Canada’s government into arbitration</a>. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com ">michael.angell@spglobal.com</a>.</div>

Rail-mounted gantry cranes (RMGs) at container terminals have emerged as the deciding factor for the International Longshoremen’s Association (ILA) in whether they will agree to a new master contract that avoids another port strike in January. The union was unable to block the introduction of RMGs at two East Coast ports under three previous contracts but sees their further usage as a line in the sand in current contract talks. The semi-automated RMGs — which have been in use in the US since 2007 — are seen as the key method for land-constrained terminals, particularly those near urban East Coast ports, to expand. And now they are at the heart of another longshore labor dispute in North America. In a statement Monday, ILA Executive Vice President Dennis Daggett singled out RMGs for being “at the center of this [current] impasse” with the US Maritime Alliance (USMX) over resuming talks for a new master contract before a Jan. 15 deadline when the existing contract extension expires . The union broke off talks with the USMX over what it said was the employer group’s push for “semi automation” language in the new contract. Daggett said the equipment has failed to show it can outperform individual longshore machine operators. And in addition to taking away jobs, the RMGs, he said, are a target for hacking. He cast the fight against RMGs as existential for a union that under two previous administrations did not challenge the equipment’s rollout at the ports of Norfolk, Virginia, and Bayonne, New Jersey. “The ILA is not against progress, innovation, or modernization, but we cannot support technology that jeopardizes jobs, threatens national security, and puts the future of the workforce at risk,” Daggett said. “This is a pivotal moment in our history,” he added. “The decisions we make today will determine the future for generations to come.” No talks between the ILA and USMX are currently scheduled. ‘Sold the ILA a vision’ RMGs, two of which will straddle a long row of stacked containers, move boxes forward and backward between the berth and truck lanes. As truckers enter the terminal, the RMG picks out the box from each stack and delivers it to the front of the row for mounting on chassis, or in reverse for loading operations. Stacks can also be “groomed” by RMGs overnight to push containers for morning delivery to the front of the row. RMGs allow for much denser container yards as less space is required for the operation of straddle carriers or rubber tire gantry cranes, which require an individual operator on the machine. In contrast, the RMG is operated remotely from an office, with an operator also capable of operating several RMGs at once depending on volume. RMG operations are considered safer as fewer workers are required in the yard around rolling machinery. Breaks and shift changes can also be done faster as RMG operators just move away from desks rather than yard equipment. Maersk’s APM Terminals subsidiary was the first to roll out RMG technology in the US when it began developing the Portsmouth marine terminal in Norfolk. Opened in 2007, APM Portsmouth, which had design capacity of 1.5 million TEUs on 291 acres of land, originally had 30 RMG cranes and six ship-to-shore cranes. The Portsmouth terminal was developed years earlier under the then-current 1996–2001 master contract between the USMX and ILA under its previous president John Bowers. That contract had no language about technology. Daggett said in his Monday statement that “under a different ILA administration, the employers introduced semi-automated RMGs at a greenfield terminal on the East Coast.” “They sold the ILA a vision that this new terminal would create thousands of jobs,” Daggett said. “It was a loophole that came at a cost to ILA members and their families.” Increasingly aware of the potential for job losses, the union’s 2004–2010 master contract was the first to contain terms addressing technology usage at container terminals. Those original contract terms did not outright bar marine terminals from implementing new technology but require management to notify the affected local and the international longshore union about the new technology and work with the unions to mitigate any job losses. The ILA has the right to contest any technology implementation through a grievance process before a three-member panel comprised of ILA and USMX representatives and an arbitrator. Canal expansion drove RMG growth on East Coast APM eventually sold Portsmouth in 2014 to Alinda Capital Partners and a UK-based pension fund, which renamed it the Virginia International Gateway (VIG). The buyers said at the time the acquisition of the VIG was due to its “ modern design and high levels of automation, which ensure that the facility will be a key component of the port’s infrastructure now and in the future .” In 2016, as the Panama Canal’s expansion opened up the East Coast to larger ships, the Virginia Port Authority, which operates the VIG, began installing another 26 RMGs and four new ship-to-shore cranes that increased its capacity by another 500,000 TEUs. About that time, Virginia also began to convert the south berth of the nearby Norfolk International Terminal into an RMG operation. In 2014, Global Container Terminals (GCT) debuted the installation of 20 RMGs as part of a $325 million expansion of its Bayonne container terminal that also added 70 acres to its 100-acre footprint. The expansion more than doubled Bayonne’s effective capacity from 435,000 container lifts to 1.1 million container lifts per year, making what Bayonne’s executives called the most “ technologically advanced terminal in the United States. ” The rollout at Bayonne was not entirely without controversy, though. The ILA and GCT had to enter arbitration over whether the union had jurisdiction over an RMG safety device that required truckers to press a button that they were in a safe area when a container was being loaded . The 2012–2018 master contract negotiated by ILA President Harold Daggett, Dennis’ father, did not contain an outright ban on any type of automation at marine terminals or the RMGs at Bayonne. However, the language around technology implementation became stricter, requiring that any automation project at a marine terminal go before a 10-member committee of ILA and USMX members that would study the workforce effects of automation. By the time of the 2018–2024 contract, the ILA negotiated a prohibition on full automation at ports but still left the question of semi-automation technology open to collective bargaining. “We had learned from these mistakes,” Dennis Daggett said. “Under new leadership, the ILA secured workforce protections and guarantees, ensuring that automation would no longer be implemented without consideration of its impact on jobs. These agreements set clear limits on how far technology could go in replacing human labor.” Ports ‘must evolve’ The USMX, however, has laid out an opposite stance, seeing the ability to implement new technology as critical for land-constrained US ports and their workers to remain competitive. It, too, noted that RMGs were allowed under previous agreements and allowed one unidentified terminal to double its container throughput. “Port operations must evolve, and embracing modern technology is critical to this evolution,” the USMX said in a statement Tuesday in response to the ILA’s statement. “Due to the lack of available new land in most ports, the only way for US East and Gulf coast ports to handle more volume is to densify terminals.” “USMX is not, nor has it ever been, seeking to eliminate jobs, but to simply implement and maintain the use of equipment and technology already allowed under the current contract agreement and already widely in use, including at some USMX ports,” it added. Daggett said that the densification argument is designed to deflect from the job losses stemming from RMGs, which still require longshore workers at either end to move containers from the ship or onto chassis. Daggett said there’s no evidence that terminals with RMG technology are more efficient, adding that RMGs face the risk of hacking attacks due to their reliance on communications networks rather than longshore workers inside an operator’s cab. His warning comes after the ports of Houston and Charleston experienced multi-day gate outages that have gone mostly unexplained. “This isn’t about safety or productivity, it’s about job elimination,” he said. “The ILA has proven through data and real-world operations that RMGs are not more productive than traditional equipment operated by human workers.” Since their rollout, the VIG now has 56 RMGs and can handle 2.2 million TEUs per year on approximately the same amount of land it had since 2007. Virginia’s NIT now has 96 RMGs that allow it to handle 3.6 million TEUs per year on some 378 acres of land. GCT Bayonne handles about 1 million TEUs per year with its 20 RMGs. A third berth that will open in 2025 also means additional RMGs at the site that will further increase its capacity. CMA CGM purchased GCT Bayonne last year, citing its efficiency . A New Jersey terminal management source who asked not to be identified said that it’s not a matter of RMG operations being more efficient, but rather that it allows them to make the best use of available land and keep up with other operators. Maher Terminals, the largest privately operated marine terminal on the East Coast, uses over 200 straddle carriers operated individually to move over 3 million TEUs per year. But it has 450 acres of land to do so. The Bayonne terminal only moves one-third of that volume, but it does so on one-third of the land mass. “If you look at man-hours per lift, there’s very little difference,” the source said. RMGs have also been implemented at the fully automated Long Beach Container Terminal on the US West Coast , which has been the target of longshore union criticisms over productivity. DP World has also rolled out RMG technology at its Centerm facility in Vancouver , following a similar rollout of RMGs at the nearby GCT Deltaport facility in 2020. Longshore foremen at the Port of Vancouver, however, have unsuccessfully tried to negotiate a new staffing agreement with DP World over the RMG introduction, resulting in a port-wide lockout that ended as both sides have been forced by Canada’s government into arbitration . Contact Michael Angell at michael.angell@spglobal.com .

Port infrastructure

North American ports

Marine terminals

Longshore labor

ILA targets rail-mounted gantry cranes amid impasse in port labor talks

<div class="phx-topic abstract-wrapper">An influx of seafood shipments, combined with several other market factors, is leaving US importers of refrigerated products from Asia scrambling for reefer equipment.</div>

An influx of seafood shipments, combined with several other market factors, is leaving US importers of refrigerated products from Asia scrambling for reefer equipment.

<div class="phx-topic">US shippers are finding it more difficult to secure refrigerated (reefer) containers for Asian exports as volumes surge by double-digit percentages ahead of a potential US port strike next month.US reefer imports from Asia surged 10% year over year in October and have been steadily climbing since March, according to PIERS, a sister product of the Journal of Commerce within S&amp;P Global. In September, seafood imports from Asia increased by nearly 30% compared with the same month in 2023, according to the National Fisheries Association.The tightening of equipment supply is also affecting shipments from China to Southeast Asia, Taiwan-based forwarder Dimerco Express Group warned customers in a recent briefing.Shippers moving goods through ports on the US East and Gulf coasts also face the <a href="https://www.joc.com/article/ila-targets-rail-mounted-gantry-cranes-amid-impasse-in-port-labor-talks-5874742">prospect of a strike on Jan. 15</a> if the longshore union and employers fail to reach an agreement on a new coastwide contract. Despite some loosening in recent weeks, <a href="https://www.joc.com/article/us-retailers-prepare-for-new-ila-strike-threat-tariffs-on-china-imports-5822904">overall container capacity from Asia to the US remains tight</a>, challenging reefer and dry shippers alike.<h3>A ‘little bit’ of an issue</h3>Ahead of the potential interruption, some US exporters have reported difficulties in securing empty reefer containers and related generator equipment at East and Gulf coast ports, particularly the Port of Houston.“Philadelphia and Virginia are just a little bit [of an issue], but Houston is a problem,” said Eric Brown, president at JTP Transportation and chair member of the Meat Import Council of America, on generators for reefer equipment.Another source said she’s seeing some cargo rolled in Houston, something she described as an “ongoing issue” in the region. However, the source said cargo rolls are neither increasing nor significantly impacting the market.Bill Duggan, North American advisor at reefer market consultant Eskesen Advisory, said shippers can expect better reefer equipment availability in the Americas next year as equipment from Asia is repositioned, along with stronger volume growth across the board.“It seems the market for refrigerated continues strong through 2024 and up around 10% over 2023,” Duggan told the Journal of Commerce Tuesday. “And as supply of <a href="https://www.joc.com/article/perfect-storm-pushes-market-toward-q4-reefer-equipment-shortages-5725644">equipment to the southern hemisphere remains a challenge</a>, the USA should get some [equipment] supply from Asia.”Contact Laura Robb at <a href="mailto:laura.robb@spglobal.com">laura.robb@spglobal.com</a>.</div>

US shippers are finding it more difficult to secure refrigerated (reefer) containers for Asian exports as volumes surge by double-digit percentages ahead of a potential US port strike next month. US reefer imports from Asia surged 10% year over year in October and have been steadily climbing since March, according to PIERS, a sister product of the Journal of Commerce within S&P Global. In September, seafood imports from Asia increased by nearly 30% compared with the same month in 2023, according to the National Fisheries Association. The tightening of equipment supply is also affecting shipments from China to Southeast Asia, Taiwan-based forwarder Dimerco Express Group warned customers in a recent briefing. Shippers moving goods through ports on the US East and Gulf coasts also face the prospect of a strike on Jan. 15 if the longshore union and employers fail to reach an agreement on a new coastwide contract. Despite some loosening in recent weeks, overall container capacity from Asia to the US remains tight , challenging reefer and dry shippers alike. A ‘little bit’ of an issue Ahead of the potential interruption, some US exporters have reported difficulties in securing empty reefer containers and related generator equipment at East and Gulf coast ports, particularly the Port of Houston. “Philadelphia and Virginia are just a little bit [of an issue], but Houston is a problem,” said Eric Brown, president at JTP Transportation and chair member of the Meat Import Council of America, on generators for reefer equipment. Another source said she’s seeing some cargo rolled in Houston, something she described as an “ongoing issue” in the region. However, the source said cargo rolls are neither increasing nor significantly impacting the market. Bill Duggan, North American advisor at reefer market consultant Eskesen Advisory, said shippers can expect better reefer equipment availability in the Americas next year as equipment from Asia is repositioned, along with stronger volume growth across the board. “It seems the market for refrigerated continues strong through 2024 and up around 10% over 2023,” Duggan told the Journal of Commerce Tuesday. “And as supply of equipment to the southern hemisphere remains a challenge , the USA should get some [equipment] supply from Asia.” Contact Laura Robb at laura.robb@spglobal.com .

Reefer supply tightening amid surging US imports

<div class="phx-topic abstract-wrapper">The extensive frontloading of imports that occurred this fall will keep cargo volumes modest this month, but the vagaries of labor negotiations and new tariffs threaten to disrupt the market in short order.</div>

The extensive frontloading of imports that occurred this fall will keep cargo volumes modest this month, but the vagaries of labor negotiations and new tariffs threaten to disrupt the market in short order.

<div class="phx-topic">The overheated trans–Pacific Ocean market is in the midst of a December respite after months of extensive frontloading, but can quickly become roiled again given the razor's-edge nature of longshore labor talks and the threats of new tariffs by the incoming Trump administration. “Once we get to January, whether it’s on the political front, the labor front, the alliance shake-up, everything is coming fast,” Sanjay Tejwani, CEO of consulting firm 365 Logistics, told the Journal of Commerce. Also in the background is an early Lunar New Year, which begins Jan. 29 and will likely mean imports from Asia perk up again from early January ahead of the holiday factory closures that take place in the region. The import pop will take place mostly at West Coast ports. “The East Coast will drop off. The West Coast will remain robust,” a carrier executive said. Meantime, with plentiful vessel capacity scheduled and reduced blanking, sources say they expect continued downward pressure on spot rates that have been in retreat since July. Rates from Asia to the US West Coast were at $2,400 per FEU as of Thursday, down 4% on the week and sharply off the July peak of over $8,000, according to Platts, a sister company of the Journal of Commerce within S&amp;P Global. Christian Sur, executive vice president of ocean freight contract logistics at the forwarder Unique Logistics International, said there are three levels of spot/freight-all-kinds rates in the current market — “window” rates as high as $5,000 per FEU to the West Coast that some importers are willing to pay to ensure loading of their freight; the more prevalent market rates listed on the indexes, such as the $2,400 per FEU rate listed by Platts; and special “bullet” rates offered by some carriers in specific trade lanes based on demand. “Those (bullet) rates are in the low $2,000s, but they’re not across the board,” Sur said. Still, the market knows full well those rates are now at the mercy of a looming Jan. 15 deadline for the International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) to reach agreement on a new master contract and head off a second strike at ports along the US East and Gulf coasts. A multiday ILA strike in January would sustain the diversion of cargo to West Coast ports and add to the complexity that importers already face in planning their supply chains. “My assessment is we are more likely to see a strike than not see a strike, and if we do get a strike, it will last longer,” Lars Jensen, CEO and partner at Vespucci Maritime, told a Journal of Commerce webinar Thursday. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e7a65aab-9aac-4f07-9b74-1793746c01ef"></dynamic-object></div><h3>Navigating tariff uncertainty</h3>On the political front, importers are facing an increasingly tangible tariff threat in 2025 after President-elect Donald Trump’s plan to implement tariffs on foreign goods has <a href="https://www.joc.com/article/us-importers-dabbling-in-frontloading-ahead-of-new-tariff-threat-5821448">pushed some shippers to move cargo early.</a>The major uncertainty that importers will face after Trump takes office in January is what level of tariffs he will impose on which countries and when those tariffs will go into effect. “It’s fair to say nobody knows for sure,” Jensen said. It is likely that many retailers are preparing to frontload shipments if they haven’t already done so, especially if they have space in their warehouses to store the product until needed. Inventory levels at warehouses across the United States were generally high before the Black Friday in-store sales and Cyber Monday online sales, said Scott Weiss, vice president of technical sales-warehouse and distribution service for North America at A.P. Moeller-Maersk. The <a href="https://www.joc.com/article/cargo-push-to-continue-amid-mounting-market-pressures-zim-5821532">US inventory-to-retail sales ratio in September</a>, the most recent reading from the US Census Bureau, was elevated to levels not seen since before the pandemic buying spree began. “The sales were strong, so the inventory was here,” Weiss said. “However, as the inventory goes down through the holidays, space will open up for the frontloading of spring merchandise, which is occurring somewhat earlier than usual,” he said. Nevertheless, a consultant and former logistics manager at two national retailers said importers must assess inventory carrying costs and all the uncertainties surrounding tariffs as they review their frontloading plans. “There’s only so much you can frontload,” the source said. Many importers diversified supply chains after Trump’s initial round of tariffs that were implemented during his first term in office. “We successfully [addressed previous tariffs] through a combination of vendor collaboration, product reengineering and assortment changes, (and) moving product sourcing to other countries...,” said Five Below CEO Ken Bull. “We expect to utilize these tools and tactics again." <h3>Growing supply and stable demand</h3>Meanwhile, the US West Coast is poised for significant capacity injections in December and January, forecasted by maritime intelligence firm eeSea to reach a record 1.5 million TEUs in January. The company also forecasts a December blanking rate of about 1% on the East Coast and 6.7% for the West Coast. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="953f7c86-635d-4cba-9cb7-ffe651937158"></dynamic-object></div>If blanks and capacity estimates come to fruition at eeSea’s projected rates, actual capacity into the East Coast for December will climb by 27.6%, while West Coast capacity will drop 1.1%. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>. Contact Laura Robb at <a href="mailto:laura.robb@spglobal.com">laura.robb@spglobal.com</a>. </div>

The overheated trans–Pacific Ocean market is in the midst of a December respite after months of extensive frontloading, but can quickly become roiled again given the razor's-edge nature of longshore labor talks and the threats of new tariffs by the incoming Trump administration. “Once we get to January, whether it’s on the political front, the labor front, the alliance shake-up, everything is coming fast,” Sanjay Tejwani, CEO of consulting firm 365 Logistics, told the Journal of Commerce. Also in the background is an early Lunar New Year, which begins Jan. 29 and will likely mean imports from Asia perk up again from early January ahead of the holiday factory closures that take place in the region. The import pop will take place mostly at West Coast ports. “The East Coast will drop off. The West Coast will remain robust,” a carrier executive said. Meantime, with plentiful vessel capacity scheduled and reduced blanking, sources say they expect continued downward pressure on spot rates that have been in retreat since July. Rates from Asia to the US West Coast were at $2,400 per FEU as of Thursday, down 4% on the week and sharply off the July peak of over $8,000, according to Platts, a sister company of the Journal of Commerce within S&P Global. Christian Sur, executive vice president of ocean freight contract logistics at the forwarder Unique Logistics International, said there are three levels of spot/freight-all-kinds rates in the current market — “window” rates as high as $5,000 per FEU to the West Coast that some importers are willing to pay to ensure loading of their freight; the more prevalent market rates listed on the indexes, such as the $2,400 per FEU rate listed by Platts; and special “bullet” rates offered by some carriers in specific trade lanes based on demand. “Those (bullet) rates are in the low $2,000s, but they’re not across the board,” Sur said. Still, the market knows full well those rates are now at the mercy of a looming Jan. 15 deadline for the International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) to reach agreement on a new master contract and head off a second strike at ports along the US East and Gulf coasts. A multiday ILA strike in January would sustain the diversion of cargo to West Coast ports and add to the complexity that importers already face in planning their supply chains. “My assessment is we are more likely to see a strike than not see a strike, and if we do get a strike, it will last longer,” Lars Jensen, CEO and partner at Vespucci Maritime, told a Journal of Commerce webinar Thursday. Navigating tariff uncertainty On the political front, importers are facing an increasingly tangible tariff threat in 2025 after President-elect Donald Trump’s plan to implement tariffs on foreign goods has pushed some shippers to move cargo early. The major uncertainty that importers will face after Trump takes office in January is what level of tariffs he will impose on which countries and when those tariffs will go into effect. “It’s fair to say nobody knows for sure,” Jensen said. It is likely that many retailers are preparing to frontload shipments if they haven’t already done so, especially if they have space in their warehouses to store the product until needed. Inventory levels at warehouses across the United States were generally high before the Black Friday in-store sales and Cyber Monday online sales, said Scott Weiss, vice president of technical sales-warehouse and distribution service for North America at A.P. Moeller-Maersk. The US inventory-to-retail sales ratio in September , the most recent reading from the US Census Bureau, was elevated to levels not seen since before the pandemic buying spree began. “The sales were strong, so the inventory was here,” Weiss said. “However, as the inventory goes down through the holidays, space will open up for the frontloading of spring merchandise, which is occurring somewhat earlier than usual,” he said. Nevertheless, a consultant and former logistics manager at two national retailers said importers must assess inventory carrying costs and all the uncertainties surrounding tariffs as they review their frontloading plans. “There’s only so much you can frontload,” the source said. Many importers diversified supply chains after Trump’s initial round of tariffs that were implemented during his first term in office. “We successfully [addressed previous tariffs] through a combination of vendor collaboration, product reengineering and assortment changes, (and) moving product sourcing to other countries...,” said Five Below CEO Ken Bull. “We expect to utilize these tools and tactics again." Growing supply and stable demand Meanwhile, the US West Coast is poised for significant capacity injections in December and January, forecasted by maritime intelligence firm eeSea to reach a record 1.5 million TEUs in January. The company also forecasts a December blanking rate of about 1% on the East Coast and 6.7% for the West Coast. If blanks and capacity estimates come to fruition at eeSea’s projected rates, actual capacity into the East Coast for December will climb by 27.6%, while West Coast capacity will drop 1.1%. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com . Contact Laura Robb at laura.robb@spglobal.com .

Supply chain

Port News

Trans-Pac settles into sedate December before New Year’s uncertainties

<div class="phx-topic abstract-wrapper">A dispute in Canada has all the hallmarks of a similar case in the US over what qualifies as a chassis made in China.</div>

A dispute in Canada has all the hallmarks of a similar case in the US over what qualifies as a chassis made in China.

<div class="phx-topic">Canada’s Border Services Agency (CBSA) will launch an “anti-circumvention” investigation into whether British Columbia-based chassis manufacturer Ocean Trailer violated trade regulations meant to protect Canadian manufacturers against chassis subsidized by the Chinese government. The move, announced last week, comes after Canadian chassis manufacturer Max-Atlas International filed a complaint against rival Ocean Trailer with the BSA, which is Canada’s version of the US Customs and Border Protection (CBP). Max-Atlas alleges that Ocean Trailer purchased chassis from a Vietnamese manufacturer that sourced key components from China and failed to pay the necessary countervailing and antidumping duties. The Max-Atlas complaint is reminiscent of a recent case in the US against <a href="https://www.joc.com/article/us-commerce-department-rejects-pitts-appeal-in-marine-chassis-case-5200425">Dorsey Intermodal</a>, which was found to have evaded countervailing and antidumping duties. The same Vietnamese company, Truong Hai Group Corporation (THACO), is involved in both cases. The US CBP investigation found that Dorsey Intermodal chassis used Chinese parts for between 59% and 69% of the finished unit and thus it should have been considered Chinese-made, not Vietnamese. The Canadian government enacted antidumping tariffs and duties similar to those of the US government <a href="https://www.joc.com/article/crippling-duty-on-chinese-chassis-upheld-in-final-ruling-5249958">in 2021</a> to prevent China from flooding the market with chassis sold at below-market rates, thus harming Canadian domestic manufacturers such as Max-Atlas. Max-Atlas identified 1,330 chassis of Ocean Trailer marketed as built in Vietnam with as many as 10 subcomponents from China, including axles, lights, mudflaps, steel, suspension systems and tires. Ocean Trailer sold 500 chassis to Canadian Pacific Kansas City (CPKC) and 300 to Medlog Transport and Logistics, a subsidiary of Mediterranean Shipping Co., according to the complaint. “Ocean Trailer has sold THACO chassis to Canadian Pacific, one of Max-Atlas’s most important customers — and one of the three largest customers in the Canadian market, the other two being Canadian National and Canadian Tire,” Max-Atlas wrote in its complaint to Canada’s BSA. “Max-Atlas also has significant evidence that demonstrates that Vietnamese chassis are made predominantly from Chinese steel, components or subassemblies.” <h3>Complaint ‘without merit’ </h3>Ocean Trailer told the Journal of Commerce that its case and the Dorsey case involve “different applicable laws, different legal tests, and different relevant facts” due to variations between US and Canadian regulations. Ocean Trailer said that all container chassis were properly accounted for and did not circumvent Canada’s existing antidumping and countervailing duty orders on China. “Ocean Trailer believes in the strength of its position and that Max-Atlas’ complaint is wholly without merit,” the company said in a statement. “Consequently, Ocean Trailer intends to participate fully in the CBSA’s ongoing investigation.” CPKC declined to comment on the ongoing case but referred the Journal of Commerce to a company statement outlining <a href="https://www.cpkcr.com/en/suppliers/non-information-technology-policies-and-guidelines/supplier-expectations">expectations for all its suppliers</a>, including “upholding strong standards of business ethics in accordance with applicable laws.” Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>. </div>

Canada’s Border Services Agency (CBSA) will launch an “anti-circumvention” investigation into whether British Columbia-based chassis manufacturer Ocean Trailer violated trade regulations meant to protect Canadian manufacturers against chassis subsidized by the Chinese government. The move, announced last week, comes after Canadian chassis manufacturer Max-Atlas International filed a complaint against rival Ocean Trailer with the BSA, which is Canada’s version of the US Customs and Border Protection (CBP). Max-Atlas alleges that Ocean Trailer purchased chassis from a Vietnamese manufacturer that sourced key components from China and failed to pay the necessary countervailing and antidumping duties. The Max-Atlas complaint is reminiscent of a recent case in the US against Dorsey Intermodal , which was found to have evaded countervailing and antidumping duties. The same Vietnamese company, Truong Hai Group Corporation (THACO), is involved in both cases. The US CBP investigation found that Dorsey Intermodal chassis used Chinese parts for between 59% and 69% of the finished unit and thus it should have been considered Chinese-made, not Vietnamese. The Canadian government enacted antidumping tariffs and duties similar to those of the US government in 2021 to prevent China from flooding the market with chassis sold at below-market rates, thus harming Canadian domestic manufacturers such as Max-Atlas. Max-Atlas identified 1,330 chassis of Ocean Trailer marketed as built in Vietnam with as many as 10 subcomponents from China, including axles, lights, mudflaps, steel, suspension systems and tires. Ocean Trailer sold 500 chassis to Canadian Pacific Kansas City (CPKC) and 300 to Medlog Transport and Logistics, a subsidiary of Mediterranean Shipping Co., according to the complaint. “Ocean Trailer has sold THACO chassis to Canadian Pacific, one of Max-Atlas’s most important customers — and one of the three largest customers in the Canadian market, the other two being Canadian National and Canadian Tire,” Max-Atlas wrote in its complaint to Canada’s BSA. “Max-Atlas also has significant evidence that demonstrates that Vietnamese chassis are made predominantly from Chinese steel, components or subassemblies.” Complaint ‘without merit’ Ocean Trailer told the Journal of Commerce that its case and the Dorsey case involve “different applicable laws, different legal tests, and different relevant facts” due to variations between US and Canadian regulations. Ocean Trailer said that all container chassis were properly accounted for and did not circumvent Canada’s existing antidumping and countervailing duty orders on China. “Ocean Trailer believes in the strength of its position and that Max-Atlas’ complaint is wholly without merit,” the company said in a statement. “Consequently, Ocean Trailer intends to participate fully in the CBSA’s ongoing investigation.” CPKC declined to comment on the ongoing case but referred the Journal of Commerce to a company statement outlining expectations for all its suppliers , including “upholding strong standards of business ethics in accordance with applicable laws.” Contact Ari Ashe at ari.ashe@spglobal.com .

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