<div class="phx-topic abstract-wrapper">The Federal Maritime Commission is looking at areas where ships are having transit troubles with an eye on how US maritime influence can fix those problems.</div>

The Federal Maritime Commission is looking at areas where ships are having transit troubles with an eye on how US maritime influence can fix those problems.

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<div class="phx-topic">The US Federal Maritime Commission (FMC) is asking shipping interests to weigh in on the biggest global maritime chokepoints they face as part of US waterborne commerce. The probe, part of the FMC’s regular work under US shipping law, comes amid the Trump administration’s moves to assert US power across the global maritime sector and to develop a US-based shipping industry. The FMC said Thursday it is investigating “transit constraints at international maritime chokepoints” as part of its regular annual report to Congress about practices in the ocean shipping industry. The agency is asking, in particular, whether the practices or policies of foreign governments and ocean carriers exacerbate those chokepoints. “It appears that constraints on transits ... may have created shipping conditions that call for careful consideration by the Federal Maritime Commission in connection with the determination of its policies and the carrying out of its duties,” the agency said in the docket announcing the probe. The FMC identified seven chokepoints for the probe — the English Channel, the Malacca Strait, the Northern Sea Passage, the Singapore Strait, the Panama Canal, the Strait of Gibraltar and the Suez Canal. The Panama Canal has been a particular area of concern for President Donald Trump, who has criticized the 1977 treaty that ceded US control of the canal to Panama. The Trump administration got one win in that regard when <a href="https://www.joc.com/article/big-hutchison-deal-could-reshuffle-global-ports-network-drewry-5958162">BlackRock-backed investors Global Infrastructure Partners struck a $23 billion deal</a> to buy the ports network belonging to Hong Kong’s CK Hutchison. The deal included two <a href="https://www.joc.com/article/panama-canal-transit-data-belies-trumps-claims-of-chinas-control-project44-5948559">Panama marine terminals that Trump called out for their Chinese ownership</a>. The FMC said in its docket about the investigation that the Panama Canal “holds substantial geopolitical importance [and is] crucial to the interests of the United States.” “Political instability or disruptions in its operation could have far-reaching consequences,” it added. The FMC suggested that if Panama or any other maritime entity appears to be causing problems at the canal, the US is prepared to hit back at Panama’s ship registry — one of the largest in the world with 8,000 vessels — including refusing US entry to Panama-flag vessels. <h3>Attempt to bolster US maritime presence</h3>The FMC is also seeking input on avoiding other types of navigational constraints, including the <a href="https://www.joc.com/article/with-ever-given-freed-suez-backlog-to-clear-through-week-carriers-5250358">2021 grounding of the Ever Given in the Suez Canal</a> and the <a href="https://www.joc.com/article/baltimore-preps-for-limited-port-reopening-by-end-of-april-5225392">2024 closure of the Port of Baltimore</a> after the container ship Dali struck a bridge, causing it to collapse. Alongside the FMC, the Trump administration as a whole has taken interest in the maritime sector, particularly regarding how to boost the US’ presence. The US Trade Representative is currently weighing whether <a href="https://www.joc.com/article/tpm25-us-exporters-starting-to-feel-pinch-of-trump-trade-war-with-china-5956798">Chinese-built and -operated ships should face $1 million fees for US port calls</a> to offset China’s dominance in shipbuilding. A hearing on the matter is scheduled for March 24. Trump also said in his joint address to Congress at the start of March that his administration plans to create an office of commercial and military shipbuilding with a view of “bringing this industry home to America.” Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

The US Federal Maritime Commission (FMC) is asking shipping interests to weigh in on the biggest global maritime chokepoints they face as part of US waterborne commerce. The probe, part of the FMC’s regular work under US shipping law, comes amid the Trump administration’s moves to assert US power across the global maritime sector and to develop a US-based shipping industry. The FMC said Thursday it is investigating “transit constraints at international maritime chokepoints” as part of its regular annual report to Congress about practices in the ocean shipping industry. The agency is asking, in particular, whether the practices or policies of foreign governments and ocean carriers exacerbate those chokepoints. “It appears that constraints on transits ... may have created shipping conditions that call for careful consideration by the Federal Maritime Commission in connection with the determination of its policies and the carrying out of its duties,” the agency said in the docket announcing the probe. The FMC identified seven chokepoints for the probe — the English Channel, the Malacca Strait, the Northern Sea Passage, the Singapore Strait, the Panama Canal, the Strait of Gibraltar and the Suez Canal. The Panama Canal has been a particular area of concern for President Donald Trump, who has criticized the 1977 treaty that ceded US control of the canal to Panama. The Trump administration got one win in that regard when BlackRock-backed investors Global Infrastructure Partners struck a $23 billion deal to buy the ports network belonging to Hong Kong’s CK Hutchison. The deal included two Panama marine terminals that Trump called out for their Chinese ownership . The FMC said in its docket about the investigation that the Panama Canal “holds substantial geopolitical importance [and is] crucial to the interests of the United States.” “Political instability or disruptions in its operation could have far-reaching consequences,” it added. The FMC suggested that if Panama or any other maritime entity appears to be causing problems at the canal, the US is prepared to hit back at Panama’s ship registry — one of the largest in the world with 8,000 vessels — including refusing US entry to Panama-flag vessels. Attempt to bolster US maritime presence The FMC is also seeking input on avoiding other types of navigational constraints, including the 2021 grounding of the Ever Given in the Suez Canal and the 2024 closure of the Port of Baltimore after the container ship Dali struck a bridge, causing it to collapse. Alongside the FMC, the Trump administration as a whole has taken interest in the maritime sector, particularly regarding how to boost the US’ presence. The US Trade Representative is currently weighing whether Chinese-built and -operated ships should face $1 million fees for US port calls to offset China’s dominance in shipbuilding. A hearing on the matter is scheduled for March 24. Trump also said in his joint address to Congress at the start of March that his administration plans to create an office of commercial and military shipbuilding with a view of “bringing this industry home to America.” Contact Michael Angell at michael.angell@spglobal.com .

Container lines

Transport, Trade and Regulation News

FMC probes ocean chokepoints as Trump looks to rule the waves

<div class="phx-topic abstract-wrapper">A commentary published in a Hong Kong state-backed newspaper said the acquisition of Hutchison’s Panama assets by BlackRock and TiL would “Americanize” the canal and cause Washington to restrict Chinese access to the waterway. </div>

A commentary published in a Hong Kong state-backed newspaper said the acquisition of Hutchison’s Panama assets by BlackRock and TiL would “Americanize” the canal and cause Washington to restrict Chinese access to the waterway.

<div class="phx-topic">Beijing is voicing its opposition to the sale by Hong Kong conglomerate CK Hutchison of its Panama ports terminals to a consortium of BlackRock Group and Mediterranean Shipping Co.’s Terminal Investment Limited (TiL), warning the Panama Canal would be “Americanized” by the US government restricting Chinese access to the waterway. Chinese government concerns were outlined in a commentary published Thursday by Hong Kong newspaper Ta Kung Pao, a China state-backed newspaper. Official endorsement of the commentary was demonstrated when it was reposted on the joint website of the Chinese Communist Party’s Hong Kong and Macao Work Office and the Chinese government’s Hong Kong and Macao Affairs Office. The report spooked investors, causing Hutchison’s share price to drop more than 6% Friday to close at HK$46.25 (US$6). China’s opposition could put pressure on regulators to reject the sale. Hutchison on March 4 <a href="https://www.joc.com/article/hutchison-inks-228-billion-deal-to-sell-majority-of-port-holdings-to-blackrock-til-5955819">announced it had agreed to sell</a> its 90% stake in the Panama Ports Company as part of a larger $22.8 billion deal to offload its global ports business to BlackRock and TiL. The deal covers its 80% interest in Hutchison Port Holdings, which has terminal operations at 43 ports, but excludes Hutchison’s China ports. The Panama Ports Company controls terminals at Christobal and Balbao at both ends of the canal. The newspaper commentary said the sale of the Panama terminals would lead the canal to become “Americanized” and “politicized,” with the US using the canal for “political purposes and pursuit of its own political agenda.” “China’s shipping trade will inevitably be constrained by the United States,” it said. “Once the US implements measures such as selective flow restrictions and imposition of political surcharges, the logistics costs and supply chain stability of Chinese enterprises will face great risks.” <h3>‘Not ordinary business practice’</h3>When the deal was announced, Frank Sixt, CK Hutchison’s co-managing director, stressed that the transaction was “purely commercial in nature and wholly unrelated to recent political news reports concerning the Panama Ports.” He added the sale “was the result of a rapid, discrete, but competitive process in which numerous bids and expressions of interest were received.” But the newspaper commentary rejected that explanation, highlighting Donald Trump’s ongoing threats to take back control of the canal and his close relationship with BlackRock co-founder, chairman and CEO Larry Fink. The Hutchison ports sale was “not ordinary business practice,” the commentary said. “Some [on the internet] pointed out that the United States may use this transaction as a template, through political pressure, to set off port mergers and acquisitions around the world, control more key ports in the world, and use ‘long-arm jurisdiction’ to implement suppression methods so that Chinese ships have nowhere to be berth,” the commentary added. “It can be seen that this deal is a hegemonic act by the US to use national power to embezzle the legitimate rights and interests of other countries through coercion, pressure, inducement and other despicable means, and it is power politics packaged as commercial behavior,” it added. CK Hutchison was also attacked, with the commentary saying that observers “generally strongly questioned and criticized this transaction” with the company “ignoring national interests and betraying all Chinese.” Warning of possible consequences if the sale goes ahead, the commentary said: “The relevant enterprises should think twice and think carefully about what position they want to stand on and which side they want to stand on.” Hutchison structured the deal as two transactions so the Panama Ports Company can likely be sold ahead of the other terminals in its portfolio. Regulatory and related issues in jurisdictions where the terminals are located could delay the sale of those assets by about a year, Eleanor Hadland, senior associate and ports and terminals analyst at maritime consultancy Drewry, <a href="https://www.joc.com/article/big-hutchison-deal-could-reshuffle-global-ports-network-drewry-5958162">told the Journal of Commerce</a>. Officially, the Chinese government has not commented on the deal, with a Foreign Ministry spokesperson saying it does not comment on commercial matters. Hutchison, which is in a 145-day exclusive negotiating period with BlackRock and TiL, did not immediately comment. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>.</div>

Beijing is voicing its opposition to the sale by Hong Kong conglomerate CK Hutchison of its Panama ports terminals to a consortium of BlackRock Group and Mediterranean Shipping Co.’s Terminal Investment Limited (TiL), warning the Panama Canal would be “Americanized” by the US government restricting Chinese access to the waterway. Chinese government concerns were outlined in a commentary published Thursday by Hong Kong newspaper Ta Kung Pao, a China state-backed newspaper. Official endorsement of the commentary was demonstrated when it was reposted on the joint website of the Chinese Communist Party’s Hong Kong and Macao Work Office and the Chinese government’s Hong Kong and Macao Affairs Office. The report spooked investors, causing Hutchison’s share price to drop more than 6% Friday to close at HK$46.25 (US$6). China’s opposition could put pressure on regulators to reject the sale. Hutchison on March 4 announced it had agreed to sell its 90% stake in the Panama Ports Company as part of a larger $22.8 billion deal to offload its global ports business to BlackRock and TiL. The deal covers its 80% interest in Hutchison Port Holdings, which has terminal operations at 43 ports, but excludes Hutchison’s China ports. The Panama Ports Company controls terminals at Christobal and Balbao at both ends of the canal. The newspaper commentary said the sale of the Panama terminals would lead the canal to become “Americanized” and “politicized,” with the US using the canal for “political purposes and pursuit of its own political agenda.” “China’s shipping trade will inevitably be constrained by the United States,” it said. “Once the US implements measures such as selective flow restrictions and imposition of political surcharges, the logistics costs and supply chain stability of Chinese enterprises will face great risks.” ‘Not ordinary business practice’ When the deal was announced, Frank Sixt, CK Hutchison’s co-managing director, stressed that the transaction was “purely commercial in nature and wholly unrelated to recent political news reports concerning the Panama Ports.” He added the sale “was the result of a rapid, discrete, but competitive process in which numerous bids and expressions of interest were received.” But the newspaper commentary rejected that explanation, highlighting Donald Trump’s ongoing threats to take back control of the canal and his close relationship with BlackRock co-founder, chairman and CEO Larry Fink. The Hutchison ports sale was “not ordinary business practice,” the commentary said. “Some [on the internet] pointed out that the United States may use this transaction as a template, through political pressure, to set off port mergers and acquisitions around the world, control more key ports in the world, and use ‘long-arm jurisdiction’ to implement suppression methods so that Chinese ships have nowhere to be berth,” the commentary added. “It can be seen that this deal is a hegemonic act by the US to use national power to embezzle the legitimate rights and interests of other countries through coercion, pressure, inducement and other despicable means, and it is power politics packaged as commercial behavior,” it added. CK Hutchison was also attacked, with the commentary saying that observers “generally strongly questioned and criticized this transaction” with the company “ignoring national interests and betraying all Chinese.” Warning of possible consequences if the sale goes ahead, the commentary said: “The relevant enterprises should think twice and think carefully about what position they want to stand on and which side they want to stand on.” Hutchison structured the deal as two transactions so the Panama Ports Company can likely be sold ahead of the other terminals in its portfolio. Regulatory and related issues in jurisdictions where the terminals are located could delay the sale of those assets by about a year, Eleanor Hadland, senior associate and ports and terminals analyst at maritime consultancy Drewry, told the Journal of Commerce. Officially, the Chinese government has not commented on the deal, with a Foreign Ministry spokesperson saying it does not comment on commercial matters. Hutchison, which is in a 145-day exclusive negotiating period with BlackRock and TiL, did not immediately comment. Contact Keith Wallis at keithwallis@hotmail.com .

Container Shipping News

Port News

International ports

Maritime

Beijing issues warning over Hutchison’s proposed sale of Panama Ports Company

<div class="phx-topic abstract-wrapper">Engineering, procurement and construction companies are in a tailspin about the possible withdrawal of suitable ships for project cargoes if the US government’s port call proposal linked to Chinese tonnage is implemented.</div>

Engineering, procurement and construction companies are in a tailspin about the possible withdrawal of suitable ships for project cargoes if the US government’s port call proposal linked to Chinese tonnage is implemented.

<div class="phx-topic">Engineering, procurement and construction companies (EPCs) are lambasting the Trump administration’s proposed port call tax on Chinese-built and -operated ships, fearing a “devastating” 50%-plus contracting fee increase for chartering multipurpose vessels (MPVs). The increased fee would render some US projects unsustainable, they say. The US Trade Representative <a href="https://www.joc.com/article/us-port-fees-could-hit-chinese-ships-under-trump-trade-proposal-5949409">has proposed sliding scale fees</a> of up to $1.5 million per port call for Chinese tonnage, depending on factors such as the carrier’s current fleet and orders at Chinese shipyards. Chinese-built tonnage dominates the MPV sector, according to a Journal of Commerce analysis of S&amp;P Global Market Intelligence data. About half the global MPV/heavy-lift fleet is Chinese-built, but the order book makes it more vulnerable: 89% is signed for Chinese yards. The multipurpose fleet is also more exposed to the proposed port call tariffs than the container sector because the specialized construction needed for heavy-lift and project cargo ships means very few countries can build MPVs at scale. “For breakbulk shipping this is devastating,” said a global EPC source speaking to the Journal of Commerce under condition of anonymity. For projects, EPCs will often be the sole importer on a ship. On a typical $1.85 million part-charter voyage for heavy lifts and ancillary cargo, port call tariffs could add $1 million to the chartering bill.“Obviously, this is unsustainable for projects if you calculate +50% on a million-dollar charter budget,” said the source.For container shipments related to industrial projects, EPCs said they expect an additional $200 to $300 per container as a result of the port tariffs, equal to a 15% increase in costs. That was described as more manageable as the tariff burden is shared on a container ship carrying multiple consignments for different shippers. But for MPVs, the port call tariff is “horrible,” said the source. A second EPC source shared their calculation of a range of anticipated budget increases as a result of the proposed port call tariff, which maxed out at a 75% increase. “That’s unsustainable. For a $50 million chartering budget for one project, that is an additional $37.5 million,” the source said. “It’s absolutely insane.” <h3>‘Panic’ in the market</h3>EPCs speaking to the Journal of Commerce expressed hope that the US government was overplaying its hand and that after the port tariff consultation deadline of March 24 passes, it will settle for a different fee structure that does not penalize current projects. However, they described the current proposal as a “credible risk.” In considering alternative solutions to avoid the port tariff, one EPC said they had studied transshipment of project cargoes, sharing the fee on a direct deep-sea call and then utilizing a second mode to get the cargo to the job site. However, the EPC concluded this would be unviable as additional handling and on-transport costs, in addition to increased risk, would make that route as expensive as paying the port call fee. “We think that with the fee implementation we could see reduced capacity and increased freight costs, as carriers look to concentrate on other trade lanes,” the source said. An MPV carrier speaking to the Journal of Commerce said EPCs were “sweating buckets” over the Trump administration proposal. The Journal of Commerce has learned that at least one MPV carrier has issued a surcharge note to clients and another is considering employing a government intervention clause, which requires shippers to pay a surcharge or risk cancellation of the shipment if it is not on the water. Another EPC spoke of “panic” in the market regarding the Chinese ship port call tax. “Everything is being renegotiated. We are having real problems getting rates,” the source said, adding that some carriers might simply pull out of the US if they can, choking off supply for US projects.Contact Carly Fields at <a href="mailto:carly.fields@spglobal.com">carly.fields@spglobal.com</a>. </div>

Engineering, procurement and construction companies (EPCs) are lambasting the Trump administration’s proposed port call tax on Chinese-built and -operated ships, fearing a “devastating” 50%-plus contracting fee increase for chartering multipurpose vessels (MPVs). The increased fee would render some US projects unsustainable, they say. The US Trade Representative has proposed sliding scale fees of up to $1.5 million per port call for Chinese tonnage, depending on factors such as the carrier’s current fleet and orders at Chinese shipyards. Chinese-built tonnage dominates the MPV sector, according to a Journal of Commerce analysis of S&P Global Market Intelligence data. About half the global MPV/heavy-lift fleet is Chinese-built, but the order book makes it more vulnerable: 89% is signed for Chinese yards. The multipurpose fleet is also more exposed to the proposed port call tariffs than the container sector because the specialized construction needed for heavy-lift and project cargo ships means very few countries can build MPVs at scale. “For breakbulk shipping this is devastating,” said a global EPC source speaking to the Journal of Commerce under condition of anonymity. For projects, EPCs will often be the sole importer on a ship. On a typical $1.85 million part-charter voyage for heavy lifts and ancillary cargo, port call tariffs could add $1 million to the chartering bill. “Obviously, this is unsustainable for projects if you calculate +50% on a million-dollar charter budget,” said the source. For container shipments related to industrial projects, EPCs said they expect an additional $200 to $300 per container as a result of the port tariffs, equal to a 15% increase in costs. That was described as more manageable as the tariff burden is shared on a container ship carrying multiple consignments for different shippers. But for MPVs, the port call tariff is “horrible,” said the source. A second EPC source shared their calculation of a range of anticipated budget increases as a result of the proposed port call tariff, which maxed out at a 75% increase. “That’s unsustainable. For a $50 million chartering budget for one project, that is an additional $37.5 million,” the source said. “It’s absolutely insane.” ‘Panic’ in the market EPCs speaking to the Journal of Commerce expressed hope that the US government was overplaying its hand and that after the port tariff consultation deadline of March 24 passes, it will settle for a different fee structure that does not penalize current projects. However, they described the current proposal as a “credible risk.” In considering alternative solutions to avoid the port tariff, one EPC said they had studied transshipment of project cargoes, sharing the fee on a direct deep-sea call and then utilizing a second mode to get the cargo to the job site. However, the EPC concluded this would be unviable as additional handling and on-transport costs, in addition to increased risk, would make that route as expensive as paying the port call fee. “We think that with the fee implementation we could see reduced capacity and increased freight costs, as carriers look to concentrate on other trade lanes,” the source said. An MPV carrier speaking to the Journal of Commerce said EPCs were “sweating buckets” over the Trump administration proposal. The Journal of Commerce has learned that at least one MPV carrier has issued a surcharge note to clients and another is considering employing a government intervention clause, which requires shippers to pay a surcharge or risk cancellation of the shipment if it is not on the water. Another EPC spoke of “panic” in the market regarding the Chinese ship port call tax. “Everything is being renegotiated. We are having real problems getting rates,” the source said, adding that some carriers might simply pull out of the US if they can, choking off supply for US projects. Contact Carly Fields at carly.fields@spglobal.com .

Breakbulk carriers

Project cargo

Breakbulk News

EPCs paint bleak picture for MPV sector under US port fee plan

<div class="phx-topic abstract-wrapper">Fresh questions about the direction of the US economy after the tariff chaos unleashed by the Trump administration in recent weeks has container lines resetting their rate expectations for the 2025–26 service year.</div>

Fresh questions about the direction of the US economy after the tariff chaos unleashed by the Trump administration in recent weeks has container lines resetting their rate expectations for the 2025–26 service year.

<div class="phx-topic">Ocean carriers on the eastbound trans-Pacific are acknowledging they will be unable to achieve their hoped-for rates in 2025–26 annual service contracts with importers amid fresh concerns about the health of the US economy and a spot market that continues to slide. Mere weeks ago, those same carriers were adamant about nailing down rates for next year at a minimum level of $2,000 per FEU to the West Coast and $3,000 per FEU to the East Coast, <a href="https://www.joc.com/article/trans-pacific-carriers-reaching-higher-in-early-202526-contract-talks-5952701">saying they were determined not to underprice their services again</a> as they believe they did in the existing 2024–25 contracts. But a plummeting stock market and larger questions about the direction of the US economy after the tariff chaos unleashed by the Trump administration in recent weeks has container lines resetting their rate expectations. Four carriers told the Journal of Commerce they are now setting their sights slightly lower than $2,000/FEU for the West Coast and $3,000/FEU to the East Coast. One carrier executive said the new going rate in service contract negotiations with shippers is $1,800 to $1,900 per FEU to the West Coast and about $1,000 higher to the East Coast. But even that may not be a level to satiate some beneficial cargo owners (BCOs) who may prefer to wait to see if the market moves lower. “BCOs are still asking for lower,” the carrier executive said. The rapid decline in spot rates during the Lunar New Year factory closures in Asia is prompting some retailers to look at one or two more rounds of negotiations before they agree to a final contract rate for the 2025–26 service year, a second carrier source said. Most service contracts begin on May 1. <h3>Spot rate plunge influencing contract talks </h3>Spot rates from North Asia to the West Coast were at $1,850 per FEU as of Thursday, down 19% in just one week, according to Platts, a sister company of the Journal of Commerce within S&amp;P Global. Rates to the East Coast of $2,900 per FEU were down 14% over the week. Plummeting spot rates — which are about 46% lower than this time last year — are having a knock-on effect on service contract levels now under negotiation. “Contract rates have mostly fallen below $2,000/$3,000,” said Rachel Shames, vice president for pricing and procurement at the forwarder CV International. “Carriers are becoming more aggressive with rates.” <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e7a65aab-9aac-4f07-9b74-1793746c01ef"></dynamic-object></div>Kevin Parkerson, an industry consultant and former logistics manager at national retailers, said he’s seeing West Coast/East Coast levels now talked at $1,800/$2,900. “I would not be surprised to see $1,700 [for the West Coast],” he said. Four importers who spoke to the Journal of Commerce said carriers, in a second round of negotiations over 2025–26 contracts, are now quoting rates below $2,000 to the West Coast and $3,000 to the East Coast. “Round two is now south of $2,000 [to the West Coast],” said one importer in the apparel sector. <h3>Confusion, frustration over tariffs </h3>While they negotiate new service contracts with carriers, importers are also trying to plan their sourcing and supply chain requirements while wading through the day-to-day confusion over the Trump administration’s ever-changing policy on tariffs. Frustrated retailers and importers say it has become increasingly difficult to plan ahead. “We are making estimates on [the tariffs’] impact on a per-unit basis and determining how that might impact imports on [vessel] strings where we do not have many options,” said an importer in the automotive sector. “This whole tariff thing is causing chaos and an inability to plan. We hate it.” An importer in the furniture sector said he is almost becoming numb to the bluster and constantly changing announcements from the White House on which nations will be hit with tariffs and how much those tariffs will be. “Whatever answer I get could change in the next 24 hours,” the source said. If and when some clarity is achieved as to how the tariffs will affect sourcing, “[we] will certainly go to our carriers” to lock in vessel space, he added. Meanwhile, importers say they will <a href="https://www.joc.com/article/new-year-heralds-triple-threat-to-us-container-shipping-5908327">continue to engage in frontloading of seasonal merchandise</a> while they wait for clarity on tariffs. One importer said he is already bringing in back-to-school and other fall merchandise, and another said his team is preparing to begin importing year-end holiday merchandise soon depending on the ability of factories in Asia to deliver the products. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>.</div>

Ocean carriers on the eastbound trans-Pacific are acknowledging they will be unable to achieve their hoped-for rates in 2025–26 annual service contracts with importers amid fresh concerns about the health of the US economy and a spot market that continues to slide. Mere weeks ago, those same carriers were adamant about nailing down rates for next year at a minimum level of $2,000 per FEU to the West Coast and $3,000 per FEU to the East Coast, saying they were determined not to underprice their services again as they believe they did in the existing 2024–25 contracts. But a plummeting stock market and larger questions about the direction of the US economy after the tariff chaos unleashed by the Trump administration in recent weeks has container lines resetting their rate expectations. Four carriers told the Journal of Commerce they are now setting their sights slightly lower than $2,000/FEU for the West Coast and $3,000/FEU to the East Coast. One carrier executive said the new going rate in service contract negotiations with shippers is $1,800 to $1,900 per FEU to the West Coast and about $1,000 higher to the East Coast. But even that may not be a level to satiate some beneficial cargo owners (BCOs) who may prefer to wait to see if the market moves lower. “BCOs are still asking for lower,” the carrier executive said. The rapid decline in spot rates during the Lunar New Year factory closures in Asia is prompting some retailers to look at one or two more rounds of negotiations before they agree to a final contract rate for the 2025–26 service year, a second carrier source said. Most service contracts begin on May 1. Spot rate plunge influencing contract talks Spot rates from North Asia to the West Coast were at $1,850 per FEU as of Thursday, down 19% in just one week, according to Platts, a sister company of the Journal of Commerce within S&P Global. Rates to the East Coast of $2,900 per FEU were down 14% over the week. Plummeting spot rates — which are about 46% lower than this time last year — are having a knock-on effect on service contract levels now under negotiation. “Contract rates have mostly fallen below $2,000/$3,000,” said Rachel Shames, vice president for pricing and procurement at the forwarder CV International. “Carriers are becoming more aggressive with rates.” Kevin Parkerson, an industry consultant and former logistics manager at national retailers, said he’s seeing West Coast/East Coast levels now talked at $1,800/$2,900. “I would not be surprised to see $1,700 [for the West Coast],” he said. Four importers who spoke to the Journal of Commerce said carriers, in a second round of negotiations over 2025–26 contracts, are now quoting rates below $2,000 to the West Coast and $3,000 to the East Coast. “Round two is now south of $2,000 [to the West Coast],” said one importer in the apparel sector. Confusion, frustration over tariffs While they negotiate new service contracts with carriers, importers are also trying to plan their sourcing and supply chain requirements while wading through the day-to-day confusion over the Trump administration’s ever-changing policy on tariffs. Frustrated retailers and importers say it has become increasingly difficult to plan ahead. “We are making estimates on [the tariffs’] impact on a per-unit basis and determining how that might impact imports on [vessel] strings where we do not have many options,” said an importer in the automotive sector. “This whole tariff thing is causing chaos and an inability to plan. We hate it.” An importer in the furniture sector said he is almost becoming numb to the bluster and constantly changing announcements from the White House on which nations will be hit with tariffs and how much those tariffs will be. “Whatever answer I get could change in the next 24 hours,” the source said. If and when some clarity is achieved as to how the tariffs will affect sourcing, “[we] will certainly go to our carriers” to lock in vessel space, he added. Meanwhile, importers say they will continue to engage in frontloading of seasonal merchandise while they wait for clarity on tariffs. One importer said he is already bringing in back-to-school and other fall merchandise, and another said his team is preparing to begin importing year-end holiday merchandise soon depending on the ability of factories in Asia to deliver the products. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .

Forwarding

Trans-Pacific

Tariffs, falling spot market weaken contract resolve of trans-Pac carriers

<div class="phx-topic abstract-wrapper">The dizzying pace of the Trump administration’s moves against longtime US trading partners is putting shippers at risk of facing hefty new costs as a result of tariff “stacking.” </div>

The dizzying pace of the Trump administration’s moves against longtime US trading partners is putting shippers at risk of facing hefty new costs as a result of tariff “stacking.”

<div class="phx-topic">The Trump administration’s flurry of threats against trading partners puts shippers at risk of tariff “stacking” as import duties compound on top of other charges, customs experts say. That flurry is adding to the increasing compliance burden on shippers who face what one expert called a “massive historic shift” in the cost of US import duties. On Tuesday, President Donald Trump’s executive order ending tariff exemptions on steel and aluminum imports from Canada, Mexico, the European Union and South Korea went into effect. The move essentially reinstates a 25% tariff from Trump’s first administration, but from which those countries had successfully negotiated exemptions. Cameron Roberts, partner at trade and customs law specialist Roberts &amp; Kehagiaras, said at the Journal of Commerce’s TPM25 conference in Long Beach, California, last week that complying with the steel and aluminum tariffs “is going to be a major headache for everybody when you are importing goods into the United States” as it will require calculating the non-US metal content of goods for their customs entry. “That will be an important one to watch,” Roberts said. “There has been a recent discussion and information from the US Customs messaging system about derivatives and figuring out how much of the steel in a product is made from non-US steel and paying the countervailing duty on those amounts.” Tariffs on cooper imports could also rise under a pending US trade investigation. Those tariffs would come on top of the current 25% tariff rates on all goods from Canada and Mexico, along with the 20% tariffs on imports from China. The cornerstone of Trump’s “America First” trade policy, Roberts said, is removing the trade deficit between the US and its three largest trading partners. “The answer from the administration is we are going to make it extremely expensive to import into the United States of America,” Roberts said. “So, these [tariffs] are stacking. “Over the last two decades, tariff rates have averaged 2% to 3%,” he added. “We are seeing now, what, a [multiple of 10] change? This is a massive historic shift.” Also speaking at TPM25, Pete Mento, director of customs at forwarder DSV, said Trump’s threat of an across-the-board 10% tariff on all imports is also hanging over the heads of importers. “That would run roughshod on inflation,” Mento said. <h3>Tariff wildcards coming </h3>Trump implemented the country-specific tariffs under the International Emergency Economic Powers Act (IEEPA), which gives US presidents executive authority over parts of the economy due to a national emergency. Typically used to impose financial penalties on criminal and terrorist groups, IEEPA has only been used once before for tariffs, by President Richard Nixon in 1971. Roberts said the IEEPA tariffs, which are being justified to stem flows of illegal drugs and migrants into the US, offer the most latitude for new carveouts and exemptions because they are over negotiable issues. However, steel and aluminum tariffs, which were imposed under national security provisions of US trade law, are more likely to last due to Trump’s policy of building up US manufacturing and national defense capacity. Another tariff wildcard will come in April when the Trump administration is scheduled to release a wide-ranging report on what it sees as unfair practices of US trading partners. The report is expected to address how the US could enact “reciprocal” tariffs against countries based on the tariffs they charge US exports. That would upend the practice of most import duties being assessed based on the type of goods, not the country of origin. DSV’s Mento said the additional line items for country-specific goods will balloon the number of possible import classifications in the US tariff schedule. The retaliatory measures that China, Canada and the European Union enacted in response to Trump’s trade measures further risk spiraling reciprocal tariffs upward. “Trump said he’s going to put a 25% tariff on Japanese and European cars, but that’s far beyond reciprocal,” Mento said. “So now I’m worried that reciprocal tariffs will be far higher than imagined and more punitive.” The tariff escalations put further risk on importers who use a customs bond to release cargo prior to paying actual import duties, Roberts said. The increasing size of tariffs means importers will have to post additional bonds, raising their financial costs and increasing their credit risk. “This increase in duty will diminish your profit margin if you are an importer,” Roberts said. “If your financials don’t look as good, you will have a harder time qualifying for credit.” On top of the tariffs, Roberts said shippers need to know the makeup of the fleet carrying their imports due to <a href="https://www.joc.com/article/us-port-tax-would-scramble-ocean-services-raise-shipper-costs-drewry-5952046">Trump’s plan for a port tax on Chinese ocean carriers and ships</a>. The proposed order calls for fees of about $1 million per port call based on a mix of factors including the ship’s country of ownership, the number of newbuilds the carrier has at Chinese shipyards and the cargo capacity of the ships. “If you have a vessel, you could be responsible to pay the fee for bringing in the ship, plus being a Chinese firm, for having a majority of Chinese-built ships, plus a majority of Chinese-built ships in the order process,” Roberts said. “You could be looking at a $4 million to $5 million hit just for coming into the US.” Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

The Trump administration’s flurry of threats against trading partners puts shippers at risk of tariff “stacking” as import duties compound on top of other charges, customs experts say. That flurry is adding to the increasing compliance burden on shippers who face what one expert called a “massive historic shift” in the cost of US import duties. On Tuesday, President Donald Trump’s executive order ending tariff exemptions on steel and aluminum imports from Canada, Mexico, the European Union and South Korea went into effect. The move essentially reinstates a 25% tariff from Trump’s first administration, but from which those countries had successfully negotiated exemptions. Cameron Roberts, partner at trade and customs law specialist Roberts & Kehagiaras, said at the Journal of Commerce’s TPM25 conference in Long Beach, California, last week that complying with the steel and aluminum tariffs “is going to be a major headache for everybody when you are importing goods into the United States” as it will require calculating the non-US metal content of goods for their customs entry. “That will be an important one to watch,” Roberts said. “There has been a recent discussion and information from the US Customs messaging system about derivatives and figuring out how much of the steel in a product is made from non-US steel and paying the countervailing duty on those amounts.” Tariffs on cooper imports could also rise under a pending US trade investigation. Those tariffs would come on top of the current 25% tariff rates on all goods from Canada and Mexico, along with the 20% tariffs on imports from China. The cornerstone of Trump’s “America First” trade policy, Roberts said, is removing the trade deficit between the US and its three largest trading partners. “The answer from the administration is we are going to make it extremely expensive to import into the United States of America,” Roberts said. “So, these [tariffs] are stacking. “Over the last two decades, tariff rates have averaged 2% to 3%,” he added. “We are seeing now, what, a [multiple of 10] change? This is a massive historic shift.” Also speaking at TPM25, Pete Mento, director of customs at forwarder DSV, said Trump’s threat of an across-the-board 10% tariff on all imports is also hanging over the heads of importers. “That would run roughshod on inflation,” Mento said. Tariff wildcards coming Trump implemented the country-specific tariffs under the International Emergency Economic Powers Act (IEEPA), which gives US presidents executive authority over parts of the economy due to a national emergency. Typically used to impose financial penalties on criminal and terrorist groups, IEEPA has only been used once before for tariffs, by President Richard Nixon in 1971. Roberts said the IEEPA tariffs, which are being justified to stem flows of illegal drugs and migrants into the US, offer the most latitude for new carveouts and exemptions because they are over negotiable issues. However, steel and aluminum tariffs, which were imposed under national security provisions of US trade law, are more likely to last due to Trump’s policy of building up US manufacturing and national defense capacity. Another tariff wildcard will come in April when the Trump administration is scheduled to release a wide-ranging report on what it sees as unfair practices of US trading partners. The report is expected to address how the US could enact “reciprocal” tariffs against countries based on the tariffs they charge US exports. That would upend the practice of most import duties being assessed based on the type of goods, not the country of origin. DSV’s Mento said the additional line items for country-specific goods will balloon the number of possible import classifications in the US tariff schedule. The retaliatory measures that China, Canada and the European Union enacted in response to Trump’s trade measures further risk spiraling reciprocal tariffs upward. “Trump said he’s going to put a 25% tariff on Japanese and European cars, but that’s far beyond reciprocal,” Mento said. “So now I’m worried that reciprocal tariffs will be far higher than imagined and more punitive.” The tariff escalations put further risk on importers who use a customs bond to release cargo prior to paying actual import duties, Roberts said. The increasing size of tariffs means importers will have to post additional bonds, raising their financial costs and increasing their credit risk. “This increase in duty will diminish your profit margin if you are an importer,” Roberts said. “If your financials don’t look as good, you will have a harder time qualifying for credit.” On top of the tariffs, Roberts said shippers need to know the makeup of the fleet carrying their imports due to Trump’s plan for a port tax on Chinese ocean carriers and ships . The proposed order calls for fees of about $1 million per port call based on a mix of factors including the ship’s country of ownership, the number of newbuilds the carrier has at Chinese shipyards and the cargo capacity of the ships. “If you have a vessel, you could be responsible to pay the fee for bringing in the ship, plus being a Chinese firm, for having a majority of Chinese-built ships, plus a majority of Chinese-built ships in the order process,” Roberts said. “You could be looking at a $4 million to $5 million hit just for coming into the US.” Contact Michael Angell at michael.angell@spglobal.com .

Escalating tariff costs are ‘massive’ financial shift for US importers: experts

<div class="phx-topic abstract-wrapper">But Yang Ming said significant uncertainties continue to affect the global trade outlook, saying “key risk factors” include US tariff developments that could lead to inflationary pressures due to rising operational costs.</div>

But Yang Ming said significant uncertainties continue to affect the global trade outlook, saying “key risk factors” include US tariff developments that could lead to inflationary pressures due to rising operational costs.

<div class="phx-topic">Evergreen Marine, the largest of Taiwan’s Big Three carriers, said in a filing Thursday to the country’s stock exchange that its net profit last year jumped to $4.2 billion, an almost four-fold increase over 2023. Revenue rose about 60% to $14 billion amid higher freight rates and strong demand.Evergreen’s filing said it would spend $187 million this year to buy 66,500 containers from Dong Fang International Container (Hong Kong) and Singamas Container. The carrier, meanwhile, has also increased its stake in Egypt’s Abu Qir Container Terminal Company after paying $13 million to acquire an additional 5% interest from Hutchison Ports North Africa and Shibaya Marine, it said in a separate filing Thursday. Evergreen’s results came a day after fellow Taiwanese carrier Yang Ming reported a big jump in 2024 net profits to $2 billion from $153 million a year earlier. Revenue rose 56% to $7 billion. The carrier, in a results announcement, said its plans for the year include “strengthening its core business, enhancing existing alliances and exploring new collaborative opportunities … [while] accelerating its regional route strategy and penetrating emerging markets to refine its global service network.” Yang Ming said it will also accelerate the deployment of up to 13 new ships following an internal review of environmental regulations and the development of alternative energy technologies. The carrier announced plans to order the ships, comprised of six 8,000-TEU dual-fuel vessels and seven 15,000-TEU LNG dual-fuel ships, last December; it now says the ships will enter service sooner than planned. “This deployment is expected to strengthen Yang Ming’s core business, mitigating energy risks across the fleet, and maintain flexibility in future vessel types and fuel options,” the carrier said. Still, Yang Ming said significant uncertainties continue to affect the global trade outlook. “Key risk factors include US tariff developments, which may lead to potential inflationary pressures due to rising operational costs and impact economic growth and trade activities,” it said. Taiwan’s Wan Hai Lines, meanwhile, reported on Tuesday net profit of $1.4 billion for 2024, up from a $184 million net loss the year prior. The recovery is mainly due to the carrier deriving an increased share of revenue from longer-haul North and South America trades and Middle East and India services. Revenue increased 53% to $4.9 billion last year, Wan Hai said. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>.</div>

Evergreen Marine, the largest of Taiwan’s Big Three carriers, said in a filing Thursday to the country’s stock exchange that its net profit last year jumped to $4.2 billion, an almost four-fold increase over 2023. Revenue rose about 60% to $14 billion amid higher freight rates and strong demand. Evergreen’s filing said it would spend $187 million this year to buy 66,500 containers from Dong Fang International Container (Hong Kong) and Singamas Container. The carrier, meanwhile, has also increased its stake in Egypt’s Abu Qir Container Terminal Company after paying $13 million to acquire an additional 5% interest from Hutchison Ports North Africa and Shibaya Marine, it said in a separate filing Thursday. Evergreen’s results came a day after fellow Taiwanese carrier Yang Ming reported a big jump in 2024 net profits to $2 billion from $153 million a year earlier. Revenue rose 56% to $7 billion. The carrier, in a results announcement, said its plans for the year include “strengthening its core business, enhancing existing alliances and exploring new collaborative opportunities … [while] accelerating its regional route strategy and penetrating emerging markets to refine its global service network.” Yang Ming said it will also accelerate the deployment of up to 13 new ships following an internal review of environmental regulations and the development of alternative energy technologies. The carrier announced plans to order the ships, comprised of six 8,000-TEU dual-fuel vessels and seven 15,000-TEU LNG dual-fuel ships, last December; it now says the ships will enter service sooner than planned. “This deployment is expected to strengthen Yang Ming’s core business, mitigating energy risks across the fleet, and maintain flexibility in future vessel types and fuel options,” the carrier said. Still, Yang Ming said significant uncertainties continue to affect the global trade outlook. “Key risk factors include US tariff developments, which may lead to potential inflationary pressures due to rising operational costs and impact economic growth and trade activities,” it said. Taiwan’s Wan Hai Lines, meanwhile, reported on Tuesday net profit of $1.4 billion for 2024, up from a $184 million net loss the year prior. The recovery is mainly due to the carrier deriving an increased share of revenue from longer-haul North and South America trades and Middle East and India services. Revenue increased 53% to $4.9 billion last year, Wan Hai said. Contact Keith Wallis at keithwallis@hotmail.com .

Taiwan’s Big Three carriers report robust profit, revenue gains for 2024

<div class="phx-topic abstract-wrapper">No matter what changes occur, a FedEx Freight spinoff as a standalone LTL carrier will be good for the entire industry, writes Satish Jindel.</div>

No matter what changes occur, a FedEx Freight spinoff as a standalone LTL carrier will be good for the entire industry, writes Satish Jindel.

<div class="phx-topic">On June 25, 2024, during an earnings call, FedEx leaders announced that the company’s board had authorized management to explore options for a sale or spinoff of FedEx Freight, and that a decision would be announced by the end of the year. On Dec. 19, <a href="https://www.joc.com/article/fedex-freight-spinoff-is-latest-move-to-reshape-us-ltl-market-5909683">the leadership announced that a spinoff</a> was the best option and would be completed over 18 months. Why tell the shareholders and the less-than-truckload (LTL) market of this move if it is not happening for many months? Now, competitors and shippers can prepare for the various changes that could result from the FedEx Freight spinoff. Competing carriers and shippers should benefit from FedEx’s Priority and Economy services getting merged for a number of reasons. While the parcel market supports express and ground services, the FedEx Express volume has been shrinking for many years, with FedEx Ground now representing over 80% of total parcel volume. So, if there is a rationale to merge the Express and Ground parcel networks, FedEx Freight’s Priority and Economy services should also be merged. The premium for the Priority service price is so small that it does not make up for the various costs related to offering two services. If the two services were so appealing and financially rewarding, other LTL carriers would have done the same. Yet after 12 years, no other LTL carrier has followed suit. Many LTL carriers with just one service are generating operating margins better than 14.5% of FedEx Freight. As the LTL industry speeds up the transit times on high-volume lanes, the gap between Priority and Economy services will shrink. <h3>Greater role for technology </h3>While the parent company wants to spin it off as FedEx Freight, expect the new board to rename it American Freightways. With relief from intercompany charges of $528 million during fiscal year 2024 paid to FedEx Corporation for marketing, sales, technology and billing support, the spinoff will save FedEx Freight a few hundred million dollars by handling those corporate support functions itself. If it uses that money to go for greater market share with pricing initiatives, it could be good news for shippers. Shippers should get ready for a greater role of technology. With the National Motor Freight Traffic Association finally adopting dimensional pricing, there will be a greater need by shippers and carriers to capture shipment dimensions. This change should ensure more accurate billing and reduce the cost for auditing all freight bills for proper classification. With shippers being required to pay greater attention to the dimensions of the pallets, they can expect FedEx Freight support to improve their palletizing just as FedEx helps parcel customers improve their packaging. Because there are practically no appointment deliveries in the parcel business, expect FedEx Freight to embrace opportunities with AI to reduce the number of appointment deliveries, which should help shippers avoid charges for such service. We can also expect FedEx Freight to take greater interest in participating in LTL industry conferences and contributing its shipment data to SMC3’s national LTL database. No matter which of these changes occur, a FedEx Freight spinoff as a standalone LTL carrier will be good for the entire industry. And for those wondering why FedEx needs 18 months to spin off Freight, just imagine the pressure on the board and leadership that may find that investors are valuing its LTL business at a higher market cap than its parcel business, which is generating just a 5.5% margin compared with 14.5% for LTL business. Contact Satish Jindel at <a href="mailto:info@shipmatrix.com">info@shipmatrix.com</a>. </div>

On June 25, 2024, during an earnings call, FedEx leaders announced that the company’s board had authorized management to explore options for a sale or spinoff of FedEx Freight, and that a decision would be announced by the end of the year. On Dec. 19, the leadership announced that a spinoff was the best option and would be completed over 18 months. Why tell the shareholders and the less-than-truckload (LTL) market of this move if it is not happening for many months? Now, competitors and shippers can prepare for the various changes that could result from the FedEx Freight spinoff. Competing carriers and shippers should benefit from FedEx’s Priority and Economy services getting merged for a number of reasons. While the parcel market supports express and ground services, the FedEx Express volume has been shrinking for many years, with FedEx Ground now representing over 80% of total parcel volume. So, if there is a rationale to merge the Express and Ground parcel networks, FedEx Freight’s Priority and Economy services should also be merged. The premium for the Priority service price is so small that it does not make up for the various costs related to offering two services. If the two services were so appealing and financially rewarding, other LTL carriers would have done the same. Yet after 12 years, no other LTL carrier has followed suit. Many LTL carriers with just one service are generating operating margins better than 14.5% of FedEx Freight. As the LTL industry speeds up the transit times on high-volume lanes, the gap between Priority and Economy services will shrink. Greater role for technology While the parent company wants to spin it off as FedEx Freight, expect the new board to rename it American Freightways. With relief from intercompany charges of $528 million during fiscal year 2024 paid to FedEx Corporation for marketing, sales, technology and billing support, the spinoff will save FedEx Freight a few hundred million dollars by handling those corporate support functions itself. If it uses that money to go for greater market share with pricing initiatives, it could be good news for shippers. Shippers should get ready for a greater role of technology. With the National Motor Freight Traffic Association finally adopting dimensional pricing, there will be a greater need by shippers and carriers to capture shipment dimensions. This change should ensure more accurate billing and reduce the cost for auditing all freight bills for proper classification. With shippers being required to pay greater attention to the dimensions of the pallets, they can expect FedEx Freight support to improve their palletizing just as FedEx helps parcel customers improve their packaging. Because there are practically no appointment deliveries in the parcel business, expect FedEx Freight to embrace opportunities with AI to reduce the number of appointment deliveries, which should help shippers avoid charges for such service. We can also expect FedEx Freight to take greater interest in participating in LTL industry conferences and contributing its shipment data to SMC3’s national LTL database. No matter which of these changes occur, a FedEx Freight spinoff as a standalone LTL carrier will be good for the entire industry. And for those wondering why FedEx needs 18 months to spin off Freight, just imagine the pressure on the board and leadership that may find that investors are valuing its LTL business at a higher market cap than its parcel business, which is generating just a 5.5% margin compared with 14.5% for LTL business. Contact Satish Jindel at info@shipmatrix.com .

Surface

How the LTL market could evolve as the FedEx Freight spinoff plays out

<div class="phx-topic abstract-wrapper">What we have today in containerization is the opposite of Malcom McLean’s vision, writes Ted Prince — a vertically integrated enterprise of cost centers has been replaced by a network of profit centers that closely resembles the intermodal rail world.</div>

What we have today in containerization is the opposite of Malcom McLean’s vision, writes Ted Prince — a vertically integrated enterprise of cost centers has been replaced by a network of profit centers that closely resembles the intermodal rail world.

<div class="phx-topic">The Journal of Commerce’s roots extend back to 1827, when Samuel Morse and partners started a newspaper in New York. In 1844, Morse effectively started the telecommunications revolution. His first telegraph message asked, “What hath God wrought?” To many, the answer to that question might have been the development of containerization by Malcom McLean of Maxton, North Carolina. McLean’s transportation roots were in less-than-truckload (LTL). He was an early pioneer; McLean Trucking was founded in 1934 — the same year as the Motor Carrier Act of 1934 — and at one time was the fourth-largest motor carrier in the United States. This Motor Carrier Act followed traditional regulatory thinking. To ensure sufficient capacity, carriers were granted monopolies in the form of operating authorities. With tobacco a highly rated commodity, this was an incredibly lucrative business. These profits supported the acquisition of other motor carriers and the seed capital to start containerization. What the hagiography of McLean frequently omits is that he was not perfect. He twice “bet the company” on oil prices — and got it wrong both times. The development of high-speed container ships known as SL-7s were deployed in 1972 and 1973 during the first fuel shock. The ships’ high operating costs destroyed any profitability, and they were sold to the United States Navy in 1981 and 1982. In 1969, McLean sold Sea-Land to R.J. Reynolds Tobacco Company. In 1978, McLean purchased United States Lines and built a fleet of 4,400-TEU container ships. These were the largest ships at the time and were designed to operate in around-the-world services. Following the second oil shock of 1979, these vessels were designed to be fuel-efficient — albeit slow. When oil prices cratered five years later, so did US Lines. <h3>A ‘grander strategy’</h3>While the SL-7s and EconoShips are well-known aspects of McLean’s legacy, I think it is worthwhile exploring his grander strategy. SeaLand was vertically integrated — deploying his ships, calling his terminals, utilizing cranes of his specifications, carrying his containers, and moving on his chassis. While this model was emulated by many of those that followed, it is worthwhile to think about what has changed since then — and what it means today. Independent vessel strings are mostly a thing of the past. Vessel-sharing agreements (VSAs) have given way to global alliances — not to mention outright acquisitions. SeaLand–Maersk was an early VSA that ultimately led to Maersk acquiring SeaLand. This is a reflection of the need for economies of scope and scale — alongside density and service frequency — that are table stakes in today’s liner shipping world. By the early 1960s, McLean’s concept for standardized shipping containers gave rise to the container leasing industry. Sea Containers was an early entrant that was followed by others. This was a reflection that the capital-intensive nature of liner shipping made it almost impossible for a carrier to invest in everything. It was also a realization that economies of scale were sometimes beyond the reach of a single entity. While the chassis was necessary to provide pickup and delivery, carrier provision of chassis was limited to the United States. McLean was a trucker at heart and couldn’t imagine not having his own wheels. This decision haunted the industry for decades. Finally, in 2012, Maersk sold its chassis-leasing subsidiary, Direct ChassisLink, Inc. (DCLI), to a private equity firm. In an industry where most want to be second, almost every other line followed. Marine terminals were the last to be unbundled — perhaps because lines viewed them as their “crown jewels,” or perhaps because of their high price tags. These investments became popular with infrastructure funds and their pension fund investors. What we have today is the opposite of McLean’s vision. A vertically integrated enterprise of cost centers has been replaced by a network of profit centers that closely resembles the intermodal rail world. Whereas the former would inevitably cross-subsidize separate components through intricate transfer pricing, the latter has created a world of cutthroat capitalism. The impacts are not always clear. Container and chassis providers claim that they offer savings; however, their line customers may not agree — perhaps because they lack the sophistication to ascertain the true cost of ownership and operation. The impact on marine terminals is much more pervasive. Whereas an ocean carrier might have previously absorbed some additional costs (e.g., extra gates, third shifts, etc.) in a holistic service perspective, today’s terminals have owners that demand profitability across the spectrum. Our industry, despite its global scale, is still relatively young. We are living Joseph Schumpeter’s theory of creative destruction that he believed is essential for capitalism and economic growth. New innovations replace old ones. McLean’s innovations were essential, but not timeless. Our industry is essential, and the only certainty is change. Contact Ted Prince at <a href="mailto:ted@tricitiesintermodal.com">ted@tricitiesintermodal.com</a>.</div>

The Journal of Commerce’s roots extend back to 1827, when Samuel Morse and partners started a newspaper in New York. In 1844, Morse effectively started the telecommunications revolution. His first telegraph message asked, “What hath God wrought?” To many, the answer to that question might have been the development of containerization by Malcom McLean of Maxton, North Carolina. McLean’s transportation roots were in less-than-truckload (LTL). He was an early pioneer; McLean Trucking was founded in 1934 — the same year as the Motor Carrier Act of 1934 — and at one time was the fourth-largest motor carrier in the United States. This Motor Carrier Act followed traditional regulatory thinking. To ensure sufficient capacity, carriers were granted monopolies in the form of operating authorities. With tobacco a highly rated commodity, this was an incredibly lucrative business. These profits supported the acquisition of other motor carriers and the seed capital to start containerization. What the hagiography of McLean frequently omits is that he was not perfect. He twice “bet the company” on oil prices — and got it wrong both times. The development of high-speed container ships known as SL-7s were deployed in 1972 and 1973 during the first fuel shock. The ships’ high operating costs destroyed any profitability, and they were sold to the United States Navy in 1981 and 1982. In 1969, McLean sold Sea-Land to R.J. Reynolds Tobacco Company. In 1978, McLean purchased United States Lines and built a fleet of 4,400-TEU container ships. These were the largest ships at the time and were designed to operate in around-the-world services. Following the second oil shock of 1979, these vessels were designed to be fuel-efficient — albeit slow. When oil prices cratered five years later, so did US Lines. A ‘grander strategy’ While the SL-7s and EconoShips are well-known aspects of McLean’s legacy, I think it is worthwhile exploring his grander strategy. SeaLand was vertically integrated — deploying his ships, calling his terminals, utilizing cranes of his specifications, carrying his containers, and moving on his chassis. While this model was emulated by many of those that followed, it is worthwhile to think about what has changed since then — and what it means today. Independent vessel strings are mostly a thing of the past. Vessel-sharing agreements (VSAs) have given way to global alliances — not to mention outright acquisitions. SeaLand–Maersk was an early VSA that ultimately led to Maersk acquiring SeaLand. This is a reflection of the need for economies of scope and scale — alongside density and service frequency — that are table stakes in today’s liner shipping world. By the early 1960s, McLean’s concept for standardized shipping containers gave rise to the container leasing industry. Sea Containers was an early entrant that was followed by others. This was a reflection that the capital-intensive nature of liner shipping made it almost impossible for a carrier to invest in everything. It was also a realization that economies of scale were sometimes beyond the reach of a single entity. While the chassis was necessary to provide pickup and delivery, carrier provision of chassis was limited to the United States. McLean was a trucker at heart and couldn’t imagine not having his own wheels. This decision haunted the industry for decades. Finally, in 2012, Maersk sold its chassis-leasing subsidiary, Direct ChassisLink, Inc. (DCLI), to a private equity firm. In an industry where most want to be second, almost every other line followed. Marine terminals were the last to be unbundled — perhaps because lines viewed them as their “crown jewels,” or perhaps because of their high price tags. These investments became popular with infrastructure funds and their pension fund investors. What we have today is the opposite of McLean’s vision. A vertically integrated enterprise of cost centers has been replaced by a network of profit centers that closely resembles the intermodal rail world. Whereas the former would inevitably cross-subsidize separate components through intricate transfer pricing, the latter has created a world of cutthroat capitalism. The impacts are not always clear. Container and chassis providers claim that they offer savings; however, their line customers may not agree — perhaps because they lack the sophistication to ascertain the true cost of ownership and operation. The impact on marine terminals is much more pervasive. Whereas an ocean carrier might have previously absorbed some additional costs (e.g., extra gates, third shifts, etc.) in a holistic service perspective, today’s terminals have owners that demand profitability across the spectrum. Our industry, despite its global scale, is still relatively young. We are living Joseph Schumpeter’s theory of creative destruction that he believed is essential for capitalism and economic growth. New innovations replace old ones. McLean’s innovations were essential, but not timeless. Our industry is essential, and the only certainty is change. Contact Ted Prince at ted@tricitiesintermodal.com .

Supply chain

In appreciation of McLean’s essential, although not timeless, innovations

Notes: Data as of January 2025
Shaded areas indicate forecasts

MPV delivered

MPV demolished

HL capable delivered

HL capable demolished 

Net fleet loss/gain

The S&P Global multipurpose and heavy-lift fleet capacity database aggregates data for vessels that are in service, on order or have been demolished. The *Journal of Commerce* uses this database of current and historical data to forecast future newbuildings and demolitions.

Multipurpose and heavy-lift vessel deliveries and demolitions, with forecast (JOC)

MPV and HL Capable Fleet development Gateway

<div class="phx-topic abstract-wrapper">European governments and the European Commission will carry out regulatory reviews to assess the level of market concentration MSC will have with the planned takeover of Hutchison’s port assets, with divestitures likely on the table.</div>

European governments and the European Commission will carry out regulatory reviews to assess the level of market concentration MSC will have with the planned takeover of Hutchison’s port assets, with divestitures likely on the table.

<div class="phx-topic">Hutchison’s $22.8 billion disposal of most of its global terminal interests to a consortium of BlackRock Group and Mediterranean Shipping Co.’s Terminal Investment Limited (TiL) is likely to trigger a wave of terminal deals as MSC divests facilities to meet regulators’ anti-trust demands, Drewry’s leading port analyst says. These are expected to include terminals at Rotterdam, Le Havre, Antwerp, Hamburg and in Egypt, Eleanor Hadland, lead analyst for ports and terminals at Drewry Maritime Research, told the Journal of Commerce. The sale has also raised questions about the future of Hutchison’s port interests in China — which are not part of the BlackRock/TiL deal — and the 20% stake in Hutchison Port Holdings (HPH) held by Singapore-headquartered terminal operator PSA International, Hadland added. “Hutchison is not the most dynamic operator. Its ports portfolio has been chugging along since the COVID-19 pandemic,” Hadland said. “There has been growth, but it’s been organic, mainly expanding capacity at existing terminals rather than acquiring new ports.” CK Hutchison, the Hong Kong-listed parent of Hutchison Port Holdings, announced on Tuesday it had reached an agreement with BlackRock/TiL to sell its 80% stake in HPH, including the 90% HPH holds in the Panama Ports Company. The deal, subject to regulatory approval, will catapult MSC into pole position as the world’s largest terminal operator with annual throughput volumes of almost 120 million TEUs based on 2023 figures, leapfrogging the three existing top operators — Singapore’s PSA, China Merchants Port Holdings and Cosco Shipping Ports. Hadland said in Europe, national governments and the European Commission will carry out regulatory reviews to assess the level of market concentration MSC will have with the takeover of Hutchison’s port assets. She pointed out that in Rotterdam, MSC and Hutchison are among the largest terminal owners and operators, controlling more than 13 million TEUs of capacity. That includes MSC’s Delta Dedicated North Terminal operated under an agreement with ECT, which is 89.4% owned by Hutchison. ECT also operates the ECT Delta Terminal and holds a 60.8% stake in the Euromax Terminal, while Hutchison holds 100% of Hutchison Ports Delta II, she said. Euromax is likely to be among the divestment candidates, Hadland said. European Commission competition watchdogs are also likely to consider MSC’s dominant position in Antwerp and Hamburg when considering whether the Hutchison ports deal reduces competition at ports across Northern Europe. <h3>Future of PSA’s stake in Hutchison a question </h3>Commenting on PSA’s 20% stake in Hutchison Port Holdings, Hadland said there are two possible options. The first is for PSA to cash out, selling its interest to BlackRock/TiL or other investors. Or PSA can retain its shareholding in the hope its value increases as BlackRock/TiL rejuvenates Hutchison’s ports. PSA bought its stake for $4 billion in 2006 and made an unsuccessful attempt to dispose of its shareholding for a similar price tag in 2023 due to economic headwinds. PSA did not respond to Journal of Commerce questions about the future of its Hutchison ports stake. On the future of Hutchison’s port interests in China that are excluded from the BlackRock/TiL deal, Hadland speculated its stakes in terminals in Shanghai and Ningbo could be wrapped into Singapore-listed HPH Trust, which controls Hutchison’s port interests in Hong Kong and South China. She said an alternative option would be for Hutchison’s other shareholders — Shanghai International Port Group and Cosco Shipping Ports in Shanghai and Ningbo Port Group in Ningbo — to acquire them. The deal will bring significant benefits for MSC because the Hutchison portfolio is largely complementary to terminals controlled by TiL and opens new opportunities, such as in Australia, where MSC doesn’t have any terminals, while Hutchison has terminals in Sydney and Brisbane. “Operations in the high growth Southeast Asia and Mexican markets are seen to be particularly advantageous,” Hadland said. The deal could also prompt some shuffling of carriers between terminals as MSC moves operations to Hutchison terminals within ports. “Once the deal is done, which might be a year down the line, terminal operators could be worried about the business they are going to lose if or when MSC moves to Hutchison terminals,” Hadland said. <h3>Bank says Panama deal ‘understandable’ </h3>JPMorgan, meanwhile, said selling the Panama terminals was “understandable” given that Hutchison’s ownership has come under scrutiny from the Trump administration amid wider US concerns about alleged Chinese government control and influence on Panama Canal operations. But JPMorgan said the sale of Hutchison’s other terminals outside of China was a “surprise” and could be “an opportunistic deal.” “Based on our understanding of the management philosophy of CKH, any deal is possible as long as ‘the price is right,’” the bank said in a research note. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>.</div>

Hutchison’s $22.8 billion disposal of most of its global terminal interests to a consortium of BlackRock Group and Mediterranean Shipping Co.’s Terminal Investment Limited (TiL) is likely to trigger a wave of terminal deals as MSC divests facilities to meet regulators’ anti-trust demands, Drewry’s leading port analyst says. These are expected to include terminals at Rotterdam, Le Havre, Antwerp, Hamburg and in Egypt, Eleanor Hadland, lead analyst for ports and terminals at Drewry Maritime Research, told the Journal of Commerce. The sale has also raised questions about the future of Hutchison’s port interests in China — which are not part of the BlackRock/TiL deal — and the 20% stake in Hutchison Port Holdings (HPH) held by Singapore-headquartered terminal operator PSA International, Hadland added. “Hutchison is not the most dynamic operator. Its ports portfolio has been chugging along since the COVID-19 pandemic,” Hadland said. “There has been growth, but it’s been organic, mainly expanding capacity at existing terminals rather than acquiring new ports.” CK Hutchison, the Hong Kong-listed parent of Hutchison Port Holdings, announced on Tuesday it had reached an agreement with BlackRock/TiL to sell its 80% stake in HPH, including the 90% HPH holds in the Panama Ports Company. The deal, subject to regulatory approval, will catapult MSC into pole position as the world’s largest terminal operator with annual throughput volumes of almost 120 million TEUs based on 2023 figures, leapfrogging the three existing top operators — Singapore’s PSA, China Merchants Port Holdings and Cosco Shipping Ports. Hadland said in Europe, national governments and the European Commission will carry out regulatory reviews to assess the level of market concentration MSC will have with the takeover of Hutchison’s port assets. She pointed out that in Rotterdam, MSC and Hutchison are among the largest terminal owners and operators, controlling more than 13 million TEUs of capacity. That includes MSC’s Delta Dedicated North Terminal operated under an agreement with ECT, which is 89.4% owned by Hutchison. ECT also operates the ECT Delta Terminal and holds a 60.8% stake in the Euromax Terminal, while Hutchison holds 100% of Hutchison Ports Delta II, she said. Euromax is likely to be among the divestment candidates, Hadland said. European Commission competition watchdogs are also likely to consider MSC’s dominant position in Antwerp and Hamburg when considering whether the Hutchison ports deal reduces competition at ports across Northern Europe. Future of PSA’s stake in Hutchison a question Commenting on PSA’s 20% stake in Hutchison Port Holdings, Hadland said there are two possible options. The first is for PSA to cash out, selling its interest to BlackRock/TiL or other investors. Or PSA can retain its shareholding in the hope its value increases as BlackRock/TiL rejuvenates Hutchison’s ports. PSA bought its stake for $4 billion in 2006 and made an unsuccessful attempt to dispose of its shareholding for a similar price tag in 2023 due to economic headwinds. PSA did not respond to Journal of Commerce questions about the future of its Hutchison ports stake. On the future of Hutchison’s port interests in China that are excluded from the BlackRock/TiL deal, Hadland speculated its stakes in terminals in Shanghai and Ningbo could be wrapped into Singapore-listed HPH Trust, which controls Hutchison’s port interests in Hong Kong and South China. She said an alternative option would be for Hutchison’s other shareholders — Shanghai International Port Group and Cosco Shipping Ports in Shanghai and Ningbo Port Group in Ningbo — to acquire them. The deal will bring significant benefits for MSC because the Hutchison portfolio is largely complementary to terminals controlled by TiL and opens new opportunities, such as in Australia, where MSC doesn’t have any terminals, while Hutchison has terminals in Sydney and Brisbane. “Operations in the high growth Southeast Asia and Mexican markets are seen to be particularly advantageous,” Hadland said. The deal could also prompt some shuffling of carriers between terminals as MSC moves operations to Hutchison terminals within ports. “Once the deal is done, which might be a year down the line, terminal operators could be worried about the business they are going to lose if or when MSC moves to Hutchison terminals,” Hadland said. Bank says Panama deal ‘understandable’ JPMorgan, meanwhile, said selling the Panama terminals was “understandable” given that Hutchison’s ownership has come under scrutiny from the Trump administration amid wider US concerns about alleged Chinese government control and influence on Panama Canal operations. But JPMorgan said the sale of Hutchison’s other terminals outside of China was a “surprise” and could be “an opportunistic deal.” “Based on our understanding of the management philosophy of CKH, any deal is possible as long as ‘the price is right,’” the bank said in a research note. Contact Keith Wallis at keithwallis@hotmail.com .

Marine terminals

Big Hutchison deal could reshuffle global ports network: Drewry

<div class="phx-topic abstract-wrapper">The carrier’s investment, announced while its chief executive met at the White House with President Donald Trump, comes amid heightened political sensitivities in the US as far as the container shipping industry is concerned.</div>

The carrier’s investment, announced while its chief executive met at the White House with President Donald Trump, comes amid heightened political sensitivities in the US as far as the container shipping industry is concerned.

<div class="phx-topic">CMA CGM announced Thursday it would spend $20 billion over the next four years to significantly bolster its logistics presence in the US, including expanding its US-flag fleet and increasing capacity at key US ports. The stunning announcement from the French shipping giant came as Rodolphe Saadé, chairman and CEO of CMA CGM Group, met at the White House with US President Donald Trump. The meeting between Trump and Saadé and the huge investment from the ocean carrier also comes amid heightened political sensitivities in the US as far as the container shipping industry is concerned. Trump’s US Trade Representative has <a href="https://www.joc.com/article/us-port-tax-would-scramble-ocean-services-raise-shipper-costs-drewry-5952046">proposed slamming Chinese-built and -operated ships calling US ports with huge fees</a>, while the administration is making a push to re-energize the US shipbuilding sector. “Over the next four years, we will significantly grow our US-flagged fleet, expand the capacity of key container ports on both coasts, develop state-of-the-art warehousing across the country, and establish a significant air cargo hub in Chicago,” Saadé said in a statement. “This will create 10,000 new American jobs and further strengthen our partnership with American customers and public authorities.” The US investment plan for CMA CGM includes adding 30 new vessels to the fleet of its US-flag carrier APL and deploying five new Boeing 777 freighters to serve a new air cargo hub it will build in Chicago. The carrier said it will also develop infrastructure at ports in New York/New Jersey, Los Angeles, Houston, Miami and Dutch Harbor in Alaska and build or expand 400 “state-of-the-art" warehouses across the US. It will also develop a new logistics research and development hub in Boston. In comments from the Oval Office, Trump praised Saadé, saying that “knowing him,” he wouldn’t be surprised if CMA CGM becomes the world’s top container line. CMA CGM is now the world’s third-largest carrier as measured by tonnage. “He’s going to be investing $20 billion into the United States because of the election,” Trump said. “...We lost our way. For many years we didn’t do anything. We used to build a ship a day.” Trump said in the coming weeks he would announce a massive US shipbuilding program as the White House <a href="https://www.joc.com/article/trumps-expansionist-worldview-puts-us-maritime-interests-in-spotlight-5946935">aims to galvanize an industry</a> that’s been in decline since World War II. <h3>Spending plan follows prior US terminal investments </h3>The CMA CGM investment follows the company acquiring two marine terminals at the Port of New York and New Jersey in 2023. It also acquired the <a href="https://www.joc.com/article/cma-cgm-flexes-financial-might-fenix-marine-acquisition_20211103.html">Fenix Marine Services container terminal in Los Angeles in late 2021.</a>Thanks to record-setting profits in 2021 and 2022, container lines have invested heavily in marine terminals. Mediterranean Shipping Co., the world’s largest container line as measured by tonnage, is on track to become the largest global terminal operator after its Terminal Investment Limited (TiL) arm and BlackRock Group <a href="https://www.joc.com/article/hutchison-inks-228-billion-deal-to-sell-majority-of-port-holdings-to-blackrock-til-5955819">on Tuesday announced</a> they would acquire the majority of Hutchison Port Holdings’ network outside of China and Hong Kong in a $22.8 billion deal. Contact Mark Szakonyi at <a href="mailto:mark.szakonyi@spglobal.com">mark.szakonyi@spglobal.com</a>.</div>

CMA CGM announced Thursday it would spend $20 billion over the next four years to significantly bolster its logistics presence in the US, including expanding its US-flag fleet and increasing capacity at key US ports. The stunning announcement from the French shipping giant came as Rodolphe Saadé, chairman and CEO of CMA CGM Group, met at the White House with US President Donald Trump. The meeting between Trump and Saadé and the huge investment from the ocean carrier also comes amid heightened political sensitivities in the US as far as the container shipping industry is concerned. Trump’s US Trade Representative has proposed slamming Chinese-built and -operated ships calling US ports with huge fees , while the administration is making a push to re-energize the US shipbuilding sector. “Over the next four years, we will significantly grow our US-flagged fleet, expand the capacity of key container ports on both coasts, develop state-of-the-art warehousing across the country, and establish a significant air cargo hub in Chicago,” Saadé said in a statement. “This will create 10,000 new American jobs and further strengthen our partnership with American customers and public authorities.” The US investment plan for CMA CGM includes adding 30 new vessels to the fleet of its US-flag carrier APL and deploying five new Boeing 777 freighters to serve a new air cargo hub it will build in Chicago. The carrier said it will also develop infrastructure at ports in New York/New Jersey, Los Angeles, Houston, Miami and Dutch Harbor in Alaska and build or expand 400 “state-of-the-art" warehouses across the US. It will also develop a new logistics research and development hub in Boston. In comments from the Oval Office, Trump praised Saadé, saying that “knowing him,” he wouldn’t be surprised if CMA CGM becomes the world’s top container line. CMA CGM is now the world’s third-largest carrier as measured by tonnage. “He’s going to be investing $20 billion into the United States because of the election,” Trump said. “...We lost our way. For many years we didn’t do anything. We used to build a ship a day.” Trump said in the coming weeks he would announce a massive US shipbuilding program as the White House aims to galvanize an industry that’s been in decline since World War II. Spending plan follows prior US terminal investments The CMA CGM investment follows the company acquiring two marine terminals at the Port of New York and New Jersey in 2023. It also acquired the Fenix Marine Services container terminal in Los Angeles in late 2021. Thanks to record-setting profits in 2021 and 2022, container lines have invested heavily in marine terminals. Mediterranean Shipping Co., the world’s largest container line as measured by tonnage, is on track to become the largest global terminal operator after its Terminal Investment Limited (TiL) arm and BlackRock Group on Tuesday announced they would acquire the majority of Hutchison Port Holdings’ network outside of China and Hong Kong in a $22.8 billion deal. Contact Mark Szakonyi at mark.szakonyi@spglobal.com .

Port infrastructure

North American ports

CMA CGM to invest $20 billion in US shipping, ports and logistics

<div class="phx-topic abstract-wrapper">Spot rates soared as the deadline for US tariffs approached this week, and now many shipments are stranded in transit, according to logistics providers. </div>

Spot rates soared as the deadline for US tariffs approached this week, and now many shipments are stranded in transit, according to logistics providers.

<div class="phx-topic">Long Beach, California — Truck traffic in Laredo, Texas, surged for weeks until Tuesday, when the Trump administration’s 25% tariff on Mexican imports took effect. “Monday was just absolutely chaotic, and then yesterday was eerily slow,” Jordan Dewart, president of Redwood Mexico, told the Journal of Commerce Wednesday. “We had dozens and dozens of customers literally hit the pause button on all their northbound shipments from Mexico, wherever they were in transit,” Dewart said, speaking from Laredo. “They’ve all said, ‘Hey, let’s wait this out a few days to see what happens.’” <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5951880_0.1.jpg"></img></div>What’s happening is the collection of millions of dollars of duties that many shippers have never had to pay before when importing from Mexico or Canada, another US tariff target. “We have a customs broker partner here at the [Mexican] border, and they [took in] payments in excess of $1 million yesterday,” the first day tariffs were collected, Dewart said. Those payments came from multiple customers of Redwood Logistics “and every one of those customers had never paid” tariffs on Mexican goods previously, Dewart said. One customer had planned to bring a truckload shipment into the US Monday before the tariffs took effect, but a flat tire kept the drayage truck from crossing until Tuesday, he said. “A shipment that could have avoided the tariffs entirely instead was subject to $50,000 in duties,” said Dewart. <h3>Delays disrupting capacity </h3>Logistics providers expect to hear many similar stories as the Trump administration accelerates its trade wars with Mexico, Canada, China and other countries. Tariff threats and then the imposition of tariffs led to a surge in freight heading toward the US-Mexico border in January and February, causing congestion and delays. Now freight is being delayed as importers try to discern what twist the tariffs might take next. Late Wednesday, for example, the White House announced that cars and trucks produced in Mexico and Canada would be exempt from the 25% tariffs for one month. That’s likely to lead to a surge in high-value automotive imports in March. High-value shipments from Mexico and Canada surged in February, pushing up spot-market truckload rates in lanes between Canada, Mexico and the US by double digits. “We’ve seen easily 50% to 75% spot rate increases for some hot must-have type items [from Canada],” Paul Brashier, vice president of global logistics at ITS Logistics, said Wednesday. “It’s almost been similar to what we saw during COVID when shippers would say, ‘just let us know what it costs’ if we could cover a load — they were more worried about getting the shipment than what it would cost them,” Brashier told the Journal of Commerce. Earlier this week, US spot market load board operator DAT Freight &amp; Analytics reported surging spot rates and volumes in cross-border lanes connecting the US and Canada. Dry-van spot-market volumes from Toronto to Chicago rose 57% in the week ending Feb. 28, while rates in the cross-border lane rose 7%, according to DAT. Dewart noted that President Donald Trump plans to speak with Mexican President Claudia Sheinbaum Thursday, raising hopes that some tariff pressure may be relieved. “Frankly, the only trading partner that we have that knows how to handle [Trump] is Mexico’s Sheinbaum. She’s been able to work with him,” Peter Friedmann, executive director of the Agriculture Transportation Coalition (AgTC), said at the Journal of Commerce’s TPM25 conference here Wednesday. <h3>Redesigning supply chains </h3>But the uncertainty is costing US importers millions of dollars not only in tariff duties but in delays and last-minute changes in supply chains, logistics providers said. “Pretty much when Trump was inaugurated, we started fielding a lot more requests for [supply chain] design work, for heavy volume flows inbound to the US from Mexico and Canada,” said Brashier. Now with many shipments stuck in transit, especially between Mexico and the US, it’s unclear what the impact will be on volumes and pricing in the days and weeks ahead — but costs aren’t likely to go down as long as the disruption persists. “Contract rates are in a holding pattern, I’d say, to see what happens next,” Dewart said. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

Long Beach, California — Truck traffic in Laredo, Texas, surged for weeks until Tuesday, when the Trump administration’s 25% tariff on Mexican imports took effect. “Monday was just absolutely chaotic, and then yesterday was eerily slow,” Jordan Dewart, president of Redwood Mexico, told the Journal of Commerce Wednesday. “We had dozens and dozens of customers literally hit the pause button on all their northbound shipments from Mexico, wherever they were in transit,” Dewart said, speaking from Laredo. “They’ve all said, ‘Hey, let’s wait this out a few days to see what happens.’” What’s happening is the collection of millions of dollars of duties that many shippers have never had to pay before when importing from Mexico or Canada, another US tariff target. “We have a customs broker partner here at the [Mexican] border, and they [took in] payments in excess of $1 million yesterday,” the first day tariffs were collected, Dewart said. Those payments came from multiple customers of Redwood Logistics “and every one of those customers had never paid” tariffs on Mexican goods previously, Dewart said. One customer had planned to bring a truckload shipment into the US Monday before the tariffs took effect, but a flat tire kept the drayage truck from crossing until Tuesday, he said. “A shipment that could have avoided the tariffs entirely instead was subject to $50,000 in duties,” said Dewart. Delays disrupting capacity Logistics providers expect to hear many similar stories as the Trump administration accelerates its trade wars with Mexico, Canada, China and other countries. Tariff threats and then the imposition of tariffs led to a surge in freight heading toward the US-Mexico border in January and February, causing congestion and delays. Now freight is being delayed as importers try to discern what twist the tariffs might take next. Late Wednesday, for example, the White House announced that cars and trucks produced in Mexico and Canada would be exempt from the 25% tariffs for one month. That’s likely to lead to a surge in high-value automotive imports in March. High-value shipments from Mexico and Canada surged in February, pushing up spot-market truckload rates in lanes between Canada, Mexico and the US by double digits. “We’ve seen easily 50% to 75% spot rate increases for some hot must-have type items [from Canada],” Paul Brashier, vice president of global logistics at ITS Logistics, said Wednesday. “It’s almost been similar to what we saw during COVID when shippers would say, ‘just let us know what it costs’ if we could cover a load — they were more worried about getting the shipment than what it would cost them,” Brashier told the Journal of Commerce. Earlier this week, US spot market load board operator DAT Freight & Analytics reported surging spot rates and volumes in cross-border lanes connecting the US and Canada. Dry-van spot-market volumes from Toronto to Chicago rose 57% in the week ending Feb. 28, while rates in the cross-border lane rose 7%, according to DAT. Dewart noted that President Donald Trump plans to speak with Mexican President Claudia Sheinbaum Thursday, raising hopes that some tariff pressure may be relieved. “Frankly, the only trading partner that we have that knows how to handle [Trump] is Mexico’s Sheinbaum. She’s been able to work with him,” Peter Friedmann, executive director of the Agriculture Transportation Coalition (AgTC), said at the Journal of Commerce’s TPM25 conference here Wednesday. Redesigning supply chains But the uncertainty is costing US importers millions of dollars not only in tariff duties but in delays and last-minute changes in supply chains, logistics providers said. “Pretty much when Trump was inaugurated, we started fielding a lot more requests for [supply chain] design work, for heavy volume flows inbound to the US from Mexico and Canada,” said Brashier. Now with many shipments stuck in transit, especially between Mexico and the US, it’s unclear what the impact will be on volumes and pricing in the days and weeks ahead — but costs aren’t likely to go down as long as the disruption persists. “Contract rates are in a holding pattern, I’d say, to see what happens next,” Dewart said. Contact William B. Cassidy at bill.cassidy@spglobal.com .

Trucking News

TPM25: ‘Chaos’ erupts as US tariffs disrupt cross-border trucking with Mexico, Canada

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

SMC3rates_shutterstock_5247046.jpg

Shippers save money, time with automated transportation bidding tools

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

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<div class="phx-topic abstract-wrapper">The National Retail Federation now says it expects a downward shift in the second quarter as importers face challenges from tariffs and elevated inventories in the wake of significant cargo frontloading.</div>

The National Retail Federation now says it expects a downward shift in the second quarter as importers face challenges from tariffs and elevated inventories in the wake of significant cargo frontloading.

<div class="phx-topic">US retailers have downgraded their import projections for the second quarter amid the tariff chaos playing out between the Trump administration and key trading partners. The National Retail Federation (NRF) and Hackett Associates, publishers of the monthly Global Port Tracker (GPT), now say they expect a downward shift in the spring as retailers face challenges from tariffs and elevated inventories in the wake of significant cargo frontloading. “Retailers are continuing to bring as much merchandise into the country ahead of rising tariffs as possible,” Jonathan Gold, NRF vice president for supply chain and customs policy, said in the GPT. While March import projections remained unchanged, the latest GPT released this week has lowered import expectations for April, May, June and July compared with projections made just last month. The new GPT forecasts April volumes at 2.18 million TEUs, up 5.7% over the year but down from February’s projection of 8.2% year-over-year growth. While May’s import projections call for 2.8% growth to 2.14 million TEUs, that is down from the 5.4% year-over-year gain expected last month. June’s volume projections slipped to 2.07 million TEUs, down 3.2% over the year and a larger drop than the initial 0.6% decline predicted last month. It would be the first year-over-year import drop for any month since September 2023. And in its first forecast for July, the GPT projects import levels of 1.99 million TEUs, down 13.9% year over year. President Donald Trump’s recent doubling of tariffs on Chinese goods from 10% to 20% raises significant concerns for the shipping industry, particularly as reciprocal tariffs loom on the horizon, the NRF said. While the on-again, off-again tariffs on goods from Canada and Mexico are expected to have minimal direct impact on port volumes because most goods from those countries are transported via truck or rail, the uncertainty surrounding tariffs is prompting some retailers to adjust their supply chain strategies, the NRF said. Hackett Associates founder Ben Hackett noted that <a href="https://www.joc.com/article/proposed-us-tax-on-chinese-ship-calls-could-pressure-intermodal-networks-5960849">the possible implementation of new fees</a> on Chinese tonnage docking at US ports could further complicate the situation, potentially leading to increased costs for both cargo owners and consumers. Contact Laura Robb at <a href="mailto:Laura.Robb@spglobal.com">laura.robb@spglobal.com</a>.  </div>

US retailers have downgraded their import projections for the second quarter amid the tariff chaos playing out between the Trump administration and key trading partners. The National Retail Federation (NRF) and Hackett Associates, publishers of the monthly Global Port Tracker (GPT), now say they expect a downward shift in the spring as retailers face challenges from tariffs and elevated inventories in the wake of significant cargo frontloading. “Retailers are continuing to bring as much merchandise into the country ahead of rising tariffs as possible,” Jonathan Gold, NRF vice president for supply chain and customs policy, said in the GPT. While March import projections remained unchanged, the latest GPT released this week has lowered import expectations for April, May, June and July compared with projections made just last month. The new GPT forecasts April volumes at 2.18 million TEUs, up 5.7% over the year but down from February’s projection of 8.2% year-over-year growth. While May’s import projections call for 2.8% growth to 2.14 million TEUs, that is down from the 5.4% year-over-year gain expected last month. June’s volume projections slipped to 2.07 million TEUs, down 3.2% over the year and a larger drop than the initial 0.6% decline predicted last month. It would be the first year-over-year import drop for any month since September 2023. And in its first forecast for July, the GPT projects import levels of 1.99 million TEUs, down 13.9% year over year. President Donald Trump’s recent doubling of tariffs on Chinese goods from 10% to 20% raises significant concerns for the shipping industry, particularly as reciprocal tariffs loom on the horizon, the NRF said. While the on-again, off-again tariffs on goods from Canada and Mexico are expected to have minimal direct impact on port volumes because most goods from those countries are transported via truck or rail, the uncertainty surrounding tariffs is prompting some retailers to adjust their supply chain strategies, the NRF said. Hackett Associates founder Ben Hackett noted that the possible implementation of new fees on Chinese tonnage docking at US ports could further complicate the situation, potentially leading to increased costs for both cargo owners and consumers. Contact Laura Robb at laura.robb@spglobal.com . 

Trans-Atlantic

Tariff uncertainty prompts US retailers to downgrade spring import forecast

<div class="phx-topic abstract-wrapper">Reshuffling port calls because of a potential Trump administration fee on Chinese-built and -operated ships would place additional strain on the US intermodal supply chain, railroad executives say.</div>

Reshuffling port calls because of a potential Trump administration fee on Chinese-built and -operated ships would place additional strain on the US intermodal supply chain, railroad executives say.

<div class="phx-topic">If a Trump administration proposal to <a href="https://www.joc.com/article/us-port-tax-would-scramble-ocean-services-raise-shipper-costs-drewry-5952046">tax Chinese-built and -operated ships</a> calling at US ports is enacted, the nation’s Class I railroads could face the challenge of attempting to move cargo through fewer entry points without disrupting service, railroad executives said Tuesday. Executives from CSX Transportation and Union Pacific Railroad (UP), speaking at the J.P. Morgan Industrials Conference, said while they could accommodate a shift toward larger ports, it would not come without “significant” disruption. “Certainly, this potential port fee that could come into play would have a significant disruptive impact,” said CSX CFO Sean Pelkey. “If there’s more consolidation at ports that we serve and there’s more volume that wants to come into those ports, that’s a good thing. We can be a part of the solution for that. But it could also result in more congestion as well, which could have significant disruptive effects.” Congestion on the rail network is a key concern. During last year’s peak shipping season, service disruptions on the US West Coast coincided with double-digit percentage growth in cargo volume. In October, 795 of UP’s loaded intermodal railcars sat idle for at least 48 hours, according to the US Surface Transportation Board. That same month, UP’s average intermodal train speed fell to 27.9 miles per hour during the week of Oct. 9–16, its slowest week since 2019. Mediterranean Shipping Co. CEO Soren Toft <a href="https://www.joc.com/article/tpm25-port-tax-on-chinese-ships-will-make-some-routes-unviable-mscs-toft-5954640">said at TPM25 last week</a> that it would no longer be economically viable for carriers to call smaller US ports if the Trump plan was implemented, something echoed by UP CEO Jennifer Hamann. “It does lend preference to the larger ports...,” Hamann said at the J.P. Morgan event. Eric Gehringer, Union Pacific’s executive vice president of operations, said recent capital investments have given the railroad the flexibility to absorb volume shifts from smaller ports such as Oakland to major gateways such as Los Angeles. “[In] Inland Empire, we’ve been able to add another 70,000 lifts last year and we’re going to add in even more than that this year,” Gehringer said at the J.P. Morgan event. “If you think about the whole intermodal network in total over the last handful of years, we’ve added in almost 1 million lifts across our network. We’ve been building in this capacity, and we’ll be able to handle that volume.” According to a Journal of Commerce analysis of data from the Intermodal Association of North America, approximately 10,000 to 15,000 ocean containers move by rail each year from Oakland to Chicago, similar to the volume from the Port of Mobile and the Port of Philadelphia to Chicago. By comparison, BNSF Railway and Union Pacific haul that same volume from Southern California to Chicago every 10 to 14 days. There are no other rail-served routes handling more than 10,000 international loads annually from ports in Jacksonville, Mobile, New Orleans, Philadelphia or Wilmington, North Carolina. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>.</div>

If a Trump administration proposal to tax Chinese-built and -operated ships calling at US ports is enacted, the nation’s Class I railroads could face the challenge of attempting to move cargo through fewer entry points without disrupting service, railroad executives said Tuesday. Executives from CSX Transportation and Union Pacific Railroad (UP), speaking at the J.P. Morgan Industrials Conference, said while they could accommodate a shift toward larger ports, it would not come without “significant” disruption. “Certainly, this potential port fee that could come into play would have a significant disruptive impact,” said CSX CFO Sean Pelkey. “If there’s more consolidation at ports that we serve and there’s more volume that wants to come into those ports, that’s a good thing. We can be a part of the solution for that. But it could also result in more congestion as well, which could have significant disruptive effects.” Congestion on the rail network is a key concern. During last year’s peak shipping season, service disruptions on the US West Coast coincided with double-digit percentage growth in cargo volume. In October, 795 of UP’s loaded intermodal railcars sat idle for at least 48 hours, according to the US Surface Transportation Board. That same month, UP’s average intermodal train speed fell to 27.9 miles per hour during the week of Oct. 9–16, its slowest week since 2019. Mediterranean Shipping Co. CEO Soren Toft said at TPM25 last week that it would no longer be economically viable for carriers to call smaller US ports if the Trump plan was implemented, something echoed by UP CEO Jennifer Hamann. “It does lend preference to the larger ports...,” Hamann said at the J.P. Morgan event. Eric Gehringer, Union Pacific’s executive vice president of operations, said recent capital investments have given the railroad the flexibility to absorb volume shifts from smaller ports such as Oakland to major gateways such as Los Angeles. “[In] Inland Empire, we’ve been able to add another 70,000 lifts last year and we’re going to add in even more than that this year,” Gehringer said at the J.P. Morgan event. “If you think about the whole intermodal network in total over the last handful of years, we’ve added in almost 1 million lifts across our network. We’ve been building in this capacity, and we’ll be able to handle that volume.” According to a Journal of Commerce analysis of data from the Intermodal Association of North America, approximately 10,000 to 15,000 ocean containers move by rail each year from Oakland to Chicago, similar to the volume from the Port of Mobile and the Port of Philadelphia to Chicago. By comparison, BNSF Railway and Union Pacific haul that same volume from Southern California to Chicago every 10 to 14 days. There are no other rail-served routes handling more than 10,000 international loads annually from ports in Jacksonville, Mobile, New Orleans, Philadelphia or Wilmington, North Carolina. Contact Ari Ashe at ari.ashe@spglobal.com .

North-American rail

Proposed US tax on Chinese ship calls could pressure intermodal networks

<div class="phx-topic abstract-wrapper">While strong e-commerce demand last year filled all available air freight capacity out of China and kept the industry in peak season mode, recent US moves to clamp down on low-value Chinese imports have rattled the market.</div>

While strong e-commerce demand last year filled all available air freight capacity out of China and kept the industry in peak season mode, recent US moves to clamp down on low-value Chinese imports have rattled the market.

<div class="phx-topic">Air freight rates from China to the US have fallen sharply since Lunar New Year as the traditional post-holiday slump combined with mounting uncertainty over the impact of a US clampdown on low-value products under the “de minimis” threshold. While the steep decline in spot prices has moderated into March, average rates from Shanghai to the US were down 29% in February compared with the previous month in response to the regulatory and political messages emanating from the White House, according to Niall van de Wouw, chief air freight officer at rate benchmarking platform Xeneta. “From the conversations we are hearing, some shippers are clearly looking for ways to minimize the impact of US tariffs, while others will be anticipating lower air freight rates if e-commerce volumes show a sustained dip,” van de Wouw noted in Xeneta’s latest market update. Strong e-commerce demand last year filled all available air freight capacity out of China and kept the industry in peak season mode, but recent US moves to clamp down on low-value Chinese imports have rattled the market. De minimis regulations in the US allow one shipment of less than $800 in value to move between a single shipper and single consignee per day, duty free. China accounted for two-thirds of the 1.36 billion de minimis imports last year. When the Trump administration removed low-value products from de minimis exemptions in February, the system immediately backed up, forcing the exemption of low-value imports to be restored until an appropriate inspection and duty collection system can be devised. Alan Beacham, managing director of global forwarder Toll Group, said the market experienced huge disruption when low-value shipments were excluded from the de minimis rules last month. “I don't think any of us were ready to experience what happened in those three or four days where a million and a half parcels were on the ground in Chicago and five to seven million parcels across the US,” Beacham told an air cargo panel last week at the Journal of Commerce’s TPM25 conference in Long Beach. “That was within three days. Imagine if it continued for a month and all that cargo would have to be cleared through US customs,” he said. “E-commerce will continue to grow, and the complexity around the intersection with tariffs and the intersection with customs is creating uncertainty as to how that will play out.” <h3>Shifting from air to ocean </h3>Kathy Liu, vice president of global sales and marketing at Taiwan-based Dimerco Express Group, said the air cargo market slowed significantly after Jan. 20 following the de minimis policy announcements from the Trump administration. "This led to e-commerce platforms canceling charters, disrupting the supply and demand balance,” she wrote in a March update. Liu said although e-commerce “will not disappear,” it is shifting from a business-to-consumer (B2C) model to a more traditional fulfilment model that will reduce air freight demand as more shipments move to ocean freight. Xeneta forecasts air freight growth of 4% to 6% in 2025 following the strong performance in 2024 when volume grew 12%. But the growing trade tensions have placed “a big question mark” over the outlook, van de Wouw noted in his market update. “This is a situation completely outside of the control of the air cargo market, and there’s a great deal of noise, which is adding to stakeholders’ anxiety,” he said. “The issue is no one knows what the end game is and what’s going to happen from a regulatory perspective and how this will impact consumer confidence.” While any dip in demand from a regulatory clampdown on low-value imports into the US may temporarily ease capacity pressures, long-term structural challenges — such as aging fleets, slow production and regulatory hurdles — will keep the market tight, according to air cargo consultancy Cargo Facts. “The near-term future of air cargo remains uncertain, with shifting trade policies and supply chain challenges shaping the industry,” Cargo Facts wrote this week in the latest Baltic Air Index market outlook. “On one side, rising trade tensions and new tariffs are slowing demand in key areas like trans-Pacific e-commerce,” the consultancy wrote. “On the other hand, delays in aircraft production and freighter conversions mean supply growth may not keep up, creating potential capacity shortages in the coming years.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Air freight rates from China to the US have fallen sharply since Lunar New Year as the traditional post-holiday slump combined with mounting uncertainty over the impact of a US clampdown on low-value products under the “de minimis” threshold. While the steep decline in spot prices has moderated into March, average rates from Shanghai to the US were down 29% in February compared with the previous month in response to the regulatory and political messages emanating from the White House, according to Niall van de Wouw, chief air freight officer at rate benchmarking platform Xeneta. “From the conversations we are hearing, some shippers are clearly looking for ways to minimize the impact of US tariffs, while others will be anticipating lower air freight rates if e-commerce volumes show a sustained dip,” van de Wouw noted in Xeneta’s latest market update. Strong e-commerce demand last year filled all available air freight capacity out of China and kept the industry in peak season mode, but recent US moves to clamp down on low-value Chinese imports have rattled the market. De minimis regulations in the US allow one shipment of less than $800 in value to move between a single shipper and single consignee per day, duty free. China accounted for two-thirds of the 1.36 billion de minimis imports last year. When the Trump administration removed low-value products from de minimis exemptions in February, the system immediately backed up, forcing the exemption of low-value imports to be restored until an appropriate inspection and duty collection system can be devised. Alan Beacham, managing director of global forwarder Toll Group, said the market experienced huge disruption when low-value shipments were excluded from the de minimis rules last month. “I don't think any of us were ready to experience what happened in those three or four days where a million and a half parcels were on the ground in Chicago and five to seven million parcels across the US,” Beacham told an air cargo panel last week at the Journal of Commerce’s TPM25 conference in Long Beach. “That was within three days. Imagine if it continued for a month and all that cargo would have to be cleared through US customs,” he said. “E-commerce will continue to grow, and the complexity around the intersection with tariffs and the intersection with customs is creating uncertainty as to how that will play out.” Shifting from air to ocean Kathy Liu, vice president of global sales and marketing at Taiwan-based Dimerco Express Group, said the air cargo market slowed significantly after Jan. 20 following the de minimis policy announcements from the Trump administration. "This led to e-commerce platforms canceling charters, disrupting the supply and demand balance,” she wrote in a March update. Liu said although e-commerce “will not disappear,” it is shifting from a business-to-consumer (B2C) model to a more traditional fulfilment model that will reduce air freight demand as more shipments move to ocean freight. Xeneta forecasts air freight growth of 4% to 6% in 2025 following the strong performance in 2024 when volume grew 12%. But the growing trade tensions have placed “a big question mark” over the outlook, van de Wouw noted in his market update. “This is a situation completely outside of the control of the air cargo market, and there’s a great deal of noise, which is adding to stakeholders’ anxiety,” he said. “The issue is no one knows what the end game is and what’s going to happen from a regulatory perspective and how this will impact consumer confidence.” While any dip in demand from a regulatory clampdown on low-value imports into the US may temporarily ease capacity pressures, long-term structural challenges — such as aging fleets, slow production and regulatory hurdles — will keep the market tight, according to air cargo consultancy Cargo Facts. “The near-term future of air cargo remains uncertain, with shifting trade policies and supply chain challenges shaping the industry,” Cargo Facts wrote this week in the latest Baltic Air Index market outlook. “On one side, rising trade tensions and new tariffs are slowing demand in key areas like trans-Pacific e-commerce,” the consultancy wrote. “On the other hand, delays in aircraft production and freighter conversions mean supply growth may not keep up, creating potential capacity shortages in the coming years.” Contact Greg Knowler at greg.knowler@spglobal.com .

Air Cargo Forwarder News

Air Cargo Carriers News

Air Cargo

Air cargo rates tumble as market adjusts to looming ‘de minimis’ changes

<div class="phx-topic abstract-wrapper">The threat underscores the fragility of the Red Sea security situation and the reluctance of ocean carriers to return to Suez Canal transits until the safety of crew, ships and cargo can be guaranteed. </div>

The threat underscores the fragility of the Red Sea security situation and the reluctance of ocean carriers to return to Suez Canal transits until the safety of crew, ships and cargo can be guaranteed. 

<div class="phx-topic">Houthi militants have threatened to resume attacks on merchant shipping in the Red Sea by midweek unless Israel resumes humanitarian aid and electricity supplies to Gaza that were cut earlier this month. Speaking during a televised address on March 8, Houthi leader Abdul-Malik Al-Houthi set a four-day deadline for Israel to lift a blockade on aid deliveries into Gaza — which have been halted since March 2 — after which time the Houthis would “resume our naval operations against the Israeli enemy.” The Houthis had paused attacks on international shipping and on Israel on Jan. 19, except for vessels wholly owned by Israeli individuals and/or sailing under the Israeli flag, in line with the ceasefire between Israel and Hamas in Gaza that expired on March 1 without being extended or progressing to its proposed second stage. S&amp;P Global Market Intelligence said in a risk assessment Monday that the Houthi threat to resume attacks on Israel “is credible.” “A resumption of Houthi ‘naval operations’ would represent a severe risk to all vessels in transit in the Red Sea and Gulf of Aden, regardless of affiliation with Israel, due to uncertainties around targeting selection,” S&amp;P Global Market Intelligence said. The high potential for strikes on shipping to resume was highlighted by Jack Kennedy, head of Middle East and North Africa country risk at S&amp;P Global Market Intelligence, at the Journal of Commerce's TPM25 conference in Long Beach, Calif., last week. S&amp;P Global is the parent company of the Journal of Commerce. “We expect the ceasefire process is likely to break down in the next 12 months and military operations will resume in Gaza,” was Kennedy’s bleak assessment. The threat underscores the fragility of the Red Sea security situation and the reluctance of ocean carriers to resume Suez Canal transits until the safety of crew, ships and cargo can be guaranteed. Carriers have been diverting vessels around southern Africa since the Houthi attacks on shipping began 15 months ago. “It has to be safe, and right now it is not safe,” Soren Toft, CEO of Mediterranean Shipping Co. (MSC), told TPM25. “It is all linked to a number of agreements in the Middle East that are still being discussed, so for us there will be no immediate return to the Red Sea,” Toft added. “Could it happen next month, two months, six months? I don’t know. Eventually it will happen.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Houthi militants have threatened to resume attacks on merchant shipping in the Red Sea by midweek unless Israel resumes humanitarian aid and electricity supplies to Gaza that were cut earlier this month. Speaking during a televised address on March 8, Houthi leader Abdul-Malik Al-Houthi set a four-day deadline for Israel to lift a blockade on aid deliveries into Gaza — which have been halted since March 2 — after which time the Houthis would “resume our naval operations against the Israeli enemy.” The Houthis had paused attacks on international shipping and on Israel on Jan. 19, except for vessels wholly owned by Israeli individuals and/or sailing under the Israeli flag, in line with the ceasefire between Israel and Hamas in Gaza that expired on March 1 without being extended or progressing to its proposed second stage. S&P Global Market Intelligence said in a risk assessment Monday that the Houthi threat to resume attacks on Israel “is credible.” “A resumption of Houthi ‘naval operations’ would represent a severe risk to all vessels in transit in the Red Sea and Gulf of Aden, regardless of affiliation with Israel, due to uncertainties around targeting selection,” S&P Global Market Intelligence said. The high potential for strikes on shipping to resume was highlighted by Jack Kennedy, head of Middle East and North Africa country risk at S&P Global Market Intelligence, at the Journal of Commerce's TPM25 conference in Long Beach, Calif., last week. S&P Global is the parent company of the Journal of Commerce. “We expect the ceasefire process is likely to break down in the next 12 months and military operations will resume in Gaza,” was Kennedy’s bleak assessment. The threat underscores the fragility of the Red Sea security situation and the reluctance of ocean carriers to resume Suez Canal transits until the safety of crew, ships and cargo can be guaranteed. Carriers have been diverting vessels around southern Africa since the Houthi attacks on shipping began 15 months ago. “It has to be safe, and right now it is not safe,” Soren Toft, CEO of Mediterranean Shipping Co. (MSC), told TPM25. “It is all linked to a number of agreements in the Middle East that are still being discussed, so for us there will be no immediate return to the Red Sea,” Toft added. “Could it happen next month, two months, six months? I don’t know. Eventually it will happen.” Contact Greg Knowler at greg.knowler@spglobal.com .

Asia-Europe

Houthi militants threaten to restart attacks on Red Sea shipping

<div class="phx-topic abstract-wrapper">As a top tier of mega carriers has emerged through consolidation and organic growth, so has the need of those carriers to align their dominance on the ocean with capacity at ports.</div>

As a top tier of mega carriers has emerged through consolidation and organic growth, so has the need of those carriers to align their dominance on the ocean with capacity at ports.

<div class="phx-topic">Container lines going back to Sea-Land Service Inc. have seen value in controlling marine terminals, but the advantages — and the competition to acquire key facilities — are intensifying in line with growing port congestion, finite port capacity and the growing dominance of a top tier of mega carriers. Securing port access and the efficiencies it brings, while allowing competitors to be blocked out, was the major victory that the Mediterranean Shipping Co. achieved by participating via its terminal operating unit in the <a href="https://www.joc.com/article/hutchison-inks-228-billion-deal-to-sell-majority-of-port-holdings-to-blackrock-til-5955819">$23 billion deal with BlackRock to acquire the non-China assets of CK Hutchison’s terminal portfolio</a>. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5960667_0.1.jpg"></img></div>As a top tier of mega carriers has emerged through consolidation and organic growth, so has the need of those carriers to align their dominance on the ocean with capacity at ports. “The aspiration of major carriers and alliances today is the ability to control their own destiny with regard to port and terminal operating capability,” said Peter Levesque, advanced leadership fellow at Harvard University who has led terminal operating businesses, including Modern Terminals and Ports America. MSC, through its Terminal Investment Limited (TiL) unit, will gain access to terminals at 43 ports in 23 countries totaling 199 berths — although some of those <a href="https://www.joc.com/article/big-hutchison-deal-could-reshuffle-global-ports-network-drewry-5958162">terminals may be divested pursuant to antitrust review in Europe</a> — and will emerge as the world’s largest terminal operator. “The fact that TIL is involved in this deal with Blackrock speaks volumes as to what MSC looks to achieve in global terminal operating capability and competitive advantage,” Levesque said. The competition among carriers for prized port assets is visible on multiple fronts. Hapag-Lloyd last year announced the creation of a terminal operating unit, reflecting its commitment to “expansive terminal operations,” and <a href="https://www.joc.com/article/hapag-lloyds-ports-arm-buys-majority-stake-in-le-havre-terminal-5959230">on Monday announced the acquisition of a majority stake in a Le Havre terminal operator</a>. Growing terminal portfolios are controlled by Maersk, CMA CGM and Ocean Network Express. “There is a tendency for each shipping line now to build their own terminal portfolio,” said Robbert van Trooijen, head of consultancy Inception Partners LLC Inc. and the former Maersk head of Asia-Pacific and Latin America. Carriers are growing increasingly aggressive in pursuit of ports. In its winning bid to acquire Global Container Terminal facilities at Bayonne and Staten Island, CMA CGM agreed to the surprise terms of sharing detention and demurrage revenue with the Port Authority of New York and New Jersey, and to helping fund quayside improvements. <a href="https://www.ckh.com.hk/en/media/press_each.php?id=3431">CK Hutchison said</a> the TiL/BlackRock deal resulted from a “competitive process in which numerous bids and expressions of interest were received,” which reportedly included other carriers. <h3>Moves driven by port congestion, capacity constraints </h3>Carriers’ urgency in acquiring terminals reflects concerns about growing port congestion globally combined with limited greenfield port projects. “Globally, terminal capacity is under significant constraint. Globally, port congestion is growing,” said van Trooijen. “There is a lack of greenfield projects out there that will deliver expansion, so getting your hands on existing capacity, and especially a portfolio of this size, this was a once-in-a-decade opportunity.” The ratio of a ship’s time at sea versus time in port has grown from 80-20 to 70-30 in recent years, said Johnson Leung of Linerlytica. China in recent years has stopped building port capacity ahead of demand as it did for many years, leading to growing congestion at Shanghai and Ningbo. Controlling terminals enables carriers to control costs at the terminal, tightly coordinate port calls and ensure its ships are guaranteed priority on arrival and departure. Control of hub ports is deemed the essential ingredient in delivering the <a href="https://www.joc.com/article/tpm25-gemini-hitting-90-reliability-target-as-new-network-rolls-out-habben-jansen-5955794">90%-plus schedule reliability promised by the hub-and-spoke Gemini alliance.</a>“Controlling key port infrastructure provides carriers with cost and operating efficiencies that are difficult to achieve with non-carrier-affiliated terminals and government port authorities,” Levesque said. The growing dominance of the top tier of carriers, where MSC crossed the 20% market share threshold and the top five carriers control 65% of capacity, according to Alphaliner, is forcing third-party terminal businesses to align with key carriers able to provide the volume needed to keep terminals profitable. “For a big terminal operator, you increasingly need to have a long-term relationship with carriers with whom you have more than average cooperation if you want to safeguard your future for the long term,” van Trooijen said. “Terminal operators who are successful are the ones who have developed long-term carrier relationships.” Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>.</div>

Container lines going back to Sea-Land Service Inc. have seen value in controlling marine terminals, but the advantages — and the competition to acquire key facilities — are intensifying in line with growing port congestion, finite port capacity and the growing dominance of a top tier of mega carriers. Securing port access and the efficiencies it brings, while allowing competitors to be blocked out, was the major victory that the Mediterranean Shipping Co. achieved by participating via its terminal operating unit in the $23 billion deal with BlackRock to acquire the non-China assets of CK Hutchison’s terminal portfolio . As a top tier of mega carriers has emerged through consolidation and organic growth, so has the need of those carriers to align their dominance on the ocean with capacity at ports. “The aspiration of major carriers and alliances today is the ability to control their own destiny with regard to port and terminal operating capability,” said Peter Levesque, advanced leadership fellow at Harvard University who has led terminal operating businesses, including Modern Terminals and Ports America. MSC, through its Terminal Investment Limited (TiL) unit, will gain access to terminals at 43 ports in 23 countries totaling 199 berths — although some of those terminals may be divested pursuant to antitrust review in Europe — and will emerge as the world’s largest terminal operator. “The fact that TIL is involved in this deal with Blackrock speaks volumes as to what MSC looks to achieve in global terminal operating capability and competitive advantage,” Levesque said. The competition among carriers for prized port assets is visible on multiple fronts. Hapag-Lloyd last year announced the creation of a terminal operating unit, reflecting its commitment to “expansive terminal operations,” and on Monday announced the acquisition of a majority stake in a Le Havre terminal operator . Growing terminal portfolios are controlled by Maersk, CMA CGM and Ocean Network Express. “There is a tendency for each shipping line now to build their own terminal portfolio,” said Robbert van Trooijen, head of consultancy Inception Partners LLC Inc. and the former Maersk head of Asia-Pacific and Latin America. Carriers are growing increasingly aggressive in pursuit of ports. In its winning bid to acquire Global Container Terminal facilities at Bayonne and Staten Island, CMA CGM agreed to the surprise terms of sharing detention and demurrage revenue with the Port Authority of New York and New Jersey, and to helping fund quayside improvements. CK Hutchison said the TiL/BlackRock deal resulted from a “competitive process in which numerous bids and expressions of interest were received,” which reportedly included other carriers. Moves driven by port congestion, capacity constraints Carriers’ urgency in acquiring terminals reflects concerns about growing port congestion globally combined with limited greenfield port projects. “Globally, terminal capacity is under significant constraint. Globally, port congestion is growing,” said van Trooijen. “There is a lack of greenfield projects out there that will deliver expansion, so getting your hands on existing capacity, and especially a portfolio of this size, this was a once-in-a-decade opportunity.” The ratio of a ship’s time at sea versus time in port has grown from 80-20 to 70-30 in recent years, said Johnson Leung of Linerlytica. China in recent years has stopped building port capacity ahead of demand as it did for many years, leading to growing congestion at Shanghai and Ningbo. Controlling terminals enables carriers to control costs at the terminal, tightly coordinate port calls and ensure its ships are guaranteed priority on arrival and departure. Control of hub ports is deemed the essential ingredient in delivering the 90%-plus schedule reliability promised by the hub-and-spoke Gemini alliance. “Controlling key port infrastructure provides carriers with cost and operating efficiencies that are difficult to achieve with non-carrier-affiliated terminals and government port authorities,” Levesque said. The growing dominance of the top tier of carriers, where MSC crossed the 20% market share threshold and the top five carriers control 65% of capacity, according to Alphaliner, is forcing third-party terminal businesses to align with key carriers able to provide the volume needed to keep terminals profitable. “For a big terminal operator, you increasingly need to have a long-term relationship with carriers with whom you have more than average cooperation if you want to safeguard your future for the long term,” van Trooijen said. “Terminal operators who are successful are the ones who have developed long-term carrier relationships.” Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

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