<div class="phx-topic abstract-wrapper">TGS Logistics said state grants for electric trucks failed to stem higher costs for new equipment amid a soft rate environment. </div>

TGS Logistics said state grants for electric trucks failed to stem higher costs for new equipment amid a soft rate environment.

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<div class="phx-topic">A second major California-based drayage operator has closed its doors in less than a month, raising renewed concerns that the cost of the state’s green push for low and zero-emission trucks might be hastening the demise of the companies. TGS Logistics last week shut down its operations in Northern and Southern California, <a href="https://www.joc.com/article/drayage-stakeholders-say-industry-under-threat-from-falling-rates-increased-costs-6045985">following GSC Enterprises’ announcement</a> in mid-July that it ceased operations in the Oakland area. Robert Loya, chief operating officer at TGS, said that drayage operators in California rely upon “layered grants” from the state and from the ports of Los Angeles and Long Beach. A harbor-wide clean truck program reimburses drayage providers partly for electric truck purchases, but much of the revenues collected through the $10-per-TEU fee on laden containers goes toward building electric charging infrastructure. <a href="https://www.joc.com/article/drayage-stakeholders-say-industry-under-threat-from-falling-rates-increased-costs-6045985">Drayage operators are struggling</a> in an environment marked by stagnating pricing while drayage operators’ costs have increased significantly. These market developments haven’t spared drayage operators in California who also face the additional cost of approximately $500,000 per zero-emission truck, said Matt Schrap, CEO of the Harbor Trucking Association. Drayage operators in California have been upgrading their fleets <a href="https://www.joc.com/article/proposed-california-container-fee-would-hit-bcos-5198183">with clean-diesel trucks</a> and, more recently, <a href="https://www.joc.com/article/new-fee-to-support-zero-emission-drayage-fleet-at-la-lb-5228423">with the purchase of zero-emission trucks</a>. Those purchases have “exacerbated” current market conditions, he said. The ports since 2022 together have collected about $250 million in revenue from the Clean Truck Fund (CTF) rate. The grants to individual drayage companies are made when the zero-emission vehicles are delivered. The ports continue to modify the CTF rate so that it will have a greater impact on the financial capability of drayage operators to purchase zero-emission vehicles, said Noel Hacegaba, chief operating officer of the Port of Long Beach. Bryan Brandes maritime director at the Port of Oakland, said drayage operators in California — who are already struggling with waning pricing power and increased operating costs and at the same time are purchasing clean-diesel and zero-emission vehicles — run the risk of following TGS’ fate. “TGS was trying to be a leader in the clean-truck movement,” Brandes said. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>. </div>

A second major California-based drayage operator has closed its doors in less than a month, raising renewed concerns that the cost of the state’s green push for low and zero-emission trucks might be hastening the demise of the companies. TGS Logistics last week shut down its operations in Northern and Southern California, following GSC Enterprises’ announcement in mid-July that it ceased operations in the Oakland area. Robert Loya, chief operating officer at TGS, said that drayage operators in California rely upon “layered grants” from the state and from the ports of Los Angeles and Long Beach. A harbor-wide clean truck program reimburses drayage providers partly for electric truck purchases, but much of the revenues collected through the $10-per-TEU fee on laden containers goes toward building electric charging infrastructure. Drayage operators are struggling in an environment marked by stagnating pricing while drayage operators’ costs have increased significantly. These market developments haven’t spared drayage operators in California who also face the additional cost of approximately $500,000 per zero-emission truck, said Matt Schrap, CEO of the Harbor Trucking Association. Drayage operators in California have been upgrading their fleets with clean-diesel trucks and, more recently, with the purchase of zero-emission trucks . Those purchases have “exacerbated” current market conditions, he said. The ports since 2022 together have collected about $250 million in revenue from the Clean Truck Fund (CTF) rate. The grants to individual drayage companies are made when the zero-emission vehicles are delivered. The ports continue to modify the CTF rate so that it will have a greater impact on the financial capability of drayage operators to purchase zero-emission vehicles, said Noel Hacegaba, chief operating officer of the Port of Long Beach. Bryan Brandes maritime director at the Port of Oakland, said drayage operators in California — who are already struggling with waning pricing power and increased operating costs and at the same time are purchasing clean-diesel and zero-emission vehicles — run the risk of following TGS’ fate. “TGS was trying to be a leader in the clean-truck movement,” Brandes said. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .

Surface

Port News

Trucking News

Drayage

Second California drayage operator shuts business, cites electric truck costs

<div class="phx-topic abstract-wrapper">But the increase in truck counts at large truckload providers is more about anticipated growth than any change in current demand. </div>

But the increase in truck counts at large truckload providers is more about anticipated growth than any change in current demand.

<div class="phx-topic">Large US truckload carriers are beginning to add capacity to their fleets after three years of deep cuts, pushing the Journal of Commerce Truckload Capacity Index (TCI) up 1.1 percentage points sequentially in the second quarter to a reading of 76%. The capacity gain was only a trickle of tractors, but it caused the first increase in the TCI in 11 quarters, signaling growing — if not cautious — confidence among trucking executives that the freight downturn that began in 2022, while not yet finished, is finally approaching its end. The TCI was down 0.9 of a percentage point year over year, but the gain from the first quarter indicates the index could soon turn positive on an annualized basis, perhaps by year-end. The increase isn’t a reaction to higher demand in today’s US domestic freight market. Instead, the gain in capacity shows truckload carriers are slowly and judiciously preparing for higher volumes that may arrive in the fourth quarter of 2025 and early 2026. Contract rates negotiated with shippers are either flat or up by low single-digit percentages, carriers report. Capacity is still widely available, and while small and midsized carriers continue to leave the market, shippers retain pricing power. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="bbf4a072-889b-4bbf-94bd-cd682d4252d0"></dynamic-object></div>“The impact of accumulated inflation remains a drag on the amount of truckload freight generated in relation to consumer spending,” Frank Lonegro, president and CEO of Landstar System, told Wall Street analysts during a July 29 earnings call. “Truck capacity continued to be readily available with small pockets of supply-demand equilibrium and market conditions continue to favor the shipper,” Lonegro said. Several truckload shippers have told the Journal of Commerce that they’ve given some carriers small rate increases this year simply to retain access to their capacity, not because of any significant tightness in the marketplace. <h3>Looking ahead </h3>The second-quarter increase in the TCI — which measures changes in actual truck counts at a select group of large, publicly-owned truckload carriers — indicates the US domestic freight market is doing more than just bouncing along the bottom it hit in mid-2022. Shippers are evaluating their capacity needs for the second half of the year and for 2026 amid volatile changes in US trade and tariff policy. Those who expect freight demand and the US economy to improve are looking to secure capacity ahead of any crunch. “We’re having some discussions around doing some peak projects,” Adam Miller, CEO of Knight-Swift Transportation Holdings, told Wall Street analysts July 23. “There’s some discussion about what capacity may look like at scale,” Miller said during an earnings call. “[When capacity gets tight], that’s when a carrier of our size at our different brands has the ability to come in and solve large problems for our customers.” Knight-Swift cut its average truckload tractor count by 6.6% year over year in the second quarter and by 6.3% in the first half of 2025. CFO Andrew Hess told analysts Knight-Swift’s truck count should be stable through the rest of 2025. A <a href="https://www.joc.com/article/truckload-carriers-balance-networks-as-tariff-uncertainty-shifts-demand-6052453">reshuffling of capacity</a> across lanes, driven in part by higher US tariffs, is also affecting demand. In the second quarter, Werner Enterprises increased its truck count 1.4% sequentially from the first quarter and 1.1% from a year ago to 7,545 trucks. That’s still a 12.3% reduction compared with a peak of 8,600 trucks in the fourth quarter of 2022, according to company data. “Our one-way fleet size increased sequentially, driven in part from engineered pop-up solutions in response to customer requests,” Derek Leathers, Werner chairman and CEO, told Wall Street analysts July 29. “We have assets in place to support growth through the rest of this year,” Leathers said. <h3>Adding capacity as needed </h3>Other large trucking companies say shippers are seeking to ensure carriers can ramp up capacity as demand grows. “Their conversations with us focus on how to dynamically optimize their supply chain and capacity plans to meet their service needs,” Bradley Hicks, president of dedicated contract services for J.B. Hunt Transport Services, said during a July 15 earnings call. J.B. Hunt wants to be ready with people and equipment “whenever that demand does occur over the next few months,” Spencer Frazier, executive vice president of sales and marketing, said during the call. J.B. Hunt Truckload, the company’s smallest division, increased its one-way truckload capacity by 10.2% sequentially and 7.6% from a year ago in the second quarter. “We’re not banking on big demand improvement, but we do think the supply story will continue to play out,” with more carriers exiting the market, Werner’s Leathers said. Executives at large truckload carriers have been predicting — incorrectly — an imminent shortfall in capacity as smaller providers have left the market over the past three years. Today, they’re more cautious about predictions. “Anecdotally, we hear about failures in our industry, [and] some are sizeable fleets, but it’s always hard to have a good feel about what’s happening with capacity,” Knight-Swift’s Miller said. “We think it’s going to be a slow process for capacity to exit the market.” Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>. </div>

Large US truckload carriers are beginning to add capacity to their fleets after three years of deep cuts, pushing the Journal of Commerce Truckload Capacity Index (TCI) up 1.1 percentage points sequentially in the second quarter to a reading of 76%. The capacity gain was only a trickle of tractors, but it caused the first increase in the TCI in 11 quarters, signaling growing — if not cautious — confidence among trucking executives that the freight downturn that began in 2022, while not yet finished, is finally approaching its end. The TCI was down 0.9 of a percentage point year over year, but the gain from the first quarter indicates the index could soon turn positive on an annualized basis, perhaps by year-end. The increase isn’t a reaction to higher demand in today’s US domestic freight market. Instead, the gain in capacity shows truckload carriers are slowly and judiciously preparing for higher volumes that may arrive in the fourth quarter of 2025 and early 2026. Contract rates negotiated with shippers are either flat or up by low single-digit percentages, carriers report. Capacity is still widely available, and while small and midsized carriers continue to leave the market, shippers retain pricing power. “The impact of accumulated inflation remains a drag on the amount of truckload freight generated in relation to consumer spending,” Frank Lonegro, president and CEO of Landstar System, told Wall Street analysts during a July 29 earnings call. “Truck capacity continued to be readily available with small pockets of supply-demand equilibrium and market conditions continue to favor the shipper,” Lonegro said. Several truckload shippers have told the Journal of Commerce that they’ve given some carriers small rate increases this year simply to retain access to their capacity, not because of any significant tightness in the marketplace. Looking ahead The second-quarter increase in the TCI — which measures changes in actual truck counts at a select group of large, publicly-owned truckload carriers — indicates the US domestic freight market is doing more than just bouncing along the bottom it hit in mid-2022. Shippers are evaluating their capacity needs for the second half of the year and for 2026 amid volatile changes in US trade and tariff policy. Those who expect freight demand and the US economy to improve are looking to secure capacity ahead of any crunch. “We’re having some discussions around doing some peak projects,” Adam Miller, CEO of Knight-Swift Transportation Holdings, told Wall Street analysts July 23. “There’s some discussion about what capacity may look like at scale,” Miller said during an earnings call. “[When capacity gets tight], that’s when a carrier of our size at our different brands has the ability to come in and solve large problems for our customers.” Knight-Swift cut its average truckload tractor count by 6.6% year over year in the second quarter and by 6.3% in the first half of 2025. CFO Andrew Hess told analysts Knight-Swift’s truck count should be stable through the rest of 2025. A reshuffling of capacity across lanes, driven in part by higher US tariffs, is also affecting demand. In the second quarter, Werner Enterprises increased its truck count 1.4% sequentially from the first quarter and 1.1% from a year ago to 7,545 trucks. That’s still a 12.3% reduction compared with a peak of 8,600 trucks in the fourth quarter of 2022, according to company data. “Our one-way fleet size increased sequentially, driven in part from engineered pop-up solutions in response to customer requests,” Derek Leathers, Werner chairman and CEO, told Wall Street analysts July 29. “We have assets in place to support growth through the rest of this year,” Leathers said. Adding capacity as needed Other large trucking companies say shippers are seeking to ensure carriers can ramp up capacity as demand grows. “Their conversations with us focus on how to dynamically optimize their supply chain and capacity plans to meet their service needs,” Bradley Hicks, president of dedicated contract services for J.B. Hunt Transport Services, said during a July 15 earnings call. J.B. Hunt wants to be ready with people and equipment “whenever that demand does occur over the next few months,” Spencer Frazier, executive vice president of sales and marketing, said during the call. J.B. Hunt Truckload, the company’s smallest division, increased its one-way truckload capacity by 10.2% sequentially and 7.6% from a year ago in the second quarter. “We’re not banking on big demand improvement, but we do think the supply story will continue to play out,” with more carriers exiting the market, Werner’s Leathers said. Executives at large truckload carriers have been predicting — incorrectly — an imminent shortfall in capacity as smaller providers have left the market over the past three years. Today, they’re more cautious about predictions. “Anecdotally, we hear about failures in our industry, [and] some are sizeable fleets, but it’s always hard to have a good feel about what’s happening with capacity,” Knight-Swift’s Miller said. “We think it’s going to be a slow process for capacity to exit the market.” Contact William B. Cassidy at bill.cassidy@spglobal.com .

Truckload

Truckload capacity index turns upward as carriers cautiously add trucks

<div class="phx-topic abstract-wrapper">Trans-Pacific rates are falling sharply, but the ability of carriers to withdraw capacity, the potential for continued diversions away from the Red Sea, and long-term changes to the global trade landscape due to US tariff policy mean liners have levers to pull.</div>

Trans-Pacific rates are falling sharply, but the ability of carriers to withdraw capacity, the potential for continued diversions away from the Red Sea, and long-term changes to the global trade landscape due to US tariff policy mean liners have levers to pull.

<div class="phx-topic">Trans-Pacific spot rates are plunging — a bellwether indicator informing analysts’ negative view of container shipping as it heads into the final stretch of the year and begins to look out into 2026. Translation: Pressure on the market is growing despite a multi-level capacity squeeze due to ongoing diversions around southern Africa, port congestion in Asia and Europe, whiplash US tariff policy, blank sailings, and carrier network adjustments and alliance reshuffling. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6056712_0.1.jpg"></img></div>The combined effects have not prevented rates from falling significantly in 2025. The Freightos Baltic Global Container Index is down 57% over the past year while the Drewry World Container Shipping Index is down 50%. Growing evidence of weakness led Ocean Network Express (ONE), the sixth-largest carrier in capacity terms, according to Alphaliner, <a href="https://www.joc.com/article/one-cuts-profit-forecast-as-falling-rates-excess-capacity-weigh-on-carriers-6055266">to announce Aug. 1 it would reduce its full-year profit expectation by $400 million</a>, noting the “overall market environment may not prove as robust as initially anticipated.” Global banks are taking note as well. “Volumes are likely to soften sharply post end-July as shippers exhaust rush orders,” HSBC analysts wrote on July 20. “Even worse, the accelerated vessel delivery schedule will collide with potentially weakening demand, exacerbating overcapacity.” Two conclusions are that, despite long-term industry consolidation and pressure on capacity from port congestion and diversions, forces of supply and demand remain alive and well. And secondly, carriers are behaving in ways they had not previously. “The market will continue to be driven by supply and demand dynamics,” Hua Joo Tan, analyst at Linerlytica, told the Journal of Commerce. “The current [trans-Pacific] rate collapse is a testament to my point.” Yet there is evidence the behavior of carriers has changed in ways that will affect the market on a short-term basis — for example, a willingness to hit the gas pedal on rate increases at the first sign of market tightness, reacting faster and driving spot rates higher than in pre-COVID-19 times, according to many observers. This happened most recently in the trans-Pacific the moment 145% US tariffs on China were eased to 30% on May 12, unleashing cargo that had been held back over the previous month. Trans-Pacific eastbound spot rates were $2,220 per FEU on May 9, as measured by Platts, but had shot up 270% to $6,040 per FEU by June 6, at which point they started to fall. Carriers’ response to the brief opportunity included implementing peak season surcharges (PSSs) on contract cargo despite the lack of a firm seasonality connection, sources said, another indication of carriers’ opportunism. “PSSs have shifted from yielding higher revenue in certain months to a cash grab when carriers expect or have full ships, regardless of whether or not it’s a traditional peak season specifically,” said one forwarder. <h3>Carriers not without weapons </h3>Further out, sources are less negative on the industry, seeing a combination of carriers’ multi-pronged ability to withdraw capacity and the potential for continued diversions away from the Red Sea, as well as long-term changes to the trade landscape due to US tariff policy. “Overall, for the container sector, recent long-term trade deals present a healthier outlook than expected earlier this year when negative trade rhetoric had taken hold,” Jefferies analyst Omar Nokta wrote July 28. “It appears these trade deals are supportive to global trade as compared to prior fears that aggressive US tariffs would stifle trade. “Whether this leads to a long-term compelling demand equation remains to be seen, but we are more inclined to believe container shipping will benefit as supply chains become more diversified and thus more complex from a transportation perspective,” he added. Others say carriers still have more levers to pull to withdraw capacity and prevent rates from slipping into unprofitable territory. “The carriers will use two levers, one is the idle fleet can go up significantly and the second is they will send a lot more ships to the demolition yards, as many of the old ships are operating on heavy fuel and not compliant with environment laws, especially in the EU,” said Sanjay Tejwani, a veteran carrier and forwarding executive and now CEO of consulting firm 365 Logistics. “They will use these two levers including more tactical tools of blanking and slow-steaming to help them manage capacity to ensure rates don’t drop to unprofitable levels,” he added. “From a long-term perspective, rates may not go back to $5,000 to the West Coast, but they will remain at fairly healthy levels and will continue to remain elevated compared to pre-COVID levels.” Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>. </div>

Trans-Pacific spot rates are plunging — a bellwether indicator informing analysts’ negative view of container shipping as it heads into the final stretch of the year and begins to look out into 2026. Translation: Pressure on the market is growing despite a multi-level capacity squeeze due to ongoing diversions around southern Africa, port congestion in Asia and Europe, whiplash US tariff policy, blank sailings, and carrier network adjustments and alliance reshuffling. The combined effects have not prevented rates from falling significantly in 2025. The Freightos Baltic Global Container Index is down 57% over the past year while the Drewry World Container Shipping Index is down 50%. Growing evidence of weakness led Ocean Network Express (ONE), the sixth-largest carrier in capacity terms, according to Alphaliner, to announce Aug. 1 it would reduce its full-year profit expectation by $400 million , noting the “overall market environment may not prove as robust as initially anticipated.” Global banks are taking note as well. “Volumes are likely to soften sharply post end-July as shippers exhaust rush orders,” HSBC analysts wrote on July 20. “Even worse, the accelerated vessel delivery schedule will collide with potentially weakening demand, exacerbating overcapacity.” Two conclusions are that, despite long-term industry consolidation and pressure on capacity from port congestion and diversions, forces of supply and demand remain alive and well. And secondly, carriers are behaving in ways they had not previously. “The market will continue to be driven by supply and demand dynamics,” Hua Joo Tan, analyst at Linerlytica, told the Journal of Commerce. “The current [trans-Pacific] rate collapse is a testament to my point.” Yet there is evidence the behavior of carriers has changed in ways that will affect the market on a short-term basis — for example, a willingness to hit the gas pedal on rate increases at the first sign of market tightness, reacting faster and driving spot rates higher than in pre-COVID-19 times, according to many observers. This happened most recently in the trans-Pacific the moment 145% US tariffs on China were eased to 30% on May 12, unleashing cargo that had been held back over the previous month. Trans-Pacific eastbound spot rates were $2,220 per FEU on May 9, as measured by Platts, but had shot up 270% to $6,040 per FEU by June 6, at which point they started to fall. Carriers’ response to the brief opportunity included implementing peak season surcharges (PSSs) on contract cargo despite the lack of a firm seasonality connection, sources said, another indication of carriers’ opportunism. “PSSs have shifted from yielding higher revenue in certain months to a cash grab when carriers expect or have full ships, regardless of whether or not it’s a traditional peak season specifically,” said one forwarder. Carriers not without weapons Further out, sources are less negative on the industry, seeing a combination of carriers’ multi-pronged ability to withdraw capacity and the potential for continued diversions away from the Red Sea, as well as long-term changes to the trade landscape due to US tariff policy. “Overall, for the container sector, recent long-term trade deals present a healthier outlook than expected earlier this year when negative trade rhetoric had taken hold,” Jefferies analyst Omar Nokta wrote July 28. “It appears these trade deals are supportive to global trade as compared to prior fears that aggressive US tariffs would stifle trade. “Whether this leads to a long-term compelling demand equation remains to be seen, but we are more inclined to believe container shipping will benefit as supply chains become more diversified and thus more complex from a transportation perspective,” he added. Others say carriers still have more levers to pull to withdraw capacity and prevent rates from slipping into unprofitable territory. “The carriers will use two levers, one is the idle fleet can go up significantly and the second is they will send a lot more ships to the demolition yards, as many of the old ships are operating on heavy fuel and not compliant with environment laws, especially in the EU,” said Sanjay Tejwani, a veteran carrier and forwarding executive and now CEO of consulting firm 365 Logistics. “They will use these two levers including more tactical tools of blanking and slow-steaming to help them manage capacity to ensure rates don’t drop to unprofitable levels,” he added. “From a long-term perspective, rates may not go back to $5,000 to the West Coast, but they will remain at fairly healthy levels and will continue to remain elevated compared to pre-COVID levels.” Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

Maritime

Container Shipping News

Container lines

Ocean carriers still have cards to play despite weakening container market

<div class="phx-topic abstract-wrapper">The number of unique services on routes navigating through Houthi-controlled waters has doubled since the third quarter of last year, according to data from eeSea, as carriers who do not call Israel feel growing comfort sailing the Bab-el-Mandeb Strait.</div>

The number of unique services on routes navigating through Houthi-controlled waters has doubled since the third quarter of last year, according to data from eeSea, as carriers who do not call Israel feel growing comfort sailing the Bab-el-Mandeb Strait.

<div class="phx-topic">The Red Sea is seeing “a quiet revival” in shipping services as regional carriers steadily add capacity to vessel strings passing through the Houthi-controlled Bab-el-Mandeb Strait, according to ocean visibility provider eeSea. Some are Asia-Europe services passing through the Suez Canal, while others are regional services calling at Red Sea ports such as Jeddah, Destine Ozuygur, chief analyst at eeSea, said in a market update. “The number of unique service versions on this trade has doubled since Q3 2024, when there was an average of eight services on any given month,” Ozuygur said. “This gradual comeback now boasts 16 services and a 54% year-to-date planned capacity increase that is set to peak at 104,000 TEUs of proforma capacity in August.” Many of the services are operated by carriers from China or those based in the Middle East or India that serve the Asia-Middle East trade lane with small- to medium-sized vessels. The Red Sea has effectively been out of bounds since December 2023, when Yemen’s Houthi militants began attacking commercial shipping passing through the narrow Bab-el-Mandeb Strait at the southern entrance to the Red Sea as a show of solidarity for Gaza amid the Israel-Hamas war. Major carriers on the Asia-Europe and Asia-US East Coast trade lanes were then forced to reroute ships around the Cape of Good Hope in southern Africa, which has absorbed an estimated 10% of global capacity and extended transit times by two weeks. Most of the carriers on the Asia-Middle East trade and those passing through the Red Sea en route to Europe do not make calls to Israel on any of their strings, regardless of trade lane, “so that probably lends them confidence” to sail through Houthi-controlled waters, Ozuygur said. After no attacks on shipping were reported since this past December, pressure was beginning to build on the major container shipping companies to return to Red Sea transits. However, in July, two bulk carriers were attacked and sunk, killing three crew and leaving 11 missing, effectively <a href="https://www.joc.com/article/new-houthi-attacks-likely-kill-hopes-of-shipping-returning-to-red-sea-this-year-6040923">ending any chance of a Red Sea return this year</a>. CMA CGM has some services operating in the Red Sea, but group CFO Ramon Fernandez told the Journal of Commerce last week that security in the region was strictly monitored. “We have a constant position here, which is that vessels will pass the Bab-al-Mandab Strait when security conditions are met,” he said. “That means security for the crew, security for the vessel and for the cargo. “We have some vessels going through when these conditions are met, and for the rest of the fleet must go around the Cape of Good Hope,” Fernandez added. “This is a constant policy the group has followed since the early days of last year.” <h3>Navigating dangerous waters </h3>Of the Asia-Europe services that continue to operate through the strait and the Suez Canal, 39% call ports outside the East Mediterranean and 33% make direct calls to Russian ports, according to eeSea. “A score of new or improved services announced as recently as Q2 2025 are not restricted to regional carriers alone,” Ozuygur noted. She outlined some of the services that are currently sailing through the Houthi-controlled waterway. A China United Lines extra loader is scheduled to begin operations in the last week of August that will complement the carrier’s Red Sea Service (REX) that began in December 2023. Cosco increased the frequency of the RES2 service operated alongside PIL since March 2024 from a 12-day to a weekly service with the addition of three more sailings at the end of April. Cosco also introduced an additional RES1 service in early May, partnering with OOCL and currently operating with three general cargo vessels. Hong Kong-based Kawa Shipping operates the China-Europe Express (CEX) service between Ningbo and Wilhelmshaven in Germany through the Red Sea that was launched in 2023. In June, its Eastern Mediterranean Express (EMX) service covering the Red Sea, Egypt and Turkey was expanded with the addition of four more vessels. Taiwanese carrier Wan Hai Lines will double the number of vessels on its AR2 service to eight later this month, while increasing the sailing frequency from every 14 days to seven days. India-based Sea Legend Shipping introduced their Asia-Red Sea service in mid-June with three of nine available vessels currently providing voyages. Dubai’s CStar Lines began their China-Red Sea services FRS1, FRS1-X, and FRS2 in May and June, and Singapore headquartered SeaLead Shipping recently reinstated its China-Red Sea (CRS) service, which has not been operational since December 2022. Carriers in the Ocean Alliance — CMA CGM, Cosco, OOCL and Evergreen — operate the MED5 service via the Suez Canal to connect Asia to its Mediterranean network. “While the Asia-Europe trade has largely suffered from longer transit times and increased CO2 emissions tied to military conflict in the zone, the secondary Asia-Middle East trade serving the Red Sea is finally witnessing a quiet revival,” Ozuygur said. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

The Red Sea is seeing “a quiet revival” in shipping services as regional carriers steadily add capacity to vessel strings passing through the Houthi-controlled Bab-el-Mandeb Strait, according to ocean visibility provider eeSea. Some are Asia-Europe services passing through the Suez Canal, while others are regional services calling at Red Sea ports such as Jeddah, Destine Ozuygur, chief analyst at eeSea, said in a market update. “The number of unique service versions on this trade has doubled since Q3 2024, when there was an average of eight services on any given month,” Ozuygur said. “This gradual comeback now boasts 16 services and a 54% year-to-date planned capacity increase that is set to peak at 104,000 TEUs of proforma capacity in August.” Many of the services are operated by carriers from China or those based in the Middle East or India that serve the Asia-Middle East trade lane with small- to medium-sized vessels. The Red Sea has effectively been out of bounds since December 2023, when Yemen’s Houthi militants began attacking commercial shipping passing through the narrow Bab-el-Mandeb Strait at the southern entrance to the Red Sea as a show of solidarity for Gaza amid the Israel-Hamas war. Major carriers on the Asia-Europe and Asia-US East Coast trade lanes were then forced to reroute ships around the Cape of Good Hope in southern Africa, which has absorbed an estimated 10% of global capacity and extended transit times by two weeks. Most of the carriers on the Asia-Middle East trade and those passing through the Red Sea en route to Europe do not make calls to Israel on any of their strings, regardless of trade lane, “so that probably lends them confidence” to sail through Houthi-controlled waters, Ozuygur said. After no attacks on shipping were reported since this past December, pressure was beginning to build on the major container shipping companies to return to Red Sea transits. However, in July, two bulk carriers were attacked and sunk, killing three crew and leaving 11 missing, effectively ending any chance of a Red Sea return this year . CMA CGM has some services operating in the Red Sea, but group CFO Ramon Fernandez told the Journal of Commerce last week that security in the region was strictly monitored. “We have a constant position here, which is that vessels will pass the Bab-al-Mandab Strait when security conditions are met,” he said. “That means security for the crew, security for the vessel and for the cargo. “We have some vessels going through when these conditions are met, and for the rest of the fleet must go around the Cape of Good Hope,” Fernandez added. “This is a constant policy the group has followed since the early days of last year.” Navigating dangerous waters Of the Asia-Europe services that continue to operate through the strait and the Suez Canal, 39% call ports outside the East Mediterranean and 33% make direct calls to Russian ports, according to eeSea. “A score of new or improved services announced as recently as Q2 2025 are not restricted to regional carriers alone,” Ozuygur noted. She outlined some of the services that are currently sailing through the Houthi-controlled waterway. A China United Lines extra loader is scheduled to begin operations in the last week of August that will complement the carrier’s Red Sea Service (REX) that began in December 2023. Cosco increased the frequency of the RES2 service operated alongside PIL since March 2024 from a 12-day to a weekly service with the addition of three more sailings at the end of April. Cosco also introduced an additional RES1 service in early May, partnering with OOCL and currently operating with three general cargo vessels. Hong Kong-based Kawa Shipping operates the China-Europe Express (CEX) service between Ningbo and Wilhelmshaven in Germany through the Red Sea that was launched in 2023. In June, its Eastern Mediterranean Express (EMX) service covering the Red Sea, Egypt and Turkey was expanded with the addition of four more vessels. Taiwanese carrier Wan Hai Lines will double the number of vessels on its AR2 service to eight later this month, while increasing the sailing frequency from every 14 days to seven days. India-based Sea Legend Shipping introduced their Asia-Red Sea service in mid-June with three of nine available vessels currently providing voyages. Dubai’s CStar Lines began their China-Red Sea services FRS1, FRS1-X, and FRS2 in May and June, and Singapore headquartered SeaLead Shipping recently reinstated its China-Red Sea (CRS) service, which has not been operational since December 2022. Carriers in the Ocean Alliance — CMA CGM, Cosco, OOCL and Evergreen — operate the MED5 service via the Suez Canal to connect Asia to its Mediterranean network. “While the Asia-Europe trade has largely suffered from longer transit times and increased CO2 emissions tied to military conflict in the zone, the secondary Asia-Middle East trade serving the Red Sea is finally witnessing a quiet revival,” Ozuygur said. Contact Greg Knowler at greg.knowler@spglobal.com .

Asia-Europe

Red Sea ‘revival’ taking place as regional carriers lead the way

<div class="phx-topic abstract-wrapper">A resurgence of nuclear projects in the US should provide a steady stream of project cargo work through the end of the decade. </div>

A resurgence of nuclear projects in the US should provide a steady stream of project cargo work through the end of the decade.

<div class="phx-topic">After decades of relatively dormant development, the nuclear industry is in comeback mode, as the US looks to develop large-scale, low-carbon energy sources to feed power-hungry technologies such as artificial intelligence (AI) and the energy-intensive production of smartphone microchips. That development could significantly power up breakbulk and project cargo activity over the next decade. To support the varying stages of the nuclear fuel cycle, policy changes and investments are lining up for the US to execute an extensive buildout of new and redeveloped power plants, reactors, mines and enrichment facilities. The second Trump administration has shifted national energy policy to prioritize fossil fuels over renewable energy sources. But that shift has also included a heavy focus on nuclear. After declaring a national energy emergency upon taking office, Trump issued a flurry of executive orders in May targeted at reinvigorating the US nuclear energy industry and its supply chain. The orders called for quadrupling domestic nuclear capacity to 400 gigawatts (GW) by 2050 and having 10 large reactors under construction in the US by 2030. Jack Britt, senior director of fuel and radiation safety at the Nuclear Energy Institute in Washington, DC, told the Journal of Commerce that the US push to rebuild its nuclear fuel supply chain has renewed investments in domestic uranium production, conversion and enrichment. “These efforts require major infrastructure,” Britt said. He cited active projects, including the restart of Honeywell’s Metropolis Works conversion facility in Illinois and expanded enrichment activity at the American Centrifuge Plant in Ohio, where Centrus Energy has begun producing high-assay, low-enriched uranium (HALEU) for advanced reactors. “That investment is likely to drive increased activity across the supply chain, including manufacturing, shipping and other services that support nuclear development and deployment,” Britt said. Recharging the US nuclear industry has received broad bipartisan support as a means to generate massive amounts of power consistently, and with little to no carbon emissions. Kim Casey, investor relations manager for US uranium provider Energy Fuels, told the Journal of Commerce that those advantages — along with the rapidly growing energy demands of expansive AI datacenters and chip-powered modern technologies — are positioning nuclear as an attractive energy option. “There’s some excitement that nuclear energy is going to fill a gap, because everybody wants to use their phones,” she said. “Everybody wants their data, and they want it now.” <h3>Plant potential for project cargo </h3>The US nuclear industry is coming full circle for Edlow International Company, which has provided global nuclear and radioactive transport since 1957. President Jack Edlow told the Journal of Commerce that when he entered the industry over 50 years ago, most of the world’s uranium was produced, enriched and converted into nuclear fuel in the US. “Now, it’s pretty much the opposite,” he said. “This gives us an opportunity to reconstitute our industry and go back into the world market with US uranium conversion, enrichment and reactor designs, and I’m hopeful that’s what’s going to happen over the next five to 10 years.” Edlow said a significant opportunity for breakbulk and project cargo will come from the development of facilities to enrich processed uranium so it can become fuel for power plants. Nearly all of the enriched uranium the US relies on is imported, and Urenco USA’s centrifuge enrichment plant in New Mexico is the only commercially operating enrichment plant in the US. “New enrichment plants will be big for cargo,” Edlow said. “Those are huge components weighing hundreds of tons each that will come in.” A handful of projects are in the works and could cost $5 billion to $8 billion, depending on their size, Edlow said. “They will require a lot of equipment and time to build,” he said. “You’re probably looking at four years or more to get large-scale capacity.” Among those projects, nuclear supplier Orano USA is developing a multibillion-dollar uranium enrichment facility in Tennessee. In May, Urenco began production at the first phase of an expansion that will increase its New Mexico plant’s capacity by 15% by 2027. And in April, BWX Technologies Inc. (BWXT) acquired 97 acres of land to develop a centrifuge manufacturing facility to support uranium enrichment. Another key source of project cargo would be the development of nuclear plants and reactors. According to the World Nuclear Association (WNA), there are 94 operating reactors in the US, but 41 that have been shut down over the years. Although no new reactors are currently under construction in the US, 21 have been proposed, according to the WNA. A potential growth area for project development is advanced small modular reactors, or SMRs. Whereas traditional nuclear reactors can cost billions and take decades to build, SMRs would consist of modular components that can be delivered and assembled onsite. Contact Autumn Cafiero Giusti at <a href="mailto:autumn@autumngiusti.com">autumn@autumngiusti.com</a>. </div>

After decades of relatively dormant development, the nuclear industry is in comeback mode, as the US looks to develop large-scale, low-carbon energy sources to feed power-hungry technologies such as artificial intelligence (AI) and the energy-intensive production of smartphone microchips. That development could significantly power up breakbulk and project cargo activity over the next decade. To support the varying stages of the nuclear fuel cycle, policy changes and investments are lining up for the US to execute an extensive buildout of new and redeveloped power plants, reactors, mines and enrichment facilities. The second Trump administration has shifted national energy policy to prioritize fossil fuels over renewable energy sources. But that shift has also included a heavy focus on nuclear. After declaring a national energy emergency upon taking office, Trump issued a flurry of executive orders in May targeted at reinvigorating the US nuclear energy industry and its supply chain. The orders called for quadrupling domestic nuclear capacity to 400 gigawatts (GW) by 2050 and having 10 large reactors under construction in the US by 2030. Jack Britt, senior director of fuel and radiation safety at the Nuclear Energy Institute in Washington, DC, told the Journal of Commerce that the US push to rebuild its nuclear fuel supply chain has renewed investments in domestic uranium production, conversion and enrichment. “These efforts require major infrastructure,” Britt said. He cited active projects, including the restart of Honeywell’s Metropolis Works conversion facility in Illinois and expanded enrichment activity at the American Centrifuge Plant in Ohio, where Centrus Energy has begun producing high-assay, low-enriched uranium (HALEU) for advanced reactors. “That investment is likely to drive increased activity across the supply chain, including manufacturing, shipping and other services that support nuclear development and deployment,” Britt said. Recharging the US nuclear industry has received broad bipartisan support as a means to generate massive amounts of power consistently, and with little to no carbon emissions. Kim Casey, investor relations manager for US uranium provider Energy Fuels, told the Journal of Commerce that those advantages — along with the rapidly growing energy demands of expansive AI datacenters and chip-powered modern technologies — are positioning nuclear as an attractive energy option. “There’s some excitement that nuclear energy is going to fill a gap, because everybody wants to use their phones,” she said. “Everybody wants their data, and they want it now.” Plant potential for project cargo The US nuclear industry is coming full circle for Edlow International Company, which has provided global nuclear and radioactive transport since 1957. President Jack Edlow told the Journal of Commerce that when he entered the industry over 50 years ago, most of the world’s uranium was produced, enriched and converted into nuclear fuel in the US. “Now, it’s pretty much the opposite,” he said. “This gives us an opportunity to reconstitute our industry and go back into the world market with US uranium conversion, enrichment and reactor designs, and I’m hopeful that’s what’s going to happen over the next five to 10 years.” Edlow said a significant opportunity for breakbulk and project cargo will come from the development of facilities to enrich processed uranium so it can become fuel for power plants. Nearly all of the enriched uranium the US relies on is imported, and Urenco USA’s centrifuge enrichment plant in New Mexico is the only commercially operating enrichment plant in the US. “New enrichment plants will be big for cargo,” Edlow said. “Those are huge components weighing hundreds of tons each that will come in.” A handful of projects are in the works and could cost $5 billion to $8 billion, depending on their size, Edlow said. “They will require a lot of equipment and time to build,” he said. “You’re probably looking at four years or more to get large-scale capacity.” Among those projects, nuclear supplier Orano USA is developing a multibillion-dollar uranium enrichment facility in Tennessee. In May, Urenco began production at the first phase of an expansion that will increase its New Mexico plant’s capacity by 15% by 2027. And in April, BWX Technologies Inc. (BWXT) acquired 97 acres of land to develop a centrifuge manufacturing facility to support uranium enrichment. Another key source of project cargo would be the development of nuclear plants and reactors. According to the World Nuclear Association (WNA), there are 94 operating reactors in the US, but 41 that have been shut down over the years. Although no new reactors are currently under construction in the US, 21 have been proposed, according to the WNA. A potential growth area for project development is advanced small modular reactors, or SMRs. Whereas traditional nuclear reactors can cost billions and take decades to build, SMRs would consist of modular components that can be delivered and assembled onsite. Contact Autumn Cafiero Giusti at autumn@autumngiusti.com .

Energy projects

Project cargo

Breakbulk News

US policy, investments line up for project cargo-dependent nuclear buildout

<div class="phx-topic abstract-wrapper">Ports say they stand to lose about $1 billion in funding for maintenance work because the US Army Corps of Engineers’ budget is not treating so-called donor ports equally. </div>

Ports say they stand to lose about $1 billion in funding for maintenance work because the US Army Corps of Engineers’ budget is not treating so-called donor ports equally.

<div class="phx-topic">US port officials say they could be shortchanged about $1 billion for dredging and maintenance projects because the current budget for the US Army Corps of Engineers does not follow through on a 2020 law aimed at more equal distribution of the fees importers pay for maintaining US harbors.In a letter sent Thursday to a joint Congressional committee on energy and water, the American Association of Port Authorities (AAPA), along with the directors of 22 ports, said the Corps fiscal year 2025 budget allocation for dredging and other maintenance does not adhere to a provision of the Water Resources Development Act of 2020 (WRDA 2020).That provision allocated 10% of the Harbor Maintenance Trust Fund (HMTF) to “donor ports.” Due to their size, donor ports have contributed over 50% of the monies to the HMTF, funded through a 0.125% fee on goods movements, but receive less than 2% of that back for maintenance projects, the AAPA said. “Ports need consistent and predictable funding to plan and execute the billions in additional expanded use projects in their pipelines,” the group said.The AAPA said the specified allocation to donor ports resulted in $332 million of extra funding for dredging and maintenance during fiscal year 2024. Donor ports expected to receive a similar amount in the Army Corps’ fiscal year 2025 work plan, which totals $5.5 billion, but it was not included. The AAPA said that maintenance projects begun in 2024 may stall due to the lack of funding in the 2025 budget. Ports share the cost of dredging and maintenance with the Army Corps, so they will have to make up any difference.With the fiscal year 2026 appropriations for the Army Corps now being drawn up, the concern is that it will also not include the required funding for donor ports. The AAPA said it wants Congress to expressly set aside about $480 million in the next appropriations process for the Army Corps to ensure donor ports get their fair share. How the HMTF us disbursed has been a long-standing issue among donor ports. West Coast ports, which were the first to benefit from containerization, were concerned about East Coast ports receiving an outsize share of the HMTF relative to their size. In 1982, then-American Association of Port Authorities President J. Ron Brinson built an expensive headquarters building in Alexandria, Va., <a href="https://www.joc.com/article/dredging-for-dollars-5232988">in a pre-emptive move to keep the group from being torn apart by the new HMTF</a>. Contact Michael Angell at <a href="mailto: michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

US port officials say they could be shortchanged about $1 billion for dredging and maintenance projects because the current budget for the US Army Corps of Engineers does not follow through on a 2020 law aimed at more equal distribution of the fees importers pay for maintaining US harbors. In a letter sent Thursday to a joint Congressional committee on energy and water, the American Association of Port Authorities (AAPA), along with the directors of 22 ports, said the Corps fiscal year 2025 budget allocation for dredging and other maintenance does not adhere to a provision of the Water Resources Development Act of 2020 (WRDA 2020). That provision allocated 10% of the Harbor Maintenance Trust Fund (HMTF) to “donor ports.” Due to their size, donor ports have contributed over 50% of the monies to the HMTF, funded through a 0.125% fee on goods movements, but receive less than 2% of that back for maintenance projects, the AAPA said. “Ports need consistent and predictable funding to plan and execute the billions in additional expanded use projects in their pipelines,” the group said. The AAPA said the specified allocation to donor ports resulted in $332 million of extra funding for dredging and maintenance during fiscal year 2024. Donor ports expected to receive a similar amount in the Army Corps’ fiscal year 2025 work plan, which totals $5.5 billion, but it was not included. The AAPA said that maintenance projects begun in 2024 may stall due to the lack of funding in the 2025 budget. Ports share the cost of dredging and maintenance with the Army Corps, so they will have to make up any difference. With the fiscal year 2026 appropriations for the Army Corps now being drawn up, the concern is that it will also not include the required funding for donor ports. The AAPA said it wants Congress to expressly set aside about $480 million in the next appropriations process for the Army Corps to ensure donor ports get their fair share. How the HMTF us disbursed has been a long-standing issue among donor ports. West Coast ports, which were the first to benefit from containerization, were concerned about East Coast ports receiving an outsize share of the HMTF relative to their size. In 1982, then-American Association of Port Authorities President J. Ron Brinson built an expensive headquarters building in Alexandria, Va., in a pre-emptive move to keep the group from being torn apart by the new HMTF . Contact Michael Angell at michael.angell@spglobal.com .

Port infrastructure

North American ports

Transport, Trade and Regulation News

Big US ports ask Congress to follow law for equal funding of dredging work

<div class="phx-topic abstract-wrapper">The introduction of containerized shipping to Michigan presents an opportunity to reinforce the domestic maritime industrial base.</div>

The introduction of containerized shipping to Michigan presents an opportunity to reinforce the domestic maritime industrial base.

<div class="phx-topic">For decades, international containerized freight from Michigan and the broader Midwest has been routed through distant US coastal gateways such as New York, Norfolk and Savannah, or Canadian ports such as Halifax and Montreal. Export-side users have included automotive original equipment manufacturers (OEMs), steel and chemical producers and agricultural shippers, while imports have consisted of tier 1 suppliers, machinery and equipment distributors and retail or e-commerce consolidators. These routes were not chosen for efficiency or cost. They were imposed by federal restrictions that have for decades prevented containerized freight from entering or exiting the Great Lakes by vessel. US Customs today does not permit such movements through Michigan because no facility in the state meets the required federal standards for security and processing. That is about to change. In 2026, the Port of Monroe will activate the first SAFE Port Act-compliant international container terminal in the Great Lakes, along with a new roll-on/roll-off (ro/ro) platform that complements existing vessel berths, dual Class I rail access and proximity to interstate highways and Midwest manufacturing. Together, these assets position Monroe as a fully integrated inland gateway for containerized trade and high-value industrial logistics. Conservatively, 1 million to 2 million TEUs of oceangoing cargo are generated annually from the Great Lakes’ industrial core, according to port estimates. This includes high-value shipments from sectors such as automotive, machinery, chemicals and electronics. Rather than projecting future throughput volumes, the Port of Monroe is focused on establishing a lawful and functioning corridor, allowing the market to respond. The goal is to restore balance, provide carriers with a practical entry point and give shippers a logistics option that should have existed decades ago. The terminal at Monroe will be available to operators who recognize the value of establishing service in an underserved but strategically positioned market. The automotive industry, in particular, stands to benefit. With production concentrated in the Midwest and export demand on the rise, direct vessel service from Monroe reduces complexity and supports just-in-time inventory models. Monroe offers a new point of connection between Midwest production and global markets, serving as a strategic outlet for general containerized freight and, more uniquely, for the direct shipment of new vehicles via ro/ro or in containers. Resilience has become a defining priority for today’s logistics networks. The March 2024 collapse of the Francis Scott Key Bridge in Baltimore, a critical ro/ro and vehicle export hub, exposed the system’s fragility. Overnight, cargo flows were disrupted, schedules were delayed and shippers were forced to reroute at significant cost. Inland ports such as the Port of Monroe offer a hedge against that kind of single-point failure. <h3>‘Manageable’ constraints </h3>Do the Great Lakes have constraints? Yes, but they are manageable. The annual three-month winter closure of the St. Lawrence Seaway is predictable and published well in advance, allowing cargo owners and carriers to plan accordingly. Intra-lake shipping continues throughout the winter, particularly with ice-class vessels. Recent climate trends indicate shorter freeze periods and milder conditions, which are gradually increasing intralake shipping capacity during the winter months. Other northern regions facing even harsher winter conditions have demonstrated what is possible. The Baltic Sea offers a relevant example. Despite a smaller economic footprint and more severe ice conditions, Baltic ports remain active year-round through the use of ice-capable vessels and integrated multimodal infrastructure. There is no reason the Great Lakes, now that the regulatory path has been cleared, should not do the same and make a comparable contribution to North American trade resilience. Unlike coastal gateways, which face sudden disruptions from hurricanes, labor action and infrastructure failures, the risks on the Great Lakes are stable and foreseeable. That reliability offers a competitive advantage for shippers navigating global volatility. But infrastructure alone is not enough. What is required is a shift in mindset. Federal freight policy must treat the Great Lakes as a fully integrated corridor. Carriers need to revisit assumptions about vessel size and routing patterns. Shippers will now be able to prioritize proximity, reliability and carbon performance rather than adhering to legacy paths shaped by outdated restrictions. The introduction of containerized shipping to Michigan presents an opportunity to reinforce the domestic maritime industrial base. Supporting inland container movement by vessel can drive demand for US-built ships, sustain skilled shipyard jobs, and expand the national maritime workforce. This is not just a logistics upgrade. It is a long-term investment in national capacity, employment, and competitiveness. This is a practical opportunity to enhance the national freight system using inland infrastructure that is efficient, cost-effective and underutilized. Monroe stands ready to serve shippers, carriers and policymakers seeking flexible, durable solutions. The Great Lakes have always had the potential to support containerized trade. Now that the path is open, the Port of Monroe is prepared to deliver. Capt. Paul C. LaMarre III is also director of the Port of Monroe in Michigan. Contact him at <a href="mailto:plamarre@portofmonroe.com">plamarre@portofmonroe.com</a>. </div>

For decades, international containerized freight from Michigan and the broader Midwest has been routed through distant US coastal gateways such as New York, Norfolk and Savannah, or Canadian ports such as Halifax and Montreal. Export-side users have included automotive original equipment manufacturers (OEMs), steel and chemical producers and agricultural shippers, while imports have consisted of tier 1 suppliers, machinery and equipment distributors and retail or e-commerce consolidators. These routes were not chosen for efficiency or cost. They were imposed by federal restrictions that have for decades prevented containerized freight from entering or exiting the Great Lakes by vessel. US Customs today does not permit such movements through Michigan because no facility in the state meets the required federal standards for security and processing. That is about to change. In 2026, the Port of Monroe will activate the first SAFE Port Act-compliant international container terminal in the Great Lakes, along with a new roll-on/roll-off (ro/ro) platform that complements existing vessel berths, dual Class I rail access and proximity to interstate highways and Midwest manufacturing. Together, these assets position Monroe as a fully integrated inland gateway for containerized trade and high-value industrial logistics. Conservatively, 1 million to 2 million TEUs of oceangoing cargo are generated annually from the Great Lakes’ industrial core, according to port estimates. This includes high-value shipments from sectors such as automotive, machinery, chemicals and electronics. Rather than projecting future throughput volumes, the Port of Monroe is focused on establishing a lawful and functioning corridor, allowing the market to respond. The goal is to restore balance, provide carriers with a practical entry point and give shippers a logistics option that should have existed decades ago. The terminal at Monroe will be available to operators who recognize the value of establishing service in an underserved but strategically positioned market. The automotive industry, in particular, stands to benefit. With production concentrated in the Midwest and export demand on the rise, direct vessel service from Monroe reduces complexity and supports just-in-time inventory models. Monroe offers a new point of connection between Midwest production and global markets, serving as a strategic outlet for general containerized freight and, more uniquely, for the direct shipment of new vehicles via ro/ro or in containers. Resilience has become a defining priority for today’s logistics networks. The March 2024 collapse of the Francis Scott Key Bridge in Baltimore, a critical ro/ro and vehicle export hub, exposed the system’s fragility. Overnight, cargo flows were disrupted, schedules were delayed and shippers were forced to reroute at significant cost. Inland ports such as the Port of Monroe offer a hedge against that kind of single-point failure. ‘Manageable’ constraints Do the Great Lakes have constraints? Yes, but they are manageable. The annual three-month winter closure of the St. Lawrence Seaway is predictable and published well in advance, allowing cargo owners and carriers to plan accordingly. Intra-lake shipping continues throughout the winter, particularly with ice-class vessels. Recent climate trends indicate shorter freeze periods and milder conditions, which are gradually increasing intralake shipping capacity during the winter months. Other northern regions facing even harsher winter conditions have demonstrated what is possible. The Baltic Sea offers a relevant example. Despite a smaller economic footprint and more severe ice conditions, Baltic ports remain active year-round through the use of ice-capable vessels and integrated multimodal infrastructure. There is no reason the Great Lakes, now that the regulatory path has been cleared, should not do the same and make a comparable contribution to North American trade resilience. Unlike coastal gateways, which face sudden disruptions from hurricanes, labor action and infrastructure failures, the risks on the Great Lakes are stable and foreseeable. That reliability offers a competitive advantage for shippers navigating global volatility. But infrastructure alone is not enough. What is required is a shift in mindset. Federal freight policy must treat the Great Lakes as a fully integrated corridor. Carriers need to revisit assumptions about vessel size and routing patterns. Shippers will now be able to prioritize proximity, reliability and carbon performance rather than adhering to legacy paths shaped by outdated restrictions. The introduction of containerized shipping to Michigan presents an opportunity to reinforce the domestic maritime industrial base. Supporting inland container movement by vessel can drive demand for US-built ships, sustain skilled shipyard jobs, and expand the national maritime workforce. This is not just a logistics upgrade. It is a long-term investment in national capacity, employment, and competitiveness. This is a practical opportunity to enhance the national freight system using inland infrastructure that is efficient, cost-effective and underutilized. Monroe stands ready to serve shippers, carriers and policymakers seeking flexible, durable solutions. The Great Lakes have always had the potential to support containerized trade. Now that the path is open, the Port of Monroe is prepared to deliver. Capt. Paul C. LaMarre III is also director of the Port of Monroe in Michigan. Contact him at plamarre@portofmonroe.com .

Supply chain

Ro/ro cargo

Marine terminals

Michigan inland port offers new option for Great Lakes containerized freight

<div class="phx-topic abstract-wrapper">Creating a transcontinental railroad is a test of whether North American freight can become globally competitive before it’s leapfrogged by digital platforms, foreign investment and shifting supply chains. </div>

Creating a transcontinental railroad is a test of whether North American freight can become globally competitive before it’s leapfrogged by digital platforms, foreign investment and shifting supply chains.

<div class="phx-topic">Over three decades in rail and logistics — from opening Canadian National Railway’s (CN’s) China offices to overseeing over $1 billion a year in rail and truck procurement at Maersk — I’ve seen our industry at its best and most frustrating. These experiences taught me that success in freight isn’t about owning more track, it’s about making what you have work together, predictably and seamlessly. Coordination and integration — not just scale — unlock value in modern freight. That’s why I believe creating a transcontinental railroad isn’t just corporate consolidation. It’s a test of whether North American freight can become globally competitive before it’s leapfrogged by digital platforms, foreign investment and shifting supply chains. We’re in a global race. The real question is whether we’re ready to evolve from a fragmented, legacy-bound system into a digitally enabled, customer-centric network. Modal conversion is hard. At CN, we worked to divert truck volume onto rail. But at Coyote and Maersk, I saw the reverse — when unreliable interchange, visibility gaps and inconsistent service pushed freight back to the highway. Modal shift doesn’t stick unless the product performs across every touchpoint: drayage, chassis, dwell, and data. <a href="https://www.joc.com/article/potential-up-ns-tie-up-would-cause-major-shift-in-us-intermodal-market-6046025">A transcontinental merger</a> would give coast-to-coast reach on their own rails. That’s not just a coverage map — it’s a reimagining of how service is delivered. It could finally make rail more competitive against truck movements, but only if the combined company behaves more like a platform and less like a legacy carrier. That means unifying schedules, data, and service metrics. But let’s be clear — railroads don’t have a great track record here. Past mergers often promised integration but delivered disruption: slower transit, misaligned systems and customer confusion. If the potential tie-up between Union Pacific and Norfolk Southern becomes another top-down rebrand without operational and digital harmony, we’ll squander a once-in-a-generation opportunity. Today’s shippers expect predictive insights, not just tracking pings. Modern tools are raising the bar by providing predictive truck-rail diversion intelligence and transforming frontline operations into structured, searchable data. These aren’t bolt-ons; they’re rewiring how decisions get made and how freight gets moved. Railroads must embed this kind of intelligence into their operating DNA. Visibility is no longer a feature — it’s the product. <h3>‘Align incentives’ </h3>I worked with the Chinese Ministry of Railways to consider a Chengdu to Narvik, Norway, route — ultimately connecting to Halifax. Three-gauge changes, uncertain infrastructure and limited partners made it unachievable. But today, weekly trains run from Asia to Europe. The difference? Capital, coordination and a unified commercial mindset. That’s the blueprint we need. North America has the backbone of rail — what it lacks is connective tissue. A transcontinental railroad would give one network end-to-end visibility and control. Think the kind of integrated vision Cornelius Vanderbilt dreamed of. In the Gilded Age, railroads shaped economies and connected cities. Today’s equivalent is data integration and seamless execution. We don’t need more steel — we need more reliability. For shippers, that means fewer surprises and a more resilient supply chain. Handled correctly, this potential merger could rebuild a product that earns modal conversion — but only if we align incentives across the ecosystem. Every player must show up. Shortlines need to get in the game by pushing for digital handshakes, carload connectivity, and shared metrics. Intermodal marketing companies can bring data and customers to the table and help shape lane strategies and expectations. Steamship lines port-to-door are your future. Make inland rail performance a C-suite issue. Bulk/merchandise shippers should demand parity: carload deserves the same precision as intermodal. Finally, logistics tech and third-party logistics providers must embed intelligence into the freight fabric, not around it. Handled poorly, this could become another merger that burdens operations and alienates customers. In a world of AI-driven dispatch and predictive ETAs, the window to rewire American freight is closing fast. Connecting teams, systems and expectations matters more than just connecting rail lines. Modernize now or risk handing the next decade of North American freight to faster, more agile competitors. Freight isn’t just a cost center — it’s a competitive edge. We either lead or step aside. That’s why I support a transcontinental rail system. Paul Tonsager has held executive roles at Maersk, CN Rail, CN Worldwide, Coyote (RXO), and Patriot Rail. He can be reached at <a href="mailto:paul.tonsager@multimodalsolutions.io">paul.tonsager@multimodalsolutions.io</a>. </div>

Over three decades in rail and logistics — from opening Canadian National Railway’s (CN’s) China offices to overseeing over $1 billion a year in rail and truck procurement at Maersk — I’ve seen our industry at its best and most frustrating. These experiences taught me that success in freight isn’t about owning more track, it’s about making what you have work together, predictably and seamlessly. Coordination and integration — not just scale — unlock value in modern freight. That’s why I believe creating a transcontinental railroad isn’t just corporate consolidation. It’s a test of whether North American freight can become globally competitive before it’s leapfrogged by digital platforms, foreign investment and shifting supply chains. We’re in a global race. The real question is whether we’re ready to evolve from a fragmented, legacy-bound system into a digitally enabled, customer-centric network. Modal conversion is hard. At CN, we worked to divert truck volume onto rail. But at Coyote and Maersk, I saw the reverse — when unreliable interchange, visibility gaps and inconsistent service pushed freight back to the highway. Modal shift doesn’t stick unless the product performs across every touchpoint: drayage, chassis, dwell, and data. A transcontinental merger would give coast-to-coast reach on their own rails. That’s not just a coverage map — it’s a reimagining of how service is delivered. It could finally make rail more competitive against truck movements, but only if the combined company behaves more like a platform and less like a legacy carrier. That means unifying schedules, data, and service metrics. But let’s be clear — railroads don’t have a great track record here. Past mergers often promised integration but delivered disruption: slower transit, misaligned systems and customer confusion. If the potential tie-up between Union Pacific and Norfolk Southern becomes another top-down rebrand without operational and digital harmony, we’ll squander a once-in-a-generation opportunity. Today’s shippers expect predictive insights, not just tracking pings. Modern tools are raising the bar by providing predictive truck-rail diversion intelligence and transforming frontline operations into structured, searchable data. These aren’t bolt-ons; they’re rewiring how decisions get made and how freight gets moved. Railroads must embed this kind of intelligence into their operating DNA. Visibility is no longer a feature — it’s the product. ‘Align incentives’ I worked with the Chinese Ministry of Railways to consider a Chengdu to Narvik, Norway, route — ultimately connecting to Halifax. Three-gauge changes, uncertain infrastructure and limited partners made it unachievable. But today, weekly trains run from Asia to Europe. The difference? Capital, coordination and a unified commercial mindset. That’s the blueprint we need. North America has the backbone of rail — what it lacks is connective tissue. A transcontinental railroad would give one network end-to-end visibility and control. Think the kind of integrated vision Cornelius Vanderbilt dreamed of. In the Gilded Age, railroads shaped economies and connected cities. Today’s equivalent is data integration and seamless execution. We don’t need more steel — we need more reliability. For shippers, that means fewer surprises and a more resilient supply chain. Handled correctly, this potential merger could rebuild a product that earns modal conversion — but only if we align incentives across the ecosystem. Every player must show up. Shortlines need to get in the game by pushing for digital handshakes, carload connectivity, and shared metrics. Intermodal marketing companies can bring data and customers to the table and help shape lane strategies and expectations. Steamship lines port-to-door are your future. Make inland rail performance a C-suite issue. Bulk/merchandise shippers should demand parity: carload deserves the same precision as intermodal. Finally, logistics tech and third-party logistics providers must embed intelligence into the freight fabric, not around it. Handled poorly, this could become another merger that burdens operations and alienates customers. In a world of AI-driven dispatch and predictive ETAs, the window to rewire American freight is closing fast. Connecting teams, systems and expectations matters more than just connecting rail lines. Modernize now or risk handing the next decade of North American freight to faster, more agile competitors. Freight isn’t just a cost center — it’s a competitive edge. We either lead or step aside. That’s why I support a transcontinental rail system. Paul Tonsager has held executive roles at Maersk, CN Rail, CN Worldwide, Coyote (RXO), and Patriot Rail. He can be reached at paul.tonsager@multimodalsolutions.io .

North-American rail

Possible transcontinental rail a chance to ‘rewire’ US freight movements

JOC Contract Truckload Shipper Rates

JOC Contract Intermodal Shipper Rates

Intermodal ${valueY.formatNumber('#.##')}

The *Journal of Commerce* Intermodal Savings Indices (ISIs) measure the average differential between rates for US domestic intermodal rail and truckload service — both spot and contract — across 120 lanes by sending estimates to third-party logistics providers (3PLs) and shippers to review. The estimates include margins and fuel but exclude accessorial charges such as detention, demurrage (storage fees), excessive per diem, lumper fees and other fees. ISI data partners include DAT Freight & Analytics, the International Association of North America (IANA), InTek Freight and Logistics, Loadsmart, and Sunset Transport.

US shipper truckload and domestic intermodal contract rates (JOC)

Shipper contract rates for truckload, domestic rail Gateway

<div class="phx-topic abstract-wrapper">DSV will start adding the first few country operations of DB Schenker into its network from Aug. 1 in an integration process expected to be completed by 2028.</div>

DSV will start adding the first few country operations of DB Schenker into its network from Aug. 1 in an integration process expected to be completed by 2028.

<div class="phx-topic">DB Schenker made its first appearance on the financial results of DSV since its $16.25 billion acquisition by the Danish forwarder <a href="https://www.joc.com/article/dsv-embarks-on-mammoth-test-as-db-schenker-integration-begins-ceo-5994493">was finalized on May 1</a>, with CEO Jens Lund on Thursday hailing the positive start to the multi-year integration process. DSV will start adding the first few country operations of DB Schenker into its network from Aug. 1 and expects 50% of the integration to be completed by the end of 2026, 75% by the end of 2027 and full integration by 2028, Lund told analysts in a second-quarter earnings call. “I don’t think we could have hoped to be in a better position than where we are,” Lund said. “It means that the real integration in the business kicks off now and we can start to deliver on synergies as well.” The total costs of integrating Schenker will be as high as $1.6 billion by the time the process is completed, with this year’s integration costs expected to reach $380 million. DSV expects total synergies to be near $1.3 billion, with DB Schenker this year generating synergies of $76 million to $92 million. For a second quarter Lund described as both “extraordinary” and “unpredictable,” DSV reported revenue of $9.5 billion, down 1.1% year over year as integration costs and foreign exchange headwinds, mainly in the air and sea division, impacted the top line. Second-quarter gross profit of $2.6 billion was up 2.4%, earnings before interest and taxes (EBIT) fell 4.6% to $722 million and net profit was down 13% at $360 million. Gross profit in the air division was up 8.8% in the second quarter at $656 million, with overall volume up 46% year over year as Schenker contributed 168,000 tons of air freight to DSV’s 341,000 tons. In the sea division, second-quarter gross profit rose 9.5% to $641 million, boosted by Schenker’s contribution of $143 million, while volume improved 43% to 950,000 tons. Schenker business generated 271,000 TEUs in May and June. Road division business was heavily impacted by the weak automotive sector, with revenue of $3.1 billion down 4.1%, gross profit falling 7.5% to $650 million and EBIT plunging 29% to $80 million. While Schenker contributed positively to the division’s earnings, the performance was negatively affected by the overall low activity level and weak market conditions within some markets in Europe and the US. The contract logistics unit had a similarly dismal quarter as the low utilization of capacity and an increasing cost base related to new warehouses dragged down revenue and profit. Revenue was down 15% at $1.5 billion, gross profit fell 3.7% to $707 million and EBIT was down 41.6% at $110 million. DSV’s outlook for the full year remained unchanged, with EBIT forecast to be between $2.9 billion and $3.93 billion. “The current uncertainties related to trade tariffs, the geopolitical landscape, including the Red Sea situation, and macroeconomic factors, which all can impact the global trading environment and activity level, remain uncertain, and unforeseen changes may impact our financial expectations,” DSV said in its earnings statement. <h3>Little business overlap </h3>In an interview with the Journal of Commerce Thursday, DSV CFO Michael Ebbe said as the integration process moved forward, there was surprisingly little business overlap found between the two forwarders. “We had heard there were some customers on both sides but found that it was rather limited compared to what we initially expected,” Ebbe said. “There are only a few customers where there is truly an overlap, and we’ve not yet had any of those saying we have too large a share of wallet,” he added. “So that means that we can mitigate that risk quite easily.” Ebbe said that although there was not a loss of many customers during the acquisition process, there was significant “downtrading” in verticals such as consumer and automotive. “You can argue that we lose volume, but most of that is due to the market and how it has developed,” he said, noting that DB Schenker was far more exposed to the automotive market than DSV. “If we had BMW as a customer, we would not have lost it, but given that they sell fewer cars, they would be downtrading, and that has an impact,” Ebbe said. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

DB Schenker made its first appearance on the financial results of DSV since its $16.25 billion acquisition by the Danish forwarder was finalized on May 1 , with CEO Jens Lund on Thursday hailing the positive start to the multi-year integration process. DSV will start adding the first few country operations of DB Schenker into its network from Aug. 1 and expects 50% of the integration to be completed by the end of 2026, 75% by the end of 2027 and full integration by 2028, Lund told analysts in a second-quarter earnings call. “I don’t think we could have hoped to be in a better position than where we are,” Lund said. “It means that the real integration in the business kicks off now and we can start to deliver on synergies as well.” The total costs of integrating Schenker will be as high as $1.6 billion by the time the process is completed, with this year’s integration costs expected to reach $380 million. DSV expects total synergies to be near $1.3 billion, with DB Schenker this year generating synergies of $76 million to $92 million. For a second quarter Lund described as both “extraordinary” and “unpredictable,” DSV reported revenue of $9.5 billion, down 1.1% year over year as integration costs and foreign exchange headwinds, mainly in the air and sea division, impacted the top line. Second-quarter gross profit of $2.6 billion was up 2.4%, earnings before interest and taxes (EBIT) fell 4.6% to $722 million and net profit was down 13% at $360 million. Gross profit in the air division was up 8.8% in the second quarter at $656 million, with overall volume up 46% year over year as Schenker contributed 168,000 tons of air freight to DSV’s 341,000 tons. In the sea division, second-quarter gross profit rose 9.5% to $641 million, boosted by Schenker’s contribution of $143 million, while volume improved 43% to 950,000 tons. Schenker business generated 271,000 TEUs in May and June. Road division business was heavily impacted by the weak automotive sector, with revenue of $3.1 billion down 4.1%, gross profit falling 7.5% to $650 million and EBIT plunging 29% to $80 million. While Schenker contributed positively to the division’s earnings, the performance was negatively affected by the overall low activity level and weak market conditions within some markets in Europe and the US. The contract logistics unit had a similarly dismal quarter as the low utilization of capacity and an increasing cost base related to new warehouses dragged down revenue and profit. Revenue was down 15% at $1.5 billion, gross profit fell 3.7% to $707 million and EBIT was down 41.6% at $110 million. DSV’s outlook for the full year remained unchanged, with EBIT forecast to be between $2.9 billion and $3.93 billion. “The current uncertainties related to trade tariffs, the geopolitical landscape, including the Red Sea situation, and macroeconomic factors, which all can impact the global trading environment and activity level, remain uncertain, and unforeseen changes may impact our financial expectations,” DSV said in its earnings statement. Little business overlap In an interview with the Journal of Commerce Thursday, DSV CFO Michael Ebbe said as the integration process moved forward, there was surprisingly little business overlap found between the two forwarders. “We had heard there were some customers on both sides but found that it was rather limited compared to what we initially expected,” Ebbe said. “There are only a few customers where there is truly an overlap, and we’ve not yet had any of those saying we have too large a share of wallet,” he added. “So that means that we can mitigate that risk quite easily.” Ebbe said that although there was not a loss of many customers during the acquisition process, there was significant “downtrading” in verticals such as consumer and automotive. “You can argue that we lose volume, but most of that is due to the market and how it has developed,” he said, noting that DB Schenker was far more exposed to the automotive market than DSV. “If we had BMW as a customer, we would not have lost it, but given that they sell fewer cars, they would be downtrading, and that has an impact,” Ebbe said. Contact Greg Knowler at greg.knowler@spglobal.com .

Forwarding

DB Schenker adds to DSV coffers as multi-year integration begins

<div class="phx-topic abstract-wrapper">While not yet reflected in freight rates, analysts and forwarders report growing space constraints out of Southeast Asian origins. </div>

While not yet reflected in freight rates, analysts and forwarders report growing space constraints out of Southeast Asian origins.

<div class="phx-topic">European air freight importers are being indirectly affected by a tariff-driven shift in Asian trade flows that is putting capacity out of Southeast Asia under increasing pressure. While deployed air cargo capacity on routes from Southeast Asia to both Europe and the US remains flat this week compared with the average of the past four weeks, the shifting of volume from China to its southern neighbors is tightening available space, according to Jonathan Mellink, head of sales at air cargo analyst Rotate. “Shippers have shifted supply chains to cater for the differences in [US] tariff levies on different countries of origin, and we see these goods — computers, smartphones, auto parts — that were mostly coming out of China are being sourced in other locations,” Mellink told an air freight webinar hosted by Rhenus Logistics this week. For example, Mellink said 90% of all video game consoles were exported from China last year, but 50% of the products were now being sourced from Vietnam. Another example included Apple iPhones made in India, where significant volumes produced for the European market have been shifted to the US. While some electronics such as laptops, semiconductors and smartphones are excluded from the 10% US “reciprocal tariff” on Chinese imports, all imports of Chinese origin are subject to the 20% fentanyl tariff. “Shippers are trying to be agile and change their supply chains to benefit from at least some of the tariff differences out there,” Mellink said. Still, Chris Bode, vice president of global air freight at Rhenus Logistics, said exporters shifting thousands of tons of air freight from China to Southeast Asian manufacturing hubs such as Thailand and Vietnam risk overloading the outbound market. “[Thailand and Vietnam] are exporting roughly 40,000 tons a month on average, and when suddenly you have another 3,000 tons of a single commodity that was originally from China, it can affect global supply and demand,” Bode told the air freight webinar. “If a customer today is importing automotive-related cargo from Thailand into Germany, he will feel the impact of the US tariffs, even though he’s not involved directly with China-US trade,” he added. “It is important to understand how this new supply-demand is going to balance out and what its impact will be on customers that do not have direct trade flows with the US.” <h3>Keeping eggs ‘in the China basket’ </h3>The shifting of trade flows also poses a challenge to airlines, especially those deeply committed to the Chinese market, such as Abu Dhabi’s Etihad Airways. Leonard Rodrigues, director of revenue management and network planning at Etihad Cargo, told the webinar that the carrier in June signed a joint business agreement with Shenzhen-based SF Airlines, the largest cargo carrier in China. “It’s going to be very interesting to see what the impact of the tariffs and the trade volatility will be, because a big share of our eggs is in the China basket,” he told the air freight webinar, noting that Etihad in the past year has increased the number of weekly China flights from 11 to 18. However, Rodrigues said “making life easier” was the fact that Etihad Cargo had low exposure to the US, with only 3% of its freighter capacity deployed on Asia-US trade routes. Another factor insulating the carrier from the shifting trade flows was its size, as Etihad Cargo is a small player compared with the major air freight operators. Despite the shifting trade flows, Rodrigues pointed to the stability of air freight rates, with China-US rates this week close to levels seen during Chinese New Year in early February and China-North Europe up 10% over that time. China-North America rates were at $5.02 per kilogram this week while the China-Europe market was at $4.25/kg, according to the Baltic Air Index. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

European air freight importers are being indirectly affected by a tariff-driven shift in Asian trade flows that is putting capacity out of Southeast Asia under increasing pressure. While deployed air cargo capacity on routes from Southeast Asia to both Europe and the US remains flat this week compared with the average of the past four weeks, the shifting of volume from China to its southern neighbors is tightening available space, according to Jonathan Mellink, head of sales at air cargo analyst Rotate. “Shippers have shifted supply chains to cater for the differences in [US] tariff levies on different countries of origin, and we see these goods — computers, smartphones, auto parts — that were mostly coming out of China are being sourced in other locations,” Mellink told an air freight webinar hosted by Rhenus Logistics this week. For example, Mellink said 90% of all video game consoles were exported from China last year, but 50% of the products were now being sourced from Vietnam. Another example included Apple iPhones made in India, where significant volumes produced for the European market have been shifted to the US. While some electronics such as laptops, semiconductors and smartphones are excluded from the 10% US “reciprocal tariff” on Chinese imports, all imports of Chinese origin are subject to the 20% fentanyl tariff. “Shippers are trying to be agile and change their supply chains to benefit from at least some of the tariff differences out there,” Mellink said. Still, Chris Bode, vice president of global air freight at Rhenus Logistics, said exporters shifting thousands of tons of air freight from China to Southeast Asian manufacturing hubs such as Thailand and Vietnam risk overloading the outbound market. “[Thailand and Vietnam] are exporting roughly 40,000 tons a month on average, and when suddenly you have another 3,000 tons of a single commodity that was originally from China, it can affect global supply and demand,” Bode told the air freight webinar. “If a customer today is importing automotive-related cargo from Thailand into Germany, he will feel the impact of the US tariffs, even though he’s not involved directly with China-US trade,” he added. “It is important to understand how this new supply-demand is going to balance out and what its impact will be on customers that do not have direct trade flows with the US.” Keeping eggs ‘in the China basket’ The shifting of trade flows also poses a challenge to airlines, especially those deeply committed to the Chinese market, such as Abu Dhabi’s Etihad Airways. Leonard Rodrigues, director of revenue management and network planning at Etihad Cargo, told the webinar that the carrier in June signed a joint business agreement with Shenzhen-based SF Airlines, the largest cargo carrier in China. “It’s going to be very interesting to see what the impact of the tariffs and the trade volatility will be, because a big share of our eggs is in the China basket,” he told the air freight webinar, noting that Etihad in the past year has increased the number of weekly China flights from 11 to 18. However, Rodrigues said “making life easier” was the fact that Etihad Cargo had low exposure to the US, with only 3% of its freighter capacity deployed on Asia-US trade routes. Another factor insulating the carrier from the shifting trade flows was its size, as Etihad Cargo is a small player compared with the major air freight operators. Despite the shifting trade flows, Rodrigues pointed to the stability of air freight rates, with China-US rates this week close to levels seen during Chinese New Year in early February and China-North Europe up 10% over that time. China-North America rates were at $5.02 per kilogram this week while the China-Europe market was at $4.25/kg, according to the Baltic Air Index. Contact Greg Knowler at greg.knowler@spglobal.com .

Air Cargo

Air Cargo Carriers News

Tariff-linked trade flow shift tightens Asian air freight capacity

<div class="phx-topic abstract-wrapper">As tariff fatigue sets in, US retailers are concentrating more on their product delivery needs rather than adjusting their supply chains on the fly to the vagaries of the Trump administration’s trade policy.</div>

As tariff fatigue sets in, US retailers are concentrating more on their product delivery needs rather than adjusting their supply chains on the fly to the vagaries of the Trump administration’s trade policy.

<div class="phx-topic">The whiplash reality of the Trump administration’s tariff policy is no longer driving sharp swings in import volumes from Asia, but expectations of more blank sailings to curb the capacity overhang in the trans-Pacific could still jostle the weakening inbound trade. US retailers are giving less thought to the tariffs in terms of their ordering for the rest of the year, having gained at least some degree of clarity through the several trade deals that have been announced to date. Importantly, a growing number of retail logistics managers and importers, exhausted by the US’ ever-shifting trade policy, have given up on trying to beat moving tariff deadlines. “It doesn’t seem that tariffs and trade deals are quite the driving factor that they had been as recently as six to eight weeks ago,” Stephen Nothdurft, vice president of sales for North America at the forwarder MOL Consolidation Services, told the Journal of Commerce. “The import community has kind of decided, ‘It is what it is, and we can’t control it, but what we can control is just making sure our freight is on the shelf when we need it.’” Indeed, the prospects of a final rush of cargo tied to US trade policy announcements are fading, even if some forwarders and carriers hold out for a final pop in volumes in August. “Strategic planning and long-term decision-making based on tariff deadlines makes no sense because you just don’t know what those deadlines will be from week to week,” the logistics manager of a national furniture retailer told the Journal of Commerce. Ocean carriers <a href="https://www.joc.com/article/looming-august-tariff-deadline-prompts-carriers-to-pull-trans-pacific-capacity-6045526">plan to deploy less tonnage</a> from Asia to the United States in August than in July, according to ocean visibility provider eeSea. So far, ocean carriers are planning to blank less capacity next month than in July, although carriers warn that may change as container spot rates keep falling. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="88ff376b-3b44-447f-ae0f-22d6a0011592"></dynamic-object></div>Spot rates, a measure of how capacity matches up with demand, have been falling since late May and early June, according to various indexes. At a little more than $2,000 per FEU, spot rates from China to the US West Coast are down 70% from a year ago, according to the Shanghai Containerized Freight Index. Some cargo owner customers are still uncertain whether the Aug. 1 deadline — in which the 10% blanket tariff on all US imports will revert to higher levels for countries that haven’t hashed out an agreement with the Trump administration — will hold, a carrier executive said. He added that while some tariff-related price increases have taken place, they haven’t blunted consumer demand enough to have a noticeable impact on import volumes. One automotive industry importer said that at the current 10% reciprocal tariff rate, his company can move product as the sector has absorbed that level. “However, we will not take product into the US at rates above 15% to 20% as some countries have negotiated,” he said. “We have completely pulled out of China due to tariffs.” <h3>GRIs unlikely to stick </h3>While carriers may attempt to impose general rate increases (GRIs) on the first and 15th of each month, forwarders and importers on the trans-Pacific <a href="https://www.joc.com/article/pause-in-tariff-hikes-drives-big-gains-in-trans-pacific-spot-rates-6017111">do not expect any further rate hikes this peak season to stick.</a> “There’s no impetus to keep prices high,” Nothdurft said. “I don’t know what the carriers are banking on in August, but it doesn’t appear that those ships are full, either.” A steady stream of frontloading of fall and holiday merchandise has taken the wind out of carrier attempts to sustain price increases. “A lot of cargo for the rest of the year is already here in the US so there is no need for anyone to rush any huge amounts of cargo into the US for the next few months,” said Sanjay Tejwani, chief executive officer at the consulting firm 365 Logistics. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="a2606c91-b30c-4219-b617-9491b44b6af1"></dynamic-object></div>Even some carriers agree that the extensive frontloading that has already taken place in the eastbound trans-Pacific means cargo volumes may drop off dramatically in the fourth quarter. “I think it’s going to be a bad Q4,” a carrier executive told the Journal of Commerce. For importers, planning their supply chains while attempting to balance the cost of ocean transportation with the delivery of their product to store shelves on schedule requires the use of several forms of shipping. John Pace, senior manager of global logistics at Revelyst, a manufacturer of outdoor performance gear, said that for merchandise that was ordered months ago and is scheduled to be delivered this summer and fall, he can use the preferred mode of regular ocean shipping. As delivery deadlines approach for products with tighter deadlines, he will shift some shipments to expedited ocean service with guaranteed next-day container availability landside. Pace said he will use air freight as a last resort. 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 whiplash reality of the Trump administration’s tariff policy is no longer driving sharp swings in import volumes from Asia, but expectations of more blank sailings to curb the capacity overhang in the trans-Pacific could still jostle the weakening inbound trade. US retailers are giving less thought to the tariffs in terms of their ordering for the rest of the year, having gained at least some degree of clarity through the several trade deals that have been announced to date. Importantly, a growing number of retail logistics managers and importers, exhausted by the US’ ever-shifting trade policy, have given up on trying to beat moving tariff deadlines. “It doesn’t seem that tariffs and trade deals are quite the driving factor that they had been as recently as six to eight weeks ago,” Stephen Nothdurft, vice president of sales for North America at the forwarder MOL Consolidation Services, told the Journal of Commerce. “The import community has kind of decided, ‘It is what it is, and we can’t control it, but what we can control is just making sure our freight is on the shelf when we need it.’” Indeed, the prospects of a final rush of cargo tied to US trade policy announcements are fading, even if some forwarders and carriers hold out for a final pop in volumes in August. “Strategic planning and long-term decision-making based on tariff deadlines makes no sense because you just don’t know what those deadlines will be from week to week,” the logistics manager of a national furniture retailer told the Journal of Commerce. Ocean carriers plan to deploy less tonnage from Asia to the United States in August than in July, according to ocean visibility provider eeSea. So far, ocean carriers are planning to blank less capacity next month than in July, although carriers warn that may change as container spot rates keep falling. Spot rates, a measure of how capacity matches up with demand, have been falling since late May and early June, according to various indexes. At a little more than $2,000 per FEU, spot rates from China to the US West Coast are down 70% from a year ago, according to the Shanghai Containerized Freight Index. Some cargo owner customers are still uncertain whether the Aug. 1 deadline — in which the 10% blanket tariff on all US imports will revert to higher levels for countries that haven’t hashed out an agreement with the Trump administration — will hold, a carrier executive said. He added that while some tariff-related price increases have taken place, they haven’t blunted consumer demand enough to have a noticeable impact on import volumes. One automotive industry importer said that at the current 10% reciprocal tariff rate, his company can move product as the sector has absorbed that level. “However, we will not take product into the US at rates above 15% to 20% as some countries have negotiated,” he said. “We have completely pulled out of China due to tariffs.” GRIs unlikely to stick While carriers may attempt to impose general rate increases (GRIs) on the first and 15th of each month, forwarders and importers on the trans-Pacific do not expect any further rate hikes this peak season to stick. “There’s no impetus to keep prices high,” Nothdurft said. “I don’t know what the carriers are banking on in August, but it doesn’t appear that those ships are full, either.” A steady stream of frontloading of fall and holiday merchandise has taken the wind out of carrier attempts to sustain price increases. “A lot of cargo for the rest of the year is already here in the US so there is no need for anyone to rush any huge amounts of cargo into the US for the next few months,” said Sanjay Tejwani, chief executive officer at the consulting firm 365 Logistics. Even some carriers agree that the extensive frontloading that has already taken place in the eastbound trans-Pacific means cargo volumes may drop off dramatically in the fourth quarter. “I think it’s going to be a bad Q4,” a carrier executive told the Journal of Commerce. For importers, planning their supply chains while attempting to balance the cost of ocean transportation with the delivery of their product to store shelves on schedule requires the use of several forms of shipping. John Pace, senior manager of global logistics at Revelyst, a manufacturer of outdoor performance gear, said that for merchandise that was ordered months ago and is scheduled to be delivered this summer and fall, he can use the preferred mode of regular ocean shipping. As delivery deadlines approach for products with tighter deadlines, he will shift some shipments to expedited ocean service with guaranteed next-day container availability landside. Pace said he will use air freight as a last resort. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com . Contact Laura Robb at laura.robb@spglobal.com .

Trans-Pacific

US tariff volatility no longer driving trans-Pacific trade plans

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At SSA Marine Mexico, we firmly believe that business development must go hand in hand with social and environmental well-being. Our vision is not solely focused on operating efficiently, but also on creating a meaningful and positive impact in the communities where we are present. Since 1995, we have reaffirmed this commitment through tangible actions that reflect our core values of responsibility, solidarity, and sustainability. <span class="joc_admin__inline-image joc_admin__inline-image-aspect-ratio-3_2 joc_admin__inline-image-position-left joc_admin__inline-image-size-medium" data-figure-size="medium" data-figure-position="left" data-figure-aspect-ratio="3:2"><img src="/content-assets/1752584535914_Photo%201.jpg" alt="" class="joc_admin__inline-image-inherit"> A Year of Major Achievements Over the past year, we allocated more than $107,000 USD to the implementation of 60 social and environmental projects, positively impacting over 7,800 people across various regions of Mexico. Each initiative was designed with a holistic approach, addressing key areas that contribute to long-term community development. Education: Laying the Foundation for the Future Education is one of the most powerful tools to promote social mobility and equitable development. At SSA Marine Mexico, we support academic initiatives that inspire and empower the next generation of leaders. One of our most impactful partnerships was with the University of Colima, where we sponsored the “Reto Camp” program. This initiative encourages university students to develop innovative solutions in the fields of sustainability, logistics, and port operations, offering them mentorship, tools, and real-world challenges to solve. In addition, we donated microscopes, school supplies, and educational materials to institutions in underserved communities, helping to improve the learning environment and provide students with the resources they need to succeed. Health and Sports: Promoting Wellness We believe that healthy communities are strong communities. We have supported several local sporting events and provided direct assistance to talented athletes, enabling them to pursue their passions and represent their regions with pride. Beyond sports, we also strengthened our collaboration with critical emergency response organizations such as the Mexican Red Cross and Civil Protection. Our contributions helped enhance their readiness and capabilities in times of crisis, ensuring better outcomes for those affected by emergencies. Supporting Vulnerable Groups: Reaching Those Who Need It Most A core part of our social responsibility efforts is directed toward supporting vulnerable populations. We have contributed to a range of initiatives focused on children, migrants, and at-risk families. These efforts included donations to orphanages and shelters, as well as support for the National Institute of Migration and grassroots organizations dedicated to protecting and empowering people facing adversity. By standing with those in need, we reinforce our commitment to inclusion and social justice, values that are central to our identity as a responsible company. <span class="joc_admin__inline-image joc_admin__inline-image-aspect-ratio-3_2 joc_admin__inline-image-position-left joc_admin__inline-image-size-medium" data-figure-size="medium" data-figure-position="left" data-figure-aspect-ratio="3:2"><img src="/content-assets/1752584944645_Photo%202.png" alt="" class="joc_admin__inline-image-inherit">Culture: Strengthening Community Identity Cultural identity is a key element in building resilient and united communities. At SSA Marine Mexico, we actively participate in the organization and sponsorship of cultural events that celebrate local traditions and foster civic pride. Working alongside port authorities and municipal governments, we helped bring music, art, and heritage to the forefront, creating spaces for community engagement and intercultural dialogue. Environment: Investing in the Planet Our commitment to sustainability goes beyond operations—it’s a philosophy that drives every decision we make. We have partnered with environmental institutions to carry out reforestation campaigns, beach cleanups, and conservation efforts. In collaboration with the Institute for the Environment, we supported initiatives aimed at decarbonization, biodiversity protection, and environmental education. By involving our employees and local volunteers in these actions, we also foster a culture of environmental stewardship throughout our organization and our surrounding communities. Innovation for a Sustainable Future Sustainability is not just about doing good—it’s also about doing things better. In 2024, we invested $22 million USD in the acquisition of 11 state-of-the-art E-RTG cranes. These electric rubber-tired gantry cranes represent a significant technological advancement in port equipment. Seven of them are already operating on clean electric energy, resulting in a reduction of nearly 4,000 tons of CO₂ emissions and improving operational efficiency by 7%. The remaining four cranes are fully compatible with future electrification, underscoring our long-term strategy to modernize our operations in an environmentally responsible way. This investment is part of a broader innovation roadmap that includes digitalization, automation, and cleaner energy sources—all designed to ensure that our ports continue to grow without compromising the health of our planet. Building a Better Tomorrow, Together At SSA Marine Mexico, we understand that sustainability is a shared and ongoing responsibility. True impact requires collaboration across sectors, long-term vision, and unwavering commitment. That is why we continue to work hand-in-hand with local authorities, non-profit organizations, universities, and our own employees to create solutions that are both scalable and sustainable. Our journey is far from over. In the years ahead, we will continue to deepen our community engagement, explore cleaner technologies, and strengthen the social fabric of the regions where we operate. Each initiative, no matter the size, is a step toward building a future where business success goes hand-in-hand with human and environmental prosperity. We are proud of what we have achieved in 2024, but we are even more excited about what lies ahead. SSA Marine Mexico — Moving the World, Caring for People and Planet. LINK: https://www.ssamarine.mx/

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<div class="phx-topic abstract-wrapper">Marine terminal operators may be forced to resell or even abandon cranes if the tariffs take effect, which would further erode US port productivity.</div>

Marine terminal operators may be forced to resell or even abandon cranes if the tariffs take effect, which would further erode US port productivity.

<div class="phx-topic">US ports and terminal operators <a href="https://www.joc.com/article/ports-look-to-delay-proposed-us-tariffs-on-chinese-made-cranes-6007628">facing up to 270% tariffs on ship-to-shore cranes</a> they’ll receive from China in the coming months are considering reselling the units or laying them up in bond if they don’t receive exemptions from the Trump administration. The tariffs taking effect Oct. 14, absent relief of some kind, will make the total cost unfeasible for ports and terminals, tripling the price tag in some cases. While the industry lobbies the White House for an exemption, marine terminal operators may be forced to resell or even abandon cranes if the tariffs take effect, said Carl Bentzel, president of the National Association of Waterfront Employers (NAWE). <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6055442_0.1.jpg"></img></div>Such moves would interrupt normal US replenishment demand of 20 to 25 cranes per year on an installed base of an estimated 450 ship-to-shore (STS) cranes deployed at ports in the US and US territories. “Without relief or accommodation, these tariffs pose a serious risk of rendering critical investments economically unfeasible and will ultimately undermine the very policy objectives they are intended to advance,” Ports America CEO Matthew Leech told the Journal of Commerce. Port Houston is proposing grandfathering China-built ship-to-shore cranes that were under contract and in fabrication before Dec. 31, 2024. “This proposal would solve the Port Houston issue, along with similar issues Port Freeport, Port of Virginia and Ports America have with their STS cranes currently completing fabrication,” <a href="https://comments.ustr.gov/s/commentdetails?rid=HTCTBWHHBW">according to Port Houston Executive Director Charlie Jenkins</a>. But with that solution not guaranteed, alternative options being considered by ports and terminals include not putting the cranes to use. “If they must pay these tariffs, they will have three options,” Cary Davis, president of the American Association of Port Authorities (AAPA), wrote in a May letter to US Trade Representative (USTR) Jamison Greer. “First, they can let the cranes collect dust while they are held in bonded warehouses at an additional cost. Second, they can attempt to slash budgets elsewhere to pay the tariff costs. Or third, ports planning future procurement can purchase used cranes instead, which are not as structurally or operationally sound.” <h3>Port productivity at risk </h3>The result of not upgrading or expanding ship-to-shore crane capacity would have several negative consequences, including lower port productivity driven by longer wait times for ships, delayed cargo availability and the inability to handle larger ships. That would further erode the competitiveness of US ports, which rank low in global port productivity rankings and are among the most expensive in the world on a per-container lifted basis. The main benefit of larger cranes is greater height, meaning US ports would face greater operational challenges handing larger ships without the upgrades. The Port of Virginia <a href="https://comments.ustr.gov/s/commentdetails?rid=73RDQKH6G2">told the USTR</a> it expects to be handling vessels in the 18,000 to 20,000-TEU range in the coming years, but that “without continued investment in greater port capacity, these larger ships are hampered from consistently calling the East Coast because the existing infrastructure, specifically ship-to-shore cranes, cannot support them.” Houston is a case in point in terms of the immediate challenges US ports are facing from the potential tariffs. The port is under contract with dominant Chinese crane manufacturer ZPMC for eight cranes at $14 million each scheduled for delivery in the spring of 2026. If it is forced to pay the full tariffs, it will owe $302.4 million in total, which would equate to more than half of the port’s annual container operating revenues and greater than a full year of operating cash flow, Jenkins wrote. The tax figure includes a proposed additional 100% tariff on China-made ship-to-shore cranes on top of 25% tariffs imposed in 2024 and the 145% in tariffs that still could be applied to all Chinese goods absent a broader settlement. For Ports America, the price tag for a single STS crane scheduled to arrive at Gulfport in early September is $16 million. “However, any scenario in which the total landed cost — including applicable penalties, tariffs and related charges — exceeds $22 million would render the equipment economically unviable for deployment,” Leech said. “In such a case, the only practical options would be to resell and re-export the crane or to store it in a bonded facility without commissioning it or paying duties.” <h3>Reshoring push from White House </h3>New legislation just introduced in the House of Representatives seeks to encourage the domestic <a href="https://www.joc.com/article/congress-eyes-a-tax-credit-for-reshoring-port-crane-manufacturing-6053124">building of cranes to lessen the dependence on China-built equipment</a>, which makes up 80% of cranes at US ports and has raised security concerns. Although no solid plan to support US manufacturing or assembly of cranes has materialized as yet, affected ports appear to universally support the idea. The Canadian infrastructure investor Brookfield is discussing such an initiative in collaboration with Matsui-Paceco, Paceco being the builder of the original container cranes for Sea-Land Service Inc. in the 1960s. A White House meeting in April attended by several US port leaders included participation by Peter Stone, a leader of Brookfield’s US port business. At that meeting, according to one participant, the message from White House officials was: “We don’t understand why US industry is buying Chinese equipment and we don’t want you to. We want you to get on board with a program that creates availability of US-assembled cranes.” “There was no objection to this from the assembled ports assuming a transition agreement covering price, timing and specs,” the meeting participant told the Journal of Commerce. “Currently, there is ongoing engagement on developing a framework to nearshore and onshore STS crane manufacturing between the Trump administration, Congress and industry stakeholders. However, no agreement has been proposed as of yet.” If the threatened tariffs are implemented and remain in place, a prospect ports are taking seriously, it would stunt the planned expansion of US port capacity. According to an AAPA survey conducted with the US Maritime Administration, 165 cranes are either on order or will be ordered for delivery from China over the next 10 years, potentially being subjected to a prohibitive $6.7 billion in tariffs and penalties. Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>.</div>

US ports and terminal operators facing up to 270% tariffs on ship-to-shore cranes they’ll receive from China in the coming months are considering reselling the units or laying them up in bond if they don’t receive exemptions from the Trump administration. The tariffs taking effect Oct. 14, absent relief of some kind, will make the total cost unfeasible for ports and terminals, tripling the price tag in some cases. While the industry lobbies the White House for an exemption, marine terminal operators may be forced to resell or even abandon cranes if the tariffs take effect, said Carl Bentzel, president of the National Association of Waterfront Employers (NAWE). Such moves would interrupt normal US replenishment demand of 20 to 25 cranes per year on an installed base of an estimated 450 ship-to-shore (STS) cranes deployed at ports in the US and US territories. “Without relief or accommodation, these tariffs pose a serious risk of rendering critical investments economically unfeasible and will ultimately undermine the very policy objectives they are intended to advance,” Ports America CEO Matthew Leech told the Journal of Commerce. Port Houston is proposing grandfathering China-built ship-to-shore cranes that were under contract and in fabrication before Dec. 31, 2024. “This proposal would solve the Port Houston issue, along with similar issues Port Freeport, Port of Virginia and Ports America have with their STS cranes currently completing fabrication,” according to Port Houston Executive Director Charlie Jenkins . But with that solution not guaranteed, alternative options being considered by ports and terminals include not putting the cranes to use. “If they must pay these tariffs, they will have three options,” Cary Davis, president of the American Association of Port Authorities (AAPA), wrote in a May letter to US Trade Representative (USTR) Jamison Greer. “First, they can let the cranes collect dust while they are held in bonded warehouses at an additional cost. Second, they can attempt to slash budgets elsewhere to pay the tariff costs. Or third, ports planning future procurement can purchase used cranes instead, which are not as structurally or operationally sound.” Port productivity at risk The result of not upgrading or expanding ship-to-shore crane capacity would have several negative consequences, including lower port productivity driven by longer wait times for ships, delayed cargo availability and the inability to handle larger ships. That would further erode the competitiveness of US ports, which rank low in global port productivity rankings and are among the most expensive in the world on a per-container lifted basis. The main benefit of larger cranes is greater height, meaning US ports would face greater operational challenges handing larger ships without the upgrades. The Port of Virginia told the USTR it expects to be handling vessels in the 18,000 to 20,000-TEU range in the coming years, but that “without continued investment in greater port capacity, these larger ships are hampered from consistently calling the East Coast because the existing infrastructure, specifically ship-to-shore cranes, cannot support them.” Houston is a case in point in terms of the immediate challenges US ports are facing from the potential tariffs. The port is under contract with dominant Chinese crane manufacturer ZPMC for eight cranes at $14 million each scheduled for delivery in the spring of 2026. If it is forced to pay the full tariffs, it will owe $302.4 million in total, which would equate to more than half of the port’s annual container operating revenues and greater than a full year of operating cash flow, Jenkins wrote. The tax figure includes a proposed additional 100% tariff on China-made ship-to-shore cranes on top of 25% tariffs imposed in 2024 and the 145% in tariffs that still could be applied to all Chinese goods absent a broader settlement. For Ports America, the price tag for a single STS crane scheduled to arrive at Gulfport in early September is $16 million. “However, any scenario in which the total landed cost — including applicable penalties, tariffs and related charges — exceeds $22 million would render the equipment economically unviable for deployment,” Leech said. “In such a case, the only practical options would be to resell and re-export the crane or to store it in a bonded facility without commissioning it or paying duties.” Reshoring push from White House New legislation just introduced in the House of Representatives seeks to encourage the domestic building of cranes to lessen the dependence on China-built equipment , which makes up 80% of cranes at US ports and has raised security concerns. Although no solid plan to support US manufacturing or assembly of cranes has materialized as yet, affected ports appear to universally support the idea. The Canadian infrastructure investor Brookfield is discussing such an initiative in collaboration with Matsui-Paceco, Paceco being the builder of the original container cranes for Sea-Land Service Inc. in the 1960s. A White House meeting in April attended by several US port leaders included participation by Peter Stone, a leader of Brookfield’s US port business. At that meeting, according to one participant, the message from White House officials was: “We don’t understand why US industry is buying Chinese equipment and we don’t want you to. We want you to get on board with a program that creates availability of US-assembled cranes.” “There was no objection to this from the assembled ports assuming a transition agreement covering price, timing and specs,” the meeting participant told the Journal of Commerce. “Currently, there is ongoing engagement on developing a framework to nearshore and onshore STS crane manufacturing between the Trump administration, Congress and industry stakeholders. However, no agreement has been proposed as of yet.” If the threatened tariffs are implemented and remain in place, a prospect ports are taking seriously, it would stunt the planned expansion of US port capacity. According to an AAPA survey conducted with the US Maritime Administration, 165 cranes are either on order or will be ordered for delivery from China over the next 10 years, potentially being subjected to a prohibitive $6.7 billion in tariffs and penalties. Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

Looming US tariffs put economic viability of STS cranes in doubt

<div class="phx-topic abstract-wrapper">While the intermodal piece of the Union Pacific-Norfolk Southern deal could face some obstacles, UP CEO Jim Vena and his team have shown a willingness to try new approaches in growing their intermodal franchise, writes Ted Prince.</div>

While the intermodal piece of the Union Pacific-Norfolk Southern deal could face some obstacles, UP CEO Jim Vena and his team have shown a willingness to try new approaches in growing their intermodal franchise, writes Ted Prince.

<div class="phx-topic">There is no doubt that the <a href="https://www.joc.com/article/up-looks-to-create-first-coast-to-coast-railroad-with-85-billion-ns-deal-6052288">Union Pacific-Norfolk Southern merger announced Tuesday</a> is a possible inflection point in the rail industry. But there are major issues to resolve. The most obvious is the US Surface Transportation Board’s de facto moratorium on big rail mergers that has been in place since 2001, which was prompted by the intended merger of BNSF and Canadian National. There has been so much discussion on the moratorium point already <a href="https://www.joc.com/article/up-confirms-in-advanced-discussions-on-deal-with-norfolk-southern-6049046">in the lead-up</a> to Tuesday’s announcement that I will pass on adding to it. Rather, I will focus on topics that have not been addressed — or, in my opinion, have been misunderstood. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6052287_0.1.jpg"></img></div>There seems to be an assumption that the merged transcontinental railroad will be based on intermodal. There is some underlying validity to this. Rail intermodal’s competitive advantage increases with the length of haul, and there is a great deal of rail traffic currently moving over the two railroads. However, I am not sure how we magically arrive at the enhanced operational efficiency that is expected. There are already “steel-wheel” blocks that move intact between western and eastern railroads. <ul><li>In the domestic market, these are limited to major origins such as southern California to New York, Harrisburg, Pa., and New England. The reason there aren’t many more is because there is either a lack of daily critical mass, or the complexity of loading multiple blocks is avoided. These lanes are often only in one direction because the return lacks critical mass, frequently because empties are repositioned to an intermediate market for reloading. </li><li>The intact international market does not have the daily density threshold; however, it still has the challenge of sufficient scale and constraints on the number of blocks loaded on dock at origin. </li></ul>That is why so many point pairs are rehandled at network nodes. Chicago is predominant; however, Kansas City, Memphis, and Dallas also perform this unload-cross-town-reload function. One solution would be to de-market certain destinations (e.g., close Taylor, Allentown and Bethlehem to increase volume to Croxton and Harrisburg/Rutherford). This would generate scale, but pickup and delivery costs would increase. Intermodal routing is often about “closest to the pin” to minimize drayage. There is also a question as to whether these mega hubs would have the capacity to accommodate this new volume. To borrow an airline metaphor, it is unclear to me how the itinerary that involves a flight change today becomes a non-stop flight tomorrow. This issue is even greater for the “watershed volume” (e.g., Minneapolis to Pittsburgh) that has been out of intermodal’s reach for ages but is now expected to be converted from highway. There are ways to overcome these challenges, but they fall outside the boundaries of “the way we’ve always done it.” However, this might not be the obstacle it has always been. While UP CEO Jim Vena and his team have instilled core operating principles, they have also shown a willingness to try new approaches in growing their intermodal franchise. <h3>More deals to come? </h3>There are also commercial challenges. What happens to customers currently moving BNSF-NS or UP-CSX? Will they convert to the new UP-NS? And if so, how will that transpire? In some cases, this involves large volumes. Otherwise, this business will need to remain with the intermediate rehandling. Also, how much transcon volume is still left to convert? A great deal of the remaining volume involves cargo not conducive to intermodal, possibly due to multiple stops en route and restrictions on commodity and/or equipment type. The Burlington Northern merger with Atchison, Topeka and Santa Fe in 1994 quickly led to UP and Southern Pacific in 1996. What will the fallout be now? Is BNSF-CSX a foregone conclusion, or might we see CN-CSX instead? Looking back at railroad merger history, it is not uncommon for a third railroad to force itself into a merger of two others. The New Haven achieved this in 1969 by forcing its way into Penn Central. Could we see one of the six Class I railroads pursue this strategy if it perceives itself to be a loser in this game of musical chairs? The possible combination of BNSF and JB Hunt has long been the industry’s equivalent of Elvis sightings. Could it now come true with BNSF avoiding an eastern rail partner in favor of merging with a virtual transcon? The possibilities are endless. It will certainly make for interesting discussions. Contact Ted Prince at <a href="mailto:ted@tricitiesintermodal.com">ted@tricitiesintermodal.com</a>. </div>

There is no doubt that the Union Pacific-Norfolk Southern merger announced Tuesday is a possible inflection point in the rail industry. But there are major issues to resolve. The most obvious is the US Surface Transportation Board’s de facto moratorium on big rail mergers that has been in place since 2001, which was prompted by the intended merger of BNSF and Canadian National. There has been so much discussion on the moratorium point already in the lead-up to Tuesday’s announcement that I will pass on adding to it. Rather, I will focus on topics that have not been addressed — or, in my opinion, have been misunderstood. There seems to be an assumption that the merged transcontinental railroad will be based on intermodal. There is some underlying validity to this. Rail intermodal’s competitive advantage increases with the length of haul, and there is a great deal of rail traffic currently moving over the two railroads. However, I am not sure how we magically arrive at the enhanced operational efficiency that is expected. There are already “steel-wheel” blocks that move intact between western and eastern railroads. In the domestic market, these are limited to major origins such as southern California to New York, Harrisburg, Pa., and New England. The reason there aren’t many more is because there is either a lack of daily critical mass, or the complexity of loading multiple blocks is avoided. These lanes are often only in one direction because the return lacks critical mass, frequently because empties are repositioned to an intermediate market for reloading. The intact international market does not have the daily density threshold; however, it still has the challenge of sufficient scale and constraints on the number of blocks loaded on dock at origin. That is why so many point pairs are rehandled at network nodes. Chicago is predominant; however, Kansas City, Memphis, and Dallas also perform this unload-cross-town-reload function. One solution would be to de-market certain destinations (e.g., close Taylor, Allentown and Bethlehem to increase volume to Croxton and Harrisburg/Rutherford). This would generate scale, but pickup and delivery costs would increase. Intermodal routing is often about “closest to the pin” to minimize drayage. There is also a question as to whether these mega hubs would have the capacity to accommodate this new volume. To borrow an airline metaphor, it is unclear to me how the itinerary that involves a flight change today becomes a non-stop flight tomorrow. This issue is even greater for the “watershed volume” (e.g., Minneapolis to Pittsburgh) that has been out of intermodal’s reach for ages but is now expected to be converted from highway. There are ways to overcome these challenges, but they fall outside the boundaries of “the way we’ve always done it.” However, this might not be the obstacle it has always been. While UP CEO Jim Vena and his team have instilled core operating principles, they have also shown a willingness to try new approaches in growing their intermodal franchise. More deals to come? There are also commercial challenges. What happens to customers currently moving BNSF-NS or UP-CSX? Will they convert to the new UP-NS? And if so, how will that transpire? In some cases, this involves large volumes. Otherwise, this business will need to remain with the intermediate rehandling. Also, how much transcon volume is still left to convert? A great deal of the remaining volume involves cargo not conducive to intermodal, possibly due to multiple stops en route and restrictions on commodity and/or equipment type. The Burlington Northern merger with Atchison, Topeka and Santa Fe in 1994 quickly led to UP and Southern Pacific in 1996. What will the fallout be now? Is BNSF-CSX a foregone conclusion, or might we see CN-CSX instead? Looking back at railroad merger history, it is not uncommon for a third railroad to force itself into a merger of two others. The New Haven achieved this in 1969 by forcing its way into Penn Central. Could we see one of the six Class I railroads pursue this strategy if it perceives itself to be a loser in this game of musical chairs? The possible combination of BNSF and JB Hunt has long been the industry’s equivalent of Elvis sightings. Could it now come true with BNSF avoiding an eastern rail partner in favor of merging with a virtual transcon? The possibilities are endless. It will certainly make for interesting discussions. Contact Ted Prince at ted@tricitiesintermodal.com .

Intermodal providers

Resolution of ‘major issues’ now takes spotlight in UP-NS merger process

<div class="phx-topic abstract-wrapper">The company did not disclose the identity of the potential Chinese investor in the $23 billion deal, although it is widely thought to be Cosco Shipping Holdings.</div>

The company did not disclose the identity of the potential Chinese investor in the $23 billion deal, although it is widely thought to be Cosco Shipping Holdings.

<div class="phx-topic">CK Hutchison is in talks with a “major strategic investor from China” to join the BlackRock-Terminal Investment Limited (TiL) consortium in their planned $23 billion purchase of Hutchison’s non-China terminals, the Hong Kong conglomerate confirmed Monday. Hutchison, whose businesses include ports, telecoms, real estate and retail, did not provide details on the Chinese investor, although it is widely thought to be Cosco Shipping Holdings. Cosco’s potential involvement follows speculation the Chinese government was pushing for a Chinese shipping group to join the BlackRock-TiL group as a condition of <a href="https://www.joc.com/article/beijing-issues-warning-over-hutchisons-proposed-sale-of-panama-ports-company-5962910">Beijing giving regulatory approval to the deal</a>, announced in March. TiL is the terminals division of Gianluigi Aponte’s Mediterranean Shipping Co. The deal would also make MSC/TiL the world’s biggest terminal operator, with throughput volumes of more than 130 million TEUs, according to Drewry. Hutchison’s comments about Chinese involvement were made in a statement to the Hong Kong stock exchange following the weekend expiry of the 145-day exclusive negotiating period Hutchison had with BlackRock-TiL. Despite the end of the exclusivity period, Hutchison said it “remains in discussions with members of the consortium with a view to inviting a major strategic investor from [China] to join as a significant member of the consortium.” “Changes to the membership of the consortium and the structure of the transaction [will be needed for the deal] to be capable of being approved by all relevant authorities,” Hutchison added in the statement. It gave no deadline for the changes to be finalized. Instead, the company said it “intends to allow such time as is required for such discussions to achieve” the alterations. <h3>Balancing act to keep Trump administration happy </h3>There were to be two agreements under terms of the initial deal, one covering the sale of Hutchison’s Panama ports and the second involving the rest of its global ports network, excluding those in China. There is speculation the restructured deal will see BlackRock-TiL buying Hutchison Port Holdings’ 90% stake in the Panama Port Company, with BlackRock and its Global Investment Partners as the lead investor and no Chinese involvement. That would assuage Trump administration criticism that China influences cargo and ship movements through HPH’s ownership of Balboa and Cristobal ports at either end of the Panama Canal. The claims, made soon after Donald Trump became president in January, have been rejected by China. Instead, the Chinese investor would join BlackRock-TiL in the purchase of Hutchison’s 80% stake in HPH, which owns and operates 199 berths at terminals in 43 ports in 23 countries. The remaining 20% of HPH is owned by Singapore’s PSA International. Analysts say Chinese involvement, especially through Cosco Shipping Ports, could intensify regulatory scrutiny, particularly in Europe, where Hutchison, TiL/MSC and Cosco all operate terminals in Rotterdam and Antwerp. Eleanor Hadland, lead analyst for ports and terminals at Drewry Maritime Research, <a href="https://www.joc.com/article/big-hutchison-deal-could-reshuffle-global-ports-network-drewry-5958162">previously told the Journal of Commerce</a> that TiL/MSC would likely have to sell off some terminals in Rotterdam, Le Havre, Antwerp, Hamburg and Egypt as a condition of the deal being approved by competition watchdogs. If Cosco joins the consortium there could be added scrutiny from regulators in South Korea and the Middle East due to overlapping terminal interests by HPH and Cosco in Busan, the United Arab Emirates and Egypt, one analyst told the Journal of Commerce. HPH, CK Hutchison, TiL, MSC and Cosco Shipping did not respond to the Journal of Commerce’s requests for comment Monday. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>.</div>

CK Hutchison is in talks with a “major strategic investor from China” to join the BlackRock-Terminal Investment Limited (TiL) consortium in their planned $23 billion purchase of Hutchison’s non-China terminals, the Hong Kong conglomerate confirmed Monday. Hutchison, whose businesses include ports, telecoms, real estate and retail, did not provide details on the Chinese investor, although it is widely thought to be Cosco Shipping Holdings. Cosco’s potential involvement follows speculation the Chinese government was pushing for a Chinese shipping group to join the BlackRock-TiL group as a condition of Beijing giving regulatory approval to the deal , announced in March. TiL is the terminals division of Gianluigi Aponte’s Mediterranean Shipping Co. The deal would also make MSC/TiL the world’s biggest terminal operator, with throughput volumes of more than 130 million TEUs, according to Drewry. Hutchison’s comments about Chinese involvement were made in a statement to the Hong Kong stock exchange following the weekend expiry of the 145-day exclusive negotiating period Hutchison had with BlackRock-TiL. Despite the end of the exclusivity period, Hutchison said it “remains in discussions with members of the consortium with a view to inviting a major strategic investor from [China] to join as a significant member of the consortium.” “Changes to the membership of the consortium and the structure of the transaction [will be needed for the deal] to be capable of being approved by all relevant authorities,” Hutchison added in the statement. It gave no deadline for the changes to be finalized. Instead, the company said it “intends to allow such time as is required for such discussions to achieve” the alterations. Balancing act to keep Trump administration happy There were to be two agreements under terms of the initial deal, one covering the sale of Hutchison’s Panama ports and the second involving the rest of its global ports network, excluding those in China. There is speculation the restructured deal will see BlackRock-TiL buying Hutchison Port Holdings’ 90% stake in the Panama Port Company, with BlackRock and its Global Investment Partners as the lead investor and no Chinese involvement. That would assuage Trump administration criticism that China influences cargo and ship movements through HPH’s ownership of Balboa and Cristobal ports at either end of the Panama Canal. The claims, made soon after Donald Trump became president in January, have been rejected by China. Instead, the Chinese investor would join BlackRock-TiL in the purchase of Hutchison’s 80% stake in HPH, which owns and operates 199 berths at terminals in 43 ports in 23 countries. The remaining 20% of HPH is owned by Singapore’s PSA International. Analysts say Chinese involvement, especially through Cosco Shipping Ports, could intensify regulatory scrutiny, particularly in Europe, where Hutchison, TiL/MSC and Cosco all operate terminals in Rotterdam and Antwerp. Eleanor Hadland, lead analyst for ports and terminals at Drewry Maritime Research, previously told the Journal of Commerce that TiL/MSC would likely have to sell off some terminals in Rotterdam, Le Havre, Antwerp, Hamburg and Egypt as a condition of the deal being approved by competition watchdogs. If Cosco joins the consortium there could be added scrutiny from regulators in South Korea and the Middle East due to overlapping terminal interests by HPH and Cosco in Busan, the United Arab Emirates and Egypt, one analyst told the Journal of Commerce. HPH, CK Hutchison, TiL, MSC and Cosco Shipping did not respond to the Journal of Commerce’s requests for comment Monday. Contact Keith Wallis at keithwallis@hotmail.com .

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